- Reason study on reforming environmental litigation
- Assessing New York’s congestion pricing debacle
- INRIX: traffic congestion is back, worldwide
- What will it cost to collect per-mile charges?
- Automated trucking nears commercial deployment, but questions remain
- Intriguing study projects city population losses
- News Notes
- Quotable Quotes
Reason Study Seeks Reform of Environmental Litigation
Building needed U.S. infrastructure is plagued by long delays, cost overruns, and an increased risk that projects will be cancelled rather than implemented. Concerns have increased as U.S. policy moves toward major increases in the supply of “green” electricity, requiring massive investments in energy generation, long-distance transmission lines, mining and processing of needed minerals, etc. We also need to rebuild and modernize our aging Interstate Highway System and add facilities for new forms of air and surface transportation. In a Reason Foundation policy study, I outline a case for environmental litigation reform.
Since 2020 a growing number of opinion leaders have published critiques of the U.S. environmental review process, with a new focus on environmental litigation, its last stage. These critiques all refer to the excessive use of “citizen voice” to prevent projects from gaining needed federal approvals. While some critiques come from conservatives, a growing number arise from centrists and liberals, including in major national media outlets like The New York Times and The Atlantic.
As Matthew Yglesias wrote, “Delay is a policy choice—one governments at various levels have opted for over the past half century, regularly prioritizing community input and litigation avoidance over the goal of getting something done quickly.”
In 2023, a new study from Stanford University sought to identify the impact of environmental litigation, using White House Council on Environmental Quality (CEQ) data on environmental impact statements (EISs) from 171 large energy projects and 184 large transportation projects. Some categories of projects of each kind faced average litigation rates of 50% or more and permit process duration averaging as much as seven years for energy projects and as much as 9.6 years for transportation projects. Their assessment concluded that environmental litigation prioritizes local concerns over broader regional and national concerns and, even more importantly, that it provides no mechanism by which such a balancing could even be attempted.
U.S. environmental assessment appears to be an outlier compared with many peer nations in Europe along with Australia and New Zealand. A study by the Competitive Enterprise Institute on environmental reform showed very few examples of U.S.-type litigation delays, except for the United Kingdom, whose common-law system is similar to ours. In 2023, Germany enacted sweeping reforms of litigation related to major infrastructure. Many peer governments impose time limits for their environmental review process, and some provide a streamlined process for projects with national significance.
Two major studies of the cost of rail transit projects in other countries were released in 2023. The Eno Center for Transportation found that the average construction cost premium for U.S. rail transit projects is 48% for at-grade rail transit projects and 57% for tunneled projects. The Marron Institute at New York University, using a database of 900 transit projects in 59 countries, found striking differences, identifying relatively low costs per kilometer in Greece, Italy, Portugal, South Korea, Spain, and Switzerland. The 10 most costly countries, in addition to the United States, included Hong Kong, the Netherlands, New Zealand, Singapore, and United Kingdom. While the study did not focus on litigation per se, its case study of Italy revealed a dramatically different approach to such reviews, with the first stage addressing environmental (ecological) impacts, and with public objections addressed by specialized administrative tribunals at that early stage—not in post-EIS litigation.
Congress has adopted several environmental reforms in recent legislation. The Infrastructure Investment & Jobs Act (IIJA) in 2021 codified aspects of the One Federal Decision policy from the Trump administration, limited the alternatives analysis in EISs to 200 pages, and required the release of a Record of Decision within 90 days of the final EIS.
In the Fiscal Responsibility Act (FRA) of 2023, Congress imposed time limits and page limits for EISs and Environmental Assessments (EAs) and codified CEQ requirements that an EIS must consider only “reasonably foreseeable” environmental impacts and a “reasonable range” of alternatives that are “technically and economically feasible.”
None of these changes addressed the problems caused by environmental litigation. Hence, my Reason policy study outlines an array of potential litigation reforms. Some of these originated from centrist organizations, including the Bipartisan Policy Center and the Institute for Progress. Others come from legal analysts and university researchers, and another from an affiliate of the Federalist Society. The Reason study suggests an initial bipartisan reform agenda along the lines of the BPC and IFP proposals.
The study’s final section assesses the political feasibility of bipartisan litigation reform in Congress. It cites a wide array of organizations assembled by the U.S. Chamber of Commerce in 2023—96 national organizations and state business groups in 46 states—arguing for streamlining the environmental permitting process. Signers also included several major labor unions and an array of think tanks. Potential reform originators could be the Conservative Climate Caucus (CCC) and the bipartisan House Problem Solvers Caucus, whose members overlap somewhat with the CCC. There are no Senate counterparts to these organizations, but these two groups have worked with bipartisan groups of Senators in 2020 and 2021.
