Surface Transportation News #142

Surface Transportation Innovations Newsletter

Surface Transportation News #142

Ballooning the Highway Trust Fund; Missouri seeks I-70 "Roadway to Tomorrow"

In this issue:

Ballooning the Highway Trust Fund

One day last month I was listening to “Marketplace” on NPR and heard a bizarre story. According to the reporter, the huge electronic signs in Times Square in New York are now “illegal billboards” that must be taken down. Why? Because Broadway and 7th Avenue are now defined by the Federal Highway Administration as “other principal arterials”-and that whole category of roadways was added to the “National Highway System” by Congress in the MAP-21 legislation. So anti-billboard provisions apply, etc.

My correspondence with FHWA quickly made it clear that “No part of the U.S. government is trying to illegalize or remove Times Square billboards.” But this story led me to dig into what Congress did, and why. This case is a prime example of how the Highway Trust Fund-originally created in 1956 to pay for building the Interstate highway system-has been bloated beyond recognition by Congress over the years, leading to its current dire straits in which spending commitments far outstrip highway user-tax revenues.

The overall federal-aid highway system-the routes eligible for federal highway grant funding-has expanded over the decades, due to lobbying by various highway groups, to a total of 1,077,777 route-miles (compared with just 47,182 route-miles of Interstates), handling nearly 85% of all vehicle miles of travel (VMT). Most of these route-miles are highways that existed before the Interstates and were long the responsibility of state DOTs, not the federal government.

Congress made a major change in the 1991 reauthorization bill, ISTEA. It created the National Highway System (NHS) as an expanded version of the Interstates, adding to their 47,182 route-miles “other principal arterials” deemed important for commerce, for military mobilization, as connectors to military installations, and as intermodal connectors. These routes would get higher priority for federal highway grants than the rest of the federal-aid system. Until recently, the NHS totaled 162,870 route-miles. (Incidentally, knowledgeable highway people told me that when it came to nominating highways to be included in NHS, state DOTs took two different approaches. Most used an expansive approach, to get as many additional miles as possible positioned for increased funding, but others used a narrow approach, not wanting to bear the additional costs that come with federal funding.)

In 2012, as part of MAP-21, Congress disregarded the previous selection criteria and basically decreed that all the remaining highways already categorized as “other principal arterials” would become part of NHS (although FHWA has some degree of discretion over the details, and has not finished the new designations). If all remaining OPAs are added, that would add another 61,424 route-miles to the NHS, expanding it nearly 38% to 224,300 route-miles.

What this would do is increasingly federalize critically important major arterials in U.S. metro areas, bringing them somewhat increased funding priority at the price of increased federal restrictions and controls. If Congress were serious about generating a long-term, fiscally sustainable reauthorization bill, one good first step would be to un-do the MAP-21 expansion of NHS. A much larger step would be to redefine the federal-aid system to include just the (reformed) NHS, giving back to the states the responsibility to pay for, manage, and maintain all the rest of their highways.

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Missouri Seeks I-70 “Road to Tomorrow”

Missouri DOT is struggling with major highway challenges and a dire funding outlook. Unless something significant changes, its contingency plan for 2017 calls for a triage approach under which only about 8,000 miles of primary highway will be assured of funding. Yet the state has a growing problem of deficient bridges and some of the nation’s oldest Interstate highways in real need of replacement.

I-70 in Missouri was the very first Interstate highway to begin construction after the program was authorized in 1956. Some of its original pavement dates back to the former U.S. 40 that was built in the 1920s, so its entire 200-mile length needs full-depth reconstruction, along with widening to handle its large and growing volume of heavy truck traffic. In a major four-state federally funded Corridors of the Future feasibility late last decade, the preferred alternative for the entire corridor between eastern Ohio and Kansas City was for I-70 widened to eight lanes, four of them as dedicated truck lanes, at a cost of about $24 billion. That cost is so far removed from current funding realities that the only way forward was found to be toll financing and delivery via long-term P3 concessions.

