Surface Transportation News: Bipartisan infrastructure bill, ranking state highway systems, and more
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Surface Transportation Innovations Newsletter

Surface Transportation News: Bipartisan infrastructure bill, ranking state highway systems, and more

Plus: Suspending gas taxes, electric vehicle charging stations, threats to Uber and Lyft, and more.

In this issue:

Assessing the Bipartisan Infrastructure Law

Media coverage of the bipartisan infrastructure law (BIL), the Infrastructure Investment and Jobs Act, has been all over the map. Some news articles have presented the bill as $1.2 trillion of new money. However, the total includes all the funds authorized for five more years of the federal surface transportation program, with the law’s net new money generally estimated at $550 billion. And most of that funding, of course, comes from the general fund, meaning it is borrowed from those who purchase Treasury bonds, to be repaid by taxpayers.

Many media reports mischaracterized this bipartisan bill as a “roads & bridges” law. The BIL does provide $110 billion of the new money for highway programs, but that is just 9.2% of the $1.2 trillion total. Counting both old and new money, the Federal-Aid Highway Program’s annual authorizations over the coming five years are 26% above the last year of the FAST Act.

By contrast, transit formula grants are up 38%, transit capital investment grants are up 30%, and annual passenger rail authorizations are triple what was authorized for FY20. (These numbers are based on my interpretation of a seven-page detailed spreadsheet compiled by Jeff Davis of the Eno Center for Transportation, by far the most reliable source on federal transportation budgets.)

As I wrote in the August issue of this newsletter about the original bill that passed the Senate, there are some good points in it. The bill includes a long-needed $15 billion increase in the federal cap on tax-exempt private activity bonds (PABs) that have been important financing tools for a growing number of public-private partnership (P3) projects. The Transportation Infrastructure Finance and Innovation Act (TIFIA) loan program has also been continued, though at slightly lower funding levels. Another provision (Section 71001) provides planning grants for jurisdictions seeking to embark on complex P3 project procurements. And Section 70701 requires a Value for Money (VfM) analysis for any project seeking either a TIFIA or Railroad Rehabilitation and Improvement Financing (RRIF) loan. And this bill, unlike the current version of the still-pending reconciliation bill (Build Back Better) that has been passed by the House, avoids mandating Davis-Bacon prevailing-wage provisions for projects issuing PABs. There is also a new Congestion Relief Program that offers grants to urban areas seeking to implement an integrated congestion management system that includes variably priced express toll lanes. And the BIL codifies the One Federal Decision policy that was put forth by the previous administration but rescinded by the Biden administration; this should help reduce the excessively long environmental process for major transportation projects.

Unfortunately, there are also many negative aspects of this legislation. First, by providing gobs of “free federal money,” the new bipartisan infrastructure law will undercut the use of long-term financing for major projects, which is far wiser than paying cash for a handful of, say, 10 major bridge replacements. The bond market has already responded with falling yields, since the BIL represents “a move by federal officials toward paying directly for [a few] projects, rather than standing back and ensuring states and cities can borrow cheaply for infrastructure while leaving the details to the locals,” as The Wall Street Journal’s Heather Gillers put it. At the same time, many of the best prospects for toll-financed P3 bridge replacements may well be shifted to the new federal Discretionary Bridge Program, and left without a source of ongoing maintenance funding.

Coming at a time when the economy is growing fast and experiencing shortages of skilled construction workers, this seems an odd time to enact a trillion-dollar stimulus bill. All that money focused on infrastructure, combined with a number of union labor mandates, is likely to drive up the already record-high cost of building and rebuilding U.S. infrastructure.

Another disturbing aspect of the BIL is the large increase in “discretionary” programs, in which either the Office of the Secretary, FHWA, or FTA will be able to define the criteria they prefer, rather than what state or local officials decide they need. “We’ve never seen anything on this scale before. The amount of funding and the number of new discretionary programs that are being created are unprecedented,” AASHTO executive director Jim Tymon told The Wall Street Journal, “The discretionary programs are going to allow the administration to pick the projects that really fit their policy lens.”

There is also a lesson to be learned from prior federal stimulus programs. As Jill Jamieson of Tufts University told Inspiratia Infrastructure, “As we saw in 2009 with President Obama’s American Recovery and Reinvestment Act, the last time the federal government increased spending on infrastructure, we saw a proportional decrease in spending at the state and local levels.” She also noted the “lack of consideration of life-cycle asset management” in the measure, due to its absence of long-term revenue-based financing.

