```
                                                                 
Surface and Maritime Transportation: Developing Strategies for	 
Enhancing Mobility: A National Challenge (30-AUG-02, GAO-02-775).
                                                                 
The U.S. surface and maritime transportation systems include	 
roads, mass transit systems, railroads, and ports and waterways. 
One of the major goals of these systems is to provide and enhance
mobility, that is, the free flow of passengers and goods.	 
Mobility provides people with access to goods, services,	 
recreation, and jobs; provides businesses with access to	 
materials, markets and people; and promotes the movement of	 
personnel and material to meet national defense needs. During the
past decade, total public sector spending increased for public	 
roads and transit, remained constant for waterways, and decreased
for rail. Passenger and freight travel are expected to increase  
over the next 10 years, according to Department of Transportation
projections. Passenger vehicle travel on public roads is expected
to grow by 24.7 percent from 2000 to 2010. Passenger travel on	 
transit systems is expected to increase by 17.2 percent over the 
same period. Amtrak has estimated that intercity passenger rail  
ridership will increase by 25.9 percent from 2001 to 2010. The	 
key factors behind increases in passenger travel, and the modes  
travelers choose, are expected to be population growth, the aging
of the population, and rising affluence. According to GAO's	 
expert panelists and other sources, with increasing passenger and
freight travel, the surface and maritime transportation systems  
face a number of challenges that involve ensuring continued	 
mobility while maintaining a balance with other social goals,	 
such as environmental preservation. These challenges include (1) 
preventing congestion from overwhelming the transportation	 
system, (2) ensuring access to transportation for certain	 
undeserved populations, and (3) addressing the transportation	 
system's negative effects on the environment and communities.	 
There is no one solution for the mobility challenges facing the  
nation, and GAO's expert panelists indicated that numerous	 
approaches are needed to address these challenges. Strategies	 
included are to (1) focus on the entire surface and maritime	 
transportation system rather than on specific modes and types of 
travel, (2) use a full range of tools to achieve desired mobility
outcomes, and (3) provide more options for financing mobility	 
improvements and consider additional sources of revenue.	 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-02-775 					        
    ACCNO:   A04688						        
  TITLE:     Surface and Maritime Transportation: Developing	      
Strategies for Enhancing Mobility: A National Challenge 	 
     DATE:   08/30/2002 
  SUBJECT:   Ground transportation operations			 
	     Marine transportation operations			 
	     Strategic planning 				 
	     Water transportation operations			 
	     FTA Transit Cooperative Research Program		 
	     Harbor Maintenance Trust Fund			 
	     Highway Trust Fund 				 
	     National Cooperative Highway Research		 
	     Program						 
                                                                 
	     Treasury General Fund				 

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GAO-02-775

                                       A

Report to the Committee on Environment and Public Works, U. S. Senate

August 2002 SURFACE AND MARITIME TRANSPORTATION

Developing Strategies for Enhancing Mobility: A National Challenge

GAO- 02- 775

Letter 1 Results in Brief 3 Background 6 Trends in Public Expenditures for
Surface and Maritime

Transportation Vary by Mode 11 Passenger and Freight Travel Are Expected
to Increase on All

Modes 17 Key Mobility Challenges Include Growing Congestion, Limited

Access to the Transportation System for Certain Groups, and Effects on the
Environment and Communities 27 Strategies for Addressing Mobility
Challenges Include Focusing on

Systemwide Outcomes, Using a Full Range of Tools, and Providing Options
for Financing Surface and Maritime Transportation 37 Agency Comments and
Our Evaluation 48

Appendixes

Appendix I: Expenditures for Capital, Operations, and Maintenance 50

Appendix II: Travel Forecast Methodologies 54

Appendix III: Factors Influencing Future Travel 60

Appendix IV: Intelligent Transportation Systems 66

Appendix V: Alternative Financing Methods 69

Appendix VI: Scope and Methodology 72

Appendix VII: GAO Contacts and Acknowledgments 78 Table Table 1: Projected
Average Annual Growth Rates for Vehicle Miles

Traveled, 2000- 2020 58 Figures Figure 1: Total Public Sector Expenditures
for Surface and

Maritime Transportation by Mode, Fiscal Years 1991- 1999 11 Figure 2:
Federal Government and State and Local Government

Shares of Expenditures on Public Roads (in millions of 1999 dollars) 13

Figure 3: Federal Government and State and Local Government Shares of
Expenditures on Public Transit (in millions of 1999 dollars) 15

Figure 4: Federal Government and State and Local Government Shares of
Expenditures on Waterborne Transportation (in millions of 1999 dollars) 16
Figure 5: Historical and Projected Vehicle Miles Traveled for

Passenger Vehicles on Public Roads, 1991- 2010 19 Figure 6: Historical and
Projected Passenger Miles Traveled on Transit, 1991- 2010 20

Figure 7: Freight Tons (in billions) in 1998 and Projected to 2010 for
Surface and Maritime Modes 24 Figure 8: Purposes for Capital Outlays for
Public Roads, Fiscal Years 1993 and 2000 51

Figure 9: Federal Expenditures for Construction and Operations and
Maintenance of Locks and Dams, Fiscal Years 1991- 2000 52

Abbreviations

AASHTO American Association of State Highway and Transportation Officials
APTA American Public Transportation Association Corps of Engineers U. S.
Army Corps of Engineers DOT U. S. Department of Transportation FHWA
Federal Highway Administration FRA Federal Railroad Administration FTA
Federal Transit Administration GARVEE Grant Anticipation Revenue Vehicle
HOT high occupancy toll HOV high occupancy vehicle HPMS Highway
Performance Monitoring System ISTEA Intermodal Surface Transportation
Efficiency Act of 1991

ITS Intelligent Transportation Systems MPO Metropolitan Planning
Organization NAS National Academy of Sciences RABA Revenue Aligned Budget
Authority RRIF Rail Rehabilitation and Improvement Financing

Program SIB State Infrastructure Bank TEA- 21 Transportation Equity Act
for the 21 st Century TIFIA Transportation Infrastructure Finance and
Innovation

Act of 1998 TRB Transportation Research Board WMATA Washington
Metropolitan Area Transit Authority

Lett er

August 30, 2002 The Honorable James Jeffords Chairman The Honorable Robert
Smith Ranking Minority Member Committee on Environment and Public Works
United States Senate

The scope of the U. S. surface and maritime transportation systems* which
primarily include roads, mass transit systems, railroads, and ports and
waterways 1 *is vast. One of the major goals of these systems is to
provide and enhance mobility, that is, the free flow of passengers and
goods. Mobility provides people with access to goods, services,
recreation, and jobs; provides businesses with access to materials,
markets, and people; and promotes the movement of personnel and material
to meet national defense needs. Among the social and economic benefits of
enhanced

mobility are improved economies and, for some, better quality of life and
access to job opportunities. In 2000, the surface and maritime
transportation systems carried 2. 7 trillion miles of travel by passenger
vehicles and trucks, 8.7 billion trips on public transit, 22. 5 million
trips on intercity passenger rail (Amtrak), and in 1998, about 13.5
billion tons of

freight on all modes. While the U. S. surface and maritime transportation
systems provide many benefits, they have also generated some concerns
about congestion and the burden they impose on the nation*s quality of
life through wasted energy,

time, and money; increased pollution and threats to public safety;
barriers to transportation accessibility for certain population groups;
and the level of financial resources available to address transportation
problems. Several key pieces of legislation that authorize funding for
federal surface transportation programs will expire soon. For example, the
Transportation

Equity Act for the 21st Century (TEA- 21) 2 *which authorizes federal
funding for highways, mass transit, and a variety of other surface
transportation programs* expires in fiscal year 2003 and the Amtrak

1 In this report, we define the surface transportation system as highways,
mass transit systems, and railroads; and the maritime transportation
system as ports, inland waterways, and the intermodal connections leading
to them. Pipelines were not part of our review.

2 P. L. 105- 178 (June 9, 1998).

Reform and Accountability Act of 1997 3 that authorizes federal
appropriations for Amtrak expires at the end of fiscal year 2002. In
addition, the federal funding processes and mechanisms for the maritime

transportation system are currently under review by two interagency
groups. 4 As the Congress considers reauthorizing surface transportation
legislation, it will weigh the structure, nature, and level of federal
investment it will provide in future years to enhance mobility and support
other surface and maritime transportation activities.

Given the social and economic importance of the surface and maritime
transportation systems and to inform the Congress in its reauthorization
deliberations, you asked us to provide information on the following
questions:

1. What have been the trends over the past 10 years in surface and
maritime transportation expenditures made by the public sector?

2. What are the projected trends in the levels of passenger and freight
travel on surface and maritime transportation modes over the next 10 years
and what are the key factors that influence those trends? 3. What key
challenges in maintaining and improving mobility have experts and other
sources identified? 4. What are some key strategies for addressing the
challenges?

