Surface Transportation Reauthorization Legislation in the 112th Congress: Summary of Selected Major Provisions

Robert S. Kirk
Specialist in Transportation Policy

William J. Mallett
Specialist in Transportation Policy

David Randall Peterman
Analyst in Transportation Policy

John Frittelli
Specialist in Transportation Policy

Linda Luther
Analyst in Environmental Policy

Brent D. Yacobucci
Specialist in Energy and Environmental Policy

The federal government’s highway, mass transit, and surface transportation safety programs are periodically authorized in a multi-year surface transportation reauthorization bill. The most recent reauthorization act, the Safe, Accountable, Flexible, Efficient Transportation Equity Act: a Legacy for Users (SAFETEA-LU or SAFETEA; P.L. 109-59), expired at the end of FY2009. Since then, the surface transportation programs and activities have been funded under a series of extension acts.

The main reason for the failure to pass a new multi-year bill during the past two years has been the disparity between projected spending and the much lower projections of the revenue flows to the highway trust fund (HTF). Taxes on gasoline and diesel provide 90% of the revenues for the HTF, which historically has funded the entire highway program and roughly 80% of the mass transit program. The rates on these taxes, which are on a cents-per-gallon basis, have not been increased since 1993. In addition, the condition of the economy and improvements in fuel economy have held down fuel consumption and as a result are adversely affecting HTF revenues. Consequently, authorizers face a dilemma: how to pass a bill without cutting infrastructure spending, raising the gas tax, or increasing the budget deficit.

On November 9, 2011, the Senate Environment and Public Works Committee marked up and reported favorably on S. 1813, the Moving Ahead for Progress in the 21st Century Act (MAP-21). MAP-21 is a two-year reauthorization bill (FY2012-FY2013). To fully fund the bill, $12 billion in new revenues or offsets (to allow for General Fund transfers) is needed beyond anticipated HTF revenues. MAP-21 proposes:

• A total Federal-Aid Highway Program authorization of $39.4 billion for FY2012 and $40.4 billion for FY2013 (reflecting rescissions), and $400 million for research and education in each fiscal year. 
• To reduce the total number of highway programs from roughly 90 to 30. The overall Federal-Aid Highway Program would be structured around five large “core” programs, including a new National Freight Program. The existing Equity Bonus Program would be discontinued. 
• To eliminate individual program formula factors used to allocate funds. Instead, each state’s initial amount of the bill’s authorized contract authority would be calculated based on its share of total apportionments and allocations during FY2005-FY2009. These state shares would then be used to calculate the MAP-21 apportionments among the core programs. 
• To accelerate project delivery through innovative contracting, enhanced dispute resolution, early right-of-way acquisition, early coordination among agencies, and provisions designed to speed up the environmental review process. 
• To increase the use of performance measures, including creation of a National Highway Performance Program.

The House Committee on Transportation and Infrastructure, as well as other committees of jurisdiction in both the House and Senate, are also expected to mark-up bill language for surface transportation reauthorization.


Date of Report: December 14, 2011
Number of Pages: 32
Order Number: R42120
Price: $29.95

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National Infrastructure Bank: Overview and Current Legislation

William J. Mallett
Specialist in Transportation Policy

Steven Maguire
Specialist in Public Finance

Kevin R. Kosar
Analyst in American National Government

Several bills to establish a national infrastructure bank have been introduced in the 112th Congress. This report examines three such bills, the Building and Upgrading Infrastructure for Long-Term Development Act (S. 652), the American Infrastructure Investment Fund Act of 2011 (S. 936), and the National Infrastructure Development Bank Act of 2011 (H.R. 402). These proposals share three main goals:

• increasing total investment in infrastructure by encouraging new investment from nonfederal sources;
• improving project selection by insulating decisions from political influence; and
• encouraging new investment with relatively little effect on the federal budget through a mostly self-sustaining entity.

The federal government already uses a wide range of direct expenditures, grants, loans, loan guarantees, and tax preferences to expand infrastructure investment. A national infrastructure bank would be another way to provide federal credit assistance, such as direct loans and loan guarantees, to sponsors of infrastructure projects. To a certain extent, a new institution may be duplicative with existing federal programs in this area, and Congress may wish to consider the extent to which an infrastructure bank should supplant or complement existing federal infrastructure efforts.

It is unclear how much new nonfederal investment would be encouraged by a national infrastructure bank, beyond the additional budgetary resources Congress might choose to devote to it. The bank may be able to improve resource allocation through a rigorous project selection process, but this could have consequences that Congress might find undesirable, such as an emphasis on projects that have the potential to generate revenue through user fees and a corresponding de-emphasis on projects that generate broad public benefits that cannot easily be captured through fees or taxes.

As with other federal credit assistance programs, the loan capacity of an infrastructure bank would be large relative to the size of the appropriation. The bank is unlikely to be self-sustaining, however, if it is intended to provide financing at below-market interest rates. The extent to which the bank is placed under direct congressional and presidential oversight may also affect its ability to control project selection and achieve financial self-sufficiency.

