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DEPARTMENT OF
TRANSPORTATION
Diana Furchtgott-RothINTRODUCTION

America needs transportation that is more abundant and affordable as well as
dignified, accessible, and family friendly. Transportation plays a vital role in theprosperity and flourishing of the United States. Americans use trucks, tankers,
and trains to keep our supply chains running and cars, transit, and planes to go
where we want to go.
Two hundred and forty years ago, Adam Smith recognized that connections
were a bedrock of society because they stimulate specialization, innovation, andcapital investment. In the following decades, America’s growth was made possibleby transportation—first ports and transatlantic shipping, then roads, canals, andeventually railroads pushing westward to create the nation we call home. Accessto transportation is part of what made our country great.
The U.S. Department of Transportation (DOT), with a requested fiscal year (FY)2023 budget of $142 billion,1 was originally intended simply to provide a policy
framework for transportation safety, rulemaking, and regulation. However, it has
evolved to believe that its role is “to deliver the world’s leading transportation
system”2—that is, to select individual projects and allocate taxpayer funds in theactual planning, developing, and building of transportation assets. Such a role isheld more appropriately by transportation asset owners: primarily states, municipalities, and the private sector.
In addition to providing a safety and regulatory framework through its 11 subcomponents, known as modes, the department has become a de facto grantmaking
and lending organization. DOT provides approximately $50 billion in discretionary— 619 —

Mandate for Leadership: The Conservative Promiseand formula grants, known as obligations, annually in areas ranging from transit
systems to road construction to universities and has lent or subsidized more than
$60 billion since the Transportation Infrastructure Finance and Innovation Act(TIFIA) program,3 now managed by the Build America Bureau, was created in 1998.
This evolved role as a major, and often primary, funding and financing source is far
from the department’s original policy framework. It also removes incentives forstate and local officials to ensure that investments are worthwhile, because federal
money removes the need to get public buy-in to build and maintain infrastructure
projects as funding becomes “someone else’s money.”
Despite the department’s tremendous resources, congressional mandates andfunding priorities have made it difficult for DOT to focus on the pressing transportation challenges that most directly affect average Americans, such as the highcost of personal automobiles, especially in an era of high inflation; unpredictableand expensive commercial shipping by rail, air, and sea; and infrastructure spending that does not match the types of transportation that most Americans prefer.
Transforming the department to address the varied needs of all Americans more
effectively remains a central challenge.
DOT is particularly difficult to manage because its 11 major components—ninemodal administrations, the Office of the Secretary, and the Office of the Inspector
General—all have their own sets of personnel including administrators, deputy
administrators, chiefs of staff, and general counsels. Most grants flow through themodes, such as the Federal Highway Administration, Federal Transit Administration, and Federal Aviation Administration.
The Office of the Secretary contains its own grantmaking operation that funds
research and some special grants, as well as a major lending operation, the Build
America Bureau, that functions as an infrastructure bank. The Office of the Secretary has department-wide offices for such functions as Budget and Financial
Management, the General Counsel, Policy, the Office of Research and Technology,
Government Affairs, Administration, the Office of the Chief Information Officer,
Small and Disadvantaged Business Utilization, Public Affairs, Drug and Alcohol
Policy and Compliance, and Civil Rights. The modal administrations include the:lFederal Aviation Administration (FAA);lFederal Highway Administration (FHWA);lFederal Railroad Administration (FRA);lNational Highway Traffic Safety Administration (NHTSA);l

Federal Transit Administration (FTA);— 620 —

2025 Presidential Transition ProjectlGreat Lakes St. Lawrence Seaway Development Corporation (GLS);lMaritime Administration (MARAD);l

Federal Motor Carrier Safety Administration (FMCSA); andlPipeline Safety and Hazardous Material Administration (PHMSA).

DOT’s fundamental problem is that instead of being able to focus on providing
Americans with affordable and abundant transportation, it has become saddledwith congressional requirements that reduce the department to a de facto grantmaking organization. Yet there is little need for much of this grantmaking, for
two reasons:ll

New technology enables private companies to charge for transportation in
many areas, which could transform how innovation is financed. It is vital toconsider the role of user fees and other pricing innovations with regard totransportation infrastructure. Airport landing fees for aircraft, toll charges
on roads and bridges, and per-gallon taxes on gasoline and diesel fuel are
all examples of user charges that affect the decisions of transportation
system users. These changes could shift our nation’s transportation awayfrom being a top–down system that is misaligned with the needs of somany Americans. Increasing private-sector financing could revolutionize
travel and increase everyday mobility to its greatest potential in a way that
Americans prefer. Doing so would keep transportation decisions out of thehands of bureaucrats in Washington, D.C., who are far removed from local
problems and preferences.
If funding must be federal, it would be more efficient for the U.S. Congress
to send transportation grants to each of the 50 states and allow each state
to purchase the transportation services that it thinks are best. Such an
approach would enable states to prioritize different types of transportationaccording to the needs of their citizens. States that rely more on automotivetransportation, for example, could use their funding to meet those needs.