Alas, Missouri still lacks both a P3 enabling law and tolling authorization. Last fall Gov. Jay Nixon asked MoDOT for an updated plan for a toll-financed I-70 replacement, which the agency produced. So far no tolling or P3 legislation has materialized. But the July issue of Roads & Bridges reports a bill in the state House of Representatives that would combine a modest fuel tax increase with creation of a board to proceed with a toll-financed I-70 P3 concession.

Meanwhile, MoDOT in June released a call for innovative proposals from the private sector, suggesting that I-70 from Kansas City to St. Louis could be a “laboratory for construction of the next generation of highways” via innovation and technology. Stephen Miller, chairman of the Missouri Highways and Transportation Commission announced that “We’re open to any and all ideas,” and referred to the potential of automated vehicles, GPS systems, new construction materials, etc. MoDOT chief engineer Ed Hassinger has appointed a team of experts to evaluate ideas from the private sector, but stressed that proposals must include innovative funding in addition to innovations in traffic engineering, design, and construction. Preliminary ideas may be submitted via www.modot.org/road2tomorrow.

I doubt if there are any major alternatives to some kind of all-electronic toll revenue as the primary means of financing such a mega-project, but perhaps private-sector innovators will surprise me. Since dedicated truck lanes on I-70 would be the first in the nation (and already have the support of the state trucking association), one idea would be to build into the project the opportunity for truck platooning on the dedicated truck lanes. That would likely strengthen trucking industry support, which could be critically important in getting tolling/P3 legislation enacted for the project. So would a commitment to the kind of customer-friendly tolling policies laid out last month in the Reason policy study “Truck-Friendly Tolls for 21st Century Interstates.”

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Connected Vehicles and Cybersecurity

In May Transportation Secretary Anthony Foxx announced that the federal government would be accelerating its efforts to mandate that new automobiles come equipped to communicate with one another. A regulation to that effect is to be submitted by the National Highway Traffic Safety Administration to the Office of Management & Budget for final review by the end of the year.

But last month Wired published an account in which “white hat” hackers described how they remotely used a Jeep Cherokee’s wireless UCONNECT system to take control of the vehicle from the driver and force it to stop. Shortly thereafter, Jeep producer Fiat Chrysler Automotive recalled 1.4 million vehicles to install some kind of a fix. The Wired hackers said they selected the Jeep because it is “among the most hackable” of current car models, but they also listed other highly vulnerable ones from Toyota, General Motors, Ford, BMW, and Range Rover.

It is the “connectedness” of the vehicles-at least in its current unencrypted format-that is the vulnerability. A minority of the many articles on connected vehicles that I’ve read over the last few years stressed the importance of cybersecurity, but far too many advocates either ignored or downplayed this concern. But that appears to be changing, at least within the auto industry. Several weeks before the Wired piece appeared, automakers representing 98% of US vehicle sales created a consortium called the Auto Information Sharing Advisory Center (ISAC) to share information on cybersecurity measures without violating antitrust laws.

Back in February, Sen. Ed Markey (D, MA) released a report called “Tracking & Hacking: Security & Privacy Gaps Put American Drivers at Risk.” His staff surveyed 20 major auto equipment suppliers about connected vehicle technologies, and their findings from the 16 that responded included the news that nearly 100% of current new vehicles offer wireless entry points that are at risk of hacking and that current security measures are “inconsistent and haphazard across all manufacturers.”

NHTSA’s current fast-track toward a connected-vehicle mandate seems ill-advised, not merely because of the lack of serious cybersecurity planning. In late April the Transportation Research Board published its review of the U.S. DOT’s draft plan to mandate the use of dedicated short-range communications (DSRC) technology in the 5.9 gigaherz (GHz) band for connected vehicles. The report noted a number of concerns, including (1) that devices and technologies that would use DSRC for vehicle to vehicle (V2V) communications are at too early a stage of development to render an assessment, (2) that proposed spectrum sharing in the 5.9 GHz band, and local area wi-fi technology, both pose interference risks with V2V communications, and (3) that a long list of unknowns must be resolved before proceeding with implementation, including “security and privacy considerations.”

Taken together, it looks to me as if NHTSA’s fast track needs a significant slow-down.

