Highway and Transit Program Reauthorization Legislation in the 2nd Session, 108th Congress
Congressional research reportDec 15, 2004
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Highway and Transit Program
Reauthorization Legislation in the
2nd Session, 108th Congress
Updated December 15, 2004
John W. Fischer
Coordinator
Resources, Science, and Industry Division
Congressional Research Service ˜ The Library of Congress
Highway and Transit Program Reauthorization
Legislation in the 2nd Session, 108th Congress
Summary
This report discusses significant legislative provisions in the two principal bills
that were the subject of congressional discussion to reauthorize federal highway,
highway safety, and transit programs in the 108th Congress. These are the Safe,
Accountable, Flexible, and Efficient Transportation Equity Act of 2003
(SAFETEA)(S. 1072)(“Senate bill”) passed by the Senate on February 12, 2004, and
the Transportation Equity Act: A Legacy for Users (TEA-LU)(H.R. 3550)(“House
bill”) passed by the House on April 2, 2004.
Throughout the year, the congressional reauthorization debate focused largely
on money issues. There was an expectation within the highway community that new
reauthorization legislation should contain significantly higher funding levels then
existing legislation. No large source of new revenue for these trust fund financed
programs became available, however. The American Jobs Creation Act of 2004
(October 22, 2004, P.L. 108-357), however, provided for modest increases in
revenue, primarily as a result of changes in gasohol taxation.
Other than funding, the provision of these bills that seems to engender the most
controversy is the long-standing donor-donee state problem. Both bills tried to
resolve the tension between so-called donor and donee states, by seeking to increase
funding now, or in the future, and creating mechanisms to guarantee each state a
higher rate of return on their proportional contribution to the highway trust fund
(95% in both bills versus 90.5% in current law). The House bill, however, would
have accomplish this by requiring a reopening of the reauthorization funding debate
before the end of FY2006, in order to insure that additional funding is found for
donor states without taking future funds away from donee states, a politically
unpopular alternative that may have complicated final action on this legislation.
As proposed, neither bill makes major structural changes to the core highway
programs. Both bills, however, add new highway programs. This is especially the
case in the House bill which creates, among other things, a multi-billion dollar
program to construct projects of national/regional significance.
A Conference Committee was unable to reach agreement on a final bill prior to
the end of the 2nd Session. In the interim all federal programs authorized by this bill
continue to operate until May 31, 2005 on the basis of extension legislation (P.L.
108- 310). Further work on the reauthorization issue now becomes the purview of
the 109th Congress.
This report has been updated to reflect actions taken in the waning days of the
108 Congress. Some sections of the report were not subject to end of session update,
but all are nonetheless current as of the last congressional consideration of the
specific subject under discussion. This report will not be subject to further updates.
This report does not contain extensive background information about the operation
of federal surface transportation programs. Those seeking this information should
consult CRS Report RL31665, Highway and Transit Program Reauthorization.
th
CRS Highway, Highway Safety, and Transit Reauthorization Policy Staff
Area of Expertise
Name
CRS
Telephone
Division
John Fischer
Bob Kirk
RSI
RSI
7-7766
7-7769
Trust Fund Issues
John Fischer
Bob Kirk
RSI
RSI
7-7766
7-7769
Donor/Donee & Formula Issues
Bob Kirk
John Fischer
RSI
RSI
7-7769
7-7766
Highway, Railroad, & Truck Safety
Paul Rothberg
RSI
7-7012
Auto and Traffic Safety
Paul Rothberg
RSI
7-7012
Intelligent Transportation Systems (ITS)
Paul Rothberg
RSI
7-7012
Transportation Enhancements & Planning
Glennon Harrison
RSI
7-7783
Transit Program Issues
Randy Peterman
RSI
7-3267
Intermodal/Freight Issues
John Frittelli
RSI
7-7033
CMAQ
Linda Luther
RSI
7-6852
Environmental Streamlining
Linda Luther
RSI
7-6852
Conformity with the Clean Air Act
Jim McCarthy
RSI
7-7225
Recreational Trails
Sandy Johnson
RSI
7-7214
Transportation Infrastructure Policy
John Fischer
RSI
7-7766
Surface Transportation Security
John Frittelli
RSI
7-7033
Highway and Transit Program Data
Hussein Hassan
John Williamson
RSI
RSI
7-2119
7-7725
Highway Program Issues
Division abbreviations: RSI = Resources, Science, and Industry Division.
Contents
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Overview of Legislative Proposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Extension Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Conference Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Conference Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Highway and Transit Finance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Highway Trust Fund Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Trust Fund Budgetary Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Revenue Raising Proposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
No New Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Donor-Donee State Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
The TEA-21 Minimum Guarantee Program . . . . . . . . . . . . . . . . . . . . . . . . 17
The House Minimum Guarantee Proposal . . . . . . . . . . . . . . . . . . . . . . . . . . 18
The Senate’s Proposed Equity Bonus (EB) Program . . . . . . . . . . . . . . . . . . 21
Donor - Donee Conference Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Statistical Caveats . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
House “Re-Opener” Provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Highway Program Structural Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Apportioned Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Allocated (Discretionary) Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Highway Program Formula Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Existing Formula Program Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
New Programs’ Formulas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
New Directed Spending . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Highway Program Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Flexibility/Transferability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
High Priority Projects (Earmarking) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Innovative Financing Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Bonding Proposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Transportation Enhancements (TE) Program . . . . . . . . . . . . . . . . . . . . . . . 34
Transportation and Community and System Preservation (TCSP)
Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Pedestrian and Bicycle Mobility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Appalachian Development Highway Program (ADHP) . . . . . . . . . . . . . . . 38
Recreational Trails Program (RTP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Congestion Mitigation and Air Quality Improvement Program . . . . . . . . . 40
Environmental Streamlining . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Conformity of Transportation Plans and State Implementation Plans (SIPs) . . . 46
Highway and Commercial Vehicle Safety Programs . . . . . . . . . . . . . . . . . . . . . . 47
Intelligent Transportation Systems (ITS) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Research and Development and Technology Deployment . . . . . . . . . . . . . . . . . 54
Transit Reauthorization Proposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Formula (Apportioned) Transit Programs . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Discretionary (Allocated) Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Other Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Rail Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
House bill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Senate bill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Intermodal Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Intermodal Freight Connectors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Rail Freight Infrastructure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Appendix 1: Transportation Budget Terminology . . . . . . . . . . . . . . . . . . . . . . . . 67
List of Tables
Table 1. Authorizations for Surface Transportation Programs in
Selected Reauthorization Legislation FY2004-FY2009 . . . . . . . . . . . . . . . . 4
Table 2. Proposed Funding: Transportation Enhancements Program,
FY2004-2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Table 3. Proposed Funding: Transportation and Community and System
Preservation (TCSP) Program, FY2004-2009 . . . . . . . . . . . . . . . . . . . . . . . 35
Table 4. Proposed Funding for the Safe Routes to School Program,
FY2004-2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Highway and Transit Program
Reauthorization Legislation in the 2nd
Session, 108th Congress
Introduction
This report discusses significant legislative provisions in the two principal bills
that were the subject of congressional discussion to reauthorize federal highway,
highway safety, and transit programs in the 108th Congress. These are the Senate bill
S. 1072 (the Safe, Accountable, Flexible, and Efficient Transportation Equity Act of
2003, or SAFETEA) passed by the Senate on February 12, 20041, and the House bill
H.R. 3550 (the Transportation Equity Act: A Legacy for Users, or TEA-LU), passed
by the House on April 2, 2004. Although reauthorization is more that a year overdue
all highway, highway safety, and transit programs continue to operate as a result of
extension legislation. A Conference Committee was unable to complete its work
prior to the end of the 2nd Session.
From the public’s perspective the ongoing surface transportation reauthorization
debate is taking place against the backdrop of growing concern about congestion and
sprawl in urbanized areas, and increased concern about maintaining access to markets
and the rest of the national transportation system in rural areas. The congressional
debate focuses primarily on money. Given the large increase in funding made
available by the last reauthorization bill, the Transportation Equity Act for the 21st
Century,2 better known as TEA-21, there appears to be an expectation in some
quarters that the reauthorization under discussion should also provide for a large
increase in funding. At the time TEA-21 was passed, a confluence of circumstances
provided for a considerable boost to highway trust fund revenues. Unfortunately, for
those seeking extensive new funding, no similar confluence of events appears likely
any time in the near future.
As a result, much of the discussion turns on whether significant additional funds
can be found for federal surface transportation programs, or whether funding for
these programs will be limited to the modest growth forecast for the highway trust
fund over the next six years. If new funds can be found, many of the provisions put
forth in House and Senate legislation may be adopted in some form during the
reauthorization process. Without significant new funding sources, however, a
1
On May 19, 2004 the Senate adopted H.R. 3550 and inserted the language of S. 1072 into
the bill to facilitate conference consideration. For the purposes of this report the Senate bill
continues to be referred to as S. 1072.
2
P.L.105-178 and P.L. 105-206. Federal highway law is codified in 23 U.S.C. Other
transportation provisions included in TEA-21, such as transit, are codified in 49 U.S.C.
CRS-2
competition for the existing pot of funds will almost surely ensue amongst the
various state, regional, and programmatic stakeholders. So far this competition has
stifled the reauthorization debate and led to further extension of the TEA-21
framework.
This report begins with a brief overview of the House and Senate bills followed
by an examination of how the two bills deal with the problem of constrained
budgetary resources and donor-donee state issues. It then examines the proposed
programmatic changes for the Federal-Aid Highway programs. Environmental and
Safety provisions and issues are then discussed. Finally, the bills’ mass transit and
intermodal provisions are examined.
Overview of Legislative Proposals
This report focuses on the two pieces of legislation under consideration in the
House and the Senate that were the principal vehicles for the reauthorization debate
in the 108th Congress, SAFETEA and TEA-LU. The Senate completed action on its
bill, S. 1072, on February 12, 2004. The House has also completed action its bill,
H.R. 3550, doing so on April 2, 2004. The bill as approved by the House, however,
provided funding at a level well below what the Committee originally intended at
introduction. To emphasize this point the Committee at its March 25, 2004 markup
also passed a similar bill, H.R. 3994, with higher funding levels, but did not report
it.
Prior to House and Senate consideration, the Bush Administration submitted a
bill of its own indicating the Administration’s reauthorization views and priorities.
This bill was introduced by request in both the House and the Senate as S. 1072 and
H.R. 2088, respectively, which are hereafter referred to as the Administration bill.
It should be noted that the Senate bill carries the title Safe, Accountable, Flexible,
and Efficient Transportation Equity Act of 2003 (SAFETEA) originally proposed by
the Administration bill. The Senate Committee on Environment and Public Works
further chose to use S. 1072 as their markup vehicle and amended the bill by
including their own provisions in the nature of a substitute. S. 1072 in its Senate
passed form, however, is the Senate bill, and although it contains provisions
proposed by the Administration, the bill itself is dramatically different from the
introduced version of the bill.
In both the House and the Senate, multiple committees have a role in
reauthorization. In the House, most of the bill, as discussed above, is under the
control of the Committee on Transportation and Infrastructure. The House
Committee on Science contributes to the research title of the bill (H.R. 3551) and the
House Committee on Ways and Means has jurisdiction over the revenue title (H.R.
3971). All three Committees reported legislation that became part of H.R. 3550
during Floor action on April 2, 2004.
In the Senate, the Senate Committee on Commerce, Science, and Transportation
had previously marked up a bill, S. 1978 (S.Rept. 108-215), authorizing the Motor
Carrier Safety Administration and National Highway Traffic Safety Administration
CRS-3
(NHTSA) programs under its jurisdiction. This bill, with a manager’s amendment,
became part of S. 1072 during floor consideration. The Senate Committee on
Banking, Housing, and Urban Affairs, which has jurisdiction over Federal Transit
Administration (FTA) programs, marked up its portion of the reauthorization bill,
which was also attached to S.1072 as an amendment. Finally, the Senate Committee
on Finance has jurisdiction over the revenue title of the bill. The Finance Committee
title, the Highway Reauthorization and Excise Tax Simplification Act of 2004 was
marked up in committee on February 2, 2004. This title was also added by
amendment to the now Senate passed version of S. 1072.
Much of the discussion about the reauthorization bills has centered on the total
spending envisioned in each proposal. The Senate bill is believed to contain $318
billion in total spending authority for the period FY2004 - FY2009. The House bill
as passed by the House now contains $275 billion, which is dramatically below the
$375 billion figure found in the introduced version of the bill. Either bill is above the
Administration’s stated position that total spending be set at $256 billion over the
next six years.3 A break-out of expected program authorizations by major activity
is shown in Table 1. Neither the House nor the Senate proposal can be funded by
current revenues projected from the programs’ existing funding sources. As will be
discussed later in this report, the Administration bill could, perhaps, be financed from
current revenue sources.
The Bush Administration has gone on record against the level of spending
proposed by S. 1072 and has indicated its intent to veto any bill of such size that
Congress might generate.4 A letter signed by the Secretary of the Treasury and the
Secretary of Transportation on February 11, 2004, indicated that they would
recommend a presidential veto of any bill that included new taxes, bonding, or
unrelated provisions dealing with issues like Amtrak (which is included in the Senate
bill). The Senate passed its bill by a vote of 76-21. Senate bill managers, therefore,
believe that barring changing the Administration’s mind on this issue, they could
override a veto.5
The Administration, in a March 30, 2004 Statement of Administration Policy,
is also threatening a veto of the House passed version of H.R. 3550 at its $275 billion
spending level. This veto threat came as a surprise to many House Members. The
bill passed the House with a possibly veto proof margin of 357-65. It is, therefore,
unclear whether the President would be able to sustain a veto of this legislation.
For procedural reasons the Senate brought H.R. 3550 to the floor on May 19,
2004 and adopted it with the text of S. 1072 inserted in the nature of a substitute.
3
The Administration bill as introduced allowed for $247 billion in total funding. The
President’s budget submission for FY2005 adjusts this figure upward to the $256 billion
amount.
4
The full text of the Administration’s letter, indicating its objections to the bill, can be
found at [http://www.whitehouse.gov/omb/legislative/sap/108-2/s1072sap-s.pdf]
5
Rothman, Heather M. Senate Reducing Extension as House Works to Scale Back
Transportation Bill. Daily Report for Executives. BNA Inc. Washington. February 25, 2004.
p. A-34
CRS-4
This action facilitates a conference and allows the Senate to meet the constitutional
requirement that tax bills originate in the House.
Table 1. Authorizations for Surface Transportation Programs in
Selected Reauthorization Legislation FY2004-FY2009
($ billions)
Bill Title
Highways
Administration
Bill
House
Bill
Senate Bill
(estimate)
206.4
217.5
255.0
Safety
6.0
6.0
6.0
Transit
43.6
51.5
56.5
Total Authorization
256.0*
275.0*
318.0*
Source: Washington Letter on Transportation. T&I Committee Approves Six-Year $275 Billion
Reauthorization Bill. March 29, 2004. p.1.
* There are several ways a table such as this can be constructed. This table shows the totals most
commonly associated with each bill. There are, for example, know issues with the totals for the House
and Senate bills, which in both cases might be different than those shown here. By one analysis6 the
House bill contains total authorizations of $283.8 billion.
Extension Legislation
As mentioned earlier, all existing highway, highway safety, and transit
programs continue to operate on the basis of legislation that extends the program
structure of TEA-21. Congress is now on its sixth program extension (P.L. 108310). This extension continues the highway program until May 31, 2005. The
existing authorization had been extended previously to February 29, 2004 (P.L. 10888), to April 30, 2004 (P.L. 108-202),to June 30, 2004 (P.L. 108-224),to July 31,
2004 (P.L. 108-263) and to September 30 (P.L. 108-280).7 It was hoped at the time
that the first extension was passed that this would give Congress sufficient time to
complete action on a reauthorization bill early in the second session. This was not the
case, and it is now clear that the reauthorization discussion will be taken up again in
the 109th Congress.
