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White House Unveils Infrastructure Proposal

This week, the White House released a 10-year, $1.5 trillion infrastructure proposal that seeks to dramatically shift the way in which the nation funds its long-term infrastructure needs.  The proposed budget was a drafted before the agreement to raise spending caps was enacted.  Therefore, the proposed budget fails to account for the fact that Congress has approximately $67 billion additional resources to spend in fiscal year 2019.

While it proposal will not be approved by Congress as a package, several elements, if enacted, would significantly transform the relationship between the federal government and state and local agencies in carrying out the design and construction of public works.  At its foundation, the proposal relies heavily upon a priority to support projects that minimize reliance on federal assistance and enhances policies to advance projects through public private partnerships.

The proposal will now become a focus for the almost dozen congressional committees with jurisdiction over infrastructure policy on how to proceed. The White House fiscal year 2019 budget, separately released on Monday, dovetails many elements of the infrastructure proposal.  Select summary of the White House infrastructure proposal:

$100 Billion – Infrastructure Incentives Program

  • To attract and leverage non-federal revenue streams to support waterways, flood control, water supply, hydropower, water resources, drinking water facilities, wastewater facilities, stormwater facilities, and Brownfield and Superfund sites.
  • Funds would be divided in specific amounts to be administered by the U.S. Department of Transportation, U.S. Army Corps, and USEPA.

Incentive Grant Awards

  • Incentive grant could not exceed 20 % of new revenue
  • Any individual State limited to not more than 10% of the total amount appropriated
  • Awards would be conditioned on project progress milestones
  • Incomplete milestones after 2 years would be voided

$50 Billion – Rural Infrastructure Program

$20 Billion – Transformative Projects Program

  • Would provide federal funding and technical assistance for “bold, innovative and transformative” projects.
  • Funding would be awarded on a competitive basis to projects that are expected to be commercially viable, but possess unique technical and financial risk characteristics that otherwise deter private sector investment.

Funding Tracks

Funding be available under 3 tracks, demonstration, project planning and capital construction.  Each track would be designed to support a distinct phase of project life cycle.  To optimize return of taxpayer investment, funding under program could be used for:

  • Up to 30% eligible costs under the demonstration track
  • Up to 50% of eligible costs under project planning track
  • Up to 80% of eligible costs under capital construction track

$20 Billion – Infrastructure Financing Programs

To advance major complex infrastructure projects via increasing capacity of federal credit programs and broadening PABs use.

  • Within this program, $14 billion would be made available for expansion of existing credit programs to address broader range of infrastructure needs
  • All funds remaining in credit programs 10 years after enactment would be diverted to Federal capital financing fund to allow for efficient acquisition of real property
  • Budgetary cost for expansion of PABs would be $6 billion.
  • Expands Funding and Program Eligibility under the Water Infrastructure Finance and Innovative Act (WIFIA) program and would eliminate current $3.2 billion leveraging limit.
    • Expands WIFIA to include non-federal flood mitigation, navigation and water supply – USEPA lacks authority for flood mitigation, hurricane, and storm damage reduction, navigation, environmental restoration, and restoration of aquatic ecosystems (which has principally been within USACE jurisdiction).
    • Would eliminate requirement under WIFIA for borrowers to be community water systems – currently, public authority that sells water directly to another water provider is not a community water system and is not eligible for WIFIA funding unless specific authority is provided – e.g. desalination plant – is unable to receive WIFIA funding.
    • Would authorize Brownfield rehabilitation and cleanup of Superfund sites under WIFIA – Brownfield and Superfund programs do not have access to Federal lending program that requires large upfront funding and repayment based on later development.
    • Expands the WIFIA program to authorize eligibility for credit assistance for water system acquisitions and restructurings.
    • Expand authorization to include Federal deauthorized water resource projects

Expands Private Activity Bonds Categories and Offers Increased Flexibility

  • Expands category for Hydroelectric power generating facilities.
  • Creates new categories for flood control and stormwater facilities and for environmental remediation costs on Brownfield and Superfund sites.
  • Eliminate the Alternative Minimum Tax on PABs
  • Remove State volume caps on PABs for public purpose infrastructure projects and expand eligibility to ports and airports

Water Infrastructure Financing

  • Authorizes Clean Water Revolving Fund for Privately Owned Public-purpose Treatment Works
  • Authorizes User Fee Collection and Retention under the WRRDA Section 5014 Pilot Program and Recreation User Fees for Operation and Maintenance of Public Facilities and user fees that are paid to the U.S. Treasury once collected, would instead be retained at project to operate and maintain the site from which they were generated.
  • Expands authority for the acceptance of nonfederal contributed and advanced funds

 Infrastructure Permitting

  • Would establish a “One Agency, One Decision” Environmental Review Structure with a firm deadline of 21 months for lead agencies to complete environmental reviews through the issuance of a Finding of No Significant Impact (FONSI) or Record of Decision (ROD), as appropriate.
  • Firm deadline of 3 months after the lead agency’s FONSI or ROD for Federal agencies to make decisions with respect to the necessary permits.
  • Would direct Environmental Reviews through a single Environmental Review document and a Single Record of Decision coordinated by the Lead Agency, clarify that alternatives outside of the scope of an Agency’s authority or applicant’s capability are Not Feasible Alternatives , direct the Council on Environmental Quality to Issue Regulations to Streamline the NEPA Process, deduce duplication and increase use of Categorical Exclusions, and remove duplication in the review process for Mitigation Banking by eliminating Interagency Review Team.
  • Would authorize all lead federal agencies for infrastructure projects to opt into Highway and Transit Streamlining Procedures.

