July 6, 2017
On June 22, 2017, H.R. 3001, Economy in Motion: The National Multimodal and Sustainable Freight Infrastructure Act, was filed in the U.S. House of Representatives. The current proposal hews closely to previous iterations of this bill that have been filed in recent years. H.R. 3001 would expand upon the national freight policy and funding system established in the FAST Act in December 2015, establishing new formula and grant programs for freight improvements, called the Multimodal Freight Funding Formula Program and the National Freight Infrastructure Competitive Grant Program, respectively. These two programs would be funded by a new Freight Trust Fund, supported through revenues raised from a new national waybill fee, which would act as a surcharge on the cost of freight transportation. H.R. 3001 would also revise national and state freight planning requirements.
This Policy Update examines the policies and provisions of H.R. 3001, including how the bill would advance the nation's freight agenda and support regional freight priorities.
Freight funding policy
The bill would establish a new Freight Trust Fund, separate from the existing Highway Trust Fund, to receive new freight-related revenues and expend them on the new competitive and formula programs. These revenues would come from a Freight Mobility Infrastructure Tax, which would be levied at a rate of 1 percent on the waybill, the amount paid for ground transportation of property, which in turn is defined as transportation provided by freight rail or truck. This report discusses waybill fees, among other freight revenue sources, at length. For shipments in which there is no payment for ground transportation services (e.g., a shipment made by a company's own fleet), the 1 percent tax would be levied on the fair market value of such transportation.
A 2015 iteration of this bill, H.R. 1308, would have generated $8 billion annually, with the revenues split evenly between the formula and competitive programs. According to estimates obtained at the time from the Federal Highway Administration and reported in a memo to the CMAP Freight Committee, Illinois would have received a maximum of $186 million annually under the formula program. This portion comes to about 4.67 percent of the total formula program, which compares favorably to the state's current 3.63 percent share of national highway apportionments in the FAST Act.
The bill would require the Secretary of the Treasury to determine a mechanism for prorating shipments that include a portion of transportation outside the United States, as well as rules to prevent transportation outside the United States for the purposes of evading the new Freight Mobility Infrastructure Tax. Shipments for U.S., state, and local government purposes would be exempt from the tax.
Formula freight program
The Multimodal Freight Funding Formula Program would have broad eligibility to support capital and operating investments, as well as planning, across freight modes to meet transportation, environmental, or economic development purposes. The federal funding share for a project under this program would be the standard 80 percent, although that share may increase to 85 percent for projects that mitigate diesel emissions related to construction activity.
Apportionment of the formula program to the states is based on each state's share of the nation's overall freight tonnage, value, and number of facilities. The calculations include all freight modes except pipeline, and the formula is weighted more heavily in favor of freight tonnage and value. More specifically:
- 37.5 percent is based on a state's share of the nation's total tonnage of rail, waterborne, highway, and airport freight.
- 37.5 percent is based on a state's value of the nation's total value of rail, waterborne, highway, and airport freight.
- 6.25 percent is based on a state's share of the nation's total number of cargo-handling airports.
- 6.25 percent is based on a state's share of the nation's total number of ports.
- 6.25 percent is based on a state's share of the nation's total number of freight rail track-miles.
- 6.25 percent is based on a state's share of the nation's total number of Interstate system miles.
Access to these formula funds would be contingent on a state completing various freight planning efforts. The bill would allow each state to access 40 percent of its formula funds after meeting "Tier I eligibility" requirements, which would require states to establish freight advisory committees, complete freight plans, identify freight bottlenecks across modes, prioritize freight projects for investment, and demonstrate that these projects will improve environmental outcomes (specifically: reduced greenhouse gas emissions, local air pollution, adverse water impacts, and habitat loss). Each state would be able to access the remaining 60 percent of its formula funding if it meets "Tier II eligibility" requirements, which would require states to complete freight analyses and investment plans across state or international borders.
Any formula funds that are not distributed to the states under either the Tier I or Tier II eligibility requirements would be swept into the competitive funding program, along with any formula funds that remain unobligated more than three fiscal years after they were initially apportioned to a state.