And finally, as I have written elsewhere, this sweeping $1.2 trillion measure ignores the 596-page report of the Transportation Research Board’s special committee on the future of the Interstate Highway System. Those experts found that our most important surface transportation infrastructure is wearing out and needs reconstruction, at an estimated cost over 20 years of about $1 trillion. Apart from 10 to-be-selected major bridge projects, the BIL is silent on this critically important national investment need.

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Annual Highway Report Finds America’s Highways Aren’t Crumbling
By Baruch Feigenbaum

Reason Foundation recently released its 26th Annual Highway Report. The study evaluates every state on the cost-effectiveness and performance of its highway systems. Similar to past years, the best- and worst-performing states were a mix of high-population and low-population states. The five best-performing state highway systems in this edition were North Dakota (ranked first overall), Virginia, Missouri, Kentucky, and North Carolina. The five worst-performing, least cost-effective states were New Jersey (ranked last overall), Rhode Island, Alaska, Hawaii, and New York.

In the report, each state is evaluated in 13 categories. Four categories measure highway spending, four others measure pavement quality, one measures urbanized area traffic congestion and four categories measure safety.

Fatality rates make up three of the safety measurements with structurally deficient bridges making up the fourth category. All category scores are ratios. For example, if the average number of deficient bridges nationally was four, Georgia had two deficient bridges, and Nebraska had eight deficient bridges, Georgia’s score would be 0.50 and Nebraska’s would be 2.00. Each of the ratios is added together and divided by 13 to determine the final score.

We made one small change to this year’s report. Instead of measuring disbursements by lane miles, centerline miles, and vehicle miles traveled per lane mile and using a z-score to combine the three measurements, we used lane miles only. Last year, we switched to the combination method from lane miles in an effort to balance out the higher densities of urban states with the less-traveled highways in rural states. However, while the combined approach did not noticeably change the scores it did make the disbursement data more complicated.

Overall, the Annual Highway Report finds the condition of the state highway systems improved. While much of the political hype that political leaders used to promote the recently-passed bipartisan infrastructure bill surrounds the claim that America’s highways are one big pothole in need of more spending, these claims are not supported by the data. Over the 26 years of this report (using FHWA data through 2019), pavement conditions have continued to improve nationally. Between 2018 and 2019, the quality of pavement also improved. Poor rural Interstate pavement, poor urban Interstate pavement, poor rural arterial pavement, and poor urban arterial pavement decreased by 2%, 4.97%, 4.35%, and 3.84% respectively.

The reports show the percent of structurally deficient bridges continued to decrease, this year by 2.10%.

Finally, the overall fatality rate, rural fatality rate, and urban fatality rate decreased 1.76%, 7.35%, and 0.0001%.

However, between 2018 and 2019 state highway system costs increased. Total disbursements, capital and bridge disbursements, maintenance disbursements, and administrative disbursements increased 3.80%, 2.09%, 3.25%, and 5.77% respectively. Increasing disbursements is not necessarily a problem, particularly if system quality improves. And all nine measures of system quality show improvement. However, each of the cost increases was significantly higher than the Consumer Price Index, which increased 1.56%.

While we are still analyzing the ongoing effects of the COVID-19 pandemic on transportation, it impacted urbanized area traffic congestion significantly. The report’s congestion data are from 2020, which was heavily impacted by working at home, especially from March to September of 2020. As a result, the number of hours that drivers spent in congestion differ drastically from the previous report. And the change was not consistent from state to state. The number of hours stuck in traffic congestion in Utah declined from 7.40 to 1.75, while in New Jersey the hours increased from 51.70 to 86.14. In part, these changes have to do with the share of vehicles commuting (and working from home) compared with the share delivering freight in a given state.

States with lower overall costs and good system performance, such as Virginia (2nd overall), tend to score highest in this report. But states that struggle in one category and excel in the others, as North Carolina (5th overall) does with percent structurally deficient bridges, can also rank highly. And a state with above-average costs and outstanding system quality, like Utah (6th overall), can also rank highly. States with high costs and poor performance, however, rank poorly. New Jersey (last overall) is an example of this. But, states with low costs and poor highway system performance tend to rank far below average as well. For example, Oklahoma ranked 36th.

Why do some states excel in the report’s rankings?

There are four factors that high-performing states tend to share. First, they have quantitative benefit/cost selection processes. North Carolina and Virginia offer the best models. At the state or local level, officials create a list of projects. The projects are evaluated based on costs (including construction and planning) and benefits (including reductions in fatalities and congestion). The projects that receive the best scores are the ones placed in the short-term improvement plan. This quantitative process helps reduce political interference.

