WASHINGTON INSIGHT

Funding, new regulations top 2002 infrastructure policy agenda

Jim Fahey
Director of Government Relations
APWA Washington Office

Diminishing federal resources, budget deficits likely to exceed $100 billion, and significant funding increases to meet homeland defense needs are expected to dominate the Washington policy agenda in 2002. Public works issues also will assume a prominent place as both the Congress and the Bush Administration move forward on a number of pressing issues concerning infrastructure needs, infrastructure security, and the environment.

Drinking Water
In the wake of the attacks of September 11, 2001, shoring up infrastructure security will continue to be a priority for Washington policy makers this year. The U.S. Environmental Protection Agency (EPA) will be distributing vulnerability assessment grants authorized as part of a $20 billion comprehensive anti-terrorism bill approved by Congress in December of 2001. Pending legislation in the Congress includes a bio-terrorism bill to provide $120 million for assessments of water systems. A second bill, Water Infrastructure Security and Research Development Act, passed late last year in the House but awaits Senate action this year. This bill would authorize $60 million over five years for research, development, and demonstration activities to achieve improvements to technologies and related processes for the security of water supply systems.

Drinking water regulatory-related actions expected from EPA in 2002 include the promulgation of a final radon standard for drinking water, work on a secondary standard for MTBE, and development of the Long-Term 2 Enhanced Surface Water Treatment Rule and the Stage 2 Disinfectants and Disinfection Byproducts rule.

Clean Water
This year marks the 30th anniversary of passage of the 1972 Clean Water Act, and several clean water issues are expected to be addressed during the year. EPA is expected to re-propose a Total Maximum Daily Load (TMDL) rule, originally issued July 2000 but pulled by the agency in October 2001. The agency is working to develop a pollutant trading program to incorporate into the rule. Also anticipated during spring of 2002 is a proposed sanitary sewer overflow (SSO) regulation, which was originally signed in January 2000 but never published. In addition, EPA has been working on guidance on wet-weather wastewater bypass and may issue a draft of it soon. In accordance with a court order, EPA will be issuing an effluent limitation guideline (ELG) each month through June 2002, including the construction ELG to establish a national standard for runoff from construction sites, expected by the end of March.

Water Infrastructure Funding
Legislation to provide federal funds for the repair and improvement of aging and deteriorating wastewater and drinking water infrastructure will be considered by the Congress in 2002. Sen. James Jeffords (I-VT), chair of the Senate Environment and Public Works Committee (EPW), and EPW Committee members, Sens. Robert Smith (R-NH), Robert Graham (D-FL) and Michael Crapo (R-ID) will introduce a bill addressing funding of state revolving loan funds (SRF) and ways to make them more flexible. Federal funds are distributed to states to capitalize Clean Water and Drinking Water SRFs, which are used to provide loans to local communities for water infrastructure improvements. The Water Infrastructure Network (WIN)—a coalition including APWA formed to advocate increased investment in water infrastructure—has identified a $23 billion annual investment gap for wastewater and drinking water infrastructure needs over the next 20 years. Last year, Congress appropriated $850 million for the drinking water SRF and $1.35 billion for the clean water SRF.

Transportation
In 2002, the security needs of the transportation system will remain a priority for the U.S. Department of Transportation (DOT) and the Congress, with efforts to include border security, improved system monitoring, and continued implementation of aviation security measures. In addition, a reported cut of more than $9 billion in TEA-21 (Transportation Equity Act for the 21st Century) funding for 2003 will also dominate the highway transportation agenda this year. TEA-21, a six-year, $218 billion law, provides federal funding to state and local highway and mass transit programs.

In late January, DOT announced that a drop in tax receipts to the Federal Highway Trust Fund will result in a 2003 funding level of $22.7 billion for the highway program, a decrease of nearly one-third from $31.8 billion in 2002. Factors contributing to the revenue decline to the Trust Fund include a fall in the estimated amount of commercial truck travel, which generates diesel fuel tax revenue; higher use of gasohol than estimated (gasohol is taxed at a lower rate than gasoline); and slower growth in the purchases of trucks and trailers (taxes from such purchases go to the Trust Fund).

