Rep. Blumenauer Details Highway Trust Fund, Climate Change Policy

Rep. Earl Blumenauer

After a wild half year on Capitol Hill, familiar crises persist, including a bankrupt Highway Trust Fund. But with challenge there are opportunities, such as the reauthorization of the surface VerdeXchange News is pleased to present the following interview with Rep. Earl Blumenauer (D-Oregon)—whose advocacy for sustainable communities, infrastructure, and the interests of California have been consistent throughout his tenure in Washington. In the interview, Rep. Blumenauer indicates that the new leadership at the federal level will produce game-changing results on critical issues for the West.

VerdeX: The Highway Trust Fund appears to be without funds. How is Congress dealing with the trust fund’s budget and its obligations to state transportation projects?

Rep. Blumenauer: We have been deeply concerned that for the last year and a half there has been a precipitous drop in the revenues that the federal government collects in its Highway Trust Fund. For the first time in history it has gone into deficit—it has not had enough money to reach its current obligations. We had to transfer money in the last Congress and, indeed, Congress will have to do it again before Labor Day of this year to avoid canceling obligations that states are relying upon. This is, in part, a reduction in the gallons of gasoline and diesel that are consumed because of the spike in prices and the reduction in industrial demand. It started, however, with a reduction in the excise tax on trucks and equipment that go into the fund. We are on a path now to collect about $50 billion less in the next six years than we collected during the last six years. It’s less than $230 billion. A program that would be merely adjusted for inflation would require in the neighborhood of $325 billion. We are looking at about a $95 billion deficit just to stay where we are.

The House Transportation Committee, under the leadership of Chairman Oberstar, and the chairman of his Surface Transportation Subcommittee, Rep. Peter DeFazio (D-OR), is looking at a $500 billion, six-year program, which most experts feel is in the ballpark of what we need. This means, essentially, that we have to more than double the flow of money that goes into the Highway Trust Fund.

It will be a challenge in a climate where the economy is still not back on a positive trajectory and for an administration that has prematurely ruled out both a gas tax increase and moving towards a longer term program of highway revenues based on vehicle miles traveled.

VerdeX: What does Chairman Oberstar have in mind for what you estimated will be a $500 billion program for transportation infrastructure? When and how will ICE-TEA be reauthorized?

Rep. Blumenauer: For the last 30 months, since Rep. Jim Oberstar assumed the chairmanship of the Transportation Infrastructure Committee, he has been pointing toward legislation that wouldn’t just reauthorize ICE-TEA, but would be new and transformational legislation. It would be the most significant surface transportation legislation since the landmark 1991 legislation. He is looking to consolidate over 100 programs in the department. He is looking to focus on the big picture and how the pieces fit together. He is a champion of multi-modal transportation, transit, and cycling. He is probably the single-most avid cyclist in Congress. He can tell you—to probably the tenth of the kilometer—how many miles he has cycled in any given year over the last two decades. I find it exciting that he is looking to break down some of the artificial barriers that were created in times past.

Just one little example—he recognizes the success we have had in Portland, reintroducing the modern streetcar to urban America. I developed what we call “small-starts legislation” in the last reauthorization, which had significant support. There are some 80 cities across America interested in small-start legislation—smaller grants for simpler projects with a vision for a faster process, because we weren’t talking about multi-billions of dollars and things that could take a decade. We were talking about projects that could be done in a couple of years and be $20 million to $100 million dollars. There is an opportunity to have a significant streetcar on Broadway in Los Angeles. It is exciting. The theater district people are thinking about it.

The Department of Transportation in the last administration couldn’t figure out how to administer it. It took them four years and they didn’t even have administrative rules formulated. What the Bush Administration couldn’t do in four years the Obama Administration broke loose in four months. They are getting an extension in Portland that is welcomed not just by our community but also by people around the country who are excited about this new tool. Rep. Oberstar and his committee have zeroed in on the dysfunction we had with bureaucrats chewing up time.

A very graphic example is the extension of the DC Metro to Dulles Airport. The federal government is going to invest $900 million in this project—about 16 percent. But the delay that has been associated with this project because of the federal government is going to cost them more than $1 billion. They lost more than they will get from their entire federal contribution. They would have been better off if they had just given up on the federal government to begin with. They would have the project well underway and it would cost less. We need to have a federal partnership in those parts of the country. This is part of what is envisioned in this legislation.

It is also going to be the best bill in history for cycling. The “Safe Routes to School Program” that was pioneered in the last bill will be expanded at a time when we are worried about carbon footprints and how deep the footprints of our morbidly obese fourth graders are. Helping children bike and walk to school safely is a winner on both counts.

