TR Daily Plan Puts DoT, EPA, Army Corps in Charge of Half of Infrastructure Funds
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Monday, February 12, 2018

Plan Puts DoT, EPA, Army Corps in Charge of Half of Infrastructure Funds

The White House today formally asked Congress to draft legislation to implement the $200 billion federal infrastructure investment program that President Trump announced in his State of the Union address (TR Daily, Jan. 31), offering more details on how the money would be divided among specific goals and indicating that half the money would go to a competitive grant fund that would be in the charge of the Department of Transportation, Army Corps of Engineers, and Environmental Protection Agency.

Other agencies, such as the Rural Utilities Service, FCC, and the National Telecommunications and Information Administration, which have a history of funding broadband projects, would have to “petition” to be able to distribute any of the funding in the $100 billion competitive grant fund, which is the largest pot of money in overall infrastructure proposal.

The bulk of the second largest program within the overall proposal would be distributed as block grants to the states for distribution by the governors.

The Trump administration expects to leverage the $200 billion in federal funding to encourage state, local, tribal, and private sector spending for a total of $1.5 trillion in infrastructure investment.

Under the proposal outlined today, $100 billion of the total $200 billion would be allocated for “an Incentives Program to spur additional dedicated funds from States, localities, and the private sector”; $50 billion for “a new Rural Infrastructure Program to rebuild and modernize infrastructure in rural America”; and $20 billion for a Transformative Projects Program that “will provide Federal aid for bold and innovative projects that have the potential to dramatically improve America’s infrastructure” and “will focus on projects that could have a significant positive impact on States, cities, and localities but may not attract private sector investment because of the project’s unique characteristics.”

In addition, $20 billion would be allocated for expanding infrastructure financing programs, with $14 billion specified for “expanding a number of existing credit programs: TIFIA, WIFIA, RRIF, and rural utility lending” and $6 billion for Private Activity Bonds.

Finally, $10 billion would be allocated for a Federal Capital Revolving Fund, “which will reduce inefficient leasing of Federal real property which would be more cost-effective to purchase,” the White House said.

In addition, it said, “A new fund will allow some incremental revenues from energy development on public lands to pay for the capital and maintenance needs of public lands infrastructure.”

Under the $100 billion Incentives Program, applications would be “evaluated on objective criteria, with creating additional infrastructure investment being the largest factor,” the White House said in announcing the proposal. “Incentives Program will promote accountability, making Federal funding conditional on projects meeting agreed upon milestones,” it added.

An addendum to President Trump’s fiscal 2019 budget proposal submitted to Congress today (see separate stories) laid out funding plans for the infrastructure initiative, and explained, “The Department of Transportation (DOT), United States Army Corps of Engineers (USACE), and Environmental Protection Agency (EPA) will administer the [$100 billion Infrastructure Incentives] program. Other Federal agencies seeking to issue grants under this program within their areas of jurisdiction may petition DOT, USACE, or EPA for a transfer of funds. Entities eligible include, but are not limited to, States, the District of Columbia, tribal governments, U.S. Territories, metropolitan planning organizations, units of local governments, special purpose districts or public authorities responsible for maintaining infrastructure, public-owned or -regulated water utilities, non-profit entities, and private entities with a public sponsor.”

The addendum added, “Each Federal agency will solicit applications as soon as practicable after enactment of the program, and every six months thereafter. Agencies will evaluate and score each application based on specific, quantifiable criteria. The primary criterion is how the applicant will secure and commit new, non-Federal revenue to create sustainable, long-term funding for infrastructure investments. An application's score (and grant) will also account for the percentage of non-Federal revenues that will be used to fund the eligible project(s). To ensure applicants may receive grants for actions that are consistent with the program's purposes, but occurred prior to the program's enactment, a look-back period of three years with an application rating sliding-scale is provided.”

Under the $50 billion Rural Infrastructure Program, the “bulk” of funding “will be allocated to State governors, giving States the flexibility to prioritize their communities’ needs,” it said. “The remaining funds will be distributed through rural performance grants to encourage the best use of taxpayer dollars,” it added.

According to the addendum, 80% of the Rural Infrastructure Program funding would be distributed “to each State's Governor via a formula distribution. The formula will consider the State's total rural population and rural lane miles. Governors, in consultation with a designated Federal agency and State directors of rural development, will have discretion to choose investments that respond to the unique rural needs of their States. There will be a minimum and a maximum amount of funding that a State may receive under the formula distribution.”

The addendum adds, “Twenty percent of the funds made available to States will be reserved for competitive rural performance grants for additional funding for eligible asset classes and according to specified criteria. In order to qualify for rural performance grants, a State must publish a comprehensive rural infrastructure investment plan for the formula funds received that demonstrates how the identified projects align with specific evaluation criteria. Rural performance grants will be distributed as block grants without any Federal requirements attached. However, the grants must be used for core infrastructure projects in rural areas with a population of less than 50,000.”

“The Rural Infrastructure program will invest in tribal infrastructure by providing dedicated funding under the performance grants allocation for DOT's Tribal Transportation Program, and to the Department of the Interior (DOI) for grants or awards to Tribes determined by a process created in consultation with Tribes. The Rural Infrastructure program will also provide dedicated funding to address core infrastructure needs of the U.S. Territories,” the addendum adds.