The growing support for streamlining environmental litigation and the existence of potential sponsors in Congress suggest this should be a priority for the new Congress that will take office in Jan. 2025.
Assessing the New York Congestion Pricing Debacle
While I have long supported various forms of road pricing, I was not surprised at the extent of opposition to the plan that was terminated by New York Gov. Kathy Hochul only days before it was about to start last month. The congestion pricing plan was ill-conceived from the outset.
First, its primary purpose was to raise $1 billion per year to support the capital program of the city’s Metropolitan Transportation Authority (MTA), which runs the city’s subways and buses. Working backward from the revenue target led to decisions such as charging vehicles 24/7 rather than, perhaps, only during business hours. It also ended up leading to what many considered very high daily rates, especially for those who already pay tolls to get to Manhattan from New Jersey.
Second, the congestion pricing project’s planners should have looked more carefully at the three successful cases of congestion charges to enter city centers—Singapore, London, and Stockholm. The first of these is not very relevant since Singapore is governed as a one-party state, with some laws and regulations that would seem authoritarian if they were proposed for a U.S. city.
London’s congestion zone is a much smaller fraction of the city’s downtown than the Manhattan charging zone, and those who use cars to commute to and from “the city” in London are among its most-affluent residents.
Stockholm is the example New York City could have learned a lot from. Stockholm’s congestion pricing plan was first implemented as a six-month experiment, to be followed by a referendum in which commuters, as well as those living within the charging zone, were entitled to vote. A majority in the referendum judged the pricing system to be beneficial, so only then was it adopted permanently. The prices charged were based on models of how well they would reduce congestion, not on how much revenue would result. The proceeds were used to improve both transit service and the Stockholm metro area roadway system.
The New York MTA is now faced with a funding crisis. The revenues from the congestion tolls (more accurately congestion taxes) were to have been placed in a “lockbox” along with revenues from a relatively recent “mansion tax” and two “internet market taxes.” MTA bonds would then be issued against the lockbox revenue stream, as Jeff Davis reported in a June 7 Eno Center for Transportation commentary.
A June 26 presentation to the MTA board on the impact of the congestion pricing cancellation said the net impact of losing the projected pricing revenues will be $16.5 billion less for the coming five-year period. Among the impacts are deferring $5 billion in system expansion (primarily Phase 2 of the Second Avenue Subway), $2 billion in “accessibility” projects such as Americans with Disabilities Act compliance, $500 million for zero-emission buses, $1.5 billion for subway rolling stock, $3 billion for signal modernization, $3 billion for “state of good repair” projects (i.e., resulting from deferred maintenance), and $1.5 billion for miscellaneous infrastructure upgrades.
I’m not sure that the federal Environmental Assessment (EA) for the project was correct in finding that the project would have “no unmitigated impacts.” That 4,000-page EA (far less complex than an EIS) showed that by diverting some traffic around Manhattan, the plan would lead to increased traffic (and emissions) in the Bronx, Staten Island, and northern New Jersey. There would be an estimated 700 more trucks per day on the Cross-Bronx Expressway, reported Manhattan Institute’s Nicole Gelinas in a New York Times guest essay.
It seems doubtful that the current congestion pricing plan will be re-instated after the November election, when Gov. Hochul hopes Democratic members of Congress from New York will all be re-elected. But as the world’s most-congested city, per the latest INRIX analysis, there might be hope for something like Stockholm’s successful approach to be considered in New York.
INRIX Finds Traffic Congestion Is Back, Worldwide
Last month, the folks at transportation data firm INRIX released their “2023 INRIX Global Traffic Scorecard.” While it lacks the level of detail about U.S. metro areas that used to be provided by the Texas A&M Transportation Institute (TTI), it provides a global context for U.S. metro area congestion—which is back, in a big way.
The overall report (not the summary released in June) includes data from 947 urban areas for 2023 and comparisons with both 2022 and pre-Covid 2019. Overall, 78% of those metro areas experienced increased congestion compared with the prior year, and 54% experienced more delays in 2023 than in 2019.
Transit ridership has declined globally, as in the United States, and few transit systems have achieved 2019 passenger levels. U.S. transit ridership grew 15% last year but is still down 28% from 2019.
Regarding both car traffic and transit, INRIX suggests that 2023 data may be the “new normal.” One aspect of that is the changed daily pattern of personal trips, with a large peak in the late afternoon but not in the morning (their Figure 6).
How do major U.S. metro areas compare with their global counterparts?
Of the world’s 25 most-congested metros, nine are American, with New York being the most congested, followed by Chicago (ranked third most congested), Los Angeles (#7), Boston (#8), Miami (#11), Philadelphia (#13), Washington, DC (#18), Houston (#19) and Atlanta (#21). Non-U.S. metro areas in the top 10 congested rankings are Mexico City (#2), London (#3), Paris (#4), Istanbul (#6), Cape Town (#9), and Jakarta (#10).
