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**The Interim Report of the National Surface Transportation
Infrastructure Financing Commission**

**"The Path Forward: Funding and Financing Our Surface Transportation
System"**

**American Society of Civil Engineers**

**Comments**

**June 2, 2008**

The American Society of Civil Engineers appreciates the opportunity to
comment on the interim report of the National Surface Transportation
Infrastructure Financing Commission, "The Path Forward: Funding and
Financing Our Surface Transportation System."

On behalf of the over 140,000 ASCE members, we extend our appreciation
to all members of the National Surface Transportation Infrastructure
Financing Commission. The work of the Commission is desperately needed
and will be a key addition to the debate next year on the authorization
of the nation's surface transportation program.

The nation's surface transportation network is at a crossroads. Demands
on the system imposed by a growing population and economy vastly outpace
the ability to maintain and upgrade critical surface transportation
assets. It is becoming widely accepted that transportation
infrastructure network inadequacies are an impediment to the
international competitiveness of the U.S. economy. The federal Highway
Trust Fund is facing an immediate revenue crisis in FY 2009. Meanwhile,
countless states and localities are struggling to meet their own needs,
with some dipping into their transportation funds to finance unrelated
activities. In short, the status quo is not only unacceptable---it is
deteriorating.

ASCE's 2005 Report Card for America's Infrastructure graded the nation's
infrastructure a \"D\" based on fifteen categories, including roads with
a grade of "D," bridges with a grade of "C," and transit with a grade of
"D+." Nearly all of these grades represent a decrease from the 2001
Report Card and indicate that not only is the nation's infrastructure
crumbling, it is worsening with each passing day.

The downslide in grades is caused by obvious factors, such as deferred
maintenance on aging systems and decreased funding from all levels of
government, but also from a lack of compelling national leadership.
Throughout the twentieth century, our nation's leaders envisioned large
scale infrastructure plans that inspired the public and contributed to
unprecedented economic growth. Now much of that infrastructure is
reaching the end of its design life, and we are seeing increasing
problems with deterioration across all public infrastructure. From the
Works Progress Administration projects completed during the Great
Depression to the creation of the interstate highway system in the
Fifties, the twentieth century will be remembered as a time when
Americans took pride in building a strong and lasting foundation. An
equivalent to those examples has yet to arise in the twenty-first
century.

The nation continues to under invest in infrastructure at the national
level. Federal spending for infrastructure as a share of all federal
spending has steadily declined over the last 30 years, according to the
Congressional Budget Office (CBO). The CBO recently estimated that
America's investment in surface transportation infrastructure by all
levels of government in 2004 was \$191 billion (in 2006 dollars), or 1.5
percent of gross domestic product (GDP). In comparison, the Chinese
government invested an estimated 2.5 percent of GDP in highway
construction in 2001. The United States must invest more in
infrastructure to stay competitive in the global marketplace.

The 2009 authorization of the federal surface transportation program
provides the best opportunity in more than 50 years to begin charting a
new course for the future of America's highway and transit systems. ASCE
urges the Commission, the Congress and the nation to adopt a long-term
perspective in attempting to develop policies and financing mechanisms
that will yield a surface transportation network that meets the nation's
needs, we must also recognize the reality of the appropriate time
horizons to accomplish this goal. The 2009 authorization bill is the
appropriate starting point to begin these transformations.

**A Strong Federal Role is Needed**

Included in the authorization debate will undoubtedly be the proper
federal role in transportation. While implementing the significant
changes ASCE recommends will require the cooperation and commitment of
state and local governments and the private sector, the ultimate
responsibility for funding and oversight still must rest at the federal
level.

Our nation's surface transportation system ignores the boundaries of
states and localities, as people travel across multiple jurisdictions
for work and pleasure. Similarly, goods and services on their way to
market must move across great distances and many different modes.
States, localities, and even private investors are implementing creative
solutions to the problems encountered on the nation's surface
transportation, but coordination of resources to ensure interstate and
intermodal coordination is needed from the federal government. If we are
going to ensure a strong economy and quality of life, the federal
government must play a strong role in ensuring the planning, execution,
and funding of needed improvements.