In addressing the first two questions, we analyzed databases and other
information obtained from the U. S. Department of Transportation (DOT) and
the U. S. Army Corps of Engineers (Corps of Engineers). 5 We did not
verify the accuracy of these data. In addressing the third and fourth
questions, we relied upon the results of two panels of surface and
maritime

transportation experts that we convened in April 2002. The 22 experts were
selected by the National Academy of Sciences (NAS) and its Transportation
Research Board with input from us; they included a cross- section of 3 P.
L. 105- 134 (Dec. 2, 1997).

4 The two groups are the Interagency Committee on the Marine
Transportation System and the Marine Transportation System National
Advisory Council. 5 The DOT data on expenditures included spending by the
U. S. Coast Guard and the St.

Lawrence Seaway Development Corporation for transportation.

representatives from all surface and maritime modes and from various
occupations involved in transportation planning. We also reviewed reports
prepared by federal agencies, academics, and industry groups to address
the third and fourth questions. Appendix VI provides further information
on our scope and methodology. In this report we discuss three types of
travel that have important distinctions: local passenger travel, intercity
passenger travel, and freight travel. Local travel includes commuting
trips to and from work, shopping

trips, and other personal trips such as for school, social, or
recreational purposes. The main types of vehicles and modes of
transportation used for local trips include automobiles and mass transit,
including city buses, commuter rail, subways, and ferries. Intercity
passenger travel is different from local travel because it represents
longer distances traveled, and it occurs on some different modes of
transportation, primarily automobile,

air service, intercity bus, and intercity rail. Freight generally moves by
trucks on public roads; by barges and various cargo ships on the inland,
intra- coastal, coastal, and Great Lakes waterways; by trains on rail on
private right- of- way; and by airplane. The choice of mode is influenced
by the type, weight, and value of goods being shipped; available modes of
transportation in the region; and cost, speed, and other service

requirements. Results in Brief During the past decade, total public sector
spending (in 1999 dollars) 6 increased for public roads and transit,
remained constant for waterways,

and decreased for rail. Federal expenditures for public roads have
substantially increased since the passage of TEA- 21 in 1998* from $21. 2
billion in 1998 to $26.9 billion in 2000, an increase of 26. 8 percent. 7
Federal spending for transit decreased slightly between 1991 and 1999 and
then increased by 21. 5 percent from $4.3 billion in 1999 to $5.2 billion
in 2000. Federal spending stayed constant for waterways and decreased for
rail during the period from 1991 to 2000. The state and local share of
total public sector expenditures stayed relatively constant during fiscal
years

6 We adjusted the expenditure data to account for inflation using separate
indexes for expenditures made by the federal government or state and local
governments. We used price indexes from the U. S. Bureau of Economic
Analysis* National Income and Products Accounts. 7 Throughout this report,
the percentage calculations are based on amounts that have not been
rounded.

1991 through 1999 8 for public roads, while modestly increasing for other
modes.

Passenger and freight travel are expected to increase over the next 10
years, according to DOT projections. Passenger vehicle travel on public
roads is expected to grow by 24.7 percent from 2000 to 2010. Passenger

travel on transit systems is expected to increase by 17.2 percent over the
same period. Amtrak has estimated that intercity passenger rail ridership
will increase by 25. 9 percent from 2001 to 2010. Preliminary estimates by
DOT indicate that tons of freight moved on all surface and maritime modes*
truck, rail, and water* are expected to increase by 43 percent from 1998
through 2010, with the largest increase expected to be in the truck
sector. The key factors behind increases in passenger travel, and the
modes travelers choose, are expected to be population growth, the aging of
the population, and rising affluence. For freight movements, economic
growth, increasing international trade, and the increasing value of cargo

shipped may affect future travel levels and the modes used to move
freight. However, several factors in the forecast methodologies limit
their ability to capture the effects of changes in travel levels on the
surface and maritime transportation systems. In particular, the key
assumption underlying most of the national travel projections that we
obtained is that capacity will increase as levels of travel increase;
therefore, the projections are not limited by possible future constraints
on capacity such as increasing

congestion. According to our expert panelists and other sources, with
increasing passenger and freight travel, the surface and maritime
transportation systems face a number of challenges that involve ensuring
continued mobility while maintaining a balance with other social goals,
such as environmental preservation. These challenges include:

 Preventing congestion from overwhelming the transportation system.
Increasing travel has already been leading to increasing levels of
congestion at bottlenecks and peak travel times in some areas.

According to the Texas Transportation Institute, 9 the average amount of
time that roadways were congested increased from about 4. 5 hours per

8 Data on state and local expenditures are only available through fiscal
year 1999, while federal expenditures data are available through fiscal
year 2000. 9 David Shrank and Tim Lomax, 2002 Urban Mobility Report
(College Station, TX: Texas Transportation Institute, June 2002).

day in 1982 to about 7 hours in 2000 in 75 metropolitan areas that were
studied. Freight mobility is affected by increasing congestion within
specific heavily used corridors and at specific bottlenecks that tend to
involve intermodal connections, such as border crossings, and road and
rail connections at major seaports and within metropolitan areas. For
example, one panelist said that railroads are beginning to experience more
severe capacity constraints in areas where commuter and intercity

passenger rail services share tracks with freight railroads.  Ensuring
access to transportation for certain underserved populations, including
some elderly, poor, and rural populations that have restricted mobility.
Policies and patterns of development that encourage automobile dependence
and favor provision of transit services with inflexible routes and
schedules* such as subway or bus* may disadvantage these groups by
limiting their access to needed services

and/ or jobs.

 Addressing the transportation system*s negative effects on the
environment and communities. Increasing travel can lead to degradation of
air quality and other negative externalities. Passenger and freight
vehicle emissions contribute to air and water pollution, particularly in
congested areas, and the accompanying noise is also a form of pollution.

There is no one solution for the mobility challenges facing the nation,
and our expert panelists indicated that numerous approaches are needed to
address these challenges. From these discussions, we believe that the wide

range of approaches discussed can be clustered into three key strategies
that may aid transportation decisionmakers at all levels of government in
addressing mobility challenges. These strategies include the following: 1.
Focus on the entire surface and maritime transportation system rather than
on specific modes or types of travel to achieve desired mobility outcomes.
This strategy involves shifting the focus of transportation

agencies at the federal, state, and local level from their current
emphasis on single modes to consider performance outcomes of all modes in
addressing mobility challenges, as well as recognizing interactions across
modes, between passenger and freight traffic, and between public and
private interests. This strategy offers promise to better target the
specific mobility challenges identified above.

2. Use a full range of tools to achieve desired mobility outcomes. This
strategy, which calls for using various tools* such as new construction,

corrective and preventive maintenance, rehabilitation, operations and
system management, and pricing* to address complex mobility challenges,
offers promise to be more effective than placing emphasis on any one
technique. For example, building new infrastructure can

ease congestion in bottlenecks but is not always a viable solution due to
cost, land, regulatory, or administrative constraints. Also, performing
needed maintenance on existing transportation systems can improve the
speed and reliability of passenger and freight travel, while

instituting tolls or fees during peak travel times may lead people to
schedule recreational trips or move freight during less congested times or
by alternate routes. 3. Provide more options for financing mobility
improvements and

consider additional sources of revenue. This strategy* which involves
providing options for targeting the financing of transportation projects
to achieve desired mobility outcomes and to address transportation systems
that face the greatest challenges* suggests the value of identifying more
options for raising and distributing funds for surface and maritime
transportation.

Background The U. S. surface and maritime transportation systems
facilitate mobility through an extensive network of infrastructure and
operators, as well as through the vehicles and vessels that permit
passengers and freight to move within the systems. The systems include 3.
9 million miles of public roads, 121,000 miles of major private railroad
networks, and 25, 000 miles of commercially navigable waterways. They also
include over 500 major urban public transit operators in addition to
numerous private transit operators, and more than 300 ports on the coasts,
Great Lakes, and inland waterways. Maintaining the transportation system
is critical to sustaining America*s economic growth. Efficient mobility
systems are essential facilitators of economic development* cities could
not exist and global trade could not

occur without systems to transport people and goods. DOT has adopted
improved mobility* to *shape an accessible, affordable, reliable
transportation system for all people, goods, and regions** as one of its
strategic goals. To achieve this goal, it has identified several desired

outcomes, including (1) improving the physical condition of the
transportation system, (2) reducing transportation time from origin to
destination, (3) increasing the reliability of trip times, (4) increasing
access

to transportation systems, and (5) reducing the cost of transportation
services.

