Posted by LLOYD J CAZES CPA

Top 10 Impacts of FAST Act

Top 10 Impacts of FAST Act

The FAST (Fixing America Surface Transportation) Act, a five-year law on bipartite land transport approved by the House (359-65) and the Senate (83-16), was signed by President Obama. By adopting the FAST Act, Congress committed to putting in place a five-year infrastructure funded by the federal government at moderately higher levels. However, the United States continues to meet the growing need to build and maintain critical infrastructure without the funds to do the job. Promoting private investment in infrastructure is part of the solution. And to achieve this, public-private partnerships (P3) are a proven tool. The FAST Act will positively and negatively determine the role of private investment in infrastructure projects in the coming years, not just with substantial changes in the number of front-line loans. Here is a summary of the top ten impacts of the legislation:

Accelerating permits and reviewing the environment

FAST law requires the US Department of Transportation (USDOT) is working to develop coordinated and simultaneous environmental reviews in all federal agencies for significant transportation projects. In addition, a new Federal Authorization Improvement Commission, consisting of a CEO appointed by the President and employees of the relevant federal agencies, will develop the recommended programs for different types of approvals and examinations, work with agencies to coordinate processes and maintain a specialized group online authorizations line to track the status of projects in the review and approval process. This latter effort applies not only to transportation, which covers energy projects, pipelines, broadband networks, and water-related projects, costing more than $200 million. By reducing delivery times and project delays, these provisions can make private investors more comfortable investing in US projects. A new pilot program is also included that would allow up to five States to implement their environmental review laws and regulations in place of those provided for in the National Environmental Policy Act, designed to assist projects in avoiding current duplication requirements in the permitting process.

Create a one-stop-shop for credit support

FAST establishes USDOT's National Board for Surface Transportation and Innovative Finance as a one-stop-shop for credit assistance programs to coordinate and accelerate federal assessments and approvals, and to provide technical assistance. The office appears to be modeled in the same way as the Build America Transportation financing center, launched in September 2015 but is now legally allowed to preserve its future. The law also creates a new financial and credit assistance commission to simplify the application process for TIFIA and other credit programs.

70% slashed from TIFIA

Funding for the Transport Infrastructure Financing and Innovation Act (TIFIA) is the main government program that supports PPPs, in addition to other publicly funded infrastructure projects. However, the FAST law has reduced TIFIA from an authorized level of USD 1 billion for 2015 to USD 275 million in 2016 and 2017, to USD 285 million in 2018 and USD 300 million in 2019 and 2020, most cost-effective tools for infrastructure construction projects FAST gives states the power to use other federal funds to finance the TIFIA grant (which essentially allows state projects to use TIFIA's financial take advantage of it), especially for TIFIA, but it is unclear whether a State would choose to use the funding for this purpose.

Supports P3 offices and state infrastructure banks

The FAST Act reinstates a state's ability to use up to 10 percent of the federal government's road funds to take advantage of a state-owned infrastructure bank. The 2005 SAFETEA-LU law granted this authority to states, but it was not maintained in MAP-21 in 2012. Also, it is possible to use funds from the surface transportation program, the most flexible federal road funds. Establishes and manages a PPP government office to assist in the design, implementation, and monitoring of PPPs and provides bursaries for expired PPP bidders "if necessary to promote strong competition in the acquisition of public-private partnerships." The legislative model previously published by the PAC recommends the creation of state PPO offices to assist private agencies or firms interested in PPPs and to contribute to reducing the complexity and uncertainty associated with PPP.

Indicates a national loading strategy

FAST requires USDOT to designate a national multimodal transportation network consisting of a national road freight network (established by the USDOT and the states), Class I railways, public ports with annual trade total of at least 2 tones of inland waterways, and 50 airports with the highest freight traffic. USDOT is required to update the National Freight Transport Strategic Plan every five years. States should develop freight transport plans to govern direct and long-term investments and are encouraged to set up freight transport advisory committees. This will assist private investors to identify national infrastructure, and help all levels of government better recognize the interconnectedness of our transportation systems, identify needs, and allocate limited resources.

Providing new grants and pilot programs

The FAST Act creates a pilot project as part of the New Starts transit program, so that up to eight P3 projects can be quickly approved. These projects may be new rail or road lines or projects to extend the capacity of existing lines. Pilot projects receive a reduced federal quota of 25% (lower than the FAST 60% federal quota for other New Starts projects). Also, a new grant program is designed to help states test other user-based revenue mechanisms to finance transportation. To date, only Oregon has tested vehicle mileage (VMT) as a potential alternative to the gas tax, although many other states are considering it. This new subsidy program can help accelerate the investigation and implementation of VMT royalties or other user-based mechanisms that some consider being more viable than the long-term gas tax. The program has $ 15 million in 2016 and $ 20 million a year in 2017-2020.

Promotes competition and the economic development of railways and traffic

The FAST Act encourages private and public consortia to participate in the provision of rail services, authorizing the USDOT to open three of Amtrak's long-haul routes to competition and to solicit proposals for the development of high-speed trains. Also, the FAST Act extends federal support for economic development in the railway and rail sectors in several ways. It allows the use of TIFIA and RRIF (a similar TIFIA program for rail projects) for transit-oriented development projects. Amtrak needs to analyze the potential for revenue growth by developing stations and taking advantage of its right-of-way, allowing the placement of telecommunications and other equipment.

Allows Bundled Projects

The FAST Act states that states can consolidate bridge projects and ensure that the whole is treated as a single project for federal funding. 

Supports innovative technologies and project improvement

The FAST Act requires several reports or other actions to support the diffusion of new technologies or the difficult realization of the project. The law creates a program for the implementation of advanced transport and congestion management technologies to support the testing and implementation of new technologies. USDOT aims to identify national corridors for charging stations for electric vehicles to encourage the development of the infrastructure required for electric vehicles. The USDOT also aims to guide to encourage the pragmatic realization of projects and accelerated acquisition techniques.

Conclusion

The FAST Act commits for five years to increase the funding of surface transport and includes some changes to support investments in private infrastructure. By speeding up the costly long and late process of environmental licensing and environmental reviews to support the establishment of state offices in PPPs, the law recognizes the role that private investment can play in the provision of critical infrastructure. However, not all changes are so beneficial. Although Congress worked in a bipartisan way to approve the FAST Act, it did not tackle a crucial problem: how to pay for surface transportation projects in the future sustainably? However, small steps have been taken to enable states and localities to engage in the private sector to help build and improve roads, bridges, railways, and other places in our country in ways that creative.

LLOYD J CAZES CPA
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