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Greater Louisville Inc. “Capitol Connection” lunch

Remarks Delivered by
U.S. Secretary of Transportation Elaine L. Chao
Greater Louisville Inc. “Capitol Connection” lunch
Louisville, KY.
Friday, July 14, 2017

Thank you, Shelley [Shaughnessy], for that nice introduction.

Mayor [Greg] Fischer, State Senators [Julie Raque] Adams and [Ernie] Harris,  Oldham County Judge-Executive [David] Voegele, former Representative Denny Butler and other distinguished guests, it is good to be back home in Kentucky and to be with you today. Mitch sends his greetings.  He’s been working hard for you in Washington, and he’s on his way home now.  His flight got delayed.

I’m proud to call Kentucky home.  I am a proud Kentuckian.  I have lived all around the world and there’s no place I’d rather call home.  Kentucky and Louisville have so much of what makes America great – history, restaurants, museums, art and sports and most of all – wonderful, friendly and kind Kentuckians.   It also has every form of transportation: roads, highways, rails, airports, zero emission mass transit, and inland waterways. 

As employers and entrepreneurs, you understand the importance of infrastructure.  It is the backbone of America’s world-class economy—the most productive, flexible and dynamic in the world.  It is a key factor in productivity and economic growth, which has provided millions of hard working Americans with a standard of living which is the envy of the world.  And it has provided our country with unprecedented mobility, safety and security.  Yet today these gains are threatened by aging infrastructure that is not keeping pace with technology, causing safety issues and congestion.

Last fall, USA Today reported that American motorists spend more than 6.9 billion hours sitting in traffic which amounts to more than $300 billion in wasted time and fuel.  Fewer traffic jams and improved safety increase the quality of life.  Transportation systems can also build a sense of community and connect people to essential services.

As you may have heard, the Administration has proposed an ambitious plan to revitalize our country’s infrastructure.  16 different federal government departments and agencies are involved in the Infrastructure Initiative.  And a task force was created to reach out to governors, mayors, state and local leaders, and private sector stakeholders.  The plan will not be limited to transportation, but will also include energy, power transmission, water supplies, veterans’ hospitals, and possibly broadband, as well. 

The new plan will include $200 billion in federal funds that will be used to leverage $1 trillion in investment over ten years.  While the plan is not yet final, the principles have been announced.  They include:

  • encouraging self-help by state and local governments;
  • leveraging private sector resources;
  • making targeted federal investments in the most transformative projects; and,
  • streamlining project delivery.

In the past, poorly designed programs have wasted a lot of money.  This Administration believes infrastructure can be improved without asking the taxpayers to shoulder the entire burden.  That’s why a key component of the Administration’s plan will be incentivizing public-private partnerships, in order to unleash the billions in private capital available to invest in infrastructure.

Public-private partnerships are widely used throughout the world to finance infrastructure.  They are not the answer to every infrastructure financing challenge.  But they work well in many situations.  Unfortunately, many states still discriminate against private sector funding in infrastructure. Kentucky was one of the states that didn't allow private investment in infrastructure until 2016, when the legislature passed a law allowing it for roads and bridges.

Let me note that the Administration’s infrastructure proposal will have a separate title to address the needs of rural America, which will cover circumstances in which public private partnerships may not be appropriate.

Federal money will be used as an incentive to get projects underway quickly, not to overwhelm or replace state, local or private funding sources. That means states and localities that have secured some funding or financing of their own for infrastructure projects will be given priority access to new federal funds. The goal is to use federal funds as an incentive or like seed capital to get projects underway and built more quickly, with greater participation by state, local and private partners. That is important because historically, only 16% of infrastructure spending is federal. The other 84% is state, local and private investment.

Regulatory reform is another key part of the plan. We hear that the private sector is eager to invest in infrastructure.  There are plenty of resources available but not enough projects ready for investment because of regulatory and permitting hurdles, which can delay projects years, and in some cases, decades.   