Here is how the largest U.S. metro areas fared in congestion figures for 2023, adapted from a table in the INRIX summary report.
| 2023 Rank | Urban Area | 2023 Delay Hours/Driver | Vs. Pre-Covid | 2023 $/Driver | 2023 $/City |
| 1 | New York | 101 | +11% | $1,762 | $9.1B |
| 2 | Chicago | 96 | +18% | $1,672 | $6.1B |
| 3 | Los Angeles | 89 | -4% | $1,545 | $8.3B |
| 4 | Boston | 88 | -1% | $1,543 | $2.9B |
| 5 | Miami | 70 | +18% | $1,219 | $3.1B |
| 6 | Philadelphia | 69 | +2% | $1,209 | $2.9B |
| 7 | Washington | 63 | -9% | $1,095 | $2.7B |
| 8 | Houston | 62 | +1% | $1,082 | $3.2B |
| 9 | Atlanta | 61 | -3% | $1,066 | $2.6B |
| 10 | Seattle | 58 | -11% | $1,010 | $1.6B |
| 11 | San Juan | 57 | +14% | $ 994 | $0.802B |
| 12 | Nashville | 56 | -8% | $ 985 | $0.852B |
| 13 | San Francisco | 45 | -6% | $ 787 | $1.3B |
| 14 | Baltimore | 44 | -24% | $ 762 | $0.905B |
| 15 | Pittsburgh | 43 | -14% | $ 749 | $0.724B |
| 16 | Charlotte | 41 | -10% | $ 711 | $0.794B |
| 17 | Dallas | 38 | +12% | $ 658 | $2.2B |
| 18 | Honolulu | 42 | -3% | $ 739 | $0.270B |
| 19 | Portland | 39 | -8% | $ 679 | $0.665B |
| 20 | Stamford | 41 | +12% | $ 706 | $0.265B |
| 21 | Austin | 38 | -14% | $ 663 | $0.632B |
| 22 | Denver | 37 | -11% | $ 640 | $0.831B |
| 23 | King of Prussia | 53 | -18% | $ 918 | $0.009B |
| 24 | New Orleans | 37 | +9% | $ 641 | $0.329B |
| 25 | San Antonio | 35 | +17% | $ 607 | $0.625B |
Here are a few points to keep in mind in interpreting the above data. First, from the comparison of current delay hours with pre-Covid 2019 delays, you can get an indication of which metro areas’ economies have come back more robustly post-pandemic. The delay/congestion cost per driver is the impact per individual, but the last column’s cost to the metro area depends considerably on the size/population of that area, as you can see from Dallas’ relatively low per-driver cost of $658 per year compared with the $2.2 billion cost to that very large metro area.
The delay/congestion cost is calculated by multiplying the average number of delay hours by the Federal Highway Administration’s suggested $17.45 per hour (inflation-adjusted to 2023 by INRIX). The former TTI congestion reports also included the per-vehicle cost of wasted fuel due to stop-and-go traffic, so its cost estimates would have been somewhat higher.
What Will It Cost to Collect a Mileage-Based User Fee?
Despite a growing consensus within the transportation community that per-gallon fuel tax revenue is shrinking and will continue to shrink, there is still no good model for a state or national mileage-based user fees/road usage charging (MBUF/RUC) program that identifies both the technology needed and the cost of collecting this new form of highway user fee.
Back in 2021, the trucking industry research group American Transportation Research Institute (ATRI) produced a 50-page report, “A Practical Analysis of a National VMT System,” which I reviewed in the April 2021 issue of this newsletter. Basically, the report identified an array of unresolved questions and made assumptions unfavorable to affordable costs of collection. For example, it asserted long-obsolete cost of toll collection estimates based on 20th-century cash toll collection rather than today’s much lower-cost all-electronic tolling. Second, it drew on figures from several small state MBUF/RUC pilot projects to assert that 40% of the revenue raised would be needed for administrative costs. This ignores the very large economies of scale that would be inherent in a statewide or nationwide per-mile charging system.
Unfortunately, estimates of the more-likely administrative/collection costs of statewide systems are practically non-existent. Fortunately, such work is finally starting to get under way. One of my Reason colleagues shared with me a presentation at a recent conference by Nate Bryer of WSP, titled “Costs of a RUC Program.” It begins by reminding the audience of the typical monthly costs people willingly pay for services like Netflix, Amazon, smartphones, and connected-vehicle systems like GM’s OnStar ($30-$50/month).
