At long last, SAFETEA-LU (Safe, Accountable, Flexible, Efficient Transportation Equity Act – A Legacy for Users) was signed into law and will provide a record level of transit investment of $52.6 billion over six years, a nearly 50% increase from TEA 21.
The new law makes some changes to existing programs such as Buy America and adds some new ones like the New Freedom program. The following is a simplified guide highlighting some of these changes, as well as a look at the future.
1. Spending money
One major change in the transportation program is how it will be funded. The original 80/20 split has given way to a new structure, in which the general fund pays for New Starts, Research and University Research Centers programs and Federal Transit Administration (FTA) expenses. The Mass Transit Account of the Highway Trust Fund will now support all other programs. “Funding the balance of the programs out of the general fund means that those programs now compete for federal funding against defense, healthcare, education and other programs,” says Jeff Boothe, partner for Holland + Knight LLP. “While there is a funding guarantee in the bill, it still puts those general fund programs at risk, so this is a significant concern.” There is also concern that monies provided by the new bill are at risk of being diverted to assist with the rebuilding of the Hurricane Katrina-ravaged Gulf Coast. “There should be no impact to any of the funding authorized under SAFETEA-LU,” said Joyce Rose of the U.S. House Committee on Transportation and Infrastructure during a September 2005 Webinar sponsored by the American Public Transportation Association (APTA). “[Congress] is talking about how to pay for Katrina without just adding to the deficit,” says Art Guzzetti, APTA’s director of policy and advocacy. “Right before Congress adjourned in December, there was a 1% across-the-board cut to all programs to save money for the federal deficit. So we lost about $80 million.” 2. Implementation
Implementation of the transportation bill is the highest priority for all shareholders. Unfortunately, the delay in getting the bill through Congress created implementation issues, Boothe says. Some of these problems will crop up during the implementation of New Starts/Small Starts rulings. “[The rules] may not influence or give clear indication for projects until FY 2010, which is the first year of the next bill. The [FTA] can only move so fast and provide sufficient opportunity for comments,” he says. The following are the FTA’s accomplishments so far in implementing the new legislation:Conducted six SAFETEA-LU listening sessions in local cities
Implemented the Federal Register Apportionments Notice for FY ’06 Funds
Issued the Buy America Notice of Proposed Rulemaking
Solicitation for the new National Technical Assistance Center for senior transportation
Solicitation for the Elderly and Disabled Operating Assistance Pilot Program
FY ’06 Certifications and Assurances
Issued notice on FTA transit program changes and authorized funding levels and implementation of SAFETEA-LU
3. Buy America
The revamped Buy America portion of the law requires a clarification of the definition of an “end product.” When it comes to procuring systems, loopholes in the original provisions have inadvertently allowed non-domestic subcomponents to comply with Buy America. “The procurement of systems has become a major problem in the industry, because there are items inside ticket vending machines, for example, that are considered subcomponents and aren’t American-made,” says Peter Peyser, senior principal with D.C.-based Blank Rome. Considering the end product only, he says, misses the point of the law. “The U.S. Transit Suppliers Coalition believes this loophole runs contrary to the original intent of Congress, so we are in the middle of a regulatory battle to make sure this intent is reflected in the regulations.” Another piece of Buy America is the microprocessor waiver, which repeals the original waiver and now applies to the processor itself and not the product it is contained in. There is also a provision that allows people who feel they have been adversely affected by Buy America to seek an administrative review. 4. New Starts
Although the New Starts program retains its 80% federal funding structure, its principal change relates to the FTA’s project review criteria. Wording of the law now provides that “land use” and “economic development” would be on par with “cost effectiveness” as the ultimate criteria when determining a project’s worthiness for advancement. “We would argue that this no longer allows the FTA to distinguish “cost-effectiveness” or to give it heavier weight or preeminence over the other requirements for all stages of project advancement,” Boothe says. Another modification replaces the current New Starts rating system (highly-recommended, recommended, not recommended) with a five-level system — high, medium-high, medium, medium-low, low. “If a project was given a ‘not recommended’ rating, communities interpreted that as meaning it was not worthy of FTA support,” says Boothe. “We believe [the new ratings] carry a less negative connotation than the previous terminology.” A Notice of Proposed Rulemaking on New Starts is expected to be issued this summer. 5. Small Starts
The new Small Starts program is an offshoot of the New Starts program, from which is derives its funding and provides projects with a federal share of less than $75 million. These are defined as smaller projects, including streetcar, trolley, bus rapid transit and commuter rail projects, with a total price tag of $250 million. The FTA plans to devise a simplified approach to evaluating these projects, which is advantageous for a faster implementation. “The Small Starts program is really intended to respond to a demand from a wider range of communities seeking smaller type investments, which would be subject to a lesser amount of federal scrutiny than larger New Starts projects,” Boothe says. 6. New Freedom
