Surface Transportation News: Toll Roads Study, How the Pandemic Changes Infrastructure Planning, and More

Surface Transportation Innovations Newsletter

Surface Transportation News: Toll Roads Study, How the Pandemic Changes Infrastructure Planning, and More

Plus: Electric vehicles’ battery problems, dedicated lanes for autonomous vehicles, and more.

In this issue:

Study on Toll Roads P3 Leasing Gets Varied Responses

On Aug. 25, Reason Foundation released a major study asking whether state governments should consider long-term P3 leases of their existing toll roads, as five governments (including Indiana and Chicago) did over a decade ago. To illustrate the potential, my study analyzed nine major state-owned toll road systems and estimated their gross asset value, using a range of cash-flow multiples from global toll road lease transactions. After paying off each system’s outstanding bonds (as required by federal tax law), the net proceeds ranged from a high of $17.4 billion for the New Jersey Turnpike system to $1.1 billion for the Kansas Turnpike. You can see some of the media coverage in Bond Buyer and local coverage of the specific states with toll roads examined in the study, including, Florida, Illinois, New York, New Jersey, Ohio, Oklahoma, and Pennsylvania.

The study provided context in terms of 19th century U.S. and U.K. private toll road franchises, the conversion two decades ago of major state-owned toll agencies in Europe to long-term concessions that were auctioned off, and the growing experience of such transactions in India, Australia, and Latin America. It suggested that if the lease proceeds are provided as a one-time lump sum, they should be used responsibly for balance-sheet purposes, such as paying for major (but currently unfunded) transportation infrastructure projects, reducing state debt, or reducing the unfunded liabilities of public pension systems.

Back in 2016 when I was writing my book, Rethinking America’s Highways (University of Chicago Press, 2018), I wrote that there was little likelihood of further long-term leases of existing U.S. toll roads, after the bitter controversy over Gov. Ed Rendell’s attempt to lease the Pennsylvania Turnpike and the dismissal of similar proposals in Florida, Illinois, Texas, and Virginia. But by 2018, the concept of “infrastructure asset recycling” re-emerged, thanks to a successful national program in Australia. Panel discussions took place at infrastructure investment conferences and at the annual American Road & Transportation Builders’ Association (ARTBA) P3 conference. The Australian embassy publicized that country’s success in using lease proceeds for new transportation investments. The White House infrastructure plan drafted by D. J. Gribbin (February 2018) included incentives for state and local government to consider leveraging existing revenue-generating infrastructure, and the idea was picked up by the U.S. Department of Transportation’s (DOT’s) Office of the Secretary. Based on this renewed interest, I researched and published an Oct. 2018 Reason policy study called “Asset Recycling to Rebuild America’s Infrastructure.”  It included some hypothetical value estimates for U.S. airports, toll roads, seaports, water and wastewater systems, and university parking.

Continued interest led to the idea of a more detailed study of the potential of toll road public-private partnership (P3) leasing. The research began late last year—before there was any inkling of the COVID-19 pandemic and the large negative fiscal impact it would have on state and local governments. The pandemic and recession gave new urgency to the idea that governments should look into which of their assets might attract interest from well-qualified companies to operate, manage, and improve them under long-term regulatory oversight per the terms of a very detailed long-term P3 agreement.

Alas, it turns out that the reaction from some existing toll agencies was very negative. A long-time friend who works with the toll industry told me that the study had ignited a “firestorm” of criticism and concern among some toll agencies, whose reaction may be akin to a well-known company being suddenly confronted by the threat of a hostile takeover. I was not prepared for this reaction, having previewed the forthcoming study the week before its launch on the weekly Café IBTTA. So in the rest of this article, I want to address two questions: What’s in it for current management and staff of a toll agency? And what’s in it for toll road customers?

On the first question, the study went to some lengths to explain that the likely bidders would be world-class toll road companies, a dozen of which are profiled. They would have no problem with making job offers to current managers and staff, as was done in the Indiana Toll Road lease. For those not wanting to leave civil service, the government would likely offer lateral transfers to other state jobs. Private-sector companies pay market-based compensation that may include profit-sharing. And for senior managers, working for a global toll road company would offer career opportunities unavailable within a state agency.

Another key difference would be to insulate the toll road from legislative efforts to treat it as a cash cow—which is unfair to its customers, frustrating to its managers, and detrimental to its bond rating. An egregious case in point is the Pennsylvania Turnpike, saddled by the legislature last decade with a mandate to divert $450 million a year to the state DOT for transit subsidies, primarily in Philadelphia and Pittsburgh. That mandate has required large annual toll increases and has ballooned the Turnpike’s debt from about $3 billion at the time of the 2008 lease offer to nearly $14 billion today. That added annual expense has reduced the Turnpike’s ability to replace the 80-year-old pavement.