**[Increasing Infrastructure Investment]{.underline}**

ASCE welcomes the recommendations of the commission to increase
investment in the nation's surface transportation system significantly.
While we share many of the same goals and solutions as the Commission,
ASCE disagrees with the notion that the federal motor fuels tax is an
outmoded and indirect method of financing. Faced with growing concerns
with fossil fuel emissions, the rising price of gas, and a recent
downward trend in vehicle miles traveled, ASCE recognizes the need to
explore and implement new streams of revenue for sustainable funding. At
the present time, however, no other proposed financing mechanism is well
tested or widely available. Until such time, ASCE believes that
retaining and increasing the tax on gasoline is the fairest and most
reliable means of financing the nation's surface transportation for
immediate improvements.

Specifically, ASCE supports the following items to address the needed
levels of infrastructure investment:

-   **A 25 cent per gallon increase in the motor fuels user fee**. To
    maintain the current conditions of the surface transportation
    infrastructure, as defined by the U.S. Department of
    Transportation's Conditions and Performance (C&P) Report, a 10 cent
    increase is necessary. The additional 15 cent increase would go
    towards system improvement including congestion relief, freight
    mobility, and traffic safety.

-   A **maintenance of effort requirement** to ensure that all levels of
    government are making comparable financial commitments to improve
    the nation's surface transportation system.

-   The user fee on motor fuels should be **indexed to the Consumer
    Price Index** (CPI), in order to preserve the purchasing power of
    the fee.

-   All **motor fuels should be taxed equitably**.

-   The Highway Trust Fund **balances should be managed to maximize
    investment** in the nation's infrastructure.

-   Congress should **preserve the current firewalls** to allow for full
    use of trust fund revenues for investment in the nation's surface
    transportation system.

-   The authorization should **maintain funding guarantees**.

-   Tolling, vehicle taxes, state sales taxes, congestion pricing,
    container fees, and transit ticket **fees must all be considered in
    the development of revenues** for the maintenance and improvement of
    the surface transportation system.

-   The current **flexibility provisions should be maintained**. The
    goal of the flexibility should be to establish an efficient
    multi-modal transportation system for the nation.

-   The **development of a freight mobility program** to guarantee the
    efficient movement of freight and reduce system congestion.

-   The creation of a **permanent commission to determine the levels at
    which motor fuel user fees should be set**, and when those fees
    should be increased.

-   **Efficiency in delivering infrastructure projects** to shorten
    delivery times and decrease costs.

While the motor fuels user fees are an important element of the current
revenue stream feeding the Federal Highway Trust Fund, those revenues
continue to erode in value due to an inherent inelastic nature. Three
strategies must be advanced to remedy this condition. First, would be to
raise the motor fuels user fee by 25 cents per gallon. This would
provide a much needed infusion of funding towards the \$78.8 billion per
year need. In tandem with raising the motor fuels user fee, ASCE
believes that it is important to shore up the weakness of the motor
fuels user fee and its inability to retain value over the long term by
adding a provision to the law that would index it based on the Consumer
Price Index. This would allow the rate to adjust, thus reflecting the
current economic conditions of the nation. Finally, motor fuels other
than gasoline (diesel, ethanol, bio-diesel, etc.) must be taxed in a
manner equitable to the gasoline user fee.

With the establishment of firewalls on the Federal Highway Trust Fund, a
condition was created wherein the states could count on their funds in a
long term investment strategy. These firewalls must be maintained to
ensure the integrity and viability of the Trust Fund. This will be
especially important as user fees are increased and Trust Fund levels
rise.

Positive, proactive management of these larger trust fund balances will
be essential to addressing the critical transportation needs facing our
nation today.

Long-term Viability of Fuel Taxes for Transportation Finance

ASCE supports the need to address the issue of future sources of revenue
for surface transportation funding. Congress should allow for the
exploration of the viability of the most promising funding options that
will maintain the viability of the Trust Fund. In particular, the
impacts of increased fuel efficiency and alternate fuel technologies
such as fuel cells should be studied. A mileage-based system for funding
our nation's surface transportation systems also needs further study. A
large scale demonstration project, to follow up on the work done in
Oregon, should be executed to determine the practicality of such a
program. This data will be critical in determining how to generate Trust
Fund revenue as the nation's dependence on gasoline as a fuel source for
automobiles is reduced.

