a

GAO

United States General Accounting Office

Report to the Committee on Environment 

and Public Works, U.S. Senate

December 2003 FREIGHT 

TRANSPORTATION

Strategies Needed to 

Address Planning and 

Financing Limitations

GAO-04-165
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Highlights of GAO-04-165, a report to the 

Committee on Environment and Public 

Works, U.S. Senate 

December 2003

FREIGHT TRANSPORTATION

Strategies Needed to Address Planning 

and Financing Limitations 

The major challenges to freight mobility share a common theme—

congestion. National studies point to such problems as overcrowded 

highways and freight-specific “chokepoints” that stifle effective intermodal 

transfer of cargoes. All 10 ports GAO studied faced similar congestionrelated problems. For example, many of the ports are in dense urban areas, 

limiting the ability to expand rail yards, roadways, and other infrastructure. 

Increased port security measures may exacerbate congestion if new controls 

drastically slow the movement of goods. 

Stakeholders encounter two main limitations in addressing freight mobility 

challenges. The first relates to the limited visibility that freight projects 

receive in the process for planning and prioritizing how transportation 

dollars should be spent. The planning process often lacks a comprehensive 

evaluation approach, such as a cost-benefit framework that might result in 

the implementation of freight improvements to better ensure that systemwide, multimodal solutions are considered and adopted where appropriate. 

The second relates to limitations of federal funding programs, which tend to 

dedicate funds to a single mode of transportation or a nonfreight purpose. 

Two strategies may help address these limitations. One is to ensure that 

transportation planning cuts across modes and individual jurisdictions, 

includes coordination with freight stakeholders representing an intermodal 

perspective, and includes sound analytical approaches and meaningful data 

needed to compare the benefits of freight and passenger projects. The 

second is to develop a multifaceted funding approach that includes 

improved access of freight projects to existing funding sources and support 

for programs that emphasize better use of existing infrastructure. If 

integrated in these strategies, three principles could better assure that the 

freight infrastructure system provides the level of capacity and performance 

that makes the greatest contribution to the nation’s economic well-being. 

These principles include promoting efficiency by embracing a “user pay” 

approach, establishing performance measures, and aligning incentives for 

planning agencies to adopt best practices. 

Truck Congestion near the Port of New York/New Jersey 

The strong productivity gains in the 

U.S. economy have hinged in part 

on transportation networks 

working more efficiently. The 

nation’s ports, which handle 95 

percent of overseas freight 

tonnage, are a key link in this 

network, and efficient intermodal 

links between ship, rail, and 

highways are vital to continued 

productivity gains. GAO was asked 

to address (1) the challenges to 

freight mobility, (2) the limitations 

key stakeholders have encountered 

in addressing these challenges, and 

(3) strategies that may aid decision 

makers in enhancing freight 

mobility. GAO’s work was based 

on a synthesis of previous studies 

and a review of conditions at 10 

ports and surrounding areas that 

handle almost two-thirds of all 

containers moving in and out of the 

country. 

GAO recommends that the 

Secretary of Transportation take 

steps to facilitate state and local 

planners’ use of better methods 

and tools to make freight 

transportation investment 

decisions. These methods and 

tools include better freight-related 

data, consistent and sound 

evaluation approaches, and greater 

consideration of alternatives to 

capital construction. The 

Department of Transportation 

reviewed the draft of this report 

and generally agreed with the facts 

presented, but did not take a 

formal position on the 

recommendations. 
Page i GAO-04-165 Strategies Needed to Address Planning and Financing Limitations

Contents

Letter 1

Results in Brief 2

Background 6

Challenges to Freight Mobility Center on Congestion 8

Planning and Financing Limitations Pose Difficulties in Addressing 

Freight Mobility Challenges 19

Two Key Strategies Could Help Address Freight Planning and 

Financing Limitations 34

Conclusions 54

Recommendations for Executive Action 55

Agency Comments and Our Evaluation 56

Appendixes

Appendix I: Objectives, Scope, and Methodology 58

Appendix II: Summary of the Administration’s 2003 Surface 

Transportation Reauthorization Proposal Freight-related 

Provisions and Observations 60

Appendix III: Summary of Freight-related Recommendations Developed by 

the Transportation Research Board 65

Appendix IV: Summary of the Freight-related Reauthorization Proposals 

Developed by Stakeholders 67

Appendix V: Assessment of Stakeholder Proposals 72

Appendix VI: GAO Contacts and Staff Acknowledgments 73

GAO Contacts 73

Staff Acknowledgments 73

Tables Table 1: Key Elements of Evaluations Used in a Public 

Decision-making Process 25

Table 2: Types of Data Collected and the Additional Data Needs for 

Freight Mobility Planning 28

Table 3: Federal Funding and Financing Sources Providing 

Eligibility for Some Freight Projects 33

Table 4: Examples of Stakeholder Proposals to Expand Eligibility 

Criteria to Include Freight Projects 44

Table 5: Description of Nonbuild Alternatives and Relevant 

Stakeholder Proposals 50

Table 6: Coverage of Strategy Elements in the Most Extensive 

Reauthorization Proposals 72
Contents

Page ii GAO-04-165 Strategies Needed to Address Planning and Financing Limitations

Figures Figure 1: Congestion-related Challenges Are the Dominant 

Constraint to Freight Mobility 9

Figure 2: Trucks and Cars on Congested I-710 near the Ports of Los 

Angeles and Long Beach 10

Figure 3: Examples of Freight-related Congestion at Six Large 

Gateway Ports and the Surrounding Areas 12

Figure 4: Connector to the Elizabeth New Jersey Port Authority 

Marine Terminal: Intersection of North Fleet Street and 

Corbin Street 15

Figure 5: At-Grade Rail Crossing Near Ports of Seattle/Tacoma—

before and after Construction of Overpass 16

Figure 6: Examples of Infrastructure with Limited Expansion 

Potential 17

Figure 7: Focus of Planning and Funding Processes Limit 

Consideration of Freight Improvements 20

Figure 8: Reasons for Limited Private-Sector Participation in the 

Planning Process 24

Figure 9: Key Strategies and Principles to Address Planning and 

Financing Limitations 35
Contents

Page iii GAO-04-165 Strategies Needed to Address Planning and Financing Limitations

Abbreviations

CMAQ Congestion Mitigation and Air Quality

CMS Congestion Management System

DOT Department of Transportation

FAF Freight Analysis Framework

FAIR Fast and Intertwined Regular Lanes

FAST Freight Action Strategy

FHWA Federal Highway Administration

FMSIB Freight Mobility Strategic Investment Board

HOT high-occupancy toll 

HOV high-occupancy vehicle 

ISTEA Intermodal Surface Transportation Equity Act 

ITS Intelligent Transportation System

MPO metropolitan planning organization

NHS National Highway System

RRIF Rail Revitalization and Improvement Funding

STP Surface Transportation Program

TEA-21 Transportation Equity Act for the 21st Century

TIFIA Transportation Infrastructure Finance and Innovation Act

TRB Transportation Research Board

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Page 1 GAO-04-165 Strategies Needed to Address Planning and Financing Limitations

United States General Accounting Office

Washington, D.C. 20548

Page 1 GAO-04-165 Strategies Needed to Address Planning and Financing Limitations

A

December 19, 2003 Letr

The Honorable James M. Inhofe

Chairman

The Honorable James M. Jeffords

Ranking Minority Member

Committee on Environment and Public Works

United States Senate

Globalization has had a dramatic effect on the U.S. economy, resulting in a 

greater reliance on international trade and the efficient movement of goods 

within the United States. Continued development and efficient 

management of the vast transportation system of highways and rail lines 

that connect seaports, airports, and intermodal facilities are all important 

factors contributing to the nation’s economic growth and productivity. 

Because more than 95 percent of our nation’s overseas trade tonnage 

moves by water, container ports are key gateways for our nation’s imports 

and exports and, therefore, play a particularly critical role in moving goods 

into and across the country. Increasing congestion at these seaports and 

the surrounding metropolitan areas is a growing national concern and 

represents a threat to the efficient flow of the nation’s goods. 

Planning and funding of projects to improve the efficiency of freight 

movement in the transportation system are becoming increasingly 

important. At the federal level, the Intermodal Surface Transportation 

Efficiency Act of 1991 and its successor legislation, the Transportation 

Equity Act for the 21st Century, establish much of the structure of federal 

assistance for surface transportation projects. Under this structure, 

planning and funding of federally assisted projects is carried out primarily 

by local metropolitan planning organizations and by state departments of 

transportation. Reauthorization of this legislation—an issue currently 

before Congress—presents an opportunity to reexamine ways to enhance 

planning and financing activities that improve freight movement at the 

local level and to consider whether adjustments should be made in current 

policies and programs.

This report responds to your request to provide information on issues 

related to moving freight through the nation’s largest container ports and 

surrounding metropolitan areas and federal efforts to assist and enhance 

freight mobility efforts at these locations. As agreed with your offices, we 

identified (1) the national challenges to freight mobility and how these 

challenges were evident at selected container ports and surrounding 
Page 2 GAO-04-165 Strategies Needed to Address Planning and Financing Limitations

metropolitan areas, (2) the existing limitations to effectively addressing 

these challenges, and (3) strategies that may help public decision makers 

improve freight mobility, including a discussion of relevant provisions of 

selected proposals related to reauthorization of federal surface 

transportation programs.

To identify the challenges to freight mobility, the limitations to advancing 

freight improvements, and strategies to enhance freight mobility, we 

conducted an evaluation synthesis of public- and private-sector reports, 

studies, and proposals related to freight movement issues. To determine 

whether these challenges and limitations were evident at the nation’s 

largest container ports and surrounding metropolitan areas, we conducted 

site visits and interviews of a wide range of public and private 

transportation officials in six metropolitan areas that collectively contain 

10 ports that handle two-thirds of the containers moving in and out of the 

country each year.1

 To identify strategies that may aid decision makers in 

enhancing freight mobility, we analyzed the results of our review of the 

challenges and limitations and built on the perspectives gained from our 

past work in transportation and infrastructure systems and federal 

investment strategies. 2

 We assessed various reauthorization proposals 

developed by key stakeholders, including the administration, within the 

context of these strategies. (See app. I for more information on the scope 

and methodology.) We conducted our work from October 2002 to 

November 2003 in accordance with generally accepted government 

auditing standards.

Results in Brief Freight mobility is most affected by congestion-related challenges. Freight 

traffic on roadways has increased fourfold over the last two decades, and 

both rail and highway congestion are particularly severe in urban areas 

1

The six metropolitan areas are Charleston, SC; Seattle/Tacoma, WA; Los Angeles/Long 

Beach, CA; San Francisco/Oakland, CA; Houston, TX; and New Jersey/New York. Except for 

Charleston and Houston, each of the areas has two ports. The percentage is based on the 

number of 20-foot equivalent container units (TEUs), a standard measurement of container 

volume.

2

U.S. General Accounting Office, Surface and Maritime Transportation: Developing 

Strategies for Enhancing Mobility: A National Challenge, GAO-02-775 (Washington, D.C.: 

Aug. 30, 2002); U.S. General Accounting Office, Marine Transportation: Federal Financing 

and a Framework for Infrastructure Investments, GAO-02-1033 (Washington, D.C.: Sept. 9, 

2002); and U.S. General Accounting Office, U.S. Infrastructure: Agencies’ Approaches to 

Developing Investment Estimates Vary, GAO-01-835 (Washington, D.C.: July 20, 2001).
Page 3 GAO-04-165 Strategies Needed to Address Planning and Financing Limitations

where container ports for international trade are located. Such congestion 

was evident at all six locations we visited. In Oakland, for example, truck 

traffic on key access highways to the port increased by 50 to 100 percent 

from 1996 to 2000. Congestion on rail lines is also an issue. In the Los 

Angeles area, two mainline freight railroads are already experiencing 30-

minute delays per train; freight traffic is projected to more than double 

along these rail lines by 2025. Severe congestion also regularly occurs at 

freight-specific “chokepoints” or bottlenecks, which exist at entrances to 

port facilities, at-grade rail crossings where highways and rail lines 

intersect, and roads connecting interstate highways and rail lines to ports 

and intermodal facilities.3

 The area around the Port of Seattle located in 

the heart of the downtown area, for example, has considerable congestion 

due to at-grade rail crossings, which slow freight trains and trucks moving 

in and out of the port. Old and inadequate infrastructure in and around 

gateway seaports—such as underpasses, tunnels, and bridges with 

insufficient clearance—is another source of congestion. The ability to 

expand or improve this infrastructure is often limited by geography or by 

surrounding development. For example, about 90 percent of the freight 

moved through the Port of New York/New Jersey is carried by truck. 

Dense commercial and residential development adjacent to key routes in 

the area limits highway expansion in most areas and makes upgrades to 

tunnels and overpasses very expensive. Moreover, existing rail lines in the 

area have high-density usage due to heavy use by freight, commuter, and 

intercity passenger trains. Another potential source of congestion—which 

has not yet materialized—centers on tighter security measures being 

adopted in and around gateway seaports. The impact of future security 

measures, such as stricter container inspections and port access controls, 

could have a major impact on the efficient flow of goods at seaports and 

surrounding metropolitan areas, depending how such measures are applied 

and implemented. 

The fundamental limitation to overcoming freight mobility challenges is 

that the public-sector process at the state and local levels for planning and 

financing transportation improvements is not well suited to address freight 

projects. On the planning side, consideration of freight improvement 

projects as part of the local planning process is limited because the process 

is oriented to projects that clearly produce public benefits, such as 

3

For the purposes of this report, intermodal freight transportation refers to the transport of 

goods in containers that can be moved on land by rail or truck and on water by ship or 

barge.
Page 4 GAO-04-165 Strategies Needed to Address Planning and Financing Limitations

passenger-oriented projects. While freight projects also may produce 

public benefits by reducing freight congestion, generally, public planners 

are wary of providing public support for projects that directly benefit the 

private sector. In addition, the planning process often does not consider 

the regional nature of freight mobility and is subject to long lead times to 

plan and implement projects, a factor which deters valuable private sector 

participation in the process. These limitations were evident at the 

locations we visited. For example, planning officials in Southern California 

indicated that improvements to a key freight interstate route from the ports 

of Los Angeles and Long Beach clearly would have benefits that extend 

beyond the jurisdiction of the planning body. Instead of funding this type 

of freight improvement, however, planning bodies tend to allocate funding 

to nonfreight projects, which clearly benefit the local constituents. In New 

York, state officials said that the long planning horizons associated with the 

public planning process and the perception by the freight industry that it 

was not benefiting from the process have limited participation by the 

freight sector. In addition, freight projects are disadvantaged in the 

planning process because many local planning bodies have not applied 

rigorous evaluation approaches, such as a cost-benefit framework, or do 

not have good data to evaluate freight projects relative to other projects 

and to better ensure that multimodal solutions to enhance freight mobility 

are considered. Financing limitations pose another difficulty in advancing 

freight improvements. Freight projects can often have difficulty securing 

public funding because they may generate substantial private-sector 

benefits and are intermodal in nature, while funding sources often restrict 

access to private firms and focus on a single mode. For example, gaining 

access to funding sources—even those federal programs specifically 

targeted for freight projects, such as the National Corridor Planning and 

Development Program and the Coordinated Border Infrastructure 

Program—has been limited because, according to the Federal Highway 

Administration (FHWA), these programs are oversubscribed and much of 

the funding for these programs has been allocated to congressionally 

designated projects. Also, because of private ownership and other issues, 

certain freight projects, most notably rail projects, are especially difficult to 

fund through federal programs because of restrictions in using public funds 

for infrastructure that is privately owned. 

Based on our past work and the work of transportation experts, we have 

identified two key strategies that we believe are needed to effectively 

address the freight planning and financing limitations. The first strategy 

involves promoting a more systemwide perspective in planning 

transportation projects. Such a perspective involves several facets in 
Page 5 GAO-04-165 Strategies Needed to Address Planning and Financing Limitations

planning projects. For one, our case studies have demonstrated that 

successful intermodal projects—such as the Freight Action Strategy (FAST 

Corridor) project in Washington state4

—are those that are coordinated 

across various transportation modes and planning jurisdictions and include 

close coordination among multiple sets of stakeholders. Also, active 

participation by the private sector in partnership with the public sector 

often helps to ensure a successful outcome. The private sector often can 

bring a more global view of freight needs to the planning process, can help 

identify and implement projects, and can provide new data for making 

more informed decisions. An integral part of this strategy is also ensuring 

that sound analytical approaches are being applied locally and meaningful 

data are available, not only to evaluate and prioritize infrastructure 

investments but also to determine whether public support is justified by 

considering a wider array of social and economic costs and benefits. The 

second strategy involves determining the appropriate federal role and 

providing a wider range of financing and related options to enhance freight 

mobility. Expanding the eligibility criteria for existing programs to cover a 

broader range of freight projects is one way to accomplish this. For 

example, one of the administration’s current proposals is to expand the 

eligibility of one relevant program to include public or private freight rail 

facilities and intermodal freight transfer facilities. Another way could 

involve expanded support for alternative financing mechanisms, such as 

federal loan programs, and new sources of revenue, such as truck toll 

lanes, to appropriately blend public and private funds to match public and 

private costs and benefits. Finally, promoting low cost alternatives to 

expand capacity through the more efficient use of existing transportation 

infrastructure may be a way to address congestion with limited funds. 