The relative roles, responsibilities, and revenue sources of each sector
involved in surface and maritime transportation activities* including the
federal government, other levels of government, and the private sector*

vary across modes. For public roads, ownership is divided among federal,
state, and local governments* over 77 percent of the roads are owned by
local governments; 20 percent are owned by the states, including most of
the Interstate Highway System; and 3 percent are owned by the federal
government. 10 While the federal government owns few roads, it has played

a major role in funding the nation*s highways. For example, from 1954
through 2001, the federal government invested over $370 billion (in
constant 2001 dollars) in the Interstate Highway System. With the
completion of the interstate system in the 1980s* and continuing with
passage of the Intermodal Surface Transportation Efficiency Act of 1991
(ISTEA) 11 and its successor legislation, TEA- 21, in 1998* the federal
government shifted its focus toward preserving and enhancing the capacity
of the system. Under the Federal Aid Highway Program, the Federal Highway
Administration (FHWA) provides funds to states to construct,

improve, and maintain the interstate highway system and other parts of the
U. S. road network and to replace and rehabilitate bridges. TEA- 21
established, among other things, a mechanism for ensuring that the level
of

federal highway program funds distributed to the states would be more
closely linked than before to the highway user tax receipts credited to
the Highway Account of the Highway Trust Fund. These user taxes include

excise taxes on motor fuels (gasoline, gasohol, diesel, and special fuels)
and truck- related taxes on truck tires, sales of trucks and trailers, and
the use of heavy vehicles. FHWA distributes highway program funds to the
states through annual apportionments according to statutory formulas that
consider a variety of factors including vehicles miles traveled on the
interstate system, motor fuel usage by each state*s highway users, and
other factors. 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 with funds from other sources, such
as state or local revenues. 10 These include roads in national forests and
parks and on military and Indian reservations.

11 P. L. 102- 240 (Dec. 18, 1991).

While the federal government*s primary role has been to provide capital
funding for the interstate system and other highway projects, state and
local governments provide the bulk of the funding for public roads in the
United States and are responsible for operating and maintaining all
nonfederal roads including the interstate system. The sources of state
highway revenues include user charges, such as taxes on motor fuels and

motor vehicles and tolls; proceeds of bond issues; General Fund
appropriations; and other taxes and investment income. The sources of
local highway revenues include many of the user charges and other sources

used by state governments, as well as property taxes and assessments. The
U. S. transit system includes a variety of multiple- occupancy vehicle
services designed to transport passengers on local and regional routes.
Capital funding for transit came from the following sources in 2000: 47
percent of the total came from the federal government, 27 percent from
transit agencies and other nongovernmental sources, 15 percent from local
governments, and 11 percent from states. In that same year, the sources of

operating funds for transit included passenger fares (36 percent of
operating funds); state governments (20 percent); local governments (22
percent); other funds directly generated by transit agencies and local
governments through taxes, advertising, and other sources (17 percent);

and the federal government (5 percent). The Federal Transit Administration
(FTA) provides financial assistance to states and local transit operators
to develop new transit systems and improve, maintain, and operate existing
systems. This assistance includes (1) formula grants to provide capital
and operating assistance to urbanized and nonurbanized areas and to
organizations that provide specialized transit services to the elderly and
disabled persons; (2) competitive capital investment grants for
constructing new fixed guideway 12 systems and

extensions to existing ones, modernizing fixed guideway systems, and
investing in buses and bus- related facilities; (3) assistance for transit
planning and research; and (4) grants to local governments and nonprofit
organizations to connect low- income persons and welfare recipients to

jobs and support services. Funding for federal transit programs is
generally provided on an 80 percent/ 20 percent federal to local match
basis. Federal 12 Fixed guideway systems use and occupy a separate right-
of- way for the exclusive use of public transportation services. They
include fixed rail, exclusive lanes for buses and other high- occupancy
vehicles, and other systems.

support for transit projects comes from the Highway Trust Fund*s highway
and transit accounts and from the General Fund of the U. S. Treasury. 13
The respective roles of the public and private sector and the revenue
sources vary for passenger as compared with freight railroads. With regard
to passengers, the Rail Passenger Service Act of 1970 created Amtrak to
provide intercity passenger rail service because existing railroads found
such service unprofitable. Since its founding, Amtrak has rebuilt rail
equipment and benefited from significant public investment in track and

stations, especially in the Northeast corridor, which runs between Boston,
Mass., and Washington, D. C. The federal government, through the Federal
Railroad Administration (FRA), has provided Amtrak with $39 billion (in
2000 dollars) 14 for capital and operating expenses from 1971 through
2002. Federal payments are a significant revenue source for Amtrak*s
capital budget, 15 but not its operating budget. In fiscal year 2001, for
example, the sources of Amtrak*s capital funding were private sector debt
financing (59 percent of total revenues), the federal government (36
percent), and

state and local transportation agencies (5 percent). In that same year,
the sources of funding for Amtrak*s operating budget were passenger fares
(59 percent of total revenues), other business activities and commuter
railroads (34 percent), and the federal government and state governments
(7 percent). 16 The role of the federal government in providing financial

support to Amtrak is currently under review amid concerns about the
corporation*s financial viability and discussions about the future
direction of federal policy toward intercity rail service.

With regard to freight, the private sector owns, operates, and provides
almost all of the financing for freight railroads. Since the 1970s, the
railroad industry has experienced many changes including deregulation and
industry consolidation. Currently, the federal government plays a
relatively small role in financing freight railroad infrastructure by
offering some 13 The General Fund contains receipts that are not earmarked
by law for a specific purpose, such as almost all income tax receipts.

14 In nominal dollars, the Congress provided Amtrak with about $25 billion
from 1971 through 2002. 15 Amtrak*s capital revenues are used to acquire
property, plant, and equipment. 16 In addition, Amtrak used a portion of
its federal capital funding to pay for operating expenses related to
overhauling equipment.

credit assistance to state and local governments and railroads for capital
improvements. The U. S. maritime transportation system primarily consists
of waterways, ports, the intermodal connections (e. g., inland rail and
roadways) that permit passengers and cargo to reach marine facilities, and
the vessels and vehicles that move cargo and people within the system. The
maritime infrastructure is owned and operated by an aggregation of state
and local agencies and private companies, with some federal funding
provided by the Corps of Engineers, the U. S. Coast Guard, and DOT*s
Maritime

Administration. The Corps of Engineers provides funding for projects to
deepen or otherwise improve navigation channels, maintain existing
waterways, and construct and rehabilitate inland waterway infrastructure,
primarily locks and dams. Funding for channel operations and maintenance
generally comes from the Harbor Maintenance Trust Fund supported by a tax
on imports, domestic commodities, and other types of port usage. The costs
of deepening federal channels are shared by the federal government and
nonfederal entities. The Inland Waterways Trust Fund, supported by a fuel
tax, funds one- half of the inland and intra- coastal

capital investments. Coast Guard funding promotes (1) mobility by
providing aids to navigation, icebreaking services, bridge administration,
and traffic management activities; (2) security through law enforcement
and border control activities; and (3) safety through programs for

prevention, response, and investigation. DOT*s Maritime Administration
provides loan guarantees for the construction, reconstruction, or
reconditioning of eligible export vessels and for shipyard modernization
and improvement. It also subsidizes the operating costs of some companies
that provide maritime services and provides technical assistance to state

and local port authorities, terminal operators, the private maritime
industry, and others on a variety of topics (e. g., port, intermodal, and
advanced cargo handling technologies; environmental compliance; and
planning, management, and operations of ports).

Trends in Public Expenditures for Surface and Maritime Transportation Vary
by Mode

Public Sector Expenditures Public sector spending (in 1999 dollars) has
increased for public roads and transit between fiscal years 1991 and 1999,
but stayed constant for waterways and decreased for rail, as shown in
figure 1.

Figure 1: Total Public Sector Expenditures for Surface and Maritime
Transportation by Mode, Fiscal Years 1991- 1999

Source: U. S. Department of Transportation, Bureau of Transportation
Statistics (2002), Government Transportation Financial Statistics
(Preliminary Data), Washington, D. C.

Total public sector spending for public roads increased by 18.4 percent
between fiscal years 1991 and 1999, 17 from $80. 6 billion to $95.5
billion (in 1999 dollars). 18 Of those totals, the relative shares
contributed by the federal government and by state and local governments
remained constant from 1991 to 1999, as shown in figure 2. Contributions
from state and local governments* own funds* that is, independent of
federal grants to state

and local governments* were approximately 75 percent, with the federal
government contributing the remaining 25 percent. 19 17 As of May 2002,
state and local government expenditures were not available for fiscal
years after 1999. Therefore, total public sector expenditures are only
reported through fiscal year 1999. Federal expenditure data are available
for fiscal year 2000, but only appropriations data are available for
fiscal years 2001 and 2002. 18 Throughout this report, the percentage
calculations are based on amounts that have not been rounded. 19 State and
local governments* highway expenditures reported by the Bureau of
Transportation Statistics are slightly lower than those reported in the
FHWA*s Highway Statistics, because data from the FHWA include outlays for
activities* such as law enforcement and patrols and policing of streets
and highways* not included in the Bureau of Transportation Statistics*
data.

Figure 2: Federal Government and State and Local Government Shares of
Expenditures on Public Roads (in millions of 1999 dollars)

Source: U. S. Department of Transportation, Bureau of Transportation
Statistics (2002), Government Transportation Financial Statistics
(Preliminary Data), Washington, D. C.

The increases in total public spending for roads reflect federal
programmatic spending increases resulting from ISTEA in 1992 and TEA- 21
in 1998, as well as increases in total state and local spending. In
particular, since the passage of TEA- 21, the federal government*s
contribution to total public expenditures on roads increased by 26. 8
percent (in 1999 dollars) from $21. 2 billion in fiscal year 1998 to $26.