**Innovative Financing**

While recognizing that innovative financing is not a replacement for new
funding, ASCE supports innovative financing programs and advocates
making programs available to all states where appropriate. Additionally,
the federal government should make every effort to develop new programs.
These types of programs include the Transportation Infrastructure
Finance and Innovation Act, State Infrastructure Banks, and Grant
Anticipation Revenue Vehicles. It should be noted, however, that
innovative financing does not produce revenue, and should not be seen as
an alternative to increasing direct user fee funding of surface
transportation infrastructure.

Innovative financing techniques can greatly accelerate infrastructure
development and can have a powerful economic stimulus effect compared to
conventional methods. This is the current approach in South Carolina,
Georgia, Louisiana, Florida, and Texas, where expanded and accelerated
transportation investment programs have been utilized.

ASCE recognizes Public Private Partnerships (PPPs) as one of many
methods of financing infrastructure improvements. ASCE supports the use
of PPPs only when the public interest is protected and the following
criteria are met:

-   Any public revenue derived from PPPs must be dedicated exclusively
    to comparable infrastructure facilities in the state or locality
    where the project is based;

-   PPP contracts must include performance criteria that address
    long-term viability, life cycle costs, and residual value;

-   Transparency must be a key element in all aspects of contract
    development, including all terms and conditions in the contract.
    There should be public participation and compliance with all
    applicable planning and design standards, and environmental
    requirements; and

ASCE supports the development of criteria by governing agencies engaging
in PPPs to protect the public interest. Examples of criteria include
input from affected individuals and communities, effectiveness,
accountability, transparency, equity, public access, consumer rights,
safety and security, sustainability, long-term ownership, and reasonable
rate of return.

**[Intelligent Investment Complemented by Better Operation of the
System]{.underline}**

ASCE agrees with the Commission that the system by which we plan, build,
and operate our nation's surface transportation system is in need of
improvement. Better coordination and prioritization of projects, both
nationally and at state and local levels, as well as an expedited design
and approval process are two vital improvements that can be made to the
system. ASCE does not agree, however, with the Commission's intimation
that the problem is due merely to earmarks for special projects or
federal directives that interfere with local priorities. While examples
of these problems do exist, remedying them will not have a significant
positive impact.

ASCE believes in a comprehensive and integrated approach to planning and
operations and maintenance which takes into account the life cycle costs
of the project, preserves *and* expands the current system, and uses
intermodal planning decisions to increase the mobility of both people
and goods.

**Life Cycle Cost & Surface Transportation Design**

The use of Life-Cycle Cost Analysis (LCCA) principles will raise the
awareness of clients of the total cost of projects and promote quality
engineering. Short-term design cost savings which lead to high future
costs will be exposed as a result of the analysis. In the short-term the
cost of projects will increase; however, the useful life of a project
will increase, and there may be cost savings in operations and
maintenance over the long term.

When the cost of a project is estimated only for design and
construction, the long-term costs associated with maintenance,
operation, and retiring a project, as well as the cost to the public due
to delays, inconvenience and lost commerce are overlooked. The
increasing use of bidding to select the design team has resulted in a
pattern of reducing engineering effort to remain competitive, with the
result of higher construction and life cycle costs.

ASCE encourages the use of Life-Cycle Cost Analysis (LCCA) principles in
the design process to evaluate the total cost of projects. The analysis
should include initial construction, operation, maintenance,
environmental, safety and all other costs reasonably anticipated during
the life of the project, whether borne by the project owner or those
otherwise affected

**System Preservation**

While the surface transportation system must be authorized in a new and
innovative way that meets the demands future generations will put on it,
current conditions are not meeting today's demands. ASCE's 2005 Report
Card for America's Infrastructure graded the nation's roads at a D,
bridges at a C, and transit at a D+. According to the U.S. DOT, ride
quality was unacceptable on more than 25 percent of urban arterials in
2004, a 20 percent increase from ten years before. Based on those
figures, the U.S. DOT estimates it will take \$181 billion just to fix
the current backlog of pavement deficiencies. A major goal of the
surface transportation program must be to protect the investments that
have been made through timely repair and maintenance of transportation
assets.

