Surface Transportation News #173

In this issue:

• The potential of mileage based user fees
• Can states get to yes on Interstate tolling?
• The White House infrastructure plan, continued
• Third DOT AV guidelines will further deregulate
• Congestion is even worse than we thought
• Reforming the world’s costliest subway construction
• Book news
• Upcoming transportation events
• News notes
• Quotable quotes

The Potential of Mileage Based User Fees

“A Higher Gas Tax Won’t Fix America’s Highways.” That headline on a March 2^nd Bloomberg news story is correct, since per-gallon fuel taxes are increasingly unsustainable, due to ongoing changes in vehicle propulsion methods. That point was stressed in the 2018 Economic Report of the President, released late last month by the Council of Economic Advisers. “Innovations such as user fees for vehicle miles traveled—as are being pioneered in Oregon, for example—and highway tolls that vary with congestion can increase efficiency and raise needed revenues to pay for infrastructure improvements and additions to capacity,” the report said.

Transitioning from per-gallon to per-mile, however, will be a complicated endeavor. Public opinion surveys show little support for per-mile charging—in part because most people don’t understand it. Many think it would be an additional “tax” on driving and most also assume that it would require the government to keep track of when and where everyone drives. That’s why the growing number of state pilot programs, partly funded by federal grants, is critically important. Some general lessons from the pilot programs thus far are that:

• It’s important to offer motorists a choice of ways to pay;
• Participants always understand that the per-mile charge is instead of, not in addition to, the gas tax;
• Commercial vendors can handle communications and account management, keeping any detailed data out of the government’s hands.

Participation in a pilot program leads to far greater understanding of how mileage-based user fees would work, and participant surveys show high levels of satisfaction and generally a judgement that paying per mile is fair, including for rural residents who mostly drive gas-guzzling vehicles like pickup trucks.

Getting under way this year are pilot projects in a number of new states, as well as the first multi-state projects: one between California and Oregon and another encompassing a group of states along I-95 on the east coast. In addition, commercial trucks are being added to pilot projects, including the pilot being run by the I-95 Corridor Coalition.

Given how much is still to be learned, calls for Congress to launch a federal MBUF are very premature. That applies to a proposal earlier this month by well-meaning Rep. Sam Graves (R, MO), a contender to be the next chairman of the House Transportation & Infrastructure Committee after current chairman Rep. Billl Shuster (R, PA) retires at year-end. Graves proposed adding a “federal mileage tax” as an alternative to current calls for increasing federal gasoline and diesel taxes. In addition to being premature, imposing an additional federal “tax” on motorists and truckers could create a serious backlash against the MBUF concept.

In my view, the biggest challenge facing this needed transition is the idea that it should be a tax, rather than a user fee. Fuel taxes began as pure user taxes: highway users paid the tax, the money was set aside in dedicated highway funds, and the proceeds were spent to benefit those same highway users. That principle was pretty well adhered to for about 50 years, but since then has broken down. Both federal and state governments now spend fuel taxes on a wide array of public works projects, many of which produce little or no benefit to those who pay for them. And that, in turn, explains the vehement opposition to a federal “tax increase” right after Congress has given Americans a significant tax cut. (See recent statements by Speaker Paul Ryan, Americans for Prosperity, and any number of taxpayer groups.)

The single most important success factor to enable the needed transition from per-gallon to per-mile is to make MBUFs true highway user fees, not some new kind of tax. In designing the MBUF, we should try to solve all the problems with fuel taxes. One of those, of course, is the ongoing changes in vehicle propulsion. Another is that fuel taxes are not indexed for inflation. But the third is that, to most people, they are no longer user fees but taxes, pure and simple. And that means endless debates and battles over increasing them, when needed, to maintain high-quality roadways as travel grows and the cost of building and maintaining them increases.

We don’t fund our other vital infrastructure that way. We pay our electric bill directly to the electric company, based on how much we have used. We pay our natural gas bill the same way, and our water bill, and our cable/satellite bill, and our mobile phone bill. In all these vital utilities, we don’t have endless political battles over rate increases needed to add capacity to maintain high-quality service. Only the highway system is plagued by such battles—and that’s because highways are funded by a tax.

There are two paths we could go by. One path is to implement a “vehicle miles tax” whose purpose is to fund the vast array of over 100 federal surface transportation programs now encompassed by the Highway Trust Fund. The other is to implement “mileage-based user fees” that really are user fees, restoring the users-pay/users-benefit principle that is the basis of funding all our other public-purpose infrastructure. As Led Zeppelin sang, “There’s still time to change the road we’re on.”

