Surface Transportation News: Analysis of the Bipartisan Infrastructure Bill, How ‘Buy America’ Undermines Transit, and More
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Surface Transportation Innovations Newsletter

Surface Transportation News: Analysis of the Bipartisan Infrastructure Bill, How ‘Buy America’ Undermines Transit, and More

The good, the bad, and the ugly in the infrastructure bill.

In this issue:

Bipartisan Infrastructure Bill: The Good, the Bad, and the Ugly

As I write, the United States Senate is finalizing and seems poised to pass, what is now called the Infrastructure Investment and Jobs Act (IIJA). A few of the final details may change, but this 2,700-page infrastructure bill (as introduced) incorporates much of what Senate committees dealing with transportation and public works had already agreed upon in the context of reauthorizing the surface transportation program—the Fixing America’s Surface Transportation Act (FAST Act), which expires Sept. 30. To those transportation provisions, the infrastructure bill adds a number of other categories of infrastructure (broadband, water utility service, electrification, and other energy topics). The infrastructure bill was introduced as an amendment that replaces the House surface transportation reauthorization bill. Thus, the intent here is to wrap up into one bill both a one-time infrastructure program and the upcoming five-year FAST Act reauthorization.

From my perspective, there are some good things in the bill, many more bad things, and a truly ugly thing. Let’s take them in that order.

The Good

The bipartisan Senate drafters took to heart the urging of groups including Reason Foundation, the Bipartisan Policy Center, Business Roundtable, House Problem Solvers Caucus, and many business groups that private capital investment should be encouraged as part of addressing the country’s infrastructure needs. The infrastructure bill includes three key provisions regarding private investment. The bill:

  • Increases the federal cap on tax-exempt surface transportation private activity bonds (PABs) from $15 billion to $30 billion. This is not enough, but it is a step in the right direction. It should have also clarified the law to make clear that PABs can be used not only for new facilities but also to rebuild existing highways, bridges, etc. This would be consistent with the president’s “build back better” goals.
  • Provides for $100 million in grants to help state and local governments develop public-private partenrship (P3) procurement processes, which should help expand the P3 market.
  • Requires projects larger than $750 million that apply for Transportation Infrastructure Finance and Innovation Act (TIFIA) or Railroad Rehabilitation and Improvement Financing (RRIF) loans to engage in value for money (VfM) analysis (to see if P3 procurement provides greater benefits than conventional procurement).

There were no such provisions in the House bill.

Second, it provides modest procurement reforms, including making permanent the Title 41 reforms from the FAST Act, but does not reinstate the previous administration’s One Federal Decision policy that President Joe Biden rescinded soon after taking office.

Third, it did not include the House bill’s short-sighted repeal of the pilot program that permits toll-financed reconstruction and modernization of three individual Interstate highways (Interstate System Reconstruction and Rehabilitation Pilot, ISRRPP). What the bill should have done is liberalized that program to permit all states that want to use this approach to do so—and for all their aging Interstates. This would cost the federal government zero; it would simply repeal an obsolete ban on tolling.

Fourth, thanks to a nearly unanimous amendment on Aug. 3, the infrastructure bill requires the Department of Transportation (DOT) to finally do a highway cost allocation study, the first one since 1997, as a basis for evaluating who pays how much in highway user taxes compared with how they use the highways.

Finally, in terms of focusing more on “hard” infrastructure, the infrastructure bill is better, or far less bad, than the House bill that it’s intended to replace.

That’s all I’ve found thus far to celebrate, though I haven’t read all 2,700 pages (and, unfortunately, neither have many members of the Senate).

The Bad

The list of bad things in the bill is somewhat longer, but I will focus on just four primary problems.

First, I was pleased to see a provision in the infrastructure bill calling for a national mileage-based user fee pilot program. We’ve learned a lot from federally-assisted state and multi-state pilot projects over the past decade, but there are greater complexities in a potential national mileage-based user fee system that have not been seriously researched yet. Much of what the program in the bill calls for makes sense. It was only when I got near the end that I found a huge problem. All the MBUF pilot programs thus far have charged only hypothetical per-mile charges, and compared each user’s MBUF “bill” with the amount of state fuel tax paid for driving the same miles. But this national pilot program, as currently written, seems intended to actually collect a federal mileage-based user fee and deposit the revenues in the federal Highway Trust Fund. This violates the basic premise—stressed to participants in the state pilot projects—that a federal or state mileage-based user fee is supposed to be a replacement for fuel taxes, not charged in addition to gas taxes. I’m told that there will be an attempt to fix this provision, but if it remains part of the program, it could undercut the progress made in state MBUF pilots whose participants came to see the mileage fee, correctly, as a replacement funding source. By contrast, if incorrectly tested and implemented, the new federal program could easily be termed “yet another tax increase” by many, including opponents looking to prevent an eventual shift from gas taxes to mileage-based user fees.

