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Senate Commerce Subcommittee Hearing on Rural Transportation Initiatives

Senate Commerce, Science, and Transportation Subcommittee on Transportation and Safety

“Building Infrastructure in America: Overview of the Build America Bureau and the U.S. Department of Transportation Rural Transportation Initiatives”

Tuesday, January 28, 2020

 

Key Topics & Takeaways

  • The purpose of the hearing was for members of the Senate Commerce Subcommittee to exercise its oversight responsibilities of the Build America Bureau, as required by the Fixing America’s Surface Transportation (FAST) Act and review the Department of Transportation’s (DOT) Rural Transportation Initiatives.
  • DOT and Build America Bureau Initiatives: Fischer asked Szabat how DOT efforts such as the ROUTES initiative would help increase rural community access to infrastructure funding. Szabat said that the DOT had sought feedback from stakeholders to improve and evolve their initiatives. Szabat said that the DOT does consider which projects will help reduce congestion and have future economic benefits and impact. Farajian said that the Bureau had focused on finding and implementing many underutilized and innovative opportunities for rural transportation development. Farajian added that outreach efforts expand beyond state visits, including conference calls, webinars, and industry gatherings.
  • RRIF: Fischer asked about financing for the RRIF credit risk premium. Farajian said that projects under $50 million are eligible for Bureau assistance, including financial support, to pay the credit risk premium. Duckworth asked Farajian for recommendations to improve the RRIF program. He said he would provide the Senator a list of recommendations on how to improve RRIF.
  • INFRA Program Caps: Szabat said safety is a top priority for the DOT, and that the administration has not taken a position on the cap but would consider lifting the cap. He added that there is a need for investment in infrastructure outside the federal government.

Witnesses

 

Opening Statements

Chairwoman Deb Fischer (R-Neb.)

In her opening statement, Fischer stated that the focus of the hearing would be on the DOT infrastructure development programs. Specifically, she said she would like to discuss the Build America Bureau’s efforts and new rural engagement opportunities for transportation and railroad rehabilitation and refinancing. Fischer highlighted the American Society of Civil Engineers’ D+ rating of U.S. infrastructure, which she called “unacceptable.” Fischer opined that there should be a focus on improving current infrastructure and building new assets to accommodate increasing demands for both urban and rural communities. Fisher explained the intent of passing the FAST Act was for the DOT to simplify the grant and financing information process, streamline the application process, and provide technical assistance to project sponsors. She expressed her desire to hear about the Transportation Infrastructure Finance and Innovation Act (TIFIA) program, the Railroad Rehabilitation and Improvement Financing (RRIF) program and the Rural Opportunities to Use Transportation for Economic Success (ROUTES) initiative.

Ranking Member Tammy Duckworth (D-Ill.)

In her opening statement, Duckworth echoed several of Fischer’s points, specifically about the low rating of U.S. infrastructure and the need for reliable, safe and efficient transportation advancements for the U.S. to remain globally competitive. Duckworth highlighted the importance of established DOT grant and credit programs and the Build America Bureau to improve access to financing for infrastructure projects. She noted the diminishing number of infrastructure projects in rural communities, as costs and needs have increased. Duckworth expressed her alignment with the Trump administration regarding rural infrastructure investment and recommended that DOT be transparent and create a level playing field for communities, regardless of geography.

Testimony

The Honorable Joel Szabat, Acting Under Secretary of Transportation for Policy, U.S. Department of Transportation

In his testimony, Szabat emphasized that many rural communities continue to face transportation-related challenges and said that the DOT has focused on improving safety and mobility in rural communities. Szabat said that the ROUTES initiative and the TIFIA Rural Project Initiative (RPI) are two projects the DOT is using to address concerns in rural communities. He said that RPI would allow more rural communities to utilize the DOT’s major loan program. Szabat added that the ROUTES initiative would help rural communities to access federal transportation grant funding and loan programs and would also improve data sharing networks. Szabat said that the DOT has been working to increase the share of its nine program discretionary grants for rural communities, noting the Better Utilizing Investments to Leverage Development (BUILD) grant awards have increased 50-64 percent in the last few years. He added that other key administrative departments at DOT, such as transit, highway and rail, have also increased their rural community safety and mobility efforts.

