DOT Secretary Chao says Vision for U.S. National Infrastructure Plan to be Unveiled Soon

DOT Secretary Chao says Vision for U.S. National Infrastructure Plan to be Unveiled Soon

The current state of interminable flux that comes with evaluating the future of the United States long-term infrastructure plan may appear to be reaching some sort of conclusion, or at least the initial semblance of one.

That could be viewed as a key takeaway of the Infrastructure Week kickoff speech in Washington, D.C. yesterday given by Department of Transportation Secretary Elaine Chao.

In her opening comments, Chao lauded the benefits of infrastructure, calling it the “backbone of our world class economy–one of the most productive, flexible, and dynamic in the world” adding “it is a key factor in productivity and economic growth.” But even though that remains true, she stressed that the gains and strides from infrastructure are in a state of disrepair, due to crumbling infrastructure that is increasingly congested, in need of repair, and unable to keep up with technological change.

As for what happens next, Chao said that the White House will soon share its vision of what the infrastructure plan will look like and subsequently begin working with Congress in earnest.

“As OMB Director Mulvaney recently announced, the new infrastructure plan will include $200 billion in direct federal funds,” Chao said. “These funds will be used to leverage $1 trillion in infrastructure investment over ten years. OMB is identifying offsets, in order to avoid saddling future generations with more debt.  That’s why a key feature of the infrastructure plan will be unleashing the billions of dollars in private capital available for investment in infrastructure.

During the consultation process, investors told us again and again that there is ample capital available, waiting to invest in infrastructure. A major problem is the delays caused by government permitting and approval processes, which hold up projects for years, even decades. These delays increase the risk, adding uncertainty and billions of dollars to project costs. That’s why another key part of this Administration’s infrastructure plan will include common-sense regulatory, administrative, organizational, and policy changes to speed project delivery and reduce uncertainty. Many of the departments and agencies mentioned in the interagency task force will have a role in addressing these issues.”      

Chao explained that DOT has begun an initial regulatory review process, citing how the Federal Highway Administration, as an example, has started to reduce the regulatory burden in an effort to quicken the pace of productivity.

Perhaps the most telling part of Chao’s speech was in her explaining how a new paradigm will hopefully be created and shift the focus beyond what is being built  to how projects are being funded and financed.

“For example, states and localities that have secured some funding or financing of their own for infrastructure projects will be given higher priority access to new federal funds,” she said. “The goal is to use federal funds as an incentive to get projects underway and built more quickly, with greater participation by state, local and private partners.”

The need for sufficient infrastructure funding is never too far back in the rearview mirror.

That was a main talking point by the Coalition for America’s Gateways and Trade Corridors (CAGTC), in explaining that making freight infrastructure the hallmark of a large-scale investment program a unique opportunity to attract and retain domestic manufacturing and augment infrastructure, which are key objectives for the White House.

“As Congress and the Administration consider a large-scale infrastructure investment package to address transportation needs, CAGTC calls for a robust contribution for goods moving infrastructure,” said Tim Lovain, CAGTC Chairman and Executive Vice President of Crossroads Strategies, in a statement. “Dollar for dollar, direct federal investment in freight infrastructure yields a high return, creating construction jobs in the immediacy, and in the long term, bolstering the infrastructure that moves commerce.”

The importance of needed infrastructure funding was made clear at an April hearing held by the Senate Commerce, Science and Transportation Committee’s Subcommittee on Surface Transportation and Merchant Marine Infrastructure, Safety and Security which featured testimonies by  Derek Leathers, president and CEO of Werner Enterprises, and Mike Ducker, president and CEO of FedEx Freight.

In their respective testimonies, both executives stressed that more funding is needed in United States roads and bridges in order for the trucking industry to be able to safely and efficiently move goods throughout the country.

“Our highways, bridges, and roads are the lifeblood of the trucking industry,” Leathers said. “Unfortunately, the current infrastructure system increasingly feels the strain of long-term underinvestment at all levels of government. Nearly one-third of major urban roadways are in substandard condition, and the average motorist in the United States is losing $523 annually — $112 billion nationally — in additional vehicle operating costs as a result of driving on roads that are in need of repair.”

Not surprisingly, one way to boost badly needed infrastructure investment is through raising the federal fuel tax, something Leathers has ardently campaigned for over the years, with this hearing no exception.

Supporting federal investment in highways primarily through user fees i.e. fuel taxes on the beneficiaries of the system i.e. anyone driving on highways, with the revenue source being: efficient and inexpensive to pay and collect; Have a low evasion rate; Be tied directly to highway use; and Avoid creating impediments to interstate commerce, explained Leathers.

“Werner believes fuel taxes meet all of these criteria and we support an increase in, and indexation of, the federal fuel tax,” he said. “The fuel tax is the most efficient revenue source, and increasing it will produce no additional collection costs and minimal evasion. Indexing can limit the negative revenue impacts of inflation and improved vehicle fuel efficiency.”

Federal fuel taxes have remained unchanged from current levels going back to 1993 at 24.4 cents on diesel and18.4 cents on gasoline.

The fuel tax was not the sole topic addressed by Leathers. He also went into detail things like addressing the driver shortage, improving highway safety, investing in freight bottlenecks and congestion that impacts efficient movement for both freight and passenger travel.

FedEx Freight’s Ducker was equally blunt, explaining that “every day we are all reminded of the unfortunate state of disrepair of our nation’s highways and bridges, as well as the lost productivity for businesses and individuals caused by traffic congestion.”

Citing the “DOT Released 30-year Freight projection” from the Bureau of Transportation Statistics, which pegs freight volume increasing by 45 percent by 2015, Ducker laid out a vision for what is needed to meet that growth.

“In order to address these challenges, we must work together on policy and solutions that will modernize our surface transportation system and drive our economy forward,” he said. “Infrastructure investment cannot be limited to road and bridge improvements. A holistic modern transportation system needs to be established combining physical and digital infrastructure enhancements with sound transportation policies, including incentives for improved safety and fuel efficiency. And, of course, stable and sustainable sources of funding for the Highway Trust Fund will be essential for success.”


Source: Logistics Management