Second, although the Senate bill included a provision similar to the House bill allowing electric vehicle charging facilities to be located at rest areas on Interstate highways, it was removed at the last minute over what has been described to me as one Republican senator having thrown a fit to get it removed from the bill. This provision for charging stations at rest areas has support not only in the electric vehicle community but also among a growing number of state transportation departments and even some trucking organizations. Its removal is especially ironic since one of the key architects of the bill, Sen. Rob Portman (R-OH), in 2012 cosponsored a bill to repeal the federal ban on commercial services at rest areas.

Third, the infrastructure bill largely accepts the basics of the Biden administration’s approach to expanding broadband internet service to rural areas. The plan insists on costly, uneconomical fiber optics for broadband in low-density rural areas and would provide federal funding only to government or co-op providers (modeled on Franklin Delano Roosevelt’s rural electrification program). Unfortunately, the bill would lavish $65 billion more on this foolish approach even as three private companies (Amazon, Oneweb, and SpaceX) are investing their own billions to provide global satellite broadband service to rural areas. For some perspective on this, see this recent post by Reason magazine reporter Eric Boehm.

Fourth, at a time when the future of urban mass transit is very much in question due to the long-term effects of the COVID-19 pandemic on workplaces and residential changes, the prudent course is to restore previous transit service (and address very large deferred maintenance backlogs) before making any commitments to expanding, in particular, costly rail transit lines. Yet, the infrastructure bill dramatically expands funding for New Starts capital projects, while making only a modest commitment to “state of good repair.” Whatever happened to the “fix-it-first” mantra of groups like Transportation for America? And the same can be said for the huge increase in funding for Amtrak, which handles far less than 1% of all inter-city passenger miles of travel and serves only a fraction of the routes served by generally self-supporting inter-city bus companies.

The Ugly

The infrastructure bill continues Congress’ accelerating retreat from the principle of users-pay/users-benefit. First, it adds another $118 billion bailout of the Highway Trust Fund using (borrowed) general fund money. Added to previous bailouts of the Highway Trust Fund since 2008, the bailouts to the fund now total $271.8 billion. In my April 2021 testimony before the U.S. Senate Committee on Environment and Public Works, I pointed out that if Congress used all the highway user tax revenues to fund only federal highway programs, there would be no looming trust fund “insolvency.” Since mass transit, sidewalks, bike paths, and a variety of other things that Congress funds out of highway user taxes don’t generate any meaningful federal revenue, they are appropriate candidates for subsidy. But that’s no reason to make highway users pay for them.

Far beyond that problem, is the generally pathetic set of “pay-fors” cobbled together to allegedly cover the large fraction of new spending in this massive bill. And for highways and water utilities, where users-pay/users-benefit has been the funding framework for at least the past century, there is really no excuse for making businesses and upper-income taxpayers pay for needed investments in better highways and water supply. To be sure, the IIJA is being billed as a one-time effort to improve U.S. infrastructure, while also helping an already-booming economy to “recover” from the impact of the COVID-19 pandemic. But the bill’s funding gimmicks, much of which will likely not materialize (meaning even more deficit spending) sets a very bad precedent for the future of infrastructure funding and federal spending. It also appears to violate the federal “PAYGO” law, which is still in effect (see more on this in quotable quotes below). As this newsletter was being written, the Congressional Budget Office released its finding that the infrastructure bill is likely to increase the federal budget deficit by $256 billion over 10 years. That’s not exactly “paid for.”

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PABs and P3s Retained in Bipartisan Infrastructure Bill, Despite Misunderstandings
By Marc Scribner

In the days leading up to the agreement on the bipartisan infrastructure deal, it became known in Washington, DC, that infrastructure financing—and specifically, private activity bonds (PABs)—remained a sticking point with negotiators. Some senators were apparently alarmed to learn that private activity bonds and public-private partnerships (P3s) could not be counted as “pay-fors” or offsets to the infrastructure bill’s spending provisions and would in fact count against the Treasury due to budget scoring rules. Supporters of P3s and PABs quickly responded, attempting to explain what PABs are and what they are not, and why they are critical to modernizing America’s infrastructure.

First and foremost, a public-private partnership and private activity bonds potentially used in that P3 are not funding sources. Rather, a public-private partnership is a project procurement method for states and a private activity bond is an important financing component in those procurements. Private activity bonds, especially a tax-exempt category called exempt facility bonds, typically provide financing for 20-30% of a P3 project’s total cost. Exempt facility PABs have been used successfully in a variety of projects, and for megaprojects, $12 billion has been leveraged to support $45 billion in project activity, a ratio of $1 leveraging to $3.75.