Meanwhile, many Americans continue to confront serious challenges with
their day-to-day transportation, including costs that have increased dramatically in recent years. DOT in its current form is insufficiently equipped to address
those problems. DOT’s discretionary grant-making processes should be abolished, and funding should be focused on formulaic distributions to the states,
which know best their transportation needs and are incentivized to think of the— 621 —

Mandate for Leadership: The Conservative Promise

long-term maintenance costs. At a bare minimum, the number of grants should
be consolidated.
DOT would also reduce unnecessary burdens by returning to the Trump Administration’s “rule on rules” approach to regulations, implemented in late 2019 as RIN
2105-AE84.4 This rule strengthened the Administration’s effort to remove outdated
regulations, find cost-saving reforms, and clarify that guidance documents arein fact guidance rather than mandatory impositions. The Biden Administration
unwisely moved away from this reform, and the next Administration should revive
it without delay.
BUILD AMERICA BUREAUThe Build America Bureau (BAB) resides within the Office of the Secretary anddescribes itself as “responsible for driving transportation infrastructure development projects in the United States.”5 This lofty-sounding goal in practice meansthat the Bureau serves as the point of contact for distributing funds for transportation projects in the form of subsidized 30-year loans. For higher-quality projects
and in certain circumstances, these government loans may disintermediate theprivate sector from providing similar financing, albeit at higher costs.
At certain times in the economic cycle, and for many lower-quality projects withmore dubious economic return, similar loans from the private sector are simply
not available. Should the BAB continue to exist and potentially disintermediate
the private financing sector, it must maintain underwriting discipline and continue
best practices of requiring rigorous financial modeling and cushion for repaymentof loans in a variety of economic scenarios. In addition:lll

The BAB should ensure that these loans do not become grants in anotherform by maintaining the requirement that all project borrowers be rated
at least investment grade by the major ratings agencies and that projectsponsors remain liable to ensure that all financing is repaid, even in periodsof financial stress and economic downturns.
Project sponsors should be required to show that projects have positive
economic value to taxpayers, and sponsors should guarantee that all federal
financing will be repaid through properly structured loan terms, including aminimum equity commitment from all project sponsors.
All projects should also be required to show repayment ability in various
interest rate environments, and the BAB should ensure that long-term loans
are structured appropriately with regard to the fixing of interest rates andhedging of interest rate risk on the part of the borrowers to avoid financial
stress or default driven solely by rising interest rates.

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2025 Presidential Transition Projectll

Policymakers should maintain awareness and promote transparency
regarding the continued existence of this loan program and whether private
financiers are being disintermediated by the subsidized BAB lending thatthe private sector simply cannot match.
A cost-benefit analysis of the federal government’s potential replacementand disintermediation of the private financing sector regarding
infrastructure loans, which is not currently performed, should be conducted
on a regular basis.

PUBLIC–PRIVATE PARTNERSHIPS

Much infrastructure could be funded through public–private partnerships (P3s),
a procurement method that uses private financing to construct infrastructure. In
exchange for providing the financing, the private partner typically retains the rightto operate the asset under requirements specified by the government in a contract
called a concession agreement. In addition, the private partner is given the righteither to collect fees from the users of the asset or to receive a periodic payment
from the government conditioned on the asset’s availability: If a highway is notopen to traffic when it should be, for example, the government’s payment to theprivate concessionaire is reduced.
The best practice for a government that is interested in using a P3 to delivera project is for the government first to perform a value-for-money study, which
compares the costs and benefits of procuring the asset under a typical procurement
against the costs and benefits of utilizing a P3. Since private equity is involved, thefinancing costs for P3s are higher, but they also are frequently more than offset by
the private sector’s ability to generate efficiencies and cost savings in the design,
construction, maintenance, and operation of the asset. If the value-for-money
study finds that the efficiencies of a P3 and the value of risk shifted to the private
sector exceed the additional financing costs, then utilizing a P3 is good public policy
because Americans have better infrastructure at a lower cost.
As well as providing better transportation facilities for Americans, P3s offer anumber of benefits to governments. Specifically, they:lllProvide access to some of the world’s best talent with vast experience indelivering infrastructure,
Create incentives for innovation and creativity,
Shift unique project risks to companies that are familiar withthose risks, and— 623 —

Mandate for Leadership: The Conservative PromiselAllow designers, contractors, and maintenance teams to work together
through the delivery of the process to focus on lifecycle costs as opposed tojust initial design and construction costs.

It should be noted that project funding and P3s are not synonymous. Policymakers and government leaders frequently mistake the financing that P3s provide
for funding. A P3 allows the government to obtain equity from the private sector,
but that equity has to be paid back with interest. Like a loan, a P3 can be used toaccelerate revenues and provide needed capital to help pay the upfront costs of a
project, but also like a loan, the private P3 investors must be paid back for investors
to realize a financial return.
Some mistakenly think that using a P3 would allow a road or bridge to be delivered without increases in tolls or taxes. It is important to remember that all funding
for governmental infrastructure comes from either taxes or user fees. P3 financing
can be used to make those funding sources more efficient, but it cannot replace theneed for taxes or user fees to provide the funding for the project.
In addition, a poorly managed P3 procurement process (the process government uses to identify the best private P3 partner) can result in excessive consultant
costs and years-long delays in delivery. While P3s can offer efficiencies in delivering
the project, the P3 procurement process itself can be significantly longer and more
expensive than traditional procurement processes.
Finally, and possibly most important, a P3 gives a private party the ability tocollect fees or payments over decades (a period well beyond the length of the
careers of the political appointees who sign contracts with private parties). Thus,
P3s create an opportunity for current governmental leaders to obtain a higher
upfront payment from the private party in exchange for greater user fees paid by
future generations who will use the asset. In other words, a governmental CEO(governor, mayor, head of an authority) can use a P3 to impose unnecessarily highcosts on users decades in the future in exchange for upfront cash. It is importantthat contracts be transparent in order to minimize this possibility.
A P3’s greatest public value is realized when the procurement model is used fora project that is unusually risky or a type of project with which the government
has limited experience such as a tunnel or light rail line. P3s are an excellent tool
for transferring risk from the public sector to the private sector and can create
considerable value for the taxpaying public. However, a high degree of expertiseis required to ensure that the risk transfer warrants the higher financing and procurement costs that P3s impose.
EMERGING TECHNOLOGIESAs private companies develop a future of new, emerging technologies, one rolefor DOT is driving clarity in the government’s role and setting standards for safety,— 624 —