9 billion in fiscal year 2000, the latest year for which federal
expenditure data are available. Although data on federal expenditures are
not currently available for fiscal years after

2000, federal appropriations for fiscal years 2001 and 2002 reached $32.1
billion and $33.3 billion, respectively. 20 Federal funding increases in
those years largely resulted from adjustments required by the Revenue
Aligned

20 Appropriations are not directly comparable to expenditures.
Appropriations provide the authority to make obligations, which eventually
turn into expenditures. However, those expenditures might not be made in
the same fiscal year as the appropriations.

Budget Authority (RABA) provisions in TEA- 21. 21 Since TEA- 21, the
federal government has shifted its focus toward preserving and enhancing
the capacity of public roads, while state and local government
expenditures have been focused on maintaining and operating public roads.
Appendix I contains additional information on the levels of capital
investment and maintenance spending by the public sector. Total public
spending for transit increased by 14.8 percent between fiscal years 1991
and 1999 to just over $29 billion (in 1999 dollars). This mainly reflects
increases in state and local expenditures, as federal expenditures for
transit actually decreased slightly over this period to $4. 3 billion in
1999. In fiscal year 2000, however, federal spending on transit increased
by 21.5 percent from $4.3 billion to $5. 2 billion (in 1999 dollars).
Although federal data on expenditures are not currently available for
fiscal years after 2000, appropriations for fiscal years 2001 and 2002
reached $6. 3 billion and $6. 8 billion, respectively. State and local
expenditures, independent of federal grants, increased to over $24 billion
in 1999, accounting for over 85 percent

of total public sector expenditures for transit, a share that has
increased somewhat since 1991, as shown in figure 3. 21 Under the RABA
provision, the annual spending levels that are guaranteed for most federal
highway programs are to be adjusted upward or downward during each fiscal
year if the receipt levels in the Highway Account of the Highway Trust
Fund increase or decrease from those projected in TEA- 21.

Figure 3: Federal Government and State and Local Government Shares of
Expenditures on Public Transit (in millions of 1999 dollars)

Source: U. S. Department of Transportation, Bureau of Transportation
Statistics (2002), Government Transportation Financial Statistics
(Preliminary Data), Washington, D. C.

Public sector spending on ports and waterways has remained between $7. 2
and $7.9 billion (in 1999 dollars), between fiscal years 1991 and 1999.
This spending pattern reflects fairly steady levels of federal spending by
the Corps of Engineers, the Coast Guard, and the Maritime Administration
for water transportation expenditures. Expenditures by the Corps of
Engineers and the Coast Guard comprise the bulk of federal spending for
water transportation, and have remained at about $1.5 billion and $2
billion (in 1999 dollars) per year, respectively. State and local
expenditures, however, increased by 27. 7 percent, from $2.4 billion in
fiscal year 1991 to $3. 1 billion in fiscal year 1999, and accounted for
about 41 percent of total public water transportation expenditures in
fiscal year 1999, having grown

from about 34 percent of the total in fiscal year 1991, as shown in figure
4.

Figure 4: Federal Government and State and Local Government Shares of
Expenditures on Waterborne Transportation (in millions of 1999 dollars)

Source: U. S. Department of Transportation, Bureau of Transportation
Statistics (2002), Government Transportation Financial Statistics
(Preliminary Data), Washington, D. C.

The public sector*s role in the funding of freight railroads is limited
since the private sector owns, operates, and provides almost all of the
financing for freight railroads. In addition, since public sector
expenditures for commuter rail and subways are considered public transit
expenditures, public expenditures discussed here for passenger rail are
limited to funding

for Amtrak. Federal support for Amtrak has fluctuated somewhat throughout
the 1990s, but has dropped off substantially in recent years, with fiscal
years 2001 and 2002 appropriations of $520 and $521 million, respectively.
Sufficient data are not currently available to characterize trends in
state and local governments* spending for intercity passenger rail. 22

22 However, Amtrak estimates that states will contribute $223 million to
Amtrak routes and infrastructure in 2002.

Private Sector Expenditures The private sector plays an important role in
the provision of transportation services in each mode. For example, while
the private sector does not invest heavily in providing roads, it
purchases and operates most

of the vehicles for use on publicly provided roads. For freight rail, the
private sector owns and operates most of the tracks as well as the freight
trains that run on the tracks. In the maritime sector, many ports on the
inland waterways are privately owned, as are freight vessels and towboats.

Data on private sector expenditures on a national level are limited.
However, available data show that private expenditures for transportation
on roads, rail, and waterways rose throughout the 1990s. According to the
U. S. Bureau of Economic Analysis* Survey of Current Business, 23
individuals and businesses spent about $397 billion in 2000 for the
purchase

of new cars, buses, trucks, and other motor vehicles, a 57- percent
increase from 1993 levels (in 2000 dollars). In addition to the purchase
of vehicles, the private sector also invests in and operates toll roads
and lanes; however, data on these investments are not currently available
on a

national level. According to the Survey of Current Business, freight
railroads and other businesses spent over $11 billion for railroad
infrastructure and rail cars in 2000, a 66- percent increase from 1991 (in
2000 dollars). In addition, private sector investment on ships and boats
more than doubled between 1991 and 2000, to about $3.7 billion (in 2000

dollars). However, private investment in waterways also includes port
facilities for loading and unloading ships and for warehousing goods. Data
on these investments are also currently not available on a national level.

Passenger and Freight Federal projections show passenger and freight
travel increasing over the

next 10 years on all modes, 24 due to population growth, increasing Travel
Are Expected to affluence, economic growth, and other factors. Passenger
vehicle travel on Increase on All Modes

public roads is expected to grow by 24.7 percent from 2000 to 2010.
Passenger travel on transit systems is expected to increase by 17.2
percent over the same period. Intercity passenger rail ridership is
expected to 23 Data were compiled from issues of the survey released
between 1994 and 2001 (tables B- 4, B- 5, B- 6, 5.6, and 5. 8) and were
adjusted for inflation using separate indexes from U. S.

Bureau of Economic Analysis* National Income and Products Accounts for
individual expenditures on new vehicles or business expenditures on
transportation equipment. The survey data do not include overall private
investment in transit systems. 24 The projections used in this report were
developed by the DOT modal administrations, the Corps of Engineers, and
Amtrak. We did not verify the data used in making projections, and

we do not endorse the projections as accurate.

increase by 26 percent from 2001 to 2010. Finally, preliminary estimates
by DOT also indicate that tons of freight moved on all surface and
maritime modes* truck, rail, and water* are expected to increase by about
43

percent from 1998 through 2010, with the largest increase expected to be
in tons moved by truck.

However, several factors in the forecast methodologies limit their ability
to capture the effects of changes in travel levels on the surface and
maritime transportation systems as a whole (see app. II for more
information about the travel forecast methodologies). For example, a key
assumption

underlying most of the national travel projections we obtained is that
capacity will increase as levels of travel increase; that is, the
projections are not limited by possible future constraints on capacity
such as increasing congestion. On the other hand, if capacity does not
increase, future travel levels may be lower than projected. 25 In
addition, differences in travel measurements hinder direct comparisons
between modes and

types of travel. For example, intercity highway travel is not
differentiated from local travel in FHWA*s projections of travel on public
roads, so projections of intercity highway travel cannot be directly
compared to

intercity passenger travel projections for other modes, such as rail. For
freight travel, FHWA produces projections of future tonnage shipped on
each mode; however, tonnage is only one measure of freight travel and does
not capture important aspects of freight mobility, such as the distances
over which freight moves or the value of the freight being moved.

Travel on Public Roads Is As shown in figure 5, vehicle miles traveled for
passenger vehicles on

Projected to Grow Fairly public roads are projected to grow fairly
steadily through 2010, by 24. 7

Steadily percent over the 10- year period from 2000 through 2010, with an
average

annual increase of 2.2 percent. This is similar to the actual average
annual rate of growth from 1991 to 2000, which was 2. 5 percent. At the
projected rate of growth, vehicle miles traveled would reach 3.2 trillion
by 2010. The

25 Other factors also influence travel but were not always included in
travel projections. For example, growth in miles driven on public roads is
influenced by shifts in population to less populated residential areas,
transit ridership is affected by levels of immigration, and freight

travel is affected by technological innovations that improve
transportation efficiency, but the influence of these factors is not taken
into account. In addition, investments in additional transportation
capacity can stimulate corresponding increases in travel demand.

Consequently, these national travel projections need to be used carefully
in evaluating how capacity improvements or other changes in one mode of
transportation might affect travel across other modes and the
transportation system as a whole.

20- year annual growth rate forecasts produced by individual states ranged
from a low of 0.39 percent for Maine to a high of 3.43 percent for Utah.
26 (See app. II for more detailed information on state forecasts.)

Figure 5: Historical and Projected Vehicle Miles Traveled for Passenger
Vehicles on Public Roads, 1991- 2010

Note: Automobiles include all passenger cars plus motorcycles. Light
trucks are defined as other 2- axle 4- tire vehicles (such as vans, pickup
trucks, and sport utility vehicles). Buses include commercial buses,
school buses, and buses owned by federal, state, or local governments.