Innovative delivery is also important. Public-private partnerships are the gold standard project delivery method, but even design-build is an improvement over design-bid-build. P3s are not just for major metro areas like the Beltway. Utah has also used P3s for its Salt Lake City managed lane network and P3s can also be used for somewhat smaller projects such as Pennsylvania’s availability-payment bridge replacement project that improved more than 550 small bridges. Overall, Pennsylvania’s bridges still need attention, but they are in much better condition than they were 10 years ago.

Third, states can use an internal reward system. Oftentimes the problem is not a lack of qualified staff or resources but the design of governmental transportation entities. States that want to improve their rural arterial pavement, for example, should set a goal of reducing the percent of pavement in poor condition by 20% and ensure the department resources are allocated for that goal.

Fourth, states should set a goal of learning from peer states. Georgia is able to maintain good pavement conditions at low overall costs. Comparable states should consider speaking with Georgia Department of Transportation engineers through national or regional trade groups such as the American Association of State Transportation and Highway Officials (AASHTO) and the Southern Association State Highway and Transportation Officials (SASHTO), or at conferences focusing on pavement quality such as the Transportation Research Board’s Annual Meeting.

One of the challenges of the report is ensuring it is fair to all states. On average, smaller, more-urbanized states tend to perform more poorly. Some of these states have complained that the report is biased against them. They argue that highways with higher average annual vehicle counts will have worse pavement quality. However, states with more traffic typically also have higher gas tax revenues or tolls that should balance out the higher traffic volumes and be used to maintain and upgrade the highway systems.

This past year we have conducted a series of multivariate regressions to determine which external factors affect a state’s highway performance. Researchers have speculated that colder weather (specifically the freeze-thaw cycle), more elevation (highways in hilly or mountainous terrain), smaller system size (larger state systems have local roads and elements of scale), and higher population density result in a lower ranking. But of those four, only population density was statistically significant. The challenge is factoring population density into the report fairly, without adversely harming more-rural states. As we continue to improve the report in the future, we are considering the addition of a density factor and welcome your feedback as well. The full report is available here.

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What’s the Outlook for the EV Charging Network?

The bipartisan infrastructure law provides $7.5 billion in federal funding to increase the extent of electric vehicle charging infrastructure. Of that total, $5 billion will be allocated by formula to the states by FHWA, under a program called the National Electric Vehicle Formula Program. Those funds are intended to support electric vehicle charging facilities along “designated alternative fuel corridors.” The other $2.5 billion will fund the Charging and Fueling Infrastructure Program. Via discretionary grants, it will provide funding for EV charging, as well as hydrogen, propane, and natural gas fueling infrastructure. These grants will be available to cities, as well as state governments.

Most of the discretionary funding is likely to be devoted to large numbers of Level 2 chargers, which are relatively inexpensive but can only provide about 25 miles of propulsion energy per hour of charging. This is the kind of charger that could be installed at workplaces, shopping mall garages, and other places, for electric vehicle owners to top up their batteries while doing other things. Their cost is in the range of $5,000 to $6,000.

The real challenge is building out the network of chargers for long-distance travel. Here the requirement is for DC fast chargers, which can provide a major recharge in 30 to 45 minutes. These chargers cost $110,000 or more, meaning the federal grant funds won’t provide as many fast chargers compared with the inexpensive Level 2 chargers. Of the fast chargers in place as of mid-summer 2021, The Wall Street Journal reported that 56% were proprietary Tesla chargers, 15% were part of the Electrify America program run by Volkswagen, 8% by provider EVgo Network, another 8% by ChargePoint Network, and 13% by various others. An emerging player is the Electric Highway Coalition organized by (thus far) 14 electric utilities focused mainly on the eastern half of the country.

The major omission in the Formula program is the Interstate Highway System. To be sure, the government’s designated corridor system allows charging stations and alternative fueling sites to be listed if they are no more than five miles from an Interstate off-ramp. But it is illegal to place them in the most logical and convenient place: at Interstate rest areas right alongside the highway. That’s due to a still-in-place 1960 federal law aimed at protecting the gas stations and fast-food places that were built around Interstate off-ramps when those brand-new superhighways bypassed numerous small towns in the 1960s and 1970s. That law is staunchly defended by the National Association of Truck Stop Operators (NATSO), whose membership also includes numerous franchisees of gas stations and fast-food outlets. Every time state DOTs have pushed for legislation to overturn the ban on commercial services, NATSO has lobbied fiercely and successfully to defeat it.

The situation is very different on those Interstate highways that were financed via toll revenues instead of federal fuel taxes. Because nearly all were already in existence or underway when Congress launched the Interstate program, they were grandfathered in and allowed to retain their customer-friendly service plazas, which offer refueling, food services, other shopping, and (more recently) EV charging stations.

