States, Republicans skeptical of Biden rule to cut transportation emissions

BY SourceMedia | MUNICIPAL | 11/27/23 02:24 PM EST By Caitlin Devitt

A new Biden administration rule requiring states to reduce transportation-related carbon emissions, which could affect infrastructure spending, faces opposition from states and Congressional Republicans.

The rule, finalized last Wednesday, requires state departments of transportation and metropolitan planning organizations to measure greenhouse gas emissions from vehicles and implement targets to reduce the emissions. It's part of President Joe Biden's effort to cut carbon emissions in half by 2030. Transportation is the largest greenhouse gas contributor in the U.S., accounting for just under 30% of the country's emissions in 2021, according to the Environmental Protection Agency.

State DOTs are pretty split in their support or opposition of the rule, said Joung Lee, director of policy and government relations at the American Association of Highway Transportation Officials, which submitted a 35-page comment on the proposed rule last October.

"States are addressing the impact of climate change whether this rule is there or not," Lee said. "There are a lot of ways to go about reducing emissions and frankly state DOTs can directly impact some, but certainly not all, of the actions as infrastructure owners and operators."

The rule requires state DOTs and MPOs to gather emissions data from vehicles into a single standard, and establish carbon emission targets that will be reviewed every two years. The rule requires the targets to decline over time but leave it to states and MPOs to set the actual targets and strategies for meeting them. The first targets are due by Feb. 1, 2024, which Lee said is a short timeline.

There are no penalties for missing the targets.

FHWA Administrator Shailen Bhatt said in a statement that reducing transportation-related emissions is "critical to addressing the climate crisis. We don't expect state DOTs and MPOs to solve a problem this large on their own, which is why this performance measure does not impose penalties for those who miss their targets," Bhatt said. The FHWA added that the 2021 Infrastructure Investment and Jobs Act allocates more than $27 billion to support carbon pollution reduction infrastructure and projects.

One question that AASHTO, Congressional Republicans and some states have is whether the FHWA has the legal authority to establish a greenhouse gas emissions performance measure, Lee said.

"From our review, there are still questions about whether there is clear legal authority to establish this particular rule," he said.

Sen. Kevin Cramer, R-N.D., said he plans to introduce a Congressional Review Act Joint Resolution of Disapproval to try to overturn the rule. Cramer's move came after the Senate defeated his proposed amendment to the 2024 transportation appropriations bill that would have defund the proposed rule.

Sen. Shelley Moore Capito, R-W.Va., who sits on the transportation and public works committees, said last Wednesday that the proposal was already debated and rejected during negotiations over the 2021 Infrastructure Investment and Jobs Act.

"Federal overreach to advance a misguided climate agenda has become a staple of the Biden administration," Capito said, referring in part to the debate over the FHWA's controversial guidance restricting how states could spend their highway funds.

Outside of Congress, the rule may also be opposed in federal court by states.

Currently, 24 states and Washington, D.C. have laws requiring them to track and set reduction targets for transportation-related emissions. Minnesota has imposed a 20% reduction target by 2050 and a law that drops any proposed highway expansion project that will not meet the greenhouse gas emission reduction target.

In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.

fir_news_article