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July/August 2007 · Vol. 71 · No. 1
July/August 2007
Targeted Investment
by James D. Ray
With the Corridors of the Future Program, USDOT focuses on a few key areas to get the biggest bang for the public's dollars.
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| (Above) As this traffic on I-35 in Texas shows, congestion is already a problem on many U.S. highway corridors and will only get worse without focused, cooperative efforts by Federal, State, and local interests. Photo: Texas Department of Transportation. |
"Today, traffic congestion is choking our cities, clogging our highways and airways, and complicating our lives. All the rewards that once came from transportation — the freedom, the opportunity, the independence — are increasingly being strangled by gridlock," said Transportation Secretary Mary E. Peters in a February 2007 keynote speech at the U.S. Chamber of Commerce's conference, Moving Enterprise: Transportation and the Global Economy.
Congestion on America's highways is increasing at an alarming rate and is robbing U.S. citizens of economic opportunity and time spent at home and in their communities. Many observers believe that gridlock is a problem without a solution. However, the U.S. Department of Transportation (USDOT) currently is in the process of selecting three to five major transportation corridors in need of investment to reduce congestion and improve system performance — now and in the future — for participation in its Corridors of the Future Program (CFP). The program is a component of USDOT's National Strategy to Reduce Congestion on America's Transportation Network (also known as the Congestion Initiative). The projects selected as part of the CFP will benefit from many advantages, including possible inclusion on the Department of Transportation Priority Project List (a list of high-priority infrastructure projects under U.S. Presidential Executive Order 13274, Environmental Stewardship and Transportation Infrastructure Project Reviews). Other advantages are accelerated review and conditional approval of features under Special Experimental Project 15 (SEP-15) and expeditious credit assistance.
The Congestion Initiative consists of a six-point plan, including the CFP, designed both to reduce congestion in the short term and lay the foundation for long-term congestion reduction efforts. The CFP is a forward-looking component of the initiative and is specifically designed to encourage States and the private sector to work together to develop innovative solutions to both passenger and freight congestion on the Nation's major transportation corridors. Addressing the congestion crises on these corridors is vital to the economic future of the United States.
Congestion's Effects
According to the Texas Transportation Institute's (TTI) 2005 Annual Urban Mobility Report, congestion in 2003 caused Americans 3.7 billion hours of travel delay sitting in traffic jams and 2.3 billion gallons of wasted fuel. This translates to a cost of $63 billion; however, USDOT calculates the total cost of congestion to be at least twice that. In 2003, in the Nation's 13 largest urban areas, each rush-hour traveler "paid" an annual "congestion tax" of between $640 and $1,600 in lost time and fuel, and spent the equivalent of almost 8 workdays each year stuck in traffic.
The Nation's congestion problem is not limited to its most urbanized areas. More than 62,764 kilometers (39,000 miles) of highways experienced peak-period congestion in 2003. Of these, more than 10,944 kilometers (6,800 miles), or almost 28 percent, were in rural areas. Based on current trends, highway congestion in medium-size cities will grow at a faster rate than in large urban areas over the next 10 years. Smaller cities and towns, and the suburban and rural fringe, can expect to see similar challenges over the next 10 to 15 years.
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| The corridors carrying 50,000 trucks and more daily are in the Northeast "megalopolis" stretching from Washington, DC, to Boston, MA. California also will be greatly congested, the map depicting 50,000-plus trucks on corridors near San Diego, Los Angeles, and up through the Central Valley to San Francisco. Heavy truck volumes also can be expected near major cities such as Buffalo, NY; Charlotte, NC; Chicago, IL; Detroit, MI; Houston, TX; and Phoenix, AZ. Source: USDOT. |
Reliable travel time is vital to the Nation's ability to compete in a global economy. Unreliable travel time requires drivers to build in additional "buffer" time to ensure ontime arrival. Congestion raises the costs of delivering goods and services because of the increased travel time and operating costs. To remain a strong competitor in the world marketplace, American industry must be able to move freight efficiently. Many experts believe that "just in time" delivery has provided the Nation's economy with unparalleled efficiencies, and the resulting savings are reallocated to other, more productive uses. However, increasing congestion is reversing these efficiencies, causing businesses to incur greater costs by stocking more inventories, adjusting delivery times, purchasing more delivery vehicles, and hiring more employees, thereby reducing revenues and the capital available to expand their businesses.
In 2005, highway congestion caused a total of 243 million hours of delay for trucks annually. At a delay cost of $32.15 per hour, which is the conservative value used by the Federal Highway Administration's (FHWA) Highway Economic Requirements System model for estimating national highway costs and benefits, the direct user cost of the bottlenecks is about $7.8 billion per year.