These alternatives include a diverse mix of measures, including corrective 

and preventive maintenance, operations and systems management, and 

new technology. The administration and freight stakeholders have 

developed a variety of reauthorization proposals to broaden eligibility 

criteria, expand alternative funding, and promote low cost alternatives 

that, taken together, could represent key components of the two strategies 

we identified. While one aspect of the administration’s reauthorization 

proposal encourages coordination and cooperation of planning agencies 

across jurisdictional boundaries and various transportation modes, more 

fundamental, bolder steps to change the way projects are planned and 

4

Through various partnerships, the FAST Corridor is a project that has identified solutions 

to problems where transportation systems meet along the freight corridor between Everett 

and Tacoma.
Page 6 GAO-04-165 Strategies Needed to Address Planning and Financing Limitations

financed may be necessary to overcome widely recognized limitations with 

the process. Some transportation experts contend that more far-reaching 

solutions, such as establishing a federally administered program to identify 

and fund freight projects having national significance, are needed to 

overcome local disincentives currently impeding such cooperation. 

We are making specific recommendations to the Secretary of 

Transportation to facilitate the use by state and local planners of better 

methods to make freight-related and other transportation investment 

decisions. These methods include increasing efforts to collect and 

maintain more complete and useful freight-related data and using 

consistent and sound analytical methods and evaluation approaches. The 

Department of Transportation reviewed a draft of this report, provided 

technical comments, and generally agreed with the facts presented in this 

report. We made changes, as appropriate, to ensure the accuracy of our 

report. The department did not take a formal position on GAO’s 

recommendations.

Background The economic significance of gateway ports is related both to consumer 

demand for imported products, which has fueled the United States’ 

increasing dependence on international trade, and to significant shifts in 

business and logistics trends. Businesses, to remain globally competitive, 

have reduced costs by moving production facilities overseas and by 

developing improved practices that highlight reliability, efficiency, and 

quality of service. For example, more companies are practicing 

multinational production, which involves manufacturing or assembling 

goods or components overseas and importing them into the United States. 

Also, the time-dependent manufacturing practice, which minimizes 

inventories to reduce warehousing costs, has resulted in the need for 

smaller, more frequent shipments of goods. 

Effective implementation of these new business practices is dependent on 

an integrated, intermodal transportation system to provide efficient and 

reliable freight movement. Within the ports, quick movement of imports 

and exports relies on ready transfer between ships and other 

transportation modes, particularly highway and rail. Outside the ports 

themselves, freight shares the transportation system with passenger traffic. 

However, the transportation system also includes some infrastructure that 

is more freight-specific, such as rail yards, intermodal connectors, and 

some exclusive rail rights-of-way that allow trains to move quickly without 

contributing to congestion. 
Page 7 GAO-04-165 Strategies Needed to Address Planning and Financing Limitations

Freight infrastructure projects are essentially a joint enterprise of both the 

private and public sectors and are typically intermodal in nature. Virtually 

all freight transportation carriers are private companies and conduct most 

of the actual transportation of cargo. Private sector players include 

shipping lines, terminal operators, trucking companies, railroads, airlines, 

and pipeline companies that often compete with each other for shipping 

business. These entities typically make key routing, operating, and 

equipment investment decisions. The public sector provides infrastructure 

such as highways, waterside and upland port/intermodal facilities, harbor 

development, channels, navigation aids, and locks and dams on inland 

waterways. For the most part, the supporting transportation infrastructure 

for freight transportation is publicly owned, with the exception of rail 

infrastructure. 

The Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA) and 

its successor legislation, the Transportation Equity Act for the 21st Century 

(TEA-21), established federal funding and financing programs for surface 

transportation projects. Federal support for freight transportation 

infrastructure projects mainly occurs through the federal surface 

transportation programs, which include a number of programs targeted for 

specific modes and purposes. Other programs have been established at the 

federal level to build, maintain, and operate inland waterways and enhance 

and maintain harbors. 

Revenues collected and disbursed through the surface transportation 

program are derived mainly from user tax receipts credited to the Highway 

Account of the Highway Trust Fund. The user taxes include excise taxes 

on motor fuels (gasoline, gasohol, diesel, and special fuels) and truckrelated taxes on truck tires and sales of trucks and trailers. FHWA 

distributes highway program funds to the states through annual 

apportionments according to statutory formulas that consider a variety of 

factors, including vehicle miles traveled on the interstate system and motor 

fuel usage by each state’s highway users. The federal share for project 

funding is usually 80 percent but can vary among programs, road types, and 

states. State and local governments then match federal funds from other 

sources, such as state and local revenues. 

States have primary responsibility for selecting projects and for building 

and maintaining roads. Innovations in ISTEA and TEA-21 allowed states 

more flexibility to use federal funds for freight projects, established publicprivate partnerships, and allowed the expenditure of federal aid on 

nonhighway freight projects in certain circumstances. For example, with 
Page 8 GAO-04-165 Strategies Needed to Address Planning and Financing Limitations

the passage of ISTEA, it was possible through the Congestion Mitigation 

and Air Quality program (CMAQ) for states to fund intermodal freight 

projects that included improvements to rail lines and port facilities. With 

the passage of TEA-21, public-private partnerships were made possible 

through programs like the Transportation Infrastructure Finance and 

Innovation Act (TIFIA), a loan and loan guarantee program. However, 

because surface transportation infrastructure is mainly funded through 

highway user fees and is based on a user-pays principle, revenues 

generated from these fees generally are targeted for highway or transit 

projects. 5

Challenges to Freight 

Mobility Center on 

Congestion

Congestion-related challenges are among the dominant constraints for 

freight mobility. Congestion on our nation’s highways and at intermodal 

connectors to rail lines, terminals, and port facilities threaten the efficiency 

and reliability of the freight transportation system, both locally and 

nationally. Locally, the most acute impacts of congestion are traffic 

slowdowns, noise, and air pollution, which threaten freight and passenger 

mobility alike. Just as significant is the impact that an inefficient, 

congested transportation system has on the national economy and on 

international trade. For example, the ports of Los Angeles, Long Beach, 

and Oakland together account for over 40 percent of the container traffic 

coming into and going out of the United States; over half of the cargo 

coming into those three ports is destined for locations throughout the 

nation, including New York City and Atlanta.6

 

Several major sources of congestion can impede efficient freight flow. (See 

fig. 1.) One is the current high level of traffic on roadways and rail lines, 

which is particularly severe in metropolitan centers near gateway ports for 

international trade, and which shows no signs of abating. Moreover, 

freight-specific chokepoints exist at rail crossings and roads connecting 

intermodal terminals, seaports, and airports. In urban areas, limited 

expansion potential and infrastructure deficiencies, such as poorly 

5

A portion of highway user revenues is dedicated to mass transit.

6

According to information provided by the Port of Los Angeles, slowdown of this cargo in 

the Los Angeles area can have an economic ripple effect for the nation as a whole. For 

example, the Los Angeles Economic Development Corporation released estimates as part of 

a study, placing the total trade disruption cost at $6.28 billion. However, the Bureau of 

Transportation Statistics notes that costs of the shutdown have ranged from $1.67 billion to 

$19.4 billion, depending on the provider of the estimate.
Page 9 GAO-04-165 Strategies Needed to Address Planning and Financing Limitations

designed access roads and insufficient rail and roadway clearances for 

bridges and tunnels, further contribute to congestion and impede the 

efficient flow of goods. Tighter security measures being adopted in and 

around large gateway seaports may also directly impact the efficient flow 

of goods. While security measures adopted thus far have not apparently 

disrupted the efficient flow of goods to and from seaports, the impact of 

future security measures on goods movement, such as stricter container 

inspections and tighter access controls to port facilities, is largely unknown 

and is a growing concern of freight industry stakeholders. 

Figure 1: Congestion-related Challenges Are the Dominant Constraint to Freight 

Mobility
Page 10 GAO-04-165 Strategies Needed to Address Planning and Financing Limitations

Current Levels of 

Congestion Are Already 

Significant and Will Likely 

Grow with Increasing 

Traffic Volumes

One major challenge to freight mobility is the existing high demand on the 

transportation infrastructure, which is increasing in large urban areas near 

international gateway ports. Overall, highway congestion for passenger 

and commercial vehicles traveling during peak driving periods doubled 

from 1982 through 2000. Freight traffic is adding to this congestion at a 

faster rate than passenger traffic. For example, from 1993 through 2001, 

truck traffic on urban highways increased more than twice as much as 

passenger traffic.7 This is particularly relevant for freight mobility, since 

trucks carried over 70 percent of all tonnage and must share the highways 

with other road users. (See fig. 2.) 

Figure 2: Trucks and Cars on Congested I-710 near the Ports of Los Angeles and 

Long Beach

7

Trucks include both single unit trucks (six tires or more) and combination trucks (trailers 

and semitrailers).
Page 11 GAO-04-165 Strategies Needed to Address Planning and Financing Limitations

As a group, the six regions we studied had varying degrees of highway 

congestion. According to a study by the Texas Transportation Institute, 

driver delay times8

 for the locations we visited ranged from 26 hours per 

year in Charleston, South Carolina, to nearly 140 hours per year in Los 

Angeles—the latter representing more than twice the average of 62 hours 

for the locations included in the study.9

 Officials in the large gateway ports 

we visited cited numerous examples of how congestion affects the 

movement of freight in and around the ports and surrounding urban areas. 

(See fig. 3.) 

8

Delay times for passenger and freight are measured in average annual peak-person hours of 

delay. Annual person-hours of delay is equal to daily vehicle hours of incident plus recurring 

delay times 250 working days per year times 1.25 persons per vehicle.

9

Texas Transportation Institute, The 2002 Urban Mobility Study, http://mobility.tamu.edu, 

Texas A&M University (June 2003). 
Page 12 GAO-04-165 Strategies Needed to Address Planning and Financing Limitations

Figure 3: Examples of Freight-related Congestion at Six Large Gateway Ports and 

the Surrounding Areas

While congestion affects roads, it was also present on other transport 

modes. In Southern California, for example, rail freight operations move 

along the main lines of two railroads; parts of these tracks are shared by 

both commuter and intercity passenger rail. Currently, freight trains are 

experiencing daily delays on the lines averaging about 30 minutes per train. 

In 2000, these lines handled up to 59 freight trains per day. Unless more 

tracks are added and key at-grade rail crossings are eliminated, the average 

delay per train will likely escalate because the number of freight trains is 

projected to increase to as many as 130 per day by 2025. 
Page 13 GAO-04-165 Strategies Needed to Address Planning and Financing Limitations

Specific Intermodal 

Chokepoints Exacerbate 

Congestion as Traffic 

Volumes Increase

While the freight industry shares many congestion problems with other 

users of the transportation system, some sources of congestion have a 

more severe impact on freight mobility. In large urban gateway areas, 

severe freight congestion regularly occurs at roads connecting main 

highway and port landside facilities10 and where rail lines and highways 

intersect. These bottlenecks or chokepoints are an important indicator of 

those locations where the transportation system has reached capacity. 

Chokepoints on highway intermodal connectors and access roads are a 

major source of congestion and concern among freight stakeholders. 

Examples of such connectors include exit ramps from major highways, as 

well as local access roads that link highways to the port facilities and 

intermodal yards. Although these connectors represent less than 1 percent 

of total National Highway System11 (NHS) mileage, they provide critical 

connectivity between highways and primary roadways, rail yards, airports, 

and seaports. According to FHWA officials, investment to improve 

intermodal connectors is expected to be a key component in reducing 

freight chokepoints.12 Because these connectors were not originally 

designed to handle large volumes of freight traffic, they typically have 

higher rates of deterioration than other roads and highways. Further, the 

size of current equipment (e.g., trucks and trailers) has often surpassed 

what the connectors were designed to handle, with the result that 

roadways are too narrow, turning radii are tight, and turning lanes are 

lacking. (See fig 4.) All of these factors slow freight movement and cause

10These are port facilities located on land, such as terminals including warehouses, storage 

facilities, and intermodal connectors.

11The NHS is approximately 160,000 miles of roadway including the Interstate Highway 

System, as well as other roads important to the nation’s economy, defense, and mobility. 

The Department of Transportation (DOT), in cooperation with the states, local officials, and 

metropolitan planning organizations developed the NHS.

12U.S. Department of Transportation, Federal Highway Administration, The Role of the 

National Highway System Connectors: Industry Context and Issues (Washington, D.C.: 

February 1999).
Page 14 GAO-04-165 Strategies Needed to Address Planning and Financing Limitations

safety and operational problems along these connectors. Improving the 

condition of many of these connectors is not being addressed by local 

transportation departments because other passenger-oriented roadways 

often have a higher priority.13 

Another major chokepoint for freight mobility often occurs where the 

railroads meet highways. At-grade rail crossings, where rail lines intersect 

with roadways, can be especially problematic. (See fig. 6.) At-grade 

crossings have a double effect on both trucks and trains. At these 

locations, automobiles and trucks must often stop to allow a train to pass, 

but trains must often slow down as well.

13U.S. Department of Transportation, NHS Intermodal Freight Connectors: A Report to 

Congress (Washington, D.C.: July 2000).
Page 15 GAO-04-165 Strategies Needed to Address Planning and Financing Limitations

Figure 4: Connector to the Elizabeth New Jersey Port Authority Marine Terminal: 

Intersection of North Fleet Street and Corbin Street

Officials at some of the locations we visited view at-grade rail crossings as 

a serious freight transportation problem and are putting forth considerable 

effort and resources to develop solutions. For example, around the ports 

of Seattle, Tacoma, and Everett, officials have targeted the elimination of 

key at-grade crossings as part of a large project to address freight mobility 

needs in the area. (See fig. 5.) Phase 1 of this project is implementing a 

total of 15 infrastructure improvements, 11 of which are rail/highway 

separations.
Page 16 GAO-04-165 Strategies Needed to Address Planning and Financing Limitations

Figure 5: At-Grade Rail Crossing Near Ports of Seattle/Tacoma—before and after 

Construction of Overpass

Other rail challenges identified at the gateway container ports we visited 

include a lack of alternative train routes to prevent train blockages on 

major roadways, substandard crossing warning devices, and the need for 

rail upgrades to handle heavier cars. For example, in some locations the 

rail industry has increased the load capacity of rail cars from 263,000 to 

286,000 pounds on main rail lines. Officials in Charleston said that this has 

affected their dockside short rail—requiring upgrades so they can 

withstand the heavier cars.

Much Inadequate 

Infrastructure Has Limited 

Expansion Potential 

Infrastructure that is old and inadequate—such as underpasses or tunnels 

with insufficient clearance—often carries limited expansion potential; 

thus, mitigating this source of congestion and enhancing the efficiency of 

goods movement by accommodating newer, longer, and heavier freight 

configurations becomes more difficult. According to the Transportation 

Research Board (TRB) and FHWA, insufficient and aged infrastructure is a 

major contributor to freight congestion and bottlenecks on U.S. freeways 

and highways and on the connectors to area ports. Even when expansion 

is possible, the growing costs of infrastructure projects, stagnant highway 

spending, and long delivery times (5 to 15 years) for completing 

infrastructure projects have slowed the development of infrastructure and 

prevented it from keeping up with demand. 

Officials at the metropolitan area ports we visited pointed to many 

examples where there are few alternatives for expansion due to 

geographical constraints or surrounding development. (See fig. 6.) Port 

and rail terminals are often located in densely populated urban areas, 

where space is already at a premium and where commercial developers are 

competing for available space. Additional space for piers, container 
Page 17 GAO-04-165 Strategies Needed to Address Planning and Financing Limitations

storage, railroad tracks, and truck roads is being pursued and developed, 

but slowly and at a high cost. 

Figure 6: Examples of Infrastructure with Limited Expansion Potential 

Heightened Security 

Concerns Also Must Be 

Taken into Account

Security concerns are one additional matter that needs to be considered in 

addressing congestion challenges. Many of the studies included in our 

evaluation synthesis were conducted in 2001 or earlier and did not raise 

security as a major issue. However, since the terrorist events of September 

11, 2001, security has become an important consideration, particularly to 

the transportation infrastructure in and around ports. The likely impact of 

disrupting this infrastructure—either to the economy generally or to 

military deployments—is substantial. For example, the Brookings 

Institution has reported that if a weapon of mass destruction were shipped 

into a port by container and successfully discharged, the immediate 

damage and the resulting disruption to the economy could cost as much as 

$1 trillion.14

Security and freight mobility are not mutually exclusive goals, but they can 

potentially conflict, adding to congestion. Access in and out of ports 

14Michael E. O’Hanlon et al., Protecting the American Homeland: A Preliminary Analysis

(Washington, D.C.: Brookings Institution Press, 2002).
Page 18 GAO-04-165 Strategies Needed to Address Planning and Financing Limitations

represents perhaps the highest potential for conflict between these two 

goals. Based on value, the Office of Intermodalism estimates that about 90 

percent of world water commerce moves by intermodal cargo container. 

Ensuring that containers do not contain weapons of mass destruction or 

other dangerous materials requires comprehensive security inspections of 

these cargoes. Thus far, security measures taken to control port access and 

to evaluate containers have not materially slowed freight movement to and 

from seaports, according to officials at the locations we visited. However, 

developing and effectively implementing future solutions that can 

accomplish security goals while still allowing efficient movement of goods, 

particularly at ports, is a matter of substantial concern for many freight 

industry stakeholders we interviewed. 

Protecting our nation’s transportation network against attacks is a 

formidable challenge because our land and maritime transportation 

systems, in particular, are designed to be open and accessible. 

