Recent Updates on Trump Infrastructure Plan, Autonomous Vehicle Policy
President Trump this week appeared to back away from what was expected to be a cornerstone of his plan to spend $1 trillion on infrastructure. Meanwhile, federal autonomous vehicle policy gets an update from the U.S. Department of Transportation and in new legislation expected to go before a U.S. Senate committee next week.
Trump Sours on Public-Private Partnerships
The Washington Post reported this week that President Trump told a group of Democrats from the House Ways and Means Committee that he has come to the conclusion that public-private partnerships (P3s) simply don’t work and he has decided not to make them the focus of his $1 trillion infrastructure package. The administration, The Post reported, now wants states and localities to pick up most of the tab.
Private sector financing has been mentioned in the context of the President’s infrastructure plans since before last year’s election. But a White House official told The Post there are “legitimate questions” about P3s and their research has forced them to conclude that they’re “not the silver bullet” for the nation’s infrastructure problems.
One lawmaker who attended the meeting said the President indicated the administration would seek direct federal spending to pay for an infrastructure package. That could be done through new tax revenue or by taking on debt but it likely would account for just a fraction of the $1 trillion the President has promised.
Members of Congress from both parties have proposed forcing multinational corporations to “repatriate” the approximately $2 trillion in profits they have stashed away overseas at a discounted tax rate and dedicating that revenue to infrastructure spending. But the tax plan released by Republicans this week, while it did recommend collecting a 10 percent tax on that stash, did not call for linking it to infrastructure.
Interestingly, as evidence that public-private partnerships couldn’t be counted on, the President pointed to Vice President Mike Pence’s home state of Indiana, where the Indiana Toll Road was leased to an Australian-Spanish consortium in 2006. That consortium was forced to file for bankruptcy in 2014 after they took on too much debt and the toll road failed to meet revenue projections during the recession.
Rick Sulzer, Chief Operating Officer of the Virginia-based infrastructure firm IIPL USA, spoke last month at the CSG West annual meeting in Tacoma, Washington and talked about the Indiana Toll Road in the context of a handful of U.S. P3 projects considered “failures.” His list also included SH130 in Texas, the Chicago Skyway and the Pocahontas Parkway in Virginia. But some Indiana state legislators have noted in the past that from the state’s perspective, the Indiana Toll Road was far from a failure. The state got an upfront windfall of cash in the deal to tackle other projects and when the concessionaire went bankrupt, the road never reverted back to state control and it never shut down to motorists. The asset was simply transferred to another concessionaire.
The Indiana Toll Road also was mentioned recently in the context of a concept called asset recycling that Australian officials have been promoting in conversations with the Vice President and others in the administration.
But a number of Indiana legislators told me back in 2013 that while the state got a great deal on the toll road, no state will ever be able to get that good a deal again because future deals will require a state to take on a greater share of the risk. And indeed the Indiana Toll Road has not proven to be the P3 model that has taken hold in the United States. It’s 75-year lease term did not become the benchmark, for one. Many have concluded such a long time-horizon doesn’t make much sense because the useful life of the projects that the upfront windfall payment funded will be much shorter than 75 years and they will have to be repaired and replaced long before that term is up.
State and federal officials of all stripes and others have expended much energy this year telling the administration that while P3s can be successful in certain cases, they aren’t likely to be the savior for all U.S. infrastructure. Their limitations have long been apparent. For one thing, they work best for megaprojects that can allow the private sector to get a return on their investment. Secondly, the nation has far more road resurfacing and bridge repair projects in need of completion than big megaprojects. And thirdly, municipal bonds are a much better deal right now when it comes to financing infrastructure.
However the President and the administration came to their realization that P3s can’t be their silver bullet, a $1 trillion infrastructure investment appears to be even more in doubt now than it already was and states could be left holding an even bigger bag.
NHTSA, U.S. Senate Look to Revise Autonomous Vehicle Policy
A few weeks ago I wrote about how state and federal roles on autonomous vehicle policy were expected to come into sharper focus this Fall with the passage of bipartisan legislation in the House (the SELF DRIVE Act) and the release of an update to the policy guidance document issued a year ago by the National Highway Traffic Safety Administration.
The NHTSA guidance update, released two weeks ago, is dubbed “Automated Driving Systems 2.0: A Vision for Safety.”
As The Washington Post noted, the guidance “continues and expands the hands-off approach” taken by the Obama administration.
It shrinks the first report’s 112 pages down to 27 and drops several key areas from a 15-point safety checklist aimed at the industry, arguing they were premature, speculative in nature and outside NHTSA’s authority.
But the document notes the guidance is “entirely voluntary, with no compliance requirement or enforcement mechanism.” Thus the industry is free to ignore it.
States presumably are free to ignore it as well. The guidance “strongly encourages” states not to make elements of the document mandatory or step into vehicle safety matters under NHTSA’s jurisdiction.
The guidance includes a new section called “Best Practices for Legislatures Regarding Automated Driving Systems.” But the “States’ Responsibilities” listed are not substantially changed from the Obama Administration version’s “Model State Policy.” Those include licensing and registration, traffic laws and regulations, safety inspections, and insurance & liability. The Model State Policy was the focus of a panel during the CSG Autonomous and Connected Vehicle Policy Academy in Detroit this summer, which you can read about here.
Meanwhile, the U.S. Senate Committee on Commerce, Science and Transportation has announced an October 4 markup session for their version of self-driving vehicle legislation. Chairman John Thune and Sen. Gary Peters said Wednesday they’ve reached bipartisan agreement on a measure that removes some regulations that would have made it more difficult to get autonomous vehicles on the roads. Text of the legislation was expected to be released today. The House approved its legislation earlier this month.