“Every week is infrastructure week!”

That is the running joke in Washington, DC as Congress and the administration have been hard at work formulating a comprehensive infrastructure package since President Trump’s inauguration in January of 2017. The Trump Administration, House, and Senate have all released different funding priorities for a Fixing America’s Surface Transportation (FAST) reauthorization bill, which is set to expire in September.

Trump’s $1 trillion infrastructure plan , the $760 billion House infrastructure plan, and the $287 billion Senate Highway bill (S.2302) all take different approaches to  providing funding to improve the dire transportation and infrastructure situation in the United States, but none offers a plan for how the legislation will be funded. The political near-impossibility of a gas tax increase has led some to consider new funding structures, including charging drivers for the miles they drive rather than the amount of fuel they consume. This approach, referred to as a vehicle miles traveled (VMT) tax, a road user charge (RUC), or a mile-based user fee (MBUF), is being considered by states as a supplement or a replacement for current per-gallon fuel charges.

As the funding debate plays out at the federal level several states have already implemented pilot or voluntary programs that charge users an annual flat fee to owners of cars using alternative fuels. The National Conference of State Legislatures (NCSL) has collected data and information from various per-mile programs across the country. Below is a map that the Oregon DOT compiled indicating which states have completed RUC pilots, which states are considering or planning RUC pilots, and which states are actively monitoring the topic either via their department of transportation, state legislature or another agency.

NCSL has also gathered information on regional efforts and RUC coalition groups. Two regional groups of states, RUC West and the I-95 Corridor Coalition, have coordinated efforts and resources around RUC issues to leverage resources for educational opportunities and to focus funding efforts. Membership for both coalitions are below:

Significant concerns remain over issues such as privacy, how the fee would be collected and how efficient that collection would be, and concerns about the federal government’s capacity to roll-out a national program. Either program would require passenger vehicles to be tracked, whether through odometer reading, radio-frequency identification (RFID) readers, or onboard devices. Depending on the tax or fee structure, the time and location in addition to miles traveled may need to be captured. The idea that every location and mile traveled in your personal vehicle being tracked, recorded, and captured by the federal government may be unsettling for some.

These concerns will have to be addressed before a nationwide program becomes a political possibility, but regions and states are taking the lead in testing this important new technology. Below are four states that showcase different approaches to per-mile charges:

Oregon: Road Usage Charge Program – OReGO

Oregon began its RUC journey in 2017 and is now the only state with a permanent RUC program. Oregon drivers are highly encouraged to enroll in the state’s RUC program called OReGO. A typical electric or high-mpg vehicle driver pays two to four years’ worth of registration fees in advance when purchasing a car or renewing their registration. Oregon House Bill 2017, or “Keep Oregon Moving,” will be making increases to these fees in 2022 and 2023 to respond to expected increases in vehicle performance. This could lead to a combined up-front registration fee of hundreds of dollars. If these same drivers enroll in OReGO instead they would not have to pay these registration fee increases. They would only pay the base registration of $43 per year plus the road charge of 1.8 cents per mile.

Utah Road Usage Charge Program

The Utah Department of Transportation (UDOT) began work on implementing their RUC in 2018 when two laws passed through the state legislature (SB 136 -2018 and SB 72 -2019) directing UDOT to implement a RUC process by 2020. SB 72 fiscal note appropriated $755,000 for the program’s initial setup and an additional $115,000 each year for employee operations. It is unclear when this funding will stop, but UDOT anticipates that RUC revenues will begin to fund the program by 2025.  In addition, the state received a $1.25 million federal grant from the Federal Highway Administration’s Surface Transportation System Funding Alternatives (STSFA) Program for a study on the program’s success over the next five years. Users will be charged 1.5 cents per mile driven until the accumulated total matches the annual flat fee. In 2020, the flat fee for electric vehicles will be $90. This is significantly less than the $187 average annual state gas tax payments vehicle owners paid in Utah in 2019.

California Road Charge

The California State Transportation Agency (CalSTA) managed a road charge pilot program through the California Department of Transportation (Caltrans) by working closely with the California Transportation Commission, the Road Charge Technical Advisory Committee (TAC), and additional external stakeholders throughout California. From July 2016 through March 2017, 5,000 vehicles statewide reported in excess of 37 million miles, according to the program’s full report. California’s now completed road charge pilot program was a voluntary effort that relied heavily on Oregon’s experience. Unlike Oregon’s program, this pilot was conceptual in nature and no actual financial transactions took place.

Washington Road Usage Charge Pilot Project

In December 2019, the Washington State Transportation Commission (WSTC) released  recommendations on how Washington can begin a gradual transition away from the state gas tax and toward a road usage charge system. The commission based its recommendations on extensive research, statewide public engagement and a detailed analysis of participant feedback and system performance of the 12-month Washington Road Usage Charge Pilot Project. The adopted recommendations were transmitted to the Washington State Legislature, Governor Jay Inslee and the Federal Highway Administration last month.