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Can States Get to Yes on Interstate Tolling?

As was widely noted last month, the White House infrastructure plan calls for removing the long-standing federal ban on tolling Interstate highways. Assuming Congress goes along, discussions of this idea are under way in at least eight states. But in nearly every case, the idea is still seen as contentious and politically difficult. Here’s a quick snapshot.

• Connecticut: After several years of large-scale studies, Gov. Malloy and Democratic leaders want to enact tolling legislation, but there is stiff Republican opposition. One focal point is highly congested I-95 between Greenwich and New Haven.
• Wisconsin: Though Gov. Walker vetoed a follow-on tolling study approved by the legislature, Republican leaders are pushing for enactment of tolling legislation to take advantage of limited slots in a federal Interstate tolling pilot program, and have attracted some Democratic support. Gov. Walker has indicated he might support tolling, if offset by cuts in fuel taxes.
• Minnesota: A study called for by the legislature, released in January, estimated possible toll revenue along the most likely urban and rural corridors, mostly Interstates. Republican leaders appear cautiously open to the idea
• Missouri: The Transportation System Task Force report, released in January, suggested tolling major bridges and adding express toll lanes in congested corridors.
• Illinois: Concern over congestion on I-80 south of Chicago has led to serious discussions of the Illinois Tollway taking over that stretch of Interstate and using tolls to finance major capacity improvements.
• Utah: The legislature has approved and sent to the Governor a bill to allow electronic toll collection on any highway in the state.
• Colorado: An editorial in the Aurora Sentinel (Dec. 11, 2017) called for tolling all the state’s Interstates to pay for fixing and expanding them.

As reported here last August, Indiana is far and away in the lead, with a comprehensive plan being fleshed out for toll-financed reconstruction and widening of all the state’s Interstates. But even this plan has its weak spots. Gov. Holcomb currently opposes tolling on the urban Interstates around Indianapolis, and a bill by a Republican senator in January would have put such a ban into law. But it died in committee.

Opponents raise several concerns, all are which are plausible given the rhetoric being used by some tolling proponents. They are:

1. Toll roads as cash cows—using toll revenue for a wide array of transportation and sometimes non-transportation purposes.
2. Double taxation—charging both fuel taxes and tolls on the same highway.
3. Traffic diversion—high tolls leading to vehicles avoiding them and overloading parallel roadways.

All three are known phenomena in certain states, so those raising these concerns have examples they can point to. The question is: can highway users be protected from these problems by policy provisions included in tolling legislation?

Solving the cash cow problem is easiest. The legislation simply needs to dedicate all toll revenue to the capital and operating costs of the tolled corridors. A recent AAA poll in Connecticut found that 47% of motorists are already supportive of tolls, and that support would be even higher if the revenues went into a “lockbox” to be used only widening and modernizing the state’s aging Interstates. The double taxation problem is also solvable. Just as is being done in state mileage-based user fee pilot projects, those paying tolls can be given rebates on their state fuel taxes. Fuel tax rebates have long been offered on the Massachusetts Turnpike and the New York Thruway, and this is much easier to do with all-electronic tolling (AET). Traffic diversion will likely always exist to some extent, but traffic & revenue experts know that the higher the tolls, the greater the diversion. So tolls that are limited to paying solely for the tolled corridors will keep traffic diversion to a minimum.

These points are discussed in more depth in a new policy brief from Reason Foundation: “Can Interstate Tolling Be Politically Feasible? A Customer-Friendly Approach.” It discusses the above and other points, and also notes that the national board of AAA—the world’s largest highway user group—endorsed customer-friendly tolling policies several years ago. Reason Policy Brief: Value-added Tolling (pdf)

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The White House Infrastructure Plan, Continued

Since I previewed the White House infrastructure proposal last issue, several informative new publications have crossed my desk: one from US DOT, one from the Eno Center for Transportation, and a third from bond rating agency Standard & Poor’s. Anyone interested in understanding what has been proposed would benefit from perusing these documents.

Last month DOT Secretary Elaine Chao released a 68-page “booklet” called The President’s Initiative for Rebuilding Infrastructure in America. A more accurate title would have included the word “transportation” in the title, since that is what it addresses. It begins with a well-written explanation of the Administration’s assessment of the problem, the most important of which is “a misaligned federal role.” What began in 1956 as a user tax for the specific purpose of creating the Interstate highway system has evolved over time into an all-purpose transportation public works program that has “often become a substitute for state and local funds,” which DOT calls an “unhealthy dynamic.” I agree. It says a key aspect of the overall plan is to begin to “reestablish a clear federal role in infrastructure,” which will include giving states and municipalities flexibility and incentives for more-efficient infrastructure. This section also reminds the reader that “the federal gas tax is insufficient and unsustainable,” while also stressing the need to streamline and simplify federal review of proposed projects.