A growing number of state transportation departments want to offer convenient electric vehicle charging at their Interstate rest areas. They are part of an informal coalition that has emerged this year, including an array of environmental and EV organizations and other business groups. An exemption to the federal ban, specifically allowing EV charging at rest areas, was part of the House surface transportation reauthorization bill earlier this year, but that bill got dropped in favor of the bipartisan infrastructure bill, which President Joe Biden recently signed into law. Efforts to include the EV charging provision in what is now the $1.8 trillion Build Back Better bill have so far not succeeded.

Developers of charging networks point out that it’s not sufficient to legalize only EV charging at rest areas. Since it takes 30 or more minutes to recharge via DC fast chargers, people need something to do while they’re waiting. “It’s going to be in a well-lit, secure place where you can get a cup of coffee, catch up on your emails, charge your vehicle, and move on,” Jeffrey Lyash, CEO of the Tennessee Valley Authority, told Wall Street Journal reporter Jennifer Hiller. And I would add, a place to sit down and have a meal. That is what is on offer when driving on the 10% of the Interstate system financed via tolls.

It’s time for Congress to rethink Interstate rest areas and scrap this obsolete barrier to providing full services for the motorists and truckers who use long-distance Interstates.

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Are Electric Vehicles a Threat to Uber?
By Marc Scribner

Last month, Axios’ Joann Muller published a provocative article suggesting that vehicle electrification poses serious risks to ride-hailing incumbents Uber and Lyft (“Why the electric car era is a threat to Uber and Lyft,” Nov. 5). Muller points to a new report from investment analysts at PitchBook Data, which highlights startup competitors that eschew the core elements of the incumbents’ business model— distributed vehicle ownership and driver-contractors—in favor of centrally owned fleets driven by employees. However, while there may be certain advantages to this approach to ride-hailing in the electric vehicle age, the biggest threats to ride-hailing remain the political efforts to directly undermine Uber and Lyft’s business models, not electrification.

The ride-hailing business model adopted by Uber and Lyft has allowed them to grow quickly without weighing down their balance sheets with the main assets used to provide service to customers: cars. Instead, drivers operate as independent contractors and provide their own cars that are then hailed by customers on their apps. Muller’s article discusses a handful of competitors such as Revel, Alto, and Kaptyn that adopt the very different model of purchasing vehicles and hiring drivers as wage-earning employees. She argues this may work in these new companies’ favor, and against the long-term viability of Uber and Lyft, because electric vehicles may be too expensive for contract drivers to purchase, and a centralized fleet may make EV charging infrastructure problems easier to solve.

The report Muller cites from PitchBook (“The Future of Taxis Is Electric and Asset Heavy,” Oct. 26) deserves closer scrutiny. It notes that the ride-hailing industry is under heavy pressure from both politicians and investors to decarbonize. In May, the California Air Resources Board approved its Clean Miles Standard regulation that will require 90% of ride-hail vehicle-miles traveled to be electric by 2030. Cities such as London and Paris are planning to establish zero-emission zones where all vehicle operations must be electric starting in 2025. Some other jurisdictions are expected to follow.

Uber and Lyft have responded by pledging to go all-electric through a combination of driver incentives and making electric vehicles available for rent by their contractors. But this may be easier said than done, according to the PitchBook report. Given that the vast majority of their driver-contractors are moonlighting, $50,000 electric vehicles “are likely beyond the reach of part-time drivers.”

In addition, the “lack of charging infrastructure in many locations—particularly city apartments where many drivers live—and lengthy charge times eating away at drive times” also complicate Uber and Lyft’s electric-vehicle commitments. The PitchBook report then concludes ride-hailing companies that purchase and manage fleets of electric vehicles, deploy charging infrastructure, and bring drivers in-house as employees will be better able to meet these challenges than Uber and Lyft.

However, there are reasons to be skeptical of this playing out as PitchBook envisions. Just as Uber and Lyft’s aggressive electrification commitments face an uphill battle, so too do the aggressive government policies prompting those commitments. If regulatory targets are set higher than reality can bear—thereby causing either severe harm or embarrassment—they are likely to be repealed or relaxed before the worst damage is done. Perhaps some jurisdictions would be willing to accept the fallout from unpopular and costly policies, but this approach would be difficult to sustain in most places because democracy is fundamentally a popularity contest.

PitchBook’s report also assumes EV prices stay high in perpetuity and these greener cars remain out of reach from most consumers, including those who drive as contractors for ride-hailing services. It also assumes battery charging remains very difficult and expensive for a large share of the driving population. But ride-hailing involves a small share of the consumer automobile market and it is important to consider the broader market before the ride-hailing implications. Mass-producing electric vehicles that are price-competitive with conventionally fueled vehicles, at least after subsidies, is the only way for this transition to occur. If they are not affordable to the majority of drivers, the transition most likely stalls.