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Urban Highways Even Worse than Two Years Ago

In the November 2013 issue of this newsletter, I reviewed a startling report from The Road Information Program (TRIP) that quantified the damage caused to people’s motor vehicles by pot-holed urban roads. The roadway condition data come from FHWA, as reported to them each year by state DOTs. And the impact on vehicles is generated by a well-documented, widely-used Highway Development and Management Model (HDM). So these are credible results based on good data and sound methodology.

Late last month TRIP released a new set of numbers, documenting via newer data the poor condition of urban roadways, metro area by metro area, as well as the calculated average increase in per-vehicle operating cost (VOC) due to those rough pavements. (The VOC is a combination of out-of-pocket repair costs and increased depreciation due to greater wear and tear.) Alas, the numbers are even worse than those of two years ago. This time San Francisco displaces Los Angeles as having the worst urban roads, with 74% in poor condition and a VOC per driver of $1,044. Of the nation’s 10 worst metro areas, half are in California (the other three being Concord, San Jose, and San Diego). Rounding out this rogue’s gallery are Detroit, Cleveland, New York, Grand Rapids, and Honolulu. The latter has 51% poor-condition roads and a VOC of $777.

After cataloging the 25 worst large urban areas, the report goes on to the 25 worst mid-size urban areas. Flint, MI is tops on this list, with 54% of its roads in poor condition and a VOC of $839. Reno is #7, with 46% poor roads and a VOC of $748. Down at #25 is Ann Arbor, MI, with just 26% of roads in poor condition and a VOC of $571. It’s sobering to see that even with only about one-quarter of its roads in bad shape, the annual cost to drivers still exceeds $500.

State DOTs will cry poor-mouth, but the finger should be pointed primarily at state legislators, who have a built-in bias against making highway maintenance a priority. They get more political mileage out of directing funding to more-visible projects in their districts. One California legislator wrote a strong dissent to this tendency, in an op-ed in the Los Angeles Times on July 17th. Assemblyman Jay Obernolte (R, Hesperia) called out his colleagues for two decisions that short-change highway maintenance. First, 100% of the sales tax on diesel fuel (paid largely by truckers) is spent on public transit ($620 million a year). And another heavily truck-oriented tax (the truck weight fee) that generates about $1 billion per year was diverted to the general fund during the recession. This also means truckers-and consumers-are being charged for things that have nothing to do with their use of the roads.

Highway users should hold legislators to account for such policies that lead to rough roads and significantly higher costs of driving.

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New Findings on Millennials and Driving

Do Millennials (AKA Generation Y, born between 1977 and 1994) really reject driving, car ownership, and suburbia and mostly want to live downtown and use alternative means of transportation? This has been the theme of countless media anecdotes in recent years, as well as studies by anti-auto and anti-highway interest groups. I’ve been skeptical all along, and new evidence has been assembled recently in support of that skepticism.

The most important is a PhD dissertation from the UCLA School of Urban Planning. In “Stalled on the Road to Adulthood? Analyzing the Nature of Recent Travel Changes for Young Adults in America, 1995 to 2009,” Kelcie Mechelle Ralph reports on three years of research on traveldata and macroeconomic trends. Her overall conclusion is that changes in travel demand due to telecommuting and lifestyle choices of those Millennials opting to live downtown are not statistically significant. “We’re back to the normal historical patterns,” she told Public Works Financing (June 2015). The reported reduction in driving by Millennials between 2000 and 2010 can be explained mainly by the steep fall-off in travel by only a segment of that generation. “It’s all about whether you’re working or not working,” she concludes. Ralph adds that she expects data from the forthcoming 2015 national travel survey will confirm her findings. (The dissertation is online at www.kelcieralph.org.)

A second piece of evidence appears in a new survey by Associated Press-GfK, reported by Joan Lowy and Emily Swanson in July. As part of its findings on Americans’ housing and travel preferences, the survey found that “Contrary to the widely held notion that the millennial generation is flocking to cities and giving up their cars, younger people are not significantly more or less likely than older people to prefer urban living with a shorter commute and access to public transit, the poll found.”