Source: Federal Highway Administration.

In addition to passenger vehicles, trucks carrying freight contribute to
the overall levels of travel on public roads. Vehicle miles traveled by
freight trucks are also projected to increase by 2010, but such traffic
makes up a relatively small share of total vehicle miles traveled.
According to forecasts 26 FHWA provided us with forecasts for total
(passenger and freight) vehicle miles traveled from individual states, the
District of Columbia, and Puerto Rico (see app. II). These project future
travel through 2020 rather than through 2010.

by FHWA, freight truck vehicle miles are expected to grow by 32.5 percent
from 2000 to 2010, but will constitute less than 10 percent of total
vehicle miles traveled nationwide in 2010. However, within certain
corridors, trucks may account for a more substantial portion of total
traffic. The projected average annual growth rate for truck travel is 2.9
percent for 2000

to 2010, compared to an actual average annual growth rate of 3.9 percent
from 1991 to 2000. We discuss freight travel in more detail later in this
report, after the discussion of passenger travel.

Transit Travel Is Projected For transit, FTA projects that the growth in
passenger miles traveled

to Increase between 2000 and 2010 will average 1. 6 percent annually, for
a total growth of 17.2 percent. Actual growth from 1991 through 2000
averaged 2.1 percent

annually. (See fig. 6.) At the projected growth rate, annual passenger
miles traveled on the nation*s transit systems would be approximately 52.9
billion by 2010. The transit forecast is a national weighted average and
the

individual forecasts upon which it is based vary widely by metropolitan
area. For example, transit forecasts for specific urbanized areas range
from a -0.05 percent average annual decrease in Philadelphia to a 3.56
percent average annual increase in San Diego.

Figure 6: Historical and Projected Passenger Miles Traveled on Transit,
1991- 2010

Note: Types of transit included in this figure are: automated guideway
(guided, fully automated vehicle), cable car, commuter rail, demand
response (vehicle operating in response to calls from passengers),
ferryboat, heavy rail, inclined plane (vehicle operating up and down slope
on rail via a cable mechanism), light rail, bus, monorail, public trolley,
and vanpool. Sources: For 1991- 2000: National Transit Database; for 2001-
2010: GAO*s calculations based on the Federal Transit Administration*s
annual growth rate projection.

Intercity Passenger Travel Is Both DOT and Amtrak project future increases
in intercity passenger Projected to Increase travel. Although automobiles
dominate intercity travel, FHWA*s projections of vehicle miles traveled do
not separately report long- distance travel in cars on public roads. After
automobiles, airplanes and intercity buses are

the next most used modes and intercity passenger rail is the least used.
27 However, we do not report on air travel since it is outside the scope
of this report, or on bus travel, because while FHWA projected increases
in the number of miles traveled by all types of buses, we were unable to
obtain specific projections of intercity ridership on buses. For intercity
passenger rail, Amtrak predicts a cumulative increase in total ridership
of 25. 9 percent from 23.5 million passengers in 2001 to 29. 6 million
passengers in 2010, a contrast with the relatively flat ridership of
recent years, which has remained between 20 and 23 million passengers per
year (see app. II for further details about Amtrak*s projections). 28

Factors Expected to Affect According to FHWA, FTA, and many of our
panelists, a number of factors Future Passenger Travel

are likely to influence not only the amount of travel that will occur in
the Include Population Growth,

future, but also the modes travelers choose. First, the U. S. Census
Bureau Increasing Affluence, and predicts that the country*s population
will reach almost 300 million by 2010, which will result in more travelers
on all modes. This population growth, Improved Communications and the
areas in which it is expected to occur, could have a variety of effects on
mode choices. In particular, the population growth that is expected in
suburban areas could lead to a larger increase in travel by

private vehicles than by transit because suburban areas generally have
lower population densities than inner cities, and also have more dispersed
27 In 2000, the latest year for which comparable data are available,
domestic airlines carried about 657 million passengers, intercity buses
carried about 359 million passengers, and Amtrak carried about 22. 5
million passengers.

28 The national Amtrak ridership statistics, however, mask some regional
trends. Combined ridership in the Northeast corridor and on the West Coast
has grown by about 2 million passengers since 1994, while ridership on the
rest of the intercity passenger rail system has generally decreased.

travel patterns, making them harder to serve through conventional public
transit. Rural areas are also expected to experience high rates of
population growth and persons living there, like suburban residents, are
more reliant on private vehicles and are not easily served by conventional
public transit. While these demographic trends tend to decrease transit*s
share of total passenger travel as compared to travel by private vehicle,
the overall growth in population is expected to result in absolute
increases in the level of travel on transit systems as well as by private
vehicle. Another important factor that could affect mode choice is that
the population aged

85 and over will increase 30 percent by 2010, according to data from the
Census Bureau. The aging of the population might increase the market for
demand- responsive transit services 29 and improved road safety features,
such as enhanced signage.

Second, DOT officials and our panelists believed that the increasing
affluence of the U. S. population would play a key role in future travel,
both in overall levels and in the modes travelers choose. They noted that,
as income rises, people tend to take more and longer trips, private
vehicle ownership tends to increase, and public transit use generally
decreases.

Third, communication technology could affect local and intercity travel,
but the direction and extent of the effect is uncertain. For example,
telecommuting and videoconferencing are becoming more common, but are not
expected to significantly replace face- to- face meetings unless the

technology improves substantially. Finally, changes in the price (or
perceived price), condition, and reliability of one modal choice as
compared to another are also likely to affect levels of travel and mode
choices. For example, changes in the petroleum market that affect fuel
prices, or changes in government policy that affect the cost of driving or

transit prices could result in shifts between personal vehicles and
transit; however, it is difficult to predict the extent to which these
changes would occur. Also, if road congestion increases, there could be a
shift to transit or a decrease in overall travel. See appendix III for a
more detailed discussion of these factors.

29 According to the American Public Transportation Association, demand
response modes are passenger cars, vans, or buses with fewer than 25 seats
operating in response to calls from passengers or their agents to the
transit operator, who then dispatches a vehicle to pick up the passengers
and transport them to their destinations.

The Amount of Freight Trucks move the majority of freight tonnage and are
expected to continue

Moved Is Expected to moving the bulk of freight into the future. FHWA*s
preliminary forecasts 30 of

Increase to 19.3 Billion Tons international and domestic freight tonnage
across all surface and maritime

by 2010 modes project that total freight moved will increase 43 percent,
from 13.5 billion tons in 1998 to 19. 3 billion tons in 2010. According to
the forecasts,

by 2010, 14.8 billion tons are projected to move by truck, a 47. 6-
percent increase; 3 billion tons by rail, a 31. 8- percent increase; and
1.5 billion tons by water, a 26. 6- percent increase, as shown in figure
7. 31 Trucks are expected to remain the dominant mode, in terms of
tonnage, because production of the commodities that typically move by
truck, such as manufactured goods, is expected to grow faster than the
main commodities

moved by rail or on water, such as coal and grain. 30 Numerous projections
of freight travel have been produced for particular modes, corridors, or
commodities. For example, the Corps of Engineers has produced projections
for tons moving on the inland waterways, while the Latin America Trade and
Transportation Study contains projections of trade patterns between the
United States and Latin America. For this report, we relied on projections
produced by FHWA, because these are the only projections that predict
national freight travel on all modes.

31 Some freight may be moved by more than one mode before reaching its
destination, such as moving by rail for one segment of the trip, then by
truck to its final destination. This may result in tons being counted on
more than one mode in FHWA*s projections. In addition, FHWA*s maritime
freight projections do not include international trade of bulk products
and some inland domestic bulk shipments.

Figure 7: Freight Tons (in billions) in 1998 and Projected to 2010 a for
Surface and Maritime b Modes

a These forecasts are still in draft. b FHWA*s maritime freight
projections do not include international trade of bulk products and some
inland domestic bulk shipments.

Source: Federal Highway Administration.

Tonnage is only one measure of freight travel and does not capture
important aspects of freight mobility, such as the distances over which
freight moves or the value of the freight being moved. Ton- miles 32
measure the amount of freight moved as well as the distance over which it
moves, and historically, rail has been the dominant mode in terms of ton-
miles for domestic freight. In 1998, the base year of FHWA*s projections,
domestic

rail ton- miles totaled over 1.4 trillion, while intercity truck ton-
miles totaled just over one trillion, and domestic ton- miles on the
waterways totaled 672.8 billion. Air is the dominant mode in terms of
value per ton according

32 Ton- miles are calculated by multiplying the total number of tons moved
by the total miles traveled.

to DOT*s Transportation Statistics Annual Report 2000, 33 at $51,000 per
ton (in 1997 dollars). However, in terms of total value, trucks are the
dominant mode. According to the Annual Report, trucks moved nearly $5
trillion (in 1997 dollars) in domestic goods, as opposed to $320 billion
by rail and less than $100 billion by inland waterway. International
freight is an increasingly important aspect of the U. S. economy. For
international freight, water is the dominant mode in terms of tonnage.
