Washington Report

The End - Almost! - of the 108th Congress

October 27, 2004

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Transportation Appropriations Congress has recessed for the election but will return November 16 for a post-election, lame-duck session which is expected to focus on pending FY 2005 appropriations bills, 9/11 intelligence restructuring, and raising the debt limit. Leaders in both the House and Senate expect the lame-duck session to last only one week, and most Hill observers doubt that a long-term TEA 21 reauthorization bill will be considered during that week.

• Before it recessed, Congress extended TEA 21 for eight months through May 31, 2005. The extension authorizes transit programs at a level equal to eight-twelfths of the $7.758 billion included in the Senate Appropriations Committee-passed FY 2005 appropriations bill. See below for more details.

• Currently, federal surface transportation programs are being funded under an appropriations Continuing Resolution (CR) at FY 2004 spending levels through November 20. The FY 2005 Transportation-Treasury bill has been passed by the House. The Senate Appropriations Committee has approved its version of the bill, but the bill has not been considered by the full Senate. It is not clear whether Congress will complete action on the bill during the lame-duck session. See below for more details.

Action Call! During the recess, urge your congressional delegation to support passage of the FY 2005 Transportation-Treasury Appropriations bill during the lame-duck session at no less than the Senate Committee-approved level of $7.758 billion for transit.

• On the transit security front, the President signed the FY 2005 Homeland Security Appropriations bill into law on October 18. The bill for the first time earmarks $150 million for transit, passenger rail, and freight rail security grants, and additional funds for rail security. See below for more details about this and other transit security legislation.

• Finally, Congress after much delay passed tax legislation that includes a prohibition on tax-advantaged leasing that many transit agencies have used in the past. As noted below, certain transactions pending before the FTA have been "grandfathered" and may still be approved by the FTA.

TEA 21 Reauthorization

The eight-month TEA 21 extension (P.L. 108-310) authorizes transit programs at a level equal to eight-twelfths of the $7.758 billion included the Senate Appropriations Committee-passed FY 2005 appropriations bill, and guarantees funding at an annualized level of $7.265 billion, the level set in the draft FY 2005 budget resolution conference report. In addition, the bill includes language expressing the sense of Congress that any six-year reauthorization bill should guarantee funding for the FY 2005 transit program at the authorized level of $7.758 billion. Otherwise the extension is generally "clean" in that it makes few programmatic changes and does not contain member projects.

Conferees on reauthorization worked until early October to pass a six-year bill, but were unable to agree on a number of issues, particularly the overall funding level and an increase in the minimum allocation of federal gasoline tax resources to states under the highway program. Constraints on overall spending levels made it difficult for conferees to meet demands to increase the minimum allocation to the states in the highway program from 90.5% to 95%.

Conferees discussed a six-year level of $299 billion in contract authority and $284 billion in guaranteed funding, but the Senate conferees from both parties balked at the deal. At the $299 billion level, the minimum allocation could only be increased to 92% or 93%. Further, Senate Democrats were unwilling to support the compromise because of a prior agreement not to accept any funding level which was not acceptable to all Senate conferees. The Administration also refused to publicly support any funding level of more than $256 billion. Election-year politics also played a major role.

As a result, the process of reauthorizing TEA 21 for six years will almost certainly start over next year with the 109th Congress. With a new Congress, new highway/transit legislation will have to be developed and introduced, though it is expected that much of what is in the current House and Senate bills will be incorporated into new legislation next year.

Obviously, changes in congressional leadership or control of the White House would affect the legislative calendar in the 109th Congress.

For more information, please contact Rob Healy in the APTA Government Affairs Department at (202) 496-4811, or rhealy@apta.com.

FY 2005 Appropriations

The future of the FY 2005 Transportation-Treasury appropriations bill remains uncertain. The House has passed its version (H.R. 5025), but the Senate has not yet voted on its version (S. 2806). Congress has passed only four of the thirteen appropriations bills, and it is unlikely that the remaining nine bills will be passed and sent to the President before the CR expires on November 20. While Congress is likely to complete some of the remaining nine appropriations bills and combine them in an omnibus appropriations package, some bills will probably not get done and instead be funded under another CR that runs through early next year.