Unfortunately, the most important infrastructure exempt facility bond category—highways and surface freight transfer facilities—is subject to a lifetime national volume cap of $15 billion. As of May, the U.S. Department of Transportation reported that 99.93% of that volume had been exhausted, meaning the cap would need to be significantly raised or eliminated to allow states to finance needed highway projects through P3s. Absent reform, states would be unable to transfer infrastructure financing and construction risks away from taxpayers to private investors, which is what makes this model so appealing to good-government advocates.

After learning that P3s are not funding sources, the double-whammy for some senators was that longstanding budget scoring practices show PABs reducing federal tax revenue and, if the bill is to be paid for, requiring additional funding offsets to break even. The core issues here lie with the Joint Committee on Taxation (JCT), which assumes that projects financed by exempt facility PABs would have otherwise been completed with taxable commercial bonds. Thus, the JCT scoring logic goes, the use of tax-exempt PABs would deprive the Treasury of the taxes paid on interest income from those hypothetical taxable bonds. In reality, it is far more likely that if tax-exempt exempt facility PABs were unavailable, most of the projects in question would have eventually been financed by tax-exempt municipal bonds—which are not subject to any volume cap.

Despite the dubious assumptions used in the JCT scoring of PABs, it is important to understand that the estimated tax revenue reductions are extremely small when compared to the size of the larger bill. Based on previous JCT scores, a $10 billion increase in the highway or surface freight transfer facility PAB cap might score in the vicinity of $300 million over a five-year bill. But that additional $10 billion in bonding capacity could be leveraged to support nearly $40 billion in project activity, a very good bargain when compared to the $550 billion in new federal spending contained in the bill.

Even eliminating the cap altogether to support a much more ambitious P3 infrastructure scenario—such as one that would allow for reconstruction of the aging Interstate system at an estimated minimum cost of $1 trillion—would not break the bank per the scoring rules. When the Obama administration suggested a massive expansion of exempt facility PABs with its Qualified Public Infrastructure Bond proposal, it scored at less than $5 billion over JCT’s required 10-year window.

To be sure, tens or hundreds of millions of dollars each year isn’t pocket change, but these largely illusory on-the-book costs are vanishingly small when weighed against the hundreds of billions of dollars in new government spending contained in the infrastructure bill. Whether more modest or more ambitious, no proposal to expand PAB capacity for surface transportation infrastructure ought to alarm congressional fiscal hawks—especially when the large project financing and fiscal risk transfer benefits to taxpayers are considered.

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Why “Buy America” Harms Urban Mass Transit
By Baruch Feigenbaum

Like President Donald Trump before him, President Joe Biden supports economic protectionism that is increasing the cost of transportation projects amd limiting mass transit options for working-class Americans. In January, President Biden signed an executive order strengthening “Buy American” provisions. This longstanding policy mandates that federal infrastructure projects use American construction materials.

A separate Buy America Act, passed in the 1980s, imposes those requirements on all mass transit projects that receive federal funding. While this law has been in effect for the past six presidents, President Biden seems somewhat more committed than most to these “America First” policies—even opening a Made in America office to enforce the regulations.

These laws can be waived if the cost of using American materials is 25% higher than international materials. But in that case, companies have to apply for a waiver, which they never received during the Trump administration and show no signs of receiving during the Biden administration.

The rationale for these policies is twofold. First, limiting international competition creates American jobs and increases manufacturing wages. Second, the U.S. needs a robust manufacturing sector for the middle class. The problem is that Buy America does not accomplish either of these goals.

Even when it was subject to competition, American subway manufacturing was far from state of the art. For example, as Alon Levy points out in “Why Buy America is Bad Law,” the New York City subway ordered two new railcars in the 1970s, the R44 made by the St. Louis Car Company and the R46 made by the Pullman Company. The R44 had three times the failure rate of other train cars leading the New York State comptroller to recommend suing the company. The R46 had defective brakes, which also led to a lawsuit. Both companies exited the railcar business.

Today, any railcar company wanting to do business in the U.S. needs to open a factory in this country. Given that the overall U.S. market is small, and companies often make cars for one specific agency, there has been little innovation. Step on a heavy rail car built in 2020 and the main difference between it and one built in 1980 is vinyl flooring instead of carpeting.

And using 1980s technology in 2021 increases costs. New York’s next round of subway cars cost $130,000 per linear meter, while Los Angeles’ light rail cars cost $140,000 per meter and San Francisco’s Muni cars cost $170,000 per meter. The average cost in Europe is less than $100,000 per meter. Caltrain and New Jersey Transit Vehicles cost 35% and 60% more, respectively, than their European counterparts.

