July 23, 2015

H.R. 22 – Developing a Reliable and Innovative Vision for the Economy (DRIVE) Act

Noteworthy

Background: On May 23, 2015, the Senate passed the Highway and Transportation Funding Act of 2015, a two-month extension of highway funding through July 31. H.R. 22 (Hire More Heroes Act of 2015) will be used as the revenue shell for the highways legislative package. On July 21, a perfecting amendment was filed in the Senate. The amendment adds to Hire More Heroes by incorporating legislation from the Senate committees of jurisdiction, including S. 1647 (EPW DRIVE Act), S. 1732 and S. 1626 (Commerce’s Transportation and Consumer Protection Act; Railroad Reform), Transit (Banking), and a financing package (Finance) to reauthorize and fund highway and transit programs. On July 15, the House passed H.R. 3038, a five-month, $8 billion extension.

Floor Situation: On July 15, Leader McConnell filed cloture on H.R. 22. On July 22, the Senate invoked cloture on the bill by a vote of 62 to 36.

Executive Summary: The bill authorizes federal surface transportation programs for six years, with three years of funding identified. The bill requires $47.143 billion in offsets to keep the Highway Trust Fund solvent for three years. Funding for the final three years of the bill will be available only if new legislation is enacted providing the necessary offsets. The authorization would apply to highways, highway safety, motor carrier safety, transit, and other programs funded out of the HTF. The bill includes legislation by the committees of jurisdiction: Environment and Public Works; Finance; Commerce; and Banking.

Overview of the Issue

The Highway Trust Fund provides money for transportation programs across the country. The Highway and Transportation Funding Act of 2014 authorized approximately $10.8 billion through May 31, 2015. On May 23, 2015, the Senate passed the Highway and Transportation Funding Act of 2015, a two-month extension of highway funding through July 31 that had no corresponding offsets since adequate funding remained in the HTF, but obligation authority was extended.

Congress created the Highway Trust Fund in 1956 to fund surface transportation projects. The HTF is comprised of two accounts: the highway account, which funds programs administered by the Federal Highway Administration, the Federal Motor Car Safety Administration, and the National Highway Safety Traffic Administration; and the mass transit account, which funds programs through the Federal Transit Administration.

The primary revenues for the HTF come from federal motor fuel taxes – set at 18.4 cents per gallon on gasoline and 24.4 cents per gallon on diesel fuel – and related truck excise taxes. This gas tax brings in about $34 billion per year, while the federal government spends approximately $50 billion per year on transportation projects.

Under President Obama, the Democrat-controlled Senate never managed to pass a long-term transportation funding bill. Starting in October 2009, Democrats passed 12 short-term extensions for highway funding, averaging about six months per extension (including MAP-21).

Considerations on the Bill 

On July 31, 2015, authorization for funding the Highway Trust Fund expires. Prior to the two-month extension in May 2015, the Highway and Transportation Funding Act of 2014 authorized approximately $10.8 billion to extend highway, highway safety, motor carrier safety, transit, and other programs through the fund. The costs were offset by pension smoothing ($6.4 billion), customs user fees ($3.5 billion), and a transfer from the Leaking Underground Storage Tank ($1 billion) account.

Prior to that, Congress had kept the HTF solvent primarily with general fund money – transferring $54 billion since 2008. Without an extension, federally backed transportation projects could face funding challenges this summer.

On June 23, Chairman Inhofe of the Environment and Public Works Committee and Chairman Vitter of the Transportation and Infrastructure Subcommittee introduced S. 1647, the Developing a Reliable and Innovative Vision for the Economy Act. The DRIVE act authorizes funding for highway programs for six years and $278 billion. The EPW Committee unanimously approved the DRIVE Act on June 24.

On July 15, the Committee on Commerce, Science, and Transportation Committee marked up S. 1732, the Comprehensive Transportation and Consumer Protection Act of 2015. The legislation “authorizes the office of the Secretary of Transportation for the next six years and contains key reforms to enhance safety, streamline grant programs, and improve the accountability and efficiency of oversight efforts.” The Senate Commerce Committee approved the bill – which also included other previously passed legislation regarding reform of Amtrak and other rail safety improvements.

On July 15, the House of Representatives passed an $8 billion short-term extension through the end of 2015.

Pay-fors and Offsets in Senate Substitute Bill:

Extensions

  • Extends authority to spend from the Surface Transportation trust fund, the Sportfish Restoration and Boating trust fund, and the Leaking Underground Storage Tank trust fund through October 1, 2021. Extends related tax authorities through October 1, 2023.
  • Transfers savings obtained from the bill’s offsets into the Surface Transportation general fund.
  • Transfer to Highway Trust Fund of certain motor vehicle safety penalties.