Also of note is a global survey report from 2014 by Deloitte, titled “The Changing Nature of Mobility.” (The Deloitte Review, Issue 15, 2014) Its focus was to examine consumer behavior and preferences regarding auto ownership in a number of countries, comparing the attitudes of Gen. Y with those of Baby Boomers and Gen. X. For the United States, where Gen. Y constitutes nearly 80 million people (more than one-fourth of the population), the survey found that 80% of Millennials plan to purchase a vehicle within the next five years (compared with 83% of other generations). But given the economics facing this generation in recent years, affordability and operating costs are the major factors affecting their purchase decisions. As for autonomous vehicles, the results found that most consumers, including Gen. Y, were much more comfortable with basic levels of automation than with self-driving cars. In this respect, Gen. Y respondents were quite similar to the other generations.

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Upcoming Transportation Events

Note: I don’t have the time or the space to list all transportation events that might be of interest to readers of this newsletter. Listed here are events at which a Reason Foundation transportation researcher is speaking or moderating.

How Technology Will Transform Transportation (TRF-YPT-WTS Joint Event at Reason Foundation), Aug. 12, 2015, Reason Foundation DC Office, Washington, DC (Baruch Feigenbaum moderating). Details at: https://my.yptransportation.org/civicrm/event/info?reset=1&id=226

Managed Lanes and P3 Concessions: A Good Fit? Aug. 13, 2015, a free Webinar sponsored by the ARTBA P3 Division (Robert Poole speaking). Details at: www.artba.org/shop/webinars/managed-lanes-P3-concessions.

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News Notes

U.S. VMT Reaches All-Time High. FHWA has released data on vehicle miles of travel for May 2015 and for the first five months of the year. The five-month total is 1.26 trillion miles, the highest-ever total for the first five months of a year. This number compares with the previous high-1.23 trillion-for that period in 2007, prior to the Great Recession. May 2015 also set an all-time high of 262.1 billion miles, 3.4% higher than May 2014.

Seattle Tunnelling to Resume in November. The huge tunnel boring machine nicknamed Bertha is nearing completion of repairs (including a new main bearing) and is scheduled to resume tunneling in December, excavating the tunnel that will replace the elevated Alaskan Way Viaduct in downtown Seattle. Assuming that schedule is met, Seattle Tunnel Partners set a new opening date for the SR 99 tunnel of November 2018.

Kentucky Joins E-ZPass Network. The 15-state collaboration that provides interoperable electronic tolling in the Northeast and Midwest now has its 16th member. The Kentucky Transportation Infrastructure Authority late last month approved the move, which was prompted by the $2.3 billion Ohio River Bridges Project that is constructing two new toll bridges across the Ohio River between Louisville, KY and southern Indiana. The new bridges will have no toll booths, relying on all-electronic tolling (AET). The E-ZPass transponders provided by Kapsch TrafficCom will enable customers to pay tolls electronically in all 16 E-ZPass states.

Puerto Rico Default Spurs Talk of Jones Act Reform. With one bond default already a fact, and others likely in the near future, Congress is being urged to permit the Commonwealth and its sub-units to engage in bankruptcy proceedings like those available to municipal governments in the 50 states. To further ease the Commonwealth’s plight, others are urging that it be exempted from the provisions of the 1920 Jones Act, which requires all ocean shipping between U.S. ports to be carried out on U.S.-produced, U.S.-owned, and U.S.-crewed vessels. A recent paper by three economists, led by former World Bank chief economist Anne Krueger of Johns Hopkins University, urged such an exemption, which was editorially endorsed by the New York Times. A 1990s attempt to reform the Jones Act went nowhere.

Will Greece Finally Privatize Its Ports?. Under serious pressure from its international creditors, the government of Greece has agreed, in principle, to large-scale privatization of government assets and infrastructure. A leading test case will be the current competition for a 51% stake in the Piraeus Port Authority, for which three global firms are bidding. One of the bidders, Cosco Pacific, holds a 35-year concession for two of the port’s container berths, which it has transformed into one of the top 10 European container hubs. But the Union of Port Workers, which condemns privatization as “incomprehensible and criminal,” is using strikes and protests in an effort to halt the process.