Part 2 summarizes the White House plan as it relates to transportation infrastructure, with an emphasis on leveraging private-sector investments via public-private partnerships (P3s), including long-term concessions. And it notes—contrary to some bad-mouthing—that P3s can sometimes be tailored to a batch of small projects, such as Pennsylvania’s $899 million P3 Rapid Bridge Replacement Project. I was pleasantly surprised to see two pages explaining Asset Recycling as one of the means states and municipalities could employ to raise new money for infrastructure via tapping the asset value of existing revenue-producing facilities via long-term P3 lease concessions. This was done very successfully in Australia in recent years, and in this country via the long-term leases of the Indiana Toll Road and the San Juan International Airport.

Part 2 also includes a good explanation of the proposed role of innovative financing, via expanding both the size and scope of the TIFIA loan program and private activity bonds (PABs) and making some changes to the tax law to enable wider use of PABs, including for asset recycling. But Part 2 lacks a good explanation of the leveraging power of these tools, and for that we turn to two recent pieces by Jeff Davis of Eno Transportation Weekly.

In a column for The Hill (February 28th) Davis asks and answers the question: “How does $200 billion [of new federal dollars] become $1 trillion or $1.5 trillion?” And the answer is, leverage. Some $14 billion in the plan is allocated to expanding TIFIA, RRIF, WIFIA, and RUS, each of which provides low-interest loans for qualifying infrastructure projects in various sectors. In the case of TIFIA, at least, there are solid taxpayer protections such as a requirement that the project’s primary financing receive investment-grade ratings from two rating agencies. Davis explains that under the Federal Credit Reform Act of 1990, those loans are scored at the “subsidy cost” of the loan—in TIFIA’s case, 6.3%. So each dollar of credit subsidy yields nearly $16 in loan potential. Since TIFIA loans usually cover no more than 1/3 of a project’s cost, 16 times 3 equals a 48 to 1 leverage ratio. So in principle, the $14 billion in subsidy funding for the four loan programs could leverage something close to $700 billion in projects. And that could be mostly or entirely private capital—equity and PABs, for which either user-fee revenues or availability payments would provide the revenue stream to service the debt and provide a return on equity.

In this piece, and in a more-detailed article in Eno Transportation Weekly, Davis dings a recent Penn-Wharton analysis that missed the point about leverage and concluded that the entire 10-year program would yield little more investment than the promised $200 billion in new federal spending. In this article Davis shows the leverage in action via TIFIA loans actually made from 1999 through 2017, using $1.9 billion in budget authority to deliver $28.75 billion in loans for transportation projects. And those loans helped to finance $108 billion worth of projects. $108 billion resulting from $1.9 billion in budget authority is a leverage ratio of 57 to 1—not too shabby.

Finally, what does S&P have to say about the White House Plan? In a piece titled “President Trump’s Infrastructure Plan: A Substantive Shift to Private-Sector Funding,” S&P dubs the plan a worthwhile effort to “push state and local governments to innovate and explore new funding approaches.” It also “subtly pushes investment decisions to take full account of lifecycle costs.” And it “explicitly opens up avenues for revenue-generating projects to be self-supporting—for example, encouraging states to explore [both] tolling and commercializing rest areas on Interstate highways.”

S&P poses several good questions, including whether the many needed legislative changes can gain support in Congress, though it fails to note the building blocks put in place by the Obama Administration—including a detailed Treasury report on the potential of P3 infrastructure and the creation of the Build America Bureau within DOT to facilitate innovative finance and increased use of P3s. S&P’s final question goes to the heart of the matter: “Is America ready to pay [more] to use its public assets?” It goes on to say that “At its very essence, the plan forces into the political debate a conversation about who will support new infrastructure, with massive federal funding no longer on the table.” And “S&P Global Ratings sees an inevitable need for Americans to accept paying more to use the nation’s infrastructure.”

I concur. But in exchange, Americans need to demand institutional structures that treat those who pay as customers rather than as “users,” and are accountable to those customers for first-rate facilities, properly maintained and efficiently run. In far too many cases, that is not what the “users” are getting today.

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Third DOT AV Guidelines Will Further Deregulate
By Baruch Feigenbaum

One of the Trump Administration’s main policy goals for all cabinet departments is deregulation. And while the emerging “Automated Vehicles 3.0” sets new policy, its impact on regulation might be more important.