Buy America affects more than just rail lines. As Scott Beyer and Ethan Finlan point out in “The High Cost of Protectionism”, the Mike Bloomberg New York City mayoral administration wanted to convert one Staten Island Ferry boat to run on liquefied natural gas (LNG), which would have cut the boat’s fuel costs in half and reduced greenhouse gas emissions by 25%. But there were no LNG engine manufacturers in the U.S and the city was unable to receive a waiver, killing the project.

Even Amtrak, already an inefficient operation with bewildering accounting practices, has been affected by Buy America. In 2008, the agency wanted to buy additional double-decker rail cars. Without Buy America the agency would have purchased cars from the Japanese firm Nippon Sharyo, and that would be the end of the story. But with Buy America, the Japanese firm had to build a $100 million plant in the U.S., increasing the costs of the cars and delaying the project’s timeline.

But, perhaps the worst part of Buy America is that it fails at its primary mission of creating jobs and increasing wages. Creating light rail car construction jobs in Los Angeles cost $1 million per job, yet they pay only $40,000 per employee. And the jobs are temporary, lasting only a few years. A contract for the Massachusetts Bay Transportation Authority in Springfield created 200 jobs at a cost of $6.5 million per job, with the majority of the salary money going to management jobs.

Despite 40 years of Buy America policy, we haven’t seen a domestic rail car industry develop. Why? The answer, in part, is that federal regulations don’t alter the laws of economics. Even though taxpayers have spent billions and billions of dollars on new heavy-rail, light-rail, and commuter-rail track and rolling stock, there aren’t enough rail systems in the U.S. to make domestic production cost-effective.

Buy America doesn’t help middle-class industrial workers and it harms working-class commuters. Many working-class commuters are transit-dependent, relying on buses or trains to get to work. But increased transit capital costs often result in fewer trains and bus lines operating. And those that do operate often have longer headways, making commuting more challenging for workers. The primary goal of U.S. mass transit policy should be to make accessing jobs for transit-dependent workers easier, not more difficult.

Policy analysts across the political spectrum, from Kyle Pomerleau of the American Enterprise Institute to Jason Furman, who chaired President Barack Obama’s council of economic advisers, want to get rid of Buy America policies. Advocates for all modes of transportation, ranging from Angie Schmitt at Streetsblog, who believes in government subsidies for bicycling and walking projects, to Randal O’Toole at the Cato Institute, who supports only projects that pay for themselves, recognize the problems created by these policies and want to kill Buy America regulations. Unfortunately, many politicians foolishly think they can “protect” American manufacturing jobs and build cost-effective transportation projects at the same time. In reality, they do neither. The time to end Buy America is now.

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Equity for Electronic Tolling Customers

The COVID-19 pandemic accelerated an ongoing transition to cashless tolling across the country. Most customers appreciate the lack of long lines at toll booths and the convenience of all-electronic tolling, usually with a transponder on the windshield. But these programs almost always require a pre-paid account with access to either a credit card or a bank account. That’s fine for most of us, but what about customers who lack a credit card or bank account?

In 2019, at least 5.4% of U.S. households were “unbanked,” lacking either a credit card or a bank account. Several times that many were “underbanked,” meaning that while they have an account, they conduct most transactions in cash. These people could pay tolls based on their license plate number, but that requires billing and collection, which almost always means service charges and/or higher toll rates. Since most unbanked and underbanked households have low incomes, having them pay more than most others to use toll roads is clearly inequitable.

Fortunately, several toll road operators have come up with ways for the unbanked and underbanked to have cash-based toll accounts that use the same transponders as everyone else. As documented in a new Reason Foundation policy brief, the urban toll road system in Puerto Rico pioneered this change. In 1999, more than 50% of the licensed drivers in Puerto Rico did not have a bank account, and close to 75% did not have a credit or debit card. But most people had cell phones, and there were prepaid cell phone programs in operation, with people replenishing their accounts in cash at point-of-sale (POS) terminals in retail outlets.

Puerto Rico’s new AutoExpreso cashless electronic toll program adapted this POS cash replenishment concept. Initially, the toll agency signed up Texaco, with over 250 gas stations on the island, as the initial host for new POS terminals. Other retailers soon joined the program, making it easy for potential customers to find a convenient place to sign up, and to replenish their accounts with cash. Besides getting a transponder, each AutoExpreso customer received a magnetic stripe card, to use when their account needed to be replenished with cash. These accounts are anonymous, linked only to the account number on the magnetic stripe card.

