Domestic Policy Watch — September 2009

'High Noon' in Washington

By W. Paul Farmer, FAICP
APA Executive Director

On Capitol Hill, a showdown is looming on some issues of critical importance for planning. This fall Congress faces deadlines for climate change legislation, transportation authorization, and funding for the Obama administration's sustainability initiatives. Of course, health care reform currently overshadows all other issues.

The stakes for planning are high. The proposals being debated have the potential to dramatically reshape planning requirements and processes. In addition, there is the potential for significant new resources to support innovative planning. Taken together, these initiatives could transform the relationship of federal policy to local and regional planning in ways not seen since the days of the HUD 701 program, and early NEPA, Clean Water, and Clean Air initiatives. But don't expect advances to occur without significant rear-guard actions by those who benefit from the status quo.

Next to health care, the most prominent item on this year's congressional agenda is climate change. President Obama has urged Congress to complete work on cap-and-trade legislation in time for the next major international climate negotiations in December in Copenhagen. In June, the House passed the Waxman–Markey climate bill, officially known as the American Clean Energy and Security Act, by the narrowest of margins, even though the bill is rather modest when compared to the threat.

The action now turns to the Senate. The chairman of the Senate Environment and Public Works Committee, Barbara Boxer (D-Calif.), announced that she intends to introduce a bill in late September and hold a committee vote shortly thereafter. This comes after her panel held numerous hearings on the issue prior to the August recess. Senate Majority Leader Harry Reid (D-Nev.) stated his goal of having a climate bill on the floor in October.

The Senate bill is likely to be largely based on the House version. The Waxman–Markey bill would reduce U.S. greenhouse gas emissions by more than 80 percent from 2005 levels by 2050. The measure establishes annual limits on GHG emissions from major sources like electric utilities and oil refineries and creates a system of tradable permits called emission allowances. An allowance would be required for each ton of emitted carbon.

The economic value of these allowances would be significant. The Congressional Budget Office estimates that allowances would be worth as much as $120 billion in 2030. Given the money involved, it is not surprising that the distribution of these allowances has been at the center of the debate. During the campaign, President Obama called for all allowances to be auctioned. The House bill adopted a sliding-scale approach with the majority of allowances given away free to affected industries in the early years of the program. Some critics cite this giveaway as a near-fatal flaw in the bill.

Some of the allowance revenue would support planning efforts. Two percent of the emission allowances would be set aside for domestic adaptation between 2012 and 2021. The adaptation funding would grow to 4 percent from 2022–2026 and to 8 percent thereafter. Planning must play a critical role in climate adaptation, including a variety of activities such as hazard planning, public health initiatives, and protecting natural resources. Urban forestry is also supported in the bill, a provision endorsed by APA.

States would receive 10 percent of allowances from 2012 through 2015 and then gradually lessen and settle at 5 percent from 2022 through 2050. State funding would be available for renewable energy initiatives, energy efficiency programs and transportation investments that reduce emissions. Unfortunately, the House bill only provides up to 1 percent of state allowance revenue to be used for transportation funding, and spending on things like transit and smarter growth would be optional. It is obvious that this bill is not a "game changer."

APA has supported a higher set aside for transportation and land use investments that lower GHG emissions. This is one of the areas the Senate should improve when they take up the bill. The transportation sector is one of the largest sources of emissions and any comprehensive climate package has to take into account transportation choices and development patterns. Without this element, it will be virtually impossible to reach the emission reduction targets. Opponents can be expected to first fight the targets and then fight the provisions necessary to actually reach the targets.

The House bill also creates a major new planning requirement. Section 222 of Waxman–Markey would change the current transportation planning requirements for states and MPOs. Under the new requirements, states and MPOs would set specific transportation sector emission reduction goals and incorporate strategies for meeting these targets into transportation plans. The U.S. EPA and DOT would oversee the new requirements and set standards for modeling, reporting, and data collection. APA's Policy Guide on Planning & Climate Change called for linking climate and transportation plans and supported funding for planning from allowance revenues.

Transportation authorization is another major item on this year's congressional agenda. The current surface transportation authorization, SAFETEA-LU, expires at the end of September. There is disagreement in Washington about how to address this looming deadline. Transportation Secretary LaHood has proposed an 18-month extension with a handful of programmatic reforms. The administration believes that the additional time is needed to craft a broad, transformational bill. The administration also prefers not to deal with the difficult issue of financing the bill in the midst of the current economic downturn.

The Senate has sided with the administration on the timing issue. All three Senate committees with jurisdiction have passed 18-month extensions of current law. However, the Senate would approve extensions without any changes to current programs—merely providing more money to buy time to craft the bill they want to write.