Completion of the Transportation-Treasury Appropriations bill by Congress is probably the best chance for an increase in transit funding in the 2005 fiscal year. Although the House-passed bill contains no funding for transit, highways, or Amtrak (funding for all three was stricken on the House Floor during a procedural skirmish), House conferees can be expected to use the House Committee-approved levels, with the federal transit program at $7.249 billion, as their starting point. In contrast, the bill approved by the Senate Appropriations Committee would increase FY 2005 transit funding by almost $500 million, to $7.758 billion.

The table shows funding levels for transit programs under the House and Senate bills:

Program	FY 2004 Appropriation (a) (Millions)	FY 2005 House Committee (Millions)	FY 2005 Senate Committee (Millions)
Total All Programs	7,265.88	7,249.15	7,758.00
Formula Total	3,816.35	(b) 4,039.00	(b) 4,007.18
Urbanized Area Formula	3,425.61	3,633.25	3,604.22
Rural Formula	239.19	253.35	251.32
Elderly and Disabled	90.12	95.45	94.69
Clean Fuels	49.71	50.00	50.00
Alaska Railroad	4.82	4.83	4.83
Rural Transportation Accessibility	6.91	6.95	6.95
Capital Investment Total	3,138.87	2,852.65	3,413.83
New Starts	1,315.98	(c) 1,030.83	1,474.43
Fixed-Guideway Modernization	1,199.39	1,214.40	1,214.40
Bus and Bus Facilities	623.50	607.40	725.00
Planning	72.57	73.00	73.00
Research	52.69	53.00	55.00
Job Access and Reverse Commute	104.38	150.00	125.00
University Centers	5.96	6.00	6.00
FTA Operations	75.05	75.50	78.00
(a) Reflects FY 2004 government-wide across-the-board spending reduction of 0.59%.
(b) Formula program amounts in FY 2005 House Committee Report and FY 2005 Senate Committee Report add to more than Formula Total.
(c) Does not include $157.91 million in prior year unobligated Bus and Bus Facilities and New Start funds allocated for New Starts in the FY 2005 House Committee Report.

Additionally, both the House and Senate Committee Reports accompanying the respective bills contain new directives affecting the transit program. The Senate Committee Report (108-342) would continue for another year the pooled purchase pilot program begun under the FY 2004 Appropriations bill and expand the program from three to five pilot projects. Other report language would direct the Department of Transportation's Office of Inspector General to conduct a year-long study of the transit bus procurement process. The report also notes that the Committee is troubled by actions taken by FTA last year to withhold the release of funds for new start projects that have received more than $25 million in federal funding before receiving a full funding grant agreement. The report notes that "there is no limit of $25,000,000 on alternatives analysis, preliminary engineering, or final design, and a project seeking more than that amount for such activities does not need an early systems work agreement, as FTA has interpreted to be required…".

The House Report (108-671) contains language directing the FTA, in evaluating proposed new start projects, to place greater emphasis on some factors - such as cost-effectiveness and ridership - and less emphasis on other factors - such as land use; and requires FTA to produce monthly reports on the status of all new starts projects and to formally notify Congress 30 days in advance of giving approval to any project to begin preliminary engineering or final design. The House Report accompanying the bill reflects ongoing Committee issues and concerns with the FTA, so much so that funding would be cut for the Administrator's Office, the Office of Research, Demonstration, and Innovation, and the FTA Region 4 office. The report also discourages FTA from growing its security functions at the expense of core safety activities. See our July 23, 2004 Legislative Update for more details in this regard.

For more information, please contact Rob Healy in the APTA Government Affairs Department at (202) 496-4811, or rhealy@apta.com.

