Federal Highway Acting Administrator Rick Capka
Remarks as prepared for delivery
SASHTO Annual Meeting, August 22, 2005
Fajardo, Puerto Rico

TRANSPORTATION CROSSROADS

I'm honored to be Federal Highway Acting Administrator and proud that SASHTO is the first major event where I'm introduced with that title.

The theme of this year's conference . . . "Crossroads of Challenge" is right on the mark. But before I get into a discussion of what "Crossroads" in transportation means to me, I'd like to give you an overview of SAFETEA-LU.

We achieved the key elements of President Bush's near-term plan:

• A record investment for improvements in highway, transit and safety programs.
• States and local governments have a menu of options -- flexibility they need to deliver projects faster and tap the talents and resources of the private sector.
• Innovative technology solutions supported in the act will help us get more out of current capacity.

Basically, it's time to celebrate, but not too much and not for too long.

WHAT'S IN THE ACT

U.S. DOT and our Federal Highway team are digging into the difficult task of implementing legislation. There are more than 800 pages, so there's a lot of digging going on.

When President Bush signed the bill on August 10, he said: "Our economy depends on us having the most efficient, reliable transportation system in the world." He also said new funding and new policies will lead to real progress. The $286.4 billion for 2004 through 2009 represents a 38 percent increase over the funding in TEA-21. It helps all states by enhancing state-to-state funding equity. This is of particular interest to "donor" states -- states that contribute more tax revenues into the Highway Trust Fund than they receive back in federal-aid highway funding.

Every state is guaranteed a minimum rate of return on its share of HTF contributions, beginning at 90.5 percent in 2005 and rising to 92 percent by 2008. Every state is also guaranteed a minimum increase over its average annual TEA-21 apportionment, starting in 2005 at 117 percent and rising to 121 percent.

SAVING LIVES

Improving highway safety and fighting traffic congestion are at the heart of SAFETEA-LU. For safety, SAFETEA-LU helps states direct resources to their greatest needs. It creates a new core Highway Safety Improvement Program, almost doubling funds for safety projects. A record amount will go toward eliminating highway safety hazards, providing incentives to increase safety belt use, and improving coordination among law enforcement, engineering and education.

There are targeted programs such as the Work Zone Safety Grant Program. Beginning in FY06, states may apply for grants for work zone safety training. The National Work Zone Safety Information Clearinghouse -- managed by FHWA -- and by a variety of safety requirements on federal-aid projects, including high-visibility safety garments, will complement the $5 million a year program.

All in all, SAFETEA-LU is the most safety oriented transportation bill in American history.

FIGHTING CONGESTION

As I said, the Act fights congestion and improves mobility through record investment in infrastructure projects. It also offers us congestion-fighting opportunities through innovative finance and new efficiency during the construction process.

Innovative Financing

The legislation includes increased flexibility for tolling, private activity bonds, TIFIA loans, State Infrastructure Banks and other forms of innovative financing designed to attract private sector investment and participation.

• Tolling: The Interstate Reconstruction and Rehabilitation Toll Pilot Program, established in TEA-21 to let states collect tolls to repair and/or maintain interstates, continues unchanged.
  • The Value Pricing Pilot Program also continues, funded at $59 million through 2009, to support the costs of up to 15 pilot programs nationwide.
  • The act creates the Interstate Construction Toll Pilot Project to allow states to collect tolls for construction of new interstates.
• Private Activity Bonds: Highway facilities and surface freight transfer facilities are now eligible for up to $15 billion in tax-exempt facility bonds. This will encourage public-private partnerships.
• TIFIA: SAFETEA-LU authorizes $610 million through FY09 to support federal credit under TIFIA. Eligibility for TIFIA loans is expanded to include certain freight rail facilities. The threshold required for project costs is reduced to $50 million.
• State Infrastructure Banks (SIBs): SAFETEA-LU expands the successful SIB pilot program to allow all states and territories to maximize capital investment through a revolving fund -- providing loans and credit enhancement -- to finance various highway and transit projects.