The funding reduction is required by a budgetary mechanism established in TEA-21 known as Revenue Aligned Budget Authority (RABA), which was created to ensure that highway funding tracks trust fund revenues. As tax receipts rise or fall, funding levels increase or decrease accordingly. Prior to this year, RABA has generated significant increases to levels originally set by TEA-21. This year's policy debate over RABA will likely focus on ways to prevent wide swings in highway program funding.

TEA-21 is due to expire on September 30, 2003. In preparation for its reauthorization, increased oversight activity will occur in 2002 in the House and the Senate. A number of issues are expected to be addressed during this oversight period, including ways to: finance the unmet needs; improve the timeliness of project delivery (also referred to as environmental streamlining); mitigate congestion; enhance program flexibility; meet intermodal needs; and increase local official involvement in planning decisions. In January, the APWA Board of Directors approved APWA's TEA-21 reauthorization policy statement, which appears below in this issue of the APWA Reporter.

To reach Jim Fahey, call (202) 408-9541 or send e-mail to jfahey@apwa.net.

APWA Board adopts TEA-21 Reauthorization Policy

Andrea J. Fisher
Manager of Government Relations
APWA Washington Office

In September 2003 the Transportation Equity Act for the 21st Century (TEA-21) will expire. In order to identify priorities and advocate successfully on behalf of the APWA membership, an internal 12-member TEA-21 Reauthorization Task Force was appointed by past APWA President Judith M. Mueller.

During the APWA Board of Directors meeting held on January 25-26, 2002, the policy drafted by the APWA TEA-21 Reauthorization Task Force was approved and adopted. The Task Force is led by Chairman, Don LaBelle—Public Works Director for Alameda County, California. The task force has been working diligently on the policy throughout the past year. In December 2001 the Government Affairs Committee approved the policy and forwarded it to the Board of Directors for their review. The adopted policy is provided below.

The next step in the process will be to promote APWA's policy to key lawmakers in Congress, potential allies and other organizations representing transportation interests. Please contact Andrea Fisher in APWA's Washington office at (202) 408-9541 or afisher@apwa.net with any questions you may have about the policy or the work of the Task Force.

APWA Policy Statement on the Reauthorization of the Transportation Equity Act for the 21st Century (TEA-21)
The American Public Works Association (APWA), representing public works officials across the nation, strongly supports the goals and programs established by Congress in the Transportation Equity Act for the 21st Century of 1998 (TEA-21) and endorses reauthorization of the legislation retaining its core structure. TEA-21's enhanced role of local decision making and its emphasis on flexibility and intermodal goals have contributed to increased consideration of local concerns. It has also provided for the preservation of existing facilities in transportation spending decisions and greater exploration of alternative solutions to transportation problems. APWA believes that a strong transportation system provides the foundation for a healthy economy.

To build upon the successes, APWA believes that reauthorization of TEA-21 must:

  • Increase federal investment in highways, bridges and public transportation to enhance safety, security and mobility;

  • Maintain the integrity of the Federal Highway Trust Fund by preserving guaranteed funding and retaining a funding firewall mechanism;

  • Streamline the regulatory and project delivery process;

  • Enhance flexibility to address local and regional transportation priorities and needs; and

  • Be enacted in a timely manner and no later than September 30, 2003, when TEA-21 expires, in order to prevent a lapse in funding to states and local governments.
Investment
APWA recognizes the preeminent importance of capital reinvestment in transportation infrastructure. Protection and preservation of the existing system, therefore, should be the highest priority of TEA-21 reauthorization. As noted in the U.S. Department of Transportation's (USDOT) Report to Congress entitled, "1999 Status of the Nation's Highways, Bridges, and Transit: Condition and Performance," the annual cost just to maintain conditions and performance for highway, bridge and transit at 1997 levels would need to increase to $67.4 billion—$11.1 billion more than the actual 1997 capital outlay of $56.3 billion. The report also stated that the annual cost to improve the system would be $94 billion for highways and bridges and $16 billion for transit. Also, a U.S. General Accounting Office Report published July 16, 2001, indicated a serious shortage of funding for rural roads where safety is a grave concern.