None of this is to preclude asset-heavy companies from the future of ride-hailing. There will be a strong basis for ride-hailing companies to purchase and operate fleets of vehicles when technology allows them to replace their drivers with automated driving systems, which are unlikely to be available for consumer purchase—at least initially—due to the heavy maintenance and monitoring demands and anticipated liability concerns. But electrification alone should not be an insurmountable challenge for Uber and Lyft. If it is, that likely means there are much bigger problems facing the age of electrification.

Rather than electrification, Uber and Lyft’s principal near-term threat comes from politicians seeking to undermine one of the core elements of their business model: the ongoing attacks on drivers’ independent contractor classification at the behest of labor unions. California’s Assembly Bill 5 from 2019, which voters aimed to overturn with the passage of Proposition 22 in 2020, remains in legal limbo in the Golden State. Even if the current litigation over the constitutionality of Prop. 22 is resolved in favor of the ride-hailing companies, other union-dominated jurisdictions are likely to pursue anti-contractor legislation similar to AB 5.

Costly multi-front political and legal battles may well cripple an industry still struggling to actually turn a profit for increasingly impatient shareholders. The race to electrification may be bumpy for Uber and Lyft, just like for everyone else, but it is not an existential threat to be worried about.

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Could Highways Recharge Electric Vehicles?

A lengthy article on this topic, “Could Roads Recharge Electric Cars? The Technology May Be Close,” by Kerry Hannon appeared in The New York Times on Nov. 29. Hannon discussed two projects underway, respectively at Purdue University (with the Indiana Department of Transportation) and another with Michigan DOT and the state’s new Office of Future Mobility and Electrification.

The rationale for this concept (which is also being researched in Europe) is that networks of electric chargers will cost many billions and will take a long time to recharge an EV or electric truck on a long-distance trip. Instead, therefore, install some kind of magnetic coil beneath the pavement and let it recharge moving vehicles as they drive along, analogous to recharging a smartphone by placing it on a pad for “inductive” recharging.

You can appreciate the many technical challenges to making this work in the world of real highways. First, to prevent the inductive coils from being damaged by 80,000-pound big-rigs rolling over them, the current Purdue plan is to bury them beneath the surface, with a gap between the actual transmitter and the receiver on the vehicle of 10-to-15 inches. The greater this difference, the less power that gets transferred. Second, no one knows how much the buried device will be damaged by the overpressure from millions of vehicles, or by water seepage, or the other factors that affect pavements over time.

A second set of questions concerns the vehicles that need to be recharged. Just as there is a chicken-and-egg problem between the growth of electric vehicle charging stations and the fraction of EVs in the vehicle fleet, there is a comparable problem of no electric vehicles today being equipped with whatever kind of receiver would be necessary to pick up the transmitted energy to recharge the vehicle’s battery. Original equipment makers (OEMs) are not going to start adding such a component to their EVs until a large fraction of the highway system is equipped for pavement-based recharging.

Then there’s the currently unknown cost per lane-mile to add inductive charging to pavements. The Transportation Research Board’s 596-page report on the future of the Interstate highway system found that much of the system’s underlying pavement is past its useful life, and that rebuilding (and selective widening) of the majority of the system would cost about $1 trillion over the next several decades. It would make little sense to spend billions installing inductive charging in Interstates that will soon be rebuilt.

Most of these points were at least mentioned in the New York Times article, but here’s a big one that was missed: With thousands of vehicles all belonging to different owners driving along a stretch of highway with inductive charging, how would individual vehicle owners be billed for the electricity they pick up and store? No provider of electricity is going to give it away, so unless there is a reliable way to identify each customer and the amount of electricity each consumes, the whole idea is unworkable.

The article does note that federal law prevents the sale of electricity (and any other goods or services) within an Interstate right of way and at Interstate rest areas (apart from vending machines). So in addition to being difficult or impossible to bill the customers, it would also be illegal, at least on Interstates.

With all these fairly obvious shortcomings, I’m surprised that the Purdue project is being funded by the National Science Foundation.

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Further Undermining the Gas Tax as the Highway User Fee

Readers of this newsletter know that I am dismayed by the gradual erosion of the gasoline tax from its original identity as a dedicated user fee (users-pay/users-benefit) to what most people now think of as “just another tax.” This has come about in recent decades by elected officials continually coming up with new (non-highway) uses for the revenues.