2025 Presidential Transition Projectsecurity, and privacy without hampering innovation. DOT can oversee the testingand deployment of a wide variety of new technologies, allowing communities andindividuals to choose what best fits their needs. It is the role of the private sector,
not the government, to pick winners and losers in technology development. If atechnology underperforms, the private sector should be liable, not the government.
The department should ensure a tech-neutral approach to addressing any
emerging transportation technology while keeping safety as the number one
priority. As part of this, it should work to facilitate the safe and full integrationof automated vehicles into the national transportation system. Over time, theseadvanced technologies can save lives, transform personal mobility, and provide
additional transportation opportunities—including for people with disabilities, aging populations, and communities where car ownership is expensive or
impractical.
NHTSA’s and FMCSA’s current regulations were written before the advent of
automated vehicles and driving systems. Both operating administrations haveissued Advance Notices of Proposed Rulemakings (ANPRMs) that begin the process of updating their regulations to reflect this new technology. However, theseregulations have stalled under the Biden Administration, which has chosen to
use the department’s tools to get people to take transit and drive electric vehicles
instead of helping people to choose the transportation options that suit them best.
ll

NHTSA should work to remove regulatory barriers by focusing on updating
vehicle standards as well as publishing performance-based rules for theoperations of automated vehicles (AVs).
FMCSA should work to clarify the regulations to align with DOT’s AV 3.0
guidance, which would allow the drivers to be safely removed from theoperations of a commercial motor vehicle.

From a nonregulatory point of view, DOT has pivoted from a successful focus
on the voluntary sharing of data to improve safety outcomes to adoption of a morecompulsory and antagonistic approach to mandating data collection and publication through a Standing General Order related to automated vehicles. This needs
to be reversed.
Many of these new and innovative technologies rely on wireless communications that depend on the availability and purchase of radio frequency spectrum,a trend that is consistent with what we see in connectivity in our everyday lives.
There is a role for DOT in ensuring that in the fight over spectrum, transportation
gets its fair share.
For technologies to work in transportation, and in particular to work fortransportation safety, they have to meet the unique needs of a transportation— 625 —

Mandate for Leadership: The Conservative Promise

environment. They need to account for rapidly moving and out-of-line-of-sightvehicles as well as pedestrians, bicyclists, and other road users. They should
account for the potential for radio interference, and they should address security.
This is why in 1999, in response to a request from Congress, the Federal Communications Commission allocated the 5.9 GHz band of spectrum to traffic safety
and intelligent transportation systems (ITS). In 2020, the FCC took away 45 MHzof the 75 MHz it had added, leaving only 30 MHz for transportation safety and
ITS. DOT needs to represent the transportation community and make the casefor needed spectrum to the public and Congress.
CORPORATE AVERAGE FUEL ECONOMY (CAFE) STANDARDSOne reason for the high numbers of injuries on American roadways is thatnational fuel economy standards raise the price of cars, disincentivizing people
from purchasing newer, safer vehicles.
Congress requires the Secretary of Transportation to set national fuel economy standards for new motor vehicles sold in the United States. This mandate
was established in the Energy Policy and Conservation Act of 1975 (EPCA),6 a law
passed in the wake of the Arab oil embargo to promote greater energy efficiency
and lessen the national security threat of U.S. dependence on foreign oil. The statute directs DOT to prescribe the “maximum feasible” mileage requirements fordifferent categories of internal-combustion engine (ICE) automobiles for eachmodel year. The standards must be achievable using available ICE technologies
running on gasoline, diesel fuel, or similar combustible fuels and must not be set sohigh as to prevent automakers from profitably producing new vehicles at sufficientvolume to meet consumer demand.
Congress recognized that the ICE-powered automobile has been instrumental to advancing the mobility and prosperity of the American people and that thedomestic mass production of new ICE vehicles generates millions of jobs andremains critical to the overall health of the U.S. economy and the strength of thenation’s industrial base. Accordingly, Congress took care to ensure that the mileage
requirements issued by DOT would not undermine the vitality of America’s auto
industry or interfere with the market economics that drives consumer demand
for new vehicles.
This rulemaking authority, which has been delegated by the Secretary to
the National Highway Traffic Safety Administration, is exclusive to DOT. EPCA
expressly preempts states from adopting or enforcing any different requirement“related to fuel economy standards” for new motor vehicles. While the statuteinstructs DOT to consult with the Department of Energy and the Environmental
Protection Agency (EPA) in formulating its standards, no other federal agency,
including EPA, has clear authority to set fuel economy requirements in place of
NHTSA. The Clean Air Act7 gives EPA general authority to establish emissions— 626 —