Unfortunately, these systems concentrate freight flows in ways that can 

make them vulnerable to terrorist attacks. Moreover, the sheer size of the 

network presents a daunting security challenge. Given the enormity and 

accessibility of this network, protecting it through traditional means, such 

as guards, guns, and gates, seems unlikely. Rather, transportation experts, 

such as TRB, believe that transportation security can best be achieved 

through well-designed security systems that are integrated with 

transportation operations. 15 Opportunities for such integration can occur 

in many forms. For example, during the design of new facilities—such as 

bridges and intermodal facilities—or the remodeling of existing ones, costeffective protective features can be incorporated. These features could 

include improved lighting, blast-resistant structures, emergency evacuation 

routes, and open spaces that provide broad fields of vision. Where free 

access is not required, such as at a rail yard, fences, police patrols, and 

other perimeter protections can be added. Also, the application of certain 

technologies, such as cameras and sensors that detect chemical and 

biological agents, can further strengthen overall security of transportation 

infrastructure. Taken together, elements such as these can provide a 

multitiered security system that not only deters and protects but also 

improves safety, thus potentially making the system more efficient. Such 

integration will require the concerted and coordinated efforts of federal, 

state, and local law enforcement authorities, the many public and private 

15Transportation Research Board, Special Report 270: Deterrence, Protection, and 

Preparation: The New Transportation Security Imperative (Washington, D.C.: 2002).
Page 19 GAO-04-165 Strategies Needed to Address Planning and Financing Limitations

entities that plan, develop, own, and operate transportation infrastructure 

and assets, and various federal agencies responsible for port and border 

security and freight movement.

We and others are involved in separate ongoing studies of numerous public 

and private efforts to develop and implement transportation security 

enhancements.16 Because of these ongoing studies and the enormity and 

complexity of evaluating the security issues involved in protecting the 

transportation system, in this report we did not address barriers that 

agencies and others face to implement sound security measures or evaluate 

options offered by others or efforts under way to strengthen transportation 

security. These issues will be more fully addressed as part of other ongoing 

and future studies. 

Planning and Financing 

Limitations Pose 

Difficulties in 

Addressing Freight 

Mobility Challenges

Studies examining freight mobility point primarily to planning and funding 

issues as the main limitations in efforts to help address challenges to the 

system, and our work has confirmed their relevance at the ports and 

surrounding areas we visited. (See fig. 7.) On the planning side, the 

limitations center on two areas. First, consideration of freight 

improvement projects as part of the local planning process is limited 

because the process is oriented to projects that clearly produce public 

benefits, such as passenger-oriented projects. While freight projects also 

may produce public benefits by reducing freight congestion, generally, 

public planners are wary of providing public support for projects that 

directly benefit the private sector. In addition, the planning process often 

does not consider the regional nature of freight mobility and is subject to 

long lead times to plan and implement projects, factors that deter valuable 

private sector participation in the process. Second, the planning process 

often lacks a comprehensive evaluation approach, such as a cost-benefit 

framework, that might result in the selection and implementation of freight 

improvements and to better ensure that systemwide, multimodal 

solutions—as opposed to a focus on a single transportation mode—are 

considered and adopted where appropriate. On the funding side, even 

16Previous GAO studies on this issue include U.S. General Accounting Office, 

Transportation Security: Federal Action Needed to Enhance Security Efforts, GAO-03-

1154T (Washington, D.C.: Sept. 9, 2003); U.S. General Accounting Office, Aviation Security: 

Progress Since September 11, 2001, and the Challenges Ahead, GAO-03-1150T

(Washington, D.C.: Sept. 9, 2003); and U.S. General Accounting Office, Maritime Security: 

Progress Made in Implementing Maritime Security Act, but Concerns Remain, GAO-03-

1155T (Washington, D.C.: Sept. 9, 2003).
Page 20 GAO-04-165 Strategies Needed to Address Planning and Financing Limitations

when freight projects rise to the level of warranting public-sector 

involvement, federal assistance can be hampered by difficulties in 

accessing funding sources because federal programs are often structured 

such that they dedicate funds on a modal basis. Freight projects have these 

difficulties because they are frequently intermodal, while most federal 

funding sources are focused on one mode, and because the projects may 

have private benefits, raising questions about whether and how to provide 

public support.

Figure 7: Focus of Planning and Funding Processes Limit Consideration of Freight 

Improvements
Page 21 GAO-04-165 Strategies Needed to Address Planning and Financing Limitations

Freight Priorities Have 

Difficulty Competing in the 

Transportation Planning 

Process 

According to several studies examining freight mobility, the transportation 

decision-making process does not lend itself well to regional freight 

mobility planning.17 Under ISTEA and TEA-21, much of this planning 

process takes place at the local level through metropolitan planning 

organizations (MPOs) and at the state level through state departments of 

transportation.18 These planning agencies focus on the needs and issues 

within their areas of jurisdiction. Although the transportation planning 

process is set up to address freight transportation improvements and 

include private-sector freight interests, in practice, freight projects have 

difficulty competing with other projects for a number of reasons. For one, 

the public planning process by its nature focuses largely on projects that 

clearly produce public benefits. Although reducing freight congestion may 

also produce a collateral public benefit, public planners are wary of 

providing public support for projects that would also yield direct private 

benefits. Within this focus, public-sector attention tends to be directed to 

freight-related projects only when there is considerable public benefit as 

well. For example, a project that adds lanes to a crowded freeway is likely 

to help both passengers and freight haulers, while a roadway enhancing 

freight access to a port facility would likely be perceived as having limited 

public benefit. 

Another factor that can limit consideration of freight improvements is that 

local planning bodies may not sufficiently address key freight needs that 

extend beyond their local areas. Addressing freight infrastructure needs 

often involves projects along a freight corridor that cut across the 

jurisdictions of several transportation planning agencies and, in many 

cases, even states. Although state departments of transportation work to 

address freight mobility challenges on a statewide basis, many corridors 

cross state boundaries and, unless states are part of a multistate coalition, 

states do not usually address projects that involve multijurisdictional 

17Federal Highway Administration, Office of Freight Management and Operations, Freight 

Financing Options for National Freight Productivity (Washington, D.C.: April 2001) and 

Federal Highway Administration, Addressing Freight in the Transportation Planning 

Process (Washington, D.C.: October 2001).

18Federal law requires the creation of MPOs for any urbanized area with a population greater 

than 50,000. Composed of representatives from local government and transportation 

authorities, MPOs are charged with developing a comprehensive metropolitan long-range 

transportation plan and transportation improvement program that consider other interests 

in the planning process through cooperative partnerships with stakeholders. MPOs receive 

federal funding in addition to other sources to conduct their operations.
Page 22 GAO-04-165 Strategies Needed to Address Planning and Financing Limitations

corridors. According to reports issued by FHWA, getting the cooperation 

of and coordinating with multiple agencies and communities—each with its 

own priorities—to address freight projects within a relatively large area 

presents a challenge that makes the planning and implementation of this 

type of freight project difficult.19 Some MPOs and states, for example, may 

view a highway connector project for freight movement as benefiting only a 

small segment of their constituent population, with most of the benefits 

dispersed outside their jurisdiction. The New York and New Jersey region 

and the Southern California region serve as examples of the difficulties 

associated with addressing freight issues within a jurisdiction when the 

benefits extend beyond the jurisdiction. For example, officials 

representing the New York and New Jersey region are exploring the 

possibility of shifting some of the cargo from the highly congested 

roadways to railroads. However, the infrastructure limitations of rail 

tunnels in Baltimore, Maryland—outside of the jurisdiction of the states of 

New York and New Jersey—are a significant impediment to doing so. In 

Southern California, freight projects that would clearly have benefits 

beyond the jurisdiction of the MPO, such as addressing the congestion on 

the I-710 corridor, have more difficulty competing for funding against more 

localized projects that clearly benefit the constituents within the 

jurisdiction. At the locations we visited, we did find some examples in 

which officials found ways to deal effectively with projects that crossed 

jurisdictional boundaries. As we will discuss in more detail later, they 

formed multistate, multijurisdictional, and private- and public-sector 

coalitions outside the conventional public planning process to identify 

regionally significant freight transportation improvement projects. 

However, we found that few such coalitions exist. 

Finally, certain aspects inherent in the local planning process can deter 

participation by the private sector stakeholders in the process. According 

to transportation studies, private sector participation can help local 

planners identify and address needed freight transportation improvements 

and provide expertise and data to make informed decisions. According to 

state and local officials, one reason for limited participation by the private 

sector stems from their perception that freight projects proposed through 

the transportation planning process do not offer sufficient benefits to 

19Federal Highway Administration, Addressing Freight in the Transportation Planning 

Process (Washington, D.C.: October 2001) and Federal Highway Administration, Office of 

Freight Management and Operations, Freight Financing Options for National Freight 

Productivity (Washington, D.C.: April 2001). 
Page 23 GAO-04-165 Strategies Needed to Address Planning and Financing Limitations

warrant their involvement. This is not to say that private-sector freight 

interests were totally disengaged from the planning process. There were 

notable examples—discussed later in this report—in which the private 

sector became involved in planning for freight projects because the project 

held a clear, direct, and tangible benefit for the freight industry. However, 

public officials indicated that, even when freight-related projects were 

being considered by transportation planners, if the private sector did not 

perceive that the projects would meet their specific needs or the benefits 

were not clearly defined, private sector participation in the conventional 

transportation planning process was not as evident. 

Another factor that can also limit participation by freight interests involves 

the differing planning horizons of the public and private sectors. According 

to FHWA, the public-sector process for planning and delivering freight 

improvements is slow and inflexible compared with private-sector needs 

and expectations.20 According to these same studies, private firms operate 

in a faster-paced, competitive environment that is subject to fluctuations in 

demand for its services because of economic conditions. Similarly, 

ongoing business mergers sometimes make it difficult for private-sector 

officials to predict their company’s infrastructure needs in 15 to 20 years 

because they are unsure whether their company will be active at that time 

in particular markets. Several MPO officials told us that their planning 

horizons extend over longer-term periods, sometimes as much as 20 years 

and that such a planning time frame is necessary to conduct impact studies 

or obtain funding. Several MPO and state department of transportation 

officials said that even when private-sector interests initially express a 

willingness to work with the public sector, they soon lose interest or 

become frustrated because of these long horizons. 

The experience of ports and surrounding areas we reviewed generally 

mirrors the limited private-sector participation noted in studies of the 

larger transportation network. (See fig. 8.) 

20Federal Highway Administration, Office of Freight Management and Operations, Freight 

Financing Options for National Freight Productivity (Washington, D.C.: April 2001) and 

Federal Highway Administration, Addressing Freight in the Transportation Planning 

Process (Washington, D.C.: October 2001).
Page 24 GAO-04-165 Strategies Needed to Address Planning and Financing Limitations

Figure 8: Reasons for Limited Private-Sector Participation in the Planning Process

Better Analytical Methods 

and Sufficient Data Needed 

for Transportation Planning 

at the Local Level

Transportation research recognizes the importance of using a sound 

evaluation approach, such as a cost-benefit framework, to take a more 

systemwide, multimodal approach to transportation planning. 21 However, 

our review at the locations we visited showed that many state and local 

transportation planners were not consistently and systematically applying 

analytical methods as part of their investment decision-making process to 

evaluate freight-specific and other transportation projects. They also 

lacked sufficient data to identify and define current and future freight 

transportation problem areas and potential solutions to address them. 

Lack of data and sound evaluation techniques reduce the likelihood that 

the relative merits of freight transportation proposals can be adequately 

judged with passenger projects—a potentially serious consequence for 

freight projects, which already tend to receive low visibility. Also, without 

good cost-benefit studies, transportation planners may find it more difficult 

to determine the extent that public investment is required and to 

21Transportation Research Board, Special Report 271: Freight Capacity for the 21st

Century (Washington, D.C.: 2002); Transportation Research Board, Special Report 252: 

Policy Options for Intermodal Freight Transportation (Washington, D.C.: 1998); and

GAO-02-775.
Page 25 GAO-04-165 Strategies Needed to Address Planning and Financing Limitations

understand trade-offs and relationships among alternative solutions 

involving different transportation modes. More focused federal direction 

and support for states and MPOs could better ensure that sound evaluation 

approaches are incorporated into the local investment decision-making 

process for freight projects and that meaningful data are collected and 

used.

State and Local Planners Are Not 

Consistently Applying Sound 

Analytical Methods and 

Evaluation Approaches 

Our past work on best practices for capital decision-making22 found that 

establishing a decision-making framework that is supported by proper 

financial, technical, and risk analysis is a critical factor in making sound 

capital investment decisions. Transportation experts have echoed the need 

for such a framework. Key elements we and others have defined as being 

important for evaluations used in the public decision-making process are 

shown in table 1. 23

Table 1: Key Elements of Evaluations Used in a Public Decision-making Process 

Source: GAO summary of elements presented in TRB’s Policy Options for Intermodal Freight Transportation and Freight Capacity for

the 21st Century.

22U.S. General Accounting Office, Executive Guide: Leading Practices in Capital DecisionMaking, GAO/AIMD-99-32 (Washington, D.C.: December 1998).

23Transportation Research Board, Policy Options for Intermodal Freight Transportation 

(Washington, D.C.: 1998) and Transportation Research Board, Freight Capacity for the 21st

Century (Washington D.C.: 2002).

Type of 

evaluation Key elements

Prospective 

evaluation

• Cost-benefit analyses should be used, especially for projects involving 

trade-offs among freight mobility benefits, passenger benefits, and 

environmental protection. Transportation benefits should be evaluated in 

terms of users’ willingness to pay for the change. Estimating the 

demand response to changes in transportation cost is necessary. 

• Cross-modal and low cost noncapital alternatives, including traffic 

control improvements and congestion pricing, should be actively 

considered and analyzed in lieu of capital improvements. 

• External benefits and the value of avoiding external costs (like air 

pollution and congestion) should be quantified to the extent possible in 

the cost-benefit analysis.

• An analysis of risks and sources of uncertainty, including uncertainty 

in traffic projections and strategies for reducing risk should be included.

Retrospective 

evaluation

• A retrospective evaluation of completed projects should be 

performed according to established guidelines. These evaluations allow 

public planners to learn from experience, provide incentives to achieve 

results, and hold planners accountable for their decisions.
Page 26 GAO-04-165 Strategies Needed to Address Planning and Financing Limitations

In recent studies, TRB and FHWA have noted that in making freight-related 

investment decisions, local MPOs and state DOTs are not applying many of 

these evaluation elements. For example, FHWA24 said that planners lack 

the tools to evaluate freight projects with nonfreight projects. TRB 

studies25 have shown, in general, that evaluation procedures for setting 

project priorities for state highway programs throughout the United States 

are often defined in terms of engineering criteria rather than economic 

criteria. According to TRB, an important change needed to improve 

intermodal freight efficiency involves conducting better evaluations of the 

direct benefits of transportation improvements. These evaluations—which 

are now largely absent at the local level—would entail applying proper 

methods of identifying needs for connectors to ports and other intermodal 

terminals. Also, government transportation agencies do not routinely 

consider facility management alternatives to physical expansion as a 

means to increase capacity, according to TRB.

Our case study work generally confirmed these findings and demonstrated 

unevenness in the application of sound methods and evaluation 

approaches across the country. Most locations we visited use some form of 

cost-benefit analysis, but the sophistication and elements used in the 

analysis differ significantly. For example, an MPO official in Charleston 

told us that they do not conduct formal cost-benefit analyses on 

transportation projects because they do not have access to those tools or 

resources. In contrast, the Houston MPO conducts a variety of cost-benefit 

analyses using economic criteria, travel delays, and vehicle miles traveled 

reductions. The Puget Sound Regional Council (the Seattle MPO) utilizes a 

cost-benefit approach for evaluating freight projects separate from 

passenger projects but is working on a more sophisticated approach. 26 

24Federal Highway Administration, Addressing Freight in the Transportation Planning 

Process (Washington, D.C.: October 2001).

25Transportation Research Board, Special Report 252: Policy Options for Intermodal 

Freight Transportation (Washington, D.C.: 1998) and Transportation Research Board, 

Special Report 271: Freight Capacity for the 21st Century (Washington, D.C.: 2002).

26This process involves solicitation of freight projects from potential public agency sponsors 

that are then screened, ranked, and then jointly advanced for state and federal funding 

partnerships (together with local, port, and railroad funds). Within this process, a projectlevel, weighted point system is used, in combination with a documented team review of all 

applications, that includes potential funding sources and a project narrative that includes 

looking at reduced delays, cost effectiveness, and cost alternatives. Once advanced to the 

state, the Freight Mobility Strategic Investment Board (FMSIB) reviews projects to be put 

forward as part of a statewide list to the legislature for project selection and funding. 
Page 27 GAO-04-165 Strategies Needed to Address Planning and Financing Limitations

Other locations often relied on a variety of methods to evaluate and 

prioritize freight and other passenger-related projects, such as weighted 

systems that assign additional points if the project benefited freight 

mobility. Weighted systems allow freight projects to better compete with 

passenger-oriented projects under consideration. 

While many of the sites we visited performed cost-benefit studies to some 

degree, the specific elements of the analysis varied considerably. For 

example, some of the locations include low cost or cross-modal 

alternatives and external costs—two key best practice elements in our 

capital decision-making framework—during the decision-making process. 

