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President Obama Signs Comprehensive Infrastructure Bill
Practical Law Legal Update 1-520-1639 (Approx. 3 pages)
President Obama Signs Comprehensive Infrastructure Bill
by PLC Finance
| Law stated as of 06 Jul 2012 • USA (National/Federal) |
President Obama signed a comprehensive infrastructure bill reauthorizing transportation programs through September 2014.
On July 6, 2012, President Obama signed HR 4348, the Moving Ahead for Progress in the 21st Century Act (MAP–21). HR 4348 is a $127 billion comprehensive infrastructure bill that authorizes funds for transportation programs through September 2014, student loan programs and other purposes. The bill is funded mostly by extending various fuel and highway taxes, an 18.4 cents per gallon gasoline tax and a 24.4 cents per gallon diesel tax. The balance is funded by transferring $18.8 billion from the Treasury and $2.4 billion from the Leaking Underground Storage Tank Trust Fund. The Treasury expenditures are offset by revenues raised from modifications in the funding of defined benefit pension plans (see Legal Update, President Obama Signs Transportation Bill with Pension Funding Provisions). About 80% of the spending will be devoted to federal highway programs, with the remaining 20% going to mass transit projects.
Among other key transportation related provisions, the bill:
- Expands the Transportation Infrastructure Finance and Innovation Act (TIFIA) loan program. The new bill increases funding for this program from $122 million per year to $750 million in fiscal year 2013 (seven-fold increase over current levels) and to $1 billion in fiscal year 2014 (10-fold increase over current levels). The bill also increases the maximum share of project costs that can be financed through TIFIA from 33% to 49%.
- Adds $21.2 billion to the Highway Trust Fund. The HTF, funded primarily with vehicle and fuel taxes, is a major source of financing for state infrastructure projects.
- Simplifies the eligibility and application process for TIFIA loans and other types of credit support.
- Expands the TIFIA program to allow TIFIA loans to be used to make availability payments under public private partnership agreements.
- Requires the Department of Transportation to compile best practices on how the government can work with the private sector in the development, financing, construction and operation of transportation infrastructure and requires the Secretary of Transportation to:
- provide technical assistance on request; and
- develop standard PPP transaction model contracts within 18 months and make these model documents available to state and local governments.
- Consolidates 87 programs that were established under the last comprehensive infrastructure bill to less than 30 programs.
- Eliminates National Environmental Policy Act review for certain types of projects (for example, projects receiving less than $5 million in federal funds or that involve the repair or reconstruction of roads, highways and bridges damaged in a disaster or declared emergency). The bill also establishes deadlines for decision-making by agencies with responsibility for environmental review. Failure to meet these deadlines may subject these agencies to financial penalties.
The last comprehensive infrastructure bill, The Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU), expired in 2009. Until MAP-21, Congress had been funding infrastructure with periodic stop gap measures (see, for example, Legal Update, Obama Signs Stop-gap Infrastructure Bill). The most recent bill expired on June 30, 2012, but President Obama signed a one-week extension until the comprehensive bill could be signed.
MAP-21 gives some stability to infrastructure funding, which has been an issue the last few years. With transportation funding stabilized through 2014, states and project developers can better plan their projects and will have a better chance of receiving TIFIA loans or other types of credit support.
For more information on government financing of US infrastructure projects, see Practice Note, Public Private Partnerships: Issues and Considerations.