By choosing a May 31, 2005 termination date for the existing programs
Congress has given itself some leeway to find a solution to the funding debate that
has so far stifled long-term reauthorization legislation. It was the hope of many on
the authorizing committees that a new Congress and a newly reelected President will
be more sympathetic to the idea that transportation needs require significant
additional funding. It was also the hope of the authorizers that additional sources of
funding for these programs would be identified before May 31, 2005. To some
extent this has already been the case as a result of the changes in gasohol taxation
6
7
Transportation Weekly. V5. March 29, 2004.p. 1- 22.
For more information on extension legislation, see CRS Report RS21621, Surface
Transportation and Aviation Extension Legislation: A Historical Perspective. by John
Fischer and Robert Kirk.
CRS-5
afforded by the enactment of the American Jobs Creation Act. It should be pointed
out that the potential $24 billion in new revenues that these change might raise over
the next six years are still far below the amount needed to fund the program at the
levels under discussion during conference.
Conference Issues
There are numerous and significant differences between S. 1072 and H.R. 3550.
All these were to have been resolved in conference. Deciding on the total
authorization level is the most obvious and perhaps most difficult policy issue that
needed to be resolved. As mentioned above, a veto threat looms over either of the
total funding amounts contained in the two bills, and the Bush Administration
threshold is well below the amount required to fund either of the bills in their current
form.
The donor-donee issue will be one of the Conference’s most difficult issues.
Both the House and Senate solutions to this problem require more funding now, and
in the case of the House even more in the future, before either can provide states with
the 95% return on contributions to the trust fund that many desire instead of the
existing 90.5%. Also in play is the scope of the program to be covered by the
minimum guarantee or equity bonus.8 Leaving programs, such as the House passed
high priority project program in, or out of, the scope can dramatically effect a state’s
expected annual funding.
There are several large new allocated (discretionary) programs in the House bill
that require significant new funding. As written, funding decisions for these programs
will be made by FHWA, although many expect these funds to be earmarked if the
programs are included in the conference report. At least initially, these new programs
reduce the proportion of the funds provided by the bill that are available for core
apportioned (formula) programs. Many state’s prefer apportioned funds that are
under their control as opposed to dedicated discretionary funds. Hence it is likely
that the Conference will be required to determine the final ratio of programs under
state versus earmark or FHWA control.
Although environmental issues were not an important part of the floor debate
in either the House or the Senate, some environmental interests remain concerned
about certain provisions in the bills dealing with streamlining and conformity. For
example, the House bill includes a statute of limitations on legal claims and specific
deadlines for project milestones during project environmental review. Also, there is
a major difference between House and Senate bills on the Section 4(f) publically
owned lands and historic sites provisions. How significant these issues will really
be remains to be seen.
The issue of earmarking will be a major part of the Conference. The House
passed version of H.R. 3550 contains 2,884 specifically enumerated high priority
8
“Scope” has become the term most used to describe what programs within the total federalaid highway program will be included in the rate-of -return on trust fund contributions
calculation.
CRS-6
projects under the highway program and numerous additional earmarks for transit
projects. The Senate bill, however, is bereft of earmarks. It is widely believed,
however, that the Senate will insist on a significant share of any earmarking that
might emerge in the conference bill.
For transit the major issue is also money, with project designation (earmarking),
especially of new rail starts, a not to distant second. The principal issue to be resolved
in the traffic safety (NHTSA) portion of the bill is the criteria to be used to determine
which states qualify for funding under the Section 405 (occupant protection) and
Section 410 (alcohol countermeasures) programs. All of the items discussed above
are discussed in more detail later in this report.
Conference Actions
The Conference Committee met on several occasions beginning in June 2004.
On three occasions the conferees adopted a relatively small number of legislative
provisions that had been agreed upon during staff meetings. Larger and more
important decisions were put off pending a decision by Members on total program
size and on how to solve the donor-donee issue.
During June and July 2004, House and Senate conferees exchanged a series of
informal overall funding proposals. The first House proposal would have provided
for $298 billion in total spending with guaranteed obligations of $288 billion (getting
to these numbers required a $10 billion rescission of existing unspent contract
authority). The Senate countered with an offer of $303 billion in total spending, of
which $290 billion would be guaranteed (this offer requires a $13 billion rescission).
Just prior to the beginning of the summer district work period (July 22nd) the
conferees met once more and each made newly adjusted offers. The House offer was
for $299 billion in total authority, with $284 billion guaranteed ($15 billion
rescission). It was alleged, but not confirmed, that the Bush Administration would
accept these numbers and sign a bill that included them. The Senate offer was $301
billion in total spending, of which $289 billion was guaranteed ($12 billion
rescission). At this meeting it was decided that further efforts to reach a compromise
on the final bill would have to wait until September. Staff was directed to work with
FHWA to determine how either of the offers would effect state distribution of funds
and how the donor-donee framework would be adjusted by these competing offers.
When Congress returned it continued to investigate a number of funding
alternatives. None, however, proved satisfactory to all parties. Although several
public statements were made by Conferees about the desirability of completing work
on a bill during the 108th Congress, no real progress appears to have been made.
Instead, Congress passed the aforementioned extension legislation delaying the need
for long term reauthorization until early in the 1st Session of the 109th Congress.
CRS-7
Highway and Transit Finance
Highway Trust Fund Background
The highway trust fund consists of two separate accounts — highway and transit
— which are sometimes mistakenly referred to as separate trust funds. In practice,
the highway account and the transit account are discussed as though they were
separate entities, with the highway trust fund being synonymous with the highway
account.
The highway trust fund is the oldest and largest of the transportation trust funds.
The fund was created by a separate revenue title in the Federal-Aid Highway Act of
1956 (1956 Act) (P.L. 84-627). The 1956 Act provided funding for construction of
the now virtually complete Dwight D. Eisenhower System of Interstate and Defense
Highways. In addition, the 1956 Act provided some funding for other federal
highway programs. Over the last 40 plus years, the highway trust fund and the federal
programs it supports have been changed numerous times.9 In almost every instance,
Congress has chosen to expand the scope of the federal highway program.
The transit account was created by the Surface Transportation Assistance Act
of 1982 (P.L. 97-424). The transit account gave transit providers a consistent federal
funding source for capital spending on new and rehabilitated infrastructure and for
other purposes.
The highway trust fund is financed from a number of sources including sales
taxes on tires, trucks, buses, and trailers, as well as truck usage taxes, but approximately 90% of trust fund revenue comes from excise taxes on motor fuels.10 The
majority of the motor fuel revenue dedicated to the trust fund is derived from an 18.4
cents per gallon tax on gasoline (24.4 cents on diesel). The highway account receives
an allocation equivalent to 15.44 cents of the tax and the transit account receives the
revenue generated by 2.86 cents of the tax. The remaining 0.1 cents goes into the
leaking underground storage tank (LUST) trust fund.
Trust Fund Budgetary Treatment
TEA-21 changed the way the highway trust fund relates to the Federal Unified
Budget in two ways: first by creating new budget categories and second by setting
statutory limitations on obligations. The act amended the Balanced Budget and
Emergency Deficit Control Act of 1985 to create two new budget categories:
highway and mass transit. The act further amended the budget process by setting the
limitation on obligations for each fiscal year from FY1999 to FY2003 in authorizing
rather then appropriations legislation. In addition, TEA-21 provided a mechanism,
Revenue Aligned Budget Authority (RABA), to adjust these amounts in the highway
9
For a more detailed history of the trust fund see CRS Report RL30304, The Federal Excise
Tax on Gasoline and the Highway Trust Fund: A Short History, by Louis Alan Talley.
10
For a discussion of federal transportation fuel taxes see CRS Report RS20281,
Transportation Fuel Taxes and Legislative Issues, by Bernard A. Gelb.
CRS-8
account, but not the transit account, so as to correspond with increased or decreased
receipts in highway generated revenues. RABA issues will be discussed in greater
detail in the next section of this report. It should be pointed out, all of the above
notwithstanding, that annual revenues and expenditures affecting the balances in the
trust fund accounts remain part of the overall annual federal deficit calculation.
The net effect of the changes was to set a predetermined level of funding for
core highway and transit programs, referred to in TEA-21 as a discretionary spending
guarantee. These categories are separated from the rest of the discretionary budget
in a way that prevents the use of funds assigned to these categories for any other
purpose. These so called “firewalls” were viewed, in the TEA-21 context, as
guaranteed and/or minimum levels of funding for highway and transit programs.
Additional funds above the firewall level could be made available for highway and
transit programs through the annual appropriations process, but for the most part this
did not occur except in FY2003.
Coming into the reauthorization debate there were reports that some Members
would like to revisit the special budget status of the trust fund. At the time of this
writing, however, no specific objections to continuation of the current system have
arisen. Both S. 1072 and H.R. 3550 would maintain the existing system. The only
change in the bills is in the RABA computation.
Reforming Revenue Aligned Budget Authority (RABA).11 When
RABA was created it was done with the understanding that highway funds would be
increased if revenues to the trust fund increased above expectations and reduced if
the opposite occurred. In 1998 it was viewed as unlikely that revenue would
decrease, since growth in trust fund revenues had increased continuously during the
almost all of the 40-plus year life of the trust fund.
Between FY2000 and FY2002, RABA provided almost $9 billion in additional
funding for designated highway programs. The RABA adjustment in the FY2003
budget, however, a negative $4.3 billion, surprised even those who expected a small
decline in RABA as a result of the recession that began in 2001. The $4.3 billion
negative RABA would have resulted in an actual year over year decline of $8.6
billion in federal highway assistance provided to the states. (The previous year’s total
had been dramatically increased by a positive RABA adjustment.)
This year-over-year drop in the program was more than Congress was willing
to allow. As part of the FY2002 second emergency supplemental bill (P.L. 107-206),
the RABA adjustment for FY2003 was eliminated. In fact, Congress eventually
provided a full adjustment of spending by adding sufficient funds from the
unexpended balance in the trust fund to fund the program at its authorized level.
The events of FY2003 created interest in amending the RABA mechanism
during reauthorization to reduce the chance of very large annual swings in RABA
adjustments. Both the House and Senate bills try to eliminate these swings. In both
11
For more information see CRS Report RS21164, Highway Finance: RABA’s Doubleedged Sword, by John W. Fischer.
CRS-9
instances this is done by changing the way RABA is computed by the Office of
Management and Budget. This is done by eliminating what has been a required
“look ahead” computation that tried to predict the direction of the national economy.
In addition the Senate bill suspends a RABA adjustment until FY2006. This is likely
due to concerns about the level of unexpended balances in the trust fund, among
other technical considerations. In addition, S. 1072 requires that no reduction under
RABA be allowed so long as the cash balance in the highway account of the trust
fund exceeds $6 billion. This again could be viewed as a way to mitigate against a
possible repeat of what happened in FY2003.
Revenue Raising Proposals
Much of the debate about the need for new revenues focuses on the concept of
unmet highway and transit system needs as detailed in a report authored by the
FHWA and Federal Transit Administration (FTA).12 The report indicates that the
costs required to improve the surface transportation system far exceed the projected
ability of federal, state, and local governments to pay for them.
Transportation organizations, while not advocating major structural changes in
the federal highway and transit programs, are advocating an increase in funding
comparable to that in TEA-21 (which was 40% plus larger then its predecessor,
ISTEA, P.L. 102-240). They do not, however, have a ready source of funds to
accommodate this increase. Many, but not all, in the transportation community are
reluctant to seek fuel tax increases at this time. The Bush Administration has made
it clear for well over a year that it will oppose any increase in federal fuels taxes. A
number of Members of Congress, including much of the House Republican
leadership, is also on record against fuel tax increases. As a result, the transportation
community has been seeking alternative sources of new revenues for the highway and
transit program.
The discussion below addresses many of the proposed revenue sources that have
been under discussion during the 108th Congress. The Senate Committee on Finance
agreed to a proposal identifying several sources of additional funding for
reauthorization purposes that was made part of S. 1072 during floor debate.13
Supporting documents provided during Finance Committee markup on February 2,
12
There is general acceptance of the idea that there are significant unmet surface
transportation capital infrastructure needs. There are, however, numerous questions about
their measurement. The FHWA and the Federal Transit Administration (FTA) needs studies
of the last few years are viewed as much improved in this regard over the studies done a
decade ago. Questions still arise as to how needs are determined, how the costs associated
with these needs are derived, and how state “wants” are separated from actual state “needs.”
As a result, the issue of highway and transit system conditions and needs is complex and
beyond the scope of this paper. Additional information can be found at the DOT website,
[http://www.fhwa.dot.gov/pressroom/test020926.htm] and at the AASHTO website,
[http://www.transportation.org/bottomline/]
13
As discussed in U.S. Congress. Joint Committee on Taxation, Description of the
“Highway Reauthorization and Excise Tax Simplification Act of 2004” (JCX-5-04), January
29, 2004.
CRS-10
2004, indicate that an additional $35 billion in revenues could be identified during
the reauthorization period if committee provisions were to be adopted. As a result of
amendments during floor debate several of the provisions in the markup version were
changed. No further discussion as to how these changes effect revenue estimates has
been provided. In the discussion that follows, reference is made to the amounts
estimated during committee markup. As of this writing, there has been no outside
examination as to the accuracy of the revenue estimates assumed in the committee’s
documents. Also, several of the revenue sources identified do not provide “new”
money to the Treasury and are instead redistributions between Treasury general funds
and the trust funds. In the Senate proposal each of these redistributions is offset by
other changes in tax law that are primarily not transportation related and are beyond
the scope of this report.
The House Committee on Ways and Means has acted on a substantial portion
of its Title of the reauthorization bill by passing H.R. 3971, the Highway
Reauthorization Tax Act of 2004. This bill provides $17.7 billion in additional
revenue for the highway trust fund over the next six-years. The bill’s provisions are
similar to those found in the Senate bill insofar as changes in ethanol fuel taxation
and reduction of fraud and abuse activities are concerned. All of the provisions of
H.R. 3971 were attached to H.R. 3550 during floor consideration.
Prior to the end of the 2nd Session Congress passed the American Jobs Creation
Act of 2004 (P.L. 108-357). This legislation was primarily directed at solving an
international trade problem. It also addressed a wide range of other revenue issues.
In the case of transportation the act addressed many of the revenue provisions
discussed in this section. The authors of the bill hope that the provisions enacted will
raise $24 billion over six years in additional revenue for the highway trust fund.
Redirecting a Portion of the Gasohol Tax (2.5 cents) to the Trust
Fund and Increasing Trust Fund Receipts by an Amount Equivalent to
the Existing Gasohol Exemption (5.2 cents). As part of federal policy to
promote the use of ethanol as a substitute for gasoline, fuel that is up to 10% ethanol
(gasohol) has been exempt from a portion of the federal fuels tax, usually 5.2 cents
per gallon. In addition, 2.5 cents of the tax levied on gasohol based fuels has been
deposited into the U.S. Treasury’s general funds. From the perspective of the
transportation interest community, these factors are depriving the trust fund of
income that it deserves. Gasohol users use the highway system and in this view, are
not paying their fair share for its upkeep and improvement.
According to some estimates, transferring the 2.5 cents currently deposited in
the general fund to the trust fund would net the fund more than $700 million per year.
Crediting the trust fund with the equivalent of the 5.2 cent exemption, not currently
collected in any form, would result in more than $1.5 billion per year.14 This $2.2
billion plus per year would obviously make a significant potential contribution to the
highway program. In both instances, it should be pointed out that while there is a
14
Rothman, Heather. New Bill Seeks to Adjust Method of How Revenues are Credited to
Highway Trust Fund. Daily Report for Executives. BNA Inc. Washington. July 3, 2002. p
A-4.
CRS-11
significant net increase to the trust fund there is a concomitant opposite effect on
Treasury general funds.
