U.S. House makes progress on transportation funding

On this week’s Talking Michigan Transportation podcast, Susan Howard, director of government relations and policy for the American Association of State Highway and Transportation Officials (AASHTO), talks about the highlights of the latest federal surface transportation bill making its way through the legislative process. 

Leaders of the U.S. House Transportation and Infrastructure Committee this week formally introduced the BUILD America 250 Act, a bipartisan, five-year surface transportation reauthorization bill that invests in America’s roads, bridges, transit, rail transportation, and highway and motor carrier safety programs.

With a dollar figure of $580 billion for five years, the bill preserves the core federal-aid formula program structure, puts emphasis on project delivery and streamlining, makes major increases in bridge investments and restructures some climate and equity programs.

Transcript

Why The $580B Bill Matters

Jeff Cranson 0:07

Hello and welcome to the Talking Michigan Transportation Podcast. I'm Jeff Cranson. If you followed the news this week about transportation funding, you're probably aware that the U.S. House Transportation and Infrastructure Committee, usually referred to as House T and I, reached agreement on a bill that reauthorizes federal funding for roads and other modes of transportation. With a dollar figure of $580 billion over five years, there's a lot to discuss. The bill preserves poor federal aid formula program structures, puts emphasis on project delivery and streamlining, makes some major increases in bridge investments, which is very important here in Michigan, and restructures some climate and equity programs. There's no one better to break it down than Susan Howard, who directs government relations and policy for the American Association of Highway and Transportation Officials, AASHTO. She and her team have been heavily engaged on the Hill for the last few months as they worked to get this reauthorization, and she explains it very well. So, I hope you enjoy the conversation. I'm here with Susan Howard, who directs government relations and policy for AASHTO. Susan gave a pretty good rundown of the bill that I mentioned in the introduction earlier today for the Transportation Policy Forum, which consists of members from all 50 states. Susan, I really appreciate you taking time to do this. Could you just talk, I guess, at a at the highest level, the things that stick out to you most? I will say for me in Michigan, one of the most important things is the investment in bridges. We have, like a lot of states, a lot of aging bridges and not enough money. But that's just one of many components. So, tell me what jumps out for you.

Key Themes And Bipartisan Momentum

Jeff Cranson 1:59 Susan Howard 1:59

Thanks, Jeff. Thanks for the invitation to speak with you today. Yeah, so I think overall, a few of the themes that have jumped out at me, like you mentioned, the focus on bridges, um, some program consolidation that's probably welcome uh after the IOJA and the proliferation of programs that we saw in the last reauthorization bill, improvements in environmental review and the permitting process, um, as well as, you know, building upon the framework of formula funding for states. Uh so all of those things are things that are very important to AASHTO and we see reflected in the bill. It's also just great to see a return to a bipartisan bill. Um, that, you know, historically, transportation has been a bipartisan topic. It feels recently like it's gotten a little bit not that. Um, so it's nice to see your return to form with a bipartisan approach coming out of the House Transportation Infrastructure Committee.

Jeff Cranson 2:57

Yeah, I picked up on that too. And uh, we had a chance to meet with ranking member Larson, um, who's from Washington State and he was in Michigan a couple years ago. And it sounds like he and the Chairman Graves from Missouri have worked really, really well together, the open lines of communication, and they've come to a pretty good agreement. Talk about what it means that the proposal remains fundamentally state DOT centered and formula driven. Um, that I know that's a good thing in the parlance of transportation people, but what does that really mean?

Susan Howard 3:30

Sure, sure. So, you know, state DOTs rely upon a regular, steady, predictable funding stream, funding authorization. So, it's important to have that bill, that reauthorization bill every five years. And the fundamental kind of component of that is the formula dollars that go to states at the beginning of each fiscal year. They are, you know, can be used for a number of purposes to help states meet their transportation investment needs. We often, you know, see attempts to either get at goals through discretionary grant programs, meaning competitive programs. And this bill does have some of that, but it also, you know, kind of keeps the structure of the formula program that states really need intact. And it rate, you know, if there's nominal increases. We knew the funding was going to be tough for this bill. Um, and so again, it just being able to see some growth in those programs and seeing some consolidation in those programs is super helpful.

Jeff Cranson 4:31

Yeah, touch on that a little bit. When you say that uh the funding was going to be tough, I think everybody, uh everybody I've heard on the TPF call and elsewhere um were really stunningly surprised at $580 billion.