AutoExpreso proved so popular that large numbers of people with bank accounts and credit cards also opened cash-based, anonymous accounts. Within two years of its introduction, more than 50% of rush-hour vehicles on the San Juan toll roads had enrolled in the program. That very large shift from cash payments at toll booths to electronic tolling eliminated chronic congestion at the toll plazas. By 2005, more than 2 million transponders were in use in Puerto Rico.

This success did not go unnoticed. In 2010 Florida’s statewide SunPass electronic tolling system introduced a similar program for those without credit cards or bank accounts. Like the Puerto Rico program, it makes use of POS terminals at over 3,100 retail outlets near Florida toll roads (and at Florida’s Turnpike service plazas). Replenishing the account with cash is standard, and the account can be anonymous, like many of those in Puerto Rico.

Several other toll road operators have created similar programs. They include New Hampshire DOT’s E-ZPass Reload Card, the San Francisco Bay Area FasTrak cash deposit and replenishment program, and the North Texas Tollway Authority’s ZipCash program.

These new programs are win-win solutions for unbanked and underbanked customers, as well as the toll road operators. They give participants a more convenient way to pay tolls (electronically) and at the lowest toll rates. And the toll road operator avoids the high costs of billing and collections. All toll road operators should consider such programs, especially those in states with high proportions of unbanked and underbanked populations.

The new policy brief is “Providing Electronic Toll Collection to the Unbanked and Underbanked,” by Daryl S. Fleming.

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US DOT Should Consider Access Across Modes as an Equity Measure
By Marc Scribner

In May, the U.S. Department of Transportation (USDOT) published a Request for Information on transportation equity data. This came in response to President Biden’s Executive Order 13985, signed in January, which directed federal agencies under his control to “pursue a comprehensive approach to advancing equity for all, including people of color and others who have been historically underserved, marginalized, and adversely affected by persistent poverty and inequality.”

In July, I replied to USDOT with a comment letter on behalf of Reason Foundation. Those comments discuss the documented relationship between access to automobiles and labor market outcomes, as well as highlighting the large disparity in access to jobs between drivers and transit riders in America’s 50 largest metropolitan areas.

During the 1960s, transportation economist John Kain developed what came to be known as the spatial mismatch hypothesis. Kain and others suspected that advances in transportation technology and resulting changes in firm and household location choice affected labor markets in a way that particularly disadvantaged African Americans. Employment growth that increasingly clustered in auto-oriented suburbs was leaving behind black metropolitan area workers who continued to disproportionately reside in carless households located in central cities.

The impacts on employment outcomes of both spatial mismatch generally and automobile access specifically are still being debated, but the broad consensus is that spatial mismatch is real and that disparity in car access explains some of the diminished labor market outcomes observed in underserved communities. Notable studies on these questions have found:

  • The differences in the number of cars per adult household member account for 43% of the black-white employment disparity and 19% of the Latino-white employment disparity.
  • The successful job search completion gap between white and black workers would be reduced by 8% if black workers had the same car ownership rates as their white counterparts.
  • Among single mothers, car ownership often doubles the probability of employment and results in large increases in the number of hours worked per week.
  • Car ownership is a significant predictor of employment (positive) and welfare use (negative).
  • Auto access significantly reduced poverty exposure among participants in a Department of Housing and Urban Development housing assistance program.

Fortunately, auto ownership rates have been converging between disadvantaged communities and the national average for decades. In the case of racial and ethnic minorities, this trend has been pronounced.  For instance, in 1970 the percent of all households with zero cars available stood at 17.5%, but 43.1% of African-American households lacked access to a car at that time—a gap of 25.6%. By 2018, that had fallen to 8.5% carless overall and 18.1% of African-Americans—a much smaller gap of 9.6%.

For those relatively few Americans who continue to rely on mass transit, transit system performance in connecting people with places leaves much to be desired. The University of Minnesota’s Access Across America series shows that in 2019, those residing in the 50 largest U.S. metro areas could on average access 47% of metro area jobs by car in 30 minutes of travel (or one hour of bidirectional daily commuting). By contrast, just 8% of jobs were accessible by transit in 60 minutes (or two hours of bidirectional daily commuting). Even in the New York City metro area, by far the most transit-oriented American metro area, and where more than 40% of total U.S. transit trips take place, drivers can access 13% of New York metro area jobs in 30 minutes versus just 14% of jobs accessible in 60 minutes by transit.

The COVID-19 pandemic worsened transit’s already negative outlook, where transit’s pre-pandemic national market share stood at only 2.6% of total person trips and 5% of commuting trips. When the pandemic struck and people understandably feared sharing crowded spaces with strangers, mass transit ridership collapsed by 95% at its worst.