The problem for those supporting changes in gasohol taxation is the unified
budget. With the budget back in a deficit situation any action that will potentially
increase the overall deficit will be greeted with a certain amount of caution and
potential opposition. Diverting the 2.5 cents is a straightforward decision about the
appropriate destination for these funds in the budget. Crediting the trust fund with
funds equivalent to the 5.2 cent exemption is more problematic. The $1.5 billion
would likely have to be derived from funds already deposited in the Treasury from
non-transportation sources. Those who perceive that a redirection of an annual $1.5
billion might come at the expense of other government programs important to them
can be expected to object to such a move.
The ethanol issue was a part of the 1st Session’s as of yet unresolved debate
about federal energy policy.15 A part of that debate concerned the proposed
“volumetric ethanol excise tax credit” (VEETC), which essentially would have taxed
ethanol at the full transportation fuels tax rate and deposited these funds in the
highway trust fund. Ethanol producers would be offered a tax credit equivalent to the
increase in taxation from the general funds. The Senate Finance Committee adopted
this provision in its February 2, 2004 markup, estimating that it would provide $14
billion for the trust fund during the six-year reauthorization period. H.R. 3550 now
contains a similar provision, estimating that these changes will raise $15.1 billion
over the same period.
Ethanol provisions addressing both the 2.5 cent and 5.2 cent issues are included
in the American Jobs Creation Act. The authors of the act believe that these
provisions will raise a combined $18 billion for the trust fund during the life of the
bill. An additional $900 million is also provided to the trust fund by making the 2.5
cent change retroactive to FY2004.
Paying Interest on Highway Account Unexpended Balances. All
U.S. Treasury managed trust funds, with the exception of the highway trust fund,
receive interest payments on their unexpended balances. One of the changes made
as a result of TEA-21 was to stop paying interest on the unexpended balance in the
highway trust fund. The rationale behind this decision was the creation of RABA,
which is supposed to reduce growth in the unexpended balance by making funds
more immediately available for highway projects.
For a number of reasons that are beyond the scope of this report, the unexpended
balance in the highway trust fund continued to grow, albeit at a much slower rate,
during most of the TEA-21 reauthorization period. Interest payments could be source
of additional funds for the trust fund. According to Congressional Budget Office
(CBO) testimony in May 2002, interest payments to the fund for FY2004 alone have
been expected to amount to $550 million (this assumes that the gasohol taxes
15
For detailed information, see CRS Report RL30369, Fuel Ethanol: Background and
Public Policy Issues, by Brent D. Yacobucci and Jasper Womach.
CRS-12
described above have been redirected as discussed).16 While interest rates would
remain positive in the near term, it is doubtful that they would approach the
predictions of 2002. An intervening drop in the trust fund’s unexpended balance,
combined with historically low interest rates on treasury bonds has lowered the
expectations of those expecting large annual returns from this revenue raising
proposal.
The whole issue of paying interest on trust funds is a controversial subject.
Interest payments are essentially intergovernmental fund transfers. The federal funds
needed to pay interest do not represent new revenues for the federal treasury.
Proponents of paying interest on the highway trust fund believe it is only fair for the
Treasury to pay for the use of money derived by special purpose revenues, in the
same way a bank pays interest on savings accounts. Opponents of this practice,
however, believe that such payments only raise the cost of government in general and
that all federal revenues should be treated the same, regardless of how they are
collected.
The Senate has adopted a provision that will allow for payment of interest on
highway trust fund balances. This provision is expected to provide $2 billion over
six years. It should be pointed out that most of these interest payments are expected
to accrue in the early years of this period as balances in the trust fund are expected
to decline if S. 1072’s increased spending provisions are enacted. The House bill is
devoid of a similar provision.
Spending Down Trust Fund Balances. Related to the interest issue is the
fact that both the highway account and the mass transit account continue to carry
positive unexpended balances. Spending down these balances has been an issue in
the past and was an important part of the TEA-21 debate. It should be pointed out,
however, that the unexpended balance is not a “surplus,” as it is frequently and
incorrectly referred to by some in the transportation community. Rather, a
considerable portion of these funds are reserved to cover the fund’s existing
obligations.
The House, Senate, and Administration proposals all rely on spending down the
unexpended balance in the trust fund. The Senate proposal expects to spend down
the balance to an amount no lower than $6.5 billion in any year during the next
reauthorization period. There is, however, a limit to how low the balance in the trust
fund can go. The trust fund has a fiduciary protection measure know as the Byrd rule
(for former Senator Harry Byrd of Virginia) that has been a feature of the highway
finance system for most of the last four decades. In simple terms the Byrd rule
prevents the further obligation of federal highway funds if the current and expected
balances in the trust fund fall below a certain level. The Senate bill, in a potentially
controversial move, changes the Byrd rule to allow the spending proposed in S. 1072
to occur at a rate that otherwise could have triggered the rule’s spending restrictions.
16
U.S. Congressional Budget Office. Status of the Highway Trust Fund. CBO Testimony,
by Kim P. Cawley. May 9, 2002.
CRS-13
Tax Fraud and Abuse. An issue of long standing is the concern that all fuel
tax revenues are not being collected as required. Alternately there is a concern that
illegal tax avoidance activities are reducing total revenue collections. A discussion
about tax compliance has been a feature of each of the last several reauthorization
bills, including ISTEA and TEA-21. The resultant provisions in ISTEA and TEA-21
focus on improving revenue collection activities and on identifying additional
problems with revenue collections. Funding has been provided in the past to FHWA
and Internal Revenue Service (IRS) efforts to improve collections and reduce fraud.
Hearings held in the 107th Congress by the Senate Committee on Finance
identified continuing collection issues. As a result the Committee has concluded that
improved collections could raise an additional $4 billion over the six-year life of the
authorization and has included related provisions aimed at raising this amount of
additional revenues.
During its markup, the Senate Committee on Finance added a provision that
redirects over $2.1 billion from the airport and airway trust fund to the highway trust
fund. Of this amount 89% is directed into the highway account and the remaining
11% is directed into the mass transit account. According to the Committee, this is
an amount that they believe corresponds to the use of aviation fuel, which is taxed
at a lower rate, in surface transportation vehicles. This, in the Committee view, is an
instance of tax avoidance and/or abuse that needs correction. During the amendment
process this provision was modified. Instead of a fixed annual amount, the Secretary
of the Treasury is tasked with identifying and estimating the amount of aviation fuel
being used in surface transportation vehicles and crediting the highway and transit
accounts appropriately. No estimate of the amount of revenues this will provide has
been made at this time. The House bill contains similar provisions. The House bill
estimates that fraud and abuse enforcement activities should provide the trust fund
with slightly more than $2 billion in additional revenues during the reauthorization
period. A provision addressing this issue is included in the American Jobs Creation
Act. The authors of the act believe this provision will provide the trust fund with an
additional $5.1 billion over the next five years.
Ending Fuel Tax Exemptions. An issue not discussed in detail during the
last year is the concept of ending fuel tax exemptions for a wide range of fuel users,
such as; local governments, certain agricultural interests, and school bus operators.
The Senate Finance Committee markup estimates that it will be able to increase trust
fund revenues by $8 billion over the next six years by changing the manner in which
exemptions have been collected or funded and by changing a number of other tax
provisions. A major change proposed at markup appears to require all fuel users to
either pay the federal fuels tax and seek a refund or to immediately document their
exemption from payment. Under the provision, these groups remain exempt from
taxation, but reporting as to what would have been paid in the form of fuel taxes is
required where it was not before. All of the funds identified here are not new money.
Rather, they are transfers from Treasury general funds that are offset elsewhere in the
bill by new revenue sources. There is no similar provision in the House bill.
Additional Senate Finance Markup Provisions. During markup, the
Senate Finance Committee considered a wide range of tax provisions. Some of these
provisions have a relationship to transportation, e.g. redirecting the proceeds for the
CRS-14
gas guzzler tax from Treasury general funds to the trust funds. The majority of the
provisions in this portion of the Senate revenue title, however, especially those
treated as offsets to increased highway spending, change federal excise tax laws in
ways that are well outside the scope of this report. The House, similarly, added nontransportation tax provisions to its bill as part of the rule for floor consideration.
Revenue and Other Forms of Bonding. After a year of somewhat public
discussion the Senate Committee on Finance has decided not to include any bonding
provisions in the revenue section of the bill. The American Association of State
Highway and Transportation Officials (AASHTO) began consideration of a bonding
mechanism by proposing the creation of a new $59.5 billion bond program as an
alternative vehicle for financing surface transportation projects. Its plan would have
created a organization to be know as the Transportation Finance Corporation (TFC)
that would be established by Congress to issue bonds. The TFC would issue tax
credit bonds for sale in the open market.
Senate Finance actively considered a proposal that would have created a
bonding mechanism for transit funding during the 1st Session of the 108th Congress.17
Under the proposal the 2.86 cents dedicated to the mass transit account would have
been redirected to the highway account and tax credit or other bonds would have
been issued to fund the transit program. This proposal was met with considerable
criticism from the transit community. It was also met with a veto threat from the
Bush Administration which viewed the issue of bonds as a “grave threat to the
general fund and the government’s ability to control spending.”18 Although Senate
Finance dropped its proposal, the use of bonds continues to be discussed in the
context of reauthorization and, as will be discussed later in this report, bonding
provisions were added to S. 1072 during the floor amendment process.
The House Ways and Means Committee also considered bonds as part of its
revenue proposal. An earlier bill considered by the Committee, H.R. 3967, contained
the same ethanol, and fraud and abuse provisions as H.R. 3971. Also included was
a provision that allowed for private activity bonds for the funding of transportation
infrastructure. Ultimately, however, the Committee dropped its bond proposal and
reported H.R. 3971 without a bond provision.
Increasing and/or Indexing the Federal Fuels Tax. The American Road
and Transportation Builders Association (ARTBA) took the lead in actively
promoting an increase in the federal fuels tax.19 Its “two cents makes sense” proposal
would raise the federal fuels tax two cents per year during the life of the next
reauthorization. According to ARTBA raising the tax by 8 cents would raise an
additional $ 17 billion for highways and transit. This, in ARTBA’s view, would go
a long way to meeting the unmet needs of the system.
17
Details of Senate Highway/Transit Revenue Plan Emerge. Transportation Weekly. Vol.
4, issue 26. May 13, 2003, p. 1.
18
Bush Administration Announces Veto Threat of TEA-21 Successor. Daily Report for
Executives. BNA Inc. No. 144. July 28, 2003. p. G-6.
19
[http://www.artba.org/government/tea-21/tea_21.htm]
CRS-15
Depending on the source of the estimate, a one cent increase in the fuel tax will
add between $1.5 billion and $1.8 billion to the trust fund on an annual basis. It has
been argued that if Congress and the President are unwilling to raise the fuels tax
they should at least consider indexing it in the future. Supporters of this idea believe
that the trust fund should be indexed to the consumer price index (CPI) or some other
measure of national economic activity to allow revenues to the trust fund to keep
pace with inflation. Over the last decade indexing would likely have added a few
cents to the fuel tax with a concomitant increase in revenues. This mechanism,
however, may provide the greatest benefit during periods of high inflation, which has
not been the case in recent years.
Although not specifically endorsing the ARTBA proposal, Chairman Don
Young of the House Committee on Transportation and Infrastructure, as well as other
Members of the Committee leadership, have endorsed an increase in the federal fuels
tax.20 This has mostly been proposed in the context of indexing. At first, discussion
of this idea centered on retroactively indexing the fuels tax back to the last time it
was raised in 1993. More recently the indexing under consideration has been
prospective for the next six-year authorization period. In either case, it was hoped
that the fuel tax increase would amount to about 8 cents. No fuel tax increase,
however, is proposed in either the House or the Senate bills.
Long Term Viability of the Trust Fund System. Many observers are
concerned that the funding uncertainties created by the FY2003 RABA debate and
increasing interest in identifying alternative power sources in the auto industry, e.g.,
fuel cells and hybrid power, should alert Congress and the transportation industry to
the fact that its long-standing trust fund revenue sources should be reviewed. There
is a growing recognition of this problem, but specific suggestions as to how the long
term health of the trust fund could be ensured are few in number. Both H.R. 3550
and S. 1072 contain provisions that would create a commission, or in the case of S.
1072 commissions, to study this issue so that its recommendations might be acted
upon during the next reauthorization cycle.
No New Funding
Much of the lobbying in preparation for reauthorization is, as shown above,
predicated on the belief that some significant level of new funding can be identified
for the highway, highway safety, and transit programs. Given the existing state of
the economy and concerns about the costs associated with the war on terrorism,
homeland security, and the costs of sustaining our effort in Iraq, such a conclusion,
however, is far from foregone.
If none of the revenue raising proposals discussed above are ultimately adopted,
income to the trust funds is still predicted to increase. According to one estimate the
additional income available for the trust fund during the six-year reauthorization
could be between $10 billion and $17.6 billion. This increase, however, is modest by
comparison with the program growth experience during TEA-21. In addition, this
20
Wolfe, Kathryn A. Young May Drop Bid to Hike Gas Tax to Get Highway Authorization
Moving. CQ Today. November 6, 2003.
CRS-16
increase is subject to revision and is closely related to the fate of the national
economy during the expected six-year reauthorization period.21 This increase will not
provide the funds that many highway program advocates view as essential to
improving highway and transit infrastructure. This is especially true in the current
environment with states facing their own budget crises.
Neither S. 1072 nor H.R. 3550 can survive in their current form without
significant new funding. Among pending bills, only the Administration bill, or some
derivative thereof, could be enacted and stay within the no new revenue test. The
most significant potential problem that could result from a no new funding scenario
is the likelihood of an enhanced donor/donee struggle that might very well spill over
from the highway program into the transit program. There also would likely be
enhanced competition between programmatically focused interest groups, e.g.,
highway safety vs. transit, etc. This competition for scarce resources could, in the
extreme, divert attention from any of the many new programmatic initiatives under
discussion and change the whole tenor of the reauthorization debate. (CRS contact:
John Fischer)
Donor-Donee State Remedies
How closely a state’s annual return, in the form of federal-aid highway funds,
should match a state’s highway user tax payments is a long-standing and on-going
controversy, as are attempts to guarantee a minimum “return” on these payments.22
Often referred to as the “donor-donee” state debate, the controversy pits “donor”
states (states that receive less than a dollar in highway funds for each dollar the
state’s highway users pay to the highway account of the highway trust fund (HTF))
against the “donee” states (states that receive more than a dollar for each dollar their
highway users pay to the highway account). TEA-21 guaranteed a minimum 90.5%
return from the highway account of the HTF on each state’s estimated payments to
the highway account (based on the latest fiscal year for which data are available,
generally two fiscal years earlier). Both the House Transportation and Infrastructure
Committee (T & I) and the Senate Environment and Public Works Committee (EPW)
leadership have pledged to work toward a guaranteed 95% return. The House T& I
bill, as introduced, included language detailing how and under what conditions the
minimum guarantee will be increased to 95%. The much smaller version of TEA-LU
passed by the House did not include the language of the introduced version that
would have phased in a guaranteed 95% share return by FY2009, effectively leaving
21
[http://www.transportation.org/publications/HTMLJournal.nsf/ViewItems/]
Based on a August 2004 Department of Treasury estimate it now appears that actual
collections to the trust fund over the next few years could be lower then the estimates
described in this paragraph.
22
This section only examines the existing minimum guarantee program in brief, focusing
on the donor-donee and minimum guarantee debate within the context of the House bill and
the Senate bill. For a background and issue discussion of the donor-donee/minimum
guarantee debate see CRS Report RL31735, Federal-Aid Highway Program: “DonorDonee” State Issues, by Robert S. Kirk and CRS Report RL32409, Highway Program
Equity Guarantee Issues.