“Funds awarded to State and local authorities, such as through the Incentives Program and the Rural Infrastructure Program, will be allocated to infrastructure projects they prioritize,” the White House said.

“The plan will expand processes that allow environmental review and permitting decisions to be delegated to States,” and “will also allow Federal agencies to divest assets that can be better managed by State or local governments or the private sector,” it added.

Regarding the Transformative Projects program, the budget addendum says, “Funding will be awarded on a competitive basis to projects that are likely to be commercially viable, but that possess unique technical and risk characteristics that deter private sector investment. With Federal support, these projects are capable of generating revenue, will provide net public benefits, and will have a significant positive impact on the Nation, a region, State, or metropolitan area. Infrastructure sectors covered by the program include, but are not limited to, the transportation, clean water, drinking water, energy, commercial space, and broadband sectors. Entities eligible for program assistance include, but are not limited to, States, the District of Columbia, tribal governments, U.S. Territories, metropolitan planning organizations, units of local governments, public utilities, special purpose districts or public authorities responsible for maintaining infrastructure, multijurisdictional groups of eligible entities, and private corporations or non-profit organizations with a non-Federal public sponsor.”

It adds, “Funding under this program will be available under three tracks: 1) a Demonstration Track for the planning, construction, deployment, and evaluation of demonstration trials (Federal share capped at 30 percent per project); 2) a Project Planning Track for final pre-construction activities, including final design and engineering (Federal share capped at 50 percent per project); and 3) a Capital Construction Track for the construction of a capital project (Federal share capped at 80 percent per project). As a condition for Capital Construction Track financial assistance, an applicant will be required to enter into a partnership agreement with the Federal Government providing terms for the Federal Government to share in any project value. Technical assistance under the program could include support to navigate Federal regulatory, policy, and administrative processes.

“The Department of Commerce (DOC) will administer the transformative projects program and the Secretary will chair an interagency selection committee composed of the principals of relevant Federal agencies. Given the multidisciplinary nature of the program, interagency evaluation panels comprised of individuals from the applicable Federal agencies will review and evaluate all applications. DOC, in consultation with the applicable Federal agencies, will annually publish a Notice of Funding Opportunity, soliciting applications and providing details on program requirements, evaluation criteria, and the selection process. Applicants selected for award will enter into a partnership agreement with the Federal Government that specifies the terms and conditions of the award, major milestones, and other key metrics to assess performance,” the budget addendum says. In addition to funding, the proposal calls for streamlining federal environmental reviews for infrastructure projects, including creating “two new pilot programs to test new ways to improve the environmental review process,” and “reform[ing] Federal education and workforce development programs to better prepare Americans to perform the in-demand jobs of today and the future.”

In a statement, the National Governors Association said, “The nation’s governors welcome the President’s and Congress’ focus on improving our nation’s infrastructure. That includes roads and bridges, airports, ports, inland waterways, transit, passenger rail, drinking water and wastewater systems, energy and broadband networks. “That is why it is absolutely paramount that state, federal and local governments continue our longstanding partnership to invest in quality infrastructure and meet the nation’s needs. A strong cooperative relationship between states and the federal government is essential to best serve the interests of all citizens,” the NGA added. During a meeting that President Trump held today with a number of state and local officials on the infrastructure initiative, several governors mentioned the importance of funding broadband.

President Trump said, “Well, it's been very unfair what's happened with broadband in terms of the Midwest and in terms, really, of rural areas, as you know. And you, sort of, were a victim of it, too. But now it's going to be taken care of. We're spending a great deal of money on that. It's only fair. And they want it. They want it. They know how to use it. They want it. And we're going to get it.”

“Governors look forward to working with Congress as it develops legislation that enhances our current infrastructure programs, provides states flexibility for augmenting investment with innovative financing tools and streamlines the federal review process in a way that maintains necessary environmental protections,” the NGA said.

House Speaker Paul Ryan (R., Wis.) said, “The president is right to make improving America’s infrastructure a national priority, and last week’s budget agreement included a $20 billion down payment on this goal. Today’s proposal recognizes the urgency of tackling the bureaucratic hurdles that needlessly delay infrastructure projects. Real action to streamline the permitting process will help jumpstart projects that are vital to our communities and our economy. Already in this Congress, the House has passed dozens of infrastructure reforms, and we look forward to working with the administration on this critical issue.”

In a joint press release, Senate Commerce, Science, and Transportation Committee Chairman John Thune (R., S.D.) and ranking minority member Bill Nelson (D., Fla.) agreed on the need for investing in broadband and other infrastructure, and pledged to work together on legislation to implement federal infrastructure funding.

Chairman Thune said, “Through this guidance and letting Congress have the opportunity to write bipartisan legislation, President Trump has offered us direction to meet infrastructure needs in our nation’s states, cities, and rural communities. Aligning federal infrastructure funding with local priorities and looking at other impediments to building would increase accountability and help us meet our most critical infrastructure needs faster. I look forward to working with my ranking member, Sen. Nelson, and other colleagues on both sides of the aisle to discuss and incorporate their ideas and priorities into legislation.”