However, while many locations considered these elements, MPO 

stakeholders typically did not apply these elements in a consistent and 

systematic manner. Instead, elements were considered in general through 

a process of negotiation among MPO stakeholders. Furthermore, none of 

the locations conducted retrospective evaluations. Some of the MPO 

officials stated they would like to conduct retrospective evaluations, and 

others said they did not have the data nor the resources to do so. 

The use of cost-benefit analyses and the application of best practices 

evaluation elements at the state level mirrored the MPO experience for the 

most part. Most states we visited conduct some form of cost-benefit 

analysis, but in varied forms. For example, California conducts a number 

of cost-benefit analyses based on economic, safety, and highway 

maintenance information, while other states, such as such as New Jersey 

and Texas, mainly conduct cost-benefit analyses as a component of their 

environmental studies. Some states did not consistently look at crossmodal or low cost noncapital alternatives. For example, officials in Texas 

said they had not advanced to the point of evaluating management 

alternatives, although they were beginning to consider alternative financing 

mechanisms and user fees. Officials from New Jersey and New York said 

they have discussed user fees and tolls, but these discussions usually have 

occurred outside the planning process.

Transportation Planners Lack 

Sufficient Data to Evaluate 

Freight Investment Decisions

Transportation studies by us and by others have found that sufficient data 

and information systems are essential to make sound investment decisions. 

However, according to recent TRB and FHWA studies, state and local 

transportation planners do not have data to sufficiently evaluate freight 

infrastructure proposals. Some transportation companies may consider 

data on private freight movement to be proprietary. However, such data 

can often be used to identify heavily traveled highways and intersections 

and possible measures to mitigate intermodal freight bottlenecks. TRB 
Page 28 GAO-04-165 Strategies Needed to Address Planning and Financing Limitations

case studies of transportation projects show that planning agencies 

sometimes lack data and proper modeling techniques to compare the 

benefits of alternative solutions—such as operations and management 

alternatives—with proposals for physical expansion, such as adding new 

roadways or highway lanes. According to these studies, data are also 

needed that would allow state and local planners to evaluate forecasts of 

transportation demand, forecasts of the effect a project would have on 

diverting traffic to or from other transportation modes, or estimates of a 

project’s effect on congestion or pollution. 

At the locations we visited, most state and local planners confirmed that 

they did not have sufficient data to accurately and effectively evaluate 

freight projects as part of the planning and investment decision-making 

process. Table 2 summarizes the types of data being collected by each 

location and additional data needed.

Table 2: Types of Data Collected and the Additional Data Needs for Freight Mobility 

Planning 

Location

Examples of types of 

data used Key limitations cited by planners

Charleston Freight Analysis 

Framework (FAF)a

, census 

data, commodity flow data, 

travel demand model

• Accessible data are generalized to 

state and national level; specific 

localized data is not available.

• Some of the data from private 

companies are confidential and 

proprietary and, therefore, lack 

sufficient detail for accurate freight 

planning purposes. 

Houston A variety of national, state, 

and local data that 

includes freight flows, 

emissions, vehicle miles 

traveled, truck counts, 

purchased data from 

consultants

• The validity of some of the national, 

state, and local data are questionable, 

and it is difficult to get the data in detail 

at the local level. 

• Data purchased from consultants are 

expensive.

Los Angeles/Long 

Beach

A variety of national and 

state data including 

commodity flow data; 

demand model that 

incorporates heavy trucks 

included in regional 

transportation plan 

• Useful freight data are generally 

unavailable. 

• Available commodity flow data are not 

detailed enough (i.e., county or by zip 

code) for accurate freight planning.
Page 29 GAO-04-165 Strategies Needed to Address Planning and Financing Limitations

Sources: Highlights of information collected by GAO from the metropolitan planning organizations for these locations.

a

FHWA has created the FAF. This framework was developed from various government and privatesector databases including the commodity flow database and the highway capacity dataset.

While many MPOs struggle to obtain sufficient data to make freight 

mobility planning decisions, some state and local planners are working 

toward collecting and maintaining databases to better evaluate freight 

projects. The New Jersey Transportation Planning Authority (an MPO in 

New Jersey), for example, in cooperation with the International Intermodal 

Transportation Center (IITC) at the New Jersey Institute of Technology 

(NJIT) has undertaken a comprehensive data gathering and research 

initiative designed to strengthen the evaluation process for freight planning 

and decisionmaking.27 As part of this initiative, IITC developed goods 

movement indicators and a freight planning framework and modeling 

program to forecast the impact of selected freight mobility strategies for 

New Jersey National data such as the 

FAF, some state data, inhouse modeling, 

purchased data from a 

consultant

• Modeling data are available, but results 

are often unreliable because of 

questionable assumptions on routes for 

trucks. 

• Reconciling similar data from different 

sources is also a problem; combining 

data and developing new data sets is 

time consuming and resource 

intensive.

New York Commodity flows and 

volumes, origin and 

destination data, truck 

counts

• Proprietary issues make it difficult to 

obtain detailed data that are useful.

• Often there is a time lag in the data 

received, and the data may not 

necessarily reflect the current 

environment.

Oakland State and local data, travel 

demand models, roadway 

monitoring including car 

and truck counts

• There is a need for more interstate 

import and export data and more 

freight-specific data.

Seattle/Tacoma FAF and Bureau of 

Transportation Statistics 

data, marine cargo 

forecasting, modeling data, 

state-level data, trucking 

data

• There is a need for better information 

on trip reliability or predictability. 

Metropolitan traffic models do a poor 

job of reflecting “real world” traffic 

delays. 

27Freight Planning Support System, Final Summary Report (New Jersey Institute of 

Technology, July 2003).

(Continued From Previous Page)

Location

Examples of types of 

data used Key limitations cited by planners
Page 30 GAO-04-165 Strategies Needed to Address Planning and Financing Limitations

northern New Jersey region. For example, the model can be used to 

forecast the decrease in truck delay resulting from a strategy that considers 

adding truck-only lanes to selected highway segments. Also, IITC has 

summarized data collection practices used by selected MPOs throughout 

the United States. 

Federal Efforts to Encourage 

Sound Evaluation Procedures 

Have Been Limited 

The variation in local planning evaluation approaches and data gathering 

among MPOs is not surprising given the wide latitude that planning 

jurisdictions have under the law and the limited guidance provided at the 

federal level by DOT and its various transportation agencies. Under TEA21 and existing regulations, MPOs and state departments of transportation 

have a great deal of latitude in how they evaluate projects and make 

investment decisions. DOT officials told us they viewed their role in this 

regard as facilitators rather than being prescriptive in dictating an 

evaluation process. For example, FHWA officials said they try to enhance 

consideration of freight issues through such efforts as the Freight 

Professional Development Program, which includes seminars by industry 

experts; technical assistance through peer exchanges and an online list of 

experts; and the FAF database program, which can be used to estimate 

trade flows and identify areas of potential improvement. DOT officials said 

their limited oversight efforts are directed at ensuring that states and MPOs 

keep broad goals in mind in designing their process, such as choosing 

projects that support economic vitality, increase safety and accessibility, 

promote efficiency, protect the environment, and promote energy 

conservation. 

Although DOT’s approach is consistent with giving planning bodies wide 

latitude in how to operate, there are strong signs from the planning bodies 

themselves that they would prefer more guidance and support in this area. 

State and MPO officials with whom we talked said they would welcome 

more help in designing an evaluation approach for making transportation 

investment decisions for a variety of reasons. One official, for example, 

said more specific policies and procedures were needed to better ensure 

that they were in compliance with planning requirements.28 Almost all of 

the officials said they wanted more help in obtaining sufficient data for 

28For example, ISTEA and TEA-21 require the Department of Transportation, through the 

FHWA and FTA, to review and certify that all metropolitan areas with a population of 

200,000 or more meet certain transportation planning requirements, including developing a 

Congestion Management System (CMS). Some transportation officials said more detailed 

guidance was needed on how to implement a CMS that meets specific requirements.
Page 31 GAO-04-165 Strategies Needed to Address Planning and Financing Limitations

evaluating transportation proposals. Much of the available freight data, 

they said, are usually at a macro level, privately held, cost-prohibitive to 

acquire, and of limited use because of proprietary and reliability concerns. 

Other groups have also urged DOT to do more. Several transportation 

studies have noted the limited amount of guidance and oversight and the 

need for better evaluation approaches and have recommended that DOT 

take steps to provide better guidance and support in this area. The TRB, 

for example, has recommended that DOT actively promote states’ use of 

economic evaluation methods in transportation programs that receive 

federal aid, particularly highway aid programs. TRB also recommended 

that, as a means of promoting more useful evaluation at the federal and 

state levels, Congress establish a clearinghouse within DOT devoted to 

evaluation methods, so that DOT program agencies and local and state 

governments could share and compare methods and examples of 

evaluations. 

Intermodal Nature of 

Freight Projects and Access 

Limitations to Federal 

Programs Can Hamper 

Planners in Funding Freight 

Improvements

A variety of factors in the way federal transportation programs are 

structured and used as funding sources for infrastructure projects hamper 

MPOs and states in advancing freight improvement projects. For one, 

freight improvement projects are more complicated to fund than 

traditional, modally oriented projects, both because of the intermodal 

nature of most freight projects and the challenge in balancing public and 

private benefits. For example, a traditional, modally oriented project, such 

as a project to widen a highway, typically involves only one mode and 

yields public benefits. This makes the planning and development of 

traditional transportation projects fairly clear-cut—there is a single 

sponsor (e.g., an MPO) and a clearly defined funding source (e.g., one of 

several highway programs). In contrast, freight improvement projects tend 

to be more complicated because they are frequently intermodal, which 

means that a clear sponsor for the project may not exist, discussions 

among multiple sponsors are usually required, and it may require 

consideration of multiple sources of funding. Also, the project can result in 

private benefits, which raises questions about whether and how to provide 

public support for private infrastructure. For example, an intermodal 

connector linking a port to an intermodal rail yard has no clear sponsor. 

Such a project may be viewed as the responsibility of the port, the railroad, 

or even the MPO. When such a project becomes the responsibility of the 

MPO, the project must also overcome the limitations to advancing freight 

improvements in the planning process described earlier. Moreover, 

because federal programs are often structured such that they dedicate 
Page 32 GAO-04-165 Strategies Needed to Address Planning and Financing Limitations

funds on a modal basis, MPOs may make decisions based on the mode 

eligible for federal funding, which puts freight projects at a disadvantage.29

Aside from the greater complexities associated with funding intermodal 

freight projects, gaining access to funding sources more specifically 

targeted for freight projects is often difficult as well. For example, two 

programs—the National Corridor Planning and Development Program and 

the Coordinated Border Infrastructure Program (hereafter referred to as 

the Borders and Corridors programs)—were created by TEA-21 to better 

address freight transportation needs. They are federal grant programs that 

share an annual funding allocation of up to $140 million. Although 

considered a good source of funding for freight projects, the most 

significant limitation with these programs is that they are oversubscribed, 

and much of the funding for these programs is allocated to congressionally 

designated projects, according to FHWA. Two other credit programs 

established in TEA-21—TIFIA and the Rail Revitalization and Improvement 

Funding program (RRIF) provide loans, loan guarantees, and lines of credit 

for projects. The TIFIA program, for example, can leverage federal funds 

by attracting additional private investments in infrastructure projects. 

However, according to stakeholders, the eligibility criteria for the TIFIA 

program limit some freight projects, as the program does not allow 

assistance to privately owned facilities, such as privately owned rail 

infrastructure. Further, to qualify for assistance, TIFIA projects must be 

valued at over $100 million, which, according to many stakeholders, may 

exclude many freight projects that are valued at less than this amount. In 

addition, stakeholders have indicated that shortcomings with the RRIF 

program include the up-front fee applicants must pay in order to receive 

the loan and the length of time applicants must wait before receiving a 

decision. These shortcomings have proven to be a disincentive to use the 

program, according to DOT.30 Table 3 shows the federal programs 

established in ISTEA and TEA-21 that are available as funding sources for 

freight projects. 

29When MPOs make infrastructure decisions based on the mode eligible for federal funding, 

this can potentially result in greater funding for one mode over another.

30U.S. Department of Transportation, Federal Highway Administration, Office of Freight 

Management and Operations, Transportation Policy: Evolution of Federal Freight 

Transportation Policy (Washington, D.C.: 2001).
Page 33 GAO-04-165 Strategies Needed to Address Planning and Financing Limitations

Table 3: Federal Funding and Financing Sources Providing Eligibility for Some 

Freight Projects

Source: FHWA.

Because of private ownership and other issues, certain freight 

transportation projects are especially difficult to fund or finance through 

federal programs, even when they are identified as priorities within the 

transportation planning process. For example, rail projects in particular 

are difficult to fund even when considered a priority in the public planning 

process largely because rail infrastructure is privately owned. According 

 Funding source Applicability

Congestion Mitigation and Air 

Quality Program (CMAQ)

• Can be used to fund a wide range of freight 

improvement projects, including rail and other 

nonhighway transportation projects. 

• Project must reduce carbon monoxide or other 

specified air pollutants in a nonattainment or 

maintenance area as specified in the Clean Air Act.

• Freight projects are required to show reduced air 

emissions.

Surface Transportation Program 

(STP)

• Can be used for highway-related freight projects, 

such as roadway improvements to facilitate truckfreight movement or accommodate other modes, 

raising bridges, at-grade rail separations, and 

improvements to intermodal connectors.

• Project must be related to federal-aid highway 

system.

National Highway System (NHS) • Can be used to improve intermodal connectors. 

• Project must be identified as a NHS priority 

highway or a connector linking the NHS to key 

intermodal facilities.

National Corridor Planning and 

Development Program and 

Coordinated Border Infrastructure 

Program (Corridors and Borders)

• Can be used to fund projects related to planning 

and construction on major corridors that have been 

identified. 

• These programs are oversubscribed, and much of 

the funding is allocated to congressionally 

designated projects.

Transportation Infrastructure 

Finance and Innovation Act (TIFIA)

• Can be used for publicly owned, intermodal, 

surface freight transportation facilities (other than 

seaports and airports) located adjacent to the NHS. 

• To qualify for assistance, projects must be valued at 

over $100 million.

Rail Revitalization and 

Improvement Funding Program 

(RRIF)

• Targeted specifically at providing credit for rail 

infrastructure and equipment. 

• Applicants must pay an up-front fee in order to 

receive the loan, are subject to the lengthy 

application process, and must first be turned down 

by a bank or credit institution.
Page 34 GAO-04-165 Strategies Needed to Address Planning and Financing Limitations

to a report issued by FHWA, although public support under existing 

programs can be used to fund or finance rail, the projects are usually only 

eligible for purpose-oriented programs, such as CMAQ, or through 

financing programs such as RRIF.31 However, even with these programs, 

there are certain restrictions. For example, in the case of CMAQ, unless a 

project has a positive impact on air quality in a nonattainment32 or 

maintenance area, it would not be eligible for CMAQ funds. In the case of 

TIFIA, a project must be publicly owned, which excludes many rail 

infrastructure projects as rail infrastructure is often privately owned and in 

the case of RRIF, applicants must pay an up-front fee in order to qualify, 

creating a disincentive to use the program. 

One example that typified the complexities associated with funding freight 

projects under existing programs occurred recently on a major project 

undertaken at the Port of Tacoma (Washington). This project, the D Street 

overpass, which involved widening a road and relocating rail tracks to 

better facilitate road and rail freight flow, was delayed because the project 

involved two different modes, and the funding for one was available but 

funding for the other was not. Highway funds were available for the road 

portion, but private-sector funding for the rail portion was not readily 

available. Financing limitations such as this can delay needed freight 

improvement projects or prevent them from occurring all together. 

Two Key Strategies 

Could Help Address 

Freight Planning and 

Financing Limitations

The upcoming reauthorization of TEA-21 provides an opportunity to 

consider ways in which federal policies and programs might be adjusted to 

help address the planning and funding limitations described above. Using 

the work of transportation experts and our own experience in evaluating 

transportation mobility projects,33 we identified two key strategies that 

hold promise for addressing the planning and financing limitations that 

surfaced from our work. The first strategy addresses planning limitations, 

31U.S. Department of Transportation, Federal Highway Administration, Freight Financing 

Options for National Freight Productivity (Washington, D.C.: April 2001).

32EPA uses six criteria pollutants as indicators of air quality. When an area does not meet 

the air quality standard for one of the criteria pollutants, it may be designated as a 

nonattainment area.

33GAO-02-775, GAO-02-1033, Transportation Research Board, Special Report 252: Policy 

Options for Intermodal Freight Transportation (Washington, D.C.: 1998) and 

Transportation Research Board, Special Report 271: Freight Capacity for the 21st Century 

(Washington, D.C.: 2002). 
Page 35 GAO-04-165 Strategies Needed to Address Planning and Financing Limitations

and the second strategy addresses financing limitations. In addition, we 

identified certain overarching, economic and management principles for 

consideration as the Congress and other transportation decision makers 

develop and implement strategies to enhance freight mobility. (See fig. 9.) 