Susan Howard 4:45

Yes, yes, pleasantly surprised. Um, folks were definitely setting expectations that this was not going to be another trillion dollar plus bill like the IIJA that was actually a once-in-a-lifetime bill. Um, and so, you know, Chairman Graves had been kind of circumspect, but had mentioned 500 to 550. So, 580 was above, I think, what a lot of folks expected. And again, I think that it's difficult to do that in today's environment, in a constrained fiscal environment. But you know, Chairman Graves is kind of putting his neck on the line, I think, to say this is important and we need to maintain these investments. Even if we can't get to the point we had with the IJA in this environment, uh, we're gonna do our best and hopefully provide folks with something significant that can, that can help them meet their goals.

Jeff Cranson 5:41

It's almost like it's infrastructure week.

Susan Howard 5:44

Ironically, it is.

A New Bridge Formula Program

Jeff Cranson 5:47

So talk about the bridge component a little bit and what that means.

Susan Howard 5:52

Yeah, so there's been a focus on bridges, you know, in the in the IJA and then in subsequent appropriations bills, there's been a lot of attempts to get at some of the unmet needs when it comes to bridge investment. And so this bill takes the approach of creating a new formula program that is dedicated to uh bridge improvement, and it's a pretty robust funding level. I think it's $9.2 billion a year. So that's pretty significant. Um, there is uh, you know, a set aside in there for culverts. Um, there's money that's uh a percentage dedicated to off-system bridges, which you know, in the bridge world, there's these different classes and categories of bridges that matter a lot to um who owns the asset. Um, and then there's also a percentage for states to run a competitive program for localities because the locals, particularly the counties who own a lot of bridges as well, really want to get in into the game of you know being able to fix some of those assets, invest in some of those assets. So we've seen kind of an evolution over time with how a bridge formula might look. And this is kind of the latest iteration, but it's a but it's a really big you know down payment here looking at $9.2 billion a year.

Jeff Cranson 7:12

Yeah, I think uh that focus on the local bridges kind of fits with some things we've done here in Michigan. Uh MDOT has partnered with the locals, and some other states have done this too, on bridge bundling, where MDOT can offer you know contracting expertise and some engineering expertise to help the counties. Uh it's just about economies of scale and the ways to get and I think as you just stated, um, we think of the most important bridges is those carrying the most traffic, but if it's the bridge on your street that gets you where you go, it's the most important bridge, right? So

Rail Safety And Two Person Crews

Jeff Cranson 7:46

right, right. Something else that interested me, uh, because it's always a big deal here, too, is rail safety. Um, there's been some discussion that there's going to be a spirited debate probably about that and some of the issues raised around the East Palestine incident. Um, does that fit with what you're tracking too?

Susan Howard 8:03

Yes. Uh there, you know, following the East Palestine incident, there was legislation introduced in both the House and Senate, Railway Safety Act that made a lot of changes to the operation and safety of uh freight rail. And it never has come to fruition in in terms of being enacted. It's been a long and winding road. And I think that there is definitely an interest in using the surface transportation reauthorization bill as a way to advance some of those provisions of that bill. They did not make it into the underlying text, which is not necessarily surprising. You know, it might, it's a different animal, perhaps. Um, but I think there'll be some amendments. The biggest one that seems to have the most potential for controversy is the requirement of a two-person crew. Um, that is something that has been a top priority for the sponsors of that legislation and the folks interested in that. And um, but the railroads are not a big fan of that. Um, so I do expect to see a number of amendments tomorrow related to pre various provisions of that rail safety legislation that is really born out of that of the East Palestine disaster.

Jeff Cranson 9:16

And when you say the railroads aren't a big fan, this is where I should probably point out that the railroads are traditionally a very powerful lobby.

Susan Howard 9:23

Indeed, they are. Indeed, they are. But you know, this this has gotten the attention of the president. There were some social media posts last night, and I just thought to myself, I would not necessarily want to work for the American Railroads Association today to have that kind of focus uh leading into this markup tomorrow. Uh, so yes, I think for sure that'll be a big theme that emerges through the amendment process.

NEPA Assignment And Review Streamlining

Jeff Cranson 9:46

So another thing that we fully expected would be part of this is uh a discussion of NEPA assignment and environmental streamlining. Um, I think a lot of people hear that and assume that that just means that they want to, you know, deregulate as much as possible and make it easier. Um, and I I'll admit that when I first started hearing about this a few years ago, I kind of thought that was the intention too. But then I found out that some pretty progressive states have done this and found that it does make things uh easier, move more quickly. So could you talk about that a little bit?