CRS-17
the guarantee at 90.5%. The Senate bill would use an “equity bonus” mechanism to
bring all states up to 95% by the last year of the authorization.23
The main difficulty faced in both the House and Senate is that a bill that simply
reduces the shares of donee states to increase the shares of donor states may have
difficulty overcoming a filibuster by donee states in the Senate. To construct an MG
mechanism that can overcome this obstacle, ISTEA and TEA-21 both had provisions
that could be seen as “hold harmless” provisions that maintained certain base shares
for all states. This meant that part of the process of bringing donor state shares up
to the MG percentage required increasing the overall federal highway program size
(since donee state funding could not be reduced). This process has been very
expensive. The MG program under TEA-21 became the largest Federal-Aid
Highway program in the final years of the TEA-21 authorization cycle. To raise the
guaranteed rate of return significantly, the TEA-21 MG framework will have to be
altered unless significant new revenue sources can be found to support the HTF.
The TEA-21 Minimum Guarantee Program
The TEA-21 minimum guarantee had three components:
Guaranteed Base Share. TEA-21 guaranteed each state a percentage share
of the total program, defined as all the apportioned (formula) programs: Interstate
Maintenance Program(IM), National Highway System Program (NHS), Surface
Transportation Program (STP), Highway Bridge Replacement and Rehabilitation
Program (HBRRP), Congestion Mitigation and Air Quality Program (CMAQ),
Metropolitan Planning, Recreational Trails Program, Appalachian Development
Highway System Program, and Minimum Guarantee, as well as High Priority
Projects. These programs constitute the “scope” of the program. The State base
percentages are in a table set forth in title 23 U.S.C. 105 (b).
Minimum State Payment. Each state was guaranteed that as part of the
minimum guarantee it would receive at least $1 million in Minimum Guarantee
funds.
Guarantee of a 90.5% Return on Tax Payments. Each state was
guaranteed at least a 90.5% share return on its share of tax contributions to the
highway account of the HTF (based on the most recent year for which the data are
available — generally from two fiscal years before). If the guaranteed base share was
less than a 90.5% return to a state, then the share was adjusted upward until the
90.5% share was reached. Other states’ base shares (but not their apportioned
dollars) were squeezed down to make room for these share increases and to prevent
the national share total from exceeding 100%. At this point each state had a new
adjusted percentage share and no share was lower than 90.5%.
As mentioned earlier, to accomplish states’ adjusted base shares, without taking
money away from any of the states, required increasing the entire national MG
program size to the point it was large enough to drop the share of the state that
23
See Congressional Record, v. 150, Feb 3, 2004: S508-509.
CRS-18
needed the largest national MG program to achieve its adjusted base share (under
TEA-21 the District of Columbia determined the national program size). This
increase in the program size in turn determined the distribution amount of the MG
funds needed to fulfill all aspects of the MG including the 90.5% minimum. This
adjustment process required a great deal of money. As mentioned earlier, during the
last years of TEA-21 the MG program was the largest Federal-Aid Highway program.
Minimum Guarantee Distribution. Each year, the first $2.8 billion of
Minimum Guarantee funds were administered as Surface Transportation Program
(STP) funds, except that set-asides for Transportation Enhancements, Safety
Construction, and certain population-based sub-state allocations did not benefit from
this distribution. Any Minimum Guarantee funds above $2.8 million were
distributed to the five core programs: STP, IM; HBRRP; NHS; CMAQ. The
distributions to the states were based on the ratio of each core program’s
apportionment to the total apportionment of all five programs for each state.24
The House Minimum Guarantee Proposal
As introduced, TEA-LU would have amended the existing MG program (23
U.S.C. 105), rather than replace it. The bill provisions would have made changes in
the guaranteed return, the list of programs under the MG program umbrella, and the
distribution of MG funds. The House-passed versions of TEA-LU would leave the
rate of return at the TEA-21 level of 90.5% but retain the changes in the
programmatic “scope” of the bill as introduced.
Guaranteed Specified Return. TEA-LU, as introduced, would have
achieved a guaranteed 95% state return on payments to the HTF by guaranteeing
90.5% for FY2004, 91% for FY2005, 92% for FY2006, 93% for FY2007, 94% for
FY2008, and 95% for FY2009. As was true under TEA-21, the estimated state
highway user tax payments to the HTF (other than the Mass Transit Account) are
based on statistics from the latest fiscal year for which data are available (usually two
fiscal years prior).
The phasing in of the 95% return over the life of the authorization would have
had advantages during the current authorization cycle but could have posed problems
for authorizers when they faced the next reauthorization cycle. The big advantage
of phasing in the increase is that it saves money while fulfilling the promise to raise
the guaranteed return to 95%. On the other hand, it shifts the heaviest burden on the
trust fund to the last year of the authorization, possibly constraining future
authorization increases in FY2010 and beyond.
As introduced, TEA-LU included a budgetary escape valve on the ramp-up to
95%, which would have suspended the provision if the annual obligation limitations
listed in the bill were not fully funded. Should this have happened in any fiscal year
of the authorization, the guaranteed return would have defaulted back to 90.5%.
24
23 U.S.C. 105(c)(1).
CRS-19
TEA-LU, as Reported, and as Passed by the House. The version of
TEA-LU, reported out of the Transportation and Infrastructure Committee and
eventually passed by the House, cut over $70 billion in contract authority for highway
programs from the funding level in the original bill. Within this financial context,
the guaranteed specified return was held at the TEA-21 level of 90.5%. The language
in TEA-LU, as introduced, that ramped up the rate of return to 95%, was dropped.
On the other hand, as is discussed below, the House-passed bill retained the “scope”
of the guarantee set forth in TEA-LU as introduced. The bill, however, as is
discussed later in this report, includes a “re-opener” provision that would cut off
funding of all non-safety apportioned programs on September 30, 2005, if Congress
has failed by then to enact legislation that would ramp up states’ guaranteed rate of
return to 95% by FY2009.
The “Scope” of the Guarantee: the Highway Programs Under the
MG Umbrella. TEA-LU maintains the base share guarantee that the apportioned
funds for the listed highway funds be allocated among the states in a way to
guarantee each state percentage of the total apportionment for the listed programs be
equal to the percentages set forth in section 23 U.S.C. 105(b). In the past, state
shares have been adjusted during the authorization debate for a variety of reasons,
including garnering support for the bill.
TEA-LU, however, does make changes in the TEA-21 list of programs that are
included under the MG umbrella (changing what is commonly referred to as the
scope of the MG).25 First, it adds a number of new and modified existing programs
to the MG program group: the Coordinated Border Infrastructure; Infrastructure,
Freight Intermodal Connectors; Safe Routes to School; Highway Safety
Improvement; and High Risk Rural Road Safety Improvement. Second, the bill
moves the High Priority Projects Program (HPP) out from under the MG umbrella.
Third, it placed a number of new or greatly expanded programs outside the MG
program group: including Projects of National and Regional Significance; Dedicated
Truck Lanes; Highways for Life; Pedestrian and Cyclist Equity; 511 Traveler
Information; Hydrogen Infrastructure Deployment, as well as the expanded National
Corridor Infrastructure Improvement Program.
TEA-LU’s changes in the scope of the MG are controversial and is believed by
some observers to create problems for the functioning of the MG. By placing a
significant number of new and expanded programs outside the MG umbrella, the
House bill, as reported and eventually passed by the House, would restrict the impact
of the MG calculation of guaranteed apportionment shares to roughly 84% of the
total program.26 Donor states are concerned that this situation would mean that they
will have to successfully compete for earmarks in the allocated (non-MG programs)
to achieve even the lowered 90.5% rate of return level relative to the all the highway
programs. This arrangement has the advantage of keeping down the overall program
costs. It also means, however, that when donor states eventually compare their dollar
25
“Scope” usually refers to the percentage of contract authority in a reauthorization bill that
is subject to the MG. Less often it refers to the programs covered by the MG umbrella.
26
Under TEA-LU, as introduced, the scope would have been roughly 80%.
CRS-20
returns on dollar contributions to the HTF, many will still fall below the specified
share return.
Another issue concerns earmarking. Because the MG sets the overall amount
of funds that states get for the programs under the MG umbrella, earmarking within
this group of programs does not generally bring any new money to the state.27 These
earmarks merely allow Members of Congress to set project priorities. The core
formula program totals for each state adjust through changes in the MG distribution
for the impact of the designation. An earmark outside the MG group of programs
will actually increase the amount of money going to the state. This makes shifting
the HPP out of the MG group especially controversial because the $11.1 billion
authorized would, through earmarking, significantly impact the state shares when
eventually calculated on a dollar for dollar basis. The $6.6 billion Projects of
National/Regional Significance Program could also impact state shares.28 With
roughly $37 billion of the $225 billion (contract authority) provided for Federal-Aid
Highway programs outside the MG program, most donor states did not favor TEALU’s MG proposal when the bill was brought to the floor. Some donor states,
however, did well enough in obtaining HPP earmarks that, according to some
analysis, they might be better off if the HPP were kept outside the scope of the
MG.29
Both the issues of scope and the impact of earmarking on the MG program
surfaced during debate on the floor of the House in the form of an amendment
(H.Amdt. 514) offered by Representative Johnny Isakson of Georgia. The
amendment would have brought both the HPP and the Projects of National and
Regional Significance within the scope of the MG. The amendment also would have
increased funding to the core highway formula programs. However, the wealth of
earmarks and perhaps the hesitance of some donor state Representatives to break
with the Transportation and Infrastructure Committee leadership, softened the
cohesiveness of the donor state coalition and the amendment was defeated.
Minimum Guarantee Distribution. TEA-LU, as passed, keeps the basic
TEA-21 distribution paradigm, with one major exception: the bill raises the portion
of the MG funds reserved for STP, under the “remaining distribution” provision,
from $2.8 billion under TEA-21 to $2.87 billion for FY2004, $2.94 billion for
FY2005, $3.02 billion for FY2006, $3.09 billion for FY2007, $3.17 billion for
FY2008, and $3.25 billion for FY2009. STP is the highway program with the
broadest eligibility criteria. Its formula also is least dependent on total lane miles and
most dependent on estimated tax payments to the highway account of the HTF. This
also squeezes down the relative MG amounts going to the other core formula
programs (IM, NHS, CMAQ, HBRR).
27
For HPP earmarking within the scope of the MG to bring increased money to a state its
dollar total would need to exceed the state’s MG payment (minus the $6 million minimum
MG payment received over the life of the authorization).
28
The HPP was reduced by nearly $4 billion and Projects of National/Regional Significance
were reduced by $11 billion in TEA-LU, as reported.
29
See Transportation Weekly, v. 5, March 29, 2004. P. 7-8,14. CRS has not verified the
accuracy of this analysis.
CRS-21
The Senate’s Proposed Equity Bonus (EB) Program
The Senate has taken a different approach from the House. The Senate bill
would replace the entire MG program with an “Equity Bonus” program (EB).30 As
is true with the House bill, the Senate bill would achieve a 95 % return on payments
to the highway account of the HTF by FY2009, the final year of the authorization.
It would eliminate the base state share percentage table used in TEA-21 and in the
House bill. Basically, the individual program formulas would determine the initial
apportionment and the equity bonus would be added to these levels.
The Equity Bonus. The Senate bill directs the Secretary of Transportation
to allocate to the states for each of the fiscal years 2004 through 2009 sufficient funds
to ensure that each state receives at least a 95% return (to EB specified programs )
on its estimated payments to the highway account of the HTF (subject to a number
of rules and limitations discussed below). The Senate bill would keep nearly all the
programs subject to MG under TEA-21 (IM, NHS, STP, CMAQ, HBRR,
Recreational Trails, Appalachian Development Highway System, and metropolitan
planning) subject to the equity provision. In addition the Senate bill, as passed, also
includes the new Highway Safety Improvement Program, the infrastructure
performance and maintenance program, the safe routes to schools program, the railhighway grade crossing program, as well as the EB program itself, under the EB
program umbrella. As of Senate passage, the HPP program has not been included
among the EB programs.31 The estimated scope of the EB program is roughly 93%,
slightly lower than TEA-21 but significantly higher than TEA-LU’s 84%.
The bill protects some states that would lose percent share under the EB’s 95%
share. States with a population density of less than 20 people per square mile, a
population under one million, or a median household income under $35,000 would
get either the 95% share or their average share of allocations under TEA-21.
Equity Bonus Special Rules and Limitations. The EB is also subject to
certain rules and limitations which taken together can be seen as placing a floor and
a number of ceilings on the program.
Special Rules.
All states are to be allocated enough funds to ensure that each state
gets at least 110% of its TEA-21 annual average.
! No negative adjustment may be made to any state’s apportionment
during the EB allocation.
!
30
The Equity Bonus provision was introduced as a modification to the EPW committee
amendment in the nature of a substitute during initial floor consideration on February 3,
2004. See Congressional Record, Feb. 3, 2004: S506-09. See also Transportation Weekly,
v. 5, Jan. 27, 2004: 1, 5-10, and Washington Letter on Transportation, v. 23, Jan. 26, 2004:
3-4.
31
Historically, EPW has held its HPP list of projects out of its reported bill only to add it
during conference negotiations.
CRS-22
!
Not withstanding the limitations (see “Limitation on Adjustments”
below) the amendment requires that no state in any year may drop
below 90.5%.
Limitation on Adjustments. EB allocations are not to be given to states
under certain conditions. If a state’s total apportionments of all the designated EB
programs exceeds the state’s average TEA-21 apportionments by the following
percentages the state gets no bonus.
!
!
!
!
!
!
FY2004 ceiling: 120% of state’s TEA-21 average
FY2005 ceiling: 130% of state’s TEA-21 average
FY2006 ceiling: 134% of state’s TEA-21 average
FY2007 ceiling: 137% of state’s TEA-21 average
FY2008 ceiling: 145% of state’s TEA-21 average
FY2009 ceiling: 250% of state’s TEA-21 average
This is the main mechanism that phases in the 95% share goal by the final year
of the authorization. It also holds down the cost of the EB program.
Equity Bonus Distribution. The distribution of the EB is to the core
formula programs (IM, NHS, STP, CMAQ, HBRR, the Highway Safety
Improvement Program and Metropolitan Planning). The bonus would be distributed
to each program based on the relative share each state received for each program
based on the program formulas. Metropolitan Planning, however, would receive no
bonus. The initial $2.8 billion that under TEA-21 went to STP is not in the EB
proposal.
EPW committee staff produced a table that projected the state percentage share
return on payments over the life of the bill.32 The process of ramping the donor states
up to 95% return appears to have a variable impact on states. For example, Michigan
and Indiana achieve a 95% return in FY2004 while California and Texas remain at
90.5% until FY2009. As mentioned earlier some sparsely populated, low population,
and low income states receive some protection under the proposal. However some
donee states, New York and Pennsylvania, for example, face significant share
reductions.
Donor - Donee Conference Issues
Conferees face reconciling the House and Senate bill equity guarantee
provisions that differ in approach, scope, and rate of return. The House bill retains
the basic TEA-21 minimum guarantee structure. Perhaps its main advantage is that
it is a known program with a six year track record. On the other hand, the way the
MG is calculated and implemented is complex and has been shown to at times to
have unexpected outcomes. The Senate Equity Bonus (EB) program is a new
approach which in concept is much simpler than the MG. Some of this simplicity,
however, is lost with the protections, special rules and limitation adjustments
32
This table was reproduced in modified form in Transportation Weekly, v. 5, Jan. 27, 2004:
10.
CRS-23
imposed on the bonus. Even so, it probably a simpler equity paradigm than the TEA21 model, although there is no track record to judge it by.