In July of this year, California and four major automakers, BMW, Ford, Honda, and Volkswagon, reached an agreement over a framework for setting Corporate Average Fuel Economy (CAFE) standards and vehicle greenhouse gas (GHG) emissions standards through the year 2026.

The framework was announced in anticipation of a Trump administration rollback of federal emissions standards set during the Obama administration.

The Obama-era standards require an average mileage of 54.5 miles per gallon for passenger vehicles by 2025, along with a year-over-year 4.7 percent reduction of greenhouse gas (GHG) emissions through 2025.

The rollback proposed by the Trump administration freezes model year 2020 CAFE and carbon dioxide emissions standards for passenger cars and light trucks through the year 2026.

The framework developed by California and the four automakers eases the Obama-era standards slightly, but rejects the freeze of the proposed rollback. The framework would drop average mileage standards from 54.5 by 2025 to 51 by 2026, and loosen GHG reduction standards from 4.7 percent over four years to 3.7 percent over five years

How California Sets Its Own Standards

The Clean Air Act provides the State of California with the right to waive federal preemption regarding air pollution standards for vehicle emissions. This waiver allows California to set stricter air emissions standards than the federal government. The waiver, however, must be approved by the Environmental Protection Agency (EPA).

Under Clean Air Act Section 209, the EPA is required to grant California a waiver unless they find that:

• California was arbitrary and capricious in its finding that its standards are, in the aggregate, at least as protective of public health and welfare as applicable federal standards;
• California does not need such standards to meet compelling and extraordinary conditions; or
• such standards and accompanying enforcement procedures are not consistent with Section202(a) of the Clean Air Act.

The Administration’s Reaction

Following the announcement of the framework, the Trump administration began pushing back against California and the four automakers through several actions:

September 6, 2019: DOT and EPA Write Letter to CARB Stating that the Framework May be Illegal

On September 6, the Department of Transportation (DOT) and the EPA wrote a letter to the California Air Resources Board (CARB), the state agency responsible for filing the waiver request with EPA. The letter states that the framework agreement between California and the automakers “appears to be inconsistent with Federal law.”

September 6, 2019: DOJ Opens Anti-Trust Probe Against Automakers

Also on September 6, it was reported that the Department of Justice would be opening an anti-trust probe to determine if the four automakers involved in the framework had acted lawfully.

September 19, 2019: EPA and NHTSA Announce One National Program Rule on Federal Preemption of State Fuel Economy Standards

On September 19, the DOT’s National Highway Traffic Safety Administration (NHTSA) and the EPA issued a final action establishing the One National Program rule that would ensure that the federal government sets one single fuel efficiency standard for the country. Along with this rule, EPA withdrew California’s Clean Air Act waiver that authorized the state to determine its own emissions standards.

September 24, 2019: EPA Threatens to Block California Highway Funding

On September 24, EPA Administrator Andrew Wheeler issued a letter to CARB Chair Mary Nichols warning that the state’s violation of Clean Air Act regulations could affect it’s highway funding. The letter notes that California has “failed to carry out its most basic tasks under the Clean Air Act” and has a backlog of 130 State Implementation Plans (SIPs), the plans which have to be developed to increase air quality for areas failing to attain National Ambient Air Quality Standards (NAAQS). The letter further states that if California does not work with the EPA to develop approvable SIPs, the EPA will begin a disapproval process which could result in a stoppage of DOT approvals for highway projects.[1]

California’s Response

September 20, 2019: California Files Lawsuit Along With 22 Other States

On September 20, California, along with 22 other states and the District of Columbia, filed a lawsuit against the NHTSA, the DOT division which withdrew California’s Clean Air Act waiver. According to the filing, the action “exceeds NHTSA’s authority, contravenes Congressional intent, and is arbitrary and capricious.”

Significance for Regions

Preemption

The repeal of California’s emissions standards waiver is federal preemption of the state’s authority to regulate vehicle emissions. Recent increases in federal preemption of state and local authority are a serious concern for local governments which need the authority to make decisions based on their region’s needs. The precedent that this exercise of preemption could set is notable and worrying.[2]

Air-Quality – Non-attainment Consequences

Many regional councils function as air-quality planners. In this role, they work to maintain NAAQS in their regions. Repealing California’s waiver and setting lower national emissions standards will result in increased emissions. This could make NAAQS more challenging for regions to attain and sustain.

NAAQS non-attainment can result in sanctions from the EPA, which affect approval of highway projects. (for an example of this, see the section titled “EPA Threatens to Block California Highway Funding” above).