2025 Presidential Transition Project

limits for new motor vehicles for air pollutants that are found to pose a danger tohumans. However, there is no reason to believe Congress ever contemplated that
EPA’s authority to address automotive air pollution might be used to displace orsupersede NHTSA’s fuel economy mandate under EPCA.
Congress chose to assign the power to set fuel economy standards to DOT
rather than EPA. This was not only because DOT understands the technologies
and economics of the auto industry, but also because NHTSA is the nation’s leading
motor vehicle safety regulator, and Congress sought to ensure that fuel economy
requirements would not adversely affect highway safety. Unfortunately, the Biden
Administration has flouted these statutory limitations in nearly every respect. The
predictable result is higher expected transportation costs for Americans.
lll

In pursuit of an anti–fossil fuel climate agenda never approved by Congress,
the Biden Administration has raised fuel economy requirements to levels thatcannot realistically be met by most categories of ICE vehicles. The purpose
is to force the auto industry to transition away from traditional technologies
to the production of electric vehicles (EVs) and compel Americans to
accept costly EVs despite a clear and persistent consumer preference for
ICE-powered vehicles. In further support of this agenda, federal regulators
administer a scheme of generous fuel economy credits that subsidize EV
producers such as Tesla at the expense of legacy automakers.
Moreover, and contrary to Congress’s design, the Biden EPA has been
given preeminence in the regulation of fuel economy through the settingof carbon dioxide emissions limits for new motor vehicles under the Clean
Air Act. Because carbon dioxide emissions levels correspond to mileagein automobiles powered by fossil fuels, these EPA rules are de facto fueleconomy requirements that apply independently of NHTSA’s standards.
The Biden Administration has also granted California a special waiver under
the Clean Air Act that permits the California Air Resources Board (CARB) to
issue its own fuel economy directives, notwithstanding EPCA’s prohibition
on state standards. Under this waiver, CARB has ordered automakers tophase out the sale of ICE-powered automobiles in California and transition
to the production of zero-emission vehicles by 2035. The Clean Air Act
allows other states to follow California’s requirements; thus, CARB iseffectively determining fuel economy policies for the entire nation.

As a result of these regulatory actions, automobiles will be significantly more
expensive to produce, there will be fewer affordable new vehicle options for American families, and fewer new vehicles will be sold in the U.S. That will do more than

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Mandate for Leadership: The Conservative Promisetranslate into a loss of auto industry jobs for American workers: It will also mean asignificant increase in traffic deaths and injuries. As fewer new cars are purchased,
the price of used cars will rise, and more Americans will be left driving older cars,
which traffic statistics show are much less safe than newer vehicles. NHTSA itself
has acknowledged that the Biden Administration’s fuel economy standards will
generate hundreds of additional fatalities and thousands of additional injuries
on U.S. highways. Because older cars also produce more harmful air pollution, theaging of America’s fleet will also have negative consequences for air quality.
In addition, the Biden Administration’s efforts to accelerate EV sales by regulatory fiat work against the national security interests of the United States incontravention of Congress’s goals under EPCA. Increasing the production of EVs
will make the U.S. more dependent on China and other foreign countries that
control the supply and processing of rare earth minerals that are needed for EV
batteries. And the faster deployment of EVs will put a major strain on America’s
vulnerable power grid, requiring large investments in critical infrastructure anda big boost in the nation’s electricity production, including from gas-fired and oilfired power plants.
In exchange for all of these harmful effects—on traffic safety, consumer choice,
American jobs, the nation’s air quality, and U.S. national security—the Biden fueleconomy regulations are predicted to have no meaningful effect on global temperature trends over the long term.8
The next Administration must return the federal fuel economy program to thelimits established by Congress. The standards issued by NHTSA must be reset atreasonable levels that are technologically feasible for ICE automobiles and consistent with an increase in domestic auto production and healthy growth in thesale of safer and more affordable new vehicles. To achieve these goals, the next
Administration should:llReduce proposed fuel economy levels. The Administration should
consider returning to the minimum average fuel economy levels specified
by Congress for model year 2020 vehicles: levels aimed at achieving afleet-wide average of 35 miles per gallon. Consideration should be given
to maintaining the standards at those levels for the near term in order topromote the objectives laid out by Congress.
Ensure that DOT again exercises priority in the setting of fueleconomy standards. Any EPA limits on carbon dioxide emissions, even
if authorized under the Clean Air Act, must support and work in harmony
with DOT standards and must not override them or usurp DOT’s regulatoryrole under EPCA. For example, EPA could regulate air conditioning systems
and leave engine standards to DOT.

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2025 Presidential Transition Projectl

Revoke the special waiver granted to California by the Biden
Administration. California has no valid basis under the Clean Air Act toclaim an extraordinary or unique air quality impact from carbon dioxide
emissions, and EPCA is clear that under no circumstances may a stateagency regulate fuel economy in place of DOT. The federal government
should therefore exercise its preemptive authority over CARB and take all
steps necessary to invalidate any inconsistent fuel economy requirements
imposed by CARB, including its ban on sales of internal combustion engines.