Scope is a major issue for conferees. There are really two scope issues that will
need to be dealt with. First, is the breadth of the scope as a percentage of total
funding. The scope of the House bill is roughly 84%. The scope of the Senate’s EB
proposal is roughly 93%. This percentage could change depending on the treatment
of the HPP project list in conference. Applying each bill’s guaranteed rate of return
against the scope of the two bill means that, in effect, the rate of return in the House
bill it is 90.5% of 84% of the total bill (prior to the September 30, 2005 “re-opener”
requirement) while in the Senate it builds to become 95% of roughly 93% of the total
bill in the last year of the authorization. Second, is the issue of the choice of
programs within the scope of the eventually decided equity provision. The House bill
has significantly more new or reconfigured programs than the Senate bill. Part of the
scope decision making process will have to be which programs are kept in the final
bill and which are dropped or altered. In the past, donor states almost always argued
for the broadest scope possible. The experience in the House with the Isakson
amendment, however, may indicate that donor state support for the broadest scope
possible may not be as predictable as in the past.
The core of the equity debate is the proper level of the MG rate of return on state
payments to the HTF. Providing for a substantial increase in the guaranteed minimum
guarantee percentage is an expensive proposition. As mentioned earlier, the MG
became the largest highway program under TEA-21. Even the House bill as
introduced, which had roughly $70 billion more in contract authority than the Housepassed version, could only achieve a 95% guaranteed return by phasing in the
increase over the life of the bill. The much smaller bill passed by the House retains
the TEA-21 guarantee of 90.5% coupled with the re-opener provision. The case can
be made that the re-opener provision in effect makes the House bill an 18 month
reauthorization bill. The Senate’s EB gets to the 95% guarantee, but only by delaying
the bonus for some of the large donor states until the last year of the authorization.
Despite the dissatisfaction over the delayed nature of their 95% guarantee by
Senators from major donor states, the Senate bill may have an advantage in
conference in that, it does get all the donor states to the 95% goal, even if it is only
in the last year of the authorization. Once that level has been achieved it could set
a precedent that could be difficult for future authorizers to ignore. On the other hand,
debate on the House floor brought up concerns that too broad a scope aligned with
a percentage guarantee as high as 95% could constrain Congress from dealing with
all federal transportation needs, the spending for which could not always rationally
be spread across all states.
Statistical Caveats
A number of statistical issues have an impact on MG and EB proposals. The
use of non-current data (i.e., revenue estimates from two years prior) may skew the
state donor-donee ratios and lead to conclusions about donor or donee status that are
questionable. Also state-by-state data on payments to the highway account of the
HTF are estimates based on extrapolations from state tax data and may not always
be accurate or up to date. The economic cycle can have an impact on revenues and
the budgetary process that can lead to years when revenues and spending levels differ
CRS-24
significantly from each other: this can have an impact on rate of return. Finally, the
MG and EB proposals attempt to achieve a specified “share” return on two year old
payments data. Distribution equity, however, is almost always judged by Table FE221 in the annual FHWA Highway Statistics Report33, which compares estimated
dollars paid and apportionments and allocations received in the same year. This
statistical disconnect means that even an effective MG or EB program will face
criticism when the same year dollar for dollar return data are released. In addition,
the impact of proposed revenue changes on states’ relative shares of payments to the
HTF are hard to gage over the life of the reauthorization. These changes could
change some donor states to donee states, or vice versa, over the next few years. It
could also impact the calculation of program size under the MG. The difficulties
with statistics are particularly acute during the reauthorization process. Because
reauthorization deals with changing law and looking to the future there is an
enormous amount of uncertainty in any statistical analysis. Many assumptions must
be made which may or may not prove to be accurate as the future moves into the
present. The share of payments data, which begins the MG calculation, change from
year to year and not always in predictable ways. This alone can have a major impact
in donor-donee outcomes and especially on the projection of total program size. The
projection of state-by-state allocations over a six year authorization, although perhaps
not as unpredictable as the revenue data, is also uncertain. (CRS contact: Bob Kirk)
House “Re-Opener” Provision
As mentioned earlier, the introduced version of H.R. 3550 was a $375 billion
bill. With that amount of money it was possible to ramp up the state share of
programs under the MG structure on an annual basis, with all states receiving 95%
by FY2009. The House Committee on Transportation and Infrastructure reluctantly
bowed to House Leadership and reported a $275 billion bill. As rewritten to
accommodate this lower funding level the MG level remains at the 90.5% level
through the life of the bill.
The Committee remains very concerned that $275 billion is insufficient funding
for the federal transportation program and that this amount does not allow for any
increase in the MG level. Seeking to force the issue of funding in the future, the
reported bill contains a provision (Section 1124) that causes automatic termination
of most federal-aid highway programs after September 30, 2005 unless certain
conditions are met. This so-called “re-opener” or “trigger” provision is designed to
insure that Congress must raise funding and addresses the donor-donee issue in a
manner that raises each state’s share to 95% by FY2009.
The re-opener provision is straightforward. If Congress has failed to enact
legislation that increases funding or otherwise allows the MG to rise to 92% in
FY2006, with an additional one percent increase in each subsequent fiscal year, most
federal highway program funding ends. At the same time a hold harmless provision
in the section requires that no state receive less as a result of this provision and that
each state receive an amount of additional assistance at least comparable to a
Consumer Price Index (CPI) measured rate of inflation.
33
[http://www.fhwa.dot.gov/policy/ohpi/hss/index.htm]
CRS-25
This is a controversial provision. Some will view its inclusion in the bill as
evidence that H.R. 3550 is not actually a six-year bill, but really a two-year bill (18
months at this point). The Bush Administration objects to this provision because it
requires additional funding that could ultimately raise the final cost of the bill to a
level it finds unacceptable. It is unclear how the Senate might react to this provision
in Conference.
Highway Program Structural Changes
Apportioned Programs
Funds for all of the programs discussed here are apportioned to the states on an
annual basis using formulas found in TEA-21. As a result they are sometimes
referred to as the “apportioned” programs. In some instances, apportioned programs
are also referred to as formula programs.
Under TEA-21 most highway funding is reserved for five major programs,
which are usually referred to as the core programs. They, along with the minimum
guarantee, accounted for the vast majority of highway spending: 86% of the FY2003
authorized amount. These programs are: the national highway system program
(NHS); the interstate maintenance program (IM); the surface transportation program
(STP); the bridge replacement and rehabilitation program; and the congestion
mitigation and air quality improvement program (CMAQ). Each of these programs
provides funding for specific segments of the federal-aid highway system and/or
other statutorily enunciated activities, e.g., congestion relief projects using CMAQ
funds. In addition to the “so-called” core programs there are a couple of additional
and much smaller apportioned programs in TEA-21, e.g.: metropolitan planning and
the recreational trails program.
Because the minimum guarantee program is so large it could also be thought of
as a core program; it provides additional apportioned funds for each of the five core
programs. By the last year of TEA-21, the minimum guarantee was, in fact, the
largest highway program. In the FY2003 authorization, for example, it provided fully
20% of all funding.
New Apportioned Programs — House and Senate. Both the House and
the Senate bills add one new program to the core, the Highway Safety Improvement
Program (HSIP). Originally proposed by the Bush Administration, this program
consolidates a number of existing safety programs into a new formula grant program.
(HSIP is discussed in greater detail in the safety section of this report.) The Senate
HSIP contains a new “safe routes to school” program. The House creates a much
larger safe routes to school program as a separate formula program. (This program
is discussed in greater detail in the pedestrian and bicycle mobility section of this
report.)
As discussed earlier, the House bill continues the existing minimum guarantee
program, leaving that aspect of the core program structure unchanged. The Senate bill
adopts a new “equity bonus” program that apparently will only provide funds to those
CRS-26
states whose annual highway program funding falls below a certain level. (It also
restricts funding above a certain level for all states).
The House creates additional apportioned programs that would not necessarily
be considered core programs. Among these is a new freight intermodal connectors
program, with $1.37 billion in funding over the next six years. The Senate creates
a similar program for freight transportation gateways, but does not fund it separately.
Rather S. 1072 requires each state to use up to two percent of its NHS funding for
intermodal freight terminals and other freight related activities. (These programs are
discussed in more detail in the intermodal section of this report.)
New Apportioned Programs — Senate. As introduced the border
planning, operations, technology, and capacity program in S. 1072 was an allocated
program. As amended on the floor, however, it has become a formula program. This
program is a successor to the TEA-21 created National Corridor Planning and
Development Program (part of the CORBOR program), now limited to specific
border states, but with broadened project eligibility.
New Apportioned Programs — House. The House breaks up the existing
national corridor planning and development and coordinated border infrastructure
program (CORBOR) program (which is currently an allocated program) and creates
a new formula coordinated border infrastructure program. This program provides
funding for new and improved infrastructure within 20 miles of the Mexican and
Canadian borders. The program receives $1.1 billion over the life of the legislation.
One other fairly large formula program is created in H.R. 3550, a high risk rural
road safety improvement program, which receives $675 million over six years. This
program is focused on fixing problems on rural roads with higher-than-average fatal
accident rates.
A significant new apportioned program in the House bill is not a separate
program. H.R. 3550 creates a new congestion relief program, but funds it from
existing core program obligations. States are required to reserve a computed portion
of their total apportionments for specified congestion relief activities.
Allocated (Discretionary) Programs
All remaining highway programs are subject to allocations that are based on
criteria established in highway authorization and appropriation law. They also may
be, and usually are, subject to congressional earmarking. In TEA-21 all of the
programs in this category were smaller than the core programs, although there were
some programs with significant funding levels. The largest allocated program in
TEA-21 was for congressionally mandated high priority projects (earmarks) that were
specifically designated in the act. Other relatively large programs in the allocated
category are the federal lands program, the aforementioned national corridor planning
and development and coordinated border infrastructure program (CORBOR), the
interstate maintenance discretionary program, the bridge discretionary program, and
the transportation and community and system pilot preservation program (TCSP).
CRS-27
New Allocated Programs — Senate. The Senate bill creates one large new
allocated program, the infrastructure performance and maintenance program (IPMP).
The IPMP, which was also part of the Administration bill, is for so-called “ready to
go projects.” Funding is limited to projects that improve operations and/or preserve
or maintain existing highways or other infrastructure. The Secretary of Transportation
is charged with developing an allocation program that provides for funding of
projects that can be obligated within 180 days. The bill initially provided $12 billion
for this program over the six-year authorization period, with the money front-loaded,
i.e., more funds are available in the first few years than in later years. As a result of
floor amendments, however, IPMP is now funded at the $2 billion level, and only for
FY2004. During floor consideration a new, but unfunded, multistate international
corridor development program was added to the bill. This provision is focused on
the movement of freight from ports through and to the interior.
New Allocated Programs — House. The House bill contains several large
new allocated programs. In fact, much of the new money in the House bill is for the
allocated programs. The largest new program is for projects of national or regional
significance. This program receives $6.6 billion. These funds are reserved for very
large projects costing over $500 million or the equivalent of 75% of a state’s annual
total program apportionment. The criteria for selection are to be determined by the
Secretary of Transportation and the Secretary is empowered to provide selected
recipients with formal “letters of intent” in the same manner that new-start transit
projects are funded. Considerable latitude is provided in this program, which can, for
example, be used to fund multi-state projects that are difficult to arrange under the
existing highway program.
The other large new allocated program is for congressional high priority projects
(earmarks). H.R. 3550 provides just over $11.1 billion for these projects, which are
widely distributed amongst Members. As reported the bill lists 2,884 separate
projects. This is 1,034 more projects then were included in TEA-21. The Senate does
not have a comparable provision in its bill. Senate earmarks have been added,
however, to previous reauthorization bills, normally at the conference stage. (CRS
contacts: John Fischer and Bob Kirk)
Highway Program Formula Changes
Under TEA-21, most of the funds distributed by the Federal-Aid Highway
program were apportioned to the states based on apportionment formula factors set
forth for the individual programs under Title 23 of the U.S. Code. The major
existing formula programs are IM, NHS, STP, HBRR, CMAQ, Recreational Trails
Program, and Metropolitan Planning.34 Some program formulas include a
combination of weighted factors such as lane miles, vehicle miles traveled, and
estimated tax payments to the highway account of the HTF. Other programs are
primarily based on a single factor such as the relative state share of total cost to repair
34
The MG program and the proposed Equity Bonus program also apportion funds by
formula. For a discussion of these programs see the “Donor-Donee Remedies” section.
CRS-28
or replace deficient bridges (HBRR) or weighted non-attainment and maintenance
area population under the Clean Air Act (CMAQ).
Existing Formula Program Changes
Neither the House nor Senate bills make major changes in the existing program
formulas. The bills do, however, make some adjustments that are of note. The
Senate makes adjustments to the underlying calculation under CMAQ of weighted
non-attainment and maintenance area population, in part to add the Clean Air Act’s
new particulate matter standard into the underlying calculation. The Senate bill
would require each state to set-aside 2% of its NHS apportionment to carry out the
proposed Freight Transportation Gateways/Freight Intermodal Connections program.
S. 1072 also provides a number of formula program set-asides for the New Strategic
Highway Research Program, including set-asides of $15 million from IM, $19
million from the NHS, $13 million from the HBRR, $20 million from STP, and $5
million from CMAQ. The House bill (section 1205) includes a provision that
requires that $3 billion of amounts authorized under NHS, IM, STP, and CMAQ be
utilized to expand deployment of intelligent transportation systems. The House bill
also creates a $20 million NHS set-aside for the construction of ferry boats and ferry
terminal facilities in Alaska, New Jersey, and Washington.
New Programs’ Formulas35
House and Senate. The proposed Highway Safety Improvement Program
(HSIP) formula distribution is weighted 25%, in the ratio of total federal lane miles
in each state to the total lane miles of the federal-aid highways (FAHP) in all states;
40%, in the ratio of total FAHP vehicle miles traveled (VMT) in the state to total
VMT on all FAHP highways; 35%, in the ratio of estimated tax payments from users
in each state to the estimated tax payments by highway users in all states. The
minimum payment is set at 0.5%.
Senate Bill. The Senate bill includes only one significant new formula
program that does not appear in the House bill.
Border Planning, Operations, Technology, and Capacity Program.
Funds are distributed on the basis of four factors, each of which receives equal
weight. First is a ratio of the average annual weight of all cargo entering a border
state (defined in the bill) from Canada or Mexico to the total of such cargo entering
all border states. The second factor is a similarly computed ratio using the average
trade value of cargo. The third factor is a ratio of the number of commercial vehicles
entering a border state to the total number of such vehicles. And the final factor is the
same computation using passenger vehicles.
House Bill. In addition to HSIP, discussed above, the House bill includes a
number of new or changed programs whose funds are to be apportioned according
to formula.
35
TEA-LU, as reported and as passed, made no changes to the formulas discussed in this
section. The formulas are the same as in TEA-LU, as introduced.
CRS-29
Coordinated Border Infrastructure Program. Under TEA-21, this was
an allocated (discretionary) program. Under TEA-LU, the funds are to be apportioned
under the following formula: 20% in the ratio of incoming commercial truck
crossings in a state to the total incoming commercial truck crossings in all border
states; 30% in the ratio that incoming personal vehicle and bus crossings into a state
to the total of incoming personal vehicle and bus crossings in all border states; 25%
in the ratio of total weight of incoming cargo in a state to the total weight of
incoming cargo in all border states; and 25% of the ratio that the total number of
ports-of-entry in a state bears to the total number of ports-of-entry of all border states.
Freight Intermodal Connectors. Sums are to be distributed as follows:
33.3% in the ratio of the freight intermodal connectors in a state to the number of
freight intermodal connectors in all states; 33.3% in the ratio that a state’s estimated
payments by the state’s highway users to the highway account of the HTF bears to
the total of such payments by all states; and 33.4% in the ratios apportioned for the
NHS.
Motor Vehicle Congestion Relief. The portion of a state’s apportionments
from core programs to be obligated for congestion relief activities is determined by
multiplying the amount apportioned to the state under IM, NHS, STP, and CMAQ
by 10% and then by the percentage of the state’s population residing in urbanized
areas of the state with a population of over 200,000 people.