After that comes a serious attempt to figure out what kinds of back office functions would be required for a large-scale state RUC system and the staffing skills required to perform those functions. It also lays out other costs such as in-vehicle device(s) and related costs, plus an array of software that would be needed. This is followed by an estimated cost of staffing for a smaller (low-volume) and larger (high-volume) state system. After this comes a breakdown of tangible asset costs, which is summarized at about $99 for the in-vehicle device and an operating cost of 45 cents/month. Added to this are monthly software costs for the system, estimated at between $35K/month (low-volume system) to $130K/month (high-volume system). Putting this all together, Bryer estimates that in a low-volume system with an in-vehicle device the monthly cost per vehicle would be around $9.56 which he estimates would be 30-61% of the revenue connected. In a high-volume system, the corresponding figures are $4.25/month, which would be 13.5-27% of the revenue collected. If a system like these were implemented, ATRI would be correct that the collection cost would be much higher than the 2 to 3% of revenue needed to collect fuel taxes.
Bryer goes on from there to hypothesize an alternative system without a device added to the vehicle whose monthly cost of collection would be 20 to 41% of the revenue collected (low-volume system) to 3.3 to 6.7% of revenue collected. The latter approach would be in the ballpark of collection cost for today’s all-electronic tolling.
The lesson I take from this is that an all-roadways MBUF/RUC system for all vehicles is far from ready for prime time, no matter how much it will be needed in coming decades. So besides encouraging serious R&D on potential systems, what do we do in the meantime as fuel-tax revenue continues to shrink?
This is a good reason not to attempt an all-vehicles/all-roadways MBUF/RUC program within the next decade. However, we could cost-effectively convert about one-third of all vehicle miles of travel to per-mile charges if the conversion took place only for the limited-access highways—freeways and Interstates. This initial step could rely on today’s all-electronic tolling technology (no new in-vehicle technology needed) and would basically convert those freeways and Interstates to toll roads. For the large majority that are not currently tolled, the state would provide refunds of the fuel taxes paid for the miles driven on the converted roads, in response to concerns about “double taxation.”
Converting the limited-access system first would give the fledgling MBUF/RUC technologists a decade or two to develop and prove out cost-effective ways for vehicles to report all their other miles traveled, at low cost. Nate Bryer has laid out the challenge for the future all-vehicles/all-roadways MBUF/RUC system. It’s time for extensive R&D to address this problem.
Automated Trucking Nears Commercial Deployment, But Questions Remain
By Marc Scribner
In May, automated vehicle (AV) expert Richard Bishop released his latest issue of Automated Driving Industry Trends: Automated Trucks, which is available for free download on the Bishop Consulting website. Bishop’s survey of AV progress is a valuable resource and provides a high-level overview as well as company-level reporting. Several AV truck developers have promised to introduce commercial driver-out services this year, so attention is especially warranted. That said, emerging policy threats may limit the potential of AV trucking. Bishop divides automated trucking into four use types: long-haul, short-haul/middle-mile, terminal tractors, and off-road.
However, he notes that “boundaries between these four buckets will become increasingly permeable as the technology matures. Companies focusing on off-highway already have their sights set on public road operations near the industrial site.”
For long-haul AV trucking, Bishop notes that both Aurora Innovation and Kodiak Robotics plan to introduce commercial driver-out service in Texas later this year. Aurora has announced an aggressive deployment timeline. It plans to have thousands of vehicles on the road by 2026, begin mass production through OEM partners (Volvo Group and PACCAR) in 2027, and become profitable in 2028. While Aurora will launch under a highway-only “transfer hub” model between Dallas and Houston, where loads will be manually driven on local streets, the company is currently developing surface street automated driving capability to enable dock-to-dock operations in the future.
In the short-haul/middle-mile market, Gatik remains the business-to-business AV trucking leader, with plans to deploy large numbers of its driverless trucks in the Dallas metro area in 2024 and 2025. Gatik uses medium-duty box trucks to drive repetitive routes on surface streets between distribution centers and retail stores. Its customers include Georgia-Pacific, KBX, Kroger, Loblaws, Pitney-Bowes, Tyson Foods, and Walmart. Nuro, which operates in the short-haul business-to-consumer market, remains the only AV developer to have received an exemption from Federal Motor Vehicle Safety Standards for its R2 vehicle—a low-speed vehicle that lacks manual driving controls. According to Bishop’s report, Nuro plans to introduce its new purpose-built automated delivery vehicle, the R3, in late 2024.
Turning to terminal tractors, Bishop’s report features two companies, ISEE and Outrider, that have developed robotic arms to connect and disconnect air brake lines between tractors and trailers. These types of technologies will be necessary to achieve full end-to-end automation and support Bishop’s point about increasingly permeable boundaries between AV trucking use types.
