05.15.2017 - Infrastructure Week Kickoff

Remarks Prepared for Delivery by

U.S. Secretary of Transportation Elaine L. Chao

Infrastructure Week Kickoff

Monday, May 15, 2017

Thank you, Tom [Donahue], for that gracious introduction.

And a special thanks to you, and all the other friends of infrastructure, for putting together this series of events all across the country highlighting our infrastructure challenges.

As you know so well, infrastructure is the backbone of our world-class economy—one of 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 that 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 crumbling infrastructure that is increasingly congested, in need of repair, and unable to keep pace with technological change. 

We are fortunate to have a President who understands the challenges of infrastructure perhaps more than any other leader in recent memory. He has made revitalizing, repairing and rebuilding our country’s infrastructure one of his top priorities. 

The Administration will share its vision of what the infrastructure plan will look like soon, which will kick off our collaboration with Congress. To put the proposal together, the White House launched a wide-ranging consultation process.  This has included establishing an interagency task force consisting of 16 different federal government department and agencies, including Transportation, OMB, Treasury, Commerce, Interior, EPA, Agriculture, Labor, Energy, the Department of Defense, Veterans Affairs, the Council of Environmental Quality, the Education department and others. And meeting and consulting with many governors, mayors, state and local leaders, and private sector stakeholders, as well. It’s important to hear from a myriad of stakeholders and not repeat the mistakes of the past.       

As OMB Director Mulvaney recently announced, the new infrastructure plan will include $200 billion in direct federal funds.  These funds will be used to leverage $1 trillion in infrastructure investment over ten years. OMB is identifying offsets, in order to avoid saddling future generations with more debt.  That’s why a key feature of the infrastructure plan will be unleashing the billions of dollars in private capital available for investment in infrastructure. 

During the consultation process, investors told us again and again that there is ample capital available, waiting to invest in infrastructure. A major problem is the delays caused by government permitting and approval processes, which hold up projects for years, even decades. These delays increase the risk, adding uncertainty and billions of dollars to project costs. That’s why another key part of this Administration’s infrastructure plan will include common-sense regulatory, administrative, organizational, and policy changes to speed project delivery and reduce uncertainty. Many of the departments and agencies mentioned in the interagency task force will have a role in addressing these issues.      

The Department of Transportation has already initiated an internal regulatory review process.  The Federal Highway Administration, for example, has taken first steps to reduce the regulatory burden, and is looking for more ways to speed things up.   

A Task Force on Regulatory Reform at the Department of Transportation has been assembled that has identified many additional legislative and regulatory changes that could streamline project approval.  Streamlining the regulatory process not only cuts costs. It can improve environmental outcomes by delivering infrastructure improvements more quickly, and spending resources on actual environmental mitigation, rather than stacks of paperwork. 

To illustrate what is possible, let me refer you to the pictures on the big screen of the I-85 bridge that collapsed in Atlanta, Georgia on March 31, 2017.  I-85 is a major traffic corridor connecting seven counties that feed workers and commuters into Atlanta. The first picture shows the collapsed bridge; the second shows the new bridge, which was replaced in just 49 days.

A team from the U.S. Department of Transportation was on the ground almost immediately after the incident. Within 12 hours, the Department had delivered $10 million in emergency relief funds to help replace the bridge. A supply chain located within two hours of the site was quickly identified. And federal regulatory requirements were expedited to ensure timely execution of contracts and funding.  

Of course, replacing a structure is not the same as starting a project from scratch.  I-85 was an emergency situation.  And it’s not possible to slash the time for federal requirements on every project from years to months. But there is much room for improvement. I-85 is an example of what can be accomplished with federal, state and local governments working together.

As we begin to implement this Administration’s infrastructure reforms, a new paradigm will hopefully be created. This paradigm will shift the focus beyond what is being built, to how projects are being funded and financed. For example, states and localities that have secured some funding or financing of their own for infrastructure projects will be given higher priority access to new federal funds. The goal is to use federal funds as an incentive to get projects underway and built more quickly, with greater participation by state, local and private partners.

This approach is in line with studies that show federal spending often substitutes for, rather than augments, state and local funding on infrastructure. That was the conclusion of a 2004 GAO report on highway spending. It found that the states and localities studied used federal dollars to replace, rather than supplement, what they would otherwise have spent.  The Administration would like to avoid that outcome.  Currently, less than one-fifth of all infrastructure spending is federal.  The rest comes from state, local and private sources.  This Administration wants to retain the primacy of state and local spending, and use federal funds as leverage to increase the total amount of funding available for infrastructure.

At the same time, everyone recognizes there is no one-size-fits-all revenue model for infrastructure projects.  Toll roads, for example, may work well in urban areas, where they generate consistent revenue because of high demand. But lower demand on rural roads may not generate enough revenue to repay private investment. This Administration is committed to an infrastructure package that addresses the needs of the entire country, urban and rural.    

Availability payments, for example, are one of the most widely used alternative financing methods for infrastructure in the world.  In this model, a government entity contracts with the private sector to build, operate and maintain a piece of infrastructure. In return, the contractor receives payments from the government over a specified period of time, provided certain milestones and targets are met.  Using this approach, the government doesn’t have to bear the full cost of infrastructure up front, and the risk to both the private and public sectors is mitigated.  So there are many creative models out there to be considered. 

The administration’s definition of infrastructure is broad and inclusive.  It not only recognizes traditional infrastructure such as roads, bridges, railroads, inland waterways and ports.  It may also potentially include energy, water, broadband and veteran hospitals, as well.  That’s why there are 16 different departments and agencies working to put together this initiative.  In addition, a few special projects that are not candidates for private investment will likely be identified and funded directly.  Candidates for this special category may include projects that have the potential to significantly increase GDP growth, or to lift the American spirit.

Incentivizing local, state and private sector investment—as well as streamlining permitting processes-- will have the biggest impact on future infrastructure development.  But in the process of revitalizing our country’s infrastructure, we are also looking at ways to revitalize our country’s workforce.

As a former Secretary of Labor, this is especially important to me.  Far too many people are being left behind because they are not equipped with the skills in demand in our rapidly changing economy.   

In transportation, for example, drivers of the future will be in charge of fleets of cars that talk to each other, dispatched by workers at a computer.  Drones will inspect our infrastructure with prevision and reliability, but will require human control, oversight and analysis.  So digital literacy and higher skills will be key.

The good news is that workers do not need an expensive, four-year college degree to access these good paying jobs.  A two-year program at a local community college is an important resource, and far more affordable.  And increasingly, employers are offering vocational training to high school students.  And there are excellent training programs offered by many skilled trade unions, and government programs to help train workers, as well  But to be relevant, all vocational and skills training programs must involve employers, who know best which skills are in demand. 

Let me add that emerging technology requires a regulatory approach that ensures safety, while encouraging innovation and preserving creativity.  This last point is especially important.  Creativity and innovation are part of the great genius of America—one of its hallmarks.  We must safeguard and nurture this legacy.  But it is also critical that Silicon Valley and other innovators step up and share with the public their understanding of new technology, and address legitimate public concerns about safety and privacy.

Let me close by noting there has never been a more exciting time to be involved in infrastructure. It’s a national priority, and has growing public support.  There is also rare bipartisan consensus that now is the time to act.      

Thank you for inviting me today.  I look forward to working with you to incentivize innovation, eliminate unnecessary barriers to change, and usher in a new era of safety, mobility and prosperity for our country and its residents.