Today, ridership remains down by more than half of its 2019 level, while automobile vehicle-miles traveled have basically recovered to the pre-pandemic baseline. Contrary to frequent claims that transit has been chronically underfunded in the U.S., transit was already receiving nearly 30% of total federal, state, and local spending on highways and transit, according to the Congressional Budget Office. That does not include the roughly five years’ worth of normal annual federal funding that transit agencies have received since March 2020.

Reason’s comments encourage USDOT to consider job access by mode as an important equity measure, as well as contemplate the likelihood that policies perpetuating transit dependence and limiting auto access may also perpetuate unemployment and poverty, particularly among disadvantaged communities who still experience reduced automobile access and resulting benefits relative to the national average.

The full comment letter of Reason Foundation in response to USDOT’s Request for Information on transportation equity data is available here. It includes citations of the studies noted in this article.

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Correction re: New High-Speed Rail Proposal Article in the July Issue

An alert reader emailed promptly after receiving the July issue of this newsletter, questioning my assessment of the cost of the high-speed rail (HSR) portion of the hugely ambitious North Atlantic Rail (NAR) proposal. As you may recall, the NAR proposal is for true HSR (dedicated right of way, including major tunnels) between New York and Boston, plus many Amtrak upgrades in New England and some new regional rail projects. From a map of what the NAR website designated as priority corridors, I estimated the route miles of each and then applied recent unit cost numbers for each type of rail project.

The reader questioned one of those unit costs: $1.3 billion per mile for the high-speed rail portion, which seemed unbelievably high. Turns out he was correct. I derived that number from Amtrak’s NEC Future Tier 1 EIS, dividing the total cost of that proposed HSR project by the number of route miles. My error was to use the HSR route miles from the NAR proposal (New York-Boston) rather than the route miles from the Amtrak NEC Future study (Washington to Boston). Correcting this error led to a revised unit cost for NAR’s HSR portion of $875 million per mile. That revised unit cost number yields an estimated cost for the HSR portion of NAR of $234 billion. Adding the additional costs of the priority Amtrak-upgrade and new regional rail lines in the NAR near-term plan and the revised total cost estimate is $246 billion. That’s more than double the cost estimate in the NAR material: a mere $105 billion.

And that’s before taking into account typical passenger rail megaproject cost overruns. The classic study by Bent Flyvbjerg and colleagues using a global database of 258 highway and rail megaprojects found that the average passenger rail project exceeded original cost estimates by 45%. Were that to be the case with the North Atlantic Rail project, assuming it were ever built, the more likely cost would be $357 billion. That is 3.4 times the rosy-scenario $105 billion estimate from the NAR proponents.

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News Notes

Maryland Express Toll Lanes Megaproject Back in Plan 
In June, the Regional Transportation Planning Board had voted to remove phase 1 of the Maryland express toll lanes project from its long-range transportation plan in a poorly attended meeting. That decision was reversed by a large majority at the July meeting. Inclusion in the plan is a prerequisite to the project later receiving a federal record of decision (ROD) to move into implementation. Phase 1 of the $9 billion project will replace the bottleneck American Legion Bridge and extend the express toll lanes on I-495 in Virginia onto a stretch of I-495 on the Maryland side of the river and will also extend the toll lanes up I-270. If subsequent phases add such lanes to the rest of the I-495 Beltway, that will be a major expansion of the regional express lanes network.

Autonomous Vehicle Tests in Manhattan and Miami
Two new test programs for autonomous vehicles were announced in July. Unlike Waymo’s testing in low-density suburban Chandler, AZ, the new testing sites will be very dense urban areas. Mobileye announced that it was already under way testing camera-only autonomous vehicles in New York City, including Manhattan. And a day later, Ford, Lyft, and Argo AI announced a plan to test automated robo-taxies in Miami this coming winter. Lyft will charge regular rates for the robo-taxi rides. These programs will be much better tests of the ability of the companies’ automation systems than suburban driving.

Four Teams Short-Listed for Major Bridge Replacement in Louisiana
The aging and inadequate Calcasieu River Bridge on I-10 needs replacing with a wider, state-of-the-art bridge, a project estimated to cost $800 million. Having launched its first toll-financed P3 project (the Belle Chasse bridge) last year, the Louisiana Department of Transportation & Development selected a similar procurement model for the I-10 bridge. On July 15th, it announced a shortlist of the best qualified P3 teams. They are headed by AECON/Acciona, Macquarie/John Laing, Itinera/BCP Infrastructure Fund, and Cintra/Vinci/Meridiam. The four-lane bridge on a six-lane Interstate has long been a bottleneck.