Highway Trust Fund Bailouts Reach New High. A tally by Eno Transportation Weekly of the amount of general fund bailouts of the federal Highway Trust Fund shows the new total, as of July 30th, has reached $73.3 billion. The transfers began in 2008, when Congress refused to reduce spending to match the reduced highway user tax revenues that had begun declining due in part to the Great Recession. The latest $8.07 billion is the amount passed by the House in July to keep the HTF solvent through this fall.

SunPass Going Interoperable Across Southeast. Having already achieved interoperability with tolling in Georgia and North Carolina, Florida’s electronic tolling system, SunPass, is in testing with South Carolina to add that state to its network, and is expecting to achieve interoperability with Texas and Alabama next year. These developments were announced by Florida Turnpike CEO Diane Gutierrez-Scaccetti during a three-day conference of the International Bridge, Tunnel & Turnpike Association last month in Miami. She also noted that with so many Canadians spending the winter in Florida, SunPass transponders are now on sale at the Thousand Islands Bridge border crossing linking southeastern Canada to upstate New York.

Better News on DOT Size & Weight Findings. The Coalition for Transportation Productivity, a group of some 200 shippers and other associations, is highlighting an important finding of the U.S. DOT’s recently completed study of truck size and weight issues. It found that allowing heavier trucks supported by six (rather than the current five) axles would shift less than 1% of freight from rail to truck. That is a tiny fraction of the huge freight market, which in any event is projected by DOT to increase 45% by 2040. But the increased freight carried per truck would reduce the number of trucks needed for a given volume of freight, as well as the reducing truck emissions.

“Low-Income” Vouchers for Replacing Gas Guzzlers in Los Angeles. The South Coast Air Quality Management District’s “Replace Your Ride” program is offering vouchers worth $2,500 to $9,500 to enable “low and moderate-income shoppers from disadvantaged communities” to scrap their gas-guzzlers for hybrids and electric cars. But as the San Gabriel Valley Tribune discovered when reading the fine print, the definition of “disadvantaged communities” includes nearly every ZIP code in the four-county region, including Arcadia, Beverly Hills, Diamond Bar, La Canada Flintridge, and Rancho Palos Verdes. Not to worry, though: tony San Marino is excluded.

User Revenue Pilots in Senate Reauthorization Bill. The Senate’s six-year (but only three-year-funded) DRIVE Act includes provisions for further research on user-based funding mechanisms that could be used in the future for the Highway Trust Fund (and, of course, for state highway funding). Sec. 2004, “Researching Surface Transportation Funding Alternatives,” would allocate research funding to “demonstrate and test” user-based alternative revenue mechanisms, including field trials by states or groups of states.

Texas Central Raises $75 Million for Passenger Rail Project. A group of individual investors have invested $75 million in a company called Texas Central Partners, whose aim is to develop the planned $10 billion Texas Central Railway between Dallas and Houston. TCP also announced that Tim Keith of Dallas has been hired as its CEO, responsible for the finance, development, construction, and operation of the rail line. Keith was formerly CEO of RREEF/Deutsche Bank Infrastructure Investments.

UK Announces New Road Fund. The recently elected Conservative government last month announced a new Road Investment Strategy aimed at increasing the country’s economic productivity via improved highway infrastructure. It will channel all proceeds from the country’s Vehicle Excise Duty into a new Roads Fund. A $22 billion plan will add 1,300 new lane-miles and resurface 80% of the country’s most important highways. These projects will be paid for by the Roads Fund. This is a welcome return to Britain’s long-abandoned policy of users-pay/users-benefit in the highways sector.

Major Highway Concession in Queensland. The $1.2 billion concession for the Toowoomba Second Range Crossing, a 42 km. bypass highway in southeast Queensland, will be financed, developed and operated by winning bidder Nexus Group, a consortium of Plenary, Ferrovial/Cintra, and Acciona. Once the concession terms have been agreed and financing completed, construction could begin by the end of this year. Although the highway will be tolled, the concession agreement will be based on availability payments.

Preferred Bidder Selected for Dutch Sea Lock. The $886 million project to replace the Noordersluis lock, to increase the cargo capacity of the Port of Amsterdam, will be carried out via a long-term concession. On July 17th, the Dutch Ministry of Infrastructure announced the selection of a consortium of BAN International, DIF, and Volkerwessels as the preferred bidder for the project. The project is intended to be completed in 2019.