According to a DOT report, more than 95 percent of all overseas products
and materials that enter or leave the country move through ports and
waterways. 34 More specifically, containers, which generally carry

manufactured commodities such as consumer goods and electrical equipment
and can be easily transferred to rail or truck, dominate in terms of
value, accounting for 55 percent of total imports and exports, while only
accounting for 12 percent of foreign tonnage. Containers are the fastest
growing segment of the maritime sector. While FHWA predicts that total
maritime freight tonnage will grow by 26. 6 percent, the Corps of
Engineers projects that volumes of freight moving in containers will
increase by nearly 70 percent by 2010. In addition, ships designed to
carry containers are the fastest growing segment of the maritime shipping
fleet and are also increasing in size. Although freight vessels designed
to carry bulk freight (e. g., coal, grain, or oil) are the largest sector
of the freight vessel fleet, the

number of containerships is increasing by 8.8 percent annually, which is
double the growth rate of any other type of vessel according to the Corps
of Engineers. Also, most of the overall capacity of the containership
fleet is now found in larger containerships, with a capacity of more than
3,000 twenty- foot containers, and ships with capacities of three times
that amount are currently on order.

33 Bureau of Transportation Statistics, Transportation Statistics Annual
Report 2000

(Washington, D. C.: U. S. Department of Transportation, 2001). 34 An
Assessment of the U. S. Marine Transportation System (Washington, D. C.:
U. S. Department of Transportation, September 1999).

Factors Expected to Affect According to reports by the Transportation
Research Board and the Bureau Freight Travel Include of Transportation
Statistics, 35 increasing international trade and economic

Increasing International growth are expected to influence volumes of
future freight travel. In Trade and Economic addition, the increasing
value of cargo shipped and changes in policies affecting certain
commodities can affect overall levels of freight traffic as

Growth well as the choice of mode for that traffic. The North American
Free Trade

Agreement has contributed to the increases in tonnage of imports by rail
(24- percent increase) and by truck (20- percent increase), from Mexico
and Canada between 1996 and 2000, while expanding trade with the Pacific
Rim has increased maritime traffic at west coast container ports. With
increasing affluence, economic growth often results in a greater volume of
goods produced and consumed, leading to more freight moved, particularly
higher- value cargo. In addition, the increasing value of cargo affects
the

modes on which that cargo is shipped. High- value cargo, such as
electronics and office equipment, tends to be shipped by air or truck,
while rail and barges generally carry lower- value bulk items like coal
and grains. Changes in environmental regulations and other policies also
affect the amount, cost, and mode choice for moving freight. For example,
a change in demand for coal due to stricter environmental controls could
affect rail and water transportation, the primary modes for shipping coal.
See appendix III for a more detailed discussion of the factors that
influence

freight travel. 35 *Characteristics and Changes in Freight Transportation
Demand: A Guidebook for Planners and Policy Analysts,* prepared for the
National Cooperative Highway Research Program, Project 8- 30 Phase II
(Washington, D. C.: Transportation Research Board, June 19, 1995). Bureau
of Transportation Statistics, Transportation Statistics Annual Report 2000
(Washington, D. C.: U. S. Department of Transportation, 2001).

Key Mobility To identify key mobility challenges and the strategies for
addressing those

Challenges Include challenges that are discussed later in this report, we
relied upon the results

of two panels of surface and maritime transportation experts that we
Growing Congestion,

convened in April 2002, as well as reports prepared by federal and other
Limited Access to the

government agencies, academics, and industry groups. According to our
Transportation System

expert panelists and other sources, with increasing passenger and freight
travel, the surface and maritime transportation systems face a number of

for Certain Groups, challenges that involve ensuring continued mobility
while maintaining a and Effects on the

balance with other social goals, such as environmental preservation.
Ensuring continued mobility involves preventing congestion from
Environment and overwhelming the transportation system and ensuring access
to Communities

transportation for certain underserved populations. In particular, more
travel can lead to growing congestion at bottlenecks and at peak travel
times on public roads, transit systems, freight rail lines, and at freight
hubs such as ports and borders where freight is transferred from one mode
to another. In addition, settlement patterns and dependence on the

automobile limit access to transportation systems for some elderly people
and low- income households, and in rural areas where populations are
expected to expand. Increasing travel levels can also negatively affect
the environment and communities by increasing the levels of air, water,
and noise pollution.

Congestion Is Growing at Many panelists explained that congestion is
generally growing for Bottlenecks and at Peak

passenger and freight travel and will continue to increase at localized
Travel Times

bottlenecks (places where the capacity of the transportation system is
most limited), at peak travel times, and on all surface and maritime
transportation modes to some extent. However, panelists pointed out that
transportation systems as a whole have excess capacity and that
communities may have different views on what constitutes congestion.

Residents of small cities and towns may perceive significant congestion on
their streets that may be considered insignificant to residents in major
metropolitan areas. In addition, because of the relative nature of
congestion, its severity is difficult to determine or to measure and while

one measure may be appropriate for some situations, it may be inadequate
for describing others.

Congestion in Passenger Travel For local urban travel, a study by the
Texas Transportation Institute 36 and on Freight Networks

showed that the amount of traffic experiencing congestion in peak travel
periods doubled from 33 percent in 1982 to 66 percent in 2000 in the 75
metropolitan areas studied. In addition, the average time per day that
roads were congested increased over this period, from about 4.5 hours in
1982 to about 7 hours in 2000. Increased road congestion can also affect
public bus

and other transit systems that operate on roads. Some transit systems are
also experiencing increasing rail congestion at peak travel times. For
example, the Washington Metropolitan Area Transit Authority*s (WMATA)
recent studies on crowding found that rail travel demand has reached and,
in some cases, exceeded scheduled capacity* an average of 140 passengers
per car* during the peak morning and afternoon hours. Of the more than 200
peak morning rail trips that WMATA observed over a recent 6- month period,
on average, 15 percent were considered *uncomfortably

crowded* (125 to 149 passengers per car) and 8 percent had *crush loads*
(150 or more passengers per car). 37 In addition to local travel, concerns
have been raised about how intercity and tourist travel interacts with
local traffic in metropolitan areas and in smaller towns and rural areas,
and how this interaction will evolve in the

future. According to a report sponsored by the World Business Council for
Sustainable Development, Mobility 2001, 38 capacity problems for intercity
travelers are generally not severe outside of large cities, except in
certain heavily traveled corridors, such as the Northeast corridor, which
links Washington, D. C., New York, and Boston. However, at the beginning
and end of trips, intercity bus and automobile traffic contribute to and
suffer from urban congestion. In addition, the study said that intercity
travel may constitute a substantial proportion of total traffic passing
through smaller

towns and rural areas. Also, according to a GAO survey of all states,
state officials are increasingly concerned about traffic volumes on
interstate

36 David Shrank and Tim Lomax, 2002 Urban Mobility Report (College
Station, TX: Texas Transportation Institute, June 2002). 37 U. S. General
Accounting Office, Mass Transit: Many Management Successes at WMATA, but
Capital Planning Could Be Enhanced, GAO- 01- 744 (July 2, 2001). 38
Massachusetts Institute of Technology and Charles River Associates, Inc.,
Mobility 2001: World Mobility at the End of the Twentieth Century and Its
Sustainability, (World Business Council for Sustainable Development,
August 2001).

highways in rural areas, and high levels of rural congestion are expected
in 18 states within 10 years. 39 Congestion is also expected to increase
on major freight transportation networks at specific bottlenecks,
particularly where intermodal connections occur, and at peak travel times,
according to the panelists. They expressed concern regarding interactions
between freight and

passenger travel and how increases in both types of travel will affect
mobility in the future. Trucks contribute to congestion in metropolitan
areas where they generally move on the same roads and highways as personal
vehicles, particularly during peak periods of congestion. In addition,
high demand for freight, particularly freight moved on trucks, exists in
metropolitan areas where overall congestion tends to be the worst. With
international trade an increasing part of the economy and with larger
containerships being built, some panelists indicated that more pressure
will be placed on the already congested road and rail connections to major
U. S. seaports and at the border crossings with Canada and Mexico. For

example, according to a DOT report, 40 more than one- half of the ports
responding to a 1997 survey of port access issues identified traffic
impediments on local truck routes as the major infrastructure problem.

According to one panelist from the freight rail industry, there is ample
capacity on most of the freight rail network. However, railroads are
beginning to experience more severe capacity constraints in particular
heavily used corridors, such as the Northeast corridor, and within major
metropolitan areas, especially where commuter and intercity passenger rail
services share tracks with freight railroads. Capacity constraints at
these bottlenecks are expected to worsen in the future. The panelist
explained

that congestion on some freight rail segments where the tracks are also
used for passenger rail service* for which there is growing demand*
reduces the ability of freight railroads to expand service on the existing
tracks to meet the growing demand for freight movements on those

segments. 39 U. S. General Accounting Office, Status of the Interstate
Highway System, GAO- 02- 571 (May 31, 2002). 40 An Assessment of the U. S.