Compounding those system deficiencies are the combined factors of
project delivery delay and possible effects due to climate change. While
any new model for the authorization must include expedited and
streamlined project delivery methods, the reality is that many of the
proposed intermodal solutions are decades away. The current state of the
infrastructure is such that we cannot wait to replace existing
structures and so must be committed to timely repair and maintenance.
Further, possible effects due to climate change such as extreme
temperature swings, higher sea levels, and increases of extreme weather
including hurricanes will continue to diminish the quality of the
nation's surface transportation infrastructure. Embedded in any plans
for future improvements to the nation's surface transportation system
should be a strong component aimed at preserving the current system.

**Operations and Maintenance**

ASCE strongly endorses federal leadership in increasing the focus on
transportation operations and maintenance and thereby enhancing
performance, in particular by addressing congestion relief, and
preserving our investment in the transportation system.

There is a clear and present need for an increased focus on
transportation operations and maintenance at all levels -- federal,
state, regional, and local. This need is based on several factors:

-   An aging transportation infrastructure;

-   Growing congestion and incident problems are causing transportation
    system performance to be a top priority in many areas of the
    country;

-   Capacity constraints and costs of new construction are forcing the
    examination of alternative solutions and place a premium on
    maintaining and improving the existing transportation system;

-   Customers desire travel choices, better information, and increased
    reliability to meet their mobility needs; and

-   An efficient and responsive transportation system is critical to
    meeting homeland security priorities.

An increased focus on transportation operations functions, and
application of intelligent transportation systems, can enhance
performance of the transportation system in terms of:

-   Improved traffic and transit operations including reduced congestion
    and improved mobility;

-   Improved safety and public safety responses;

-   Incident management;

-   Improved economic competitiveness, including interstate commerce;

-   Network and facility management;

-   Energy conservation and reduced environmental impact;

-   Traveler and shipper information; and

-   Bicycle and pedestrian mobility.

ASCE considers it essential that the following issues regarding
Operations and Maintenance must be considered:

-   Support and assist homeland security initiatives. Transportation
    operations and homeland security share many of the same goals and
    functions. Resource sharing (e.g. communications infrastructure,
    traffic control centers) and joint planning are appropriate. Transit
    security and preparedness, international border security, asset
    security and tracking, vulnerability assessment, planning, and
    creation of system redundancy are important transportation
    priorities for homeland security.

-   Support and assist state and local agencies. Beyond establishing
    transportation operations and maintenance as a national priority,
    the Federal role should be to support and assist state and local
    entities in accomplishing related goals. This includes support of
    research and development, provision of tools, promotion of best
    practices, and enhancement of education and training at all levels.

-   Provide flexible funding. A flexible funding approach is an
    important component to supporting operations and maintenance needs.
    Expanding funding eligibility for operations and maintenance
    programs, enabling direct funding to local and regional operating
    agencies, public-private partnerships or outsourcing, and
    simplifying and clarifying federal funding processes are important
    actions.

-   Recognize that the private sector has much to offer in management
    and technical skills in operations and maintenance. Public-private
    partnerships may provide enhanced operations and management
    programs.

The Department of Transportation should encourage local matching and
innovative funding. The federal government has a role in exploring and
promoting best practices related to innovative funding for operations
and maintenance.

**System Expansion**

To compete in the global economy, improve our quality of life and raise
our standard of living, we must successfully rebuild America's public
infrastructure. Faced with that task, the nation must begin with a
significantly improved and expanded surface transportation system. The
surface transportation system authorization must be founded on a new
paradigm; instead of focusing on the movement of cars and trucks from
place to place, it must be based on moving people, goods, and services
across the economy. Beyond simply building new roads or transit systems,
an intermodal approach must be taken to create a new vision for the
future. Included in this new vision must be plans to deal with the
possible effects of climate change, a strong link to land use,
sustainability of the system, the use of commodities, and anticipation
of the expected changes in the population's demographics especially age
and urbanization.

ASCE supports the vision of a National Intermodal Transportation System
that is economically efficient, environmentally sound, provides the
foundation for the Nation to compete in the global economy and will move
people and freight in an energy efficient manner. Support for
partnerships among the federal, state and local governments, with
various citizens, groups and firms from the private sector, are
essential to further develop a truly intermodal system.