High Risk Rural Road Safety Improvement. Funds are to be apportioned
as follows: 1/3 in the ratio that each state’s public road lane mileage for rural minor
collectors and rural local roads bears to the total for all states; 1/3 in the ratio that the
population of non-urbanized areas in a state bears to the non-urbanized area
population for all states; 1/3 in the ratio of the total vehicle miles traveled on public
roads in each state bears to the total vehicle miles traveled on public roads in all
states.
Safe Routes to School. Fund are to be apportioned among the states in the
ratio that the total student enrollment in primary and middle schools in each state
bears to the total student enrollment in primary and middle schools in all the states.
No state is to receive an apportionment of less than $2 million. (CRS contact: Bob
Kirk and John Fischer)
New Directed Spending
Motor Vehicle Congestion Relief. Section 1201 of the House bill directs
that any state with an urbanized area of over 200,000 people must obligate, for
congestion relief activities, from their IM, NHS, STP, and CMAQ apportionments
an amount determined by multiplying these programs’ totals by 10% and then by the
percentage of the state’s population residing in urbanized areas of over 200,000
people. The bill directs that 40% of the funds be spent on projects that cost less than
$1 million and can be completed within one year. Another 35% is to be spent on
projects that have no cost limit but must be completed within three years. The final
25% be spent on either the within-one-year or within-three-years category projects,
on transit capital projects, or on congestion relief activities such as telecommuting,
ridesharing, alternative work hour programs and value pricing. The provision
CRS-30
appears to be designed to encourage states to act on relatively small, low cost projects
that can be quickly completed. (CRS contact: Bob Kirk and John Fischer)
Highway Program Issues
Flexibility/Transferability
Flexibility as used in the context of the highway and transit programs refers to
the ability of states to transfer funds apportioned in one program, e.g., STP, and use
these monies to finance activities funded primarily by other federal programs, e.g.,
transit.36 These conditions are also known as transferability provisions. Increased
funding flexibility has been an important part of the last two highway
reauthorizations, TEA-21 and ISTEA.
There are often statutory limits on how much funding in any given program can
be transferred to another activity. There are also additional rules preventing certain
types of program transfers.
States and localities have usually sought the widest possible latitude for
transferability. The authors of highway and transit legislation, however, have
believed that a national purpose is served by requiring that each state spend at least
a portion its federal funding for programs that they view as having national
importance.
Both the House and Senate bills contain provisions that enhance transferability.
The Senate bill includes several such provisions, two of which are particularly
notable. First is a provision that allows highway funds to be transferred to other
Federal agencies and allows them to administer projects in certain instances. A
second provision allows the Secretary of Transportation to approve transfers of funds
between states for the funding of one or more specific projects and, in addition, to
allow states to transfer funds to FHWA for the same purpose.
The House bill also contains multiple instances that allow for greater
transferability of funds between programs and jurisdictions. For example,
transportation systems management and operations activities are considered eligible
uses for STP, NHS, and CMAQ funds. In another instance, recreational trails funds
can be used to provide what is normally the state or local matching requirement.
Finally, an important aspect of the new proposed program to fund projects of
national/regional significance is the ability of multiple states, local governments, and
in some cases private firms to enter into agreements to pool funds from multiple
sources. (CRS contact: John Fischer and Bob Kirk)
36
The highway programs have limitations on how funds can be transferred among programs.
Further information on the TEA-21 structure can be found on the DOT website at
[http://www.fhwa.dot.gov/tea21/factsheets/index.htm].
CRS-31
High Priority Projects (Earmarking)
In the view of some industry observers, the most controversial feature of TEA21 is found in Section 1601, which establishes the “high priority projects program.”
This section lists 1,850 specifically identified projects throughout the United States
and provides a specific dollar authorization for each project. In total, almost $9.4
billion in authorizations are provided for this program. This compares with 538
congressionally designated projects in ISTEA that were provided with $6.2 billion
in funding.
The growth in earmarking, however, is not isolated. Earmarking in
transportation appropriations legislation has also grown dramatically in the last
decade. In fact, certain programs, such as CORBOR and TCSP that were established
as competitive discretionary funding programs in TEA-21 are now entirely
earmarked in appropriations legislation.
Earmarks have some significant effects on policy questions that arise as part of
the reauthorization debate. Earmarking in TEA-21 does affect the donor/donee
computation. Within the context of a state’s total program spending, for example,
if the state receives a significant number of earmarks, the state will see its discretion
over total program spending somewhat reduced.
As mentioned earlier H.R. 3550 identifies 2,884 high priority projects (at an
estimated cost of $8.6 billion). Approximately $11.1 billion is reserved for high
priority projects in the bill. The project list was included as part of a manager’s
amendment adopted during committee markup of the bill. The Senate bill does not
reserve funding for earmarks. There are, however, two set-asides for specific bridge
projects in the bill that might be construed by some as earmarks. During TEA-21
consideration the Senate bill was devoid of earmarks. Senate high priority projects
were added in conference. (CRS Contact: John Fischer and Bob Kirk)
Innovative Financing Provisions
Created by highway legislation primarily in the 1990s, innovative financing
mechanisms attempt to use the guarantee of future highway funds as a way to speed
project completion and to leverage additional funds for highway projects. There are
three mechanisms currently in use: grant anticipation revenue vehicles (GARVEEs);
credit assistance available as a result of the Transportation Infrastructure Finance and
Innovation Act (TIFIA); and state infrastructure banks (SIBs). Each of these
mechanisms has specific strengths and weaknesses that have been studied and
described by GAO, CBO, and FHWA.37
37
U.S. GAO. Transportation Infrastructure: Alternative Financing Mechanisms for Surface
Transportation. Testimony before the Committee on Finance and Committee on
Environment and Public Works. September 25, 2002. Available online from the GAO
website at [http://www.gao.gov/new.items/d021126t.pdf]. See also the FHWA website at
[http://www.fhwa.dot.gov/innovativefinance/] and U.S. CBO, Innovative Financing of
Highways: An Analysis of Proposals, January 1998 online at the CBO website at
(continued...)
CRS-32
The House and Senate bills make changes in two of the federal innovative
finance programs: TIFIA and the SIB program. Most of the changes may be viewed
as perfecting changes in the programs but other changes are more significant.
TIFIA. This program provides three types of federal financial assistance for
major transportation projects: secured loans, loan guarantees, and standby lines of
credit. Both the House and Senate bills reduce the minimum project size threshold
from $100 million to $50 million. The House bill also lowers the minimum project
threshold for intelligent transportation system projects from $30 million to $15
million. The Senate bill would provide $130 million annually to support TIFIA’s
leveraging activities; the House bill, as reported, would provide $130 million for
FY2004 and then $140 million annually for FY2005-FY2009.
SIBs. Under the SIB program, federal funds are used to help capitalize state
infrastructure revolving funds. Under TEA-21, the program was limited to four
states, Missouri, Rhode Island, California, and Florida. Both the House and Senate
bills would allow any state to enter into an agreement with DOT to establish SIBs
eligible to be capitalized with federal funds drawn from core highway program funds.
Public-Private Partnerships. It has long been contended that enhanced use
of public-private partnerships in the creation of transportation infrastructure could
result in reduced overall costs and more efficient project delivery. The concept has
been discussed for some time and is already allowed in certain instances. S. 1072
contains a provision that tries to force the Secretary to broaden the use of these
arrangements by creating a public-private partnerships pilot program. This program
requires that the Secretary identify at least 10 public-private partnership projects as
part of the already existing innovative finance program framework. To accomplish
this, the bill provides funding of $10 million per year for the six year reauthorization
period. (CRS contacts: John Fischer and Bob Kirk)
Toll Projects.
S. 1072. SAFETEA contains two provisions dealing with toll projects. The
first changes the eligibility provisions in the TEA-21 created interstate system
reconstruction and rehabilitation pilot program. The TEA-21 provision required an
analysis that found tolls to be the only practical way to pay for a reconstruction
project. The SAFETEA substitute requires that the analysis show that using tolls
would be “the most efficient, economical, or expeditious way to advance the project.”
The second provision is the Senate’s inclusion of the Fast and Sensible Toll
(FAST) Lanes Program. Although it uses the same name, it varies significantly in
detail from stand-alone legislation that had been introduced earlier in the 108th
Congress.38 The program would allow the use of tolls to create new high occupancy
lanes on existing interstate highways in urbanized areas. These lanes, also known as
HOT lanes (high occupancy toll), are viewed as a tool useful for potentially reducing
37
(...continued)
[ftp://ftp.cbo.gov/3xx/doc320/finhways.pdf].
38
H.R. 1767 and S. 1384.
CRS-33
urban congestion. The tolls collected could be used to pay for the debt service
incurred by their construction and for certain other purposes. S. 1072 provides $11
million per year for this program.
H.R. 3550. TEA-LU includes two provisions that involve tolling. Section
1208 (HOV Facilities) includes a provision that would allow state departments of
transportation to allow vehicles not otherwise eligible for HOV use, to pay a toll
charged by the agency to use the HOV lanes. The provision requires that the tolls be
collected automatically, that toll amounts be varied to manage demand, that
violations be enforced, and that low-income individuals be permitted to pay reduced
tolls.
During debate, an amendment (H.Amdt. 513) by Representative Mark Kennedy
of Minnesota eliminated three existing toll provisions from the bill and introduced
a new proposal for “Fast Fees” in Section 1603. The amendment repeals the
Congestion Pricing Pilot Program, begun under the Intermodal Surface
Transportation Efficiency Act of 1991 (ISTEA; P.L.102-240), which allowed the
Secretary of Transportation to enter into agreements with state and local governments
to carry out up to 25 congestion pricing pilot projects. The amendment also struck
Section 1603, the Interstate System Reconstruction and Rehabilitation Toll Pilot
Program, which would have reestablished the TEA-21 pilot program that allowed a
state to collect tolls on an Interstate System highway, bridge, or tunnel for the
purpose of reconstructing and rehabilitating the facility. In addition, the amendment
struck Section 1604, the Interstate System Construction Toll Pilot Program, would
have allowed a state or compact of states to collect tolls on a highway, bridge, or
tunnel on the Interstate System for the purpose of constructing Interstate highways.
The Fast Fees provision is a modified version of the Freeing alternatives for
Speedy Transportation (FAST) ACT (H.R. 1767; S. 1384). The provision would
direct the Secretary of Transportation to establish an Interstate System FAST Lanes
program under which a state or public or private entity designated by a state, could
collect tolls for the purpose of reducing traffic congestion by constructing one or
more additional lanes on the Interstate System. The FAST Lanes program requires
that all tolls be collected electronically and that revenues are only to be used for: debt
service on investment, a reasonable return on investment of any private investor,
costs for improvement and proper operation and maintenance of FAST Lanes and
existing lanes if these improvements are necessary to integrate the existing lanes with
the FAST Lanes or for the construction of an interchange from the FAST Lane to
existing lanes, or for the establishment by the state of a reserve account to be used for
the long term maintenance and operation of the FAST Lanes. Fees may only be
collected on and for the use of FAST Lanes. The use of FAST Lanes must be
voluntary. Revenues may not be used for any other project. Once the debt, return on
investment, related improvements are paid for and the reserve account is funded, the
tolls would be lifted.
Although the amendment passed, opponents made a number of arguments
against the provision. First, some argued that states should have more flexibility on
the use of the toll revenue. They also argued that it would prevent the tolling of
existing Interstate System lanes. The other opposition came from trucking interests
that expressed concern that states would be allowed to add toll lanes to any Interstate
CRS-34
System highway that added new lanes. Others objected to the tolls as essentially
being a tax.39
Bonding Proposals
The Senate bill, as passed, includes two bonding provisions. One amends the
Internal Revenue Code of 1986 to allow the issuing of tax-exempt private activity
bonds to finance highway projects and rail-truck transfer facilities. Any surface
transportation project that receives assistance under any Title 23 program would
qualify, as would any international tunnel or bridge that likewise receives federal
assistance under Title 23. Any truck-train transfer facility project would also qualify.
A $15 billion limit is placed on the aggregate face amount of the bonds that can be
issued. The bill includes spending offsets for federal revenue losses under the
provision. The second bonding provision would establish a Build America
corporation that would be able to issue Build America bonds to support eligible
highway, mass transit, or congestion relief projects. Funding, however, is not
provided and there are no provisions amending the U.S. Tax Code to provide for any
special tax treatment of Build America bonds. (CRS contacts: John Fischer and
Bob Kirk)
Transportation Enhancements (TE) Program
Under the House and Senate bills, the Transportation Enhancements program
would be similar to the program under TEA-21. Currently, 10% of the funds
apportioned under the Surface Transportation Program (STP) must be allocated to
transportation enhancement activities, e.g. bike paths, landscaping and scenic
beautification, and historic preservation. Because STP funding is set to rise under
both bills, the 10% set-aside for TE activities ensures that additional funding will
become available for enhancement projects.
The Senate bill contains one revision to the definition of TE activities. Under
acquisition of scenic easements and scenic or historic sites, historic battlefields
would be included. The House bill does not propose a revision of TE activities.
Neither bill contains any other modifications to the TE program.
Table 2. Proposed Funding: Transportation Enhancements
Program, FY2004-2009
(millions)
FY2004
FY2005
FY2006
FY2007
FY2008
FY2009
Total
FY2004-09
H.R. 3550
605
620
636
652
668
685
3,866
S. 1072
688
812
842
844
886
899
4,971
Note: Figures for both the House and Senate bills were generated by assuming that the existing 10%
set-aside for transportation enhancements will be continued.
39
Transportation Weekly. V.5, April 7, 2004. P. 9. See also Congressional Record. V. 5,
April 2, 2004. P. H2066-H2070.
CRS-35
Transportation and Community and System Preservation
(TCSP) Program
The TCSP program, established under TEA-21, was designed to assist in
planning, developing, and implementing strategies to integrate transportation and
community and system preservation plans and practices. TCSP funding was
authorized for projects that aimed to improve the efficiency of the transportation
system; reduce environmental impacts of transportation; reduce the need for costly
future public infrastructure investments; ensure efficient access to jobs, services and
centers of trade; and examine development patterns and identify strategies to
encourage compatible private sector development patterns.
Under TEA-21, TCSP spending was authorized at $20 million for FY1999 and
$25 million per year for FY2000 through FY2003. As envisioned in TEA-21, state
and local governments, metropolitan planning organizations (MPOs), and tribal
governments would be eligible to apply for competitive TCSP grants. Competitive
grants were awarded in FY1999. For FY2000 to FY2003, TCSP projects were
earmarked in the annual transportation appropriations bills. TCSP funding amounted
to $13.5 million in FY1999, $31.1 million in FY2000, $46.9 million in FY2001,
$273 million in FY2002, and $89.5 million in FY2003.
Sec. 1115 of H.R. 3550 would provide a six-year total funding authorization of
$195 million for the TCSP program. The House bill proposes no other changes to
the program.
Sec. 1814 of S. 1072 would provide $50 million per year, or a six-year funding
authorization of $300 million for the program. The Senate bill would codify the
TCSP program in 23 U.S.C. S. 1072 also amends 23 U.S.C. 133(b) by allowing
states to obligate funds apportioned under the STP for TCSP activities.
Table 3. Proposed Funding: Transportation and Community and
System Preservation (TCSP) Program, FY2004-2009
(millions)
FY2004
FY2005
FY2006
FY2007
FY2008
FY2009
H.R. 3550
25
30
35
35
35
35
S. 1072
50
50
50
50
50
50
Pedestrian and Bicycle Mobility
The House and Senate bills continue to provide a significant level of funding for
bicycle and pedestrian programs that encourage a greater number of non-motorized
trips, and pedestrian and cyclist safety, health, and education.
