A new model for infrastructure funding or a high water mark? Progress on WRDA continues as House and Senate conferees meet
Chances remain high that legislation authorizing funding for navigation, dredging, hurricane risk reduction, and environmental restoration projects around the country will make it to the President’s desk for expected signature. Separate versions of this legislation passed both the Senate and the House of Representatives this year by overwhelming, bipartisan votes. A House-Senate conference committee is meeting now to iron out the differences between the House- and Senate-passed bills, which would be one of the last steps before a final vote occurs in each house and the legislation is sent to the President’s desk. We remain confident that this will happen either before Congress adjourns for the year or after it returns in January 2014. However, whether the final version of this legislation is a new model for infrastructure funding in this age of sequestration, as we earlier suggested, or simply a high-water mark for a Congress that cannot agree on the proper role for government in the funding of infrastructure, will depend on the final version that Congress produces. The devil, as always, is in the details.
The biggest factors in support of final passage? No earmarks for new water projects plus an increase in dedicated funding for harbor maintenance-specific projects. When the Senate Environment and Public Works Committee (“EPW”) first passed S. 601, the Water Resources Development Act of 2013 sponsored by EPW Chair Senator Barbara Boxer (D-CA), it enjoyed unanimous support, something unique in this post-earmark era of limited federal spending. Key to this support was the fact that the legislation did not fund any specific projects but rather authorized work to proceed on any project where “a report of the Chief of Engineers has been completed and a referral by the Assistant Secretary of the Army for Civil Works has been made to Congress as of the date of enactment” (section 1002). That would authorize 18 projects for $3.4 billion in federal funding through Fiscal Year 2018. The House-passed bill, H.R. 3080 the Water Resources Reform Development Act of 2013 sponsored by House Transportation and Infrastructure Committee Chair Bill Shuster (R-PA-9), uses similar – but not identical – language to authorize 23 new projects, totaling almost $8 billion in federal funding (section 1002). Additionally, both bills tackle the surplus in the Harbor Maintenance Trust Fund (“HTMF”) that has reached almost $7 billion by dedicating it to ongoing dredging and other harbor maintenance projects. The HTMF is supported entirely by user-fees, yet sees half of its revenue diverted from port projects to support the federal government’s activities. Both Title 8 of S. 601 and H.R. 3080 would guarantee that expenditures from the HTMF would equal receipts plus interest.
Both S. 601 and H.R. 3080 passed their respective houses with overwhelming, bipartisan majorities: S. 601 passed the Senate May 15, 2013 by a vote of 83-14. H.R. 3080 passed the House October 23, 2103 by a vote of 417-3. Yet despite such overwhelming support, a number of differences need to be resolved in conferences that go to the question of how far this legislation will go in setting a model for future bills, including:
How much of a role should the Corps of Engineers play? As noted above, S. 601 skirts the earmark ban Congress would authorize funding for projects cleared by the Corps of Engineers and referred to Congress. H.R. 3080 contains similar language but contains additional language for “Future Project Authorizations” (section 1004). Numerous reports indicate that House Republicans were unhappy with ceding too much power to the Executive Branch, which led to this language. Under this section, the Corps is to submit its own recommendation for future water project authorizations, but allow Congress the opportunity to approve or reject them. This mirrors a problem facing all spending decisions in the absence of congressional earmarking: with Congress taking itself out of the picture on spending, authority has shifted to the executive branch. This language indicates the beginning of a shift back.
Should financing be an option? As we noted earlier, Title 10 of S. 601 establishes the “Water Infrastructure Finance and Innovation Act of 2013” to provide loans and loan guarantees to water infrastructure projects. The goal would be to finance projects with dedicated, non-federal, funding sources (such as user-fees). Sections 10007 and 10008 lay out the types of eligible projects and activities, which include:
- Flood or hurricane control projects
- Levees, dams, tunnels and aqueducts
- Projects for enhanced energy efficiency
- Repair, rehabilitation, or replacement of a treatment works, community water system, or aging water distribution facility
Projects would be financed at long-term Treasury interest rates, which would represent a cost savings for many state and local borrowers. Fifty million dollars is authorized annually for a program to be run by the Army Corps of Engineers and the Environmental Protection Agency (section 10014(a)).
H.R. 3080 does not contain a similar proposal. However, we would note that the proposal is modeled after the successful transportation financing program known as the Transportation Infrastructure Finance and Innovation Act (“TIFEA”), which has provided private investment of a number of major road and bridge programs. Financing of infrastructure projects, including transportation, continues to be an option available to decision-makers in these tight times. If Congress agrees to create a similar program for water infrastructure projects, it would indicate how strong of an option.
Again, we are confident that a water infrastructure funding bill will reach the President’s desk. Its final composition remains to be determined.