Homeland Security Appropriations Bill Provides Funding for Transit and Rail Security

The conference report on the FY 2005 Department of Homeland Security (DHS) Appropriations bill (H.R. 4567) has been signed into law by the President (P.L. 108-334). The legislation for the first time earmarks funds for transit, with $150 million for transit, passenger rail, and freight rail security grants; DHS Secretary Ridge will decide how much funding each mode will receive under this category. Of this funding amount, each state agency must obligate not less than 80 percent of the total amount of the grant to local governments within 60 days after the grant is awarded. Separately, the bill provides $12 million for rail security, with $10 million to support the deployment of up to 100 federal rail compliance inspectors and $2 million for the deployment of canine explosive detection teams.

Also included in the legislation is $1.1 billion for formula-based grants and $400 million for law enforcement terrorism prevention grants, which are provided to the states through a State Administering Agency (SAA) in each state. A list of all SAAs may be found at www.ojp.usdoj.gov/odp then click on "contact information," and then "state contacts". We encourage transit systems to work with their SAA to demonstrate their need for security funding for their system. In addition, there is $885 million available for those urban areas determined by Secretary Ridge to be at high-risk of terrorist attack. Once those urban areas have been identified, we will provide that information to you.

The legislation directs the Secretary of Homeland Security, in consultation with the Secretary of Transportation, to develop, maintain, and submit to the House and Senate Committees on Appropriations no later than March 31, 2005, an integrated strategic transportation security plan. The plan will identify and evaluate the nation's transportation assets that need to be protected, and also set risk-based priorities for defending the assets identified. The plan will be required to select the most practical and cost-effective ways of defending the assets identified, and assign transportation security roles and missions to the relevant federal, state, regional, and local authorities, and to the private sector.

Transit Security Authorization Bills Move Forward

On September 29, the House Transportation and Infrastructure Committee approved H.R. 5082, the "Public Transportation Terrorism Prevention and Response Act of 2004." The bill would authorize $3.5 billion over three years for capital and operation costs associated with transit security. The Department of Transportation (DOT) would provide grants on the basis of threat and risk assessments. It would require DOT and DHS to sign a Memorandum of Understanding to define and clarify roles of the respective agencies, security standards, and funding priorities. Further, the bill would require DOT and DHS to jointly update existing risk assessments of transit agencies, and would require DOT to develop guidelines for a public transportation employee security training program.

On October 1, the Senate approved S.2884, the "Public Transportation Terrorism Prevention Act of 2004". This legislation, which was unanimously reported by the Senate Banking Committee, authorizes $3.5 billion over three years for transit security. The Senate bill differs from the House bill in that funding and administration of the program would be done through the DHS. Both bills envision such funding should be separate from and supplementary to longstanding federal programs for investment in public transportation infrastructure.

Also on October 1, the Senate approved S. 2273, the "Rail Security Act of 2004". This bill would provide $1.1 billion in funding mainly for rail security and for Amtrak to make fire and life-safety improvements to Amtrak tunnels on the Northeast Corridor in New York, Baltimore, and Washington, D.C.

With a new Congress forming next year, each of these security authorization bills will have to start the legislative process anew. Expectations at this point are that the bills will be reintroduced and acted on early in the new Congress.

For more information, please contact Tom Yedinak in the APTA Government Affairs Department at (202) 496-4865, or tyedinak@apta.com.

Legislation Affecting Transit Leasing Passes Congress

On October 22, the President signed into law the "American Jobs Creation Act of 2004," a $138 billion tax bill that, among other things, prohibits tax-advantaged leasing transactions that have been useful sources of revenue for many transit agencies. The bill, however, permits the FTA to approve such lease transactions submitted between June 30, 2003 and March 13, 2004, if the FTA approves such transactions by January 1, 2006. The bill prohibits all similar leasing transactions applied for after March 13, 2004. No word yet from the experts as to whether any form of tax-advantaged leasing would be permissible under this new legislation.

For more information, please contact Demaune Millard in the APTA Government Affairs Department at (202) 496-4887, or dmillard@apta.com.

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