FEDERAL HIGHWAY ADMINISTRATIONThe Federal Highway Administration (FHWA) has jurisdiction over the interstate highway system, which is vital for the transportation of goods and people
throughout the country. The FHWA, in conjunction with state DOTs, works toensure the quality and safety of highways and bridges.
However, over the course of decades, presidential Administrations and Congress have caused the FHWA to go beyond its original mission. The variety of
infrastructure projects now eligible for funding through the FHWA include ferryboat terminals, hiking trails, bicycle lanes, and local sidewalks. In many cases,
such projects should be the sole responsibility of local or state governments, notdependent on FHWA funding. For local projects, federal involvement adds red
tape and bureaucratic delays rather than value.
The Biden Administration has broadened the FHWA’s scope by emphasizing thepriorities of progressive activists instead of pursuing practical goals. These policies
include a focus on “equity,” a nebulous concept that in practice means awarding
grants to favored identity groups, as well as imposing obligations on states concerning carbon dioxide emissions from highway traffic—areas not encompassed within
FHWA’s statutory authorities. Furthermore, the Biden Administration’s embraceof the “Vision Zero” approach to safety often means actively seeking congestion
for automobiles to reduce speeds. Finally, the Administration has sought to use
a “guidance memo” to impose policies not enacted by Congress, most notably tomake it harder for growing states to expand highway capacity. Instead, the next
Administration should:lllSeek to refocus the FHWA on maintaining and improving the
highway system.
Remove or reform rules and regulations that hamper state
governments.
Reduce the amount of federal involvement in local
infrastructure decisions.
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Mandate for Leadership: The Conservative Promise

AVIATION

Americans value the ability to travel safely and inexpensively by air. In the
United States, the private sector has developed the world’s safest, most effective
passenger and cargo air transport networks. Current policies threaten to undo that
legacy and to strangle the development of new technologies such as drones and“advanced air mobility,” including small aircraft to serve as air taxis or to conduct
quiet vertical flights.
Starting in the 1970s, deregulation and increased competition turned air travelfrom a luxury to an affordable travel option enjoyed by most Americans. The UnitedStates has four major airlines, each with roughly 20 percent of the domestic market.
They compete with each other over the vast majority of routes. Several smaller
carriers provide additional competition and other options for travelers.
The current Administration’s policies are self-contradictory. In order to placate specific labor groups, the Biden Administration not only opposes the growthof the major airlines, which would reduce the price of air travel, but also opposesmeasures—such as low-fare foreign competition and joint ventures of smaller U.S.
carriers—that would increase competition.
Another problematic area is aviation consumer protection. Congress has authorized DOT to prohibit specific “unfair and deceptive practices” in the airline industry
after undertaking a hearing process—authority exercised by the Office of Aviation
Consumer Protection within the General Counsel’s Office. Beginning with the Obama
Administration, this authority has been used to justify broad new regulations—in thename of achieving “fair” competition—that would impose burdensome disclosuremandates and other costly requirements without a sufficient process for gathering
supporting evidence. The Trump Administration reformed the process for issuingsuch “unfair and deceptive practices” rules,9 but the Biden Administration promptly
reversed those reforms.10 A new Administration should restore them.
In general, the next Administration should focus its efforts on making air
travel more affordable and abundant, increasing safety, increasing competition
to benefit the flying public, and removing obstacles to the rapid deployment ofemerging aviation technologies that hold the promise of improved safety, competition, opportunity, and growth. To achieve a more level playing field and increase
options for the traveling public, the next Administration should:llPublicly indicate that a new Administration would support jointventure efforts by smaller carriers (for example, Jet Blue andSpirit) to achieve scale necessary to reduce costs and compete more
effectively with the larger carriers.
Review foreign ownership and control limitations and, if necessary,
work with Congress to change existing statutes. Worldwide investors— 630 —

2025 Presidential Transition Project

are providing access to capital to foreign airlines for innovations and new
equipment purchases that U.S. airlines cannot match. The U.S. should
use the Committee on Foreign Investment in the United States (CFIUS)
process to keep out nefarious foreign actors while allowing investment
from investors in designated like-minded countries so long as U.S.-based
investors maintain plurality ownership.
ll

Establish a New Entry Initiative that commits the federal
government to approving or rejecting the applications of new air
carriers within 12 months.
Initiate a rulemaking to allocate slot-pairs more consistently toairlines at capacity-controlled airports on the primary basis of safety,
maximizing capacity, and competition.

In a perfect world, the market would dictate these options, but in the highly
regulated international aviation sector, the current incentives are to keep out competitors. Slot regulations have not been updated since the 1990s.
Well-meaning legislation and the pilot shortage are adversely affecting aviation
safety. In the wake of the 2009 Colgan Airlines crash, all commercial pilots andcopilots were required to have 1,500 flight hours. Today, facing a pilot shortage,larger and safer twin-engine planes with two pilots are being phased out of service
at smaller airports and replaced by single-engine planes that have only one pilot.
This trend could be reversed if copilots were required to have fewer flight hours
or could count certified simulator training.
Federal subsidies are also distorting the commercial market. The Essential
Air Service (EAS) program subsidizes flights to 200 small airports that are nototherwise commercially viable. The program was established in the 1970s as atemporary measure to cushion deregulation. It has since been made permanent.
Finally ending the program would free hundreds of pilots to serve larger markets
with more passengers. A new Administration could reform regulations to encourage airports in lower-served areas of the nation.
International air travel is regulated and restricted by individual treaties between
the United States and other countries. The new Administration should remaincommitted to the laudatory goal of “Open Skies.” However, many of the largest
emerging markets are not fully open, and our aviation policies should reflect thatreality and ensure that U.S. air carriers compete on a level playing field. Specifically,
so long as U.S. carriers are not able to fly over Russian airspace, the U.S. should notallow foreign carriers serving markets in East Asia and South Asia to enjoy a competitive advantage by continuing to allow them to fly to the U.S. China has failed to
put in place several of the policies to which it has already agreed; the U.S. should— 631 —

