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June 27, 2012 – 11:09 p.m.

Bipartisan Deals Shape Highway Bill

By Nathan Hurst, CQ Staff

House Republican highway bill negotiators gave up their demands for quick approval of the Keystone XL oil pipeline and limits on coal ash regulation in exchange for a deal that relaxes transportation permitting and gives states more spending flexibility.

The agreement would fund federal surface transportation programs at current levels through September 2014, providing states with more than two years of funding certainty. The House and Senate are expected to take up the measure (HR 4348) before the end of this week.

“It’s going to be two years and three months at current levels,” said House Transportation and Infrastructure Chairman John L. Mica, R-Fla., who fought for a longer reauthorization than the two-year Senate-passed bill (S 1813). “It’s a pretty dramatic reform in streamlining and cutting red tape, which we insisted upon.”

Senate Environment and Public Works Chairwoman Barbara Boxer, the conference chairwoman, said the agreement will “speed up project delivery, cut red tape and do it without jeopardizing environmental laws.”

The California Democrat expressed gratitude that “House Republicans met Democrats halfway.”

Both sides made significant compromises to reach an agreement. House Speaker John A. Boehner, R-Ohio, had insisted on language in the bill to mandate quick approval of Keystone. That provision drew a veto threat from the White House, which said that would infringe on executive authority.

A House leadership aide said that demand and House GOP insistence on language limiting EPA authority to regulate coal ash were scuttled when the Senate dropped $1.4 billion in funding for the Land and Water Conservation Fund. The aide called the Senate proposal to fund it an expansion of bureaucracy to “further a radical environmental agenda.”

The Senate bill already included provisions to consolidate transportation programs, speed up the environmental and regulatory reviews of projects and give states more leeway in spending funds set aside for “enhancements,” such as highway beautification or bicycle paths.

But House negotiators pushed senators to go even further. Current law sets aside 10 percent of one category of funding to states, called the Surface Transportation Program, for enhancements. Under the new agreement, half of that money would flow to local Metropolitan Planning Organizations for such projects. States could still use the other half for those kinds of projects, but they would have the flexibility to spend it on other transportation priorities instead.

House Transportation and Infrastructure Committee member Peter A. DeFazio, an Oregon Democrat who served as a conferee and is a longtime advocate of funding for pedestrian and bicycle programs, was not enthusiastic about the change.

“Unfortunately, the states will have the option to move the money out of pedestrian, cycling and safety issues,” DeFazio said. “And some unenlightened states, like Texas, will do that. Other states, like mine, will continue to invest in these alternate modes, so that’s good news.”

Despite earlier grumbling by House Democratic conferees that they were cut out of the negotiations between Boxer and Mica, DeFazio said he expected Democrats to back the deal. A call from Boxer late Wednesday afternoon, he said, assuaged his concerns.

“I think given the fact that we now have some hard information — that this is a good, solid bill that will put a lot of people back to work, that it doesn’t do violence to programs and projects we care about — that Democrats will be supportive,” DeFazio said.

Bipartisan Deals Shape Highway Bill

Boxer stressed the bill’s economic importance, saying it would protect or create some 3 million jobs.

“This job creation is the critical focus of Democrats because we know that the unemployment rate in construction is at an unacceptable level,” she said.

Playing to a House GOP caucus dubious about the stimulative effects of government spending, Mica stressed the “unprecedented reforms” in the bill.

Other Deadlines This Week

The signed conference report clears the way for House action Friday. Senate Majority Whip Richard J. Durbin, D-Ill., said the Senate would act Thursday to “deem” the conference report adopted upon its approval by the House.

Durbin said he doubted that the House would insist on keeping the Senate in town beyond Friday.

“That would be cruel and unusual,” Durbin said.

The deal would shore up transportation funding just ahead of the June 30 expiration of the latest extension (PL 112-102) of surface transportation authorization, the ninth since the 2005 surface transportation law (PL 109-59) expired in September 2009.

Lawmakers, who are also facing end-of-week deadlines to prevent an increase in student loan interest rates and to reauthorize federal flood insurance, were expected to attach those measures to the surface transportation report.

The Club for Growth raised the stakes for House Republican by urging lawmakers to vote against the bill, which will be a “key vote” for its congressional scorecard. The outspoken conservative group earlier opposed initial passage of both the highway and student-loan measures as bad policy and too costly to the Treasury. In each case, strong GOP majorities voted for the legislation.

The conference agreement also would direct most of the penalties paid in connection with the BP oil spill of 2010 to states in the Gulf Region, which could spend the money on environmental restoration.

The conference report would maintain surface transportation spending at current authorized levels. But because Highway Trust Fund receipts fall short of the spending requirements, revenue from fuel taxes and other excise taxes will be supplemented with revenue from two pension-related changes proposed by Reid on June 7, as well as a Republican proposal to reduce the amount of time that students are eligible for an in-school interest subsidy.

The offsets also would pay for the student loan measure.

Bipartisan Deals Shape Highway Bill

Stephen Ellis, vice president of Taxpayers for Common Sense, criticized the arrangement, calling it a “mess of a transportation bill” with a “bunch of pay-fors that aren’t entirely clear.” He added, “We will oppose this package.”

Meanwhile, House Republicans drew criticism from some usual allies for yielding on their demands to expedite the Keystone pipeline approval and to block EPA regulation of coal ash.

American Energy Alliance President Thomas Pyle called the deal a “Keystone cop-out,” while Kirk A. Benson, the chairman and chief executive of Headwaters Inc., the nation’s largest coal ash recycler, said lawmakers “missed an opportunity to establish a regulatory framework that would protect the environment and allow the continued expansion of fly ash recycling. We will continue to seek other opportunities to pass this vital provision.”

Alan K. Ota, Lauren Gardner and Richard E. Cohen contributed to this story.

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