Will “Pay to Play” Laws Impact Potential New Infrastructure Spending?

blog 1In the President’s first address to Congress, two statements received near-unanimous standing ovations:  his advocacy for a major infrastructure rebuilding effort, and his continued promise to “drain the swamp” of political influence-peddling and corruption.  In the infrastructure world, these two themes come together with so-called “Pay to Play” laws, which restrict political contributions by businesses that have received or are trying to obtain government contracts, as well as by their owners, officers, and other principals.

At FHWA, my colleagues and I struggled mightily with these laws proliferating around the country.  The basic question was this:  did these restrictions run afoul of 23 U.S.C. § 112, which prohibited rules that would unduly limit competition for contracts involving federal funds?  The public certainly had the right to know that large contracts weren’t being awarded as a result of political contributions.  On the other hand, if that sort of political activity eliminated major contractors from bidding on surface transportation projects, would the cost of those projects increase due to lack of competition?  There were no easy answers.

My colleagues in Venable’s Political Law Practice Group have prepared this summary of “Pay to Play” laws, practical steps to help would-be contractors on the federal, state, and local levels, and a brief update on current trends in this field.  Any trillion-dollar infrastructure package will come with some strings attached, and “Pay to Play” may very well be one of those strings.  Creating or enhancing a compliance plan to address these kinds of restrictions is advisable now, before any new money hits the streets.

 

Funding Our Infrastructure Maintenance Backlog Before the Next Crisis

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The shocking images out of California of the near-failure of the Oroville Dam have once again shined a light on essential, aging American infrastructure. Damage to the nearly mile-long spillway and threatened complete breach of the dam’s “emergency spillway” (really just the side of the hill adjacent to the man-made structure) led to the mandatory evacuation of nearly 200,000 people.  As of this writing, water levels behind the dam have stabilized, but new storms in the short term and the expected spring melt in the longer term may once again threaten adjoining communities with devastating flooding.

Much less frightening, but equally important, the American Road and Transportation Builders Association (ARTBA) just published its updated list of “structurally deficient” bridges.  Over 55,000 bridges nationwide meet that definition, which includes facilities that need anything from substantial engineering upgrades to complete replacement.  Although this is hard to believe, ARTBA estimates that nearly one in four bridges (over 170,000) are at least 50 years old and have never had major reconstruction work!

One of the highest-profile bridges in desperate need of repair is the Memorial Bridge, one of the DC metropolitan region’s most crucial route to downtown. The bridge’s foundation is literally crumbling, with nets installed to catch pieces as they fall from the structure.  The National Park Service is responsible for that facility, and while efforts have been made recently to appropriate the necessary funds for major renovations, the money isn’t all there, and work has not started.

In the case of both the Oroville Dam and the Memorial Bridge, federal, state, and local officials take emergency measures when needed, but spend most of their time praying that nothing truly catastrophic takes place. While I’m all for guidance from above, that’s hardly a way to manage public infrastructure.

Perhaps these high-profile cases highlight the biggest challenge facing political leaders trying to coalesce around the best way to fund an infrastructure program and how much to dedicate to the effort. The popular projects are often the ones that result in a brand new facility, complete with the requisite ribbon-cutting ceremony.  Your basic maintenance and renovation projects, in contrast, usually get more attention for the interruption of service or road detours they create, and certainly don’t result in a ribbon-cutting.  (The project slogans are catchy, though – “We’re making it wider for you and your rider!”)

Ask any infrastructure executive in any sector if they would prefer to build something new to add to their inventory or increase maintenance budgets to repair the things already built, and I suspect they would almost unanimously choose the latter. Yet, maintenance projects remain stubbornly unsexy.

At least so far, there does not appear to be an appetite on Capitol Hill for a major infrastructure spending bill along the lines of the Recovery Act passed at the beginning of the Obama administration. Most of the attention has been focused on tax reform and incentivizing private infrastructure investments, although Democrats have offered more of a traditional public financing proposal.  The amount?  A trillion dollars has been bandied about, definitely a nice, round number.  The reality is that our country faces a multi-trillion-dollar deficit in infrastructure maintenance.  How should politicians solve this policy conundrum?  I have a modest proposal:

Concentrate on tax reform and incentives in the first instance. Freeing up capital and encouraging public-private partnerships has long been the goal of both parties.  In exchange for that deal, however, Congress should be willing to offer up what I’ll call a “Maintenance Match” program for states and localities that direct spending to a variety of renovation projects.  For every dollar that the states spend on priority maintenance projects (as defined by long-standing lists from groups like ARTBA and the American Society of Civil Engineers), the federal government will match it, two for one.  This way, states may bite the bullet on difficult budgetary decisions if they know they could actually reduce some of their lengthy maintenance backlog.