Mandate for Leadership: The Conservative Promise

not offer additional negotiations until the Chinese implement the agreements
they have already signed.
The current Administration’s policies in several areas that affect aviation andlimit America’s future opportunities for growth are internally inconsistent. In
addition to a New Entry Initiative, the new Administration should establish aninteragency clearinghouse to drive consistent policies across the government onspectrum, drones, and advanced air mobility.
FEDERAL AVIATION ADMINISTRATIONWith a budget of $18.6 billion requested for FY 202311 and an international
regulatory footprint, the Federal Aviation Administration (FAA) is DOT’s mostvisible mode. It needs reform. Air traffic control (ATC) operations account for
two-thirds of FAA’s budget, and the Air Traffic Organization (ATO) is far behind
its counterparts in Australia, Canada, and Western Europe in implementing
21st century technology. The FAA’s primary mission is ATC; its two smaller
functions are distributing federal airport grants and regulating all aspects ofaviation safety.
The FAA was once considered the world’s best government aviation agency.
Those days are long past. In the more than five decades since 1958 when the Federal
Aviation Agency (precursor to the Federal Aviation Administration) was formed,
there have been notable developments in air traffic control technology, aircraft
avionics, and engine reliability, but despite many well-intentioned attempts, there
have been few changes in the FAA’s funding structure. The FAA is still improperlyorganized and financed, and the management reforms provided in the late 1990s
remain largely unused.
The FAA is 10 years older than DOT. It provides two separate and functionallydifferent services: the world’s largest and most complex Air Navigation Service
Provider (ANSP) and, at the same time, the world’s largest civil aviation regulatory
and certificatory agency. The first is a 24/7/365 air traffic service provider. The
second is an inherently governmental organization responsible for ensuring thataerospace operators, vehicles, airports, and ANSPs are properly certified and follow
all FAA regulations. These two different organizations ought to run separately.
The FAA is the only modern Civil Aviation Authority (CAA) in the world that
does not assess fees for its services. Its funding structure, subject to the annual
appropriations process, stifles efficiency and innovation—and the FAA does notinnovate well. It spends too much time and money on research and development(R&D) and is not very good at either one. It should get out of the R&D business andfocus on testing, evaluating, and certifying private-sector innovation much more
quickly than it does today.
The FAA workforce needs to modernize. The agency needs safety and certification experts, not professional airframe and powerplant mechanics (A&Ps). It— 632 —

2025 Presidential Transition Projectneeds to hire people trained to oversee mechanics, engineers, and pilots. It is time
to consider promoting the FAA’s top executive team from within and requiring
strict professional requirements for its top appointees. Organizations such as the
FAA whose sole responsibility is public safety should be fully auditable and led byexperts in their field or industry with oversight from DOT leadership.
For 60 years, the FAA was the global leader in aerospace, from general aviation
to commercial space, but the U.S. lead has vanished. The FAA’s overly bureaucratic,
legalistic, byzantine, and more recently hyperpoliticized way of processing regulations, adopting innovation, publishing rules, and procuring new technologies
has been eclipsed by foreign CAAs and ANSPs that are eagerly certifying drones
and creating environments in which new technologies and new entrants, such as
air taxis, can thrive. To regain America’s global leadership in aviation, the next
Administration should:lll

Separate the FAA from DOT or, at a minimum, separate the ATO
from the FAA.
Completely restructure the FAA’s funding system so that the nation’s
aviation system is not held prisoner to annual appropriations or used
as a political football to solve nonaviation problems.
Require the FAA to operate more like a business. The FAA has not madegood use of the unique authority it has been given in areas like personnel
and acquisition.

In Europe, conventional control towers are being replaced by digital/remote
towers with high-resolution cameras and other sensors on tall structures and atpoints adjoining runways. In Germany and Scandinavia, as many as 15 small airports can be controlled from one remote tower center. The FAA has yet to certify
a single digital/remote tower.
Text messaging between controllers and pilots is widespread over the oceans.
The ATO began to implement what is now called DataComm in 2002 but suspended the project in 2003. This was restarted at airport control towers in 2016,
but as of October 2022, it was available in only seven of the 20 high-altitudecontrol centers.
Current technology enables flights to be managed “anywhere from anywhere,”
but the ATO resists consolidating its 20 aging centers into a much smaller
number—and lacks the funds to consolidate them. The FAA as regulator andthe ATO as traffic manager have no plans in place to handle millions of drones
and other emerging technologies such as electric vertical take-off and landing(eVTOL) aircraft.

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These shortcomings have been documented over many decades by the Government Accountability Office and DOT Inspector General. One peer-reviewed study
for the Hudson Institute by scholar Robert Poole identified the ATO’s underlying
problems as including an overly cautious culture, a growing lack of technologicaland managerial expertise, the inability to finance major capital projects with revenue bonds, and overdependence on aerospace/defense contractors.12
All of these problems are interrelated. Because of the ATO’s lack of top-notch
engineers and program managers, it has become dependent on aerospace contractors, unlike counterparts in Canada and the United Kingdom. Operating within theconstraints imposed by the annual congressional appropriations process—and withno bonding authority—the ATO is forced to implement major projects piecemeal
over many years. The ATO’s overly cautious culture appears to stem from its being
embedded in a safety regulatory agency rather than being regulated at arm’s length(as are airlines and airports).
Three organizational changes, all requiring legislation, offer the likelihood of
dealing with these problems based on the experiences of air traffic providers in
Canada and Europe. They could be implemented one at a time or together.
lll

Separate the ATO from the FAA and relocate it to separate
headquarters outside the District of Columbia.
Shift from aviation user taxes to fees for air traffic services paid
directly to the ATO.
Allow the ATO to issue long-term revenue bonds for major projects.