Customers would benefit by avoiding sudden major hikes in toll rates (like the 36% increase approved in May for the New Jersey Turnpike). Nearly all long-term toll road leases limit annual toll rate increases to an inflation index such as the Consumer Price Index (as do some recent policies at state toll roads, including Florida’s Turnpike). The toll road’s finances would be more resilient in times of recession. That’s because instead of 100% debt finance, the toll road company would use a mix of debt and equity. For example, if only 70% of the financing is revenue bonds that require annual debt service payments, the equity providers may have to hold off on any returns for a year or two during a recession, but the smaller debt service is more likely to be covered by the reduced toll revenue. And the long-term P3 lease agreement would include an array of performance measures, with penalties for failing to meet them, which should also benefit the customers.

These are early days. The toll industry, globally as well as in the United States, consists of two organizational forms: government toll agencies and investor-owned toll companies operating under long-term toll concessions. Government remains the roadway owner in both, and in the P3 case is also the regulator, via detailed provisions in the long-term agreement. Infrastructure asset recycling is a global phenomenon that will be part of the future of tolling—and potentially part of the trillion-dollar effort to rebuild and modernize our aging Interstate highway system and begin the transition to mileage-based user fees. Both organizational models have roles to play in these transitions, as I explained in my book and continue to advocate. The largely-government U.S. toll industry should be part of an active discussion of the pros and cons of leasing existing toll roads under a new governance model. It will likely be a better fit in some cases than others, but I think it has an important role to play in America’s transportation future.

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COVID-19 Speeds Up the Transition to All-Electronic Tolling

The large majority of those U.S. toll roads and bridges that still accepted cash suspended cash collection during the state and local lockdowns aimed at reducing the spread of coronavirus earlier this year. And while some have recently resumed accepting cash, a growing number have used the experience to accelerate their plans for going all-electronic.

On July 30, Moody’s Investors Service released a report called “Coronavirus Is Catalyst to Overcome Barriers to Implement All-Electronic Tolling.” It reviews which agencies have done what and provides reasons why those who have not yet converted should do so. Among those are:

  • Better cash flow continuity in uncertain times;
  • Lower costs of toll collection; and,
  • Preparing for a future in which charging per mile will replace per-gallon fuel taxes.

The report covers most of the major toll roads—those which are rated by Moody’s. Exhibit 2 in the report shows that almost half (26 out of 56) are already all-electronic, and all but one of the other 30 have electronic tolling plus cash—the lone holdout with all-cash is the Nassau County (NY) Bridge Authority. Several of those in the electronic toll collection (ETC) plus cash column have accelerated their conversion to all-electronic thanks to their pandemic experience. These include the Bay Area Toll Authority (all but one of the major bridges in the San Francisco Bay Area), the Maryland Transportation Authority, and the New York Thruway Authority. The Maryland system is all-electronic as of last month; the NY Thruway system is within a month of operational testing of its system now installed at all 58 entry and exit points; and the Bay Area system’s timetable has been cut from five years to one year. The Pennsylvania Turnpike did not return to cash tolling after the lockdown.

The Moody’s table is missing information on several large and medium systems, the largest of which is the Ohio Turnpike, which proudly announced the return of cash tolling, as I reported last month. Others with no reported information on cash vs. ETC includes the Chesapeake Bay Bridge & Tunnel District, the Kansas Turnpike Authority, the Maine Turnpike Authority, the New Hampshire Turnpike System, the New York State Bridge Authority, and the Oklahoma Turnpike Authority.

One of the most important points in the Moody’s report is the implications for the coming transition from per-gallon taxes to per-mile charges. Those toll roads—like the New York Thruway—that equip all their entries and exits with electronic tolling equipment will be ready to shift explicitly to per-mile charging, leading the way into the mileage-based user fee (MBUF) future. And the Thruway already has in place a program that offers rebates of state fuel taxes for tolled miles driven on it. That is a model for other long-distance toll roads to emulate.

