Date: Thursday, February 2, 2023
WASHINGTON — Transportation officials representing trucking, rail and seaports took aim at priorities touted by Democrats over the past two years — including the $1.2 trillion Infrastructure, Investment and Jobs Act (IIJA) — at the opening hearing of the House Transportation and Infrastructure Committee on Wednesday.
They took their cue from the committee’s Republicans, who now lead the 65-member panel after Republicans took control of the House in January.
“Although I did not support the IIJA, I accept that it is the law of the land,” House T&I Chairman Sam Graves, R-Mo., stated in his opening remarks. “What we have to do is make sure Congress and this committee ensure the money from IIJA is spent responsibly and is directed toward making our nation’s transportation supply chain more efficient and resilient. We owe it to the American people to do just that.”
Inflation was a major theme of the four-hour hearing, and Republicans were eager for anecdotes from industry supporting the view that IIJA’s high price tag is at the heart of the problem.
In addition to the cost of a new truck, “the price of fuel is still a huge headwind, especially for small companies and owner-operators,” testified American Trucking Associations (ATA) President and CEO Chris Spear.
Testifying on behalf of Associated General Contractors of America, Jeff Firth, vice president of Oregon-based Hamilton Construction, said that inflation was having the biggest effect on transportation fuel prices. “Our fuel bill is close to over $1 million over budget,” he said.
And Ian Jefferies, president and CEO of the Association of American Railroads, said, “Inflation affects not only the goods and materials we use to operate, it affects the customers whose goods we move.”
Despite the IIJA’s potential for contributing to inflation and associated costs, those testifying at the hearing strongly supported the funding that the law provided for roads, bridges and rail.
What ATA’s Spear opposed, however, was how Democrats prioritized the spending. He cited a Federal Highway Administration internal memo issued in December 2021 directing staff to encourage states to prioritize road maintenance and nonhighway projects over new highway construction.
The committee’s ranking member, Rick Larson, D-Wash., challenged that view, pointing out that highway expansion projects were up 22% since the memo was released.
“This is a good trend and is encouraging, but it also begs the question of why have the memo at all,” Spear responded. “Why do we have to draw lines between new and existing infrastructure?”
He encouraged lawmakers and the administration to instead use the annual ranking of the nation’s top 100 freight bottlenecks, published annually by its affiliate, the American Transportation Research Institute, as a guide for funding priorities. “We track this every year, so let’s address them,” he said. “What we don’t want is to have really nice roads and bridges as we sit on them going nowhere.”
Mega-grant money denied
Even Democrats took shots at funding prioritization. Rep. Greg Stanton, D-Ariz., noted that one of the top infrastructure priorities for years in his state has been expanding a 26-mile, two-lane stretch of Interstate 10 — a key commercial artery for freight traffic to and from the ports in Southern California, Stanton said, as well as for international commerce to and from Mexico.
“We were quite disappointed and frustrated not to receive federal funding under the mega-grant program to finally complete this critical project,” he said, referring to the discretionary grant program whose winners were announced on Tuesday.
“And when 90% of the funds were directed to projects east of the Mississippi, I can tell you that Arizonans and our regional partners feel left behind. We need federal support.”
Rep. Val Hoyle, D-Ore., was also disappointed by the mega-grant results. Backers of a new deep-water container terminal in her district at Coos Bay applied for funding.
“Unfortunately this project was recently denied a first-round DOT mega-grant even though it is exactly the type of new investment that we need to address our supply chain issues and the inflation that is exacerbated,” Hoyle said. “We’ll be applying in the next round.”
Port Houston: More draft restrictions ahead
Roger Guenther, executive director at Port Houston, complained that the federal government was not properly prioritizing funding for ports that are most critical to the U.S. economy — namely Houston, which he contends has been underfunded by 50%-60% for dredging that maintains channel depths prone to silting. That has led to draft restrictions that require vessel operators to light-load vessels — raising costs that are passed down to consumers.
“We’re the largest port in the country [on a per-ton basis] and are getting less funding relative to other ports,” he said. “But there’s not enough money in the federal work plan right now to maintain the channel, and we’re about to be draft restricted, probably as early as March.
“It must be a federal priority and federal obligation to make the capital investments on the waterside and the landside in our channels and highway infrastructure that serve our nation’s ports to maintain resiliency and fluidity going forward.”
AB5: Inflation contributor?
The hearing also delved into supply chain issues, and policies emanating from the Biden administration that Republicans and the trucking industry say will make disruptions worse.
Asked about the effects that AB5, the California law that makes it more difficult to maintain the independent contractor model in the trucking sector, Spear said it will lead to an inability to move freight.
“I have companies that are dependent on this model, and they’re going to pull out,” he said. “They’re simply not going to be able to operate in California. You can’t put everything on rail. It’s going to have to move out of those ports by truck. With less options, you’re going to pay more.”
The situation will become worse, he said, if the U.S. Department of Labor’s Wage and Hour Division moves forward with a proposed rulemaking restricting independent contractor flexibility.
“We’re short 78,000 drivers. You take away our independent contractors, you’re going to pay more for everything you eat, drink and wear. You think inflation is bad now, this would only make it worse.”
Spear added that there is no AB5 enforcement mechanism in California, other than through the court system. “That’s by design — they’re going to litigate us, and then the unions are going to come in and try to organize. That’s what’s behind this.”
Railroad crews versus service
Transportation workers were represented at the hearing by Greg Regan, president, Transportation Trades Department, AFL-CIO. Regan was asked whether service issues on the railroads were related to worker downsizing.
“I think there’s a direct correlation between the workforce reductions we saw in rail and the disruptions in service that we saw, pretty severely over the last few years,” Regan said. “That’s been pointed to by the customers as well, as to why they were seeing shipment delays. That’s a pressing issue that needs to be addressed.”
But the AAR’s Jefferies responded that total employment on Class 1 railroads was up 6.8% in December 2022 compared with January 2022.
“Railroads are taking many concrete steps to recruit new employees and continue this progress, including hiring bonuses, relocation bonuses for current workers who move to high-need areas and employee referral bonuses,” he testified.