Legal Alerts

Funds to Help Critical Transportation Projects to Move Forward

The Fixing America’s Surface Transportation Act, signed into law by Pres. Barack Obama, authorizes approximately $305 billion in federal highway and transit spending over the next five years for transportation projects. The Act provides much needed certainty for states, transit agencies and other local agencies to move forward with critical transportation infrastructure projects.

Below is a summary of some of the largest components of the approximately 1,300-page FAST Act, in addition to a more extensive breakdown of funding provided for in the Act.

Block Grants Surface Transportation Program: By converting the Surface Transportation Program to a block grant program, the Act seeks to increase state and local agency control over transportation decisions. The Act focuses a larger share of funding from the Surface Transportation Program toward more populated urban areas and establishes a Tribal Transportation Self-Governance Program under which Indian tribes may receive and administer transportation funds. Complementing the FAST Act, the Department of Transportation is also encouraging the use and development of advanced smart transportation technologies and transit-oriented development through grant programs and initiatives, as we recently discussed in a BBKnowledge post.

Funds Public Transit: It is estimated that $11.8 billion is authorized for programs administered by the Federal Transit Administration, with that amount rising to $12.6 billion in 2020. The FAST Act focuses on transit safety and ensuring a state of good repair for transit systems, in addition to providing funding for the Capital Investment Program administered by the FTA, which includes New Starts. However, the limitation that federal full funding grant agreements be limited to 60 percent is included in the Act.

Further, recognizing how costly vehicle procurements can be for transit agencies, the Act supports cooperative procurements. The FAST Act also establishes a pilot program for cooperative procurements to be administered by eligible nonprofit entities. In taking advantage of such opportunities, it will be important for agencies to review and understand the guidelines for such programs and make sure the necessary legal terms are included in any procurements and contracts.

Emphasizes Role of Rail and Freight Movement: The Act largely emphasizes the importance of our nation’s freight system and the existing strains that need to be addressed. The Act authorizes a new competitive grant known as the Nationally Significant Freight and Highway Projects program, which provides $800 million in funding for 2016, rising to $1 billion in 2020. Eligible applicants for the NSFHP grant include states or groups of states, municipal planning organizations for urban areas and public authorities with a transportation function, such as a port authority. Further, the Act provides resources for the continued update of the National Highway Freight Network.

Provides Clarity in Surface Transportation Project Financing: The Act encourages DOT to ensure all available funding mechanisms are being utilized for transportation projects. In furtherance of this goal, the Act establishes the National Surface Transportation and Innovative Finance Bureau to provide assistance and communicate financing and funding opportunities to eligible entities, and promote innovative financing best practices while reducing costs and risks to taxpayers in the construction and delivery of projects. With regard to large capital projects exceeding $1 billion, federal monies may not be obligated until an applicant demonstrates the ability to meet the non-federal share for the grant.

The Act also encourages the use of low-interest loans provided for rail projects through the Railroad Rehabilitation and Improvement Financing Program. Knowing the Act does not provide enough federal grant monies for all the projects necessary to provide the update and modernization needed to bring the country’s transportation infrastructure up to speed, we anticipate seeing an increase in use of such low-interest funding programs in the future, in addition to the increased use of public-private partnerships for the completion of future transportation projects.

Modernizes Project Delivery and Environmental Oversight: The Act continues the goals of streamlining the environmental review and permitting process, and eliminating duplicate reviews by allowing one lead agency to coordinate the environmental review process under the National Environmental Protection Act.

Embraces Continued Development of New Technologies: The Act continues to support research into the roll-out of autonomous vehicle technologies and requires the Department of Transportation to designate, within the next year, highway corridors where electric charging and hydrogen, propane and natural gas fueling stations and infrastructure should be built. The Act also adds the deployment of low- or zero-emission vehicles to the list of transportation projects eligible for research funding provided under the Act.

While there is always room for improvement and the need remains for a serious discussion on how to fund future transportation projects beyond 2020 (i.e. whether to raise the gas tax or implement a revenue creating alternative), the passage of the FAST Act is a welcome development for states, local governments, planning agencies and our transit providers.

Click here for more additional information on funding included within the Act.

Due to the size and breadth of the FAST Act, we look forward to providing more information on funding opportunities and issues that focus on the trends and best practices coming out of the many transportation and infrastructure projects that will be kicking off across the country. In the meantime, Best Best & Krieger’s transportation and infrastructure attorneys and Government Relations team look forward to assisting agencies in taking advantage of funding opportunities for transportation projects made possible by the FAST Act, assisting in successfully delivering projects, from planning and procurement to construction and project close-out, and helping communities prepare for the introduction of smart technologies, such as automated vehicles into our nation’s transportation network.
For more information, contact the author of this Legal Alert listed at right in the firm’s Government Relations Services group, or your BB&K attorney.

Disclaimer: BB&K legal alerts are not intended as legal advice. Additional facts or future developments may affect subjects contained herein. Seek the advice of an attorney before acting or relying upon any information in this communiqué.