Boost for Toll-Financing of I-10 Bridge in Alabama
Alabama DOT has come up with an alternative plan for at least partial toll financing of the new Mobile River Bridge on I-10. A far more ambitious proposal was rejected by local transportation planning bodies in 2019 due to an estimated $6 passenger car toll each way. Earlier this year, the local boards supported a trucks-only toll bridge, which would have been difficult to finance and, if restricted to trucks, of questionable value in relieving peak period congestion. ALDOT’s new proposal would charge $2 for cars and $15 for heavy trucks, which is far more realistic.

Thruway Service Plazas in $450 Million Remake
A 33-year P3 concession will rebuild and upgrade all 27 service plazas on the New York State Thruway. The agency announced early last month that construction on the first 10 plazas was expected to begin on July 29, with only their gas stations remaining open during the construction period. The project will include a wider array of food-service providers, with national brands including Shake Shack, Panera, Panda Express, and many more. The service plaza revamp is entirely privately financed, with Empire State Thruway Partners having financed the project based on its expected revenues from the various service providers. Similar service plaza P3 revamps have been completed for toll roads in Delaware, Florida, Indiana, and Maryland in recent years.

Miami Expressway Authority Fights for Its Life
Despite losing to the state government in court in April, the Miami-Dade Expressway Authority (MDX) continues operating its five toll roads in Miami, while the Miami-Dade County government plans a further appeal. The County contends that the 2019 state law (pushed for by anti-toll populists) abolishing MDX and replacing it with a severely constrained state-controlled agency violates the County’s home rule charter. County commissioners have appointed a new board, and the new appeal will be filed by the county government itself, rather than MDX. Meanwhile, the erstwhile replacement agency—GMX—still exists only on paper.

Transportation P3s Better at DBE Use, per New Study
A study by University of Maryland researchers Qingbin Cui and Kinqi Zhang used data from FHWA’s U.S. Major Projects Database to assess the extent to which highway construction projects met or exceeded disadvantaged business enterprise (DBE) goals. Their findings, published in TRB’s Transportation Research Record, showed that both long-term P3s and Design-Build/Construction Manager at Risk procurements did significantly better than tradition design-bid-build (DBB) procurements. They also found higher DBE participation the larger the project size. The paper is “Public-Private Partnerships and Social Equity: An Empirical Study of the Disadvantaged Business Enterprise Program,” Transportation Research Record, 2021.

Minnesota Joins E-ZPass System
The Minnesota DOT announced last month that as of August 2, its electronic tolling system for HOT lanes will be compatible with E-ZPass. That means replacement MnPass transponders will now work on express toll lanes and toll roads in 19 states across the Midwest and the east coast. There are no current toll roads in Minnesota, but three express toll lane projects are operational in the Twin Cities and a fourth is under development on I-35W.

Tesla Announces Start of Electric Truck Production
When Tesla first unveiled its prototype Class 8 Tesla Semi in 2017, it was expected to be on the market by 2019, then 2020, and now 2021. Tesla has been building a production line for the Semi near its Gigafactory in Nevada, aiming to produce five Semis per week by the end of the year. The company plans to use several of the first production models for its own use, but deliveries to reservation holders are now expected by late this year. Whether the Semi will deliver its originally announced range of either 300 or 500 miles, and its price points of $150K and $180K, remain to be seen.

Possible P3 for Miami Causeway Upgrades
A consortium headed by Partners Group has made an unsolicited proposal to Miami-Dade County to improve the Rickenbacker and Venetian Causeways. The former opened to traffic in 1947 while the latter dates back to 1927; both are tolled. The consortium proposed a DBFOM concession, presumably to be financed via toll revenue, to upgrade and modernize the causeways. Under county regulations, the project must be offered to potentially competing proposals, which will be the County’s next step.

Batteries First, Hydrogen Later—Amazon and UPS
At a webinar hosted by the Bipartisan Policy Coalition last month, two of America’s largest delivery companies both said that while hydrogen propulsion will have advantages, it is not yet ready for prime time. That’s true despite Amazon’s expectation that hydrogen fuel cell vehicles will be lighter, refuel faster, and have longer range than battery electric vehicles, a conclusion shared by UPS senior VP Tom Jensen. Both companies are moving heavily into battery-electric delivery vans, but see future prospects for hydrogen fuel cell power for their long-distance over-the-road transport needs. The discussion was summarized on Transport Dive, July 6, 2021.

Are EV Makers in Error by Using “Skateboard” Frames?
In a very thought-provoking article in the September 2021 issue of The Dispatcher, editor Michael Sena explores the question of whether the new generation of electric vehicle companies is making a mistake by foregoing the established “unibody” method of vehicle construction and reverting to the older and less-safe body-on-frame design. It’s a carefully researched and thought-provoking article that I highly recommend reading.