Figure 9: Key Strategies and Principles to Address Planning and Financing 

Limitations
Page 36 GAO-04-165 Strategies Needed to Address Planning and Financing Limitations

The administration and system stakeholders have developed a variety of 

reauthorization proposals to address the planning and financing 

limitations. 34 (See apps. II–IV for an overview of proposals made by 

different freight stakeholders.) For example, to address planning 

limitations, most of the proposals seek to improve coordination, encourage 

private sector involvement, and/or improve data and analysis tools to 

evaluate freight projects. In the area of financing, most of the proposals 

seek to either expand the eligibility of federal programs to include specific 

freight projects, encourage the use of alternative financing, or allow for the 

use of nonbuild tools to reduce congestion. While all of the proposals 

address planning and financing limitations—and involve at least some 

aspects of our two strategies—a balanced strategy that addresses the broad 

range of limitations we identified will likely be required to significantly 

advance freight mobility. (See app. V for a summary of how stakeholder 

proposals relate to our two broad strategies.) Optimum results could be 

furthered if three overarching principles are applied in the development 

and refinement of reauthorization provisions. These include promoting 

efficiency by embracing “user pay” principle, maximizing a performancebased program, and aligning the incentives for planning agencies and other 

decision makers to focus on efficiency and results.

First Strategy: Emphasizing 

a Systemwide Approach to 

Transportation Planning

Our past work has shown that planning should be viewed from a 

systemwide perspective.35 Such a perspective includes taking multiple 

transportation modes and jurisdictions into account—rather than 

considering each one separately—to better ensure the involvement of 

freight stakeholders in the private sector. In addition, such a perspective 

includes developing meaningful data and sound analytical methods for 

making decisions about how best to apply available resources and to 

determine the extent of public involvement. 

Coordination Across 

Transportation Modes and 

Jurisdictions

As one means to ensure that freight perspectives are included in public 

planning and programming decisions, coordination across the various 

transportation modes and planning jurisdictions is important. Intermodal 

34National stakeholders include the Freight Stakeholders Coalition, the American 

Association of State Highway and Transportation Officials, Local Officials for 

Transportation, Association of American Railroads, American Trucking Associations, 

Association of Metropolitan Planning Organizations, American Road and Transportation 

Builders Association, and U.S. Conference of Mayors.

35GAO-02-775.
Page 37 GAO-04-165 Strategies Needed to Address Planning and Financing Limitations

freight movements involve such matters as moving goods from ships to 

trucks or railroad cars for distribution throughout the country. Freight 

improvement projects must address congestion at these transfer points as 

well as congestion on the roads and railroad tracks that carry freight 

throughout the country. At the same time, extensive coordination between 

multiple sets of stakeholders representing the various modes is needed 

because of the intermodal nature of projects. When such projects affect 

not only multiple transportation modes, but also areas that extend beyond 

the jurisdiction of a single local planning body, the amount of coordination 

becomes even more complex. Our case studies showed that successful 

intermodal projects involved a high degree of intermodal and crossjurisdictional coordination. For example, the FAST project in Washington 

state, a series of related but independent projects intended to improve 

freight mobility in the Everett-Seattle-Tacoma region, crossed multiple 

jurisdictions and modes and involved multiple stakeholders. The program 

included port access improvements and railroad grade crossing 

improvements to improve safety and increase mobility. While funding for 

the project comes from various public sources and the private railroads, 

the FAST members selected and prioritized projects for funding. The 

coordination of projects and the cooperation of the multiple stakeholders 

have resulted in the elevation and acceleration of freight improvement 

projects along the corridor. 

Such coordination is not automatically a part of the transportation planning 

process; in fact, our reviews of successful projects like the FAST Corridor 

program found that they typically occurred outside of the conventional 

transportation planning process for several reasons. First, it is easier to 

address freight improvements when they do not have to compete with 

nonfreight projects in the transportation planning process. Also, it is easier 

to build consensus among the multiple stakeholders when the focus is 

solely on issues of freight mobility. As our review revealed, attempts to 

advance freight improvements within the conventional process are often 

hindered by limited cross-modal communication and limited crossjurisdictional coordination. Thus, ensuring that a freight strategy includes 

sufficient modal coordination and stakeholder participation, and 

cooperation continues to be a challenge for public-sector decision makers. 

A number of proposals developed by stakeholders are directed at greater 

coordination across modes and jurisdictions. For example, the 

administration’s 2003 surface transportation reauthorization proposal 

(hereafter referred to as the administration’s proposal) encourages MPOs 

to coordinate their planning process with officials responsible for other 
Page 38 GAO-04-165 Strategies Needed to Address Planning and Financing Limitations

types of planning activities that are affected by transportation.36 The 

administration’s proposal also encourages states and other jurisdictions to 

work together to develop plans for multimodal and multijurisdictional 

transportation decision making through allocations for planning studies.37 

This approach, which encourages more cooperation, but does not 

specifically place requirements on the parties in the planning process, is 

consistent with the premise of ISTEA and TEA-21 that states and MPOs are 

best positioned to make decisions on transportation planning and project 

selection to best address local concerns. However, while ISTEA and TEA21 have encouraged an emphasis on freight in the planning process for over 

a decade, our review highlighted the many disincentives for such a focus 

with the result that MPOs typically have not used their transportation 

resources on projects that benefit areas outside of their jurisdictions. 

Ensuring That Private-sector 

Stakeholders Are Effectively 

Involved 

Since a systemwide approach to transportation planning will require more 

focus on issues that cross jurisdictions, securing the participation of the 

private sector, which tends to have a more national and global view of the 

transportation system than public-sector planners, will be necessary. 

Greater participation by the private sector can also be helpful in supplying 

necessary data for making informed decisions and expertise to effectively 

identify and implement improvements across modes and jurisdictions. 

However, our work has shown that participation by the private sector in 

the public planning process is often limited.

Several of the projects we studied offer insights as to how the private 

sector might be effectively engaged in the planning process. For example, 

the Alameda Corridor project in Los Angeles serves as an example of a 

project that involved private sector participants in the planning and 

implementation phases of the program. Specifically, the project 

consolidated port traffic from four separate branch lines into a 20-mile 

railroad express line connecting the ports of Los Angeles and Long Beach 

to the transcontinental rail network east of downtown Los Angeles. The 

express line eliminated approximately 200 street-level railroad crossings, 

relieving congestion and improving freight mobility. This project 

succeeded because state and local stakeholders, the ports, and the 

railroads all had a financial incentive to relieve congestion and the 

commitment and ability to bring the necessary financial resources to bear. 

36Title VI, Section 6001, subsection 5203(e)(4).

37Title I, Section 1806(f)(1).
Page 39 GAO-04-165 Strategies Needed to Address Planning and Financing Limitations

Our review also showed that when the particular needs or interests of the 

private sector were not addressed, private-sector participation could be 

limited or absent altogether. As noted earlier, the FAST Corridor and the 

Alameda Corridor projects are examples of bringing diverse stakeholders 

together to forge a partnership to advance needed freight projects. Both 

projects yielded benefits for the stakeholders. The Alameda Corridor East 

project, however, serves as an example of what could happen when a 

project yields limited private benefits. This proposed project, extending 

east from Los Angeles through the San Gabriel Valley, focuses on safety 

improvements and congestion relief for the surrounding communities by 

providing grade separations at rail and highway crossings along the route. 

Unlike the original Alameda Corridor project, this project provides no new 

track capacity for the rail carriers and would not materially speed freight 

movement along the route. Therefore, according to MPO officials, the rail 

carriers see little benefit for them and currently are not actively involved in 

or committed to the project. 

Several of the proposals made by freight stakeholders would address 

private-sector involvement. For example, the Freight Stakeholders 

Coalition has recommended the formation of a group composed of freight 

transportation providers from all modes, as well as shippers and state and 

local planning organizations, to provide industry input to DOT.38 Providing 

a national perspective through such a group could provide information that 

would help to identify critical freight bottlenecks within the nation’s 

transportation system and options to balance the state and local 

perspective. Further, the Freight Stakeholders Coalition has suggested that 

states and MPOs receive additional funds for expert staff positions 

dedicated to freight issues. Hiring and training professional freight 

planners could ultimately result in improved coordination of resources and 

better transportation investment decisions leading to improved freight 

mobility. The administration’s proposal also addresses private-sector 

involvement through a program that would address freight transportation 

gateways and intermodal connections.39 This program would require states 

to designate a freight transportation coordinator responsible for fostering 

38The Freight Stakeholders Coalition is composed of the American Association of Port 

Authorities, the American Trucking Associations, the Association of American Railroads, 

the Coalition for America’s Gateways and Trade Corridors, the Intermodal Association of 

North America, the National Association of Manufacturers, the National Industrial 

Transportation League, the U.S. Chamber of Commerce, and the World Shipping Council.

39Title I, section 1205.
Page 40 GAO-04-165 Strategies Needed to Address Planning and Financing Limitations

public and private sector collaboration needed to implement solutions to 

freight-related problems. However, unless states are able to overcome the 

limitations to private-sector participation, this type of provision may do 

little in garnering private-sector participation.

Applying Sound Analytical 

Approaches and Collecting 

Sufficient Data

As part of a systemwide approach to planning, standard evaluation 

methods and sufficient data will also be needed to support public 

transportation investment decisions. Methodologically sound evaluations 

and basic freight-related data are both necessary to support public 

transportation investment decisions; to evaluate viable alternative 

solutions, including facility management alternatives; and to ensure that 

intermodal solutions to enhance freight mobility are considered and 

adopted where appropriate. Transportation experts with whom we 

collaborated on past mobility work cited the importance of considering all 

modes and travel types in addressing mobility challenges—as opposed to 

focusing on a single mode—to achieve desired results. Sound evaluation 

approaches, such as a comprehensive cost-benefit framework, are a 

necessary prerequisite for doing this. 

Various proposals have been made for strengthening this part of the 

process. For example, the administration’s proposal includes a 

modification to the planning provisions that would require states to 

address data issues by targeting part of the state apportionments for state 

planning and research.40 This set-aside is intended to be used for the 

collection and reporting of strategic surface transportation data to provide 

information about the extent, condition, use, performance, and financing of 

the nation’s highways for passenger and freight movement. This set-aside 

represents somewhat of a departure from current core transportation 

legislation, which leaves such decisions on the use of federal 

transportation funds to states and MPOs; however, it might increase freight 

data collection efforts and elevate freight issues in the planning process. 

The TRB proposed a different approach involving recommendations at 

both the national and MPO levels. At the national level, TRB recommended 

the creation of a clearinghouse devoted to evaluation methods, which DOT 

program agencies and local and state governments could use for sharing 

and comparing methods and examples of evaluations. At a more localized 

level, TRB recommended that programs in successor legislation should 

contain requirements for evaluating the performance of programs and that 

state and local governments should conduct evaluations to test the 

40Title I, Section 1503(i)(3)(A).
Page 41 GAO-04-165 Strategies Needed to Address Planning and Financing Limitations

economic rationale for both existing projects and proposed projects 

requiring new government involvement in transportation investments. 

Second Strategy: Providing 

a Wider Range of Funding 

and Related Options

The second strategy addresses the other main limitation identified by our 

own reviews and other researchers as a common obstacle to progress in 

resolving freight and overall congestion issues—financing and funding. In 

the current budgetary environment, along with long-range fiscal challenges 

confronting the country,41 substantial increases in current funding sources 

for all transportation projects will require a high level of justification. Yet, 

as our work has shown, intermodal freight projects that involve both public 

and private interests and may help foster both economic efficiency and 

growth have difficulty competing for limited transportation resources. 

Therefore, determining how federal policies and programs might be 

adjusted to address the limitations to funding freight projects raises the 

fundamental policy question of defining the appropriate scope of 

government involvement in freight improvements. When public 

subsidization of freight projects is determined to be appropriate through 

proper analysis, approaches such as expanding eligibility guidelines for 

existing federal programs, developing or expanding the range of funding 

and financing mechanisms that appropriately blend public and private 

funds to match public and private costs and benefits, and making 

maximum use of low-cost “nonbuild” approaches could be considered to 

address limitations in advancing freight improvements. 

Determining the Appropriate 

Federal Role and Apportioning 

the Cost Burden among 

Beneficiaries

Transportation experts generally agree that determining the appropriate 

scope of government involvement and level of subsidization in freightrelated and other projects is an important step in making transportation 

investment decisions. The underlying principle guiding the scope of 

government involvement is that such involvement should occur only to the 

degree that the private sector will not undertake a project needed to 

improve transportation mobility, and yet the project is deemed to be 

economically viable. There are a number of reasons why the private sector 

may not participate in such projects—for example, they may generate 

significant external or social benefits associated with reducing congestion 

and air pollution from which those in the private sector who would make 

the investment would receive no economic benefits.

41Speech made by the Comptroller General of the United States on September 17, 2003 

entitled “Truth and Transparency: The Federal Government’s Financial Condition and Fiscal 

Outlook.”
Page 42 GAO-04-165 Strategies Needed to Address Planning and Financing Limitations

Determining the scope of government involvement entails three basic 

steps: (1) determining that the project is worthwhile by applying a rigorous 

cost-benefit study; (2) justifying that government involvement is necessary 

based on known criteria; and (3) deciding on the level of subsidization 

required by the public sector reflecting the interests and benefits on a local, 

state, regional, or national level. As we have discussed previously, costbenefit frameworks that transportation agencies currently use to evaluate 

various transportation projects could be more comprehensive in 

considering and quantifying a wider array of social and economic costs and 

benefits to determine whether public support is justified. Developing 

sound justifications and determining appropriate subsidy levels can be 

undermined by an absence of rigorous evaluation approaches, and there is 

broad consensus among transportation stakeholders that state and local 

planners need to improve their evaluation capabilities. 

Justifying government involvement for freight transportation infrastructure 

projects involves having clear guidelines specifying the conditions under 

which public involvement is warranted. TRB has provided such guidelines 

in two recent reports.42 According to TRB, public support for freight 

infrastructure projects must be established on a project basis to determine 

if the project possesses certain characteristics, such as reducing the 

external costs of transportation, yields efficiencies in the transportation 

system beyond those recognized by the private sector, and/or meets some 

public safety need.43 TRB contends that if government involvement cannot 

be justified on one of these grounds, the private sector should undertake 

the project.

Once the justification is established for public involvement in freight and 

other projects, the next critical decision involves deciding on the level of 

public subsidy. While in most cases, government involvement is often 

assumed to mean subsidization of a project, such involvement need not 

necessarily imply the need for, or appropriateness of federal subsidization. 

For example, a government agency might plan a project to be entirely self42Transportation Research Board, Special Report 252: Policy Options for Intermodal 

Freight Transportation (Washington, D.C.: 1998) and Transportation Research Board, 

Special Report 271: Freight Capacity for the 21st Century (Washington, D.C.: 2002). 

43According to TRB, public support for freight infrastructure projects is appropriate if a 

project possesses certain characteristics, such as (1) reducing external costs of 

transportation, (2) producing external economic development benefits, (3) providing 

offsetting subsidies, (4) meeting a national defense need, and/or (5) is an established 

government responsibility.
Page 43 GAO-04-165 Strategies Needed to Address Planning and Financing Limitations

supporting from user fees and private sector participant contributions; in 

this case, no government subsidy is involved. However, when public 

subsidization is being considered, particularly for freight infrastructure 

projects, the appropriate scope of government involvement must carefully 

be considered because of the public-private nature of these projects. 

When public subsidization has been deemed appropriate, apportioning the 

cost burden among participants, or the beneficiaries of the project is the 

next critical step. This means identifying the beneficiaries and determining 

the level of benefits they are likely to derive from the project. According to 

TRB, “the candidates for paying for an intermodal freight transportation 

project are users (through tolls or other fees), other direct beneficiaries 

(e.g., owners of property adjacent to the development), the local public 

(through subsidies from local general tax revenues or tax concessions), the 

national public (through use of federal grants or tax-exempt bond finance), 

or indirect beneficiaries (e.g., application of road user fee revenues to rail 

transport on the grounds that rail use relieves road congestion).”44 TRB 

further noted that, for some projects, these beneficiaries should pay the 

costs commensurate with the cost of providing the service to the user. For 

example, when users are the direct beneficiaries of the project, user fees, 

which involve each user paying a fee for the cost of the service provided, 

are the preferred method that should be considered for projects that 

directly benefit the users. On the other hand, when external benefits, such 

as the reduction of pollution or congestion, result from a project, a case can 

be made that public support be provided for the project, and the direct 

users should pay the net cost of the use of the service after deducting the 

public benefit. Further, if public beneficiaries are largely local (e.g., 

reducing suburban congestion), efficiency principles would call for the 

public subsidy to be at a local rather than federal level. Again, as in other 

aspects of the decision-making process, sound evaluations and the ability 

of local planners to quantify the benefits and their distribution are critically 

important to making good decisions. 

Expanding Eligibility Guidelines 

for Existing Federal Programs

A concern voiced by national stakeholder groups and raised through our 

evaluation synthesis was that federal program eligibility requirements do 

not always lend themselves to certain types of freight improvement 

projects. For example, rail projects are eligible for federal aid funding or 

grants only if the project has a positive impact on air quality in a 

44Transportation Research Board, Special Report 252: Policy Options for Intermodal 

Freight Transportation (Washington, D.C.: 1998).
Page 44 GAO-04-165 Strategies Needed to Address Planning and Financing Limitations

nonattainment area, involves modifying a rail line to accommodate a 

federal aid highway project, or results in specified improvements in safety. 

While carefully tailored eligibility assures only projects generating public 

benefits receive subsidies, these programs do not appear to be sufficiently 

fluid to allow support for the full range of freight projects, which might 

generate substantial public benefits. One way to address this concern 

might be to expand eligibility criteria to cover a broader range of freight 

projects—by adding specific types of freight projects to the guidelines of 

existing programs—to make it easier for states and MPOs to fund freight 

projects identified as priorities through the transportation planning 

process. However, unless a determination is made that the project meets 

the criteria or characteristics that justify government involvement, public 

support for freight projects may result in more significant needs going 

unmet.