However, the cost of congestion does not stop there. The impact of increasing congestion ripples through the economy. Businesses and tens of millions of Americans pay higher prices for goods and services slowed by bottlenecks. Jobs and the future economic well-being of U.S. families are at risk if the transportation system cannot, at the very least, remain competitive with the systems of the Nation's major trading partners.
The Need for CFP
CFP is designed to encourage States to work together and with the private sector to develop innovative national and regional approaches to alleviate the systemwide effects of congestion on major transportation corridors. Due to institutional, regulatory, and financial constraints, the design, financing, construction, operation, and maintenance of these corridors traditionally stops at the State border. CFP offers a means to address these barriers and enables States to make more informed, better coordinated investments to more aggressively manage the overall operational performance of major transportation corridors.
One of the CFP's primary goals is to accelerate development and improvement of the transportation corridors that are most in need of investment without putting additional strain on the Highway Trust Fund. To deliver the corridors of the future, the CFP encourages States to partner with the private sector in the development, financing, and management of these transportation corridors. Private financial investment in surface transportation projects can encompass a wide range of contractual arrangements by which public (Federal, State, or local) authorities and private entities collaborate on a project.
The value of partnering with the private sector is not limited to financing a transportation facility. Expanding the private sector role allows public agencies to draw on technical and management resources in new ways to deliver transportation projects.
Working together, public and private entities can efficiently allocate the responsibilities and risks associated with any project component to the party that can manage them best. One of the primary benefits of this type of partnership is that it makes additional financial capital available from private sector sources to deliver key transportation projects and provides the public entity more flexibility in allocating its own financial resources most efficiently. At the same time, private sector resources can provide freight operators and the traveling public with a better managed facility, less congestion, and more reliable travel times.
Through the CFP, USDOT will work with project sponsors to expedite delivery of the corridors of the future by identifying and, where appropriate, removing the barriers associated with planning, financing, operating, and maintaining these much needed transportation facilities.
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| The number of vehicle miles traveled has far outstripped the number of roadway miles built in the last 25 years, adding to traffic congestion, such as shown here near Washington, DC, and prompting calls for more construction and alternative methods of traffic management. |
Where Are the Corridors Of the Future?
Three to five major growth corridors in need of long-term investment and systemwide management to reduce congestion will participate in the CFP. Selection of the participants is occurring in a two-step application process that USDOT published in the Federal Register (71 FR 52364) on September 5, 2006.
Phase 1 of the selection process invited States, or other public or private sector entities working with States, to submit corridor proposals in October 2006. The Federal Register notice did not limit applications in project scope; proposals could include development of entirely new capacity or upgrades or extensions of existing capacity.
Applicants were asked to provide general information about proposed corridor projects that would alleviate current or forecasted congestion on highways, railways, or waterways. They were asked to describe their proposed project's purpose, location, preliminary design features, estimated capital costs, likely financing mechanisms, delivery schedule, traffic trends, and, if a corridor crosses State lines, the status of agreement between the States to advance the project.
USDOT received 38 corridor proposals for phase 1 consideration. The proposals consisted of projects on just about every major transportation corridor in the United States, with the majority proposing projects on the corridors that currently are experiencing moderate to severe congestion that is projected to worsen. Almost all the proposals included use of intelligent transportation systems to better manage movement of freight and people.
To choose from the proposals, USDOT established a review team composed of representatives from its surface transportation administrations with expertise in finance, environment and planning, infrastructure, and operations. Selection criteria included development of corridors with national and regional importance in movement of freight and people, congestion reduction, and leveraging of public and private resources to deliver the project.
After phase 1 review, USDOT selected 14 projects located on 8 major corridors that were considered to have the greatest potential to achieve the CFP's goals. The chosen projects and corridors were announced in the Federal Register (72 FR 5787) on February 7, 2007.
USDOT then invited the project champions to participate in phase 2 of the CFP selection process. Phase 2 provided an opportunity for applicants to develop their proposals more fully and obtain support from all States affected by their projects.
In its Federal Register notice, USDOT identified the areas that applicants were asked to address in their phase 2 applications:
Congestion reduction. How would the proposed corridor improvement reduce current national and regional areas of congestion or address future congestion based on the projected demographics of the proposed corridor area?
Mobility improvements. How would the project increase mobility of people and freight? Is the proposed corridor on a new or existing alignment? What transportation technologies would be used to benefit users by reducing congestion and enhancing the mobility and efficiency of the proposed corridor?
Economic benefits and support of commerce. How would the project support national and international commerce by reducing congestion and providing reliable travel times?
Value to the user. What would be the benefits of the improved corridor for its users? Examples include increased safety, faster and more convenient access to intermodal facilities, environmental benefits, truck-only lanes, and increased travel speeds.