$4 Billion Bridge in Montreal. Under a 30-year availability-payment concession, SNC-Lavalin and ACS Group will design, finance, build, operate and maintain the new Champlain Bridge over the St. Lawrence Seaway in Montreal. Construction itself is estimated at $2.2 billion, with the balance of project cost accounted for by land acquisition, O&M, and financing costs.

Correction re I-405 Lanes. The article on managed lanes in last month’s issue mistakenly identified the new lane on I-405 through the Sepulveda Pass in Los Angeles as a HOT lane. In fact, that lane is an HOV lane. Years ago I commuted every day in that corridor, and I can only attribute this error to wishful thinking. Considerably more value would have been added had the new lanes in this horribly congested corridor been developed and operated as HOT-3 rather than HOV-2.

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Quotable Quotes

“If as a society we refuse to pay what it takes to keep up with highway demand, then at the very least we should manage that demand so that no highway or arterial is ever overloaded. Many areas use ramp metering but that is obviously ineffective. . . . But while controlling demand for road capacity by denying access to the roads might take us out of third-world status as far as congestion is concerned, it would be a totalitarian, Marxist solution, not an American capitalist one. The American way would be to treat our road system like a utility, the same way we treat electricity or water. . . . The concept of congestion pricing isn’t new, but it has typically been considered for only a few highways within a system or for higher-toll express lanes. In contrast, we can, and do meter every drop of water and every kilowatt-hour of electricity. It doesn’t make sense to put a price on some components of the system and give away the rest for free. The revenue generated by per-mile pricing could be used to both increase capacity and to maintain the highway system. This revenue-producing result of demand pricing isn’t merely a nice side effect; it is precisely how a utility works. Over time, drivers would pay the cost-no more and no less-for the facilities and capacity they consume.”
-Scott Lazenby, City Manager of Lake Oswego, OR, “Why We Should Pay for the Highway Miles We Use,” Governing, July 17, 2015

“Wishing to return to something that last predominated a half-century ago does not mean it will occur. Just as conservatives who hearken for a return to the ’50s are sure to be disappointed, urban advocates who suggest a ‘return to the city’ for middle-class families will be as well. Both minorities and millennials, often thought of as spearheading a ‘back to the city’ drive, are, according to most indicators, moving out to the suburbs as they enter their 30s and start families. Dense urbanity, of course, remains a huge contributor to the nation’s economy and culture. Urban centers are great places for the talented, the young, and childless affluent adults. But for most Americans, the central city offers at best a temporary lifestyle. It does not fit with what people can afford and where they want to live. There is a reason why 70 to 80 percent of Americans in our metropolitan areas live in suburbs, and those numbers are not likely to change appreciably in the coming decade.”
-Joel Kotkin, “What Jane Jacobs Got Wrong About Cities,” NewGeography.com, Aug. 2, 2015 (originally appeared at The Daily Beast)

“We know that today’s automation is not capable of handling all the situations that take place on the roads today, especially in crowded cities with erratic behavior and on badly maintained roads where lane markings are non-existent and even road boundaries are difficult to discern. The biggest hurdle facing full automation today is dealing with the unregulated, largely unpredictable behavior of other road users, coupled with the complexities of the transition, when we will have older, manually controlled cars along with semi-autonomous vehicles sharing the road with fully autonomous vehicles. Partial automation has its problems, the major one being the requirement that a human driver always be attentive, ready to take over when things go wrong. This is impractical: the better the automation, the less attention drivers will pay to the road, and even a one or two-second delay in regaining control is too long for safety and too short for most people to understand the situation, respond, and have the car behave appropriately. . . . I have long argued that we need to go slow with automation in the automobile. There were still too many unsolved problems. I have now changed my mind. Why? Because there are far more problems with the increasing number of distractions for drivers, too many new devices, too many new temptations. Imperfect driving is potentially more dangerous than imperfect automation.”
-Don Norman, UC San Diego, “Automated Cars or Distracted Drivers: We Need Automation Sooner, Not Later,” www.Linkedin.com , June 4, 2015

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Robert Poole is director of transportation policy and Searle Freedom Trust Transportation Fellow at Reason Foundation.