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How COVID-19 Changes Surface Transportation Planning and Policy

Last month, Reason Foundation released a thoughtful commentary by transportation analyst and commuting expert Alan Pisarski, outlining near-term principles to guide transportation spending decisions that must be made while we are still experiencing the coronavirus pandemic and, eventually, in its near-term aftermath. The starting premise is that even when the pandemic ends there are likely to be long-lasting changes, such as increased full-time telecommuting, reduced carpooling, and reduced transit use. So far, planners are in no position to put credible numbers on these changes and should avoid making major funding decisions that turn out to be unwise in a changed post-pandemic world. Hence, his five suggestions are as follows:

  • Put a temporary moratorium on all proposed major new expansion projects;
  • Focus available spending on improving existing infrastructure, including reconstruction and state-of-good-repair projects;
  • Develop ways to quantify the impacts of various levels of future full-time telecommuting;
  • Increase focus on the transportation needs of lower-income people; and,
  • Look for increased private-sector investment in new disruptive technologies.

Since the current FAST Act is due for reauthorization, Congress should pay attention to these principles in crafting that needed measure, as well as in developing the specifics of any near-term infrastructure bill.

The emphasis on state-of-good-repair is one of three key principles for transportation set forth last fall by Transportation for America, which suggests that this principle might gain bipartisan support. It also parallels findings from an often-overlooked report from the Congressional Budget Office in 2016, “Approaches to Making Federal Highway Spending More Productive.”  CBO analysts dug into the benefit-cost analysis carried out by FHWA in its 2013 report on the conditions and performance of the U.S. highway system. In terms of bang for the buck, it found significant over-spending on the expansion of rural Interstates and especially on expanding other federal-aid highways in rural areas. By contrast, CBO found high benefit-cost results for the expansion of urban interstates (via such projects as express toll lanes that would actually reduce congestion). Also getting high marks as productive investments were rural Interstate bridge rehabilitation and major repairs to urban area federal-aid highways.

Revisiting the CBO report reminded me of a 2013 study by Pengyu Zhu of Boise State University and Jeffrey Brown of Florida State University, “Donor States and Donee States: Investigating Geographic Redistribution of the U.S. Federal-Aid Highway Program, 1974-2008,” in the journal Transportation. They found that federal highway aid has disproportionately benefitted states with smaller highway systems and less highway use, and also states with higher per-capita incomes. But that was then, and the funding formulas have changed over the past decade or so, as Congress has routinely added general-fund money to the Highway Trust Fund so that it can spend considerably more than highway user taxes bring in.

For an up-to-date look at winners and losers from the Highway Trust Fund, I turned to an October 2019 report by Jeff Davis in Eno Transportation Weekly, “FY20 Donor State Update.” While 33 states averaged getting back 110% of the amount of federal highway taxes they sent to the U.S. Treasury, three groups of states did much, much better than that, Davis found. First are rural states, as follows:

Alaska 626%
Idaho 138%
Louisiana 133%
Montana 256%
Nevada 126%
New Hampshire 125%
North Dakota 155%
South Dakota 197%
Vermont 305%
West Virginia 181%
Wyoming 168%

Next are small states that are not necessarily rural:

Connecticut 166%
Delaware 180%
District of Columbia 892%
Hawaii 206%
Rhode Island 300%

Finally, two states that historically seem to have had a lot of political clout:

New York 129%
Pennsylvania 135%

Since the added cost of spending a federal-aid dollar is probably 20% or more higher than spending a state dollar (due to things like Buy America, Davis-Bacon, and NEPA regulations), it looks to me that the 33 states that average only 110% would be better off not sending those dollars to Treasury in the first place. Whereas the small states, in particular, are huge winners from this redistribution. Yet all states have become so hooked on federal highway aid that calls for devolution of funding responsibility to the states that actually own and operate the highways are seldom heard these days.

The coronavirus pandemic has cut transportation revenue, and will likely change urban commuting patterns, at the very least. Transportation analysts and policy-makers should think more comprehensively about whether the status quo still makes sense.

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Electric Vehicles’ Battery Problems

Mention electric vehicles (EVs) to most people and they will cite two problems: EVs cost significantly more than a comparable gasoline-powered car and their range is limited, generally to well under 400 miles. And assuming you can find a place to recharge before the battery is exhausted, the speediest chargers take 45-60 minutes, as opposed to a 3 to 5-minute gas stop. Those problems are inherent in current battery technology, which is lithium-ion. Given the enormous potential of non-polluting EVs, and government policies favoring and subsidizing EVs, there is a huge amount of R&D going on to develop better batteries.

Tesla’s upcoming Battery Day is scheduled for Sept. 22. As you await whatever news Elon Musk will announce at that event (rumored to be a “million-mile battery”), here are some additional points to look for.