The major federal program that has supported pedestrian and bicycle mobility
since the passage of ISTEA is the Transportation Enhancements (TE) program (23
USC §133(b)(8)), which is unchanged with respect to provisions for bicyclists and
pedestrians in both the House and Senate bills. That program permits states to
CRS-36
allocate TE funds for (1) provision of facilities for pedestrians and bicycles, (2)
provision of safety and educational activities for pedestrians and bicyclists, and (3)
preservation of abandoned railway corridors (including the conversion and use
thereof for pedestrian or bicycle trails).40 Between FY1992 and FY2002, 54% of TE
funds were programmed for these three activities. Provision of pedestrian and
bicycle facilities accounted for 44.6% of programmed TE activities through
FY2002.41 A number of other programs within TEA-21 also provide for the
construction of bicycle and pedestrian facilities associated with road and transit
projects.
Safe Routes to School Program. Both the House and Senate versions of
the surface transportation bills contain a Safe Routes to School Program (H.R. 3550,
Sec. 1120(a), and S. 1072, Sec. 1405), which would require the Secretary of
Transportation to establish and carry out a program to enable and encourage children
to walk and bicycle to school; to make bicycling and walking a safer and more
appealing transportation alternative, thereby encouraging a healthy and active
lifestyle from an early age; and to facilitate the planning, development, and
implementation of projects and activities.
In H.R. 3550, the stand alone Safe Routes to School Program would be funded
at $120 million for FY2004, $150 million for FY2005, $175 million for Fiscal Years
2006, 2007, and 2008, and $200 million for FY2009. Funding for each state would
be based on the ratio of total student enrollment in primary and middle schools in
each state relative to the total student enrollment in primary and middle schools in
all the states. Each state would receive a minimum apportionment of no less than $2
million per fiscal year and the Secretary is directed to set aside not more than 2% for
the administrative expenses of the Secretary in carrying out the program. Each
State’s apportionment would be administered by the State’s department of
transportation. In H.R. 3550, the federal share of the cost of projects and activities
under the Safe Routes to School Program is 100%. The Senate bill provides a federal
share of 90%. In both bills, funds would remain available until expended. In H.R.
3550, funds would not be transferable.
S. 1072 provides $70 million per fiscal year for the program, with funding
apportioned to the states in accordance with the formula provided in Sec.104(b)(5).42
That formula is identical to the current formula for apportioning Surface
Transportation Program funds (23 U.S.C. §104(b)(3)). Each state would receive a
minimum apportionment of one-half of 1% of the program funds.
In H.R. 3550, agencies eligible for funding under this program include state,
local, and regional agencies, including nonprofit agencies, that demonstrate an ability
to meet the requirements of the program. S. 1072 is similar, but does not specifically
40
There are 12 enhancement activities in all.
41
National Transportation Enhancements Clearinghouse. Transportation Enhancements:
Summary of Nationwide Spending as of FY2002. May 2003. p. 18.
42
Subsection 1401(b) of S. 1072 amends Section 104(b) of Title 23 to include a new
paragraph 5, which contains the formula for apportioning Highway Safety Improvement
Program Funds.
CRS-37
mention nonprofit agencies. Funds apportioned under the program may be used for
planning, design, and construction of infrastructure-related projects that will
substantially improve the ability of students to walk and bike to school. In H.R.
3550, projects include sidewalk improvements, traffic calming and speed reduction
improvements, on-street bicycle facilities, off-street bicycle and pedestrian facilities,
and traffic diversion improvements in the vicinity of schools.43 Additionally, S. 1072
includes pedestrian and bicycle crossing improvements, secure bicycle parking
facilities, traffic signal improvements, and pedestrian-railroad grade crossing
improvements. However, it does not include traffic diversion improvements in the
vicinity of schools.
Funds allocated to states under this program may also be used for
noninfrastructure-related (or behavioral) activities to encourage walking and
bicycling to school. In H.R. 3550, activities include public awareness campaigns and
outreach to press and community leaders, traffic education and enforcement in the
vicinity of schools, student sessions on bicycle and pedestrian safety, health, and
environment, and funding for training, volunteers, and coordinators of safe routes to
school programs. S. 1072 does not include funding for training, volunteers, and
coordinators for safe routes to school programs. In the House version,
noninfrastructure-related spending would amount to not less than 10% and not more
than 30% of the amount apportioned to a state for the program. S. 1072 provides that
not less than 10% shall be used for behavioral activities. In the House bill, each state
receiving an apportionment under this program would be required to use a sufficient
amount of the apportionment to fund a full-time position of coordinator of the state’s
safe route to school program. The Senate bill has no similar provision.
In H.R. 3550, but not in S. 1072, the Secretary is required to make grants to a
national nonprofit organization engaged in promoting safe routes to schools to
operate a national safe routes to school clearinghouse; to develop information and
educational programs on safe routes to school; and to provide technical assistance
and disseminate techniques and strategies used for successful safe routes to school
programs. Funding for the clearinghouse would come from the Secretary’s 2%
administrative expenses set aside. Section 1120(a)(8) of H.R. 3550 also establishes
a task force to study and develop a strategy for advancing safe routes to school
programs nationwide. The results of the study are to be transmitted to Congress not
later than March 30, 2005.
Table 4. Proposed Funding for the Safe Routes to School
Program, FY2004-2009
(millions)
43
FY2004
FY2005
FY2006
FY2007
FY2008
FY2009
Total
FY2004-09
H.R. 3550
125
150
175
175
175
200
1,000
S. 1072
70
70
70
70
70
70
420
The definition of “in the vicinity of schools” means the area within bicycling or
walking distance of the school (approximately 2 miles) (Section 1118(b)(10)(b)(A)).
CRS-38
Non-motorized Transportation Pilot Program. In addition to the Safe
Routes to School Program, Sec. 1120(b) of H.R. 3550 establishes the Nonmotorized
Transportation Pilot Program. This program, which will be implemented in four
communities selected by the Secretary, will construct a network of non-motorized
transportation infrastructure facilities, including sidewalks, bicycle lanes, and
pedestrian and bicycle trails, that connect directly with transit stations, schools,
residences, businesses, recreation areas, and other community activity centers. The
purpose of the program is to demonstrate the extent to which bicycling and walking
can carry a significant part of the transportation load and represent a major portion
of the transportation solution within selected communities. Funding sources are
unspecified for this program. (CRS contact: Glennon Harrison)
Appalachian Development Highway Program (ADHP)
The ADHP is a road building program intended to break Appalachia’s regional
isolation and encourage Appalachian economic development. It is not considered part
of the federal-aid highway program per see, but receives its funding from the
highway trust fund. The program is administered under the auspices of the
Appalachian Regional Commission. Funds are apportioned by the Department of
Transportation to the member states based on their “cost to complete” estimates. In
terms of road miles the system is 79% complete (as of 2002). The ADHS 2002 Cost
to Complete Report estimated the additional federal funds needed (FY2004 onward)
to complete the system at $4.47 billion. Under TEA-21 the ADHP received $450
million in contract authority annually. The program also received significant
additional funding through the appropriations process during the TEA-21 years. S.
1072 would provide $590 million annually through FY2009. H.R. 3550 as
introduced would have provided $600 million annually, however this was reduced
in mark-up, and the bill as passed by the House would provide $460 million for
FY2004 and $470 million annually for FY2005 through FY2009. ADHS funds are
available until expended and require an 80% federal share. Section 1805 of H.R.
3550 would designate twelve more counties as part of the Appalachian Region under
title 40 U.S.C. 14102 (a) (1) (c).
Recreational Trails Program (RTP)
TEA-21 authorized and expanded the RTP as a state-administered, federal-aid
grant program to help states develop and maintain recreational trails for motorized
and non-motorized trail uses. The RTP replaced the National Recreational Trails
Funding Program (also known as the Symms Act), which was first authorized in
ISTEA and amended by the National Highway System Designation Act of 1995.
The RTP provides funds for all types of recreational trail use, including hiking,
running, bicycling, equestrian use, wheelchair use, snowmobiling, four wheel
driving, off-road motorcycling, all-terrain riding, and other off-road vehicle use.
RTP funds may not be used for property condemnation, constructing new trails for
motorized use on National Forest or Bureau of Land Management lands unless the
project is consistent with resource management plans, or facilitating motorized
access on otherwise non-motorized trails.
CRS-39
Funding/Formula. In §1101(a)(7), TEA-21 authorized $270 million in
contract authority for the RTP for FY1998-2003. Funds are allocated to the states by
legislative formula44: 50% equally among all eligible states and 50% in proportion
to the amount of off-road recreational fuel use. States are required to use 30% of
their RTP funds for motorized trail uses, 30% for non-motorized trail uses, and 40%
for diverse trail uses. Under current law, the RTP is subject to the same annual
obligation limitation as other federal-aid highway programs. H.R. 3550, as passed,
would eliminate the discretionary waiver authority of state trail advisory committees
for motorized and nonmotorized projects. S. 1072, as passed, does not propose this
change.
S. 1072, as passed, would fund the program at $60 million per year through
FY2009 ($360 million total for six years). Originally, H.R. 3550 proposed funding
for the RTP at $700 million total for FY2004-FY2009. As passed by the House,
H.R. 3550 would fund the RTP at $53 million for FY2004, $70 million for FY2005,
$80 million for FY2006, $90 million for FY2007, $100 million for FY2008, and
$110 million for FY2009.
Currently, the federal share through the RTP for trail projects and trail related
educational programs is limited to 80%. The “sliding scale” provision in 23 U.S.C.
§120(b) provides for additional federal share under the federal-aid highway program
in states with large amounts of federal lands. This provision does not apply to RTP
projects. Both H.R. 3550 and S. 1072, as passed, would amend the program to
change the federal share for RTP projects from a strict 80% to the sliding scale share
used in some other federal-aid highway programs.
S. 1072, as passed, would amend current law to require states to spend at least
10% of RTP funds for grants, cooperative agreements, or contracts with qualified
youth conservation or service corps to perform recreational trail activities. H.R.
3550, as passed, would encourage the use of youth conservation or service corps in
the construction and maintenance of recreational trails.
Eligibility. S. 1072, as passed, would amend the existing category of
permissible uses45 for RTP funding to expand use of educational funds for non-law
enforcement trail safety, trail use patrols, and trail-related training. H.R. 3550, as
passed, would omit the use of trail crews, trail mentoring and training. Both S. 1072
and H.R. 3550, as passed, would amend current law to permit trail assessment for
accessibility and maintenance.
Exemption. Typically, states require RTP sponsors to complete environmental
compliance documentation before applying for RTP funds. Under current law, the
costs incurred to obtain documentation are not eligible for credit. Both S. 1072 and
H.R. 3550, as passed, would permit pre-approval planning and environmental
compliance costs to be credited toward the non-federal share for RTP projects,
limited to costs incurred less than 18 months prior to project approval.
44
23 U.S.C. §104(h).
45
23 U.S.C. §206(d)(2)
CRS-40
S. 1072, as passed, would exempt RTP projects from several requirements more
appropriate for large highway projects; however, the RTP would not be exempt from
23 U.S.C. §113.46 H.R. 3550, as passed, would permit no exemptions from highway
program requirements. (CRS Contact: Sandra L. Johnson)
Congestion Mitigation and Air Quality Improvement Program
The primary purpose of the Congestion Mitigation and Air Quality Improvement
Program (CMAQ) is to reduce emissions from highway travel, as a means to assist
states in complying with the National Ambient Air Quality Standards (NAAQS) for
carbon monoxide, ozone, and particulate matter. The program is based on the
fundamental concept that lowering the number of miles traveled by motor vehicles,
and reducing congestion to make vehicles operate more efficiently, can reduce
emissions and improve overall air quality.
Under current law, states with areas that are in nonattainment with the NAAQS,
and those that must maintain them, receive CMAQ funds according to a formula
based on the severity of air pollution in those areas and the population residing in
them. States that do not have any nonattainment or maintenance areas each receive
0.5% of the total annual CMAQ apportionment. Categories of project eligibility
include (1) mass transit; (2) 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; or (8) conversion of
vehicles to burn alternative fuels. According to the Federal Highway Administration
(FHWA), more funding has been obligated for conventional mass transit projects
than for any other activity, approximately 44% of total CMAQ funds since FY1992.
After more than a decade of implementation, the difficulty in quantifying the
overall emissions benefits of CMAQ projects has caused some to question whether
the program has improved air quality significantly enough to help states comply with
the NAAQS. Due to the uncertainty of the program’s benefits, some advocate that
its focus should be shifted away from air quality to reducing traffic congestion in
general. Others argue that areas on the verge of attainment may benefit from the
continued use of CMAQ funds for air quality projects, even if the emission
reductions are relatively small. They also argue that more areas will be in need of
emission reductions in order to comply with stricter federal standards for ozone and
fine particulates, scheduled for implementation in 2004, and that air quality benefits
from CMAQ projects, no matter how small, would be helpful.
As passed, neither H.R. 3550 nor S. 1072 would shift the CMAQ program’s
main focus away from reducing emissions from motor vehicles. Rather, both bills
would retain the program’s basic structure and increase its funding overall.
However, the House bill would require each state to redirect a relatively small
portion of its CMAQ funds to general congestion relief activities that would not
require an evaluation of air quality benefits as a condition of approval. The bill also
would require each state to redirect a portion of its funds for the National Highway
46
23 U.S.C. §113 (Prevailing Rate of Wage).
CRS-41
System, Surface Transportation Program, and Interstate Maintenance to general
congestion relief activities.
As mentioned earlier in this report, the amount that would be redirected from
each of these four programs would be determined by a statutory formula based on
10% of a state’s apportionment for each program, multiplied by the percentage of a
state’s population residing in urbanized areas with a population in excess of 200,000.
The total amount of funding redirected from each program would likely be less than
10%, as a state’s entire population would have to reside in urbanized areas of this
size in order for the full 10% to be diverted.
Environmental organizations have expressed concern about the House proposal,
arguing that a portion of CMAQ funds could be diverted away from states with
serious air quality needs to those that have relatively good air quality. Proponents of
the House proposal counter that the questionable impact of CMAQ projects on
improving overall air quality warrants freeing up some of these funds for reducing
traffic congestion based on transportation needs, rather than air quality
considerations.
Prior to the redirection of funds, the House bill would authorize a total of $9.4
billion in guaranteed funding for CMAQ projects from FY2004 through FY2009.
The Senate bill would authorize about $13.4 billion over this same time frame and
would not divert any CMAQ funds to general congestion relief activities. Both
amounts are higher than the Administration’s proposal of $8.9 billion and the
previous authorization of $8.1 billion. However, assessing the adequacy of the
proposed funding levels is difficult because of the lack of quantitative data on the
overall emissions benefits of CMAQ projects and the current uncertainty of the
extent to which states will need to reduce emissions from various sources in order to
attain the stricter federal air quality standards for ozone and fine particulates.
In addition to authorizing funding, each bill would expand project eligibility,
although in differing ways. The House bill would clarify CMAQ eligibility for
certain types of projects that would improve traffic flow as a means to reduce
congestion and thereby lower emissions. Specifically, the House bill would allow
the use of CMAQ funds for projects that “improve transportation systems
management and operations.” There has been some confusion over the availability
of CMAQ funds for these types of projects, and the House bill would specify their
eligibility in federal statute. The bill also would require states to dedicate a portion
of their CMAQ funds to support the deployment of intelligent transportation systems
(ITS). While such projects are already eligible for funding, states are not required to
set aside funding for them under current law.
The House bill also would add another category of eligibility to the CMAQ
program for “advanced truck stop electrification systems.” These systems could help
to reduce emissions from heavy-duty transport vehicles that are frequently left idling
overnight or for extended periods, in order to provide electrical power for heating,
air conditioning, electronic, and communications equipment onboard the vehicle.