To encourage adoption of automated vehicles, the Department of Transportation (USDOT) is writing its third version of automated vehicle guidance, creatively called “Automated Vehicles 3.0.” Version 1.0 was drafted in the last year of the Obama Administration, and version 2.0 was drafted by the Trump Administration during spring and summer 2017. While Version 1.0 had a light regulatory touch for a Democratic administration, it was still problematic. Most notably, it required a mandatory (not optional as the guidelines implied) 15-point safety assessment and indicated that the administration might move towards a European style of pre-certification. (For more than 50 years, automakers have engineered vehicles to meet federal rules for car design and performance. Regulators enforce vehicle standards once those cars are sold to customers. Changing the policy would lead to technological delays and could lead to higher prices). Version 1.0 also applied to Level 2 or higher automated vehicles (AVs) on the Society of Automotive Engineers (SAE) scale. Many experts thought that Level 2 vehicles should have been exempt.

Version 2.0 eliminated the threat of moving towards the European style of certification; it also made the safety assessment optional. The guidance decreased the number of steps in the safety assessment from 15 to 12, and the assessment would apply to Level 3 or higher AVs. It also more clearly delineates federal and state roles. Specifying the roles is helpful, since groups including the American Association of Motor Vehicle Administrators (AAMVA) have asked for more guidance. According to Version 2.0., the federal government sets Federal Motor Vehicle safety standards; enforces compliance with set standards; manages recalls; and educates the public about motor vehicle safety. The states license drivers; regulate motor vehicles and insurance; and enforce traffic laws. Issues will arise as technology advances. For example, somebody could drive a car in Georgia while being physically located in Alabama. If the car gets in a crash, which state’s laws apply? Still, such regulations are a good start. Version 2.0 also provided detailed best practices for legislators and departments of transportation. They recommended providing a technologically neutral environment and reviewing traffic laws that are a barrier to AVs.

USDOT is currently working on Version 3.0, which is scheduled for release in late summer. DOT Secretary Elaine Chao identified six department-wide principles that will guide USDOT’s work on Version 3.0:

1. Safety is a top priority;
2. Policies will be flexible and tech-neutral;
3. Regulations will be performance-based and not prescriptive;
4. Federal and state agencies will work together to avoid a patchwork of regulations;
5. USDOT will support stakeholders through guidance and pilot programs; and,
6. USDOT recognizes that there will be a mixed fleet of AVs and human-driven vehicles for the foreseeable future.

The Federal Highway Administration (FHWA), Federal Transit Administration (FTA) and National Highway Traffic Safety Administration (NHTSA) have already submitted comments. During its March 1^st summit, USDOT encouraged comments by the public.

While details are limited, Version 3.0 will likely include many of the polices in Version 2.0, including the optional vehicle safety assessment and the regulatory role of NHTSA. Among the minor changes, 3.0 will address AVs in all modes, including cars, trucks and buses. During the March 1^st summit, an entire session was focused on having all entities (highway, transit, railroad, maritime, etc.) discussing their work in automation. Previous guidance has been limited to cars. Additionally, the guidance will move the agency from oversight to actual implementation. For example, FTA will be working with transit agencies to identify barriers to integrating automated technology. Previous research has indicated technical challenges such as automating buses operating in rain and snow as well as policy challenges such as those posed by transit unions.

What will be different is a discussion of unnecessary regulatory barriers affecting the design, construction, and performance of AVs. One such policy is prioritizing the use of existing infrastructure, including lane markings and street signs. Another is revising Federal Motor Carrier Safety Administration (FCMSA) laws that apply to a human in the driver’s seat such as driver hours of service. The FTA has created the Strategic Transit Automation Research (STAR) plan to determine the hurdles for automated buses. Finally, regulations such as the Texas statute that considers someone sitting in the driver’s seat of a car–with the engine turned off and in a garage–to be guilty of driving under the influence will need to be changed.

The Obama Administration’s approach provided limited regulation of AVs. The Trump Administration’s AV 2.0 document reversed some of those regulations and set a more cooperative federal/state relationship. The main focus of the AV 3.0 document will be eliminating unnecessary regulations. In less than two years, DOT has gone from regulating AVs in the name of safety to eliminating regulations in the name of economics, a major change.

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Congestion Is Even Worse than We Thought

Big data analytics firm INRIX last month released its 2017 Global Traffic Scorecard, which measures roadway congestion in 1,360 cities in 38 countries. The data are derived from data collected from millions of drivers that use INRIX traffic services, while driving on 5 million miles of road. The results are very sobering.