Finally, for off-road AV trucks, the most interesting example in Bishop’s report comes from Australia. The Pilbara region is the center of Australia’s iron ore industry. Since 2022, AV truck developer Hexagon has been operating partially automated truck platoons on a 62-mile private road from a Pilbara iron mine to a port. Hexagon plans to introduce fully automated iron ore platoons in 2025. It estimates a 100-truck fleet could realize up to $236 million in annual savings. This has implications beyond reduced trucking costs. There is great potential for Hexagon-like AV truck platooning to enter bulk commodity transportation markets traditionally dominated by freight rail, which I discussed in a presentation at the Transportation Research Board’s Annual Workshop on Transportation Law earlier this month.
While 2024 is shaping up to be a big year for AV trucking, the future remains uncertain. This is especially true with respect to political barriers. Bishop notes that organized labor has mobilized against AV trucking. Encouraged by the Teamsters union, politicians in states from California to Delaware have introduced legislation in 2024 that would require a licensed driver to remain in the driverless truck cab during operation. Ostensibly to promote safety, these bills are politically aimed at killing the labor-saving business case for AV trucks. So far, these efforts have been unsuccessful—and California Gov. Gavin Newsom vetoed a similar bill in 2023—but union opposition is unlikely to dissipate in the near future. Federal preemption will likely be necessary to allow AV trucking to scale in the United States.
At the federal level, the Biden administration has deprioritized AV policy, which most attribute to President Biden’s close ties to organized labor. A foundational rulemaking for AV trucks at the Federal Motor Carrier Safety Administration has been languishing well past its 90-day review period at the Office of Management and Budget since Dec. 2023. This proposed rule may continue to be held until after the election, which will perpetuate nationwide regulatory uncertainty for AV trucks. While the rule will almost certainly be published eventually, this episode illustrates how easily political horse-trading can dictate the terms of AV policy.
Bishop’s report is a must-read if you wish to understand the state of AV trucking, both the promise and the problems facing the industry. As an optimist, I believe many of these challenges—including the seemingly intractable political ones—will be eventually addressed, but it is important to be realistic about the near-term prospects of this technology and its impact on the transportation system.
Intriguing Study Projects City Population Loss
By Baruch Feigenbaum
A provocative study titled Depopulation and Associated Challenges for U.S. Cities by 2100 by University of Illinois-Chicago researchers Uttara Sutradhar, Lauryn Spearing, and Sybil Derrible was released earlier this year. The study examined how population declines could affect planning for transportation and other services. Ultimately, the study hits the bullseye on some reforms yet misses badly on others.
Some of the study’s projections were surprising. By 2100, half of U.S. cities would be losing population, and that loss would average between 12-23% of all residents, the study said. Currently 43% of cities are losing population, 40% are gaining, and 17% roughly are even. Almost all states have some cities gaining population and some losing population, but the percentage varies wildly. Both sets of numbers are a noted change from the historic average of 1/3 of cities gaining population, 1/3 of cities losing population, and the other third holding steady.
The population loss is occurring mostly in central cities like New York City and in rural towns like Thomasville, GA. The suburbs and exurbs of larger metro areas are still gaining population.
The study notes that cities gaining population are better suited deal with adversity. One example is failing water infrastructure. Atlanta, Flint, MI, and Jackson, MS all poorly managed their water infrastructure with government incompetence, policies that incentivized customers to use more water, and deferred maintenance playing major roles. Yet, Atlanta had enough taxpayer revenue (an approved 1% sales tax) to fix its system, while the other systems cannot rely on a taxpayer bailout.
The study makes several recommendations for cities losing population. First, they should shift away from growth-based planning, which is largely the reliance on the construction of new infrastructure for new residents. One example of how new construction can benefit growing cities is impact fees. Many governments use these fees to balance the budget. But moving to a non-growth based approach is challenging to implement, and will likely lead to higher taxes. In a growing city, these fees generate a large amount of revenue and are easy to implement because current residents largely don’t pay them. Harvey Molotch of the University of California Santa Barbara detailed in the City as Growth Machine why, for cities, growing is the easiest thing to do politically, while focusing on existing residents and asking them to pay higher taxes is the hardest.
Second, the study says cities should redesign their transit service. The study does not provide any details, but I will. Cities need to focus on transit-dependent customers. They need to run bus or micro-mobility services 18 hours a day, seven days a week, because many transit-dependent customers work on weekends. They need to contract out transit service where it makes sense. Finally, they need to scale back rail service extensions, which transit-dependent customers in most cities use far less than buses.
Third, the authors say cities should embrace international immigration. This may be a good recommendation, but the federal government controls immigration policy. Also, while this is a solution for big cities, some rural towns may have a harder time attracting immigrants.
Fourth, the study acknowledges that it is generally much easier to reach jobs via automobile than via other modes. It doesn’t recommend every resident have an automobile, but having one certainly has its advantages. Automobiles expand employees’ circle of opportunity compared to other modes allowing them to reach more potential jobs and find the best job. Employers have access to more employees, allowing them to find the best candidate.