A number of proposals have been made to expand eligibility criteria to 

include freight projects, including the following examples. (See table 4.)

Table 4: Examples of Stakeholder Proposals to Expand Eligibility Criteria to Include 

Freight Projects

Sources: The administration’s surface transportation reauthorization proposal and the Freight Stakeholders Coalition proposal.

The provisions within the administration’s proposal to expand eligibility 

generally leave decisions about whether to advance projects to the states 

and MPOs. The extent to which eligible freight projects actually received 

support would depend on the priority they received in these local funding 

decisions. While there are specific implications of each suggested 

modification, these options retain the basic funding flexibility framework 

Stakeholder Proposal

Administration • Allows the use of Surface Transportation Program funds for 

publicly owned intermodal freight transfer facilities and National 

Highway System funds for routes connecting to intermodal freight 

terminals.

• Expands the types of private activities that can be financed with taxexempt private activity bonds to include surface freight transfer 

facilities. 

• Expands the eligibility of the Transportation Infrastructure Finance 

and Innovation Act to include public or private freight rail facilities 

and intermodal freight transfer facilities.

Freight 

Stakeholders 

Coalition

• Expands eligibility guidelines by dedicating funds for National 

Highway System connectors and expanding the Corridors and 

Borders Program to include gateways. 
Page 45 GAO-04-165 Strategies Needed to Address Planning and Financing Limitations

of ISTEA and TEA-21, which enables states and MPOs to determine their 

needs and identify the projects that are needed. This approach, however, 

may not go far enough in overcoming the difficulties in advancing freight 

improvements when their scope extends beyond the purview of individual 

states or MPOs. In such cases, many researchers and stakeholders have 

observed that public planners are wary about giving priority to freight 

projects when the costs are borne locally, but the benefits accrue 

nationally. Moreover, this approach does not recognize the intermodal 

nature of freight projects, since existing funding mechanisms tend to be 

modally focused. In addition, the administration’s proposal contains one 

provision that would establish a mandatory set-aside of NHS funds to 

address intermodal connectors. Since this would provide a dedicated pool 

of funding for intermodal connectors, these projects would no longer have 

to compete with other nonfreight priorities. However, a set-aside runs 

counter to the flexibility that ISTEA and TEA-21 allow to MPOs and states 

and could result in other needs going unmet. 

While expanding the eligibility of existing programs to cover a broader 

range of freight projects has benefits, it would not, in itself, provide a 

systemwide approach to addressing freight mobility improvements. 

Another option, however, would largely mitigate this planning limitation—

establishing a federally administered program to address freight projects of 

national significance. A federal program to address freight projects of 

national significance offers another way to address freight corridors that 

are regional in nature and achieve a systemwide approach for planning 

freight improvements, taking multiple transportation modes and 

jurisdictions into account. This program could be structured either 

through a “top-down” approach, under which a federal agency actively 

identifies, develops, and evaluates freight projects, or a “bottom-up” 

approach, under which local governments and private parties develop 

proposals and compete for federal support. This approach would provide a 

dedicated pool of funding for freight projects and, thus, would reduce, 

although not totally eliminate, the competition at the local level for 

available funding with nonfreight projects.

In structuring such a program, suggestions have been made by various 

stakeholders. The Freight Stakeholders Coalition, for example, proposed a 

tenfold increase in funding for the Borders and Corridors programs. They 

also proposed expanding the eligibility guidelines of the Borders and 

Corridors programs to include gateways. Therefore, prioritizing projects 

based on a qualification threshold, such as volume and congestion, would 

be needed to focus funding on critical corridors, gateways, and intermodal 
Page 46 GAO-04-165 Strategies Needed to Address Planning and Financing Limitations

infrastructure. As noted above, to date, much of the funding for the 

Borders and Corridors programs has been allocated to congressionally 

designated projects, and the need has far surpassed the available funding 

for the programs, according to FHWA.

FHWA describes a federally administered program as one that could 

complement the decisions made at the state and local levels, not replace 

them. In other words, the program would not remove MPOs from 

considering and approving freight projects within their respective areas of 

jurisdiction; rather, it would augment the current process by addressing 

those freight projects of national significance that crossed the boundaries 

of local jurisdictions. In terms of the revenue sources for such a program, 

some have suggested a more indirect federal role in subsidizing the 

program’s projects. For example, TRB has said that the government’s most 

effective role in subsidizing freight projects of national significance would 

be as a provider of backup credit and as an absorber of risk rather than as a 

source of grants. This, according to TRB, would make the project 

accountable for its performance and would tend to improve project 

selection. Also, FHWA suggests that such a program would need to be a 

discretionary, as opposed to a formula-driven program, to allow greater 

flexibility for the federal government to identify and fund projects as the 

need arises. 

Using Financing Mechanisms or 

Developing New Revenue 

Sources to Ensure a Blending of 

Public and Private Funds to 

Match Public and Private Costs 

and Benefits

Many stakeholders have argued that the level of transportation funding is 

insufficient to adequately address the challenges to freight mobility 

described earlier in this report. While more funding might appear to be an 

obvious solution, in the current budgetary environment, many stakeholders 

believe that other methods must be explored. One alternative would be to 

expand support for alternative financing mechanisms to access new 

sources of capital and stimulate additional investment in freight 

improvements. A closely related strategy involves raising new revenue 

through tolling and pricing strategies.

Alternative financing mechanisms include techniques such as loans and 

loan guarantees, providing credit assistance to state and local governments 

for capital projects, and using tax policy to provide incentives to the private 

sector for investing in freight improvements through, for example, bonds. 

When public transportation investment decisions are made based on sound 

evaluations, these mechanisms can lead to an appropriate blend of public 

and private funds to match public and private costs and benefits. Such 

mechanisms, however, currently provide only a small portion of the total 
Page 47 GAO-04-165 Strategies Needed to Address Planning and Financing Limitations

funding that is needed for capital investment and are not, by themselves, a 

major financing strategy for addressing freight mobility challenges. 

The administration’s proposal, for example, seeks to expand the eligibility 

of the TIFIA program, which provides loans, loan guarantees, and lines of 

credit. The proposal expands the eligibility of the program to include 

private freight rail facilities, access to intermodal freight transfer facilities, 

and allows for the grouping of projects. In addition, the loan threshold 

would be lowered from $100 million to $50 million. In addition, the 

administration’s proposal would amend the Internal Revenue Code by 

expanding the eligibility of private activities that can be financed with taxexempt private activity bonds to include freight-related projects.45 

Eligibility would be expanded to include all federal-aid eligible surface 

transportation projects and surface freight transfer facilities, such as 

intermodal rail yards. 

Alternative financing mechanisms involve a careful evaluation of trade-offs 

involving their use. On one hand, expanding eligibility could encourage 

development of new funding sources for transportation projects by 

attracting private-sector participation in projects that serve both public and 

private ends. Also, they may be necessary tools for freight infrastructure; 

many freight operators are private entities, which currently makes it 

impossible or inappropriate to provide funding for them through direct 

federal grants. On the other hand, despite potential benefits, these 

mechanisms could result in higher costs to the U.S. taxpayer. For example, 

when we compared direct appropriations for transportation infrastructure 

projects with methods such as TIFIA loans or state and local tax-exempt or 

tax credit bonds, we concluded that a direct appropriation had the lowest 

combined cost to state, local, and federal governments for a given amount 

of transportation investment.46 The U.S. Treasury has drawn similar 

conclusions. Further, because these approaches would allow public 

support for private infrastructure, it will be important that evaluations are 

conducted to prospectively test the economic rationale for government 

involvement in such projects and retrospectively evaluate whether 

intended benefits have been achieved.

45Title IX, Section 9004.

46GAO-02-1126T.
Page 48 GAO-04-165 Strategies Needed to Address Planning and Financing Limitations

A related feature of alternative financing approaches is the strategy for 

generating revenue from various tolling approaches, which can provide 

new sources of funding to address the increasing freight-related and other 

infrastructure needs. Tolling is often associated with alternative financing 

tools since nearly all require a dedicated revenue stream to repay borrowed 

funds. According to TRB, a greater reliance on tolls allows capacity to be 

more self-adjusting by rationing use, providing funds for expansion, and 

providing an indication of where expansion should occur in the long run. 

In concept, tolling on highways and major access roads is consistent with 

the premise that the users of the transportation facilities should pay the 

cost of those facilities. Also, to the extent that the private sector 

participates in building and maintaining toll roads or intermodal facilities, 

tolling can bring new funding sources into the financing mix, thus 

potentially reducing funding contributions of the public sector. 

Tolling can take many forms, but two approaches are particularly 

relevant—tolling mainly to raise revenues and tolling instituted at peak 

driving times to reduce congestion.

• Tolling as a revenue-generating source. Tolling on some roads is done 

as a way of generating new revenues to pay for needed infrastructure 

rather than to reduce congestion. The Reason Foundation has 

suggested freight-specific tolling through self-financing toll truckways.47 

Toll truckways, solely for use by large trucks, could be custom-built and 

designed for use by longer and heavier trucks. Separating large trucks 

from other vehicles would improve safety along with transportation 

efficiency. In its study, the Reason Foundation concludes that trucking 

firms would be willing to pay a toll up to one-half of the cost saving that 

would be generated from the use of the truckways. 

• Tolling for congestion pricing. Not only can pricing strategies generate 

revenue to help fund transportation investment, our past work has 

shown that this approach can potentially reduce congestion by 

providing incentives for drivers to shift trips to off-peak periods, use less 

congested routes, or use alternative modes, thereby spreading out 

demand for available transportation infrastructure. 48 A number of 

47Reason Foundation, Toll Truckways: A New Path Toward Safer and More Efficient 

Freight Transportation (Washington, D.C.: June 2002).

48GAO-03-735T.
Page 49 GAO-04-165 Strategies Needed to Address Planning and Financing Limitations

congestion pricing projects are in place in surface transportation, both 

here and abroad. For the most part, they demonstrate that congestion 

pricing can be successful. Congestion pricing also has the potential to 

generate sufficient revenue to help fund operations—and sometimes 

fund other transportation investment as well. For example, in San 

Diego, where users pay a toll to use a less crowded freeway lane, some 

of the revenues are used to operate a new express bus service, providing 

commuters with more travel options. 

In one possible form of congestion pricing for public roads, tolls would be 

set on an entire roadway or road segment during periods of peak use. In 

another form, sometimes known as value pricing, peak-period tolls would 

be set on only some lanes of a roadway, allowing drivers to choose between 

faster tolled lanes and slower nontolled lanes. High-occupancy toll (HOT) 

lanes, under which drivers of single-occupancy vehicles are given the 

option of paying a toll to use lanes that are otherwise restricted to highoccupancy vehicles, are an example of value pricing. A more freight 

specific alternative, such as truck toll lanes, may also be a way to reduce 

congestion, expand capacity, and generate revenues. 

Possible challenges to implementing congestion pricing include current 

statutory restrictions limiting the use of congestion pricing and concerns 

about equity and fairness across income groups. For example, tolls are 

prohibited on the Interstate Highway System, except for roads that already 

had tolls in place when they became part of the system or where 

exceptions have been made for pilot programs. Also, equity and fairness 

issues for low income and other groups have been raised, but there is 

evidence that these issues can be mitigated. Some projects have shown 

substantial usage by low-income groups, and other projects have used 

revenues generated to subsidize a low-income transportation option. In 

addition, some recent proposals for refining congestion pricing techniques 

have incorporated further strategies for overcoming equity concerns. For 

example, the Fast and Intertwined Regular (FAIR) lanes proposal in New 

York suggests crediting users of the nontolled lanes to partially pay for 

them to use public transportation, or to use the express lanes on other 

days. 

The administration’s proposal allows for the use of such alternatives in the 

form of variable toll pricing. The administration’s proposal encourages the 

use of a variable toll pricing provision that would permit a state or public 

authority to toll any highway, bridge, or tunnel to manage existing high 

levels of congestion or reduce emissions. The administration’s proposal 
Page 50 GAO-04-165 Strategies Needed to Address Planning and Financing Limitations

would also allow low-occupancy vehicles or solo drivers to pay a fee to use 

high-occupancy vehicle (HOV) lanes during peak travel periods.

Using Nonbuild Alternatives Finally, a number of low cost alternatives can be used to expand the 

capacity and efficient use of existing infrastructure. These alternatives are 

a diverse mix, including corrective and preventative maintenance and 

rehabilitation, operations and system management, and new technology.49 

Keeping up with growth within the constraints that will be imposed on the 

transportation system in the future will not be possible through capital 

improvements alone; operators must also extract more service and 

capacity from existing facilities. Although many of these techniques are 

currently in use, public planners can more consistently consider a full 

range of techniques. Table 5 briefly describes the types of alternatives 

available with examples of stakeholder proposals that apply to each. While 

the administration’s proposal allows for the use of all of the nonbuild 

alternatives, many of the provisions do not require the consideration and 

analysis of these noncapital alternatives in evaluating capital projects.

Table 5: Description of Nonbuild Alternatives and Relevant Stakeholder Proposals 

49Tolling for congestion pricing, discussed earlier as an alternative financing approach, is 

another nonbuild alternative. Congestion pricing can spread out demand on existing 

infrastructure, thereby reducing congestion and expanding system capacity.

Type of alternative Description Examples of proposals

Increased 

maintenance and 

rehabilitation

This entails having a regular 

and a systematic corrective and 

preventive maintenance 

program at the state and local 

level to maintain the integrity of 

existing infrastructure and 

prevent or forestall major 

rehabilitation or replacement. 

Such a program can improve 

the speed and reliability of 

freight travel. 

In the administration’s proposal, 

maintenance and rehabilitation 

is addressed through the 

establishment of a new 

program—the Infrastructure 

Performance and Maintenance 

Program—which focuses on 

projects that preserve existing 

highway facilities or alleviate 

traffic chokepoints.
Page 51 GAO-04-165 Strategies Needed to Address Planning and Financing Limitations

Source: GAO and the administration’s reauthorization proposal.

Building in Basic Economic 

and Management Principles 

into Reauthorization 

Strategies and Provisions 

Could Enhance Capacity 

and Performance of Freight 

Mobility

Congress will formulate a new national transportation policy when it 

reauthorizes TEA-21. Our past work and our review of numerous studies 

by a diverse group of transportation experts show that the planning and 

financing processes established by core transportation legislation make it 

difficult for freight mobility projects to compete with nonfreight projects. 

Our work has also led us to identify sound principles that, if integrated into 

the transportation planning and financing strategies and provisions of the 

new legislation, would better assure that the freight infrastructure system 

provides the level of capacity and performance that makes the greatest 

contribution to the nation’s economic well-being.

While not an all-inclusive list, we have synthesized three main guiding 

principles, often mentioned by transportation experts, for use in 

structuring federal support. 

Improving 

management and 

operations 

This involves using existing 

infrastructure more efficiently, 

which adds capacity. 

Examples include installing 

modern traffic control systems 

and developing strategies to 

handle traffic accidents and 

breakdowns. 

The administration’s proposal 

requires transportation plans to 

contain operational and 

management strategies. It also 

encourages transportation 

agencies to collaborate and 

coordinate on a regional level for 

improved systems management 

and operations. 

Developing and using 

new technology

This includes Intelligent 

Transportation Systems (ITS) 

that are designed to enhance 

the safety, efficiency, and 

effectiveness of the 

transportation network. ITS 

can serve as a way of 

increasing capacity and 

mobility without making major 

capital investments.

The administration’s proposal 

addresses ITS through an 

Intelligent Transportation 

Systems Performance Incentive 

Program. The goal of the 

incentive program is to 

accelerate the integration and 

interoperability of ITS to improve 

the performance of the surface 

transportation system in 

metropolitan and rural areas. 

Funding would be directly tied to 

criteria that reflect each state’s 

performance outcomes with 

respect to established criteria for 

enhanced safety, operations, 

and mobility.

(Continued From Previous Page)

Type of alternative Description Examples of proposals
Page 52 GAO-04-165 Strategies Needed to Address Planning and Financing Limitations

• Promote efficiency by embracing “user pay” principle. Public financial 

support to individual private entities or transportation modes is best 

structured so as to minimize distortion of any competition. Competition 

will be enhanced and efficiency will be promoted when capital and 

operating costs for infrastructure are paid from the revenues or fees 

charged to the direct users or beneficiaries of the facilities. Reliance on 

revenue from users will increase the likelihood that the most 

worthwhile improvements will be implemented and that facilities will be 

operated and maintained efficiently, according to transportation 

experts. Fees assessed on each mode (user) need to be accurately 

aligned with the costs each mode or vehicle imposes on the 

transportation system. Where user fees and costs are not aligned, a 

mode may enjoy an advantage over another in competing to transport 

goods. For example, according to TRB, the heaviest combination trucks 

pay a smaller share of the expenditures highway agencies incur to serve 

them.50 From an economic standpoint, this level of taxation distorts the 

competitive environment with railroads and other modes that could also 

move the goods by making it appear that these heavier trucks are a less 

expensive means for shippers to transport their goods than they really 

are. Better matching of fees to costs could provide incentives for 

shippers to make modal choices and transportation options based on 

true costs. Transportation experts recommend that, to ensure market 

outcomes of competition between trucking and other modes are in the 

public interest, adjusting user fees is preferable to providing off-setting 

subsidies to competing modes, such as railroads.