Sen. Nelson said, “Modernizing our transportation and communication networks is something we all agree the U.S. desperately needs in order to create more jobs and maintain our leadership in the global economy. We need to make real investments – not cuts – in Florida and communities around the country. That’s why I plan to work with Chairman Thune and my colleagues on the Senate Commerce Committee to try to come up with a bill that can garner broad support and include ideas from both parties.”

They noted that the Senate Commerce Committee held hearings on infrastructure and workforce development needs last year, and said that the Commerce Committee will convene hearings in March “to help inform legislative efforts on the administration’s proposal and other infrastructure questions.”

FCC Chairman Ajit Pai said, “Too often, regulatory barriers make it harder and more expensive to build out broadband than it needs to be — to the detriment of American consumers. That’s why this plan is a welcome and strong call to action. I stand ready to work with the Administration and Congress to turn this plan into a reality as we continue to bridge the digital divide and extend 5G digital opportunity to all Americans.”

FCC Commissioner Brendan Carr said, “To win the global race to 5G, we must fundamentally reform our infrastructure deployment rules. It is great to see the Administration’s infrastructure plan put a priority on efforts that would expedite deployment. We must ensure that our regulatory structures are 5G Ready.” U.S. Telecom Association President and Chief Executive Officer Jonathan Spalter said, “Closing the digital divide, particularly in our nation’s most difficult to reach rural areas, requires dedicated and adequate capital — both financial and political. Broadband providers have invested more than $1.6 trillion over the past 20 years to connect our communities, but significant, direct support from the federal government is critical to bringing broadband’s benefits to all. USTelecom is determined to work with Congress and the Administration on getting our 21st century infrastructure priorities right, including dedicated funding to ensure broadband connectivity for all Americans.”

In a statement, Chuck Hogg, chairman of the Wireless Internet Service Providers Association, said, “We are excited by the president’s focus on rural broadband. With an estimated 24 million rural Americans on the wrong side of the digital divide, there is no higher priority in U.S. telecom policy than closing the rural broadband gap.”

However, WISPA said in a press release that “any new federal support for rural broadband should not be used to subsidize large broadband carriers to compete against smaller ones, as has happened all too often in the past.” It also said that “fixed wireless technology is the most cost-effective solution for broadband access, especially in rural areas; and that subsidies alone are an ineffective approach to spurring investment in fixed wireless providers.”

“We encourage the Trump administration and the Congress to take a new approach and not focus primarily on subsidies as the policy response,” Mr. Hogg said. “All too often, subsidies tend to reinforce the dominance of larger carriers and non-cost-effective technologies. Any new subsidies must be distributed in a way that is technology-neutral, cost-effective, performance-based, and accessible to smaller providers.”

“Equally important, the FCC’s upcoming decision on the ‘CBRS’ spectrum band has enormous implications for rural broadband,” Mr. Hogg added. “Any changes to the CBRS rules that create new barriers for small providers will work against the administration’s rural broadband push.”

CTIA President and CEO Meredith Attwell Baker said, “CTIA is pleased that the Administration’s infrastructure plan recognizes the value of mobile connectivity, the importance of wireless leadership, and the need to streamline our nation’s infrastructure siting processes. U.S. wireless companies are poised to invest $275 billion to provide 5G and we look forward to working with the Administration and Congress to implement policies that will speed the permitting and deployment of new mobile broadband infrastructure.”

“President Trump’s infrastructure proposal contains a number of important provisions that will pave the way for the next generation of wireless communications,” said Wireless Infrastructure Association President and CEO Jonathan Adelstein. “The plan calls for the establishment of a 'one agency, one decision' environmental review structure, which would eliminate many of the inefficiencies companies face when building out mobile networks. The plan also calls for the reduction of duplication in using categorical exclusions, lowering the cost and time of wireless broadband buildout. I am also pleased that the plan adopts an approach for federal lands along the lines recommended by the FCC’s Broadband Deployment Advisory Council, the working group I chaired on this topic. By taking these specific steps to encourage private investments and to reduce barriers to the deployment of the wireless networks, the White House is positioning the U.S. to lead the world in mobile connectivity and the deployment of 5G networks.”

Robert McDowell, chief public policy adviser of Mobile Future, said, “Smart infrastructure policies are critical for extending high speed broadband connectivity to every American community. The Administration’s focus on removing hurdles to deployment of the small cells that will help power next generation networks is important as wireless technology races toward 5G. Mobile Future welcomes the opportunity to work with all policymakers to encourage investment in America’s wireless future.”

NTCA CEO Shirley Bloomfield said, “We greatly appreciate President Trump’s focus on rural America in the infrastructure agenda announced today. Calling for a substantial portion of infrastructure funds to be dedicated to rural projects, including rural broadband, and easing permitting processes that hinder the timely deployment of broadband networks are both essential parts of a comprehensive strategy to address the challenges faced by those seeking to deploy and operate wireline and wireless telecom infrastructure alike in rural America.”—Lynn Stanton, [email protected]

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