On a global basis, the United States has 5 of the world’s 10 most-congested metro areas, with Los Angeles in first place worldwide based on the number of hours drivers spend each year in congestion, with New York (#3), San Francisco (#5), Atlanta (#8), and Miami (#10). The non-US cities in the top 10 are Moscow, Sao Paulo, Bogota, London, and Paris.

But what surprised me most was the cost-of-congestion figures in this report on traffic in 2017. For many years I relied on the Texas A&M Transportation Institute’s widely-read Urban Mobility Scorecard, produced in recent years in cooperation with INRIX. The most recent (and apparently the last) of these was their 2015 edition, with US congestion data for 2014. The much-cited estimate for the direct cost of congestion nationwide in 2014 was $160 billion (which measures only wasted time and fuel). In its new report, INRIX reports the total cost for 2017 as $305 billion. That is reported as direct cost plus indirect costs—but the indirect costs are only 13% of the total. So the comparable 2017 direct cost total would be $265 billion. I don’t believe for a minute that congestion’s direct cost jumped by 66% in three years. Rather, I think IRIX’s data has gotten a lot better, so we can honestly say that the US total direct cost is between $250 and $300 billion. And since economists estimate the true cost to a national economy as double the direct (driver time + fuel) cost, the staggering total annual economic cost could be $500-600 billion.

Here are the key metrics for the top-10 US metro areas, per INRIX’s 2017 data.

Metro	Peak Hours Congested	Total Cost/Driver	Total Metro Area Cost ($Billions)
Los Angeles	102	$2,828	$19.2
New York	91	2,982	33.7
San Francisco	79	2,250	10.6
Atlanta	70	2,212	7.1
Miami	64	2,072	6.3
Washington	63	2,060	6.1
Boston	60	2,086	5.7
Chicago	57	1,994	5.5
Seattle	54	1,853	5.0
Dallas	54	1,674	4.9

This is a pretty dismaying picture, and it underscores the need for more variably priced express toll lanes, and ultimately for modest peak-hour pricing on the regular lanes.

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Reforming the World’s Costliest Subway Construction
By Baruch Feigenbaum

Relatively few U.S. regions have the population density and urban spatial structure to justify heavy-rail projects. One such region is New York City. As commuting patterns change and population increases, the city has a need for several new subway lines.

Unfortunately, New York infrastructure is prohibitively expensive. The 2^nd Avenue Subway is the most expensive rail project (per mile) ever built anywhere in the world, costing $807 million per track mile. One station alone cost $1 billion. The No. 7 line expansion cost $2.1 billion for a 1.5-mile extension from Times Square to a Hudson Yards Station near the Javits Center on the Far West Side. This project was planned to have an intermediate stop that was cancelled due to high costs. Until the region can get a handle on the high capital costs for construction, building new projects will be infeasible.

Thankfully, the highly respected Regional Plan Association of New York has released a new report: “Building Rail Transit Projects Better for Less.” As one of the best reports that I have read on transit construction, I highly recommend it to anyone interested in building or evaluating rail projects.

In 2016, New York City overtook Zürich as the most expensive place in the world to build public or private buildings. New York’s high costs are often justified as a result of the densities and complexities of the surface neighborhoods. Yet a closer look at the costs shows that mismanagement is a bigger problem. The budget of the 2^nd Avenue Subway project increased from $6.3 billion to $10.2 billion in less than 10 years. Yet hardly any of this increase was related to the commercial district at street level.

So what is the problem? Simply put, high costs and delays are embedded in every aspect of MTA project delivery:

• Project budgets and timelines are developed as much by politicians as professional staff. As a result, projects are subject to avoidable project delays, an excessive number of change orders, and cost overruns.
• U.S. environmental reviews take far longer than in other developed countries. MTA exacerbates this problem by protecting service and neighborhoods at the expense of project time and costs. These delays need to be weighed against the economic benefits that are deferred or reduced.
• MTA engages local communities in public review at the wrong time. It relies on tightly controlled hearings instead of listening to local concerns. Lawsuits could be avoided if the agency actually sought out and listened to community concerns.
• New York’s insurance costs are the highest in the country, in part due to the 1885 scaffold law, which imposes liability on a property owner or construction employer in case of a work-related fall. The Rockefeller Institute notes that the law increases construction costs by 7%.
• Flawed project designs result in numerous change orders.  The “constructability” of the design is seldom considered by the design contractor.
• Project management is cumbersome. The lack of vertical integration between the divisions that coordinate planning, approvals and operations leads to a fractured process for project design and implementation.
• The MTA typically awards each project phase to a separate consulting company, when awarding all of the steps to one company would be more efficient. It also selects the construction firm submitting the lowest initial cost, rather than the one providing best value. A majority of transportation agencies now use the design-build method for major projects, in which a single team both designs and constructs the project.
• Lack of post-project reviews impedes improvement. Transit agencies in Los Angeles, Madrid and London review and evaluate their completed megaprojects. These publicly available documents use lessons learned to guide future projects.
• Out-of-date work rules lead to excessive staffing and unproductive work time. Union work rules have failed to keep up with technical advances. Far fewer employers are employed in similar projects in Europe, particularly tunneling projects. These work rules have impeded the use of new technologies and inflated costs.