The benefits of such a deal could be enormous. Construction jobs are created; vital infrastructure is improved; public health and safety is protected; and the inevitable political wrangling over what shiny, new projects to build is avoided.

It shouldn’t take the specter of a failing dam or the closure of a vital transportation artery to reach this compromise. Maintenance may indeed be boring, but I predict voters will readily accept the taxes necessary to support boring over evacuations, flooding, and hair-raising commutes.

Welcome Back to EnviroStructure!

united-states-capitol-1675540_1920Welcome back to “EnviroStructure!”  I apologize for my temporary hiatus.

Did I miss anything in the last few months?

If there’s one thing I’ve learned to appreciate in recent years, it’s that there’s nothing more constant in this world than change. With that understanding, and with a great sense of optimism and enthusiasm, I’m happy to be part of a new team here at Venable LLP. I promise to offer you on these pages the same common sense reflections on all things environmental law and infrastructure that I hope have become the hallmark of this blog.

Let’s begin with one absolutely uncontroverted reality – the Trump Administration and the new Congress will grapple with infrastructure spending and with project delivery. While finding dollars and cents is always a greater challenge than advancing the seemingly perpetual goal of streamlining environmental reviews and permitting, something will happen. Unlike many of the hot-button issues being addressed in the infancy of the new Administration, both sides of the aisle will want to demonstrate accomplishments on the infrastructure front.

Where is the most likely fertile ground for agreement or compromise?

Public-private Partnerships (P3s) will return with a vengeance. Beyond the more well-established programs under the jurisdiction of the U.S. Department of Transportation (now consolidated under the Build American Bureau), look for the promotion of P3 opportunities in other industry sectors desperately in need of the influx of funding, like water treatment/delivery and the expansion of broadband to more rural populations.

In order to provide adequate oversight for the potential record number of P3 financing deals, look for states to update or reform their existing programs to ensure protection of taxpayer investments. The fairly recent statutory updates in the Commonwealth of Virginia might very well serve as a model for other states seeking to expand private investment, but to avoid deals that do not end up working fairly in the public interest.

Environmental streamlining will be expanded into multiple sectors beyond transportation. The little-known secret of the FAST Act (Congress’ most recent surface transportation reauthorization bill from 2015) is how Title 41 of the Act offers NEPA and permit reform opportunities across a variety of public infrastructure. At a recent regulatory reform conference I attended, extremely experienced attorneys lamented how streamlining efforts should have been extended beyond transportation. When I respectfully corrected the record before an audience of almost 300 onlookers (that was a bit awkward, admittedly), both the expert panel and the conference attendees seemed genuinely surprised that the FAST Act could already provide excellent opportunities for improving project delivery across the economy.

NEPA reform and permit streamlining, however, will not proceed down Easy Street.  Inevitably, focus on high-profile and controversial projects like the Keystone and Dakota Access pipelines will trigger stiff opposition from local and national NGOs. But, there simply appears to be too much momentum to expand FAST Act and other previous USDOT reforms (like the highly successful “Every Day Counts” initiative) to prevent long-lasting, and overall positive changes to the country’s complex system of project approval.

Finally, and not surprisingly, look to the courts for further guidance on whether certain project delivery reforms fall within or just outside the federal government’s authority. While at USDOT, our team successfully defended reforms like shortening the statute of limitations for challenges to final NEPA decisions, combining the Final Environmental Impact Statement and Record of Decision under the agency’s regulations, and mandating that permit and NEPA reviews be performed concurrently by USDOT and its sister resource agencies. While we may have avoided legal challenges to those efforts, might, say, the Bureau of Land Management be as successful if it applied those same measures to an oil and gas project or a mining project? Logically, you’d expect the same positive outcome, but too often logic doesn’t apply when dealing with more controversial infrastructure projects.

My new colleagues and I look forward to an open-ended conversation on these crucial issues in the coming year and beyond. Thanks again for supporting “Envirostructure”, especially in these constantly changing times.

