Top Transportation Stories of 2011

Although 2011 did not produce a new transportation bill, there were nine major stories in the transportation world.

1) Derailment of High Speed Rail: When President Obama came into office in 2009 he had a vision for high-speed rail:

“Imagine whisking through towns at speeds over 100 miles an hour, walking only a few steps to public transportation, and ending up just blocks from your destination. Imagine what a great project that would be to rebuild America.”

Unfortunately for the administration, the real world intervened. Most of the train and track improvements were incremental such as increasing train speed by ten miles per hour or less. Instead of targeting the northeast corridor as Republicans have suggested, the administration provided funds to more than 30 states for rail improvements; high-speed rail service was unrealistic for most states. With a Republican majority in 2011, the Republican House eliminated most of the funding for the program. The Democratic Senate allowed the funding to expire.

2) DOT’s Vehicle Safety Campaign: Secretary Ray LaHood is on a mission to increase highway safety. While safety is important, highway accident deaths have decreased to their lowest level in 61 years. As a result, the administration has emphasized a new problem: talking on a cell-phone while driving. While cell phones can be distracting, the evidence is mixed on whether talking on a cell phone is more dangerous than listening to the radio, eating or yelling at children in the backseat. Recent studies show that cellphone conversations do not increase crash risk beyond that of normal driving. The danger is when drivers take their eyes off the road. The administration should ensure that it treats cell phone usage in proportion to other potentially dangerous behaviors.

3) China’s Infrastructure Accidents: Over a three-month period in 2011 a high-speed train crash killed 39 people; several wind turbines exploded; and in a span of five days four bridges collapsed. If this happened in the U.S. there would be multiple investigations by the government and media, resignations or terminations, and a major public backlash. As a totalitarian country China is different. China dismissed fewer than five employees for these instances. For the past four years many transportation analysts have urged the U.S. to look to China as a model. The same authoritarian rules that allow China to quickly build new infrastructure also eliminate the necessary safety and institutional checks. While China spent billions and billions on transportation, the country may have overspent and may not have the funds to maintain its infrastructure in the future. There may be a good model for the U.S. to examine, but China is not it.

4) TSA Pleasure Zone: After the attacks of 9/11 the United States substantially increased spending on airport security. Media reports highlighted the limited but real failures of private contractors that operated airport security checkpoints. The “solution” was to create a federal bureaucracy with unionized employees screening travelers. The TSA like most federal agencies has misused funds. The screening process’ use of invasive pat-downs and strip searches is also problematic. The government response to critics is that flying is not a constitutional right and people who are not comfortable with the intimate searches do not have to fly. There are two problems with this rationale. First constitutional scholars are unsure if airport pat-downs and strip-searches are reasonable. Unreasonable searches are illegal and can disrupt commerce. Second, this increased security may not be any more effective than the old security. Certain terrorist acts have been disrupted by fellow passengers; in these instances perpetrators have already boarded a plane. A better approach would be for the U.S. to develop a risk based airport security system. Such a system would separate travelers into low-risk, ordinary, and high-risk. This system would produce significant time-savings to most travelers. Such a system could provide better security at a significantly lower cost. There is one additional TSA issue. The agency provides airport security services and regulates those same services. This dual-role system needs to be changed.

5) Surface Transportation Spending Uncertainty: The last transportation bill expired in 2009. President Obama has focused on a short-term stimulus instead of a long-term bill. The House of Representatives wants a six-year bill, but is counting on unrealistic revenues from offshore oil drilling. Fortunately, the Senate has drafted a bipartisan 2-year bill. However, the Senate also needs a source of funding. Many analysts do not think that two years is enough to provide stability for transportation investors. Funding issues and the 2012 elections may delay congressional action until 2013.

6) Aviation Spending Uncertainty: Congress is now on the 22nd extension of the Aviation bill that expired in 2007. A political stalemate in September 2011 over subsidizing rural air service was resolved by a deal. The compromise eliminated the service but allowed the Secretary of Transportation to declare certain flights essential thus ensuring the continuation of the service. This is not a long-term solution. Earlier in the Obama presidency the National Labor Mediation Board changed the aviation unionization rules so that employees who choose not to vote are counted separately from employees who vote no. This decision helped delay a new bill. There are other challenges that need to be addressed in a new bill including the source of funding for the next generation aviation system.

7) Puerto Rico’s Lease of Provincial Roads 5 and 22. In June Puerto Rico selected Autopistas Metropolitanas de Puerto Rico to invest $350,000,000 to improve the pavement quality, highway drainage, guardrail rehabilitation, signage improvements, bridge rehabilitation and other safety improvements. To safeguard consumers, tolls cannot be increased until 2014; and toll increases must be related to inflation. Puerto Rico’s PPP program includes more than surface transportation. Airports, Energy, Schools and Water are also part of the program. The proposal has already won several awards including Deal of the Year in the Americas by Project Finance International and Project of the Year Award for 2011 by the American Road and Transportation Builders Association.

8) Georgia’s Cancellation of the North by Northwest PPP Project. While some places are surging forward with PPPs others are stuck in reverse. On December 14th the state cancelled the PPP partnership to add managed lanes to I-75 and I-575 in the northwest Atlanta suburbs. The proces was stopped after the state spent $50 million and the three concessionaires spent hundreds of millions of dollars preparing bids for the corridor. Some state leaders were concerned about foreign control and financial risks to Georgia. Many PPP operators are European, Asian, or South American investors because these countries allowed PPPs before the U.S. Typically these countries partner with local builders who employ local workers. These workers spend their salaries in the state providing benefits to Georgia. All PPP contracts detail the amount that the state must contribute. PPPs protect states because the private contractor accepts all of the risks and cost overruns with the project. PPPs offer financial guarantees to the state that no state department of transportation can match. This PPP would have funded approximately 20% of the construction costs of this project. The state, which previously could not cover 80% of the cost, (much of that from the federal government) must scramble to now cover the entire 100% of the cost. Additionally no concessionaire will partner with a state that cancels a contract before it has any of the bids. Hopefully state officials in Georgia will change their minds.

9) The Decline in Driving: Driving volumes in 2011 were 1.1 percent lower than driving volumes in 2006. Population has grown by four percent, so the real decline is closer to five percent. Much of the media has focused on the decline in driving as a result of mixed-use growth or new urbanism, but other reasons are at play: higher gas prices, a high unemployment rate (people cannot drive to their job if they do not have one), and the increased use of information technology. Before the recession, much of the growth in vehicle mileage driven occurred among women and minorities (especially Hispanic). The recession and higher gas prices have decreased growth in the number of women and minorities who commute by car. Technology such as skype and other online tools are decreasing face-to-face meetings. However, while driving has decreased there has not been a corresponding increase in rail or bus travel. Driving will increase again, although more slowly, when the recession ends.