Bloomberg News

U.S. Highway Deal Nears as Keystone, Coal Ash Dropped

June 27, 2012

U.S. House and Senate negotiators on highway construction legislation dropped provisions on the Keystone XL pipeline and coal-ash regulation, removing two of the most divisive elements preventing a deal.

James Inhofe of Oklahoma, the senior Senate Republican on the conference committee negotiating the highway package, said the provisions wouldn’t be in the final legislation, which he said would be filed tonight.

“There are a few more things we need to do and then we’ll be ready very soon,” Inhofe told reporters.

The Highway Trust Fund, which enables the federal government to pay for state road, bridge and mass-transit projects, may run out of money if Congress can’t agree on long- term legislation and resorts, as it has nine times already, to a temporary extension of current law.

Without a long-term bill or extension, U.S. authority to collect the 18.4-cents-a-gallon gasoline tax and spend on highways and transit will run out June 30, cutting off money to states for programs funded by the Highway Trust Fund such as safety and repairs. Thousands of construction and government workers would probably be idled.

Inhofe said he didn’t anticipate that the absence of Keystone and coal ash provisions would threaten Republican support for the bill in the Senate.

‘One-Shot Deals’

“Keystone and coal ash are really sort of one-shot deals,” he told reporters.

Florida Republican John Mica, chairman of the House Transportation and Infrastructure Committee, said the elements under his panel’s jurisdiction are settled, including the streamlining of environmental reviews of highway and bridge projects.

“Loose ends are being tied together,” he said.

Kate Gilman, a spokeswoman for the Democratic-led Senate Environment and Public Works Committee, didn’t respond to a phone call and e-mail seeking comment.

House and Senate negotiators have compromised on ways to speed up the approval of federally funded projects, Representative James Lankford said.

“Now it’s a matter of figuring out if that’s going to work,” Lankford told reporters after members of the House- Senate conference committee on highways briefed House Republican leaders on their talks yesterday, four days before current highway legislation expires. “All of us made concessions.”

Sticking Points

The goal of speeding environmental reviews has been one of the main sticking points in talks between the House and Senate. House Republicans, including many of the 84 in their first terms, have focused on cutting the length of time it takes to complete highways and bridges built with U.S. funds, estimated at an average of 13 years, according to the U.S. Chamber of Commerce.

“That’s a really big deal for us,” Lankford, a first-term Oklahoma Republican. He said five groups worked yesterday to resolve House-Senate differences over parts of the transportation measure. House Republicans also had objected to U.S. policy that sets aside between 1 percent and 2 percent of gasoline-tax revenues for non-road projects such as pedestrian walkways and bike paths.

The highway measure will reduce the number of projects funded and “streamline the regulatory process,” House Speaker John Boehner told reporters this morning. He said the measure allows “us to focus our highway dollars on fixing America’s highways, not planting more flowers around the country.”

Student Loans

House Republican leaders plan to combine a multiyear highway bill with a one-year freeze for government subsidized student loan rates, Boehner, an Ohio Republican, said.

“We are moving, I think, towards an agreement on a transportation bill that will also include a one-year fix on the student loan rate” that otherwise would double to 6.8 percent on July 1, he said.

Republicans and Democrats want to freeze student-loan interest rates for a year. The question has been how to cover the $5.9 billion cost. Senate Majority Leader Harry Reid, a Nevada Democrat, said yesterday that a tentative agreement had been reached on that front.

Average Savings

A deal could save 7.4 million students an average of $1,000, and President Barack Obama has made this a priority since his State of the Union address, White House Press Secretary Jay Carney said in a statement.

“We hope that Congress will complete the legislative process and send a bill to the president as soon as possible,” Carney said.

On highway spending, lawmakers were pushing for a measure that extends funding through September 2013, said Representative Bill Shuster, a Pennsylvania Republican. That’s about the time frame of a $109 billion measure the Senate passed on a bipartisan 74-22 vote March 14. After efforts to approve its own long-term bill fell apart, the House passed an extension of current law April 18 to push discussions to a conference committee.

“We’ve got to wait and see what the money is,” Shuster said as talks continued. “The money is going to be the thing that drives that.”

The goal is to finish by today with a final vote by June 29, the day before the funding authorization expires, he said.

Environmental groups and transportation advocates said they’re concerned Senate Democrats may have made too many concessions on such projects, said Kevin Mills, vice president of policy and trail development at the Washington-based Rails- to-Trails Conservancy.

“They’ve been tremendously cost-effective,” Mills said. “We’re concerned there not be backtracking on these vital programs.”

Still, dropping the Keystone and coal ash provisions gave a victory to environmental groups and Democrats who had said the proposals threatened the environment and public health.

Republicans said the Keystone project, which would carry crude from Alberta’s oil sands to Gulf Coast refiners, would create thousands of jobs and lower U.S. dependence on foreign oil.

To contact the reporters on this story: Jeff Plungis in Washington at jplungis@bloomberg.net; Kathleen Hunter in Washington at khunter9@bloomberg.net

To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net


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