That’s why this Administration issued an Executive Order calling for regulatory reform across the government.  So the Department of Transportation has assembled a Task Force on Regulatory Reform that has identified many legislative and regulatory changes to speed up project approval and delivery.  Some changes being considered include eliminating duplicative processes, and allowing concurrent rather than sequential permitting.

As we move forward, the Department of Transportation is adjusting its major grant programs to reflect the principles in the President’s infrastructure plan.  The new Infrastructure for Rebuilding America grants program – called INFRA Grants – will make $1.5 billion in discretionary grants available.  INFRA Grants will use updated evaluation criteria to leverage more non-Federal funding, and will allow innovation in the project delivery and permitting process.  This program will set aside at least one-quarter of its funding for rural projects, and that is just the starting point.  The notice soliciting proposals under this program was just published, and closes November 2, 2017. You can find more information on the Department’s website at www.dot.gov.

As you may know, another important piece of the Administration’s infrastructure initiative is modernizing our country’s air traffic control system.  We have the safest air traffic system in the world.  Yet, despite spending hundreds of billions of dollars over decades, the government has not been able to fully implement state-of-the-art air traffic control technology.  Air traffic controllers still use paper strips to keep track of flights and pilots are guided using 1960 technology.  It takes 20 percent more time to fly between certain cities today than it did 25 years ago.  Congestion and delays cost more than $25 billion annually in higher fuel costs and lost productivity, not to mention our quality of life.   By 2020, air passenger traffic will soar to over one billion annually.  Air freight is expected to more than double over the next three decades.   Drones and unmanned aircraft systems will have to be integrated into the national airspace.  Without change, the current air traffic control system will be unable to keep up. 

So, this Administration has proposed a change in the governance and financing structures that will liberate air traffic control operations from the vagaries of the annual congressional appropriations process and address the delays and congestions all of us as air passengers have experienced one time or another.  Sometimes, a bit too frequently.  The proposal would move air traffic control operations to a nonprofit, nongovernmental cooperative.  The safety oversight functions would remain at FAA.   This would also solve a long standing conflict of interest issue of an operating entity, Air Traffic Control, regulating its own safety.

These reforms will enable the rapid acquisition of state-of-the-art technology and tools. Right now, the Air Traffic Control system is constrained under the government by the bureaucratic government procurement rules which slow the acquisition of state-of-the-art technology.  After all, our air traffic controllers are the best in the world and they deserve the best tools to do their job. 

Currently, the Aviation Trust Fund has a surplus of over $6 billion, held back for deficit reduction.  In the new air traffic control organization, 100 percent of any surplus will be plowed back to be reinvested in the air traffic control system.  The system would be self-funded by users and passengers like it is now. There would be no physical movement of anything and no disruption during the transition.  If adopted, these reforms will mean more direct routes, fewer delays, shorter trip times, and less fuel and emissions. And it will allow us to accommodate the expected growth in passenger and commercial air traffic.  Louisville’s airport is the nation’s number three cargo hub, so you have a real stake in being prepared for the future.

More than 50 nations have restructured their systems along these lines.  Our neighbor to the north, Canada, used this structure for the Canadian air traffic control system over 20 years ago.  It’s called NAV Canada.  Its safety, efficiency, and on-time numbers have all risen while user fees have decreased.   Recently, it proposed another 3.9 percent rate decrease.  Adjusted for inflation, NAV Canada user fees are 45 percent lower than the taxes they replaced in 1996.

Proposals to reform our country’s air traffic control system have been debated for more than 30 years.  But this is the first time there has been presidential leadership on this issue.  The Department recognizes this proposal is a big step-- but it is one worth taking. Modernizing our air traffic control system is key to ensuring that the United States remains the world’s leader in aviation.

So with that, thank you for inviting me to speak today.  I treasure every opportunity to be home.  Thank you for the jobs you create.  Because, with jobs, come hope and opportunity and a chance for people to build better lives for themselves and their families.  With that, I will be happy to take your questions.  Thank you!

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Updated: Monday, July 17, 2017
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