ASCE supports government policies that encourage anticipation of and
preparation for possible impacts of climate change on the built
environment. Global or local climate change could pose a potentially
serious impact on the nation's surface transportation system. According
to the Transportation Research Board, "the greatest impact of climate
change for North America's transportation systems will be flooding of
coastal roads, railways, transit systems, and runways because of global
rising sea levels, coupled with storm surges and exacerbated in some
locations by land subsidence." Long-term transportation plans should
consider climate change impacts and their effect on infrastructure
investments particularly in vulnerable areas. Today's investment
decisions will affect how well the infrastructure adapts to climate
change far into the future.

Programs of the Federal, state and local governments must emphasize the
need to consider a wide range of multimodal options and new technologies
in the development of transportation plans, programs and projects, and
in the comprehensiveness and usability of information systems available
to individuals and others engaged in the movement of people and freight.

A primary emphasis of passenger intermodalism is to facilitate
connections between the private automobile and other access modes and
public transportation systems. For example, park-and-ride facilities
provide critical connections for mass transit commuters using
automobiles for a portion of their trips. Another example is the use of
ITS to generate on-demand information on door-to-door multi-modal trip
options, thus providing convenient opportunities for people to evaluate
and choose more efficient routes and mode choices. Of course, the best
example of intermodalism is linking land use and transportation;
designing our communities so that people have the option of leaving
their automobiles at home and using walking, biking, and public
transportation to meet their mobility needs.

**Freight Mobility**

As the U.S. economy has expanded to global markets, the movement of
goods and services has concurrently increased its reach. Freight must
now move across vast distances, usually through a combination of modes.
The Interstate Highway System was built on a truck-dependent model, and
thus goods do not always move seamlessly from one mode to the next. To
meet the demands of the global economy, the surface transportation
authorization must enhance and improve connectivity and level of service
to the major intermodal terminals including seaports, airports, rail
terminals, ports of entry, and inland intermodal terminals. Inherent in
the authorization must be a paradigm shift that focuses on the movement
of people, goods, and services, rather than simply cars and trucks.

The volume of freight being moved on the nation's roadways continues to
increase and is expected to double by 2035. Interstate commerce remains
the historic cornerstone in defining the federal role in the nation's
transportation system. The authorization of the surface transportation
program must provide for a strong federal role in freight mobility and
intermodal connectors. This should include the creation of a program
funded with new dedicated revenue to provide new capacity and
operational improvements focused on securing safe, efficient movement of
freight.

Additionally, ASCE supports a strong rail transportation system within
this country. A federal rail trust fund should be developed to fund rail
improvements, using the 80/20 match formula to encourage state
participation. Revenues for this trust fund could come from sources such
as a tonnage fee, mileage fee, ticket tax, and/or general treasury
funds. ASCE also encourages the use of innovative financing methods like
revenue bonds and tax exempt financing at the state and local levels,
public-private partnerships, and state infrastructure banks.

**Conclusion**

The lack of adequate investment in America's infrastructure has left us
with a vast backlog of deteriorated facilities that no longer meet our
nation's increasing demands.

To remedy America\'s current and looming problem, ASCE estimated in 2005
a \$1.6 trillion investment in all categories of infrastructure over the
next five years and called for a renewed partnership among citizens,
local, state and federal governments, and the private sector.

To accomplish the goal of rebuilding the nation's crumbling
infrastructure engineers, architects, contractors, and governmental
agencies need to expand the tools available to them to deliver quality
infrastructure projects. ASCE appreciates the Committee's willingness to
address this important issue.

The cost of inaction is significant for the nation and its citizens.
Inaction will lead to a further deterioration of the nation's surface
transportation assets, a continuation of high levels of traffic
casualties, wasted time and fuel due to increasing congestion, a drag on
the economy due to problems with goods movement, and a continuing waste
of public and private funds due to excessive delays in delivering
transportation projects.

If we are going to rise above the nation's crumbling state and build an
infrastructure that will serve the needs of the new century, we will
need bold leadership and a compelling vision. We must be certain to
preserve and maintain the foundations those past generations have built
for us, but at the same time recognize a new, overarching approach is
needed. The authorization of the nation's surface transportation is an
excellent place to start.