Updated at 5:44 p.m. with response from Sen. Kerry's office.

Major transportation industry groups have "grave concerns" about a draft Senate climate and energy plan because it imposes new fees on the industry and diverts too much of that revenue elsewhere.

"This significantly undermines the user-fee principle for financing federal transportation improvements that has served our nation and our economy well for more than 50 years," wrote the coalition of 28 groups to Sens. John Kerry, D-Mass., and Joe Lieberman, I/D-Conn. "Our organizations have grave concerns that this proposal would dilute the integrity of the Federal Highway Trust Fund and significantly harm efforts to rehabilitate and improve our nation's transportation infrastructure under a new surface transportation bill."

The groups -- including the American Association of State Highway and Transportation Officials, American Highway Users Alliance, American Public Transportation Association, American Public Works Association and the Associated General Contractors of America -- say the Kerry-Lieberman draft also would "greatly impair the ability of states, counties, cities and transit systems to reduce our dependence on foreign oil and reduce transportation-related emissions."

According to a preliminary industry analysis, fees in 2013 from on-road fuel consumption would generate at least $19.5 billion. But the bill diverts 77 percent of those funds away from transportation infrastructure investment, the groups say, rising to 91 percent of fuel revenue as the price of carbon increases. Of particular concern to the industry is that new federal highway and transit investment would be topped out at $2.5 billion annually, "far below the amount the bill raises from system users," the groups wrote.

Kerry spokeswoman Whitney Smith said the bill invests more than $6 billion annually in transportation infrastructure, "which is more than any other comprehensive energy and climate bill and more than twice what's claimed in this letter."

The draft bill, she said, would likely reduce oil imports up to 40 percent while giving two-thirds of revenues back to consumers, ramping up to all revenues by 2035 outside of those needed for deficit reduction. Some of the $6 billion for infrastructure is specifically for the highway trust fund, while about $4 billion of it goes to state and local projects that reduce oil consumption and greenhouse gas emissions. Some of that $4 billion is also intended for Transportation Department TIGER grants, which go to projects deemed to have a significant economic and environmental benefit.

The draft has received accolades from Transportation for America, a broad coalition of public transit, consumer and environmental advocates.

Full letter post below.

May 18, 2010

The Honorable John Kerry

218 Russell Senate Office Building

Washington, DC 20510

The Honorable Joseph Lieberman

706 Hart Senate Office Building

Washington, DC 20510

Dear Senators Kerry and Lieberman:

We write to urge you to reconsider how revenue from transportation-based motor fuel fees is directed in the climate and energy legislation you have recently proposed. "The American Power Act" would impose new fees on surface transportation system use and dedicate the vast majority of resulting revenue to activities entirely unrelated to improving the nation's transportation infrastructure. This significantly undermines the user fee principle for financing federal transportation improvements that has served our nation and our economy well for more than 50 years.

Our organizations have grave concerns that this proposal would dilute the integrity of the Federal Highway Trust Fund and significantly harm efforts to rehabilitate and improve our nation's transportation infrastructure under a new surface transportation bill.

The draft bill would also greatly impair the ability of states, counties, cities, and transit systems to reduce our dependence on foreign oil and reduce transportation-related emissions. We hope to work with you to develop a strategy that promotes energy independence, reduces greenhouse gas emissions, and improves the condition and capacity of critical transportation assets. In our collective judgment, the current bill does not achieve these objectives.

Our preliminary analysis of the bill finds that tens of billions of dollars would be generated annually from new pollution fees on transportation motor fuels. In 2013, fees from on-road fuel consumption would generate at least $19.5 billion. Instead of returning revenue from these fees to improving the transportation system, the bill diverts at least 77 percent of the funds away from transportation infrastructure investment. As carbon prices increase, the bill diverts as much as 91 percent of fuel revenues. Of particular concern, the bill limits new investment in the Highway Trust Fund to $2.5 billion per year, far below the amount the bill raises from system users.

As we have stated previously, a proposal that diverts user fees from motor fuels while our roads, bridges and transit systems are neglected is not sound policy. The Highway Trust Fund has repeatedly faced insolvency from the lack of new revenue in recent years, and the U.S. Department of Transportation estimates that our transportation infrastructure needs a $30 billion increase in investment each year simply to be maintained. Even greater investment, at least $100 billion more annually, is needed to improve conditions and performance.

Now is the time to create the transportation infrastructure of tomorrow with investments that will generate millions of American jobs. We hope to work with you to develop climate and energy legislation that benefits the environment, as well as our economy, our workers, and the surface
transportation infrastructure on which we all rely.

Sincerely,

Amalgamated Transit Union (ATU)

American Association of State Highway and Transportation Officials
(AASHTO)

American Concrete Pavement Association (ACPA)

American Concrete Pressure Pipe Association (ACPPA)

American Council of Engineering Companies (ACEC)

American Highway Users Alliance

American Moving & Storage Association (AMSA)

American Public Transportation Association (APTA)

American Public Works Association (APWA)

American Road & Transportation Builders Association (ARTBA)

American Society of Civil Engineers (ASCE)

American Traffic Safety Services Association (ATSSA)

American Trucking Associations (ATA)

Associated Equipment Distributors (AED)

Associated General Contractors of America (AGC)

Association for Commuter Transportation (ACT)

Association of Equipment Manufacturers (AEM)

Association of Metropolitan Planning Organizations (AMPO)

Community Transportation Association of America (CTAA)

International Union of Operating Engineers (IUOE)

Laborers' International Union of North America (LiUNA!)

National Asphalt Pavement Association (NAPA)

National Association of Development Organizations (NADO)

National Ready Mixed Concrete Association (NRMCA)

National Stone, Sand & Gravel Association (NSSGA)

New Starts Working Group

Portland Cement Association (PCA)

Transport Workers Union (TWU)

Cc:

The Honorable Lindsey Graham

Majority Leader Harry Reid

Chairman Max Baucus

Chairman Barbara Boxer

Chairman Christopher Dodd

Ranking Member Chuck Grassley

Ranking Member James Inhofe

Ranking Member Richard Shelby

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