But in the space of a week or two, today’s high gasoline prices have led to a flurry of political proposals to suspend collection of gas taxes, leaving highways bereft of funding. Just before Thanksgiving, Florida’s Republican Gov. Ron DeSantis proposed a five-month suspension of the state’s gas tax to save motorists (aka voters) an estimated $1 billion in 2022. The move was described by DeSantis and supporters as a “tax cut.”

But this idea has now become national and bipartisan. Axios reported that a number of members of Congress, from both parties, are calling for suspending the federal gas tax “to help working families,” as Rep. Abby Finkenauer (D-IA) put it. Joining her in this call is Rep. Charlie Crist (D, FL—but formerly a Republican), as well as several Republican legislators in New York State and Rep. Yvette Herrell (R, NM).

Would these politicians seriously call for suspending electric bills or cable bills or water bills if the costs of running those utilities were going up? At least in those cases, the management of the utilities (and their shareholders, if investor-owned) would be up in arms. But where are the heads of state transportation departments as these reckless proposals are being put forth? Alas, since in most cases they are appointed by their governors, they are generally precluded from pushing back against such proposals.

This points to a basic flaw in allowing our highways to be run as politically managed enterprises. If at least major highways were organized and managed as highway utilities (as discussed at length in my book, Rethinking America’s Highways), one important result would be depoliticization and better stewardship of this vital infrastructure.

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News Notes

Musk’s 29-Mile Loop Wins Las Vegas Franchise
At the end of October, Elon Musk’s The Boring Company was awarded a franchise to build a 29-mile Loop tunnel connecting various resorts on and near the Strip with downtown, the Allegiant Stadium, and McCarran International Airport. The existing 2.7-mile Loop under the Convention Center opened in June, at a cost of $52.5 million ($31 million per mile). If that cost applies to the 29-mile loop, its cost would be $900 million. That would apparently be borne by Boring Company, which hopes to charge fares between $5 and $20 per trip, depending on length. The new Loop would also use Tesla vehicles to transport passengers.

New York Times Article Blasts Transportation Cost Overruns
In “Years of Delay, Billions in Overruns: The Dismal History of Big Infrastructure,” veteran transportation reporter Ralph Vartabedian documents the sorry track record of many U.S. transportation megaprojects. A particular focus is on Honolulu’s now $11.4 billion elevated rail transit project and the $100 billion California high-speed rail project, both grossly over-budget and many years from completion. The subhead notes that, with this track record, “Delivering $1.2 trillion in new infrastructure will be tough.” Kudos to The New York Times for publishing this article.

Anti-Toll Legislation May Be Vetoed in Pennsylvania
A bill to forbid PennDOT from using tolls on any project unless specially approved by the legislature was approved by the state Senate, but failed to achieve the two-thirds margin needed to prevent a gubernatorial veto. The bill, SB 382, also sought changes to restrict the operations of PennDOT’s P3 unit. The project in question of the agency’s plan to toll-finance the reconstruction or replacement of nine major bridges on the Interstate highways of Pennsylvania.

Express Toll Lanes Gaining New Venues
Kansas and Tennessee are likely to become the next two states to implement express toll lanes to provide an alternative to congested general-purpose lanes. In Kansas, the Overland Park city council approved a plan to add express toll lanes to congested Highway 69, at an estimated cost of $655 million. Kansas already has some toll roads, under the auspices of the Kansas Turnpike system. Tennessee has no toll roads, but TDOT is now studying the possible conversion of underused HOV lanes to HOT lanes, such as on I-24, I-40 and I-65 in Nashville. Traffic data show the HOV lanes are under-used by carpools and have high violation rates. Tennessee State University and Vanderbilt University are assisting TDOT with these studies.

Arizona Missing Express Toll Lane Opportunity
Arizona has announced plans to relieve congestion on a hilly stretch of I-17 north of Phoenix. The plan is to add reversible “flex lanes” alongside eight miles of the corridor. Flatter parts of this 23-mile corridor would get an extra lane in each direction, at an overall cost of $446 million. If developed instead as variably priced express toll lanes, a significant fraction of the project cost could likely be recouped from toll revenues, so that those directly benefitting from the new capacity would be paying much of the cost. Congress years ago made it legal to add toll lanes to existing non-tolled Interstates, and Arizona already has a transportation P3 law. What a missed opportunity for ADOT’s limited budget.

Dubai to Privatize Its Toll Road System
The Dubai Securities and Exchange Higher Committee announced last month that shares in the Dubai toll road system will be offered on the Dubai Financial Market. The Salik toll road system uses all-electronic (cashless) tolling. It has 3 million registered vehicles, of which 1.8 million are registered in Dubai itself. The motivation for the listing is to increase the size of the country’s stock market.