Battery Disposal. The Verge published an article last November whose subheadline was “Without recycling, electric vehicle batteries could lead to mountains of waste.” A study published in Nature estimated that the mere one million EVs sold in 2017 will eventually lead to 250,000 tons of used battery packs. This has sparked R&D on recycling used EV batteries. One form is to use old batteries for less-rigorous tasks than powering vehicles. Toyota recently launched a pilot project in Japan to use old EV batteries to back up solar power for electricity at Japanese 7-Eleven stores. The other kind of recycling is to recover the batteries’ costly metals—cobalt, lithium, and nickel—so they can be reused in new batteries. In a recent Wall Street Journal feature article, “The Secret to Affordable Electric Cars?” reporter Tim Higgins focused on the efforts of former Tesla chief technology officer JB Straubel to develop a battery-materials recycling business, Redwood Materials. The idea here is that recycled metals (rather than newly-mined metals) may lower the cost of lithium-ion batteries and thereby make EVs more affordable.

Fire Hazard. Another problem with lithium-ion batteries is their tendency to burst into flames, especially at high temperatures. As electric utilities add more solar and wind power, they have a growing need for stored energy to help supply the grid when the sun is not shining or the wind is not blowing. Arizona Public Service has experienced two explosions of battery storage facilities, one in 2012 and another in 2019. Argonne National Laboratory has found that when lithium-ion battery temperature goes above 150˚ C, a reaction takes place that creates a thermal runaway, leading to fire and/or explosion. Several Tesla accidents have led to fierce fires. And in early August, a fire destroyed a Union Pacific “auto rack” train car filled with new Teslas, in North Platte, NE. The weather was very hot on that early-August day. Photos of the melted cars were posted online.

Given this array of problems—low range, limited life, the need for very costly metals, and fire hazard—what the EV world really needs is an alternative to lithium-ion batteries. Many companies are working to develop such alternatives. British inventor/entrepreneur James Dyson developed a solid-state battery that he says stores more energy and has less need for cooling. While declining to enter the EV business as originally planned, he is now gearing up to offer this new battery to EV producers.

The largest EV producer in China—Contemporary Amperex Technology Ltd (CATL)—has been developing nickel-manganese-cobalt batteries, known as NMC cells. Reuters reported in May that a significant part of the research CATL is relying on was developed by Jeff Dahn (a lithium-ion pioneer) at Dalhousie University in Halifax, Nova Scotia. The Economist reported in April that CATL began producing NMC cells in 2019. And the Reuters article noted that Tesla inked a five-year exclusive agreement with Dahn in 2016. It also said that CATL plans to provide Tesla with NMC cells for its China EV factory next year. So one possibility is that Tesla’s Battery Day will announce plans to phase out lithium-ion batteries in favor of NMC batteries. That would be a whole new ball game.

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Cautions on Proposed Dedicated Lanes for Connected and Automated Vehicles
By Marc Scribner

Last month, the Michigan Department of Transportation (MDOT) announced it had selected Cavnue as the lead contractor for its phase 1 Connected and Automated Vehicle Corridor (CAV-C) Concept. The CAV-C envisions connecting Detroit and Ann Arbor with dedicated infrastructure for connected and automated vehicles along U.S. Route 12 and Interstate 94. The good news is the work done as part of the initial phase of the CAV-C will come at no cost to taxpayers. However, the plan raises a number of serious questions that should be addressed prior to allowing the project to progress beyond the first phase.

By way of background, Cavnue is a subsidiary of Sidewalk Infrastructure Partners, which itself is a subsidiary of Alphabet, Google’s parent company. The company was specifically created to respond to MDOT’s CAV-C request for proposals (RFP), which it did successfully. Cavnue, in partnership with major automakers and automated vehicle developers, endeavors to develop standards that are neutral with regard to particular manufacturers. The RFP and Cavnue’s response suggests this first phase will largely take place off-road in controlled laboratory settings to test the required equipment and software. Again, this phase of the CAV-C will not involve costs borne by taxpayers, which was explicitly required in MDOT’s RFP.

However, the long-term vision of the CAV-C and Cavnue faces some serious challenges.