Susan Howard 10:20

Yeah, absolutely. The NEPA process is cumbersome and I think uh not necessarily working either way, you know, not working necessarily for the states or the or the federal government in terms of being able to really see the full intent and purpose and value of NEPA executed when it comes to project delivery. So many states have worked and developed memorandums of understanding with the uh federal highway administration to be called what's called NEPA assignment states, which basically means they're assuming responsibility for the NEPA process. You cut out kind of that federal nexus. They're still all, you know, it's still very rigorous, uh, but a number of states have that uh authority and more are looking at it. It's not for every state, probably, but it is a way to uh improve project delivery times uh while, again, not sacrificing the duty that we have as state DOTs to be, you know, protecting our natural, our natural environment. So there's some changes to the uh NEPPA assignment program in this bill to allow for a longer window that a state can have that assignment without having to renew. Um and then the bill does quite a bit when it comes to things like categorical exclusions and major project thresholds. So, meaning like when that NEPA process gets triggered can be a big point of contention in terms depending on the size and the scope of the project. And so for a long time, states have looked for some flexibility there so that it's not just a one size fits all, kind of like, oh, you have you're spending a federal dollar on this, one federal dollar on this, it has to go through the extensive NEPA process. It's just it can be more project specific. Um, and there's a lot more that the states can do on their own to again keep that process going while not sacrificing any um protection of the environment.

Jeff Cranson 12:02

Yeah, so when you say it's not a one size fits all, it's a recognition that every state's waterways are different, every state's uh maybe protected species are different, that there's just a lot of things that you need to tailor it to for that state, and that gives them they presumably they know what's in their state better than anybody, right? So that's the idea. Yeah, so um something else that uh jumped out at me and uh talked a little bit about it on the call is this uh provision for cold weather states. Um, the idea being that the construction season is obviously shorter in cold weather states, of which Michigan is one. Um so can you talk a little bit about that?

Susan Howard 12:40

Yeah, absolutely. There is a section in the legislation that would uh require the Secretary of Transportation to take a look at the policies and procedures of at FHWA, the Federal Highway Administration, to um make sure that essentially reviews for construction projects are elevated for those cold weather states uh who might have a shorter construction season. So we do have a number of states, depending on where you are geographically, for whom the construction city season is very compressed. And it always puts a lot of pressure to deliver, um to let projects and get them delivered in that kind of narrow window. So, yeah, this language again would it it's not finding, it's more of a um, it would probably take additional guidance or rulemaking, but maybe not rulemaking, but additional guidance, but essentially designed to um release some of the pressure and tension that cold weather states might feel in terms of having to move through the approval process for their projects with that narrow construction season. So we'll see how it emerges and what it ends up looking like in practice. But I think for a lot of cold weather states, they're intrigued and curious about what this could mean to assist in their project delivery.

Jeff Cranson 13:52

Stick around, there's more to come right after this short message.

Speaker 13:58

Know, before you go, head on over to MiDrive to check out the latest on road construction and possible delays along your route. For a detailed map, head over to Michigan.gov slash drive.

Flexibility And The Formula Funding Balance

Jeff Cranson 14:14

Another discussion this always comes up, and you know, everybody talks about it, and it's hard to pull off, but uh there's a big emphasis on more state DOT flexibility. What does that mean?

Susan Howard 14:25

So when we talk about state flexibility, we're usually talking about a few things. One, is transferability between formula programs, as we talked about formula programs um earlier. Each state gets different amounts of funding, but funding in this in differ in the same pots, right? So there are federal aid formula program pots that have different rules and eligibilities, and we really uh need the flexibility to move some of those funds around depending on to meet the need at the right time, to meet the project need that we may have. So, the bill is kind of neutral on that, doesn't make any major changes to the percentages that can be moved around between programs. Uh one thing that it that it does include is an idea that's been floating around for a while uh out there about for a consolidated, essentially block grant program for states to allow them to have that those federal aid dollars given to them in one lump sum as opposed to each of those categories that we've mentioned. So, you know, you've got this amount of money to spend in the NHP program and this amount on freight and this amount on um, you know, CMAC. You could get those funds and you'd still have to meet performance measures, but you would be able to have a lot more flexibility in terms of how you apply them. So, the language in the uh Build America 250 Act would create a pilot program for 10 states to try that out to see to see how it works. And um, if it's appealing enough, there I think there are a number of states that will want it will want to try it, will want to take it out for a test drive to see how it works. Uh, so that's one of the things that jumps out in this bill related to flexibility.