This represents a lot of attention to the needs of metropolitan areas and a new role for the federal partnership. These are things that we have been discussing with representatives of business and government in the Los Angeles region for years. Mobility 21 is all over these principles and they are going to feel comfortable, with what they see reflected in this new legislation—they helped pioneer it.

VerdeX: The most recent issue of the Metro Investment Report included an excerpt from a panel entitled, “Financing P3 Infrastructure, Transit, and Public Facilities.” Former State Treasurer Kathleen Brown offered: “Given the amount of work Goldman Sachs has done in the public-private partnership realm, we went out and did a lot of polling data. As a recovering elected official I can tell you that if the public-private partnership was a candidate it would lose very, very badly.” She went on to say, “We need to change the way we describe this program because it is otherwise politically dead on arrival as too partisan.” As a leader in Congress and as a Democrat, what are your thoughts on the role of public-private partnerships as a vehicle for leveraging private dollars?

Rep. Blumenauer: There is a vast appetite for capital investment in this country over the course of the next decade in water, in the electrical power grid, transmission, pipelines, high-voltage lines, and transportation of all forms—rail, marine, aviation, and roadways. There will be a role in virtually all of these arenas for strategic partnerships with the private sector. There will be efforts of creative finance. I welcome it.

Ms. Brown is correct in that we need to be careful about how they are described and characterized, but also in how they are structured. Real questions have been raised with some of these programs, dealing with short-term profits and having some people in the private sector doing what the public sector could do if they just had the fortitude—for instance, keeping current with tolls. This is what led to the demise of some of the American streetcars. It wasn’t all a conspiracy by General Motors to buy them up and tear them out. There were communities where the original public-private partnerships of streetcars, inner-urban electric lines, and bus companies floundered because local officials did not have the fortitude to raise the fares and tolls to keep current with capital and operating needs.

We can structure some of these projects, essentially, like a private utility with a reasonable rate of return and reasonable over-sight, to make sure that both the public and private sectors are well treated.

There is a lot of private capital interested in aligning their long-term investment objectives with the long-term nature of infrastructure projects. They are perfect for pension plans, for instance, and some long-term, patient capital. We have to recognize that there are also a limited number of projects where it makes sense to engage the private sector to lease and operate or own. Some estimates are that only about 5 percent of American capital expenditures lend themselves to that. But there are many opportunities for refining how we contract with people to build projects and design-build activities. There are opportunities for limited partnerships about operation, maintenance, and revenue generation. I am quite confident that if we describe what we are after, if it has transparency, and if the public interest is protected, there are opportunities to coax not just private capital, but some entrepreneurial spirit and expertise that can help add value to projects.

VerdeX: Let’s transition to Congress’ work on climate legislation, more specifically, the American Clean Energy and Security Act, coming up for a vote in the House at the end of June. What can you report from you high perch in the House?

Rep. Blumenauer: We have witnessed an extraordinary effort that has resulted in this bill passing the House. It has been interesting to see the wide array of interests—people who represent what we call the oil patch, the coal patch, people from the Midwest, and farm country—and watching them understand the opportunities available for the revitalization of the economy while we protect the future of the planet.

There have been a number of compromises that have been made. Certainly the bill coming forward is not exactly as I would have designed it. But we are talking about a 40-year program to get the United States in a position of global leadership, to get our own carbon emissions under control, and to do energy efficiency work that we should have done even if we were not at risk from climate change just for our own national security and economic interests. It has been phenomenal.

The Speaker of the House, your own Chairman Henry Waxman, and Rep. Ed Markey—who is the Chairman of the Select Committee on Global Warming that I serve on—have done a suburb job. There has been extraordinary work done to bridge the gap and bring people together. It was interesting that a wide array of Democrats came together. Only one Republican on the committee—Mary Bono Mack from Palm Springs—voted for it. It is solid legislation and puts us on the path for the future. It is a form that could actually pass the Senate.

We have often joked that the Senate is where good House legislation goes to die. This may be legislation that the Senate can actually embrace. I shudder to think of some of the compromises that may be put forth, but this is a solid piece of legislation that can pass and that puts us on a sustainable path for the next 40 years. It will give the Obama Administration and those of us going to Copenhagen in December something that we can use to help jumpstart international climate negotiations.

I just returned form a trip to China with Speaker Pelosi. We met with top Chinese leadership—the President, the Premier, the Chairman of the People’s Congress, the lead strategist for climate—and an array of business interests both foreign and domestic.

There is an opportunity here for the two largest carbon polluters in the world—the United States and China—to work collaboratively on something that is of our great national interest. If China and the United States can’t deal with our emissions, the rest of the world won’t go along and we will see accelerated damage from climate change.

There is something powerful emerging. People are finding common interests, and we can help ourselves. This is going to be an extraordinarily eventful six months and the VerdeXchange Conference next year may well be ushering in a whole new era of national and international activity in energy and economic development.