Systems that would provide electricity to these vehicles and eliminate the need for
engines to idle for several hours would reduce emissions that would be otherwise be
generated by that vehicle. However, these emission reductions might be partially
CRS-42
offset from power plant emissions resulting from the generation of electricity to
power these systems.
Unlike the House bill, the Senate bill would expand eligibility to allow the use
of CMAQ funds for the purchase of alternative fuels, as defined in the Energy Policy
Act of 1992, as well as the purchase of biodiesel. Similar proposals have been
introduced in stand-alone legislation in the 108th, 107th, and 106th Congresses.
Proponents of the Senate proposal argue that making CMAQ funds available for the
purchase of alternative fuels would provide additional incentive for the use of cleaner
burning fuels and thereby help to improve air quality. Others counter that the
proposed change in eligibility would, in effect, be a subsidy for the alternative fuel
industry and that the air quality advantages of these fuels will likely diminish as
stricter diesel fuel standards are phased-in beginning in 2006.
The Senate bill also would make CMAQ funds available for two other new
purposes, one related to highway construction in general and one specific to the
purchase of certain types of equipment. First, states would be allowed to use CMAQ
funds in order to ensure the deployment of strategies that would reduce emissions
from fleets of vehicles that are used in highway construction projects in
nonattainment and maintenance areas. The bill would require states to ensure that
such strategies are in place and that they are consistent with applicable guidance.
The purpose of these strategies would be to help control emissions that occur during
the construction phase, primarily from the operation of heavy-duty vehicles, whereas
the current focus has been on controlling emissions resulting from highway travel
after the road is built. Second, the Senate bill also would expand eligibility to
include projects or programs that involve “the purchase of integrated, interoperable
emergency communications equipment.” However, it is unclear how CMAQ funds
could be approved for these types of projects, as the approval of funding is contingent
upon whether a project has the potential to reduce emissions and thereby assist a state
in attaining or maintaining a federal air quality standard.
Unlike the House bill, the Senate bill also would amend the statutory funding
formula for determining how CMAQ funds are distributed among the states. The
formula would be revised to include factors for new nonattainment areas that do not
meet the stricter federal air quality standards for ozone and fine particulates. The
structure of the current formula is based on classifications of nonattainment under the
previous ozone standard, and does not include any funding factors for either fine or
coarse particulates. Because the classification system for the designation of new
ozone nonattainment areas is different from that for the previous ozone standard, and
because there currently is not a funding factor for particulate matter nonattainment
areas, states with new nonattainment areas designated under the stricter standards for
these pollutants would not receive a greater share of CMAQ funds without the
proposed revisions to the statutory formula.
In response to continuing questions about the air quality benefits of CMAQ
projects, the Senate bill would require further study of the program’s effectiveness.
The Secretary of Transportation would be required to consult with the Administrator
of the Environmental Protection Agency to evaluate a representative sample of
CMAQ projects, and determine their impact on emissions and congestion levels. The
purpose of the study would be to assist states and metropolitan planning
CRS-43
organizations in selecting the most effective types of projects in the future. The
House bill does not include similar provisions.47 (CRS Contact: Linda Luther)
Environmental Streamlining
Before final design, property acquisition, or construction on a highway or transit
project can proceed, the FHWA must comply with certain environmental review
requirements, including those of the National Environmental Policy Act of 1969
(NEPA, 42 U.S.C. 4321 et seq.). NEPA requires all federal agencies to consider the
environmental impacts of proposed federal actions. To ensure that environmental
impacts are considered before final decisions are made, NEPA requires FHWA to
prepare an environmental impact statement (EIS) for any federally funded action that
significantly affects the quality of the human environment. Projects for which it is
not initially clear whether impacts will be significant require the preparation of an
environmental assessment (EA). If, it is determined, at any time during the
assessment, that a project’s impacts will be significant, an EIS must be prepared.
Projects that do not individually or cumulatively have a significant social, economic,
or environmental effect, and which FHWA has determined from past experience have
no significant impact, are processed as categorical exclusions.
In addition to meeting NEPA requirements, any given transportation project may
require compliance with a wide variety of legal requirements, enforceable by multiple
agencies. For example, impacts of a highway project may trigger requirements under
the Endangered Species Act of 1973 (16 U.S.C. 1536), the National Historic
Preservation Act (16 U.S.C. 470), or the Clean Water Act (33 U.S.C. 1251). FHWA
regulations require that compliance with all applicable environmental laws, executive
orders, and other legal requirements be documented within the appropriate NEPA
documentation (a concept referred to as the “NEPA umbrella”). (For more detailed
information about the NEPA process, see CRS Report RL32024, Background on
NEPA Implementation for Highway Projects: Streamlining the Process.)
Some Members of Congress have expressed concerns that the environmental
review process for large, complex FHWA projects can be inefficient, leading to
delays in completion of those projects. To address this concern, “Environmental
Streamlining” provisions were included in TEA-21. Some Members of Congress
have expressed the need for further legislation to expedite the environmental review
process required of highway construction and transit projects. In response to that
need, both the Senate and House bills would repeal TEA-21's streamlining provisions
and develop new procedures intended to expedite the environmental review process.
The Senate bill would establish a new “transportation project development
process” that could be implemented at the request of the project sponsor. The
process, applicable to highway and transit projects, includes the following:
47
For additional information see CRS Report RL32057, Highway and Transit Program
Reauthorization: Environmental Protection Issues and Legislation. by David Bearden.
CRS-44
A statutory designation of DOT as the lead federal agency for the
environmental review process.
! A statutory delineation of the roles and responsibilities of the lead
agency and cooperating agencies.
! A requirement to establish a “coordination plan” to coordinate
agency and public participation and to develop a schedule for
completion of the environmental review process.
! Provisions for the collaborative development of the project’s
statement of purpose and need and project alternatives as required
under NEPA or any other applicable statute.
! A requirement to follow specified dispute resolution procedures in
the event a cooperating agency identifies “major issues of concern”
regarding the potential environmental or socioeconomic impacts of
a project.
!
Further, the Senate bill would authorize states to assume responsibility for
determining whether certain designated activities may be included within the class
of actions currently identified in FHWA regulations as categorical exclusions. The
criteria for making such a determination would be established by the Secretary and
would apply only to projects designated by the Secretary. Such authority would be
determined through a mutual agreement between the state and the Secretary and
delineated in a memorandum of understanding. The Senate bill also proposes the
establishment of a “surface transportation project delivery pilot program” that would
delegate certain additional federal environmental review responsibilities to no more
than five states, including Oklahoma. Responsibility could be assumed for
environmental reviews required under NEPA, or any federal law, for one or more
highway projects within the state. The program would be administered in accordance
with a written agreement between the participating state and the Secretary. The
Secretary is directed to promulgate regulations to implement the pilot program within
270 days of enacting the Senate bill.
Also included in the Senate bill are revisions to Section 4(f) of the Department
of Transportation Act of 1966. “Section 4(f)” applies to the use of publicly owned
parks and recreation areas, and wildlife and waterfowl refuges.48 It also applies to
public or privately owned historic sites of national, state, or local significance.
Under current law, any use of such a resource for a transportation project is
prohibited unless there is no prudent and feasible alternative to do otherwise, and the
project includes all possible planning to minimize harm to the resource. The Senate
bill would amend the current law to allow for the use of a Section 4(f) resources if
it is determined that such use would result in “de minimus impacts.” Revisions to
Section 4(f) requirements have been viewed as a high priority to some transportation
construction stakeholders. Also related to section 4(f), the Senate bill would
48
This provision was set forth at section 4(f) of the DOT Act at 49 U.S.C. 1653(f). In 1983,
as part of a general codification of the DOT Act, 49 U.S.C., 1653(f), was formally repealed
and recodified with slightly different language in 49 U.S.C. 303. Similar requirements,
applicable only to the Federal-aid Highway program, is included in 23 U.S.C. 138. Given
that over the years, the whole body of provisions, policies, and case law have been
collectively referred to as “section 4(f)” matters, DOT has continued this reference.
CRS-45
specifically exempt the Interstate System from consideration as a historic site
pursuant to section 4(f).
Unless otherwise specified, the Senate bill directs the Secretary to promulgate
regulations to implement each of the provisions discussed above within one year of
enacting the law.
The House bill includes provisions related to the environmental review process
under Title VI regarding Transportation Planning and Project Delivery. Like the
Senate bill, TEA-LU specifies certain provisions intended to reduce delays arising
from the environmental review process. The House bill’s project development
procedures are applicable to all highway projects, public transportation capital
projects, and multimodal projects that require an EIS and may be applied to other
projects if appropriate. The project development procedures include the following:
A statutory designation of DOT as the lead federal agency and the
project sponsor (if a state or local government) as the joint lead
agency for the environmental review process.
! A provision that the joint lead agency may prepare any supporting
documents if the federal lead agency provides guidance and
assistance and approves the documents.
! A requirement that the environmental review process be initiated by
the project sponsor.
! A requirement that the project’s statement of purpose and need be
defined and the project alternatives be determined by the lead
agency after participating agencies and the public have an
opportunity for involvement.
! Establishes an extendable 60-day deadline on comments to a draft
EIS and an extendable 30-day deadline on all other comment periods
in the environmental review process.
! Establishes a dispute resolution process intended to identify and
resolve issues of concern that could delay completion of the
environmental review process.
! Requires a state participating in the environmental review process to
require the participation of all appropriate state agencies.
! Allows project funds to be provided to affected state and federal
agencies to support activities, related to the environmental review
process, that would expedite project delivery.
! Establishes a 90-day statute of limitation on claims related to final
agency actions.
!
The House bill would also amend provisions of Section 4(f). However, the
amendment would apply only to historic sites. Provisions of TEA-LU would allow
for the use of a historic site if the use is determined, in accordance with provisions
of the National Historic Preservation Act (16 U.S.C. 470f), to have no “adverse
effect” on the site. Like the Senate bill, the House bill also exempts the Interstate
System from section 4(f).
Unlike the Senate bill, TEA-LU does not direct the Secretary to develop or
promulgate regulations to implement the environmental review provisions of the bill.
CRS-46
(For more information, see CRS Report RL32032, Streamlining Environmental
Reviews of Highway and Transit Projects: Analysis of SAFETEA and Recent
Legislative Activities.) (CRS contact: Linda Luther)
Conformity of Transportation Plans and State
Implementation Plans (SIPs)
Under the Clean Air Act, areas that have not attained one or more of the six
National Ambient Air Quality Standards must develop State Implementation Plans
(SIPs) demonstrating how they will reach attainment. As of April 2004, at least 124
areas with a combined population of 159 million people were subject to the SIP
requirements. Section 176 of the Clean Air Act prohibits federal agencies from
funding projects in these areas unless they “conform” to the SIPs. Specifically,
projects must not “cause or contribute to any new violation of any standard,”
“increase the frequency or severity of any existing violation,” or “delay timely
attainment of any standard.” Because new highways generally lead to an increase in
vehicle miles traveled and related emissions, both the statute and regulations require
that an area’s Transportation Improvement Program (TIP), which identifies major
highway and transit projects an area will undertake, demonstrate conformity each
time it is revised (i.e., at least every two years). Highway and transit projects cannot
receive federal funds unless they are part of a conforming TIP.
While conformity has been required for more than a decade, the impact of the
conformity requirements is expected to grow in the next few years for several
reasons. The growth of emissions from SUVs and other light trucks and greater than
expected increases in vehicle miles traveled have both made it more difficult to
demonstrate conformity; recent court decisions have tightened the conformity rules;
and the scheduled implementation in 2004 of more stringent air quality standards
(both for ozone and for fine particles such as those found in diesel exhaust) will mean
that additional areas are subject to conformity. Thus, numerous metropolitan areas
could face a temporary suspension of highway and transit funds unless they impose
sharp reductions in vehicle, industrial, or other emissions. In a recent survey, the
General Accounting Office (GAO) found that, over the past six years, only 5
metropolitan areas have had to change transportation plans in order to resolve a
conformity lapse; but about one-third of local transportation planners surveyed
expected to have difficulty demonstrating conformity in the future. (See U.S. GAO,
Environmental Protection: Federal Planning Requirements for Transportation and
Air Quality Protection Could Potentially Be More Efficient and Better Linked, April
2003.)
The Clean Air Act provides no authority for waivers of conformity, and the only
grace period allowed is for one year following an area’s designation as
nonattainment. Only a limited set of exempt projects (mostly safety-related or
replacement and repair of existing transit facilities) can be funded in lapsed areas.
The rules do not even allow funding of new projects that might reduce emissions,
such as new transit lines. These limitations are among the issues of concern. In
addition, many have raised concerns about a mismatch between the SIP, TIP, and
long range transportation planning cycles, and have called for less frequent, but better
CRS-47
coordinated demonstrations of conformity. In its recent report, the GAO
recommended that “relevant federal agencies ... consider extending the three-year
time frame between required [long range] transportation plan updates and asking the
Congress to amend the Clean Air Act to change the conformity rules to match ....”
This recommendation appears to be generally supported by transportation planners
and highway builders, but opposed by environmental groups and air quality planning
officials.
As passed on February 12, S. 1072 would require less frequent conformity
demonstrations (at least every four years instead of every 2), and would shorten the
planning horizon over which conformity must be demonstrated to 10 years in most
cases, instead of the current 20 years. The bill would allow replacement of
Transportation Control Measures in SIPs without triggering new conformity
determinations; would allow new nonattainment areas to use such tests as the
Administrator may determine in demonstrating conformity until an emissions budget
is determined to be adequate; and would grant areas two years following approval of
a new motor vehicle emissions budget before they would need to demonstrate
conformity with the new budget. The bill also provides additional resources to
MPOs and State DOTs for planning purposes, increasing the resources available for
conformity determinations. An Administration proposal to combine the TIP and long
range transportation plan was not adopted, nor were any changes made to the SIP
time frame.
As passed by the House, H.R. 3350 contains similar provisions, except that it
would require that the local air pollution control agency agree if the planning horizon
were to be shortened. The House bill also establishes a 12-month grace period
following a failure to demonstrate conformity before a lapse would be declared. (For
additional information, see CRS Report RL32106, Transportation Conformity Under
the Clean Air Act: In Need of Reform?) (CRS contact: Jim McCarthy)
Highway and Commercial Vehicle Safety Programs
Existing surface transportation law defines the federal role in numerous aspects
of highway safety. Title I of TEA-21 authorizes billions of dollars each year for
federal-aid highway categorical grants to improve the design, throughput, and overall
performance of the highway infrastructure. In particular, Title I authorizes the
Surface Transportation Program (STP), which includes mandatory set asides to
eliminate hazards (such as by installing barriers and guard rails) and to improve the
infrastructure at highway/rail grade crossings (such as by installing signals and signs).
Collectively, investments in the STP and other categorical programs are intended to
improve safety and meet other transportation objectives. Title II of TEA-21 contains
an authorization to conduct research and development related to traffic safety, as well
as authorizations for state grants to increase occupant protection, reduce
alcohol-impaired driving, improve the collection of highway safety data, and operate
the National Driver Registry. For example, the National Highway Traffic Safety
Administration (NHTSA) deploys Title II funds to pay for the development of new
strategies for traffic enforcement (e.g., research to advance drug recognition
techniques and train detection experts). Title II funds are used by the states to deploy
CRS-48
innovative highway safety programs (e.g., the Section 402 program), to encourage
occupant protection (Section 405), and to reduce alcohol-impaired driving (Section
410). Also, NHTSA uses Title II funds to conduct evaluations of the effectiveness
of different traffic safety strategies (the Section 403 program). Title IV includes
authorization for numerous state motor carrier safety programs and for the operation
of the Federal Motor Carrier Safety Administration (FMCSA). And Title V includes
authorization for various research, technical assistance and deployment programs and
for the Intelligent Transportation Systems (ITS) program (discussed subsequently),
which supports activities intended to promote highway safety and mobility.
As part of the reauthorization process, funding levels for the safety-oriented
grants and
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