Dr. Morteza Farajian, Executive Director, Build America Bureau, U.S. Department of Transportation

In his testimony, Farajian said the Build America Bureau has implemented new programs to better facilitate grants and funding to rural communities in two ways. First, the Bureau is enhancing the pipeline of eligible projects to fully utilize existing capacities. Second, the Bureau is diversifying the pipeline of eligible projects geographically to ensure an equitable distribution of program benefits. Farajian said the Bureau will focus in on three key initiatives: 1) to streamline the credit process to improve efficiency and reduce costs to borrowers; 2) conduct focused outreach to potential borrowers; and 3) enhance the scope and scale of the technical assistance that project sponsors can seek, especially for new, smaller borrowers. He highlighted that over the last 15 years, 33 states have not taken advantage of the Bureau’s credit programs. He added that since June, the Bureau had visited ten of these states, which has led to better engagement and educational opportunities. Farajian explained that the RPI program targets and eases financial barriers for the TIFIA program. He added that the RRIF Express initiative focuses on improving the borrower’s experience for short line and regional railroads. Farajian affirmed his commitment to working with Congress and other partners to continue removing barriers to safety, economic growth and mobility for rural and urban communities.

John McCarthy, Co-Chair, The Northwest Seaport Alliance

In his testimony, McCarthy said that over a quarter of U.S. Gross Domestic Product (GDP) is dependent on seaport cargo movement and that roughly 60 percent of Northwest Seaport Alliance’s imports move beyond the direct region. He said that rural, trade-dependent commodities need well-maintained, efficient and reliable infrastructure to move goods across the U.S. and abroad. McCarthy emphasized that for the U.S. to remain competitive, especially with Canada, ports require significant infrastructure improvements. McCarthy added that ports often must invest to meet rising cargo volumes. He recommended rethinking the approach to port and freight through three initiatives: 1) increasing funding for the Port Infrastructure Development Program and the Port Intermodal Improvement Program; 2) increasing funding for the FAST Act’s Infrastructure for Rebuilding America (INFRA) and Freight Formula Programs; and 3) removing multimodal funding caps on the INFRA and Fright Formula Programs.

Question & Answer

DOT and Build America Bureau Initiatives

Fischer asked Szabat how DOT efforts such as the ROUTES initiative would help increase rural community access to infrastructure funding. Szabat said that the DOT had sought feedback from stakeholders to improve and evolve their initiatives. He also stated that the DOT has to develop more up to date information. Asked by Fischer whether DOT factors future traffic patterns into their grant approval process, Szabat said that the DOT does consider which projects will help reduce congestion and have future economic benefits and impact.

Fischer asked Farajian to identify statutory or regulatory barriers to assist rural communities. Farajian said that the Bureau had focused on finding and implementing many underutilized and innovative opportunities for rural transportation development. Farajian added that outreach efforts expand beyond state visits, including conference calls, webinars, and industry gatherings.

RRIF

Fischer asked about financing for the RRIF credit risk premium. Farajian said that projects under $50 million are eligible for Bureau assistance, including financial support, to pay the credit risk premium.

Duckworth asked Farajian for recommendations to improve the RRIF program. He said he would provide the Senator a list of recommendations on how to improve RRIF.

Duckworth about inquired about a requested TIFIA airport study. Farajian explained the effort that the study required and stated that the Bureau is working on finalizing recommendations. He stated that once the report has gone through the interagency clearance process, the Bureau will share it with Congress.

INFRA Program Caps

Sen. Maria Cantwell (D-Wash.) asked if the DOT supports lifting the cap on the INFRA program. Szabat said safety is a top priority for the DOT, and that the administration has not taken a position on the cap but would consider lifting the cap. He added that there is a need for investment in infrastructure outside the federal government.

Infrastructure Challenges for Ports

Fischer asked McCarthy about the challenges that ports face with increasing container sizes, technology utilization, maritime detention feeds, and disaster recovery funding access. McCarthy responded that the larger container sizes have led to increased congestion on roads and that ports are struggling to develop infrastructure at their facilities to address the issue.

 

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