• Establish performance measures and expectations and build in 

accountability. Leading organizations have stressed the importance of 

developing performance measures and linking investment decisions and 

their expected outcomes to overall strategic goals and objectives. Doing 

so is valuable in evaluating the effectiveness of investment decisions, 

and it provides decision makers with valuable information for 

determining whether intended benefits were achieved and whether 

goals, responsibilities, and approaches should be modified. Establishing 

a framework for performance and accountability involves three key 

components—setting expectations for performance outcome, 

developing and maintaining an information system to capture critical 

50Transportation Research Board, Special Report 271: Freight Capacity for the 21st Century

(Washington, D.C.: 2002); Transportation Research Board, Special Report 252: Policy 

Options for Intermodal Freight Transportation (Washington, D.C.: 1998); and GAO-02-775.
Page 53 GAO-04-165 Strategies Needed to Address Planning and Financing Limitations

performance-related data, and establishing a mechanism for evaluating 

and reporting results. Transportation experts have suggested that such 

a framework be built into legislation as a means of better ensuring 

effective use of transportation dollars. The Brookings Institution, for 

example, recently recommended that Congress should subject MPOs to 

enhanced accountability measures and require states and MPOs to 

maintain information systems on indicators of national significance, 

such as daily vehicle miles traveled, improving air quality, lowering 

transportation costs, and expanding transportation options. Brookings 

also recommended establishing annual performance objectives and 

holding decision makers accountable by establishing consequences for 

excellent and poor performance. TRB has suggested similar measures 

including the need for systematic and uniform retrospective evaluations 

after projects are completed to assess the financial and economic 

performance of completed projects and facilities in operation. As 

discussed above, none of the states or MPOs in the locations we visited 

currently perform retrospective evaluations. TRB also recommended 

developing benchmarks to evaluate existing or proposed transportation 

facilities. The benchmarks would be a systematic comparison of 

performance measures, such as physical efficiency, cost, and rate of 

return; such benchmarks would be used to evaluate a specific facility 

under construction with other similar facilities, including state-of-the-art 

facilities abroad.

• Align incentives for planning agencies to adopt best practices and to 

achieve expectations. Aligning incentives for existing and new 

programs or approaches to facilitate the use of better freight 

transportation project planning and financing options could improve the 

efficiency of federal transportation programs in enhancing freight 

mobility. Better aligning both intended and de facto incentives of 

federal programs could elevate freight consideration in transportation 

planning and investment decisions more effectively than rigid direction 

or mandatory programs and is consistent with the ISTEA and TEA-21 

premise of providing state and local planners with broad flexibility to 

address the nation’s transportation needs. To be effective, incentives 

should be tangible and significant enough to address the need and spur 

action. Incentive approaches can take many different forms, as 

evidenced by varied suggestions from transportation experts and 

stakeholders. FHWA has suggested, for example, that to promote a 

more system-wide approach to planning freight improvement projects, 

incentives could be offered to multistate or regional coalitions or 

organizations. One such incentive would provide funding to support 
Page 54 GAO-04-165 Strategies Needed to Address Planning and Financing Limitations

freight planning or financing for projects that meet certain criteria, such 

as involving multiple states or modes. TRB has noted, for example, that 

as an incentive for states to experiment with alternative financing and 

management methods, Congress could set aside a fund dedicated to 

projects on roads where the highway agency has implemented efficient 

maintenance, traffic control, and other management measures, 

according to specified definitions. TRB has also suggested that as part 

of the highway program reauthorization, Congress should consider 

measures to reduce obstacles and provide incentives to private 

participation in highway development. Others have suggested that to 

promote the use of low cost, noncapital alternatives to more efficiently 

use existing infrastructure, a system could be established in which 

federal support would reward those states and localities that apply 

federal money to gain efficiencies in their existing transportation 

system. Different matching criteria would be one way to provide these 

rewards. For example, to spur consideration of preservation of existing 

infrastructure, matching requirements could be changed to a 50 percent 

federal share for building new capacity and an 80 percent share for 

preservation. The Brookings Institution, for example, has 

recommended consideration of other types of incentives—for example, 

that Congress should allow DOT to maintain a small incentive pool to 

reward states and MPOs that consistently perform at the exceptional 

level. 51 Ideally, an intentional alignment of the full range of existing 

programs and policies would emerge from a rigorous retrospective 

evaluation of both intended and de facto incentives provided by current 

programs and policies. 

Conclusions The current system for planning and financing transportation 

infrastructure projects is not well suited to advancing freight 

transportation improvement projects, and fundamental changes are 

needed that take a broader, systemwide approach to planning and 

financing freight projects and that foster active participation by the private 

sector in this process. Without such changes, growing congestion, coupled 

with a doubling of freight volume in the next two decades, could 

overwhelm the capacity of our nation’s transportation infrastructure and 

51The Brookings Institution, Improving Metropolitan Decision Making in Transportation: 

Greater Funding and Devolution for Greater Accountability (Washington, D.C.: October 

2003).
Page 55 GAO-04-165 Strategies Needed to Address Planning and Financing Limitations

thereby severely impede goods movement. This, in turn, would likely 

negatively impact the nation’s economic well-being and productivity.

Reauthorization of TEA-21 represents an opportunity to examine current 

federal policies and programs and determine how best to address freight 

mobility issues. The range of freight-related options proposed by various 

freight stakeholders is broad and sometimes controversial, and selecting 

among these options and splicing them together into a cohesive package 

represents a significant challenge. A blend of measures offers promise in 

two broad strategies: first, to promote a systemwide approach to planning 

and transportation investment decision making, and, second, to provide an 

array of flexible financing approaches and funding sources for freightrelated infrastructure improvements. Taken together, these strategies offer 

a balanced approach to enhancing freight mobility. Optimum results could 

be furthered if three overarching economic and management principles are 

applied in the development and refinement of reauthorization provisions. 

These include (1) promoting efficiency by enhancing “user pay” principle, 

(2) maximizing a performance-based program, and (3) aligning the 

incentives for planning agencies and investment decision makers to focus 

on efficiency and results.

One issue requires immediate attention because of its importance in the 

process for both planning and financing transportation infrastructure. 

State and local planners, in particular, need—but lack—sound, 

economically based methods and approaches and sufficient freight-related 

data to perform a variety of critical planning and financing functions. The 

absence of these analytical methods and data undermines local planners’ 

abilities to develop evaluations essential to support public transportation 

decisions; to assess viable alternative solutions, including multimodal 

solutions; to justify government involvement in and subsidy levels for 

projects; and to retrospectively assess projects and hold planners 

accountable for their decisions. Because this issue is so critical to the 

entire process, it is important that state and local planners adopt sound, 

consistently applied methods and develop and enhance data collection 

efforts.

Recommendations for 

Executive Action

To encourage the use of sound evaluation and data collection efforts 

among state and local transportation planners, we recommend that the 

Secretary of Transportation:
Page 56 GAO-04-165 Strategies Needed to Address Planning and Financing Limitations

• Develop evaluation approaches for state and local planners to use in 

making freight-related and other transportation investment decisions 

and actively work with transportation planners to achieve 

implementation of these approaches. In developing these approaches, 

DOT should promote the incorporation of key elements of effective 

planning, including systematic cost-benefit analyses, evaluation of 

noncapital alternatives, inclusion of external benefits (e.g., congestion 

and pollution costs), and routine performance of retrospective 

evaluations.

• Facilitate the collection of freight-relevant data that would allow state 

and local planners to develop and use a broad range of evaluation 

methods and techniques, such as demand forecasts, modal diversion 

forecasts, estimates of effects of proposed investments on congestion 

and pollution, and other factors, as they make transportation investment 

choices.

Agency Comments and 

Our Evaluation

We provided a draft of this report to the Department of Transportation for 

its review and comment. Generally, the department agreed with the facts 

presented in the report. Department officials provided a number of 

comments and clarifications, which we incorporated to ensure the 

accuracy of our report. The department did not take a formal position on 

GAO’s recommendations. Department officials raised two points that were 

either outside the scope of our work or were not addressed by freight 

stakeholders at locations we visited or discussed in various reports 

included in our evaluation synthesis. First, department officials noted that 

expanding port business hours should be considered as a nonbuild option 

to relieve congestion. Although we do not disagree with the expansion of 

hours as a potential nonbuild option, it was not raised in either our 

evaluation synthesis or expressed as a major congestion issue during our 

case study work. Second, department officials indicated that intermodal 

freight movement is larger than depicted in the report and involves many 

transportation communities essential to productive freight movement. 

These include shippers, receivers, warehouses, and trucking companies. 

We recognize this point as well, but we were asked to focus on 

international gateways around major containerized ports, since this is 

where transportation congestion is often most acute and where intermodal 

solutions are critically needed. In addition, while we do not explicitly 

identify all of the various communities involved in freight movement, our 

discussion of the private and public sectors is intended to encompass all of 

the communities involved in freight movement. To this end, we have 
Page 57 GAO-04-165 Strategies Needed to Address Planning and Financing Limitations

described the key entities involved in freight movement in the background 

section. 

As agreed with your offices, unless you publicly announce the contents of 

this report earlier, we plan no further distribution until 30 days from the 

report date. At that time, we will send copies of the report to the Secretary 

of Transportation. We also will make copies available to others upon 

request. In addition, the report will be available at no charge on the GAO 

Web site at http://www.gao.gov.

If you have any questions about this report, please contact me at 

heckerj@gao.gov or (202)512-2834 or Randall Williamson at 

williamsonr@gao.gov or (206)287-4860. GAO contacts and 

acknowledgments are listed in appendix VI.

JayEtta Z. Hecker

Director, Physical Infrastructure
Page 58 GAO-04-165 Strategies Needed to Address Planning and Financing Limitations

Appendix I

Objectives, Scope, and Methodology AAppenednxidexiIs

The objectives of this report were to identify (1) the national challenges to 

freight mobility and how these challenges were evident at selected 

container ports and surrounding areas, (2) the existing limitations to 

effectively addressing these challenges, and (3) strategies that may help 

public decision makers improve freight mobility, including a discussion of 

relevant provisions of selected proposals related to reauthorization of 

federal surface transportation programs. To address these objectives, we 

conducted an evaluation synthesis of national reports and studies, an 

analysis of proposals issued by numerous stakeholders addressing 

reauthorization of TEA-21, and case studies at six international gateway 

container ports.

We conducted an evaluation synthesis of research reports, analytical 

studies, and proposals issued by numerous stakeholders to gain a national 

perspective of freight mobility issues. This was done through an extensive 

literature review and analysis of key categorical findings. Findings were 

supplemented with interviews of key officials in federal agencies and 

national association representatives to include, at the Department of 

Transportation: the Office of Intermodalism, Office of Freight Operations, 

the Federal Highway Administration, Federal Railroad Administration, 

Maritime Administration, and stakeholders including the American 

Trucking Association, Association of Metropolitan Planning Organizations, 

American Association of Port Authorities, Association of American 

Railroads, and the American Association of State Highway and 

Transportation Officials.

To identify challenges to freight mobility and the efforts to address them, 

we also conducted case studies of international gateway ports and their 

surrounding areas. We adopted a case study methodology because, while 

the results cannot be projected to the universe of ports, case studies are 

useful in illustrating the range and complexity of challenges and projects 

implemented to address those challenges. Our efforts included in-person 

interviews along with follow-up questions via telephone and e-mail, visual 

observations of ports and their surrounding areas, and collection of 

pertinent documents for analysis. The ports selected were geographically 

representative and comprised more than 65 percent of U.S. container 

traffic by volume. We conducted case studies of six regions containing 10 

container ports including Charleston, SC; Seattle/Tacoma, WA; Los 

Angeles/Long Beach, CA; San Francisco/Oakland, CA; New York/New 

Jersey; and Houston, TX. The information collected and analyzed may not 

be representative of other types of ports, such as smaller container ports 

and noncontainer ports. The information collected included information 
Appendix I

Objectives, Scope, and Methodology

Page 59 GAO-04-165 Strategies Needed to Address Planning and Financing Limitations

regarding the planning process, both at the state and local level; the 

metropolitan organization’s role, funding, and financing; private-sector 

participation; data and use of nonbuild tools; and security. In the area of 

security, we reviewed previous GAO studies on this issue, but because of 

ongoing studies and the enormity and complexity of evaluating the security 

issues involved in protecting the transportation system, we did not address, 

in this report, barriers that agencies and others face to implement sound 

security measures or evaluate options offered by others or efforts under 

way to strengthen transportation security. These issues will be more fully 

addressed as part of other ongoing and future studies. 

To identify strategies that may aid decision makers in enhancing freight 

mobility, we relied extensively on perspectives gained from our past work 

in transportation and infrastructure systems and federal investment 

strategies and other perspectives gained through our evaluation synthesis. 

We assessed the reauthorization proposals developed by key stakeholders 

within the context of these strategies.

We conducted our work from October 2002 to November 2003 in 

accordance with generally accepted government auditing standards
Page 60 GAO-04-165 Strategies Needed to Address Planning and Financing Limitations

Appendix II

Summary of the Administration’s 2003 Surface 

Transportation Reauthorization Proposal 

Freight-related Provisions and Observations ApendxiI

I. Planning

1. State planning and research (Title I, Section 1503(i)(1)(B)). 

Two and one-half percent of the sums apportioned to a state for 

state planning and research to be made available for a number of 

activities, including freight planning.

2. Transportation planning (Title VI, Section 6001, subsection 

5203(e)(4)). Metropolitan planning organizations (MPOs) are 

encouraged to coordinate their planning processes with officials 

responsible for other types of planning activities that are affected 

by transportation, including freight.

3. Multistate corridor planning program (Title I, Section 

1806(f)(1)). States and other jurisdictions are encouraged to 

work together to develop plans for multimodal and 

multijurisdictional transportation decisionmaking and to prioritize 

multimodal planning studies. 

Observation: Although these provisions are consistent with 

Intermodal Surface Transportation Efficiency Act (ISTEA) and 

Transportation Equity Act of the 21st Century (TEA-21) in that 

they emphasize the importance of freight transportation and 

continue the decentralized planning approach, states and MPOs 

are best positioned to make decisions on transportation 

planning and project selection; encouragement alone may not 

be enough to overcome planning challenges.

4. State planning and research (Title I, Section 1503(i)(3)(A)).

Not less than 20 percent of the dedicated state planning and 

research funds (2 1⁄2 percent of the sums apportioned to a state for 

state planning and research) to improve the collection and 

reporting of strategic surface transportation data to provide critical 

information about the extent, condition, use, performance, and 

financing of the nation’s highways (including intermodal 

connectors) for passenger and freight movement.

Observation: Requiring a set-aside may increase freight data 

collection efforts, which may lead to an elevation of freight 

issues in the planning process. Requiring a set-aside, however, 

may be viewed as an unwelcome mandate that negatively 
Appendix II

Summary of the Administration’s 2003 

Surface Transportation Reauthorization 

Proposal Freight-related Provisions and 

Observations

Page 61 GAO-04-165 Strategies Needed to Address Planning and Financing Limitations

affects the ability of states and MPOs to address their unique 

transportation needs.

II. Financing

1. Freight transportation gateways; freight intermodal 

connections (Title I, Section 1205, subsection 325). Creates a 

new program that adds state responsibilities and allows the use of 

Surface Transportation Program (STP) and National Highway 

System (NHS) funds for freight-related projects. (1) State 

responsibilities include ensuring that intermodal freight 

transportation, trade facilitation, and economic development needs 

are adequately addressed and fully integrated into the project 

development process; designating a freight transportation 

coordinator responsible for fostering public- and private-sector 

collaboration needed to implement complex solutions to freight 

transportation and freight transportation gateway problems; and 

encouraging the adoption of innovative financing strategies for 

freight transportation gateway improvements. (2) Allows states to 

obligate STP funds for publicly owned intermodal freight transfer 

facilities, access to such facilities, and operational improvements 

for such facilities. (3) Requires a set-aside of NHS funds for NHS 

routes connecting to intermodal freight terminals. 

Observation: Since the STP funds are part of the state 

apportionment and the provision is not requiring the use of the 

funds for freight-related projects, freight transportation projects 

would still have to compete with other projects in the planning 

process. While the mandatory set-aside of NHS funds for 

intermodal connectors would directly address the problems 

associated with NHS intermodal connectors, it runs counter to 

the funding flexibility established in ISTEA and TEA-21.

2. Transportation Infrastructure Finance and Innovation Act 

(TIFIA) amendments (Title I, Section 1304). Modifies the 

TIFIA program by (1) expanding the eligibility to include a public or 

private freight rail facility, an intermodal freight transfer facility, 

access to such facilities, and service improvements for such 

facilities; or grouping of such projects with the common objective 

of improving the flow of goods; (2) reducing the threshold from 

$100 million to $50 million; and (3) revising the lines of credit clause 
Appendix II

Summary of the Administration’s 2003 

Surface Transportation Reauthorization 

Proposal Freight-related Provisions and 

Observations

Page 62 GAO-04-165 Strategies Needed to Address Planning and Financing Limitations

by removing the requirement that TIFIA lines of credit be drawn 

upon as a last resort.

Observation: (1) Adding “private freight rail facilities” would 

suggest that rail lines would be eligible for TIFIA assistance. In 

such a case, public funds could potentially be used for privately 

owned infrastructure. The expanded definition would also 

allow for the grouping of projects, which may enable smaller 

projects to be packaged together to meet the eligibility project 

cost threshold requirement. (2) Lowering the loan threshold 

would make many more projects eligible. (3) Expanded use of 

TIFIA loans as a result of these changes could heighten federal 

risks.

