EPA Threatens to Make California Transfer Highway Funding to Mass Transit Projects

The Environmental Protection Agency on September 23 threatened to start enforcing long-dormant Clean Air Act provisions that would force many regions in California to stop building new highway projects and instead either transfer that money to mass transit projects or else lose it entirely.

This sounds like a headline that would have occurred in the Obama Administration during its more ambitious first term, but no, this was in fact the Trump Administration. The threat was contained in a letter from EPA Administrator Andrew Wheeler dated September 24 (but sent on the 23rd) to California Air Resources Board chairman Mary Nichols.

In the letter, Wheeler states that California has a backlog of over 130 State Improvement Plans (plans to improve the air quality for regions that do not meet National Ambient Air Quality Standards) that have not been approved by the EPA, many of which date back decades, and that “Most of these SIPs are inactive and appear to have fundamental issues related to approvability, state-requested holds, missing information or resources.”

The letter then asks California to “withdraw its backlogged and unapprovable SIPs and work with the EPA to develop complete, approvable SIPs. In the event California fails to withdraw them, the EPA will begin the disapproval process consistent with applicable statutory and regulatory requirements. As you know, if the EPA disapproves a SIP, that triggers statutory clocks for: Highway funding sanctions, which could result in a prohibition on federal transportation projects and grants in certain parts of California…”

(Ed. Note: This happened just after the Trump Administration moved to withdraw California’s authority to set its own auto emission standards, which drew an instant lawsuit from California. The letter seems to have been an instance of EPA saying to California, “Hey, you want to enforce the letter of the Clean Air Act? We’ll show you the letter of the Clean Air Act.”)

The highway sanctions to which the EPA letter refers are from section 179 of the Clean Air Act Amendments of 1990, which are now codified in 42 U.S.C. §7509. But the actual text of the law does not allow the cutoff of highway funding (dollars given to the state) – only the cutoff of USDOT approvals for individual highway project contracts using that funding.

Instead, the state or local region, under section 179, is allowed to keep the funding, but can only use it on highway safety projects – or mass transit projects. Per section 179, an area that has been sanctioned by the EPA for SIP noncompliance and has had its highway projects suspended can then transfer that highway money to safety projects, or any of the following:

(i) capital programs for public transit;

(ii) construction or restriction of certain roads or lanes solely for the use of passenger buses or high occupancy vehicles;

(iii) planning for requirements for employers to reduce employee work-trip-related vehicle emissions;

(iv) highway ramp metering, traffic signalization, and related programs that improve traffic flow and achieve a net emission reduction;

(v) fringe and transportation corridor parking facilities serving multiple occupancy vehicle programs or transit operations;

(vi) programs to limit or restrict vehicle use in downtown areas or other areas of emission concentration particularly during periods of peak use, through road use charges, tolls, parking surcharges, or other pricing mechanisms, vehicle restricted zones or periods, or vehicle registration programs;

(vii) programs for breakdown and accident scene management, nonrecurring congestion, and vehicle information systems, to reduce congestion and emissions; and

(viii) such other transportation-related programs as the Administrator, in consultation with the Secretary of Transportation, finds would improve air quality and would not encourage single occupancy vehicle capacity.

The 1990 Clean Air Act Amendments were part of a matched set of laws along with with the Intermodal Surface Transportation Efficiency Act (ISTEA) of 1991 – Sen. Daniel Patrick Moynihan (D-NY) was the guiding force behind both, and the CAA 1990 focus on regional emission plans was matched with the ISTEA 1991 creation of the Congestion Mitigation and Air Quality highway program (CMAQ) based on regional CAA nonattainment.

When the EPA declares an area in SIP non-compliance, they have a choice of two penalties to levy – the highway funding suspension, or an “offset” penalty that requires any new stationary emissions source to have its emissions offset by reductions elsewhere in a 2 to 1 ratio. The process of when and how to levy each penalty is described in this bafflingly complex section of the Code of Federal Regulations, but a much simpler PowerPoint on the EPA website says that the sanctions are mandatory – the offset penalty first, 18 months after the trigger (the declaration of SIP non-compliance), and the highway penalty second, 24 months after the trigger, but that the EPA also has ” the discretionary authority to impose either or discretionary authority to impose either or both sanctions any time after a finding or both sanctions any time after a finding or disapproval is made. disapproval is made.” The letter to CARB seems to telegraph how this discretion will be used.

Now, granted, if this kept up, the state or region would have to flex most of its NHPP funding (the biggest program, which has fairly little transit eligibility) over to STBTP or CMAQ (both of which allow complete funding of transit projects), and there might be problems with some rural areas not having enough transit projects already on the long-term plan to be pushed up, but even in the most pro-highway jurisdictions, if given a choice between (a) losing the money forever and (b) spending it on mass transit, they would probably choose some kind of mix between (a) and (b).

(Ed. Note: Eliminating all new highway projects and requiring states and localities to instead spend that money on mass transit or other projects that would lower VMT has long been the dream of the “smart growth” advocacy community. It is fascinating to see the Trump Administration take a giant step towards promotion of the smart growth agenda.)

(Further Ed. Note: The irony is, this whole debacle just shows how local/regional the Clean Air Act measurement/enforcement process is, which is why the Clean Air Act gave its original exemption to California, to set some of its own rules – because air pollution is fundamentally local/regional, and as of 1967 (the year in which an anti-smog law created national auto emissions standards), California had been doing a better job at passing regional anti-smog laws than the rest of the country, so the law created a carve-out intended for California. But this local/regional enforcement regime was always a weird fit for greenhouse gases, which are globally fungible. Reducing the carbon emissions of Los Angeles, or Des Moines, by one pound has exactly zero effect on the air quality or environmental quality in California, Iowa, or North America if that pound of carbon reduction is counteracted by an additional pound being emitted into the atmosphere in Shanghai or Mumbai or Lagos. Yet the Supreme Court ruled in 2007 that the EPA could regulate carbon emissions under the Clean Air Act despite their non-locality, which then led to California’s cutting-edge automotive GHG standards under their four-decades-prior delegation despite being unable to prove that those lower standards will be able to measurably improve quality of life in California or the U.S. (since it is all dependent on how much GHG the rest of the world produces).)

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