U.S. Legislative Issues

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The National Highway Traffic Safety Administration (NHTSA) has fined Honda Motor Co. a record $70 million for failing to report more than 1,700 claims of injury or death linked to potential defects in its vehicles to U.S. regulators. Honda has also agreed to increased NHTSA oversight and third party audits to ensure timely compliance with all required reporting. Honda says it has already taken steps to improve failings in its early warning procedures, including better training for workers. Last November, Honda completed an internal audit of its safety reporting processes and blamed its underreporting on accidental data entry and computer programming errors that spanned 11 years.

Automakers are required to report potential safety concerns to the government under a 14-year-old law enacted in the wake of the Ford-Firestone tire crisis, in which problems with tires on Ford Explorers went unnoticed for years due to the absence of a central database tracking accident reports. Now there is an early warning system that requires automakers to provide quarterly updates on deaths, injuries and warranty claims that allow federal officials to determine if further action, such as a recall, is necessary.

The record fine represents a sharp escalation of penalties issued by an agency that continues to face scrutiny for its slow response in identifying safety problems and its failure to use the full extent of its legal powers. Notably, in 2014 alone, NHTSA issued more than $126 million in civil penalties, exceeding the total amount collected by the agency during its forty-three year history.



The Department of Transportation’s Federal Motor Carrier Safety Administration (FMCSA) has announced that fleets must continue to drug test at least 50% of drivers in 2015, the same level required for the last two years. The FMCSA has the authority to require only 25% of drivers to be tested if data from consecutive previous years show the percent of drivers testing positive to be less than 1%. The percent of drivers testing positive in 2011 was .09% and the percent of drivers testing positive in 2012 was .06%, but data from 2013 has yet to be finalized.

DOT’s drug testing rules apply to drivers of commercial motor vehicles with a gross vehicle weight or gross combination weight of 26,001 or more pounds, or designed to carry 16 or more passengers (including the driver), or vehicles of any size that are used to transport hazardous materials which require the vehicle to be placarded.



The traditional funding source for transportation projects is the federal gasoline and diesel excise tax, which is currently priced at 18.4 cents per gallon of gas and 24.4 cents per gallon of diesel. The tax has not been increased since 1993, however, and the Federal Government’s authorization to collect it is set to expire in September unless a new transportation bill is passed. The gas tax brings in approximately $34 billion per year at its present rate, but Congress is trying to maintain current transportation funding levels of about $50 billion per year. Transportation experts have said the current funding level is the bare minimum that can be spent on U.S. infrastructure just to maintain the nation’s road and public transit systems.

Under current law, the Highway Trust Fund cannot incur negative balances and has no authority to borrow additional funds. The Department of Transportation has indicated that it needs at least $4 billion in cash balances available in the highway account to meet obligations as they are due. The Fund is scheduled to reach that $4 billion threshold again after the short term patch passed late last July expires in May. If the fund falls to that level, the Department of Transportation would have to then delay some payments to states in order to maintain that balance.

While a few members of Congress have come out in favor of raising the gas tax, many have been reluctant to support an increase. However, since the start of the 114th Congress two weeks ago, a number of high profile Republicans have signaled that they have not ruled out the gas tax as an option. Senator John Thune (R-SD), incoming Chairman of the Senate Commerce Committee and the Senate's third-ranking Republican, would not preclude the possibility of raising the gas tax when asked about the issue saying, "I don't think we take anything off the table at this point. I think it's important to recognize that we have a problem, an issue that we need a solution for, and we need to look at all the possible ways out there in which we can address the challenge and address the problem." Senator Jim Inhofe (R-OK), who will be chairing the Senate Environment and Public Works Committee, similarly refused to take the gas tax off the table. Senator Orrin Hatch (R-UT) likewise didn’t rule out the gas tax, saying "I am open to whatever it takes to get that problem solved because we have to take care of our highways." Senator Hatch will be chairing the Senate Finance Committee, one of the more important committees concerning transportation finance.

Last summer, Senator Bob Corker (R- TN), in partnership with Senator Chris Murphy (D-CT), released a bipartisan plan to replenish the Highway Trust Fund by raising the gas tax six cents a year for the next two years and then peg the rate to inflation. The public support from a sitting Republican member of Congress for raising the gas tax was significant, showing hope for a compromise. Senators Corker and Murphy say raising the gas tax preserves the "user fee" system for funding the nation’s highways rather than simply transferring money from the general fund. The Corker/Murphy plan is "revenue neutral," meaning that any additional revenue collected by the Federal Government through the gas tax would be offset through tax cuts elsewhere. Among the offsets proposed by Sen. Corker and Sen. Murphy are the research and development tax credit, the deduction of state and local sales taxes, and Section 179 expensing, a tax break used by businesses to purchase equipment. The senators say they are open to suggestions for other offsets.
 

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