December 2, 2015

Conferees' report on highway bill gives freight unprecedented slice of funding pie

Freight interests get bigger seat at the table than ever, but not everything they wanted.

By Mark B. Solomon

The five-year, $305 billion federal transport spending bill negotiated by House and Senate conferees has given freight interests the best seat at the table they've ever had. But freight is still not on the dais.

The compromise version, announced yesterday afternoon, allocates $4.5 billion in grants for what are considered "nationally significant" freight and highway projects. The program provides up to $500 million in funding for nonhighway projects that nevertheless improve the movement of highway freight. The bill provides an additional $6.3 billion to a formula program that states can use to facilitate freight mobility on a national-highway freight network. It also creates a multimodal freight policy, and it directs the Department of Transportation to establish a multimodal freight network that would identify the segments of the national freight-moving system most critical to goods transport. The industry has lobbied for years to have such an endeavor codified.

The bill, known as the "Fixing America's Surface Transportation" (FAST) Act, now returns to the House and Senate for floor votes. Each chamber must adopt the bill and vote for its final passage. If that happens, the bill is sent to President Obama's desk for signature. The current law, which was signed in July 2012 and has since been living on short-term extensions, expires Dec. 4. The so-called FAST Act would be the first transport-spending bill since 2005 that was more than 27 months in duration.

Never before has freight been showered with so much money and attention from a federal transport-spending bill. For the Coalition for America's Gateways and Trade Corridors (CAGTC), a public-private intermodal advocacy group that has spent 15 years arguing for a minimum $2 billion annual investment in the nation's freight network, the outcome was all it could have hoped for. "We are thrilled to see conferees recognize so many of the coalition's long-standing priorities," CAGTC President Leslie Blakey said in a statement. Blakey said the size of the proposed funding would "increase the efficiency and reliability" of the nation's transport and logistics network.

From a process standpoint, the bill streamlines the path of funding freight projects, which are generally large in scale and which cross multiple jurisdictions, causing delays and conflicts, according to CAGTC.

Despite the funding breakthrough, freight interests—particularly the trucking industry—got almost nothing that they sought. Negotiators dropped an amendment that would have established a federal hiring standard for motor carriers. The initial proposal would have deemed a trucker to be fit if it were properly licensed, had sufficient insurance, and received a better than unsatisfactory safety rating from the Federal Motor Carrier Safety Administration (FMCSA), the agency that oversees the truck, freight brokerage, and freight forwarding sectors. The amendment, which had been contained in the House's version of transport funding legislation, would have qualified a motor carrier as fit even if it were unrated by FMCSA.

Industry groups said that because the agency lacks the resources to conduct full safety reviews of most of the nation's 530,000 registered truckers, the original bill threatened to exclude thousands of operators that remain unrated, yet operate in a satisfactory manner. Negotiators also dropped an amendment requiring DOT to develop a program allowing licensed drivers between the ages of 19 years, six months, old and 21 years old to operate commercial motor vehicles in interstate commerce as long as the routes were between adjacent states that enter into special bistate agreements. Currently, commercial drivers under the age of 21 cannot drive across state lines, though they can operate within the boundaries of their state of residence. However, conferees adopted a pilot program allowing certain under-21 military veterans to drive across state lines.

Conferees agreed to language directing FMCSA to commission a three-year study by the Transportation Research Board (TRB) of the agency's controversial "Compliance, Safety, and Accountability" program (CSA), which grades carriers based on a series of metrics and then assigns them performance scores under what is known as a Safety Measurement System, or SMS. The bill requires FMCSA to remove SMS scores and analysis, but allows the raw data used to compile the scores to remain in public view. On that score, negotiators bowed to the language contained in the Senate version of transport funding legislation, which was passed in July. The House version, passed in early November, would have removed all data elements from public scrutiny. CSA's critics argue that the scores are based on flawed methodology, and discriminate against many of the thousands of truckers that operate safely and legally.

The legislation does not call for raising excise taxes on diesel fuel and gasoline, the primary mechanism for funding transport projects, keeping the tax levels unchanged for the 22nd year. The bill would be financed in part by a one-time $19 billion draw of Federal Reserve surplus funds and by a cut in the 6-percent dividend that national banks receive from the Fed. The dividend would be reduced by an amount tied to yields on 10-year U.S. Treasuries, currently about 2.2 percent. If Treasury yields rose higher than 6 percent, the Fed wouldn't pay the banks more. Banks with $10 billion or less in assets would be exempt from the cut.

Funds would also be raised by selling oil from the nation's Strategic Petroleum Reserve, which serves as an emergency source of oil in the event overseas supplies are disrupted. The reserve stood at 695.1 million barrels as of the end of November, below its capacity of 727 million barrels.

As the conference bill returns to both chambers, the debate may now center on the manner in which the programs would be paid for. Sen. Tom Carper (D-Del.) has already gone on record saying he would vote against the legislation because the conferees resorted to accounting gimmickry and other revenue-raising techniques that have nothing to do with transportation. Carper had proposed a doubling of motor-fuels taxes that would go directly toward road infrastructure improvements.

For the freight industry, the conferees' report, though not ideal, is a significant improvement over what had—or had not—come before. Not only will there be a higher level of stability that comes with a five-year funding timetable, but the freight side, which has historically been shunted to the back of the bus when it came to Congressional funding, has finally realized tangible benefits from the process. "While not perfect, this bill is a tremendous step forward for trucking in many respects," said Pat Thomas, senior vice president of state government affairs for Atlanta-based UPS Inc. and chairman of the American Trucking Associations (ATA), the trade group representing the nation's largest motor carriers.

About the Author

Mark B. Solomon
Executive Editor - News
Mark Solomon joined DC VELOCITY as senior editor in August 2008, and was promoted to his current position on January 1, 2015. He has spent more than 30 years in the transportation, logistics and supply chain management fields as a journalist and public relations professional. From 1989 to 1994, he worked in Washington as a reporter for the Journal of Commerce, covering the aviation and trucking industries, the Department of Transportation, Congress and the U.S. Supreme Court. Prior to that, he worked for Traffic World for seven years in a similar role. From 1994 to 2008, Mr. Solomon ran Media-Based Solutions, a public relations firm based in Atlanta. He graduated in 1978 with a B.A. in journalism from The American University in Washington, D.C.

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