Vol. 17, No. 4; July/August 2006

July/August 2006

Reflections on The Interstates' Golden Anniversary

The discussions at the AASHTO Forum, "The Interstate Highway System: Fifty Years and Looking Forward," June 28-29, 2006)  provided a preview of the issues in the emerging debate about the future of the nation's surface transportation system. That debate will focus both on its future mission and on the resources needed to support that mission. Preservation of the existing system and enhancement of its performance will be an important priority but not to the exclusion of capacity expansion, new corridors and intermodal connections to accommodate new population growth and an expanding economy. New financing methods, fresh funding sources,  the use of road pricing to manage demand, and public-private ventures will figure prominently as new approaches to addressing the needs of the future program.

The debate will be many-faceted. It will feature prominently the deliberations of the Congressional Commission but it will benefit also from other public and private sector contributions, such as U.S.DOT's Congestion Mitigation Initiative, the Reason Foundation's Mobility Project and the NCHRP study "Future Options for the National System of Interstate Highways" [NCHRP Project 20-24(52)]. Joining the debate for the first time, and reflecting its growing prominence as infrastructure investors will be the private financial community. Just this week, Federal Highway Administrator Richard Capka, underscored its emerging importance when he wrote that "a big part of the answer is to involve the private sector more fully—not just as a vendor or a financier, but as a partner in the funding, management and expansion of our transportation infrastructure." (Op-Ed in Forbes.com).

Observing the commemorative activities, listening to the presentations and conversing with participants at the AASHTO Forum and the ARTBA dinner, we had a distinct impression that this was no mere occasion for reminiscences and a nostalgic look into the past. The festivities were deliberately mounted to remind the public (and Congress) of the essential contribution of the Interstate network to the country's economic and social development and of the positive role of highways in the life of the nation. They reflected a determination of the transportation community to elevate surface transportation to a higher level of national priority and to mobilize public opinion in support of an expanded highway program. Time will tell how successful these efforts will have been. But the talent,dedication, energy and resolve behind them have been impressive. They leave no doubt that the transportation community will spare no effort in its determination to be heard.

Beyond the Tipping Point: A News Round-up

Back in March 2006, in a Brief entitled "Highway Tolling Has Reached the Tipping Point," we wrote: "Virtually every week brings fresh evidence that highway tolling and private financing are gaining new converts among governors and state transportation officials, in state legislatures, and in the media. Growing transportation budget shortfalls, eroding value of highway tax revenues and a supportive federal policy toward tolling and public-private partnerships have helped to nurture the idea. Fanning its spread are visions of highway projects built entirely with private funds and prospects of multi- billion-dollar concessionary cash payments that could jump start ambitious transportation improvements years in advance of their planned execution." The Brief's electronic version was widely circulated and led to numerous requests from our readers that we issue periodic updates documenting new developments in highway tolling and private financing. So far, we have issued three updates. Below you will find a selection of news items from these dispatches, arranged in reverse order, with the most current news first.

A New Chapter in the Evolution of the New Starts Program

As our long-time readers know, we have been avid observers of the Federal Transit Agency's New Starts Program and have followed its evolution with interest for many years. That is why we took special notice of FTA's publication of the final version of its New Starts Policy Guidance (71 FR 94, May 16, 2006) and the accompanying FY 2008 Reporting Instructions for New Starts. These two documents, along with the Proposed Interim Guidance on "Small Starts," (71 FR 111, June 9) symbolize to us the beginning of a new chapter in a program that has had its share of successes, failures and controversy over the years. ...

Buried in the text of the Small Starts Interim Guidance and Instructions is probably the most consequential policy innovation of all: incorporation of the Small Starts program as part of the U.S. DOT's Congestion Mitigation Initiative. Under "Other Factors" consideration will be given to whether " a Small Starts project is proposed as a significant element of a comprehensive congestion reduction strategy in general, and pricing, in particular."  Transit projects that are part of a congestion mitigation plan will receive a higher rating. For the first time in the Department's history, transit investment is explicitly being made part of an overall national strategy to relieve congestion. 

Private Sector Role in Highway Financing is the Focus of U.S. DOT's and Congressional Lawmakers' Attention

In a May 24 letter to Thomas E. Petri,  Chairman of the House Highways and Transit Subcommittee, Transportation Secretary Norman Mineta provided the most detailed statement yet of the Department's plans to combat congestion and encourage private sector involvement in highway development. The 8-page letter was sent to Rep.Petri on the eve of a congressional hearing on the Future of Infrastructure Finance (see below).

"This is a transformational time in the history of American highways," the Secretary wrote. We are entering a third era of Federal leadership in highway development. The first era began in 1916 with the Bureau of Public Roads' efforts to get farmers out of the mud and to the market. The second era began in the 1950s with the launching of the Interstate Highway program to enhance the nation's connectivity. The challenge of the third era is to combat growing congestion and to engage more fully the private sector in efforts to develop and improve  transportation infrastructure.

The Department's intended response to these two challenges will take the form of two broad sets of actions. The first is the recently announced National Congestion Relief Initiative (full name: "National Strategy to Reduce Congestion on America's Transportation Network"). The second is a collection of programmatic efforts intended to encourage greater private sector involvement in highway development.

Meanwhile, over on Capitol Hill, a congressional hearing provided  an impressive illustration of the rising presence of the private sector in highway development. The May 24 hearing on the Future of Infrastructure Finance, the first in a series, was intended to educate the members of the House Highways and Transit Subcommittee on the potential of using private capital and public-private partnerships to help finance new highway capacity. "Recent high profile lease agreements in Indiana, Virginia and Chicago have brought these issues to the forefront of the debate on the future of infrastructure financing," said the Committee announcement. 

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