Tax Compliance

  • Require estates with positive income tax liability to report the value of a piece of property upon the owner’s death so that beneficiaries do not overstate the value of that property. This provision raises $1.542 billion over 10 years.
  • Allow the revocation of a passport or denial of a passport application if a person has more than $50,000 in unpaid federal taxes. This provision would raise $398 million over 10 years. This offset is also included in the customs bill currently in conference.
  • Clarify that the six-year statute of limitations applies in cases in which taxpayers overstate the cost (basis) of property and thereby indirectly understate their income. Cases in which taxpayers directly understate their income are already subject to a six-year statute of limitations. This provision raises $1.206 billion over 10 years.
  • Require more mortgage information reporting to the IRS to reduce inaccuracies. This provision raises $1.806 billion over 10 years.
  • Change the filing due dates for partnerships, S corporations and C corporations in order to improve compliance. This provision raises $285 million over 10 years.
  • Require the IRS to use private debt collectors in attempting to receive unpaid taxes. This provision would raise $2.384 billion over 10 years.
  • Extends through December 31, 2025 the ability of plan sponsors to use surplus pension assets to fund retiree health accounts and retiree life insurance, previously set to expire on December 31, 2021. Offset estimate: $172 million.

Fees and Receipts

  • Extend the deposit of TSA fees into the general fund by two years. Offset estimate: $3.5 billion.
  • Index to inflation (CPI-U) the dollar amounts for various customs fees and thresholds in 19 USC 58c. This provision would raise $4 billion over 10 years.
  • Amends the Federal Reserve Act to lower the annual dividend paid to Federal Reserve banks from six percent of paid-in capital stock to one-and-a-half percent for banks with consolidated assets of $1 billion or more. Currently, a bank that is a member of the Federal Reserve System must subscribe to capital stock in the Federal Reserve Bank of its district in an amount equal to six percent of its combined capital and surplus; three percent to be paid in and three percent subject to the call of the Board of Governors. Offset estimate: $16.3 billion.
  • Provides for drawdown and sale of 101 million barrels of crude oil from the Strategic Petroleum Reserve from fiscal year 2018 through 2025, raising $9.0 billion in offsets.
  • In December 2011, Congress raised the guarantee fees charged by Fannie Mae and Freddie Mac by 10 basis points. The proceeds of this increase are remitted to the Treasury. Set to expire in October 2021, the highway bill extends this provision through October 2025. Offset estimate: $1.9 billion.

Outlays

  • Rescinds the unused TARP funds made available to states between February-September 2010 but not yet drawn down from the Administration’s Hardest Hit Fund. Also, would prohibit states from committing to any new participants after enactment.  Offset estimate: $1.7 billion.
  • Strikes requirement that the Interior Department’s Office of Natural Resources Revenue pay interest on an oil and gas lessee’s overpayment of royalties, raising $300 million in offsets. 

Notable Bill Provisions

Section 11001 – Authorization of appropriations

Extends the authorization of the federal-aid highway program, transportation infrastructure and innovation program, federal lands and tribal transportation programs, territorial and Puerto Rico highway program, research, technology and education authorizations.                      

Section 11004 – Surface transportation program

This provision authorizes the surface transportation program.

Section 11012 – Data collection on unpaved public roads

This section provides that states may elect not to collect data under certain circumstances.

Section 11114 – Modernization of the environmental review process

This section requires the federal government to examine ways to modernize, simplify, and improve the implementation of the National Environmental Policy Act of 1969 no later than 180 days after enactment of the bill.

Section 12204 – Highway Trust Fund transparency and accountability

This is a reporting requirement for information and transparency about the HTF. The report shall contain comprehensive data for each program, organized by states, financial data, and information on any funds transferred.

Section 32611 – Use of hair testing for controlled substances tests

This section adds bipartisan legislation that allows trucking companies the option to use hair testing rather than urinalysis for employee drug testing.

Section 34103 – Grants for alcohol-ignition interlock laws and 24-7 sobriety programs

Continues the grants for states with mandatory alcohol-ignition interlock laws and adds a new separate grant for states with 24-7 sobriety programs.

Section 34201. Vehicle safety authorization of appropriations

Authorizes vehicle safety efforts at NHTSA. In addition to the amounts authorized, additional amounts totaling GROW AMERICA levels are authorized if the secretary certifies that the agency has implemented recommendations called for by the DOT inspector general.

Section 34209 – Rental car safety

This provision include a prohibition on rental car firms renting a vehicle under recall that has not yet been repaired. 

Section 34210 – Higher penalties for auto safety violations

Doubles penalties for safety violations on the auto industry from $7,000 per incident to $14,000 and doubles the overall penalty cap for a series of related violations from $35 million to $70 million, provided that NHTSA conducts a previously required rulemaking process on assessing penalties.

Section 51101 – Extension of trust fund expenditure authority

This provision extends the HTF expenditure authority to October 1, 2021.

Section 51102 – Extension of highway-related taxes

This provision extends the highway-related taxes to September 30, 2023.

Section 51202 – Transfer to Highway Trust Fund of certain mother vehicle safety penalties

This provision transfers collections from motor vehicle safety penalties to the Highway Trust Fund.

Sections 52101 through 52108 – Tax compliance provisions

These sections include various revenue raising provisions.