To meet the documented needs, reauthorization must provide increased federal investment for all modes of transportation, including highways, bridges and public transportation. APWA supports full funding of TEA-21 transportation programs at levels consistent with revenues from transportation user fees including earned interest. Further, APWA believes streamlining and reducing the number of regulatory requirements on states and local governments and allowing state and local governments greater flexibility in implementing transportation programs would enhance the goals of TEA-21 and its successor.

The successor to TEA-21 should reflect a reduced federal oversight role on states and local governments while ensuring the effective functioning of a limited National Highway System that supports intercity, interstate and commercial corridors and national defense, as well as both national interests and international mobility.

Roles and Responsibilities
APWA believes the federal government must maintain a leadership role in:

  • Strategic planning for the 21st century;

  • Maintaining the highest safety standards and ensuring mobility;

  • Expanding research and development of new technologies, standards for safe and efficient design, construction and operation;

  • Assuring the availability of adequate resources;

  • Ensuring consistency and uniformity among the states; and

  • Safeguarding the nation's environment while assuring timely delivery of transportation projects.
Federal and state oversight must be streamlined to ensure the most efficient use of limited federal, state and local fiscal resources. APWA encourages Congress and USDOT to retain and expand flexibility for state and local governments through value added processes, less prescriptive regulations and more timely coordination between federal agencies that implement federal transportation and environmental legislation.

TEA-21 significantly defined and expanded the role of local governments to help shape the transportation outlook for their communities. Through direct suballocation of Surface Transportation Program (STP) funds to urbanized and rural areas and requirements that local governments have a say in spending decisions, TEA-21 brought transportation decision making closer to the citizens that fund the programs. System preservation and review of alternative solutions to transportation problems should be retained in reauthorization. APWA urges Congress to continue support for state-local transportation partnership and provide incentives to encourage all states to work cooperatively with their local government partners.

Funding
APWA endorses full funding of TEA-21 and supports increased federal investment by its successor at authorized levels consistent with all revenues received and earned from transportation user fees. APWA supports continued direct suballocation to local governments acting through their designated Metropolitan Planning Organization (MPO) with a greater emphasis on directing expenditures to reconstruction and system preservation, including a direct pass-through and suballocation of maintenance funds allocated to the states and local agencies.

To maintain the integrity and intent of the Federal Highway Trust Fund, as well as to address unmet needs, reauthorization must include guaranteed funding and a funding firewall mechanism which ensures that all funds authorized by Congress and all earned revenues from gas taxes and user fees are appropriated for transportation (highways and transit) purposes and not held in reserve or transferred to other non-transportation programs. TEA-21 reauthorization should limit highway demonstration projects to state Transportation Improvement Program (TIP) projects that meet strictly applied state and local criteria, including approval by local and state transportation authorities. Further, all roadway users should pay motor fuel taxes or some other user fee in proportion to their use of the roadway system.

APWA recommends that direct suballocations be made to all designated MPOs and the two largest cities and counties in each state. Suballocation provisions should also include continuation of funding to areas of less than 5,000 population.

FHWA should ensure that affected local governmental entities are included in the highway and transportation planning process and that 100 percent of all funding from federal gas taxes suballocated for local governmental streets and roads is distributed to local governments or as a pass-through of funds from state DOTs.