The New Freedom program, also new to the bill, is devised to improve and provide alternatives to public transportation for people with disabilities that go above and beyond ADA requirements. It allocates $339 million from FY ’06 to ’09. 7. Parks and public lands
The new Alternative Transportation in Parks and Public Lands Program was established to improve mobility and reduce congestion and pollution. A sum of $22 million is provided for the first year of this program, which brings the total cost to $97 million. “The purpose of this is to start transit services in places like the Grand Canyon. There are too many automobiles there and this will allow for alternatives,” says Michael Townes, president of Virginia-based Hampton Roads Transit (HRT) and co-chair of APTA’s reauthorization task force. 8. Rural program
The rural program received significant increases for a total of $2.2 billion over the course of the bill. Twenty percent of Section 5311 funds are now distributed from a tier-based formula, with the existing formula used to distribute the remaining 80% based on population in low-density areas. Indian tribes are now eligible recipients of funding from this program. 9. Charter rules
The Charter Bus Rules provision permits the partial withholding of federal funds from continued violators of the charter or school bus regulation. It also allows the U.S. Department of Transportation to enforce the law. The bill also stipulates that the FTA look into ways to improve the charter bus complaint and appeals process. 10. JARC
The Job Access Reverse Commute (JARC) program, which funds local programs for welfare recipients and eligible low-income individuals, as changed from a discretionary/competitive program to a formula program. Funding totals $602.5 million from FY ’06 to ’09. 11. Elderly/disabled
The bill maintains the program to provide formula funding to increase mobility for the elderly and persons with disabilities. It establishes a new seven-state pilot program for FY ’06 through ’09 to determine whether expanding eligibility to operating assistance would improve services to this population. Up to 33% of funds apportioned under 5310 for each participating state — Wisconsin, Alaska, Minnesota, Oregon and three others yet to selected — can be used for operations. 12. Alternative fuels
The Clean Fuels Grant Program provides monies for clean fuel buses, of which 25% may be clean diesel, and related facilities to any urbanized area designated as maintenance and non-attainment area for ozone or carbon monoxide. This reauthorized program provides $50 million in its first year, for a total of $188 million, and also qualifies buses built with lightweight composite materials. 13. Tolling
This highway portion of the bill uses tolling in an express lane demonstration program, which allows excess revenue to be used for transit purposes including traffic reduction, increased capacity and the funding of improved transit services. 14. Funding alternatives
While there were significant increases in funding for programs, they are not being drawn from a deep pocket. There is legitimate concern whether the Highway Trust Fund will be solvent throughout the life of the reauthorization bill. “The authorized levels may not be achieved if we don’t produce enough gasoline tax revenues to sustain the funding levels envisioned in the reauthorization,” says Holland + Knight’s Boothe. According to the American Association of State Highway and Transportation Officials, some $5.3 trillion is needed in the first quarter of the 21st century to offset the deterioration of transportation systems and support expansion for economic growth. These concerns are addressed in studies issued by the U.S. Chamber of Commerce (November 2005) and the Hudson Institute (July 2005). The Hudson Institute reports that despite SAFETEA-LU, revenue from the present motor vehicle fuel tax and state and local government appropriations, less than two-thirds of the nation’s transportation needs will be met. Both studies recommend an indexing of the fuel tax, which is not a provision in the new bill, as a sufficient short-term solution. Longer-term strategies include collection of vehicle fees, as well as implementation of a vehicle-miles-traveled fee. SAFETEA-LU has mandated the creation of commissions to study the needs of the nation’s transportation infrastructure and how to supplement its finance. “There is new emphasis [in the legislation] on bringing outside financing into the transportation program, such as private/public partnerships,” says Alan Wulkan, senior vice president Parsons Brinckerhoff. 15. Future planning
There is still a long way to go to adequately fund public transit in the U.S. “I really think we need to be thinking through transportation and transit policy beyond five-year increments of authorization,” Wulkan says. Before the next reauthorization cycle gets in full swing, the transit industry should come together to plan where it wants to be in the next 20 to 25 years, with reauthorization cycles becoming mechanisms in which to accomplish these goals. Some of these long-term goals should include rethinking how the U.S. measures progress when it comes to mobility. “I think we need to link [these measures] to the quality of our environment and if improvements are being seen in relation to the billions of dollars being spent,” he says.