Jeff Cranson 16:07

Yeah, so I think when we talk about um formula versus uh discretionary, um people understand that probably at the most basic level to mean that it's it provides more certainty, right? If we know that we're formula focused. Um there are some politics that enter into a discretionary program. There's not a lot of transparency, just like in earmarks. Um and just about every state, I think you heard from said that's a top priority, that we want more formula funds. And that's what this is doing, right?

Susan Howard 16:38

Yes. I mean, the beauty, the beauty of it, of the formula funds, if I can use that term of art, is that they are it's extremely nimble, so that a state like Michigan can utilize the formula structure and the guaranteed funding that you're going to get each year to apply to the projects that are most important to you. And those projects might look a lot different than the projects in Arizona or Florida or Maine. But that is, again, the kind of universal um benefit to all 50 states. The state DOTs are essentially main- building and maintaining our national network for transportation. The federal government doesn't do that themselves, they give us the money to do it. Um, and so it's really important that there be that kind of flexibility and almost universality in terms of what a different states can do with formula. Discretionary grants are certainly a role for them, but as you mentioned, they're not as predictable. They're costly to put together applications, they're unpredictable. The regularity of you know the notice going out and you getting, you know, getting the application in and finding out is can be unpredictable. So we saw a big shift to more discretionary grant programs in the IIJA. And I think that what we end up with for the next reauthorization bill will pull that back quite a bit because um we just, you know, we've ended up at the end of the IIJA with a lot of unspent balances in some of those discretionary grant programs and a lot of just unmet potential. So I think that uh everybody recognizes that there's uh a real benefit to formula, there's room for discretionary as well, but uh the balance has to be correct.

Jeff Cranson 18:19

Yeah, no, that's definitely something that that we pushed for from a policy standpoint here in Michigan. So I think I think we're very pleased with that part of it. Um one other thing that I noticed, because this is important, because we have a state legislative required uh pilot and study in the works for road user charge.

Road User Charges And EV Fees

Jeff Cranson 18:38

Talk a little bit about the road user charge component of this reauthorization.

Susan Howard 18:42

Yeah, so um I don't know that I was surprised, but it was sort of pleasantly surprised, I guess. Um I didn't know which way it would go in terms of what the bill might do to continue. The state pilots that have been very effective in demonstrating the potential of a uh mileage-based fee or road usage charge. We've had those, that pilot program for the last couple of bills, and we've been able to do a lot of important work across the states to really demonstrate and test out this concept. And a lot of important lessons have been learned from that. So that discretionary grant program has been continued in the this reauthorization bill, as well as continuing a national pilot uh advisory board that will help set up a national pilot or that will guide a national pilot. That was in the last bill, but it never fully got off the ground. The members of that board were named, but I don't know that they ever met before change of administration happened and it kind of all got pulled back. So, this bill is at least not closing the door on that and saying it's still an idea worth exploring through both the state grants and then looking at it at a national level. So I think it's a positive step. Um, there's been a lot of fits and starts, particularly with the national pilot, um, you know, since the IJA, but having it at least continued um provides an opportunity.

Jeff Cranson 20:04

And I know that Jack Basso, formerly of AASHTO, who uh sent a letter in in his capacity with the mileage-based user fee alliance, um they're very excited about it and there's some things on that too. So that probably makes sense.

Susan Howard 20:17

I'm sure they're thrilled. Yeah, I'm sure they're thrilled because I think there was a fear that it we didn't really get this off the ground um in the life of the IIGA and is the and you know, there being some question as to what life it had left. So I was pleased to see it.

Jeff Cranson 20:31

Yeah. Um, and kind of related to that, there are some uh registration fees for electric vehicles and plug-in hybrid electric vehicles. Um what are you hearing? That and that money is supposed to go into the highway trust fund. Um, are you hearing much of debate or do you expect a lot of debate around that?