Efficiency

• Streamlined Environmental Review: SAFETEA-LU incorporates changes aimed at improving and streamlining the environmental process for transportation projects. These changes, however, come with some additional steps and requirements on transportation agencies.
  • The provisions include a new environmental review process for highways, transit, and multimodal projects, with increased authority for transportation agencies, but also increased responsibilities.
  • A 180-day statute of limitations is added for litigation, pegged to publication of environmental actions in the Federal Register.
  • The air quality conformity process is improved with changes in the frequency of conformity determinations and conformity horizons.
• Highways For Life Pilot Program: SAFETEA-LU provides $75 million through 2009 to boost the use of cutting-edge technologies and construction practices. The goal is safer, longer-lasting and less expensive roads and bridges.

One part of Highways for LIFE will be grants for construction of projects using such innovations. The grants program is limited to 15 projects per year, but aims for each state receiving a grant by 2009.

BEYOND SAFETEA-LU

Well, all this is good news and it is indeed time to celebrate. But, like I said, not for long.

I want to look beyond August 2005 -- I want to plant a seed for our future. I think we all realize . . . at least subconsciously with all of the focus on the current bill . . . that the next bill is only four years away!

SAFETEA-LU expires September 30, 2009.

Think of it . . . only a little more than four years to implement the requirements of SAFETEA-LU and then to prepare and enact the next legislation. Can we do what needs to be done within four years?

The time is now to start working on a revolutionary "Next Act."

As Secretary Mineta has pointed out, SAFETEA-LU is evolutionary. It builds on the ideas of TEA-21 and ISTEA before it. We've learned a lot from the agonizing deliberations of the past two years. There should be no extended time to relax and celebrate.

Don't get me wrong. We've pushed the envelope to be as creative and open to new ideas as possible. For example, SEP-15 is encouraging new approaches to public private partnerships. Our efforts in environmental stewardship and streamlining are finding common ground and getting projects moving forward.

And we pushed to make highways safer. Because 43,000 Americans are being killed each year on our roads, we couldn't afford to wait for passage of a new bill.

I really want to recognize AASHTO's continuing leadership in advancing highway safety. At the Spring Meeting of the Board of Directors, AASHTO stepped forward to host the 2^nd major "Leadership Forum" on highway safety. The focus on key topics such as Comprehensive Highway Safety Plans led to recommendations that highlight how states can save lives NOW through leadership commitment and follow-through with data-driven action plans. And, closer to home, the decision within SASHTO to form the "South East Safety Coalition," currently led by Georgia DOT, has established a regular forum for spreading safety successes through the region.

FHWA appreciates the continuing commitment by all state DOTs to advance highway safety, and we are ready to strengthen our partnership in safety with AASHTO.

For the Next Act, we'll have to take a critical look at the highway trust fund (HTF). It's been 50 years since President Eisenhower authorized a comprehensive review of the federal role in highways, and how to fund them. The user-fee system that was set up to finance the Interstate Highway system -- the HTF and the gasoline tax -- has served us well. And yet, the current system is not bringing in enough revenue to meet needs.

We need to explore other ways to pay for highway transportation instead of relying mainly on funds generated by collecting taxes on gas. As you know, this is something that Secretary Mineta has been talking about.

We are encouraged that Congress recognized this challenge and included provisions for a national commission to study the federal role in surface transportation and future financing, particularly alternate approaches to generating revenue.

PRIVATE SECTOR RESOURCES

Without a doubt, funding is a critical part of any reauthorization process -- and money has been the subject of endless debate during the past two years.

It's been tough because we have been dealing with limited funds from public investment. So let's talk about private sector involvement.

How can we best tap the private sector? How much can we depend upon the private sector to deliver? How much private sector participation are we willing to allow? Interesting questions and we will need to develop good public policy to steer us in the right direction!

The public sector needs to create an environment that will attract, not discourage, private sector investment and participation. We've been fostering public-private partnerships for the past several years and those states that are turning to them are finding that their road infrastructure can be an asset. This is particularly true for large, complex, and technical projects, where the private sector builds, leases, and/or operates a transportation facility.