States would be required to report annually to the U.S. Department of Transportation (U.S. DOT) and Environmental Protection Agency (EPA) on progress made toward reducing greenhouse gas emissions and improving local air pollution as laid out in a state freight plan.
Competitive freight program
The National Freight Infrastructure Competitive Grant Program would support broad goals to improve the efficiency, reliability, and safety of goods movement; reduce the effects of freight on the environment and communities; and improve the state of good repair of freight facilities. The program would be administered by the Secretary of Transportation, who would be directed to select projects based on their support of these goals, along with benefit-cost analyses, innovation, environmental benefits, increasing American exports, and leveraging non-federal funding sources.
The competitive program would be able to support a wide array of freight projects, including both direct transportation infrastructure and environmental mitigation measures. A minimum of 5 percent of the competitive program would be reserved for "zero-emission freight demonstration projects," which would be defined by the Secretary of Transportation in consultation with the EPA Administrator. Further, eligible projects must have non-federal funding commitments, be included in state freight plans, and support the program's overall goals. As with the formula funding program, the federal funding share for a project under the competitive program would be the standard 80 percent, although that share may increase to 85 percent for projects that mitigate diesel emissions related to construction activity.
Recipients of competitive grants would be required to conduct a retrospective analysis of the project's performance, as well as annual reports to the U.S. DOT and EPA on progress made toward reducing greenhouse gas emissions and improving local air pollution as laid out in a state freight plan.
The bill would amend the national and state freight planning requirements established in the FAST Act. The National Freight Strategic Plan would be broadened to include best practices for various environmental outcomes related to freight movement. The membership of state freight advisory committees would be enumerated in greater detail and each member would be required to have certain qualifications. Further, the state freight advisory committee would be required to approve a state freight plan, including the investment plan.
The requirements for a state freight plan would broaden to include strategies and goals related to reducing four negative environmental outcomes: greenhouse gas emissions, local air pollution, water runoff and other adverse effects on water, and wildlife habitat loss. They would also expand to include strategies and goals to decrease the effects of goods movement on communities crossed by freight railroads. The bill would also add a new certification requirement for the Secretary of Transportation to approve a state freight plan. It would also require the Secretary to consult with the EPA Administrator to certify any environmental provisions of a state freight plan.
Because metropolitan Chicago is the crossroads of North America's freight network, GO TO 2040 and subsequent CMAP work recognize the vital importance of the region's freight network to economic prosperity and overall quality of life for northeastern Illinois. The plan calls on the region to create a more efficient freight network, with an emphasis on improving federal policy, securing dedicated funding for freight, and steering resources to priority projects. The plan also supports user fees, which raise transportation revenues from those that most strongly use and benefit from the transportation system. H.R. 3001 broadly meets these goals through its Freight Trust Fund; sustainable, mode-neutral waybill fee; and balance of formula and performance-based funding programs.
Further, CMAP's 2017 Federal Agenda emphasizes the importance of taking a multimodal approach to freight planning, and the need for data-driven processes to focus on national priorities for goods movement. H.R. 3001 is a good first step in this direction.
Not only does H.R. 3001 fit within the region's broad policy context, it also advances a revenue source with particular merit, the freight waybill fee. The waybill fee is the same concept as the "cost of freight service fee," which is currently being considered as a reasonably expected revenue source for the ON TO 2050 Financial Plan for Transportation. CMAP staff estimates that a freight cost of service fee imposed on the national level could raise $7 billion for northeastern Illinois through 2050. Without reasonably expected revenue sources, CMAP staff forecasts that the region will be unable to maintain and operate its transportation system, let alone modernize or expand it, over the planning period.
CMAP will monitor the progress of H.R. 3001 and continue to work closely with the region's congressional delegation to advance its federal agenda. CMAP is also developing a Regional Strategic Freight Direction, expected to be completed this coming winter, which will explore policy recommendations on how best to leverage federal freight funding opportunities for the Chicago region.