Fortunately, there are ways to reform and improve the system. Governance reform is the biggest need. Comparable major cities are building similar projects for less than half of New York City’s costs. While certain costs may be outside MTA’s control, a comprehensive set of reforms should reduce rail construction costs by 25-33%:

• Make construction costs a top priority of environmental review. MTA should seek an independent analysis that weighs the potential costs and disruptions for communities against the benefits of a lower-cost project.
• Rationalize the environmental review timeline. U.S. agencies should examine and consider European practices. By separating outreach and preliminary engineering from the environmental review European sponsors complete reviews in 18-24 months compared to the 7-year U.S. average.
• Engage the public in substantive discussions. Early and sustained outreach with a focus on community education, not public relations spin, is more likely to lead to thoughtful community engagement and suggestions to modify the project.
• Move to a ten-year pipeline for megaprojects. Such a timeframe would require sufficient revenue for operating and long-term capital projects as well as reassure the public of a project’s viability.
• Adopt London’s project delivery model of using an independent Special Purpose Delivery Vehicle. The temporary organization’s one purpose is to construct the project. The MTA, city and state would each be involved in the process. Land use and utility relocation would benefit from being managed by the city. In a nutshell, the SPDV is a type of public-public delivery model in which each agency oversees the part of the process it knows best.
• Maximize the land-use development of transportation investments. Future projects should use tax increment financing to partially fund the project and take advantage of the value captured through redevelopment. The 7 line extension on the West Side is a model.
• Rethink labor rules. Start overtime pay once a minimum 40-hour workweek has been met. Currently, overtime is paid for any work outside the normal 9-5 workday. In construction most work is outside 9-5 hours.
• Reduce the number of workers staffing tunnel boring machines. International practice is 9-15 workers. New York’s practice is 20-25.

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Book News

I’m pleased to report that my book, Rethinking America’s Highways, will be published this June by the University of Chicago Press. It’s already listed on Amazon for pre-order, and a Kindle edition will become available once the physical book is released. The book’s 12 chapters build my case for gradually converting our major highways to a kind of network utility, to solve a host of institutional problems that plague the current system. The book draws upon my three decades of work in transportation policy, and many of the ideas have been discussed in bits and pieces in this newsletter over the last 15+ years. The book pulls them together into a coherent whole.

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Upcoming Transportation Events

Note: We don’t have the time or 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.

Can Congestion Pricing Improve Mobility? California State University, March 20, 2018, San Bernardino, CA (Baruch Feigenbaum speaking). Details at: https://csusb.edu/leonard-transportation-center/conversations/events

The Future of Infrastructure Policy Under the Trump Administration, American Enterprise Institute, March 22, 2018, Washington, DC (Robert Poole speaking). Details at: www.aei.org/events

58^th Annual Transportation Research Forum, University of Minnesota, April 10-11, 2018, Minneapolis, MN (Baruch Feigenbaum speaking). Details at: https://trforum.org/18-annual-forum

IBTTA Managed Lanes, AET, and Technology Summit, Sheraton Charlotte, April 22-24, 2018 (Adrian Moore speaking). Details at: https://ibtta.org/events/managed-lanes-aet-technology-summit

Princeton Smart Driving Car Summit, Princeton, NJ, May 16-17, 2018, Princeton University (Baruch Feigenbaum speaking). Details at http://summit.smartdrivingcar.com

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News Notes

Audi Offers Nationwide Toll Transponder. One of the first carmakers to make use of Transcore’s go-anywhere toll transponder is Audi, which is installing a high-end rear-view mirror from Gentex Corporation that includes the new transponder. The transponder is compatible with all electronic tolling systems nationwide.