Would authorize Federal agencies to accept non-federal entities’ funding to support environmental and permitting reviews.

  • Would authorize Federal agencies to select and use nationwide permits without additional USACE review.
  • Allow use of one NEPA document for both Section 404 and Section 408 actions.
  • Lengthen NPDES Permit terms to 15 years and authorize automatic renewals.

White House Fiscal Year 2019 Budget

On February 12, the White House sent a $4.4 billion fiscal year 2019 budget proposal to Congress calling for increased spending for the military, infrastructure, border security and sharp cuts to environmental and agriculture programs.  Recent congressional action on tax and spending required the White House to hurriedly adjust funding levels for several programs to account for additional spending. These changes are noted in an addendum to the budget proposal.

The proposal is one of the first steps to flesh out a two-year budget framework passed by Congress last week, which increased caps on both military and domestic spending. Congressional appropriations committees will soon begin holding hearings on proposed budgets for departments within their jurisdictions. As was evidenced last year with President Trump’s first budget proposal, the deep funding cuts are expected to draw opposition from members of both political parties.  While the proposal will not be embraced by Congress, it establishes the starting point for what is expected to be a robust and contentious debate over spending priorities.  Below is a summary of select agency budgets:

Department of Agriculture

Requests $19 billion for USDA (excluding changes in mandatory programs), a $3.7 billion or 16.4 percent decrease from the 2017 enacted level.

  • Wildfire Suppression – funds 100 percent of the rolling 10-year average cost within discretionary budget caps.
  • $30 million to fund broadband grants, $23 million in broadband loans, and $24 million to fund distance learning and telemedicine grants.
  • Eliminates the Rural Economic Development Program

Department of Commerce

Requests $9.8 billion for Commerce, a $546 million or a 6 percent increase from the 2017 enacted level.

  • Eliminates the Economic Development Administration and NOAA Grants.

Department of the Interior

Requests $11.5 billion for Interior, a $2.3 billion or 16.8 percent decrease from the 2017 enacted level. This amount includes $339 million allowed for under the budget cap agreement.

  • $891 million for the Bureau of Reclamation for Water and Related Resources.
  • $444.0 million is for water and power facility operations, maintenance, and rehabilitation activities
  • $447.0 million for construction, planning, and management of water and energy projects and programs.
  • $19.9 million for WaterSmart Programs, down from $83.5 million in FY17
  • $35.0 million for California Bay-Delta Restoration
  • Proposes a new Public Lands Infrastructure Fund to help pay for repairs and improvements (estimated $152 million in FY 19) in national parks, wildlife refuges, and at BIE schools, which have more than $12 billion in deferred maintenance. The fund would be derived from 50 percent of incremental energy leasing receipts over 2018 Budget projections that are not otherwise allocated for other purposes.
  • $859.7 million for the U.S. Geological Survey
  • Supports funding for National Streamgage Network, including 3,460 Federal Priority Streamgages
  • Eliminates discretionary Abandoned Mine Land grants that overlap with existing mandatory grants, funding for National Heritage Areas that are more appropriately funded locally, and National Wildlife Refuge fund payments to local governments that are duplicative of other payment programs.

U.S. Army Corps of Engineers

Requests $4.8 billion for the Corps, a 22.2 percent decrease from the 2017 enacted level.

  • $1.930 billion for commercial navigation.
  • $1.491 billion for flood and storm damage reduction.
  • $224.464 million for aquatic ecosystem restoration.
  • $1 billion for the Construction program, consisting of $871 million from the Construction account, and $32.6 million from the Harbor Maintenance Trust Fund.

Department of Energy

Requests $30.6 billion for Energy, a $1 billion or 1 percent decrease from the 2017 enacted level.

  • $696M for Energy Efficiency and Renewable Energy, $1.3B below FY 2017
  • Recommends divestment of WAPA, Southwestern Power Administration and Bonneville Power Administration transmission assets.

U.S. Environmental Protection Agency

$6.1 billion for EPA, a $2.0 billion decrease from the 2017 enacted level.

  • *$863 million – Drinking Water State Revolving Fund
  • *$1.394 billion – Clean Water State Revolving Fund
  • *$1.089 billion for Superfund
  • $20 million Water Infrastructure Finance and Innovation Act (WIFIA)
  • $62 million for Brownfields projects
  • Eliminates: Water Quality Research and Support Grants, WaterSense, Climate Change Research and Partnership Programs; the Indoor Air and Radon Programs; Geographic Programs (SF Bay/Long Island Sound), the Marine Pollution and National Estuary Programs; the Environmental Education Program; Categorical Grant: Nonpoint Source (Sec. 319), and the Beaches Program.

* The budget cap agreement allows for an additional $397 million to the State and Tribal Assistance Grants account for the Clean Water and Drinking Water State Revolving Funds (SRF). The division of this allocation, between the DWSRF and CWSRF, was not identified.  The budget cap agreement allows for an additional $327 million to the Hazardous Substance Superfund account largely for the Superfund Remedial program

Bills/Reports/Studies

California WaterFix Cost-Benefit Analysis – analyzes the value of water system improvements and the related costs and benefits to potential participants in both the urban and agricultural sectors.

State Revolving Funds: Financing Drought Resilient Water Infrastructure Projects (USEPA)

Upcoming Congressional Hearings

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