Section 52101

Requires estates with positive income tax liability to report the value of a piece of property upon the owner’s death so that beneficiaries do not overstate the value of that property. This provision raises $1.542 billion over 10 years.

Section 52102

Allows the revocation of a passport or denial of a passport application if an individual has more than $50,000 in unpaid federal taxes. This provision would raise $398 million over 10 years. This offset is also included in the customs bill currently in conference.

Section 52103

Clarifies that the six-year statute of limitations applies in cases in which taxpayers overstate the cost (basis) of property and thereby indirectly understate their income. Cases in which taxpayers directly understate their income are already subject to a six-year statute of limitations. This provision raises $1.206 billion over 10 years.

Section 52104

Requires more mortgage information reporting to the IRS to reduce inaccuracies. This provision raises $1.806 billion over 10 years.

Section 52105

Changes the filing due dates for partnerships, S corporations and C corporations in order to improve compliance. This provision raises $285 million over 10 years.

Section 52106

Requires the IRS to use private debt collectors in attempting to receive unpaid taxes. This provision would raise $2.384 billion over 10 years.

Section 52108

Extends through December 31, 2025 the ability of plan sponsors to use surplus pension assets to fund retiree health accounts and retiree life insurance, previously set to expire on December 31, 2021. Offset estimate: $172 million.

Section 52201 – Extension of deposits of security service fees in the general fund.

This provision would extend the deposit of TSA fees into the general fund by two years. Offset estimate: $3.5 billion.

Section 52202 – Index customs user fees to inflation.

This provision would index to inflation (CPI-U) the dollar amounts for various customs fees and thresholds in 19 USC 58c. This provision would raise $4 billion over 10 years.

Section 52203 – Dividends and Surplus Funds of Federal Reserve banks

Amends the Federal Reserve Act to lower the annual dividend paid to Federal Reserve banks from six percent of paid-in capital stock to one-and-a-half percent for banks with consolidated assets of $1 billion or more. Currently, a bank that is a member of the Federal Reserve system must subscribe to capital stock in the Federal Reserve bank of its district in an amount equal to six percent of its combined capital and surplus; three percent to be paid in and three percent subject to the call of the board of governors. Offset estimate: $16.3 billion.

Section 52204 – Strategic Petroleum Reserve drawdown and sale

Provides for drawdown and sale of 101 million barrels of crude oil from the Strategic Petroleum Reserve from fiscal years 2018 through 2025, representing 15 percent of current SPR crude oil stocks and raising $9.0 billion in offsets.

Requires the drawdown and sale of four million barrels in fiscal year 2018; five million barrels in 2019; eight million barrels in 2020; eight million barrels in 2021; 10 million barrels in 2022; 16 million barrels in 2023; 25 million barrels in 2024; and 25 million barrels in 2025. Requires amounts received to be deposited in the general fund of the Treasury during the fiscal year in which the sale occurs.

In any one fiscal year, prohibits the drawdown and sale of crude oil in quantities that would result in an SPR that contains an inventory of petroleum products representing fewer than 90 days of emergency reserves, based on the average daily level of net imports of crude oil and petroleum products in the calendar year preceding that fiscal year.

Section 52205 – Extension of enterprise guarantee fee

In December 2011, Congress raised the guarantee fees charged by Fannie Mae and Freddie Mac by 10 basis points. The proceeds of this increase are remitted to the Treasury. Set to expire in October 2021, the highway bill extends this provision through October 2025. Offset estimate: $1.9 billion.

Section 52301 – Rescission of funds from Hardest Hit Fund

Rescinds the unused TARP funds made available to states between February and September 2010 but not yet drawn down from the administration’s Hardest Hit Fund. Also would prohibit states from committing to any new participants after enactment. Offset estimate: $1.7 billion.

Section 52302 – Strike requirement that ONRR pay interest on overpayment of royalties.

Strikes requirement that the Interior Department’s Office of Natural Resources Revenue pay interest on an oil and gas lessee’s overpayment of royalties, raising $300 million in offsets.

Section 71001 – Extension of federal-aid highway programs

Amends Highway and Transportation Funding Act of 2014 to extend the HTF.

Section 73101 – Extension of National Highway Traffic Safety Administration programs

Authorizes extension of national priority safety programs, national driver registry, high visibility enforcement program, law enforcement campaigns, and cooperative research.

Section 73102 – Extension of Federal Motor Carrier Safety Administration programs

Authorizes extension of motor carrier safety grants, commercial driver’s license program improvement, border enforcement grants, performance and registration information system, commercial vehicle information systems and networks deployment program, and safety data improvement grants.

Section 80002 – Maintenance of Highway Trust Fund cash balance

Turns off the final three years of contract authority provided in the bill if there is inadequate funding in the Highway Trust Fund to support that contract authority.

Administration Position

The Obama administration has not yet made a statement in support or opposition of the bill.

Cost

There is no CBO score available for the bill at this time.

Amendments

There are no amendments scheduled to be voted on at this time.