Shorter-term reforms could include implementing user fees for unconventional
airspace users (for example, advanced air mobility, space launch, and recovery)
and giving the ATO a deadline after which it could not authorize or fund any morenondigital/remote control towers. These reforms would also require legislation.
FEDERAL TRANSIT POLICY

The definition of “mobility” continues to evolve dramatically with the rise of
new multimodal concepts, traveler needs, and emerging capabilities. These fundamental changes in the way transportation services are offered also influence theform of our communities.
New micromobility solutions, ridesharing, and a possible future that includes
autonomous vehicles mean that mobility options—particularly in urban areas—
can alter the nature of public transit, making it more affordable and flexible for
Americans. Unfortunately, DOT now defines public transit only as transit provided by municipal governments. This means that when individuals change their— 634 —

2025 Presidential Transition Projectcommutes from urban buses to rideshare or electric scooter, the use of public
transit decreases. A better definition for public transit (which also would requirecongressional legislation) would be transit provided for the public rather thantransit provided by a public municipality.
The COVID-19 pandemic caused a substantial decline in usage for all forms oftransportation. Mass transit has been the slowest mode to recover, with October
2022 ridership reaching only 64 percent of the level seen in October 2019. The
sustained increase in remote work has caused changes in commuting patterns.
Since facilitating travel for workers is one of the core functions of mass transit
systems, a permanent reduction in commuting raises questions about the viabilityof fixed-route mass transit, especially considering that transit systems required
substantial subsidization before the pandemic.
Regrettably, the 2021 Infrastructure Investment and Jobs Act13 authorized tensof billions of dollars for the expansion of transit systems even as Americans weremoving away from them and into personal vehicles. Lower revenue from reduced
ridership is already driving transit agencies to a budgetary breaking point, andadded operational costs from system expansions will make this problem worse.
The Capital Investment Grants (CIG) program is another example of Washington’s tendency to fund transit expansion rather than maintaining or improving
current facilities. The CIG program, which began in 1991, funds only novel transit
projects. These can include new rail lines (regardless of the demand for preexistingrail in the area) and costly operations such as streetcars.
Because Americans have demonstrated a strong preference for alternativemeans of transportation, rather than throwing good money after bad by continuing
federal subsidies for transit expansion, there should be a focus on reducing costs
that make transit uneconomical. The Trump Administration urged Congress toeliminate the CIG program, but the program has strong support on Capitol Hill.
At a minimum, a new conservative Administration should ensure that each CIG
project meets sound economic standards and a rigorous cost-benefit analysis.
The largest expense in transit operational budgets is labor. Compensation costs
for transit workers exceed both regional and sector compensation averages. Thisis driven by generous pension and health benefits rather than by exorbitant wages.
Since workers value wages more than they value fringe benefits, this has led to aperverse situation in which transit agencies have high compensation costs yet are
struggling to attract workers.
The next Administration can remove the largest obstacle to reforming laborcosts. Section 10(c) of the Urban Mass Transportation Act of 196414 was initiallyintended to protect bargaining rights for workers in privately owned transit systems that were being absorbed by government-operated agencies. The provision
has mutated into a requirement that any transit agency receiving federal funds
cannot reduce compensation, an interpretation that far exceeds the original statute.

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Returning to the original intent would allow transit agencies to adjust fringe benefits without fearing a federal lawsuit.
It is also vital to move away from using the Highway Trust Fund to prop up
mass transit. The fund was driven into insolvency (and repeated bailouts) throughdecades of transfers to transit without any increase in transit usage to show for it.
With the federal government facing mounting debt, the best course of action would
be to remove federal subsidies for transit spending, allowing states and localities
to decide whether mass transit is a good investment for them.
FEDERAL RAILROAD POLICYThe Federal Railroad Administration (FRA) is making decisions based onpolitical considerations that are at variance with its safety mission. Instead ofbasing regulatory decisions on the costs and benefits of the available alternatives, FRA is promoting actions that favor the status quo and inhibit the use oftechnology to improve railroad safety. FRA should be making decisions basedon objective evidence of the most cost-effective way to accomplish the agency’s
safety goals.
FRA’s singular focus on job preservation is contrary to FRA’s mission, and it
has a deleterious effect on the morale of FRA’s professional staff, as shown by
the annual employee surveys conducted by the Office of Personnel Management.
FRA needs to communicate clearly to its career employees a new commitment tomaking decisions that are consistent with the agency’s safety mission.
FRA’s procedures call for decisions on waivers to be made by its Safety Board.
Appeals can be taken to the Administrator. However, FRA has deviated from theseprocedures as the Administrator has injected himself into Safety Board decisions.
FRA needs to review its actions with respect to specific proceedings where theagency’s direction cannot be justified. For example:lll

FRA’s Notice of Proposed Rulemaking (NPRM) on crew size is notbased on safety considerations; it is designed to reduce flexibility bymaking it impossible for railroads to operate with crews of fewer than
two in circumstances where there is no operational need for the secondcrew member.
Although FRA could adopt a modern inspection program that takes
advantage of technological ways to inspect track, it is refusing to amend
50-year-old track inspection requirements, leaving customers withhigher costs.
FRA is refusing to take final action on a rulemaking proceeding that would
modernize brake inspection requirements by taking advantage of the ability— 636 —