Infrastructure Gets Top Billing from President-Elect Trump

Pipeline construction

President-Elect Trump’s election night statement specifically called out infrastructure, above all other domestic policy concerns, as a focus of his new Administration. Despite some initial rumblings from the conservative wing of the Republican Party about more government spending, it seems likely that enough members of both parties could work with the Trump White House to pass a major infrastructure initiative. Unlike the financial stimulus bill passed in 2009 at the beginning of the Obama Administration, the volume of infrastructure investment Trump has advocated and the types of projects he has mentioned specifically will necessarily require attention to environmental and natural resources laws that govern project selection and delivery.  The following substantive areas will be in play: Continue Reading

Justice Antonin Scalia (1936-2016)

Justice Scalia

This week a friend in the media asked me to reflect on Justice Antonin Scalia’s environmental law legacy.  The resulting article includes a summary of my comments, and I offer some additional thoughts below.

The late Justice’s philosophy of strict statutory (and Constitutional) interpretation had broad implications for the implementation of a variety of environmental laws. In video interviews that were broadly disseminated after news of his death, Scalia said that he really didn’t view cases before the Supreme Court addressing environmental laws as particularly challenging or complex.  He professed not to worry or care about the policy issues in a specific case; rather, he did what he normally did – read the pertinent statute and tried to figure out what Congress meant based on the plain meaning of the words. Continue Reading

Autonomous Vehicle Technology: Can Lawyers Avoid Being Back-Seat Drivers?

Google Car

The old joke in my family is that my Mom, Sandy Wagner, was generations ahead of her time when it came to the now ubiquitous Google Maps and Garmin direction devices. “Shelly!  Turn here!  NO, not here, there!  In 100 feet!  Turn around!  You missed the turn, now we’ll have to recalculate!”  Mom really should have applied for a patent. Continue Reading

A Little Bit of Something for Everyone in New Surface Transportation Bill

Heap of wrapped gifts for Christmas or other celebration

The “FAST Act” (Fixing America’s Surface Transportation) that will likely pass Congress this week and be signed soon thereafter by President Obama contains a veritable potpourri of funding, permitting, safety, and innovation provisions for all surface transportation modes.

Like every major piece of compromise legislation, there are plenty of provisions for stakeholders on the entire political spectrum either to champion or to ridicule. Rolling in at 1,300 pages, the import of some of the Act’s miscellaneous provisions will only become clear over time.  Here are some preliminary reflections, to be supplemented in greater detail over the next week once the bill is signed into law. Continue Reading

Avoiding NEPA – Even for “Worthy Goals” – Is Never Advisable

Book with follow the rules

From the very first day of my legal career, clients have asked me some variation of this question:  “Why can’t we just prepare a shorter Environmental Assessment (EA) or even issue a Categorical Exclusion (no analysis at all) instead of doing a full Environmental Impact Statement (EIS) for our project?”

The answer is almost always the same:  “Agencies comply with NEPA by preparing full EISs only in rare instances.  You can do something less than an EIS here depending on what risk you wish to take.” Continue Reading

The Demise of the Illiana Expressway: Another Court Rejects Development Modeling Projections

Man Holding Stop Sign

While it may go down as a classic case of “bad facts making bad law,” last week’s ruling rejecting the government’s NEPA analysis for the controversial Illiana Expressway is the just the latest in a disturbing trend for large infrastructure development and Public-Private Partnership (P3) financing.

Ironically, just a couple of weeks before Judge Jorge Alonso issued his decision, Illinois Governor Bruce Rauner publicly announced that the project would not move forward “at this time” in light of state budgetary constraints.  The Governor’s statement said that “[i]t is the determination of IDOT that the project costs exceed currently available resources.”  This announcement was the culmination of what many political experts viewed as a long-running death spiral, although there may be some wiggle-room for the project’s future. Continue Reading

Finality! Common Sense Prevails Over Wetlands Jurisdictional Determinations

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“All good things come to those who wait,” certainly is not an expression that applies to property owners who receive wetlands jurisdictional determinations (JD) from the Army Corps of Engineers with which they disagree.  In fact, if you have been on the receiving end of an adverse JD, the only available courses of action ranged between unpalatable and downright prejudicial.

This was the reality that confronted Hawkes Co, Inc., a family-owned peat mining company in Minnesota.  Hawkes disputed an Army Corps JD that would have required it to obtain a permit to expand its existing mining operations to include a 530-acre parcel.  The events laid out in a recent opinion by the Eighth Circuit Court of Appeals read like a stereotype of the bureaucracy run amok. Continue Reading

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