But there are some important areas that I think the study misses. It does not address domestic migration, the largest source of population growth for some metro areas. Many southern states, including Florida, Georgia, North Carolina, Tennessee, and Texas, have benefited from migration from the Northeast and Midwest. Not including or examining why people are moving is a critical study omission.
As Brookings demographer William Frey notes, one of the two largest factors affecting population growth is the average January temperature. That’s one reason why Georgia has grown a lot faster than Wisconsin. Both states have similar costs of living.
Another factor is the state and local tax burden. Combine tax burden with average January temperature and compare Florida and Texas, which are two of the fastest-growing states in the country, with New York, which is rapidly losing population.
Cities cannot solve their weather problems, but solving their tax problems is more doable. States with an income tax higher than 6% have some of the worst out-migration numbers. Reducing the income tax to 6% or lower would have major benefits for many areas.
Methodologically, all the study’s projections are based on the 2020 census. The 2020 census was started in 2019, but tabulating the totals and double-checking the answers stretched into 2020. And we know that 2020 was not representative of anything, due to the COVID-19 pandemic. It would have been helpful if the authors went back four decades to try to build on much longer growth trends.
Tennessee DOT Gets Good News re Choice Lanes
The Federal Highway Administration has agreed with the Tennessee Department of Transportation (TDOT) that an Environmental Assessment (EA) is the appropriate evaluation method for its first Choice Lanes project for I-24 between Nashville and Murfreesboro. An Environmental Impact Statement (EIS) might have taken several years longer than the EA, which is estimated to take a year or less. TDOT expects to issue a request for qualifications for this large public-private partnership (P3) project by the end of this year.
Atkins Realis Plans Sale of Highway 407 Stake
Atkins Realis Group (formerly known as SNC-Lavalin) has announced plans to sell its 6.76% share of ownership in the 99-year P3 concession for Highway 407 in the suburbs of Toronto. The stake in this very profitable urban toll road is estimated to be worth $1.7 billion, which the company can use for other investments. Other owners of the 407 include the Canada Pension Plan Investment Board (CPPIB) and Cintra Global.
Threats to Tolling Emerge in Three States
Legislators in two states and a local agency in another have raised concerns about tolled facilities in their jurisdictions. The Virginia Joint Legislative Audit and Review Commission last month presented findings of its research on toll projects and long-term public-private partnerships, citing motorist confusion about different signage and fee levels at various tolled facilities, and suggesting standardization of contract provisions with toll operators. At the end of May, Texas House Speaker Dade Phelan expressed similar concerns about toll facilities in that state, suggesting a need for unspecified “toll reforms” in the 2025 legislative session. And in California, the Metropolitan Planning Organization in San Diego County, SANDAG, authorized funding for a study of the feasibility of eliminating tolls on the SR-125 expressway.
Colorado Ground-Breaking for Latest I-25 Express Lanes Project
Last month, Colorado DOT held a ground-breaking ceremony for the I-25 North Express Lanes project, which covers six miles between Mead and Berthoud. The project will close the last missing link in the I-25 express toll lanes project. When this addition is completed, I-25 will have 26 miles of continuous express toll lanes in each direction.
Electric Vehicles Losing Popularity in the United States
In a survey released by McKinsey & Co. last month, 46% of current electric vehicle owners said they would likely switch back to an internal combustion engine (ICE) vehicle for their next vehicle. The most cited reason was inadequate charging facilities, followed by high cost of ownership and too much restriction on long-distance trips. In other bad news for the EV industry, research firm Insurify found that monthly insurance premiums average 12% higher for EVs for drivers with comparable driving records. More details are provided in Telis Demos’s recent article in The Wall Street Journal.
Portuguese Toll Road Attracts Bidders
The Auto-Estradas do Douro Litoral (AEDL) is accepting bids from investors. Infralogic reports that bidders include toll road companies Abertis and Globalvia, as well as investment fund Igneo Infrastructure Partners. AEDL manages 79 kilometers of tolled motorways in the Porto metro area. With earnings before interest, taxation, depreciation and amortization (EBITDA) of €35 million this year, the estimated value is €400 million—12X EBITDA.
California Organization Offers VMT Summer School
In an effort to get buy-in for California’s new focus on limiting vehicle miles of travel (VMT) rather than trying to improve highway level of service (LOS), the California Association of Councils of Government is holding four online sessions on the subject from July 9 to Aug. 8. Topics will be Why VMT, the National Center for Sustainable Transportation (NCST) Induced Travel Calculator, the great mitigation (driving people to drive less), and the future of VMT. More details can be found at https://calcog.org.