More generally, Congress may wish to consider the extent to which greater infrastructure investment is economically beneficial. Advocates of increased investment in infrastructure typically assert that high-quality, well maintained infrastructure increases private-sector productivity and improves public health and welfare. Congress may want to weigh the benefit of the increased spending on physical infrastructure against the benefit generated by alternative types of spending.


Date of Report: December 14, 2011
Number of Pages: 31
Order Number: R42115
Price: $29.95

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Department of Transportation Budget FY2012

David Randall Peterman
Analyst in Transportation Policy

The President’s Department of Transportation (DOT) budget request for FY2012 totaled $123.9 billion. It was divided into two parts: a “base” request of $78.6 billion, and a one-time “up-front boost,” related to the President’s proposal for surface transportation reauthorization beginning in FY2012, of $50 billion.

The base request was $1.7 billion (2%) more than the FY2010 enacted DOT budget of $76.9 billion. The total request is $53 billion over the FY2010 enacted level. See Table 2 for detailed figures on the request and Congressional action.

One might ask how this increase was possible in light of the President’s stated intention to freeze overall federal discretionary spending in FY2012 (and after) at the FY2010 level. It is possible because most DOT funding is not discretionary funding; it comes from the Highway Trust Fund, and is therefore categorized as mandatory funding. Thus, virtually all of the proposed increase counted as an increase in mandatory rather than discretionary funding. Furthermore, the FY2012 DOT budget request proposed to shift funding for some accounts from the general fund to the highway trust fund (which would be renamed the “transportation trust tund”). This had the effect of reducing the total discretionary funding requested for DOT in FY2012 compared to the amount provided in FY2011, all else being equal.

The FY2012 budget request was complex because it did two different things at once: it requested funding for DOT programs for FY2012, and it restructured the major surface transportation program accounts and funding structure. The latter changes reflected elements of the Administration’s proposal for reauthorizing surface transportation programs for the next six years. The changes included adding intercity rail and new transit construction programs to the programs financed from the trust fund, and increasing the flow of revenues to the fund, although the source of the additional revenues was not specified.

Congress had not passed an FY2012 DOT appropriations bill by the time the 2012 fiscal year began. DOT funding is currently being provided by a continuing resolution (P.L. 112-36, the second one passed for FY2012), which will expire on November 19, 2011.

Congressional action on FY2012 DOT appropriations was delayed due to several factors. First, the FY2011 appropriations act for DOT and other federal agencies was not finalized until April 15, 2011.1 Second, the House-passed budget for FY2012 and subsequent 302(b) allocation of discretionary funding for the Department of Transportation, Department of Housing and Urban Development, and Related Agencies appropriations bill called for cuts to highway funding, among other accounts, that were so steep that some doubted they could pass; perhaps for this reason, action on the bill in the House was postponed. The Senate did not pass a Budget Act for FY2012. Soon after completion of FY2011 appropriations, congressional attention was taken up by protracted negotiations over raising the federal debt limit. These negotiations included discussion of the overall FY2012 appropriations level. Action on raising the debt ceiling. as well as setting an overall FY2012 appropriations level, was not concluded until August 2, 2011, with enactment of the Budget Control Act of 2011.2

The Senate Committee on Appropriations reported out an FY2012 appropriations bill for the Department of Transportation (and HUD and related agencies), S. 1596, on September 21, 2011. This bill has been combined with two other appropriations bills (Agriculture and Commerce- Justice-Science) in a “minibus” (as opposed to “omnibus”) appropriations bill, H.R. 2112. That bill was approved by the Senate on November 1, 2011.

The House Committee on Appropriations Subcommittee on Transportation, Housing and Urban Development, and Related Agencies approved a draft bill by voice vote on September 8, 2011.3 The unnumbered draft bill has not been taken up by the full committee. Press reports indicate that the House and Senate are conferencing on the minibus bill.


Date of Report: November 10, 2011
Number of Pages: 11
Order Number: R41650
Price: $29.95

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TARP Assistance for the U.S. Motor Vehicle Industry: Unwinding the Government Stake in GMAC

Baird Webel
Specialist in Financial Economics

Gary Shorter
Specialist in Financial Economics

Bill Canis
Specialist in Industrial Organization and Business

Ally Financial, formerly known as General Motors Acceptance Corporation or GMAC, provides auto financing, insurance, online banking, and mortgage and commercial financing. For most of its history, it was a subsidiary of General Motors Corporation and it still provides significant financing both for GM vehicles and for GM dealers. Like some of the automakers, it faced serious financial difficulties due to a downturn in the market for automobiles during the 2008- 2009 financial crisis and recession, while also suffering from large losses in the mortgage markets. With over 90% of all U.S. passenger vehicles financed or leased, GMAC’s ability to lend, or inability to lend, was particularly important to GM’s retail sales and dealer-financing capabilities.

The Bush and Obama Administrations used the Troubled Asset Relief Program (TARP) to fund assistance for the U.S. auto industry, concluding that the failure of one or two large U.S. automakers would cause additional layoffs at a time of already high unemployment, prompt difficulties and failures in other parts of the economy, and disrupt other markets. The decision to aid the auto industry was not without controversy, with questions raised as to the legal basis for the assistance and the manner in which it was carried out. The nearly $80 billion in TARP assistance for the auto industry included $17.2 billion for GMAC.