First, if this project progresses beyond Phase 1 to physical roadway changes, how would lane space be allocated to ensure that it is put to its most valuable use? The CAV-C appears to envision no widening of existing highways, so presumably, this would mean converting an existing general-purpose lane each way into dedicated CAV-C lanes. Since there are no connected, automated vehicles in service today, and no reliable estimates of when they will be operating in large quantity, what CAV penetration rate into the overall vehicle fleet would justify creating dedicated lanes for CAVs? If fleet penetration is low and a general-purpose lane is converted to an exclusive CAV lane, beneath the Silicon Valley gloss would be a large waste of roadway capacity. Cavnue’s RFP response suggests a phase-in period, starting with CAV buses, but except in highly unusual circumstances, bus-only lanes use only tiny fractions of total lane capacity. Details on which types and numbers of CAVs are expected by which year will be needed before MDOT should consider moving this project beyond the first phase.

Second, Cavnue’s RFP indicates that it may develop “coordination infrastructure” that would allow “transportation authorities to set policy goals to maximize mobility and accessibility, and track impact.” This appears to be something resembling air traffic control for highways. One could imagine the capacity and mobility benefits of some central coordination on specific lanes to pack CAVs close together and move them at highway speeds. But one could also imagine the downside: increasing costs per lane-mile at a time when the state of good repair work on existing “dumb” highways is regularly deferred due to fiscal constraints.

Further, the ability to centrally control all vehicles in a lane or road opens the door to cyber threats, as well as authoritarian efforts to centrally plan travel. When the direction of automobiles is distributed to their operators, failure at any point can, and sometimes does, lead to accidents. But if all vehicles are controlled by the same central coordinator, failure could be catastrophic. What protections would be in place to prevent the CAV-C dream from becoming a dystopian nightmare?

Finally, in recent years, automated vehicles have been regularly pitched by their developers as being capable of operating in conventional settings and requiring no special and costly “smart” infrastructure. If the CAV-C model takes off, will developers shift from solving the complex problems of operating in an inevitable mixed-fleet environment toward designing their automated systems to meet CAV-C-style specifications? Would such a shift in research and development priorities limit the potential of automated vehicles in serving as many customers as possible? Is this an admission by some automated vehicle developers that their automated driving systems will not achieve the transformational potential that many imagined and that they will instead focus on improving the human driver experience through assistive technologies?

To be sure, there are many difficulties to overcome before automated vehicles become widely available to consumers. And the CAV-C approach might ultimately bear fruit. But MDOT should remain cautious as the project progresses and seek to answer all of these questions and more before deciding on the next steps—especially if taxpayers and road users are expected to shoulder any future costs.

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A Flawed Critique of Transportation Planning Models
By Baruch Feigenbaum

For many years, America’s transportation planners have been using the four-step travel demand model to decide which transportation projects to build. The four steps are:

  1. Analyze trip generation including the number and purpose of trips;
  2. Determine trip distribution or destination;
  3. Select mode choice (car, bus, etc.); and
  4. Determine trip assignment or the route taken.

While the four-step model may be the best option at the moment, it definitely has plenty of weaknesses. As a result, I was excited to find an Aug. 24 Vice article titled “The Broken Algorithm That Poisoned American Transportation” take the issue to a wider, more general audience. Unfortunately, the article is focused more on criticizing the building of highways than providing an in-depth analysis of all of the modeling shortcomings.

The article spends eight paragraphs explaining the Louisville-Southern Ohio River Bridges megaproject, which added two new toll bridges. In summary, a 2011 model predicted that trips between Indiana and Kentucky would increase 29% by 2030. A subsequent analysis found that between 2010 and 2013 trips had fallen 0.9%. Another analysis for bondholders estimated that the new bridges would carry fewer trips in 2030 than the old bridge did in 2007.

The Vice piece suggests that the poor forecast was the fault of modeling flaws. Project forecasters assumed that vehicle miles traveled would keep increasing annually about 1.8%, slightly higher than average but in line with the 1.5% annual growth over the past 60 years. In hindsight, that projection was off, in part because, understandably, nobody predicted a downturn the size of the Great Recession (2007-2009). And while traffic started growing again after a short period of decline, the growth rate has been lower. As a result, traffic volumes more or less held steady between 2007 and 2018, although they did grow between 2018 and early 2020.

In 2011, there was limited modeling of tolled Interstate bridges. Early studies assumed that if drivers could reduce travel time by 5-10 minutes, they would be willing to pay a toll. But recent studies have found that drivers have a very wide range in how they value time savings. For example, some are unwilling to pay a $2 toll even if it would save 60 minutes of time while others will pay a $10 toll to save 2 minutes. Further, some drivers have reduced their number of trips entirely, to save money. Modelers overestimated the number of drivers who were willing to pay a toll by about 2%.