3. Private activity bonds (Title IX, Section 9004). Expands the 

eligibility of private activities that can be financed with tax-exempt 

private activity bonds to include surface freight transfer facilities, 

defined as facilities for the transfer of freight from truck to rail or 

rail to truck (including any temporary storage facilities directly 

related to such transfers). The total amount of the bonds issued for 

highway facilities and surface freight transfer facilities cannot 

exceed $15 billion.

Observations: Expanding eligibility could encourage 

development of new funding sources for freight projects by 

attracting private-sector participation in such projects. 

However, expanded eligibility could potentially result in higher 

costs to the taxpayers. Bonds can be more expensive than 

grants because the governments have to compensate private 

investors for the risks that they assume.

III.Nonbuild Tools

1. Infrastructure Performance and Maintenance Program (Title 

I, Section 1201). Creates a new program intended for projects 

that would preserve, maintain, or extend the life of existing 

highway infrastructure elements or provide operational 

improvements, including traffic management and intelligent 

transportation system (ITS) strategies and limited capacity 

enhancements, at points of recurring highway congestion.
Appendix II

Summary of the Administration’s 2003 

Surface Transportation Reauthorization 

Proposal Freight-related Provisions and 

Observations

Page 63 GAO-04-165 Strategies Needed to Address Planning and Financing Limitations

2. Transportation planning (Title VI, Section 6001, Subsection 

5203(g)(2)(C)). A transportation plan will be required to contain, 

among other things, operational and management strategies to 

improve the performance of existing transportation facilities to 

relieve vehicular congestion and maximize the safety and mobility 

of people and goods.

3. Transportation systems management and operations (Title I, 

Section 1701, subsection 165(b)(3)). Allows the Secretary of 

Transportation to assist and cooperate with other departments and 

agencies to improve regional collaboration and real-time 

information sharing; issue, if necessary, new guidance or 

regulations for the procurement of transportation system 

management and operations facilities equipment, and services; and 

approve for federal financial assistance support for regional 

operations collaboration and coordination activities that are 

associated with regional improvements.

Observation: While these provisions allow for the use of these 

tools, there is no explicit requirement to evaluate the 

effectiveness of the tools to discern whether intended benefits 

have been achieved.

4. Intelligent Transportation Systems Performance Incentive 

Program (Title I, Section 1703). In the area of ITS, the provision 

would allow funds to be used for projects involving planning, 

deployment, integration, and operation of ITS. The funding formula 

would be based on the following criteria that reflect each state’s (1) 

reductions in delay due to incidents, (2) improvements in the 

operation and safety of signalized intersections, (3) reductions in 

delay and improvements in safety of work zones on the NHS, (4) 

improvements in the efficiency and reliability of transit services, (5) 

overall improvement in integrated regional transportation 

operations, (6) improvements in the quality and availability of 

traveler information, (7) improved crash notification, and (8) 

improvements in the safety and productivity of commercial vehicle 

operations in the NHS.

Observation: Tying funding to performance outcomes 

increases the likelihood that agencies will endeavor to improve 

performance.
Appendix II

Summary of the Administration’s 2003 

Surface Transportation Reauthorization 

Proposal Freight-related Provisions and 

Observations

Page 64 GAO-04-165 Strategies Needed to Address Planning and Financing Limitations

5. Toll programs (Title I, Section 1615). The provision would 

allow a state or public authority to toll any highway, bridge, or 

tunnel, including facilities on the Interstate Highway System, to 

manage existing high levels of congestion or reduce emissions in a 

nonattainment area or maintenance area. The tolls must vary in 

price according to time of day to manage congestion or improve air 

quality. A state may also permit vehicles with fewer than two 

occupants to operate in high-occupancy vehicle (HOV) lanes as part 

of a variable toll pricing program.

6. Use of HOV lanes (Title I, Section 1610). Responsible agencies 

may permit vehicles that do not satisfy the established occupancy 

requirements to use an HOV facility only if they charge such 

vehicles a toll. Any agency electing to toll such vehicles shall also 

(1) establish a program that addresses how motorists can enroll and 

participate; (2) develop, manage, and maintain a system that will 

automatically collect the tolls that vehicles must pay; (3) 

continuously monitor, evaluate, and report on performance; (4) 

establish the policies and procedures for varying the toll that is 

charged to manage the demand to use the subject facilities and 

enforce violations; and (5) establish procedures that will limit or 

restrict the use of such vehicles, as necessary, to ensure that the 

performance of individual facilities or the entire system does not 

become seriously degraded. 

Observation: Pricing incentives such as these can enhance 

economic efficiency by making users take into account the 

external costs they impose on others.
Page 65 GAO-04-165 Strategies Needed to Address Planning and Financing Limitations

Appendix III

Summary of Freight-related 

Recommendations Developed by the 

Transportation Research Board ApendxiI

I. Planning

1. Department of Transportation (DOT) data and analysis 

programs. Continued support should be given to the development 

of DOT capabilities for economic analysis of the federal aid 

highway program and federal highway user fees and to the 

application of this analysis in support of decisions.

2. Evaluation methods. As one means of promoting more useful 

evaluation at the federal and state levels, a clearinghouse devoted 

to evaluation methods within DOT should be created where DOT 

program agencies and local and state governments could share and 

compare methods and examples of evaluations.

II. Financing

1. Maintain and reinforce the principle of user financing by 

reforming the structure of fees so that they more closely 

relate to costs each highway user imposes.

2. Provide funding adequate to ensure that the states have 

resources to maintain the overall performance of the 

highway system.

3. Programs in successor legislation should meet certain 

criteria. These programs should (1) sustain the “user pays” 

principle, which involves paying capital and operating costs from 

the revenues of fees charged to the direct users of the facilities; (2) 

sustain the support of the affected parties that the federal user fee 

financing system enjoys by funding projects that fee payers 

recognize as having value to them; (3) ensure that the market 

outcomes of competition between trucking and other modes are in 

the public interest, primary reliance should be placed on adjusting 

user fees rather than supply offsetting subsidies to the competing 

modes; and (4) establish requirements for ongoing and 

retrospective evaluation of the performance of the programs for 

federal multimodal credit assistance programs.

4. DOT should study the costs and market potential of 

exclusive truck facilities.
Appendix III

Summary of Freight-related 

Recommendations Developed by the 

Transportation Research Board

Page 66 GAO-04-165 Strategies Needed to Address Planning and Financing Limitations

5. State and local governments should routinely conduct 

evaluations to quantitatively test the economic rationale for 

government involvement in their freight transportation 

infrastructure projects. Federal programs should require 

such evaluations of projects receiving federal assistance.
Page 67 GAO-04-165 Strategies Needed to Address Planning and Financing Limitations

Appendix IV

Summary of the Freight-related 

Reauthorization Proposals Developed by 

Stakeholders ApendxiIV

I. Proposals to Address Planning Barriers:

American Association of State Highway and Transportation 

Officials proposed (1) the development of a freight planning capacity 

building process jointly sponsored by Department of Transportation (DOT) 

and American Association of State Highway and Transportation Officials 

(AASHTO) wherein up to $10 million annually would be provided to 

support an initiative through which DOT and the state DOTs would jointly 

develop and implement a training and capacity-building program to 

strengthen the ability of state and local transportation agencies to 

effectively address freight transportation issues, (2) enacting an increase in 

the Federal Highway Administration’s (FHWA) research and technology 

program allowing a greater emphasis on freight transportation research 

and creating a Freight Transportation Cooperative Research Program, and 

(3) creating a Freight Advisory Group to communicate with one voice to 

DOT on freight transportation issues.

Local Officials for Transportation proposed (1) encouraging the 

development of a seamless transportation system by connecting all modal 

elements to ensure the efficient movement of people and goods and (2) 

developing new approaches to help localities combat increasing urban 

congestion.

Association of American Railroads proposed encouraging that freight 

issues be given additional consideration in state and local transportation 

planning.

American Trucking Associations proposed (1) producing a national 

Freight Transportation Improvement Program (FTIP) that focuses on 

transportation corridors with heavy freight usage relative to the national 

economy and relative to regional populations and economic activity;1

 (2) 

establishing a Freight Advisory Board to review and comment on the FTIP; 

(3) requiring that MPO governing boards include representatives from the 

freight community; (4) setting aside a portion of the MPO funds for the 

salaries and training of freight planning specialists; (5) establishing a 

Freight Cooperative Research Program; (6) establishing a discretionary 

1

The American Trucking Associations proposed that the purpose of the FTIP is to identify 

corridors that are currently deficient or are likely to become deficient given projected 

freight transportation demands and specific local system bottlenecks, including deficient 

intermodal connectors.
Appendix IV

Summary of the Freight-related 

Reauthorization Proposals Developed by 

Stakeholders

Page 68 GAO-04-165 Strategies Needed to Address Planning and Financing Limitations

program that provides research grants to states, MPOs, multijurisdictional 

transportation planning groups, and private-sector groups; and (7) funding 

and supporting multimodal research programs that benefit and improve the 

safety and productivity of the trucking industry, as well as fostering 

innovative partnerships with the private sector.

Association of Metropolitan Planning Organizations proposed 

continuing efforts in the area of goods movement data and setting regional 

priorities.

American Public Transportation Association proposed a pilot 

program that will identify the benefits of shared use of freight rail corridors 

by freight and light rail. Although shared use is common in Europe, Federal 

Railroad Association (FRA) has a number of regulatory requirements that 

restrict this practice. The proposals called for amending federal transit law 

to provide for this pilot program to be carried out jointly by Federal Transit 

Administration (FTA) and FRA. It would draw on European experience 

with shared use of freight rail corridors to demonstrate that operations can 

be safe, effective, and smooth. Separate funding would not be available for 

the program. Instead, applicants would use existing resources to support 

it. Conclusions drawn from the pilot program would be the basis for FRA 

to revise its current regulatory framework.

II. Proposals to Address the Limitations with Existing 

Funding/Financing Programs

American Association of State Highway and Transportation 

Officials proposed (1) the use of existing innovative finance tools and 

new financing mechanisms for investments in freight transportation 

infrastructure such as lowering the Transportation Infrastructure 

Financing and Innovation Act (TIFIA) project dollar threshold, expanding 

the eligibility of freight projects and relaxing repayment requirements, 

allowing pooling of modal funds, expanding the state infrastructure bank 

(SIB) program to all states, creating tax incentives for freight rail and 

intermodal infrastructure investment, and exploring the utility of a 

Transportation Finance Corporation as a financing mechanism for freight 

projects; (2) tailoring existing and proposed innovative financing 

techniques to make increased investment in intermodal connectors 

possible in combination with increases in core Transportation Equity Act 

for the 21st Century (TEA-21) programs; (3) focusing the National Corridor 

Planning and Development Program and the Coordinated Border 

Infrastructure Program more tightly on freight corridors and augmenting 
Appendix IV

Summary of the Freight-related 

Reauthorization Proposals Developed by 

Stakeholders

Page 69 GAO-04-165 Strategies Needed to Address Planning and Financing Limitations

funding from the Highway Trust Fund with innovative financing; (4) 

clarifying the eligibility of freight projects for Congestion Mitigation and Air 

Quality (CMAQ) funding; (5) increasing the funding for the highway rail 

grade crossing program (section 130) 2

 proportionate to the increase in the 

overall highway program; and (6) expanding and reforming the Rail 

Revitalization and Improvement Funding Program (RRIF).

Association of American Railroads proposed (1) providing tax 

incentives and tax-exempt financing to companies making investments in 

intermodal freight infrastructure; (2) allowing funding of rail infrastructure 

through the issuance of tax-exempt indebtedness, increasing the amount of 

low-interest loans and loan guarantees available through the RRIF 

program, and removing overly restrictive regulatory requirements that have 

hindered program implementation; (3) increasing funding for the section 

130 grade crossing program and allowing funds to be spent on maintenance 

activities; (4) increasing funding and clarifying freight project eligibility for 

the CMAQ program; and (5) increasing funding for the Corridors and 

Borders program and liberalizing project eligibility criteria.

American Road and Transportation Builders Association proposed

increasing the amount of funding available nationally under TIFIA and 

reducing the overly restrictive qualifications and criteria that discourage 

expanded use of the tool.

American Trucking Associations proposed (1) ensuring that revenues 

are dedicated to projects and programs that serve national economic, 

safety, and research interests; (2) preventing further diversion of highway 

user revenues to nonhighway projects; (3) creating new innovative 

financing programs that allow states to fund extremely high-cost highway 

projects designed to expedite the movement of freight; (4) opposing the 

adoption of any new highway user fees on the trucking industry or 

increases in existing user fees; (5) preventing further diversion of highway 

user revenues to nonhighway freight projects; and (6) dedicating adequate 

resources to the development of infrastructure and human resources along 

the U.S. borders with Canada and Mexico in order to meet the challenges 

associated with rapidly increasing trade growth.

2

Section 130 is a program to enhance safety at highway-rail grade crossings on public 

highways.
Appendix IV

Summary of the Freight-related 

Reauthorization Proposals Developed by 

Stakeholders

Page 70 GAO-04-165 Strategies Needed to Address Planning and Financing Limitations

Association of Metropolitan Planning Organizations proposed (1) 

promoting the use of innovative financing arrangements, through providing 

more incentives, greater flexibility in regulations, and removal of barriers 

to public-private joint development;3

 (2) giving additional assistance to 

metropolitan areas at major entry ports and intermodal hubs; (3) using 

Highway Trust Fund or other federal funding sources in excess of current 

authorizations to increase program capacity to support the safe and 

efficient movement of goods in corridors that are crucial to national 

economic security and vitality; and (4) broadening the eligibility of freight 

project funding, providing incentives to attract private investment, and 

allowing port access and gateways to be eligible for the Corridors and 

Borders programs.

III.Proposals That Would Allow for the Use of Nonbuild Tools

American Road and Transportation Builders Association proposed

exploring new technologies to help meet system and mobility needs.

American Trucking Associations proposed elevating highway 

operations to a level comparable to highway construction and maintenance 

with comparable increases in funding for operations. As part of this 

increased focus on operations, the DOT should continue to support and 

fund research into improved highway operations.

Association of Metropolitan Planning Organizations proposed (1) 

managing existing capacity better through traditional congestion 

management techniques and ITS and (2) giving MPOs the responsibility for 

determining which institution in their region should lead the development 

of metropolitan-level management and operations plans.

Local Officials for Transportation proposed increasing funding for all 

existing research and technology programs that directly benefit local 

government.

U.S. Conference of Mayors proposed (1) suballocating surface 

transportation funds to metropolitan areas for repair and maintenance of 

3

The Association of Metropolitan Planning Organizations provides the following specific 

changes that should be considered: increasing direct federal capitalization of infrastructure 

banks, making changes to tax-exempt bond finance restrictions, removing barriers to 

public-private joint development, and broadening eligibility rules and relaxing thresholds on 

innovative financing tools already available.
Appendix IV

Summary of the Freight-related 

Reauthorization Proposals Developed by 

Stakeholders

Page 71 GAO-04-165 Strategies Needed to Address Planning and Financing Limitations

existing urban highways while giving equal weight to other transportation 

needs and (2) dedicating resources to combat increasing metropolitan 

congestion through the expanded use of ITS technology. 
Page 72 GAO-04-165 Strategies Needed to Address Planning and Financing Limitations

Appendix V

Assessment of Stakeholder Proposals ApendxiV

Stakeholder proposals vary considerably in the degree to which they 

address the various elements of the strategies to address planning and 

financing limitations. Table 6 shows the most extensive proposals that 

have been made, together with our assessment of which elements of the 

two strategies are present in the proposal. (In the table, an “X” indicates 

whether the proposal addressed this element in some manner; it does not 

indicate the nature or extent of the action.) As the table shows, the 

broadest representation of these elements is contained in the 

administration’s surface transportation reauthorization proposal. 

Collectively, the proposals touch on all of the elements of these strategies, 

although no single proposal currently contains the breadth of elements that 

will be needed to address the multidimensional limitations inherent in the 

public planning process and in federal funding/financing programs. 

Table 6: Coverage of Strategy Elements in the Most Extensive Reauthorization Proposals

Source: GAO analysis of selected system stakeholder reauthorization proposals.

Reauthorization proposal

Elements of planning strategy Elements of financing strategy

Coordination

Private 

involvement

Data and 

tools

Expand 

eligibility

Alternative 

finance

Nonbuild 

tools

Administration’s 2003 surface 

transportation reauthorization 

proposal

X X X X X X

Freight Stakeholders Coalition X X X X

American Association of State 

Highway and Transportation 

Officials

X X X

Association of American 

Railroads

X X

American Trucking 

Associations

X X X

Association of Metropolitan 

Planning Organizations

X X X X

American Road and 

Transportation Builders 

Association

X X
Page 73 GAO-04-165 Strategies Needed to Address Planning and Financing Limitations

Appendix VI

GAO Contacts and Staff Acknowledgments ApendxiVI

GAO Contacts JayEtta Z. Hecker (202) 512-2834

Randall B. Williamson (206) 287-4860

Staff 

Acknowledgments

In addition to those individuals named above, Jack Burriesci, Jay Cherlow, 

Tom Collis, Sarah Eckenrod, David Hudson, Elizabeth McNally, Albert 

Schmidt, Sharon Silas, Stan Stenerson, and Stacey Thompson made key 

contributions to this report.

(544058)
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