APWA supports efforts to promote innovative financing of transportation projects. Many communities have pursued innovative financing and found success in leveraging funds for projects. Even more innovative financing methods need to be considered and available to states and localities to accomplish projects in a shorter timeframe. This includes allowing the local government match to be paid over time through use of state infrastructure bank long-term loans, addition of toll facilities, and/or the sale of bonds to be reimbursed from local operating fees and taxes. Reauthorization of TEA-21 should authorize and encourage state and local governments to apply innovative solutions including privatization, public-private partnerships, joint development projects and public agency toll pricing as ways to address the growing transportation financing gap. It should also encourage the rapid deployment of transportation technology when appropriate for the community.

Streamlining
APWA recommends that Congress establish a special task force consisting of appropriate stakeholders and direct them to address the problem of project delays associated with regulatory requirements from the numerous federal regulations and agencies. APWA also proposes that the task force be given a specific deadline or schedule for providing recommendations to Congress and additionally, consider pilot projects that could explore alternative methods of project delivery.

Programs enacted under TEA-21 are designed and structured to address the multiple, varied and intermodal transportation needs of the states, regions and localities, and as result of this, much progress has been made in meeting identified needs. APWA endorses retention of the surface transportation programs established under TEA-21. Communities have worked hard to carry out the TEA-21 planning process and it should be retained in reauthorization. The process helps communities weigh alternatives to transportation problems and allows more innovative solutions. APWA encourages USDOT to continue its efforts to ensure that the cooperative process between state DOTs, MPOs, and local transportation officials in all areas works effectively and plays a constructive role in furthering the goals of TEA-21.

TEA-21 reauthorization and all federal legislation should restrict or minimize federal sanctions, while emphasizing incentives, and fully fund transportation mandates imposed by Congress through legislation or administrative regulation. Federal mandates and regulations should be required to demonstrate their cost-effectiveness. Full funding should not be at the expense of other transportation programs.

Flexibility
While TEA-21 promised greater flexibility for state and local governments, communities have found much of promised flexibility replaced with new restrictive regulations on the planning process. APWA urges USDOT to carefully evaluate the appropriate level of detailed federal review of projects at the regional level to determine whether a reduction in direct federal involvement might allow greater flexibility in meeting TEA-21 goals, including a reduction in direct federal involvement in the projects. Also, state agencies and MPOs should be encouraged to review their regulatory and technical assistance programs in order to assure a timely distribution of funds. In many cases the larger cities and counties have the capability to carry out the projects without the direct oversight of both the federal and state governments. APWA also supports more flexibility in allowing for contingencies in the planning and funding processes. Without latitude for local flexibility in determining funding sources and amending plans, communities lose the ability to move to the next project in line if an unforeseeable problem develops with a project.

APWA also supports continuation of the Highway Bridge Replacement and Rehabilitation Program, including provisions funding off-system bridge needs, to aid communities to meet the enormous need for bridge maintenance and repair. APWA supports continuation of the Congestion Mitigation and Air Quality Improvement Program (CMAQ), including maintenance areas, and the Transportation Enhancements program set-aside of STP. However, the Enhancement Program should be strictly limited to only those projects that are related to surface transportation. Both of these programs have allowed communities to consider a diversity of projects eligible for federal funding. TEA-21's emphasis on multimodal approaches to transportation programs is critical to improved mobility and responsible transportation decision-making. APWA urges continuation of TEA-21's flexibility to use federal funds on a range of transportation alternatives and the ability to use funds based on local needs.

While APWA supports the use of performance goals as an alternative to direct federal oversight, we encourage USDOT to work with the stakeholders involved in establishing clear broad objectives and mutual criteria for performance goals before USDOT seeks to use them as measures for evaluating performance and making funding decisions.

APWA endorses expanded and continued federal leadership in pursuing technological advances and promoting its role in improving transportation. The federal government should continue to take a leadership role in research, operation, and model deployment of Intelligent Transportation Systems. APWA encourages further deployment of innovative technologies at the local level in rural areas and in urban areas serving local needs. A greater effort should be made to educate local officials on the use of technology innovation through the Local Technical Assistance Program (LTAP) and the Rural Transit Assistance Program (RTAP).