New Studies Find Uber and Lyft Add to Urban Congestion. A widely circulated AP article by Steve LeBlanc reports on several recent studies that show ride-hailing companies are diverting customers from transit systems. A study in Boston found that nearly 60% of ride-hailing customers would have used transit or walked, biked, or skipped the trip had the ride-hailing service not been available. Similar results have been found in Chicago, Los Angeles, San Francisco, Seattle, and Washington, DC. These results are for Uber and Lyft prices that include the cost of a human driver. When driverless robo-taxis are in service, the prices are expected to be significantly lower, which bodes poorly for mass transit

Electric Car Subsidies for the Wealthy. In a new report from the Pacific Research Institute, Wayne Winegarden crunched the numbers on federal, state, and local electric vehicle subsidies—including for vehicle production, purchase by consumers, and charging stations. He found that 79% of vehicle purchase tax credits went to households with adjusted gross income over $100,000 per year. And households with incomes of $50,000 or more accounted for 99% of the credits. The report is “Costly Subsidies for the Rich.”

Bestpass Toll Transponders in 400,000 Trucks. Trucking companies that use toll roads have been snapping up nationwide transponders from Bestpass, a company that provides toll account management and consolidated billing for trucking companies across the country. The number of Bestpass toll transponders has doubled over the past two years, according to a March 8, 2018 news release from the company. Bestpass also provides transponder-based weigh station bypass service.

Northeast Maglev Admits Need for Subsidies. The last few months have seen many news stories about a proposed high-speed maglev train between Washington, DC and Baltimore, billed as the first leg of a route all the way to New York City. At a cost of $15 billion, the question is whether this first leg has any likelihood of being a commercial proposition. Maryland DOT Secretary Pete Rahn has insisted that the state won’t put any tax money into the system. But a February 24^th Washington Post article revealed that Northeast Maglev “would seek federal loans or grants for the project.” Since there would be little actual collateral for a federal loan, that amounts to a call for federal taxpayers to subsidize the project.

Norway’s National Transportation Plan Based on P3 Investment. Inspiratia Infrastructure reports that the $118 billion National Transportation Plan approved by the Norwegian government in 2017 calls for most of the plan’s road, rail, and sea projects to be developed as long-term P3 projects between 2018 and 2029. Government investment is planned as a mere $3 billion.

Asset Recycling in Greece and India. As part of its fiscal restructuring, the Greek government is planning to lease the Egnatia Odos motorway for 40 years. The winning bidder will operate, maintain and improve the 658 km tolled motorway, keeping the toll revenue. Expressions of interest were received from nine potential bidders in February, including Macquarie, Roadis, and Vinci. India is also recycling existing toll roads, with a set of nine offered to qualified bidders last fall. As of February, the field was down to four finalists: Brookfield, IRB, Macquarie, and Roadis. India’s transport minister Nitin Gadkari said that as many as 105 road projects will be auctioned, as part of the government’s asset recycling program.

Maine Legislators Reject Fees on Hybrids and Electric Vehicles. A bill that would have required alternative-fuel vehicles to pay their share of highway costs was defeated in the House transportation committee on a 6-5 vote, with Democrats opposing and Republicans favoring the measure. The annual fee would have been $150 for hybrid (gas-electric) cars and $250 for all-electric vehicles.

Bids in for Sydney’s West Connex P3 Project. At least three bids were received late in February for the $6.3 billion West Connex project that is under construction as a critical link in Sydney’s toll motorway system. The main contenders were reported by Inframation to be consortia led by Transurban, Cintra/Plenary, and IFM Investors. The entity being auctioned is called Sydney Motorways Corporation.

Georgia DOT Studying Truck-Only Lane on I-75. FleetOwner reports that Georgia DOT is studying the feasibility of a plan proposed several year ago to add a northbound truck-only lane to the I-75 corridor between Macon and Atlanta, a major truck route. The cost is estimated at $1.8 billion, and the initial concept did not call for tolls to be charged, despite the large cost and the time-saving benefits to trucks using the new lane. It would also lend itself to truck platooning.

Autonomous Cars Are About to Transform the Suburbs. That is the title of a fascinating piece on Forbes.com by geographer Joel Kotkin of Chapman University and Alan Berger, an urban design expert at MIT. While they expect long-term migration trends to suburbs to continue, they also expect that AVs will lead to the development of “smart suburbs” with important changes in land-use and business location. (https://www.forbes.com/sites/joelkotkin/2018/02/21/autonomous-cars-are-about-to-transform-the-suburbs)

Atlantia Buys 15.5% of the Channel Tunnel. Italy’s largest private transportation infrastructure company, Atlantia, has purchased 15.5% of Channel tunnel operator Getlink. Atlantia paid $1.2 billion for the stake. Atlantia owns major toll roads and airports in Italy, and is making selective infrastructure investments in other countries.