After spending eight paragraphs blaming modeling, the article argues the real problem is political. This is a valid point. The Louisville business community wanted 12 lanes of capacity for the two- bridge project and placed some pressure on modelers to use a slightly higher growth rate and slightly lower toll-diversion rate. But then why focus on the modeling numbers? And the piece was weakened by choosing an example of a project planned and built during the Great Recession.

The article does highlight some important modeling challenges. These include an assumed continuation of current trends (traffic growth during a recession), shifting population and land use patterns, demographic changes, and human behavior differences (willingness to pay tolls).

Unfortunately, it devotes only one paragraph to discussing alternatives to four-step travel demand models. Activity-based models, which focus on the person instead of the vehicle, are gaining prominence in some metro areas. Activity-based models do a better job of measuring walking, cycling, and transit use. They also have some weaknesses. These models cannot predict deadhead automated vehicle trips. But they certainly provide an option. And the claim that transportation experts ignore modeling limitations is not true. There is a Transportation Research Board (TRB) committee devoted to the topic.

The article argues there is no such thing as “fixed travel demand” because people are always deciding if a trip is worth taking. Yet some trips such as home-to-work are far more fixed than others such as home-to-leisure. The article exaggerates the influence of induced demand by highlighting traffic growth on the expanded Katy Freeway west of Houston. Yet it fails to mention that tolling helps reduce induced demand. The Katy Freeway expansion included new free lanes as well as new toll lanes. The new free lanes may fill up, but the toll lanes still allow a faster and more reliable trip time.

The Vice piece argues for higher urban density and greater expansion of mass transit. Yet one continuing trend of the past 50 years has been decentralization, in which there are multiple job centers across a large metro area. A radial rail system that funnels jobs to downtowns is not going to provide mobility for the large majority who work in suburban and exurban job centers in most American cities. The article contrasts tangled highway interchanges with walkable urban districts. All things being equal, most folks certainly don’t like sitting in traffic congestion but they also have to consider proximity to jobs for all household members, schools, public safety, and the cost of living.

The article’s real bias is shown in a paragraph about Bent Flyvbjerg’s well-known study on transportation megaprojects. The 2007 study (of a large global database of highway and transit megaprojects) found that average traffic on highway megaprojects was 9.5% more than forecast, while the average rail megaproject ridership was overestimated by 106%. In other words, for every 100 drivers forecast to use a given highway project, 110 did, and for every 100 rail passengers forecast to use a rail megaproject, only 47 did. If anything, the forecasting problem seems to be far worse with rail than with highways but the piece only mentions highways:

And here the problem is partly political; in order to receive federal funding, transit proponents have learned to game their forecasts, inflating ridership by one-third and deflating cost estimates by one-third. This is a well-known trick, and, unfortunately, the article fails to mention it or provide any way to solve this problem.

The article doesn’t include any implementable reforms, so I am going to suggest a few of my own. First, eliminate the federal requirement for long-term planning. At best, most long-term planning is an educated guess. And, as mentioned above with COVID-19 and automated vehicles, nobody has a clue of what will be happening in 30 years. Instead, use scenario planning that provides a variety of different forecasts based on different projections. This allows planners and thus modelers to develop different forecasts. Third, continue research activities to improve existing models and develop new models so these forecasts and projections get better over time. We’ll all need to adapt to future developments and it will lead to better infrastructure if we recognize most models have simply educated guesses and should not be treated as a divine forecast for the future.

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News Notes

Coalition Builds Support for Texas P3s
The Texas Association of Business has formed a coalition called Keep Texas Moving, in response to a projected state budget shortfall of $4.58 billion, including a half-billion-dollar shortfall in oil severance and sales tax revenues that are earmarked for TxDOT’s highway budget. It calls on the state legislature to lift the 2017 moratorium on privately financed public-private partnership (P3) projects that have added express toll lanes in the Dallas/Ft. Worth and Houston metro areas. “It’s time for Texas to once again unleash the power of private investment, to benefit Texans everywhere,” the group says.

Ups and Downs for Brightline Higher-Speed Rail
Last month, Florida-based Brightline ended its short alliance with Richard Branson’s Virgin Enterprises, which was going to rename the company as Virgin Trains. In addition, potential bond buyers are taking a cautious look at the company’s planned $5 billion Victorville, CA to Las Vegas project called DesertXpress. Bloomberg News cited analysts at both Nuveen LLC and Lord, Abbett suggesting that Brightline should complete its already-financed Miami to Orlando line (and planned extension to Tampa) and achieve the ridership on which its existing $2 billion (non-investment grade) bonds were issued before seeking to sell bonds for the larger project. Meanwhile, the board of the Los Angeles County Metropolitan Transportation Authority has approved a feasibility study for a 54-mile rail link to connect Victorville to Palmdale.