Possible P3 Bridge Replacement in Wilmington, NC
An unidentified company last November made an unsolicited proposal to North Carolina DOT (NCDOT) to replace the aging Cape Fear Memorial Bridge. Under the proposed long-term P3, the company would finance, design, build, operate, and maintain the new bridge, financed by tolls. In June NCDOT gave a presentation on the proposed project to the Wilmington Metropolitan Planning Organization (WMPO). The DOT said the proposal is credible and that a toll-financed bridge is one of the options it has been researching. After both county governments reviewed DOT’s assessment, WMPO voted not to support a tolled option. However, the Brunswick County commissioners on August 2nd voted unanimously to ask WMPO to look at all funding options, including tolls.

2021 Urban Mobility Report Released
How much was traffic congestion reduced in 2020, and how far had urban traffic recovered by year-end? Everything you might want to know about this, for several hundred U.S. metro areas, is presented in the Texas A&M Transportation Institute’s latest congestion report, released last month. It includes the familiar tables documenting, by individual metro area, the impacts of congestion on the metro area overall and on the average motorist. You can start your exploration of this important report here.

New Cato Institute Study Details High-Speed Rail, Here and Abroad
Advocates of large-scale investment in high-speed rail cite France, Japan, Spain and elsewhere as models; they also claim that U.S. HSR projects would attract very large numbers of travelers from air and highway travel. The empirical evidence for these claims is weak, as transportation analyst Randal O’Toole details in this well-documented (133 end-notes) new study, Policy Analysis Number 915 from the Cato Institute.

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Quotable Quotes

“As the House Budget Committee’s Democratic staff director for 20 years, I saw this nation go from record surpluses to record deficits and debt. That’s why Democrats passed a simple law in 2010 called ‘pay as you go,’ or ‘paygo,’ which states that if Congress wants to cut taxes or increase mandatory spending, it needs to pay for it. That law worked very well until Congress waived it in 2017 after passing the Trump tax cut . . . . Paygo is still on the books and we need to enforce it. We cannot rely on low interest rates to keep the cost of debt service low forever. Inflation is at its highest point in 13 years. If interest rates continue to rise, paying down and servicing debt will eventually become unmanageable, forcing new large tax hikes or spending cuts. It was smart to borrow when Congress passed Covid relief to jump-start the economy. But with strong economic growth projections coming from CBO and most private forecasters, we should start borrowing less and paying for more.”
—Thomas S. Kahn, “A Democrat Against Deficits,” The Wall Street Journal, July 29, 2021

White-collar workers are trading their expensive lives in the nation’s most densely populated areas for cheaper, greener pastures. Online real-estate company Zillow calls it the ‘Great Reshuffle.” . . .  The trend toward [more] car ownership could very well outlast the pandemic as exurbs sprawl. Less public transportation outside major urban metro areas means that even without a work commute people will continue to need a personal vehicle for daily activities like going grocery shopping or to the gym, said Deutsche Bank analyst Chris Woronka. As new residents settle down with their bigger homes, cars, and savings accounts, they are bound to cause a shake-up.”
—Laura Forman, “A Mass Migration to the Exurbs Remakes America,” The Wall Street Journal, June 26, 2021
Q: “What is your opinion on the history of U.S. 69 congestion and the plan to add express toll lanes?”
A: “We know that U.S. 69 is the most heavily trafficked road that we have in the state of Kansas. So it was imperative to come up with a solution to that problem. With Overland Park and KDOT working together, they were able to come up with a very creative, innovative, first-of-its-kind-in-Kansas solution. Instead of just adding more and more lanes, one of the [new] lanes [each way] will be a toll lane, and people have the option of using the toll lane during really heavily trafficked times or using the two remaining free lanes.”
—Gov. Laura Kelly to Leah Wankum, “Kansas Gov. Laura Kelly talks U.S. 69 toll lanes, pandemic recovery and vaccines in exclusive SM Post Interview,” Shawnee Mission Post, July 14, 2021

“King of Prussia light rail is hardly alone in exemplifying two pathologies of American transit planning: expansion for its own sake (rather than building as a result of actual demand . . . ), and making expensive concessions to placate a handful of change-averse residents. American cities are strewn with unused light rail lines in freeway margins or low-density industrial zones—where there may be no one to ride the train, planners think, but at least there’s no one to protest it. Neither pathology can be cured without two key reforms to the transit planning process. First, streamline public comments and environmental reviews to reduce the influence of small but vociferous interest groups. Second, end federal subsidies for transit capital projects, such as the New Starts program that may provide half of King of Prussia rail’s budget, that enable transit agencies to spend billions of dollars they don’t have on new rail lines they don’t need.”
—Connor Harris, “King of Prussia Rail Extension Is an Exemplar of Bad Planning,” Philadelphia Inquirer, June 7, 2021

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