The government’s aid to GMAC was accomplished primarily through U.S. Treasury purchases of the company’s preferred shares. Many of these preferred shares were later converted into common equity, resulting in the federal government acquiring a 73.8% ownership stake. This conversion from preferred to common equity significantly changed the outlook for the future government recoupment of TARP assistance. Whether the government will recoup all or most of these funds now depends largely on the future market value of the government’s ownership stake. If the government’s common equity ends up being worth less than the assistance provided, the company has no responsibility going forward to compensate the government for the difference. Conversely, if the common equity ends up being worth more than the assistance, the gain from this difference accrues to the U.S. Treasury (and is used to pay down the national debt as specified in the TARP statute). In addition to TARP assistance, during the financial crisis in 2008, GMAC converted from an industrial loan company into a bank holding company, an expedited conversion that was permitted by the Federal Reserve (Fed) due to prevailing emergency conditions in the financial markets. This change increased access to government assistance, including Fed lending facilities and Federal Deposit Insurance Corporation (FDIC) guarantees, while also increasing regulatory oversight of the company.

In March 2011, Ally Financial (GMAC having changed its name in 2010) filed with the Securities and Exchange Commission (SEC) for an initial public offering (IPO) of shares, which it expected to launch in the second quarter of 2011. The IPO, however, has yet to occur because of stock market volatility. Assuming it eventually occurs, this IPO would be a major step in unwinding the government involvement in GMAC/Ally Financial and could provide an important market signal as to the market value of the government holdings in the company. At this point, the government has not indicated how much of its 73.8% equity in Ally Financial might be sold in a future IPO, nor what price will be sought for the shares.

Although the TARP authority to purchase new assets expired in the 111th Congress, the 112th Congress has continued to oversee the program with hearings in both the House and the Senate. This report will be updated following future legislative action or market events.


Date of Report: November 4, 2011
Number of Pages: 17
Order Number: R41846
Price: $29.95

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Federal Aviation Administration (FAA) Reauthorization: An Overview of Legislative Action in the 112th Congress

Bart Elias, Coordinator
Specialist in Aviation Policy

Reauthorization of Federal Aviation Administration (FAA) programs has been an issue of considerable interest during the first session of the 112th Congress. The previous FAA authorization, Vision 100—Century of Aviation Reauthorization Act (P.L. 108-176, hereinafter referred to as “Vision 100”) expired at the end of FY2007. Attempts to enact a successor law failed in the 110th and 111th Congresses. As a result, aviation trust fund revenue collections and aviation program authority have continued under a series of short-term extensions. Most recently, the Surface and Air Transportation Programs Extension Act of 2011 (P.L. 112-30), enacted on September 16, 2011, extends existing authorizations through January 31, 2012.

The House and Senate have passed separate versions of multiyear FAA reauthorization legislation (see S. 223 and H.R. 658), and the Senate has requested a conference to resolve the differences between the House-passed and Senate-passed bills. Whereas the Senate bill only covers FY2010 and FY2011, the House bill would authorize FAA programs through FY2014. For FY2011, the only year the two bills overlap, the House-passed total authorization level for FAA is $2,082 million less than that specified by the Senate. Moreover, the House-passed bill calls for further reductions in authorized FAA funding for FY2012 through FY2014. While these levels reflect broader government-wide efforts to reduce deficit spending, they could pose considerable challenges to ongoing air traffic modernization efforts, and affect FAA’s ability to address its future needs for controllers and technical specialists to operate and maintain the nation’s air traffic system. The Senate bill proposes an increase in jet fuel tax for general aviation and a new jet fuel surcharge for fractionally owned aircraft, while the House bill does not include any changes to existing aviation taxes and fees. Neither bill includes proposals to increase the cap on passenger facility charges, and the House bill does not include the controversial provision passed by the House in the 111th Congress to bring non-aviation employees of express carriers under the National Labor Relations Act instead of the Railway Labor Act.

Key issues addressed in the FAA reauthorization bills include provisions intended to improve the management of and accelerate progress on the Next Generation Air Transportation System (NextGen); address FAA workforce and facility consolidation issues; improve the safety of air ambulance operations; improve runway safety; increase oversight of air carriers and foreign repair stations; integrate unmanned aircraft into the national airspace system; and address aircraft and airport noise and emissions. While there are many similarities in language between the House-passed and Senate-passed bills, particularly with respect to major issues affecting FAA, several important differences remain to be reconciled. Provisions that may be of particular interest during this process include 

• significant differences in authorized funding levels and aviation fuel taxes between House and Senate versions; 

•          a labor provision in the House bill that would overturn recent regulations that make it easier for certain employees covered under the Railway Labor Act to unionize;
 

•          provisions regarding the allocation of takeoff and departure slots at Reagan National Airport; and
 

•          provisions in the House bill to end the Essential Air Service (EAS) program, which subsidizes air carrier service to small and isolated communities.

Date of Report: September 29, 2011
Number of Pages: 52
Order Number: R41798
Price: $29.95

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