Driverless Deliveries Underway for Walmart
Customer orders are being delivered from a Walmart “dark store” to customers via automated trucks with no safety drivers in Bentonville, Arkansas. The vehicles have been developed and are operated by start-up company Gatik, and they began fully driverless operation there in August. They are described by Gatik as “frequent, revenue-generating, daily runs that our trucks are completing safely in a range of conditions on public roads.” Approval for this service was granted to Gatik and Walmart by the Arkansas State Highway Commission in December 2020.

More Express Toll Lane Are on the Way
The latest ETLs in metro Denver—on an 18-mile stretch of I-25—will open to traffic in mid-December, after three years of construction and a cost of $419 million. And in California, Caltrans last month began testing the electronic tolling system for the new ETLs on U.S. 101 in San Mateo County, with the southern segment set to open early next year and the northern segment to follow later in the year. The total length is 22 miles. And in Austin, the Central Texas Regional Mobility Authority is beginning the planning process to extend the successful ETLs on the MoPac expressway southward. CTRMA held a virtual open house on Nov. 22 to discuss the plan with the public.

Driverless RoboTaxi Service Begins in Shenzhen, China
Startup company AutoX, with support from e-commerce firm Alibaba, announced last month that it is operating fully driverless RoboTaxis serving 168 square kilometers of Shenzhen, the technology capital of Guangdong Province. The company is the first to offer such service in an entire district of a major city in China. Also last month,, in cooperation with Baidu, has been approved to offer driverless RoboTaxi service in 60 square kilometers in Beijing. The approval is limited to 100 vehicles.

Contrasting Approaches to Electronic Tolling
The Ohio Turnpike last month announced that is installing a new $20 million toll plaza in Newton Township that will include “highway-speed E-ZPass lanes” (generally known as “open road tolling”). This is part of a $200 million plan to “modernize” the Turnpike. By contrast, the Pennsylvania Turnpike has already converted to all-electronic (cashless) tolling, Florida’s Turnpike continues tearing out “toll plazas” in favor of all-electronic tolling. This process began several years ago in Miami-Dade County, expanded northward to Broward County, and as of last month is now in effect in Palm Beach County and Martin County. The process will conclude within three years with all toll plazas demolished and replaced by highway-speed electronic toll collection.

Croatia Plans Nationwide Electronic Toll Collection
On Nov. 25, Croatia’s Ministry of Transport announced that electronic tolling will be introduced nationwide. The goal is a cashless toll system compatible with European Union standards. The specifics were introduced in a legislative package which the Ministry expects will be approved.

First Army Corps P3 Project Reaches Financial Close
The Fargo Moorhead Flood Protection P3 (in North Dakota and Minnesota) has reached financial close, Public Works Financing reported in its October 2021 issue. It will deliver a 30-mile diversion channel on the west side of Fargo Moorhead, which the winning company will also operate and maintain for 30 years. The overall project had to be split into two parts, due to federal budget-scoring rules that require long-term financing to all be scored up-front, so the Corps could not be the counterparty for the P3 agreement. That role went to the local Flood Diversion Authority. Financing for the P3 portion includes a $529 million Water Infrastructure Finance and Innovation Act (WIFIA) loan, $273 million of tax-exempt private activity bonds, and a senior note provided by MetLife Investment Management.

Container-Stacking Rule at Port of Long Beach Rescinded
West Coast ports have been woefully short of space to store containers unloaded from ships (and others waiting to be loaded). At the Port of Long Beach, one reason was a long-standing (and enforced) rule that containers could be stacked no more than two high. If you’ve ever driven past a container port, you know this is ridiculous, but local protests about “views” led to political support for this bizarre rule. But by some sort of political miracle, the rule was rescinded late in October, permitting Long Beach to make much better use of its limited acreage for stacks of containers.

Privately Financed Expressway and Bridge Approved in Louisiana
A project to add a toll bridge across the Red River with an expressway linking it to U.S. Highway 71 received unanimous support from the governing body of one of the two parishes that would be connected, Bossier Parish. Approval will also be needed from Caddo Parish, across the river. The Red River Express was proposed and would be developed and operated by Tim James, Inc., which has developed several toll projects in Alabama. The Army Corps of Engineers’ approval is also required. Design and construction would lead to the roadway opening in 2026.

Nuclear Power Needed for a Carbon-Free U.S. Electricity System
A team of scientists and engineers from MIT and Stanford released a study last month that urges California to delay retiring the state’s last operational nuclear power plant, Diablo Canyon. Keeping it in operation until 2035 (instead of 2025) would reduce carbon emissions from the state’s electric utilities by more than 10% and save $2.6 billion in electricity costs. Extending its operating life to 2045 would avoid the need to convert 90,000 acres to 18 GW of solar power. And waste heat from the power plant could desalinate water at lower cost than other methods.