Minnesota Aims for 20% Less VMT by 2050
The Minnesota state legislature has amended a 2023 law that focused on reducing vehicle miles traveled 20% by 2050 to also require MnDOT and the Twin Cities’ metropolitan planning organization to assess whether each highway expansion project is consistent with the state’s climate goals, including the 20% VMT reduction. The law applies to all highway projects worth $15 million or more in the Twin Cities or $5 million elsewhere in the state, even if they do not add any capacity. The law will now cover 12,000 miles of state trunk highways that handle more than 60% of all miles driven in the state.
Green Tax Credits Go Mostly to the Wealthy—UC Berkeley
A new study by the Energy Institute of the Haas School of Business at the University of California-Berkeley analyzed who received the $47 billion in federal and state tax credits for solar panels, heat pumps, electric vehicles, and other clean energy technology. Using information from tax returns, they found that the credits have gone primarily to high-income households. The bottom three income quintiles received about 10%, while the top quintile received about 60% of the tax credits.
Irish Toll Motorway Conversion Will Provide Value for Travelers
Toll financing over the past several decades has upgraded thousands of miles of two-lane highways in South America into four-lane divided toll roads, enabling safer and faster travel. Ireland has a new project based on this model. The Cork-Limerick Highway will be upgraded to toll motorway standards at a cost of €2 billion via toll financing. A major benefit is that trips will take 30 minutes less than on the existing road. The project is also expected to reduce accidents and eliminate an estimated 70 highway deaths that would otherwise occur over the next 30 years.
Texas Central HSR Hits Speed Bumps
While the planned high-speed rail line between Dallas and Houston has been revived, it received two bits of bad news in June. First, the Dallas City Council voted 14-0 against any elevated passenger rail facilities in the city’s central business district, at least until an economic impact analysis is completed by early 2025. Second, the Japan Overseas Infrastructure Corporation for Transport and Urban Development announced it was booking a loss of $261 million related to its loans to and investments in the Texas Central rail project.
Two Efforts Seek Competing European Passenger Rail Service
Virgin Group announced last month that it is seeking to raise €600 million for a potential project to create and operate a competitor to the Eurostar that links London and Paris via the Channel Tunnel. And in France, Antin Infrastructure Partners announced plans to invest in a new company called Proxima that would compete with existing high-speed trains operated by state-owned rail operator SNCF. European Union law allows competing companies to operate on state-owned rail lines both within and between EU countries.
Brent Spence Bridge Corridor Project Gets Its FONSI
The $3.6 billion project to refurbish the aging Brent Spence Bridge and build an additional crossing of the Ohio River beside it has completed its federal environmental review with a finding of no significant impact (FONSI), despite adding highway capacity. The assessment included social, economic, and environmental impacts of the project. It has been awarded $1.635 billion from the bipartisan infrastructure law, which led to this megaproject being developed without any toll financing.
Cost of Railroad Electrification
A short item in ENR’s June 17 edition was headlined “Caltrain Electrifies Rail Lines.” It reported on the completion of a $2.4 billion project to upgrade 52 miles of the Caltrain commuter rail line between San Jose and San Francisco, including a photo of equipment installing overhead wires. Dividing the project cost by the number of miles yields $46 million per mile for this electrification. We hear a lot of talk about greening U.S. freight railroads by electrifying their lines. To get a ballpark estimate, the Class 1 railroads operate 92,000 route-miles; if 50% of that is dual trackage, that’s 138,000 track-miles to electrify. While not all costs would be as high as California’s, at $46 million per mile, that works out to $6.35 trillion. If any reader can provide a better estimate, I’ll be glad to publish it.
Ferrovial Listed on NASDAQ
One of the world’s leading infrastructure developers, Spain-based Ferrovial, on May 9 began trading on the NASDAQ exchange based in New York. A letter from CEO Ignacio Madridejos noted that “more than 80% of Ferrovial’s equity value comes from its North American operations.” The company is also traded on stock exchanges in Spain and the Netherlands. Public Works Financing noted that in preparation for its U.S. listing, Ferrovial relocated its headquarters to the Netherlands in 2023. Ferrovial’s Cintra subsidiary operates express toll lane projects in North Carolina, Texas, and Virginia. Ferrovial is also an investor in the John. F. Kennedy International Airport’s new Terminal One project in New York.
Queensland Considering Major Highway Tunnel
Severe congestion on Gympie Road between Kedron and Carseldine in the northern suburbs of Brisbane could be alleviated by a tolled highway tunnel estimated to cost between $5.1 and $6.5 billion. The government is spending $213 million to finalize plans for the tunnel, reported World Highways last month.
Article Explores Growing Unaffordability of Housing
Urban geographer Joel Kotkin, drawing on the 20th edition of the Demographia International Housing Affordability Report, draws a connection between “anti-sprawl” land-use policies and very high housing costs in major metro areas in Australia and the United States. Provocatively titled “The Road to Neo-Feudalism,” the article was published in online publication Quillette. Highly recommended.
