By Keith Reid
The long-awaited 1,300-page highway bill—Fixing America’s Surface Transportation Act—has finally been passed into law. Funding concerns have apparently been addressed through a combination of debt and slight-of-hand. Petroleum marketers and retailers dodged a few bullets in the process, but they will still feel the impact of some questionable funding decisions and some potential ramifications from various provisions.
The Highway Trust Fund was supposed to be a user-supported funding mechanism to maintain the transportation infrastructure. The gasoline tax—18.4-cents per gallon—envisioned to provide the core funding hasn’t increased since 1993, and this new five-year bill is no exception. The government’s focus on regulating higher fuel economy through alternatives like electric and hybrids, along with a recession-driven (and gas price influenced) drop in fuel volume and inflation have strained gasoline tax revenues.
Funding requirements in the bill are approximately $305 for the next five years. About $70 billion of that is to come from budget manipulation in the general fund. And there are a range of new fees and revenue generators tied into such diverse sources as the banking and agriculture industries, and selling a portion of the Strategic Petroleum Reserve. As usual, there were a range of provisions included that were not related to transportation, such as funding the Export-Import Bank through September 2019. On the other side, funding for high-speed rail was not provisioned.
Critics, and there are more than a few, contend that the funding is short on sustainability, and that it basically “kicks the can down the road” five years when there will be even more difficult funding challenges.
From the Dec. 1, 2015, issue of the Wall Street Journal: Greg Cohen, president and chief executive of the American Highway Users Alliance, a coalition of groups dedicated to transportation programs, said although they are “really happy” about the five-year reach of the bill, the use of revenue from sources outside the transportation arena is troubling.
“This program traditionally has been a user-pay program,” he said. “But the revenue coming in has not kept pace with inflation and with the cost of construction. So they found something…but it is not a sustainable plan going forward.” Read the article HERE. (Note: subscription required)
From an industry perspective, the bill is largely more “glass half-full.” API President and CEO Jack Gerard applauded the passage of the act that “will enhance the oil and natural gas industry’s ability to safely transport the fuels consumers want and need.” Read more HERE.
Petroleum Marketers Association of America noted a number of wins for the industry in the final bill in its announcement on the passage: The Pipeline and Hazardous Materials Safety Administration issued a proposed rule regarding the transportation of gasoline in the external product piping (wetlines) on cargo tanks transporting flammable liquids. The proposed rule limited the amount of gasoline in each wetline to one liter. The proposed rule gave tank truck operators 12 years to retrofit existing tanks with bottom protection like steel rails or install purging equipment, and any trailer manufactured two years after the date of regulation would have to be equipped with in line purging devices or steel guard rails to shield the wetlines from impact. PMAA led efforts to oppose the proposed rule that was withdrawn.
PMAA also noted that in a significant step forward for petroleum marketers, the highway bill: …requires DOT to commission a study on the accuracy of the Federal Motor Carrier Safety Administration’s Compliance, Safety, Accountability Program and take steps to address problems in identifying risk and the use of crash data where a motor carrier was free from fault. Until the study and corrections are complete FMSCA would have to take down its safety scores for trucks and motor carriers.
As outlined by PMAA, the GAO has criticized CSA data saying that: …of the 800 violations included in the motor carrier risk model, only two—speeding and failure to wear a seat belt, were reliable predictors of crashes. In addition, the CSA model was criticized for not including a sufficient amount of data on all carriers to establish a baseline risk for crashes. As a result, many motor carriers with no history of crashes have received a high predictive crash rate.
Further, PMAA stated that the bill requires the FMCSA to: … conduct a comprehensive study of passenger carrier industries’ accidents and claims histories before being permitted to proceed to radically increase minimum insurance rates.
The Not So Good
There are some notable concerns with the act as well. As we covered in the NACS/PEI show video interview with Paige Anderson, director of government affairs for NACS HERE, there were concerns over some tolling on federal highway provisions and taking money from the Leaking Underground Storage Tank Trust Fund. Those concerns came to pass, though the tolling provision was watered down.
“NACS is very pleased that Congress was able to pass a long term highway bill. Funding our transportation system is vital to our economy and important to our industry,” said Anserson in a NACS release. “Though we would have preferred that Congress eliminate the pilot program on tolling federal highways completely and not raid the LUST trust fund, we support the reforms that were included on tolling of federal highways in the final bill.”
The Leaking Underground Trust Fund receives approximately $100 million annually to prevent, detect and clean up releases from federally-regulated USTs. The trust fund is financed by a 0.1 cent tax on each gallon of motor fuel sold nationwide. It was raided to the tune of $300 million.
NACS noted that another miscellaneous provision in the bill allows the federal government to construct and operate battery recharging stations at government parking areas for use by federal employees of their private vehicles. You can read the full NACS response HERE.
The tolling provision was watered down in the House version that was passed, and is limited to expanding the existing Interstate System Reconstruction and Rehabilitation Pilot Program that was passed in 1998. As the program’s website notes, it permitted: …three existing Interstate facilities to be tolled to fund needed reconstruction or rehabilitation on Interstate corridors that could not otherwise be adequately maintained or functionally improved without the collection of tolls. Each of the three facilities must be in different states.
The current three states are Virginia, North Carolina and Missouri. No significant progress has been made in those states since ISRRPP was passed. They currently have up to two years to move tolling forward before they lose their slots. New states would have three years to act after claiming a slot. This must proceed through a legislative process in the states. Given the general desire to make taxation invisible to the taxed, the future of this funding mechanism would seem questionable, as reflected by the lack of action since 1998 in the states currently holding the slots.
Another concern that will be watched moving forward revolves around the lingering issue of commercial rest stops. As NATSO’s Tiffany Wlazlowski Neuman outlined: Congress has not expressed an explicit desire to roll back the 50-year prohibition on commercial rest areas. Some lawmakers, however, have supported legislation that would roll-back the ban in minor ways, and NATSO takes these threats seriously. During the House Transportation and Infrastructure Committee markup of the House version of the highway bill, Rep. Grace Napolitano (D-Calif.) proposed an amendment that would have allowed EV charging stations and natural gas refueling infrastructure at highway rest areas. She ultimately withdrew the amendment amid strong opposition from NATSO, the National Association of Convenience Stores, Petroleum Marketers Association of America and the Society of Independent Gasoline Marketers of America. Read more HERE.