Across the Capitol in the House, sentiments are quite different. House Transportation and Infrastructure Committee Chairman James Oberstar (D-Minn.) has vowed to press ahead with a full reauthorization this year. To that end, he introduced a $500 billion, six-year bill, the Surface Transportation Authorization Act. In July, the bill was reported out of the House Highways and Transit Subcommittee. Chairman Oberstar wants to move the bill to full committee now that the recess has ended. However, the House Ways and Means Committee has reached no consensus on how to fund the bill, stalling further progress. Although no one in the administration or on Capitol Hill favors the gas tax, no other alternative has generated much enthusiasm. Proponents of the extension hope that an improved economy will help built the political will to pay for a bill that all agree needs substantial increases in funding.

The Oberstar bill contains a variety of substantial reforms. The bill provides for a number of major changes in planning. It provides for a new "blueprint" planning process—modeled on innovative work in California—that offers scenario planning and a more integrated approach to regional transportation plans. The structure of MPOs would be changed and a new Metropolitan Mobility Program would be established. The bill would provide $50 billion for high-speed rail. Overall, the measure seeks to consolidate existing programs and give more authority to local communities. While the bill does not go far enough in terms of some reforms, it is a strong and promising starting point for a debate on federal transportation programs.

Still, the trust fund that supports transportation spending continues to be in crisis. Before the August break, Congress had to approve a transfer of $7 billion into the trust fund to ensure solvency through the end of the year. (Almost all of the $7 billion will be spent on highways.) Lower-than-expected gas tax revenues have led to a series of shortfalls in the trust fund over the last year. In the Senate, Finance Committee Chairman Max Baucus (D-Mont.) has proposed a $26.8 billion transfer to the trust fund to secure the program through an 18-month extension. The justification for the proposal is that the funding is a "reimbursement" for lost interest payments owed to the fund. A further complication is that Congress must also deal with a looming $8.7 billion rescission of federal contract authority. The rescission could lead to dramatic cuts for states and MPOs.

It appears likely that some sort of extension will be approved along with a corresponding transfer of funding to maintain the program's solvency. Taking time to craft a thoughtful, reform-minded bill that can be paid for is reasonable if the result is significant reform. However, Congress should not simply throw away nearly $30 billion on a program that needs to be changed now. We need to invest more, but we also need to invest better and smarter. That should start now, not in 2011. Leaders on Capitol Hill should follow the administration's lead and agree to make some immediate reforms—shifting more support to transit, empowering better planning, encouraging complete streets policies, and creating livability programs—while the broader authorization is hammered out.

Regardless of the extension politics on transportation, it is clear that planners should be making the case now to Congress about needed changes to the program. We can't wait 18 months to argue for better planning that ensures better outcomes.

Over the next few weeks Congress also will be finishing work on spending bills for the next fiscal year. Included in the spending package for the Department of Housing and Urban Development is funding for the new sustainability initiative. Currently, both the House and Senate have included $150 million in HUD's FY 2010 budget for the initiative: a new discretionary grant program to support innovative regional planning that better integrates housing and transportation, and challenge grants to implement sustainability projects. The program is part of the interagency partnership among HUD, DOT, and EPA.

An important new piece of legislation was introduced at the beginning of August that would provide multi-year authorization for the sustainability initiative. Senate Banking Committee Chairman and APA Legislator of the Year Christopher Dodd (D-Conn.) introduced the Livable Communities Act (S. 1619). This bill creates an Office of Sustainable Housing and Communities at HUD to oversee the sustainability initiative and lead an Interagency Council on Sustainable Communities to better coordinate federal programs and regulations to encourage local and regional sustainability efforts. The bill also authorizes a discretionary, comprehensive planning grant program at $100 million annually through FY 2013. In addition, a sustainability challenge grant program would be created to provide funding to implement projects contained in regional comprehensive plans. The challenge grants would be funded at $750 million in FY 2011, $1.25 billion in FY 2012, and $1.75 billion in FY 2013.

The Dodd bill is a major step forward in federal policy to support innovative planning and sustainable communities. APA worked closely with Sen. Dodd's staff on the legislation and we are encouraging other senators to co-sponsor the bill. We have invited Sen. Dodd to join APA members to kick off Planners' Day on Capitol Hill on October 6. Planners need to urge their congressional representatives to support sustainability funding in the current HUD appropriations bill and co-sponsor legislation to give the program a multi-year authorization.

As Congress returns from the August recess and prepares to take up these important planning issues, APA will advocate our policy positions and priorities and provide you with the opportunity not only to understand what's happening, but also to shape the outcome by making your voice heard.

This year's Federal Policy and Program Briefing and Planners' Day on Capitol Hill come at a particularly opportune time. We have a major stake in climate, transportation, and sustainability programs. I strongly urge you to join APA next month in Washington for these programs. Find out how new federal initiatives and legislation will affect you and your community and make your voice heard with policymakers at a pivotal moment in the debates.

From the beginning of the 111th Congress and the start of this administration, APA has worked with Congress, federal officials, and our many partner organizations to promote an agenda that supports good planning and builds communities of lasting value. Now it is more important than ever that APA and our members be strong advocates. I hope you'll join the effort. It's showdown time in Washington and we must all be engaged to ensure that this story will have a happy ending for our communities.