Innovations in project delivery and finance. What are the innovative project delivery and financing features proposed for the project?
Private financial investment. What are the potential sources of financing for the corridor improvement, including private sector financial contributions to the project?
Although the program is limited to a maximum of five major transportation corridors and related projects, USDOT encourages State departments of transportation (DOTs) and other project sponsors to continue to advance those ideas contained in the proposals that ultimately were not selected.
CFP Benefits
USDOT has several avenues for helping project sponsors to accelerate delivery of corridor projects that come under the CFP umbrella:
Coordination of a more efficient environmental review process. Corridors selected for the CFP can request to be added to the Department of Transportation Priority Project List. Executive Order 13274 requires Federal agencies involved in developing transportation projects to expedite environmental reviews for relevant permits and approvals as much as feasible.
Accelerated review and conditional approval of features under SEP-15. SEP-15 carves out a place in Federal highway law to allow tests and experimentation in the project development and delivery process. Potential areas of experimentation include commercialization of rights-of-way for new facilities and innovative finance, tolling, and contracting requirements.
Expedited commitment process for TIFIA credit assistance. The Transportation Infrastructure Finance and Innovation Act of 1998 (TIFIA) program provides three forms of credit assistance — secured loans, loan guarantees, and standby lines of credit — for surface transportation projects. Each project sponsor seeking to incorporate TIFIA provisions as part of a finance plan can receive a preliminary commitment from USDOT. This commitment would expedite the loan review process to be undertaken should the project sponsor seek TIFIA assistance.
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| This aerial photo shows congestion that is typical of what USDOT hopes to relieve through the CFP, with cars and trucks alike backed up and incurring costs in terms of wasted time and fuel and delayed freight delivery. Photo: Halff Associates, Inc. |
Conditional approval for private activity bonds (PABs). Projects selected for the CFP may be granted conditional approval to be supported by PABs as established in the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users. PABs are subject to a nationwide $15 billion limitation that is allocated by the Secretary of Transportation, and this funding could be extended to the CFP projects to facilitate their financing and construction.
Priority under FHWA tolling programs. The CFP projects will be granted priority under FHWA's limited toll programs, which allow States to toll motor vehicles to finance interstate construction and reconstruction, promote efficiency in the use of highways, reduce traffic congestion, and improve air quality. USDOT may consider using its authority under SEP-15 to grant deviations from these programs to provide more flexibility for tolling.
Access to USDOT program area experts. The CFP project sponsors will have access to USDOT experts knowledgeable in planning, the environment, public-private partnerships, finance, construction, safety, operations, and asset management.
Other discretionary funding. USDOT will work with applicants to identify other possible discretionary funding sources.
The Time Is Now
For most of the last 50 years, the core function of USDOT has been to oversee development of the surface transportation system to promote interstate commerce, travel, and national defense. With the Dwight D. Eisenhower National System of Inter-state and Defense Highways essentially complete, one of USDOT's most important jobs today is to develop innovative solutions to alleviate the strains being placed on the system's performance.
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| Streams of traffic such as this nighttime backup are targeted for relief through the CFP, which will offer streamlined reviews and expedited financing to three to five projects that may serve as models for the future. |
The CFP demonstrates USDOT's commitment to work with its State partners and the transportation industry to facilitate and accelerate development of major transportation corridors to reduce congestion, increase travel reliability for freight shipments, and enhance quality of life. A strong transportation infrastructure is vital to the Nation's security, economic prosperity, and way of life, and all interested parties must work together to address congestion and develop solutions now.
CFP Selection of 8 Corridors, 14 ProjectsSo far in the CFP selection process, USDOT has narrowed the field from the original 38 candidate projects to 14. Very soon it expects to select up to five corridors of the future. The following are the 14 projects, located on 8 major transportation corridors, that were chosen during the first round of the CFP selection process: I-95
I-80
I-15
Northern Tier (I-80, I-90, I-94)
I-5
I-70
I-69
I-10
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FHWA Acting Deputy Administrator and Chief Counsel James D. Ray is the team leader for the CFP. He directly advises executive-level officials in FHWA and USDOT on all legal aspects of FHWA's program. He and his staff also work with State and local government transportation attorneys and their clients to enhance their understanding of Federal laws, procedures, and policies related to transportation. He earned his bachelor's degree from the University of North Carolina at Chapel Hill and his law degree from Georgetown University.
For more information, contact James D. Ray at corridorsofthefuture@dot.gov.
Other Articles in this issue:
Targeted Investment
The Role of PPPs In Addressing Congestion
Solutions To the Traffic Snarl
Perspective on Freight Congestion
The Dream of an Automated Highway
July/August 2007 · Vol. 71 · No. 1