One major change in the transportation program is how it will be funded. The original 80/20 split has given way to a new structure, in which the general fund pays for New Starts, Research and University Research Centers programs and Federal Transit Administration (FTA) expenses. The Mass Transit Account of the Highway Trust Fund will now support all other programs. “Funding the balance of the programs out of the general fund means that those programs now compete for federal funding against defense, healthcare, education and other programs,” says Jeff Boothe, partner for Holland + Knight LLP. “While there is a funding guarantee in the bill, it still puts those general fund programs at risk, so this is a significant concern.” There is also concern that monies provided by the new bill are at risk of being diverted to assist with the rebuilding of the Hurricane Katrina-ravaged Gulf Coast. “There should be no impact to any of the funding authorized under SAFETEA-LU,” said Joyce Rose of the U.S. House Committee on Transportation and Infrastructure during a September 2005 Webinar sponsored by the American Public Transportation Association (APTA). “[Congress] is talking about how to pay for Katrina without just adding to the deficit,” says Art Guzzetti, APTA’s director of policy and advocacy. “Right before Congress adjourned in December, there was a 1% across-the-board cut to all programs to save money for the federal deficit. So we lost about $80 million.” 2. Implementation
Implementation of the transportation bill is the highest priority for all shareholders. Unfortunately, the delay in getting the bill through Congress created implementation issues, Boothe says. Some of these problems will crop up during the implementation of New Starts/Small Starts rulings. “[The rules] may not influence or give clear indication for projects until FY 2010, which is the first year of the next bill. The [FTA] can only move so fast and provide sufficient opportunity for comments,” he says. The following are the FTA’s accomplishments so far in implementing the new legislation:
The revamped Buy America portion of the law requires a clarification of the definition of an “end product.” When it comes to procuring systems, loopholes in the original provisions have inadvertently allowed non-domestic subcomponents to comply with Buy America. “The procurement of systems has become a major problem in the industry, because there are items inside ticket vending machines, for example, that are considered subcomponents and aren’t American-made,” says Peter Peyser, senior principal with D.C.-based Blank Rome. Considering the end product only, he says, misses the point of the law. “The U.S. Transit Suppliers Coalition believes this loophole runs contrary to the original intent of Congress, so we are in the middle of a regulatory battle to make sure this intent is reflected in the regulations.” Another piece of Buy America is the microprocessor waiver, which repeals the original waiver and now applies to the processor itself and not the product it is contained in. There is also a provision that allows people who feel they have been adversely affected by Buy America to seek an administrative review. 4. New Starts
Although the New Starts program retains its 80% federal funding structure, its principal change relates to the FTA’s project review criteria. Wording of the law now provides that “land use” and “economic development” would be on par with “cost effectiveness” as the ultimate criteria when determining a project’s worthiness for advancement. “We would argue that this no longer allows the FTA to distinguish “cost-effectiveness” or to give it heavier weight or preeminence over the other requirements for all stages of project advancement,” Boothe says. Another modification replaces the current New Starts rating system (highly-recommended, recommended, not recommended) with a five-level system — high, medium-high, medium, medium-low, low. “If a project was given a ‘not recommended’ rating, communities interpreted that as meaning it was not worthy of FTA support,” says Boothe. “We believe [the new ratings] carry a less negative connotation than the previous terminology.” A Notice of Proposed Rulemaking on New Starts is expected to be issued this summer. 5. Small Starts
The new Small Starts program is an offshoot of the New Starts program, from which is derives its funding and provides projects with a federal share of less than $75 million. These are defined as smaller projects, including streetcar, trolley, bus rapid transit and commuter rail projects, with a total price tag of $250 million. The FTA plans to devise a simplified approach to evaluating these projects, which is advantageous for a faster implementation. “The Small Starts program is really intended to respond to a demand from a wider range of communities seeking smaller type investments, which would be subject to a lesser amount of federal scrutiny than larger New Starts projects,” Boothe says. 6. New Freedom
The New Freedom program, also new to the bill, is devised to improve and provide alternatives to public transportation for people with disabilities that go above and beyond ADA requirements. It allocates $339 million from FY ’06 to ’09. 7. Parks and public lands