Air-Quality – Public Health

Additionally, and critically, poor air quality presents a variety of direct threats to the health of a region’s residents, including serious heart and breathing problems.[3]

Climate Change

“Greenhouse gases trap heat and make the planet warmer,” according to the EPA’s Sources of Greenhouse Gas Emissions webpage. Furthermore, the EPA identifies the transportation sector as the primary source of greenhouse gas emissions.[4] In 2017, transportation accounted for 28.9% of overall U.S. greenhouse gas emissions. Within the transportation sector, passenger cars and light-duty trucks comprise the largest portion of emissions.

Increased global temperatures present many threats to the health and well-being of residents of regions across the United States. Consequently, the drivers of warming, like GHG emissions, should be mitigated. The EPA identifies several methods for accomplishing this. Among the primary methods, the EPA includes “improving fuel efficiency with advanced design, materials, and technologies,” a strategy that is supported by increasingly stringent standards, such as those included in California’s framework.

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[1] As ENO Transportation reports, the letter cites a section of the Clean Air Amendments of 1990 which allows for the cutoff of highway project approval, but not the cutoff of actual funding. The state or region would still be able use funds for highway safety projects of mass transit projects.

[2] In this case, it should be noted that California’s proposed standards would be more stringent than those set by the federal government.

[3] CDC Public Health Issues

[4] Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990–2017 (published 2019)

The push for transportation reauthorization has begun, with approximately 15 months before the current authorizing legislation – the FAST Act – expires. This early start to the process can be ascribed to two systemic challenges Congress faces in getting a final bill across the finish line. First, the transportation reauthorization is a complex piece of legislation, under the jurisdiction of four committees in the Senate and two in the House. It is also a large program with a fading source of revenue, which requires Congress to find a funding patch every time it enacts a new, long-term authorization. This time around, the gap between anticipated Highway Trust Fund revenues and desired spending levels is expected to be $100 billion or more, which needs to be transferred from general Treasury funds and somehow offset with new revenues or spending cuts.

The second systemic challenge Congress faces is a simple one of timing: voting for the 2020 Presidential election will take place just over a month after the current authorization expires. The politicking, of course, will begin much sooner. Neither side will want to hand the other a substantial victory too close to an election, and both sides could be wary of spending hundreds of billions of dollars (to say nothing of raising the federal fuels tax), unsure of how it will swing voters.

That brings us to the Senate Environment and Public Works (EPW) Committee’s proposed highway title (transit, rail, and other items will be added later by other committees), which is a five-year, $287 billion bill. As is often the case with transportation bills, there is much for both sides to point to as advancing their policy agendas. This is part of the reason it passed out of committee on a unanimous 21-0 vote. On one side is project permit streamlining, increases to the National Highway Performance Program, and rural-focused provisions regarding safety and bridge repair. On the other side is a new climate title, safety and funding provisions for bicycle and pedestrian projects, and a new program to combat congestion in the nation’s largest urban areas.

The EPW bill maintains the existing structure of the federal transportation program. This is, overall, a positive. There are only minor changes made to the law as it applies to planning and the Congestion Mitigation and Air Quality (CMAQ) program. One change we had advocated for was an increase in the portion of the Surface Transportation Block Grant Program (STBGP) that is provided directly to local areas through their metropolitan planning organizations (MPOs). Though this share will remain at 55%, we were pleased at changes to the Transportation Alternatives Program (TAP), including an increased share for local projects (57.5%, up from 50% presently) and broader eligibility to include MPOs in urbanized areas under 200,000 population. In addition, two new programs created in the EPW bill for resilience and safety require suballocation of funds and create incentives that would allow a portion of those funds to be used as STBGP funds if certain criteria are met.

A notable aspect of the EPW bill is the sheer number of new programs that it would create, covering a broad range of topics including wildlife crossings, bridge investments, safety, charging and alternatives fuel infrastructure, carbon reduction, congestion relief, resilience, and more. This is an interesting shift in approach, with the current FAST Act bill sticking mainly to the approach initiated in the MAP-21 authorization which consolidated the program from more than 100 programs to just a handful.

If you want to learn more about what the bill contains, NARC has prepared a number of resources that will be helpful, including a section-by-section analysis and a broader overview of some of the most relevant portions. In addition, NARC will be hosting a webinar on Tuesday, August 13 at 3:00 PM ET and you can register here.

As one Senator said during the committee discussion, the committee passage of this bill is the “end of the beginning” of the process. We’ll still need to see what the Senate Commerce and Banking committees develop for their portions of the bill, and that combined package will need to make it through the full Senate. The House Transportation and Infrastructure Committee is also likely to develop its own proposal, though it is unclear when it might release something. And the Senate Finance and House Ways and Means committees have perhaps the toughest job of all, which is coming up with a way to pay for the whole package.