“Halfway Between Kyoto and 2050”
That’s the title of a 43-page policy paper from the Fraser Institute, a Canadian think tank. The author is Vaclav Smil, a professor emeritus at the University of Manitoba and author of numerous books and peer-reviewed policy papers. The subtitle of the paper—”Zero Carbon Is a Highly Unlikely Outcome” is backed up by extensive data from sources such as the International Energy Agency.
Transit Productivity Pre- and Post-Pandemic
My Reason colleague Marc Scribner testified before the House Subcommittee on Highways and Transit in June. His testimony assembled data on transit ridership (which is pretty familiar) and transit labor productivity, which is hardly ever discussed. He shows that not only has transit ridership not recovered from the pandemic but that transit productivity is now even more dismal than most of us realize. These findings are very important as transit agencies and external funders grapple with transit in a changed, post-pandemic world.
New Transportation Senior Fellow at Reason Foundation
I’m pleased to announce that James Moore, recently retired from a long teaching career at USC, and author or co-author of Reason transportation policy studies in the 1990s, has become a senior fellow at Reason Foundation. Jim received his B.S. and M.S. degrees in industrial engineering and urban planning at Northwestern University and his PhD in civil engineering from Stanford University. Jim is both a colleague and a long-time personal friend who hosted my book-tour presentation at USC for Rethinking America’s Highways.
“Procedural obstruction works so well under current environmental laws because it can gum up the works for what are already complex and capital-intensive endeavors. A permit delay or an injunction doesn’t seem impactful in isolation, but for a large infrastructure project, it can be devastating. With any delay, however seemingly small, contracts may expire and need to be renegotiated, or, much worse, the project could already be under way and all of the contractors may need to stop work (and prepare claims). A permit delay could completely change the economics and financing terms for a project as well: financial markets do not remain static while permitting lawsuits are resolved, and all lender term sheets have an expiration date. Even the uncertainty around an unresolved environmental permit or lawsuit can materially impact the economics of a complex infrastructure project.”
—Michael Bennon, “It’s Rush Hour for Lawsuits Over New York’s Congestion Pricing,” Public Works Financing, May 2024
“The original idea of the federal motor-fuel tax and Interstate highway system was that the new roads would be funded by the people using them. This approach incorporates fairness and proportionality, since those who get more use of the roads pay more for them. It is also self-limiting, since the revenue is stable year-over-year and represents a ceiling for what can be built. But we have abandoned those principles, first by allowing motor-fuel revenues to be spent on mass transit, and then by supplementing them with general funds for highways. Restoring that principle would mean limiting the role of federal funds—which is already mostly true, since state and local governments spend three to four times as much as the feds on highways and transit. Focusing only on maintaining and modernizing Interstates would accomplish that.”
—Kyle Wingfield, Georgia Public Policy Foundation, “A New Approach for Maintaining the Interstate System Is Needed,” June 12, 2024
“Two of the best alternatives for user-paid infrastructure are toll roads and variable-fee express lanes. States with fast-growing populations, including Georgia, Florida, and Texas, are embracing toll projects because they can’t wait for federal funding to expand traffic capacity. These highways shouldn’t be funded with infrastructure act money, and it just so happens that private capital is eager to invest in solid transportation projects. Booming cities such as Atlanta, Dallas, Nashville, and others must stay ahead on infrastructure or face congestion that reduces their quality of life, which eventually kills the boom.”
—Thomas Black, “Infrastructure Requires Money. Tolls Are the Way,” Bloomberg Opinion, June 13, 2024
“I did early empirical work on induced travel—trying to build a path econometric model—that sought to apportion what part of the almost inevitable increase in traffic years after a road improvement is due to truly new traffic . . . And in time, what new traffic is from the added population/employment growth that almost always follows major infrastructure investments, particularly in the suburbs/exurbs where most new traffic is added. While newly generated traffic attributable to faster, more-smoothly-flowing traffic occurs, this does get whittled down in time (all else being equal), yet some 5-10 years out (for the CA highway corridors I empirically studied) a good portion of the benefit of smoother, faster flows remained. . . . While I can see the value of a calculator to get a first-cut, rough-hewn estimate of impacts, what generated traffic in a specific location for a specific time period is so multi-layered, always complex, and often a convoluted set of relationships that pivoting off of empirical demand elasticities provides no better than a ballpark guesstimate—certainly not what decision-makers should hang their hats on when making major highway investments/expansion decisions.”
—Robert Cervero, Prof. Emeritus, City & Regional Planning, UC Berkeley, email to Robert Poole, May 9, 2024 (used with permission)