The new Alternative Transportation in Parks and Public Lands Program was established to improve mobility and reduce congestion and pollution. A sum of $22 million is provided for the first year of this program, which brings the total cost to $97 million. “The purpose of this is to start transit services in places like the Grand Canyon. There are too many automobiles there and this will allow for alternatives,” says Michael Townes, president of Virginia-based Hampton Roads Transit (HRT) and co-chair of APTA’s reauthorization task force. 8. Rural program
The rural program received significant increases for a total of $2.2 billion over the course of the bill. Twenty percent of Section 5311 funds are now distributed from a tier-based formula, with the existing formula used to distribute the remaining 80% based on population in low-density areas. Indian tribes are now eligible recipients of funding from this program. 9. Charter rules
The Charter Bus Rules provision permits the partial withholding of federal funds from continued violators of the charter or school bus regulation. It also allows the U.S. Department of Transportation to enforce the law. The bill also stipulates that the FTA look into ways to improve the charter bus complaint and appeals process. 10. JARC
The Job Access Reverse Commute (JARC) program, which funds local programs for welfare recipients and eligible low-income individuals, as changed from a discretionary/competitive program to a formula program. Funding totals $602.5 million from FY ’06 to ’09. 11. Elderly/disabled
The bill maintains the program to provide formula funding to increase mobility for the elderly and persons with disabilities. It establishes a new seven-state pilot program for FY ’06 through ’09 to determine whether expanding eligibility to operating assistance would improve services to this population. Up to 33% of funds apportioned under 5310 for each participating state — Wisconsin, Alaska, Minnesota, Oregon and three others yet to selected — can be used for operations. 12. Alternative fuels
The Clean Fuels Grant Program provides monies for clean fuel buses, of which 25% may be clean diesel, and related facilities to any urbanized area designated as maintenance and non-attainment area for ozone or carbon monoxide. This reauthorized program provides $50 million in its first year, for a total of $188 million, and also qualifies buses built with lightweight composite materials. 13. Tolling
This highway portion of the bill uses tolling in an express lane demonstration program, which allows excess revenue to be used for transit purposes including traffic reduction, increased capacity and the funding of improved transit services. 14. Funding alternatives
While there were significant increases in funding for programs, they are not being drawn from a deep pocket. There is legitimate concern whether the Highway Trust Fund will be solvent throughout the life of the reauthorization bill. “The authorized levels may not be achieved if we don’t produce enough gasoline tax revenues to sustain the funding levels envisioned in the reauthorization,” says Holland + Knight’s Boothe. According to the American Association of State Highway and Transportation Officials, some $5.3 trillion is needed in the first quarter of the 21st century to offset the deterioration of transportation systems and support expansion for economic growth. These concerns are addressed in studies issued by the U.S. Chamber of Commerce (November 2005) and the Hudson Institute (July 2005). The Hudson Institute reports that despite SAFETEA-LU, revenue from the present motor vehicle fuel tax and state and local government appropriations, less than two-thirds of the nation’s transportation needs will be met. Both studies recommend an indexing of the fuel tax, which is not a provision in the new bill, as a sufficient short-term solution. Longer-term strategies include collection of vehicle fees, as well as implementation of a vehicle-miles-traveled fee. SAFETEA-LU has mandated the creation of commissions to study the needs of the nation’s transportation infrastructure and how to supplement its finance. “There is new emphasis [in the legislation] on bringing outside financing into the transportation program, such as private/public partnerships,” says Alan Wulkan, senior vice president Parsons Brinckerhoff. 15. Future planning
There is still a long way to go to adequately fund public transit in the U.S. “I really think we need to be thinking through transportation and transit policy beyond five-year increments of authorization,” Wulkan says. Before the next reauthorization cycle gets in full swing, the transit industry should come together to plan where it wants to be in the next 20 to 25 years, with reauthorization cycles becoming mechanisms in which to accomplish these goals. Some of these long-term goals should include rethinking how the U.S. measures progress when it comes to mobility. “I think we need to link [these measures] to the quality of our environment and if improvements are being seen in relation to the billions of dollars being spent,” he says.
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