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FAST Funding for Freight

Changes, Requirements and Funding Opportunities

This article is the first of three highlighting what state and local transportation agencies need to know about the Fixing America’s Surface Transportation Act’s funding provisions for freight projects—why they matter, how states are affected, what is needed to comply and where the funding opportunities exist.

The Moving Ahead for Progress in the 21st Century Act (MAP-21), passed in 2012, made several changes to federal transportation policy, including the formalization of freight planning at the state and federal levels. The act urged, but did not require, states to develop statewide freight plans by incentivizing the federal participation for planned projects. Instead of the traditional 80/20 federal funding match, freight projects on highways could leverage a 90 percent match and on interstates a 95 percent match. While the federal funding pot did not increase for states, it allowed some states to reallocate precious state dollars to other projects.

Oh How Things Have Changed
FAST Act Freight Funding AllocationOn the heels of MAP-21’s expiration, the Fixing America’s Surface Transportation (FAST) Act was signed into law by President Obama in December 2015. FAST—the first long-term authorization passed in more than a decade—provides $207.4 billion of formula funding over the next 5 years. Similar to MAP-21, FAST made changes to the core highway funding programs.

Most noticeable, it created the National Highway Freight Program (NHFP), which allocates $1.2 billion annually by formula to states to undertake freight planning, performance measures, operational improvements and construction activities. The formula is generally based on the state’s overall share of highway program apportionment, but there will be some adjustments based on a state’s Primary Highway Freight System miles. While the program is highway focused, it allows states to allocate up to 10 percent of the program funds to truck parking, rail, intermodal and port projects. Finally, as part of FAST’s changes, the MAP-21 enhanced funding match was rescinded.

What is Required of Freight-Planning States?
Starting in fiscal year (FY) 2018, states must have a FAST-compliant state freight plan completed to receive freight formula funds. This plan may be developed separately or within a state’s long-range transportation plan (LRTP). Note that the time span for a freight plan is different than a LRTP—5 years versus 20 for a LRTP. The freight plan window is shorter because, while traditional planning methods are driven by population and job growth, freight growth is largely a function of global trends, which are much more volatile and unpredictable.

States must also update their freight plan every 5 years to maintain compliance. The plan must be a comprehensive look at a state’s short- and long-term freight planning and investment activities. We expect the guidance regarding FAST-compliant plans to be similar to MAP-21. However, there are three additional requirements in FAST:

  • New planning consideration: congestion and delay caused by freight movement (and strategies to mitigate)
  • Listing of critical rural and urban freight corridors and multimodal rural freight facilities
  • A freight investment plan for projects or phases reasonably anticipated to happen within 5 years [We will cover this requirement more thoroughly in article three of this series.]

The Federal Highway Administration has stated that the NHFP, Surface Transportation Block Grant (formerly called STP) and State Planning and Research programs can be used to develop FAST-compliant statewide freight plans.

Significant Funding Opportunities for Freight and Highway Projects
In addition to the NHFP, FAST created a discretionary grant initiative called the FASTLANE program—or Fostering Advancements in Shipping and Transportation for the Long-term Achievement of National Efficiencies. In late February 2016, USDOT began soliciting applications for FY 2016. The Office of the Secretary of Transportation (OST) will award $800 million in grants that are at least $25 million to help fund projects that have a total project cost of $100 million or more. FASTLANE sets aside 10 percent of the program for small projects and 25 percent for rural ones. Projects will be selected based on a series of “merit criteria,” including improving economic, mobility, safety and community outcomes.

States, large metropolitan planning organizations, tribes, local governments and federal land management agencies may apply under this program to build certain highway projects, freight rail, intermodal facilities, port and rail-highway grade crossing/separation projects.

Once selected by OST, Congress has 60 days to reject any project’s award. While it is always a good idea to ask your delegation to support your discretionary applications, it is now critical that they not only support your potential project, but also understand the importance of a project and how it positively affects their constituents.

To complicate things, FASTLANE and the existing TIGER—or Transportation Investment Generating Economic Recovery—grant programs have similar application cycles. While agencies can apply for both programs, the same application is unlikely to be competitive for both discretionary programs due to different overall program goals and selection criteria.

Interpreting FAST’s New Freight Network
In our next article, we will focus on FAST’s freight network. While MAP-21 created the Primary Freight Network, FAST has laid out a new network with requirements that states will need to understand to determine the best actions to take.

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