E-470 Drivers Promised Lower Toll Rates
The board of the E-470 Public Highway Authority last month announced rate reductions each year from 2021 to 2024. Toll rates were frozen in spring 2020, due to the economic effects of Covid-19. Traffic has only partly recovered from 2019 levels, and is not expected to get to that level until 2023. The toll road was presented with an unsolicited buyout offer in 2019 from ROADIS, an international toll road operator owned by a major Canadian pension fund. That offer was not accepted by E-470’s governing board.

Major Freight Company Plans Electric Big-Rigs
Sysco, which delivers food products to supermarkets and restaurants nationwide, last month announced that by 2030 it plans to have 35% of its big-rig trucks powered by electricity. That percentage equates to 2,500 electric big-rig tractors. Sysco is the country’s largest foodservice distributor.

Infrastructure Bill Won’t Assist Port Automation
The bipartisan infrastructure bill signed by President Biden promised to invest more federal money in all modes of transportation. Yet, as pointed out by Reason reporter Eric Boehm, none of the $17 billion designated in the bill for ports can be spent on automation. The $2.6 billion of that sum which is dedicated to upgrading equipment at ports (to include reducing emissions) cannot be used for any automated equipment. Page 308 of the 1,600-page bill requires that all such equipment be “human-operated” or “human-maintained.” This is a gift to the longshoreman’s union, which staunchly oppose any automation at America’s ports. U.S. ports are far less productive than major ports in Asia and Europe.

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Quotable Quotes

“Just about doubling the federal government’s expenditure on infrastructure overnight could lead to waste, however. Cost overruns often bedevil American infrastructure projects. It is more expensive to build rail in America than in almost any other country, according to Transit Costs Project, a research group. The price of building highways has also soared. That just about anyone can mount a legal challenge against public works in their vicinity is part of the problem, leading to delays and missed budgets. And the current backdrop is hardly propitious, with supply-chain congestion affecting even the most basic home-building projects.”
—“Infrastructure Year: Unlocked,” The Economist, Nov. 13, 2021

“The truth is, the Washington region is facing a population boom over the next quarter-century that includes a projected 400,000 new residents and 200,000 new jobs in the Maryland suburbs. Without major new investments in both highways and transit, growth will overwhelm existing infrastructure, and the upshot will be daily misery for everyone. . . . If those suburban [Maryland] toll lanes are not built—not just the first phase segments but along the entire length of the Beltway and further north on I-270—it’s a sure bet that today’s terrible traffic will become tomorrow’s mind-bending gridlock.”
—Editorial Board, “No One Welcomes Tolls on Maryland Highways, but the Alternative Would Be Worse,” The Washington Post, Nov. 20, 2021

“Long-haul trucking is where we will first see this technology really making an impact. There is a current shortage of drivers. At the same time, to be a truck driver is one of the most dangerous professions in North America. From a self-driving technology perspective, driving on highways, although very difficult, is much easier than driving in cities. Last-mile delivery, food delivery, it’s not clear what that [AV] product should look like. Robotaxis are an extremely hard problem, and if you want to really have a market, you have to go to the downtown core, and it’s much more difficult. For long-haul trucking, you can automate certain corridors.”
—Raquel Urtasun, Founder of Waabi, in Vipal Monga, “Solving the Self-Driving Puzzle,” The Wall Street Journal, Nov. 10, 2021 

“The Davis-Bacon Act requires workers on federally funded projects to be paid the prevailing wage, and cost-cutting advocates have long urged its reconsideration. Yet prevailing wages are interpreted quite differently in different locations. In New York City, the Comptroller determines the prevailing wage. For electricians, in 2021 that was $58 per hour, with a supplemental benefit requirement $58.46 [per hour]. After seven hours in a day, overtime kicks in, causing the wage to increase to $82 per hour and the benefit rate to rise to $62 per hour. . . . The Comptroller’s prevailing wage is significantly higher than the average wage as reported by the BLS for the New York metropolitan area ($36 per hour). By comparison, in Houston, the prevailing wage is listed as $31 per hour and the benefit level is $9 per hour. The BLS reports that the average wage for an electrician in Houston is $25.47 per hour, about three-quarters of the New York City figure from the BLS.”
—Edward Glaeser and James Poterba, “Economic Perspectives on Infrastructure  Investment,” Aspen Economic Strategy Group, Jul. 14, 2021