There are two very significant recent examples:

The Chicago Skyway. (Cintra-MacQuarie) A consortium of two firms with extensive experience in the toll road business was awarded a 99-year concession and lease agreement from the City of Chicago. Under this agreement, the consortium paid $1.8 billion for the right to toll, operate, and maintain the Skyway.

The Trans Texas Corridor. (Cintra – Zachery) A consortium of engineering, construction and financial firms signed an agreement with Texas after proposing a $7.2 billion investment to develop the approximately 600-mile, Oklahoma to Mexico portion of the Trans Texas Corridor. They are willing to pay as much as $1.2 Billion for the privilege. The consortium, using private resources, will operate the toll road for 50 years and then return it to the state.

Puerto Rico has a privatization experience: the Moscoso Toll Bridge over Laguna San Jose in San Juan was completed in the early 90s.

This movement toward roadway privatization is a familiar pattern in other countries as well. Italy, for example, privatized its largest state toll business, Autostrade, a few years ago. In Canada, a toll road near Toronto -- the 407 -- was privatized after being constructed by the Province of Ontario.

Using a program introduced in 2003, Mexico has financed a wide variety of critically needed surface transportation projects through an innovative combination of equity, bank loans and public funds. Japan has committed to privatizing its government-owned toll facilities, which are the largest toll revenue generators in the world.

Investors under government-administered agreements in fact are building most new toll facilities. These include new toll roads in 23 countries in Europe, Asia, South America, and the Caribbean.

FHWA recently created a public-private partnership office. The new office will strengthen our promotion of PPPs and provide a central point of contact for state and local transportation officials who want to explore new and creative ways to design, develop and deliver highways and bridges. I encourage you to take advantage of this new resource.

APPLYING TECHNOLOGY

Beyond innovative finance (particularly P-P-Ps) and steps to improve the construction processes -- --

We are putting a strong emphasis on applied technology that delivers improvements in mobility, safety and efficiency. Federal Highways is promoting these technologies -- and many more -- to make the most of the capacity we have now.

• 511 is spreading across the country, providing real-time traffic information to drivers, commuters and businesses. One-third of the SASHTO states -- Kentucky, North Carolina, Virginia and three regions in Florida -- have launched 511 services, and accounted for 45 percent of all calls placed to 511 in the country in June.
• ITS toll collection is a crucial component of HOT lanes, one of the most effective congestion-fighting tools. Electronic payment systems, toll tags, and smart cards are tools that make tolling and HOT lanes a more realistic option.
• The Electronic Freight Manifest (EFM) initiative holds great potential for improving productivity in a crucial sector of our economy. The vision is to enhance productivity by improving information transfer between supply chain partners and to enable access to that information by all supply chain partners in real time.
• Highways for LIFE (HfL), as I mentioned earlier, is now a pilot program with great potential to build highways and bridges safer, faster and with better quality. Together with state and local governments and with industry, we want to accelerate the movement of proven innovations into routine construction practice.

Each of these technologies -- 511, ITS in all its varieties, Electronic Freight Manifest, Highways for LIFE -- are improving or will improve mobility, safety and productivity. They help us make best use of our current capacity and they must be an even bigger part of the "Next Act" I've been talking about.

Applied technology is a crucial part of the Administration's vision to improve the way we finance, build, operate and maintain roads and bridges so that we can improve safety and mobility . . . And ensure that we have the transportation infrastructure the American economy needs.

LOOKING AHEAD

This is a critical time -- a crossroads -- for everyone involved in transportation.

There is so much going on near-term to implement new legislation and long-term with all the advances we must make to keep our economy on the move -- to ensure that drivers and freight can get to where they need to go, safely and on time. In coming months and years, we mobility professionals have an opportunity to help shape our nation's future and move America toward a more prosperous future. We'll have to take some revolutionary steps and we're ready to start on that difficult path.

I hope we continue on our transportation journey together.

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