Marine Transportation System (Washington, D. C.: U. S. Department of
Transportation, September 1999).

On the inland waterways, according to two panelists from that industry,
there is sufficient capacity on most of the inland waterway network,
although congestion is increasing at small, aging, and increasingly
unreliable locks. According to the Corps of Engineers, the number of hours
that locks were unavailable due to lock failures increased in recent
years, from about 35, 000 hours in 1991 to 55, 000 hours in 1999,
occurring primarily on the upper Mississippi and Illinois rivers. In
addition, according

to a Corps of Engineers analysis of congestion on the inland waterways,
with expected growth in freight travel, 15 locks would exceed 80 percent
of their capacity by 2020, as compared to 4 that had reached that level in
1999.

Other Systemic Factors According to our expert panelists, while increasing
passenger and freight Contributing to Congestion

travel contribute to increasing congestion at bottlenecks and at peak
travel times, other systemic factors contribute to congestion, including
barriers to building enough capacity to accommodate growing levels of
travel,

challenges to effectively managing and operating transportation systems,
and barriers in effectively managing how, and the extent to which,
transportation systems are used.

At bottlenecks and at peak travel times, there is insufficient capacity to
accommodate the levels of traffic attempting to use the infrastructure.
One reason for the insufficient capacity is that transportation
infrastructure, which is generally publicly provided (with the major
exception of freight railroads), can take a long time to plan and build,
and it may not be possible to build fast enough to keep pace with
increasing and shifting travel patterns. In addition, constructing new
capacity is often costly and can

conflict with other social goals such as environmental preservation and
community maintenance. As a result, approval of projects to build new
capacity, which requires environmental impact statements and community
outreach, generally takes a long time, if it is obtained at all.

In addition, a number of panelists indicated that funding and planning
rigidities in the public institutions responsible for providing
transportation infrastructure tend to promote one mode of transportation,
rather than a set of balanced transportation choices. Focus on a single
mode can result in difficulties dealing effectively with congestion. For
example, as

suburban expressways enable community developments to grow and move
farther out from city centers, jobs and goods follow these developments.
This results in increasing passenger and freight travel on the
expressways, and a shifting of traffic flows that may not easily be
accommodated by existing transportation choices. One panelist indicated
that suburban expressways are among the least reliable in terms of travel
times because,

if congestion occurs, there are fewer feasible alternative routes or modes
of transportation. In addition, some bottlenecks occur where modes
connect, because funding is generally mode- specific, and congestion at
these intermodal connections is not easily addressed. According to FHWA,
public sector funding programs are generally focused on a primary mode of
transportation, such as highways, or a primary purpose, such as improving

air quality. This means that intermodal projects may require a broader
range of funding than might be available under a single program. Panelists
also noted that the types of congestion problems that are expected to
worsen in the future involve interactions between longdistance and local
traffic and between passengers and freight, and existing institutions may
not have the capacity or the authority to address them. For example, some
local bottlenecks may hinder traffic that has regional or national
significance, such as national freight flows from major coastal ports, or
can affect the economies and traffic in more than one state.

Current state and local planning organizations may have difficulty
considering all the costs and benefits related to national or
international traffic flows that affect other jurisdictions as well as
their own. The concept of capacity is broader than just the physical
characteristics of the transportation network (e. g., the number of lane-
miles of road). The capacity of transportation systems is also determined
by how well they are managed and operated (particularly publicly owned and
operated systems), and how the use of those systems is managed. Many
factors related to the management and operation of transportation systems
can contribute to increasing congestion. Many panelists said that
congestion on highways was in part due to poor management of traffic flows
on the connectors between highways and poor management in clearing roads
that are blocked due to accidents, inclement weather, or construction. For

example, in the 75 metropolitan areas studied by the Texas Transportation
Institute, 54 percent of annual vehicle delays in 2000 were due to
incidents such as breakdowns or crashes. In addition, the Oak Ridge
National Laboratory reported that, nationwide, significant delays are
caused by

work zones on highways; poorly timed traffic signals; and snow, ice, and
fog. 41 41 Several sources of nonrecurring delays were not considered in
this study, including special events, rain, rail crossings, and toll
booths. S. M. Chin, O. Franzese, D. L. Greene, H. L. Hwang, and R. Gibson,
Temporary Losses of Capacity Study and Impacts on Performance, Report No.
ORNL/ TM- 2002/ 3 (Oak Ridge, TN: Oak Ridge National Laboratory, May
2002).

In addition, according to a number of panelists, congestion on
transportation systems is also in part due to inefficient pricing of the
infrastructure because users* whether they are drivers on a highway or

barge operators moving through a lock* do not pay the full costs they
impose on the system and on other users for their use of the system. They
further argued that if travelers and freight carriers had to pay a higher
cost for using transportation systems during peak periods to reflect the
full costs they impose, they would have an incentive to avoid or
reschedule

some trips and to load vehicles more fully, resulting in less congestion.
Effects of Congestion Congestion affects travel times and the reliability
of transportation systems. As discussed earlier in this report, the Texas
Transportation

Institute found that 66 percent of peak period travel on roadways was
congested in 2000, compared to 33 percent in 1982 in the 75 metropolitan
areas studied. According to the study, this means that two of every three
vehicles experience congestion in their morning or evening commute. In the
aggregate, congestion results in thousands of hours of delay every day,
which can translate into costs such as lost productivity and increased
fuel consumption. In addition, a decrease in travel reliability imposes
costs on the traveler in terms of arriving late to work or for other
appointments, and in raising the cost of moving goods resulting in higher
prices for consumers. Some panelists noted that congestion, in some sense,
reflects full use of transportation infrastructure, and is therefore not a
problem. In addition, they explained that travelers adjust to congestion
and adapt their travel routes and times, as well as housing and work
choices, to avoid congestion. For example, according to the Transportation
Statistics Annual Report 2000, median commute times increased about 2
minutes between 1985 and

1999, despite increases in the percentage of people driving to work alone
and the average commuting distance. For freight travel, one panelist made
a similar argument, citing that transportation costs related to managing
business operations have decreased as a percentage of gross national

product, indicating that producers and manufacturers adjust to
transportation supply, by switching modes or altering delivery schedules
to avoid delays and resulting cost increases. However, the Mobility 2001
report describes these adaptations by individuals and businesses as
economic inefficiencies that can be very costly. According to the report,
increasing congestion can cause avoidance of a substantial number of trips
resulting in a corresponding loss of the benefits of those trips. In
addition to negative economic effects, travelers*

adaptation to congested conditions can also have a number of negative
social effects on other people. For example, according to researchers from
the Texas Transportation Institute, traffic cutting through neighborhoods
to avoid congestion can cause community disruptions and *road rage* can be
partly attributed to increasing congestion.

Certain Underserved The FHWA and FTA*s 1999 Conditions and Performance
report 42 states that Groups Have Limited

significant accessibility 43 barriers persist for some elderly people and
lowincome Access to Transportation

households. In addition, several panelists stated that rural populations
also face accessibility difficulties. Elderly Persons According to the
Conditions and Performance report, the elderly have different mobility
challenges than other populations because they are less likely to have
drivers* licenses, have more serious health problems, and

may require special services and facilities. According to 1995 data, 45
percent of women and 16 percent of men over age 75 did not have drivers*
licenses, which may limit their ability to travel by car. Many of the
elderly also may have difficulty using public transportation due to
physical ailments. People who cannot drive themselves tend to rely on
family, other caregivers, or friends to drive them, or find alternative
means of

transportation. As a result, according to the 1999 Conditions and
Performance report and a 1998 report about mobility for older drivers, 44
they experience increased waiting times, uncertainty, and inconvenience,
and they are required to do more advance trip planning. These factors can

lead to fewer trips taken for necessary business and for recreation, as
well as restrictions on times and places that health care can be obtained.
Access to more flexible, demand- responsive forms of transit could enhance
the mobility of the elderly, particularly in rural areas, which are
difficult to 42 Federal Highway Administration and Federal Transit
Administration, 1999 Status of the Nation*s Highways, Bridges, and
Transit: Conditions and Performance (Washington, D. C.: U. S. Department
of Transportation, 2000).

43 The Bureau of Transportation Statistics* Annual Report 2000 defines
accessibility as a measure of the relative ease with which people and
businesses can reach a variety of locations.

44 Jon E. Burkhardt, Arlene M. Berger, Michael Creedon, and Adam T.
McGavock, Mobility and Independence: Changes and Challenges for Older
Drivers (July 1998). This report was developed under a cooperative
agreement with the U. S. Department of Health and Human Services (DHHS),
under the auspices of the Joint DHHS/ DOT Coordinating Council on Access
and Mobility.

serve through transit systems; however, some barriers to providing these
types of services exist. For example, according to one of our panelists,
some paratransit 45 services are not permitted to carry able- bodied
people, even if those people are on the route and are willing to pay for
the service.

As the elderly population increases over the next 10 years, issues
pertaining to access are expected to become more prominent in society.