Self-Driving Trucks’ Benefits for Truckers. Alexis Madrigal penned a thoughtful piece for The Atlantic, “Could Self-Driving Trucks Be Good for Truckers?” She quotes a number of experts pointing out that autonomy will be introduced gradually, likely over several decades; that driver turnover is a big industry problem; that partial automation can make driving less stressful for drivers; and that even with full automation, a human will still be needed at either end of the trip and in case of breakdowns en-route. The article is well worth reading.

Iceland Opens 5-Mile Highway Tunnel. A 2-lane tunnel between Neskaupstadur and Eskifjordur, Iceland, opened to traffic in January. The $146 million tunnel provides an alternative to a mountain road that was often closed during winter storms and replaces a single-lane tunnel.

$19.7 Billion Megatunnel Proposed for Baltic Sea. A feasibility study of a railroad tunnel to link Finland and Estonia estimated the cost at $19.7 billion. If built, it would carry both passenger and freight trains, like the Channel Tunnel between the U.K. and France. The study report recommended a P3 procurement, with 40% equity from EU grants and the rest privately financed under a 40-year concession. It would decrease the existing travel time between Helsinki and Talinn from two hours to just 30 minutes.

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Quotable Quotes

“Drivers paying for roads is common practice around the world. In many of the largest economies, such as China, Japan, France, and India, the majority of the motorways have tolls. Alternatively, charges based on vehicle miles traveled (VMT) are in place for trucks in Germany, Switzerland, Austria, and the Czech Republic. In the United States, a pilot VMT program exists in Oregon, an example of an innovative funding method praised by the White House [Council of Economic Advisers] in its recent economic report. Of course, it’s convenient for politicians in the United States to reject road pricing, by saying that people won’t like it. But those politicians seem to have forgotten that such a do-nothing philosophy is exactly what brought America’s infrastructure to its current, failing state. . . . The White House infrastructure plan has opened the door to fixing our roads with tolls. Policymakers at both federal and state levels should embrace it now more than ever.”
—Weifeng Zhong, American Enterprise Institute, “Congress Should Back White House Plan to Use Tolls to Fix Infrastructure,” The Hill, March 2, 2018

“It doesn’t follow that the only acceptable policy option would be to hike the federal gas tax rate to cover frivolous overspending. An alternative would be to refrain from spending money we don’t have . . . . A better solution would be to return all public funding to state and local governments, where it belongs anyway. In a report titled “Who Owns U.S. Infrastructure?” the Cato Institute’s Chris Edwards notes that 98 percent of U.S. streets and highways are owned by state and local governments. . .  . And if they own the assets, state and local governments should also pay for them. Also, if they want to expand or maintain their infrastructure, they should go to their own taxpayers to raise the money based on the merits of the projects.”
—Veronique de Rugy, Mercatus Center, “Should Infrastructure Spending Be State, Local or Federal?” Reason.com, February 22, 2018

“A fuel tax might sound great to someone whose only goal in life is to reduce carbon emissions, but there is no practical way to make a fuel tax discriminate between truck and car drivers, and between those who use highways every day and those who only drive on local roads. This means that the gas tax inevitably forces the average motorist who drives his car or SUV down the street to work every day to pay an unfair share of the cost of fixing Interstate highways he might rarely or never use, nearly all the damage to which is done by heavy commercial trucking.”
—Editorial, “To Pay for Highways, Expanded Tolls Are Better than Higher Gas Tax,” Washington Examiner, February 14, 2018

“The truth of the matter is that we in Central Texas have waited long enough for the ‘road fairy’ to appear. Tolling has filled a huge gap for those areas willing to put the real price of roads before the public. In fact, the [Central Texas Regional] Mobility Authority has leveraged approximately 20 percent to 30 percent public equity funding to bring billions of dollars to fruition. Tolls are not only a proven stream of revenue for building new roads, they also help to cover the cost of maintaining them over their 40-year lifespan.”
—Michael Heiligenstein, CTRMA, “Texas Transport Exec Calls Trump’s Plans ‘Surprisingly Innovative'” SmartHighways.net, February 14, 2018

“If trade deficits are so poisonous to U.S. economic interests, why has the U.S. economy performed so well even as its international trade deficit continued to expand? If NAFTA so negatively affects U.S. employment, why does the U.S. have full employment with NAFTA still in place and unaltered? These are honest questions U.S. policymakers must ask themselves as they craft trade policy.”
—Cora di Pietro, “Taking the Scare Out of the Trade Deficit,” The Journal of Commerce, March 5, 2018

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