Should Taxpayers Put Billions into Rural Broadband?
In a recent Reason Foundation commentary, I criticized congressional proposals to include rural broadband subsidies into potential federal infrastructure bills. My piece cited three investor-based companies—Amazon, OneWeb, and SpaceX—that are investing their own billions on global satellite networks to bring high-speed internet services to rural areas worldwide.

Spain’s High-Speed Rail Not Cost-Effective
Spain has the world’s second-largest high-speed rail (HSR) network in the world (after China) at 3,086 km. The cost so far has been $72 billion—and it’s not worth it, according to a new study by AIREF, Spain’s independent fiscal authority. The agency estimated HSR’s benefits (including environmental benefits) as less than the cost, though it estimated that the two busiest lines—Madrid to Seville and Madrid to Barcelona—might pass muster in the long term. But the study is a giant caution flag on the government’s current plans to add another 5,654 km at a further cost of $86 billion.

World’s First MBUF Radio Launched
Utah Department of Transportation Director Carlos Braceras and Reason Foundation’s Adrian Moore will kick off the initial program of MBUFA Radio on Sept. 10. It will be a regular talk radio program to which listeners can call in with questions and comments on Utah’s Road Usage Charge Program, which began Jan. 1, 2020, and is focused on electric and hybrid vehicles. Details on the RUC program are available here. Adrian Moore is vice president of education of the DC-based Mileage-Based User Fee Alliance (MBUFA), in addition to his position at Reason.

Sacramento Rejects New Light Rail Project
Last month, the board of Sacramento Regional Transit voted down a plan for a 1.1-mile extension of the city’s light-rail transit system, that would have extended the line to West Sacramento. Accordingly, the agency will return a $50 million federal grant that had been awarded for this project.

Global Electric Car Sales Projected by Consulting Firm
A new study by Boston Consulting Group projects that electric vehicles (including hybrids) will account for one-third of global new vehicle sales in 2025 and 51% by 2030. The projection reflects aggressive auto company plans for EVs, continued government subsidies, and improving EV range and performance, though EVs still cost significantly more to purchase than gasoline-powered vehicles of comparable size.

Consortium Offers to Build and Operate Missing Link in Sydney
An unsolicited proposal for the  $710 million project to extend the M7 motorway and connect it to the M12 to access the planned second Sydney airport has been made by a P3 consortium. Toll road company Transurban has teamed with investors CPPIB (a major Canadian public pension fund) and Queensland Investment Corporation (an Australian pension fund) in the offer of a design-build-finance-operate-maintain concession for the project. Inframation News reported last month that the proposal has reached stage 2 in the state government’s assessment process. It also noted that Transurban is very interested in the government’s potential sale of its 49% stake in Sydney’s WestConnex Motorway company, of which Transurban already owns 51%.

Pricing All San Francisco Bay Area Freeways?
The Metropolitan Transportation Commission (which is the MPO for the nine-county Bay Area) last month disclosed its long-term objective of putting congestion charges on all lanes of many or most Bay Area freeways. The rationale is that congestion pricing, by reducing stop-and-go congestion, will reduce emissions of greenhouse gases. The Aug. 1 letter asked each of the nine Bay Area counties to sign off on the letter, so that freeway charging can be included in the forthcoming Plan Bay Area 2050 draft plan.

AAA Caution on Partial Automation in Passenger Vehicles
The national auto association carried out driving simulations of 2019 and 2020 cars with partial automation systems such as lane-keeping and automatic emergency braking. The most significant problems occurred in simulations with a broken-down car in the vehicle’s path. About two-thirds of the time, the vehicle would hit the stalled car at about 25 mph. Problems with the automation occurred about every 8 miles in about 4,000 miles of simulated driving. One serious problem was that the new systems would often quit working without immediately notifying the driver.

MIT Report Offers Realistic Assessment of Automated Vehicle Progress
One of the most thoughtful and measured papers on the status and prospect of AVs was released recently by MIT researchers John Leonard, David Mindell, and Erik Stayton. “Autonomous Vehicle, Mobility, and Employment Policy: The Roads Ahead,” critiques hype about an imminent transition to true AVs and provides what I think are realistic assessments of the timing and magnitude of possible job losses as AVs gradually phase-in for trucking and personal travel. If you want to read one solid and well-sourced assessment on this subject, I recommend this one.