Last Tuesday, the Federal Transit Administration (FTA) announced a $1.36 billion allocation of Capital Investment Grant (CIG) funding. The money, drawn from streams of both fiscal years (FY) 2018 and 2019 allocated funds, will be directed at 11 existing projects and 5 new projects.

The announcement arrives amid criticism that the FTA has been slow to release funds. Transit advocacy groups like Transportation for America are vocally campaigning to speed delivery of allocated funds, claiming the Administration is intentionally stalling delivery.

In addition to criticism of delays, advocates have larger existential concerns regarding the program. The president’s FY 2018 and FY 2019 budgets excluded funding for new CIG projects and indicated a desire by the Administration to wind down the entire program.

The president’s recently released  FY 2020 budget and the Federal Transit Authority FY 2020 CIG recommendations include a billion dollar overall cut to the program, but also provide $500 million for new projects, the first new project funding since FY 2017. The Administration has reached a fork in the road and appears to be trying to go both directions.

CIG Background

The CIG Program, overseen by FTA, funds transit capital investments under three primary grant programs: Small Starts, New Starts, and Core Capacity. More information on the three programs can be found here.

Congress most recently authorized CIG under the 2015 FAST Act at $2.3 billion annually for fiscal years 2016 through 2020. As a discretionary program, CIG is subject to the annual appropriations process.

CIG Within the FTA Budget

Since the signing of the FAST Act, CIG dollars have constituted approximately eighteen percent of the overall appropriations provided for the FTA. As shown in Table 1 below, the president’s FY 2020 budget proposes cutting CIG funding by $1 billion. If enacted, this cut would drop the CIG’s portion of overall FTA funding to approximately twelve percent.

Winding Down the Program?

The Administration recommended massive cuts of $1.2 billion for FY 2018 and $1.0 billion for FY 2019. Congress ultimately appropriated CIG funds for FY 2018 and FY 2019 at authorized levels, but the Administration’s signaling on the program was clear: stop funding new projects and phase out existing work.

The FY 2019 FTA Annual Report on Funding Recommendations spelled this out. “For the remaining projects in the CIG program, FTA is not requesting or recommending funding. Future investments in new transit projects would be funded by the localities that use and benefit from these localized projects.” (emphasis FTA)

After Congress appropriated full CIG funding for FY 2019, Director of the Office of Management and Budget Mick Mulvaney responded with a letter stating that “the Administration believes the additional resources provided …would be better utilized by being allocated to the State of Good Repair Formula Program.”*

*For added context on administration positions regarding CIG funding: the Obama Administration recommended $3.5 billion of funding in FY 2017. Appropriators did not, however, follow this recommendation and funded the program at $2.4 billion, near its authorization level.

Breaking Down CIG Appropriations

The president’s FY 2020 budget includes limited detail of how the total $1.505 billion of recommended funding will be distributed between the different CIG programs. The only detail provided is that $995.29 million of the funding will be used for 11 existing projects and $494.85 million will be used for new projects under the three primary grant programs as well as the recently developed Expedited Delivery Pilot Program.

How Will FTA Distribute the $500 Million for New Projects?

Prior to FY 2018, money allocated to new projects was distributed among specific projects named within the president’s budget. As funding for new projects was not written into FY 2018 and FY 2019 budgets, there was no need to name projects.

The president’s FY 2020 budget proposal provides new project money, but like the FY 2018 and FY 2019 budgets, does not specifically name new projects. This lack of project naming, as well as the complaints made about slow fund distribution, has resulted in changes to the CIG selection process.

Without a clear pipeline for selection and fund distribution, Congress chose to set deadlines by which CIG funds need to be allocated. While solving the problem of fund withholding, these new deadlines also created a side effect: the Administration now treats readiness as a top criterion for project selection.

Project Selection Criteria for CIG in FY 2020

FTA lists the following general guidelines for project selection:

• Readiness of funding for CIG grant obligation by statutory deadlines;
  • Non-CIG funding committed,
  • Critical third party agreements complete,
  • Firm and final cost/scope/schedule,
  • Technical capacity of the project sponsor,
• Geographic diversity of project for a national funding program;
• Extent of overmatch proposed by the project sponsor; and
• Extent of innovative funding proposed including value capture, joint development, and public-private partnerships.

Looking Ahead

The FY 2020 budget and appropriations process has only just begun, and the only certainty is that there will be more changes before any funding levels are finalized. While the Administration’s inclusion of $500 million for new projects is a notable shift in tone from FY 2018 and FY 2019, the overall cuts to the program prevent this new funding from serving as an endorsement of the program.

Transportation planners and officials hoping to have their project selected for CIG funds will need to continue to assess the ways in which selection criteria are affected by both the overall funding structure of the program as well as the Administration’s view of the program within the context of other infrastructure funding.

NARC will continue to track CIG funding during the budget and appropriations process, as well as during upcoming discussions on transportation reauthorization and the development of an infrastructure package.