Susan Howard 20:49

I expect some debate around it. It's not a it has not been a popular idea in the Senate. Uh the House include I don't know if you remember budget reconciliation from last year, but the House included an electric vehicle fee and a plug-in hybrid fee in their part of the re of the uh budget reconciliation process. It didn't end up getting in the final version, but I always saw that as kind of a test case, a trial run for reauthorization to see what the reception was and see if they so the reception was okay. And so again, I thought, well, we're gonna see this in the in all likelihood, we're gonna see this in the bill. And it's noteworthy because this is the first time since 1993 that any reauthorization bill has attempted to tackle new sources of revenue for the trust fund. And the electric vehicle and hybrid fee make a lot of sense because those users do not pay into the um highway trust fund via the gasoline tax, the federal gasoline tax. So it makes sense. Many, many states, I think it's over 40 at this point, have some kind of state registration fee for those alternative fuel vehicles. So this bill would establish a national registration fee, an annual fee of $130 for EVs to start and $35 for plug-in hybrids. And the states are going to have to collect this. So that's something we're going to have to work through with our DMVs and our departments of revenues. How you, you know, how do you collect a fee and transmit it to the highway trust fund? That's not been done before. So there's definitely some things to figure out in terms of how this would be administered. But it's great news that it's dedicated to the Highway Trust Fund. It's not going to solve the problem that we have with uh highway trust fund solvency forever. But I think it's noteworthy in that it is the first time that Congress has really embraced trying to look at um new revenue to deposit into the trust fund.

Jeff Cranson 22:45

Yeah, I mean it's always gonna be a debate. It's a dilemma. Environmental activists say you shouldn't do anything to disincentivize anything that gets us uh fossil fuels. Um, but the other side of that argument is but they also use the roads. So Right.

Susan Howard 22:59

Yes, and I think that if that's gonna be the argument that we're gonna bump up against in the Senate, that this is again just in a time that we should when we should be encouraging adoption of EVs, uh, this is a deterrent to that.

Jeff Cranson 23:11

Yeah.

What Happens Next In Congress

Jeff Cranson 23:12

So to wrap up, since you mentioned the Senate and uh this podcast will post on Thursday, which is the day that the markup is gonna begin in earnest um in the House, um, where do things go from here?

Susan Howard 23:25

So after tomorrow's markup, Thursday's markup, uh we will kind of be in a waiting game to see if there's any possibility for there's a few other committees have to be involved in this, like different titles that live in different committees, and just that's just the nature of the of the beast. But once we have the kind of whole package, we'll just in the House be waiting to see if there is an opportunity for time on the floor this summer in June or July. It's a narrow time frame. Um, there's just not that many weeks that that the House is going to be in session before August recess and then before midterm election. So the the clock is the kind of big factor here that is of concern. The Senate is moving a lot more slowly. I think that after this bill gets through committee, one thing I'll be doing is trying to, you know, chat with the Senate uh committees of jurisdiction to say, okay, we have a House bill now, and here's what was great in it, and here's some things that we'd like to improve upon moving forward. And um, yeah, I just they're they haven't totally stalled out, but I think that there have been some delays over there that they're not moving as quick of a clip as the House is. So hopefully they can do that, move, move something through their committee as well this summer, and we can hopefully sprint to the deadline of September 30th.

Jeff Cranson 24:42

So will the broader environmental and public works committee in the Senate be uh hands-on involved in this, or will it be a lot of work in the subcommittees?

Susan Howard 24:51

It'll be um there is a highways, there is a highways and transit subcommittee similar to the House, but it'll be mostly at the full committee level. And then you have to remember in the Senate things get kind of complicated because there's different committees of jurisdiction. Senate Commerce has a big piece of this, Senate Banking has a big piece of this on the transit title, so this Environment and Public Works Committee, which has the highway title, always goes first, but there will be other more robust and complicated component parks that have to come together as well.

Jeff Cranson 25:19

Sounds like you're gonna have a fun year.

Susan Howard 25:21

Yeah. Never a dull moment.

Jeff Cranson 25:24

Yeah. Well, thank you, Susan. Um, is there anything that I missed that you think is particularly worth pointing out? Um, there'll be lots of time for more discussion about this, obviously.

Susan Howard 25:33

Yeah, absolutely. I guess I would just stress that this is the first step in a in a process. It's a great first step. It's very encouraging to see actually, you know, a bill moving. Um, and we're looking forward to working on it and you know continuing the process moving forward. So thanks so much for the opportunity to join you and talk about it.

Work Zone Safety And Sign Off

Jeff Cranson 25:52

Yeah, the only other quick thing I should mention, and we didn't get into it, but I just want to make sure people know that there is some good emphasis on work zone safety in the bill too, and that's always a welcome thing. So thanks again, Susan. Um, good luck as uh as it moves from here.

Susan Howard 26:08

Thank you.

Jeff Cranson 26:08

I'd like to thank you once more for tuning in to Talking Michigan Transportation. You can find show notes and more on Apple Podcasts or Buzzsprout. I also want to acknowledge the talented people who help make this a reality each week, starting with Randy Debler, who skillfully edits the audio, Jesse Ball, who proofs the content, and Jacke Salinas, who posts the podcast to various platforms and transcribes the audio to make it accessible to all.