2025 Presidential Transition Projectto track brake inspections on rolling stock electronically instead of by using
paper air brake slips, which would enable extending the interval between
brake inspections for trains and eliminating restrictions on the ability toplace/remove blocks of cars in trains.
ll

FRA will be proposing certification requirements for dispatchers and signal
employees despite the failure of the Railroad Safety Advisory Committee(RSAC) to identify any safety benefit.
FRA is planning to propose emergency escape breathing apparatus
requirements for train crews even though FRA staff long ago concluded
that the costs of these requirements would far outweigh their veryminimal benefits.

It is vital that the integrity of FRA’s research program be preserved. In 2022,
FRA switched the management of the Transportation Technology Center (TTC)in Pueblo, Colorado, from a subsidiary of the Association of American Railroads(AAR) to Ensco, Inc. FRA seems determined to direct research to TTC, even when
there are better choices with respect to the research in question, in an effort tosupport TTC financially and justify its decision to change management at TTC.
This change in approach threatens the collaborative approach to research between
FRA and the railroads that has existed for decades. FRA should make its decisions
on where to spend its research dollars solely on the merits of improving the safety
and efficiency of the railroad industry.
MARITIME POLICY

The Maritime Administration (MARAD) was established by President Harry
Truman in 1950 and was transferred to DOT in 1981. A principal function is “maintain[ing] the overall health of the U.S. Merchant Marine,”15 which is important
both to national defense and to foreign and domestic commerce. MARAD is alsoin charge of the United States Merchant Marine Academy and operates ships andfunding for the six state maritime academies.
MARAD would be better served by being transferred from DOT to the Department of Homeland Security (DHS). MARAD is the only DOT modal administrationthat does not regulate the industry that it represents: The maritime industry is
regulated by the U.S. Coast Guard (ships and personnel) and by the Federal Maritime Commission (cargo rates and competitive practices).
Furthermore, MARAD has responsibilities both in peacetime commerce andoperationally in wartime/crisis sealift through its responsibility to manage the
National Defense Reserve Fleet and 45-ship Ready Reserve Force for the U.S. Navy.
These missions are unique to MARAD within DOT. As a result, MARAD’s missions— 637 —

Mandate for Leadership: The Conservative Promiseand purpose, and therefore its funding priorities, are not well understood and historically have been minimalized in planning and budgeting.
MARAD, including its subordinate Service Academy (the U.S. Merchant Marine
Academy) should be transferred to the Department of Defense (if the Coast Guard
is located there because DHS has been eliminated) or to the Department of Homeland Security. In this way, the two agencies charged with oversight and regulationof the Maritime sector—MARAD and the United States Coast Guard—would bealigned under the same department where operational efficiencies could be realized more easily.
Serious consideration should be given to repealing or substantially reforming
the Jones Act,16 which would require legislation. The economic costs of the Jones
Act, which is notionally in place to promote a robust Merchant Marine, vastly
exceed its effect on the supply of domestic ships. For instance, no liquified naturalgas (LNG) can be shipped from Alaska to the lower 48 states because there are no
U.S.-flagged ships that carry LNG. If there are genuine concerns about U.S. fleet
capacity in the absence of the Jones Act, it would be possible to do so through an
expansion of the Defense Reserve Fleet.
Another DHS agency, the Federal Emergency Management Agency (FEMA), is afrequent user of MARAD Ready Reserve Force shipping during disaster assistancemissions. Transferring MARAD to DHS would make coordination and requisitionof those vessels a smoother and more rapid process. DHS has responsibility forreviewing and approving Jones Act waivers. This process first requires a market
survey of available shipping tonnage that is completed by MARAD. The processingof Jones Act waiver requests would be streamlined if both agencies were in thesame department.
Finally, DHS as a department is experienced in administering and budgeting forthe operation of an existing federal service academy, the U.S. Coast Guard Academy,
which is similar to the U.S. Merchant Marine Academy in size. There would be
increased efficiencies and better alignment of the missions of these two institutions
if they were under one single department that has equity in the industries servedby these academies.
CONCLUSION

Americans need more abundant and affordable transportation. They need more
affordable and safer cars as well as physical aspects of transportation such as roads,
bridges, airports, ports, and rail lines. The Department of Transportation shouldbe evaluating which aspects of transportation are contributing to the economic
competitiveness of the United States and the well-being of Americans—and that
therefore should continue to be funded.
All too often, DOT’s mission is described as reducing the number of trips, using
less fuel, and raising the costs of travel to Americans through increased use of— 638 —

2025 Presidential Transition Project

renewables. These goals are not compatible with what should be DOT’s purpose:to make travel easier and less expensive. That is what the American people want,
and that is what DOT should provide.

AUTHOR’S NOTE: The preparation of this chapter was a collective enterprise of individuals involved in the2025 Presidential Transition Project. All contributors to this chapter are listed at the front of this volume, but Steven
Bradbury, David Ditch, and Robert Poole deserve special mention. The author alone assumes responsibility for thecontent of this chapter, and no views expressed herein should be attributed to any other individual.

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ENDNOTES

1.
2.

3.
4.

5.
6.
7.
8.

9.

10.

11.

12.

13.
14.
15.
16.

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