FAA Approves LaGuardia Rail Link
The environmental impact study of a 1.5-mile elevated rail connection between LaGuardia Airport and a nearby subway and commuter-rail station was finalized by the Federal Aviation Administration last month. The agency judged that, despite its $2 billion price tag, the rail plan was better than the proposed ferry, bus-only lane, or subway alternatives. The Port Authority of New York & New Jersey has included the project in its current capital plans, but the Environmental Impact Statement (EIS) must still go through public hearings and may encounter litigation from opponents.

Freeway Sound Wall that “Eats” Pollution
A new type of sound wall that also reduces nitrogen oxides is being tested in Toronto and England. Called SmogStop Barrier, it was developed by a Canadian company, Envision SQ. Engineering News-Record reported that eight months of monitoring of the test section installed on Highway 401 in Toronto reduced NOx by 49% and can reduce downwind neighborhood emissions by 85% compared with conventional sound walls. The new barrier channels air from the freeway between two walls where it contacts a photoanalytic coating that breaks down NOx into nitrogen and oxygen, the main components of normal air. The ENR article gave no information on how the cost of the new barrier would compare with conventional noise walls.

Housing Industry Notes Moves to Suburbia and Other States
National Mortgage News reported early this month that data from moving-van companies show that people are leaving big cities for suburbs, small towns, and other states. About half of all New Yorkers moving out of state went to California, Florida, North Carolina, and Texas. And a front-page Wall Street Journal article on Aug. 20 reported surging home sales in July, with “people who were in condominiums looking for town-homes and people in town-homes looking for single-families.” Millennials were a significant part of this trend.

No Radiation Danger from Planned Jefferson Parkway
The Colorado Dept. of Public Health and Environment (CDPHE) reported the results of its soil study of the portion of the planned right of way adjacent to the former Rocky Flats nuclear weapons site, which has been cleaned up as a Superfund site. The Jefferson Parkway Highway Authority asked CDPHE for an objective study of the safety of the planned toll road and has now received a clean bill of health. The parkway would close the missing link in the Highway 470 beltway around metro Denver.

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Quotable Quotes

“In terms of technical knowledge, the expansion of automated vehicle systems is likely to be quite slow, because there is no guarantee that improvements in driving performance will happen linearly or predictably in these varying applications. Current best estimates show a slow shift toward Level 4 systems even in trucking, one of the easiest use cases, with only limited use by 2030. Overall shifts in other modalities, including fleets and passenger cars, are likely to be no faster, so disruptions to taxi, rideshare, and bus driver jobs is likely to be limited in the near term.”
—John J. Leonard, et al., “Autonomous Vehicles, Mobility, and Employment Policy: The Roads Ahead,” Research Brief, MIT Work of the Future project

“I sure hope no public moneys go into this [AV-only corridor].  . . . The whole AV thrust for the past 15 years has been focused on sharing existing infrastructure and not requiring any special considerations (except a smooth surface and properly painted lanes). This smacks of going back to the discarded Automated Highway days where the automated car needed an exclusive automated roadway or lane. This concept was DoA in the 1940s, 50s, 60s, 70s, 80s, 90s, and all the way to the DARPA Challenges in 2005. No one will build automated cars for non-existent automated roadways, and no one will build automated roadways for non-existent cars.”
—Alain Kornhauser, Princeton University, “Self-Driving Car Lanes? They’re Coming to a Corridor in Michigan,” Smart Driving Cars, Aug. 20, 2020

“Consider the [hyperloop] engineering issues. If you build a tube strong enough to contain a vacuum that is hundreds of miles long, don’t expect it to be lightweight. It would need strong walls and substantial foundations to keep it straight and level. It would need flexible thermal expansion joints to cope with warm days after cool nights, and these must be airtight . . . . Maintaining the vacuum would not be easy, and in an emergency there would have to be a mechanism to return the tube to atmospheric pressure to rescue the passengers. Any such mechanism would risk leaks. Re-pressurizing and re-evacuating the tube would take time. The pods themselves would have to be pressurized, and would load passengers at atmospheric pressure before entering the vacuum through an air-lock, which might malfunction. . . . Then there is the energy requirement. A modern magnetic levitation train such as Japan’s Cuo Shinkansen uses more, not less, energy than one on rails. Putting one in a vacuum saves energy, but brings a penalty, too, because not only do vacuum tubes need power, but since air resistance cannot help to slow the train, braking requires more energy.”
—Matt Ridley, “A Future Failure: Hyperloop,” in How Innovation Works, Harper Collins, 2020

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