Low- Income Households Lower income levels can also be a significant
barrier to transportation access. The cost of purchasing, insuring, and
maintaining a car is prohibitive to some households, and 26 percent of
low- income households do not own a car, compared with 4 percent of other
households, according to the 1999 Conditions and Performance report. Among
all low- income

households, about 8 percent of trips are made in cars that are owned by
others as compared to 1 percent for other income groups. Furthermore, the
same uncertainties and inconveniences apply to this group as to the
elderly regarding relying on others for transportation. Transportation
access is important for employment opportunities to help increase income,
yet this access is not always available. This is because growth in
employment

opportunities tends to occur in the suburbs and outlying areas, while many
low- income populations are concentrated in the inner cities or in rural
areas. In case studies of access to jobs for low- income populations, FTA
researchers found that transportation barriers to job access included gaps
in transit service, lack of knowledge of where transit services are
provided, and high transportation costs resulting from multiple transfers
and long distances traveled. 46 Another problem they noted was the
difficulty in coordinating certain types of work shifts with the
availability of public transportation service. Without sufficient access
to jobs, families face more obstacles to achieving the goal of
independence from government assistance. Limited transportation access can
also reduce opportunities for affordable housing and restrict choices for
shopping and other services.

Rural Populations Rural populations, which according to the 2000 Census
grew by 10 percent over the last 10 years, also face access problems.
Access to some form of transportation is necessary to connect rural
populations to jobs and other

45 Paratransit is a service where individuals who are unable to use the
regular transit system independently (because of a physical or mental
impairment) are picked up and dropped off at their destinations. 46
Federal Transit Administration, Access to Jobs: Planning Case Studies
(Washington, D. C.: U. S. Department of Transportation, September 2001).

amenities in city centers or, increasingly, in the suburbs. The Mobility
2001 report states that automobiles offer greater flexibility in schedule
and choice of destinations than other modes of transportation, and often
also provide shorter travel times with lower out- of- pocket costs. The
report also notes that conventional transit systems are best equipped to
serve high levels of travel demand that is concentrated in a relatively
limited area or

along well- defined corridors, such as inner cities and corridors between
those areas and suburbs. Trips by rural residents tend to be long due to
low population densities and the relative isolation of small communities.
Therefore, transportation can be a challenge to provide in rural areas,
especially for persons without access to private automobiles. A report
prepared for the FTA in 2001 47 found that 1 in 13 rural residents lives
in a household without a personal vehicle. In addition, the elderly made
31 percent of all rural transit trips in 2000 and persons with
disabilities made 23 percent. However, according to a report by the
Coordinating Council on

Access and Mobility, 48 while almost 60 percent of all nonmetropolitan
counties had some public transportation services in 2000, many of these
operations were small and offered services to limited geographic areas
during limited times.

Transportation*s Effects on While ISTEA and TEA- 21 provided funds aimed
at mitigating adverse

the Environment and effects of transportation, concerns persist about such
effects on the Communities Are a Growing

environment and communities. As a result of the negative consequences of
Concern transportation, tradeoffs must be made between facilitating
increased mobility and giving due regard to environmental and other social
goals. For

example, transportation vehicles are major sources of local, urban, and
regional air pollution because they depend on fossil fuels to operate.
Emissions from vehicles include sulfur dioxide, lead, carbon monoxide,
volatile organic compounds, particulate matter, and nitrous oxides. In
addition, the emission of greenhouse gases such as carbon dioxide,

methane, and nitrous oxide are increasing and greenhouse gases have been
linked to reduction in atmospheric ozone and climate changes. According to
Mobility 2001, improved technologies can help reduce per- vehicle
emissions, but the increasing numbers of vehicles traveling and the total

47 Community Transportation Association of America, Status of Rural Public
Transportation- 2000 (April 2001). 48 Coordinating Council on Access and
Mobility, Planning Guidelines for Coordinated State and Local Specialized
Transportation Services (Washington, D. C.: U. S. Department of
Transportation, Dec. 20, 2000).

miles traveled may offset these gains. In addition, congested conditions
on highways tend to exacerbate the problem because extra fuel is consumed
due to increased acceleration, deceleration, and idling. Vehicle emissions
in congested areas can trigger respiratory and other illnesses, and runoff
from

impervious surfaces can carry lawn chemicals and other pollutants into
lakes, streams, and rivers, thus threatening aquatic environments. 49
Freight transportation also has significant environmental effects. Trucks
are significant contributors to air pollution. According to the American
Trucking Association, trucks were responsible for 18.5 percent of nitrous
oxide emissions and 27. 5 percent of other particulate emissions from
mobile sources in the United States. The Mobility 2001 report states that
freight trains also contribute to emissions of hydrocarbons, carbon

monoxide, and nitrous oxide, although generally at levels considerably
lower than trucks. In addition, while large shipping vessels are more
energy efficient than trucks or trains, they are also major sources of
nitrogen, sulfur dioxide, and diesel particulate emissions. According to
the International Maritime Organization, ocean shipping is responsible for
22 percent of the wastes dumped into the sea on an annual basis. Barges

moving freight on the inland waterway system are among the most energy
efficient forms of freight transportation, contributing relatively lower
amounts of noxious emissions compared with trucks and freight trains,

according to the Corps of Engineers. However, the dredging and damming
required to make rivers and harbors navigable can cause significant
disruption to ecosystems.

Noise pollution is another factor exacerbated by increasing levels of
transportation. While FHWA, FTA, and many cities have established criteria
for different land uses close to highways and rail lines to protect
against physically damaging noise levels, average noise levels caused by
road traffic in some areas can still have adverse consequences on people*s

hearing. In addition, several studies have found that residential property
values decrease as average noise levels rise above a certain threshold.
Freight also contributes to noise pollution. According to Mobility 2001,

shipping is the largest source of low- frequency, underwater noise, which
may have adverse effects on marine life, although these effects are not
yet fully understood. These noise levels are particularly serious on
highly

49 See U. S. General Accounting Office, Environmental Protection: Federal
Incentives Could Help Promote Land Use That Protects Air and Water
Quality, GAO- 02- 12 (Washington, D. C.: Oct. 31, 2001).

trafficked shipping routes. In addition, dredging also contributes to
noise pollution.

Growing awareness of the environmental and social costs of transportation
projects is making it more difficult to pursue major transportation
improvements. According to a number of panelists, the difficulty in
quantifying and measuring the costs and benefits of increased mobility
also

hinders the ability of transportation planners to make a strong case to
local decisionmakers for mobility improvements. In addition,
transportation planning and funding is mode- specific and oriented toward
passenger travel, which hinders transportation planners* ability to
recognize systemwide and multi- modal strategies for addressing mobility
needs and other social concerns.

Strategies for The panelists presented numerous approaches for addressing
the types of

Addressing Mobility challenges discussed throughout this report, but they
emphasized that no

single strategy would be sufficient. From these discussions and our other
Challenges Include research, we have identified three key strategies that
may aid

Focusing on transportation decisionmakers at all levels of government in
addressing Systemwide Outcomes, mobility challenges and the institutional
barriers that contribute to them.

These strategies include the following: Using a Full Range of Tools, and
Providing

1. Focus on the entire surface and maritime transportation system rather
than on specific modes or types of travel to achieve desired mobility
Options for Financing outcomes. A systemwide approach to transportation
planning and Surface and Maritime

funding, as opposed to focus on a single mode or type of travel, could
Transportation

improve focus on outcomes related to customer or community needs. 2. Use a
full range of tools to achieve those desired outcomes. Controlling
congestion and improving access will require a strategic mix of

construction, corrective and preventive maintenance, rehabilitation,
operations and system management, and managing system use through pricing
and other techniques.

3. Provide more options for financing mobility improvements and consider
additional sources of revenue. Targeting financing to transportation
projects that will achieve desired mobility outcomes might require more
options for raising and distributing funds for

surface and maritime transportation. However, using revenue sources that
are not directly tied to the use of transportation systems could allow
decisionmakers to bypass transportation planning requirements

which, in turn, could limit the ability of transportation agencies to
focus on and achieve desired outcomes.

Focus on the Entire Surface Some panelists said that mobility should be
viewed on a systemwide basis and Maritime across all modes and types of
travel. Addressing the types of mobility Transportation System

challenges discussed earlier in this report can require a scope beyond a
Rather Than on Specific local jurisdiction or a state line and across more
than one mode or type of travel. For example, congestion challenges often
occur where modes Modes or Types of Travel to connect or should connect*
such as ports or freight hubs where freight is Achieve Desired Mobility
transferred from one mode to another, or airports that passengers need to
Outcomes

access by car, bus, or rail. These connections require coordination of
more than one mode of transportation and cooperation among multiple
transportation providers and planners, such as port authorities,
metropolitan planning organizations (MPO), 50 and private freight
railroads. Some panelists therefore advocated shifting the focus of
government transportation agencies at the federal, state, and local levels
to consider all modes and types of travel in addressing mobility
challenges* as opposed to focusing on a specific mode or type of travel in
planning and

implementing mobility improvements. Some panelists said that current
transportation planning institutions, such as state transportation
departments, MPOs, or Corps of Engineers regional offices, may not have
sufficient expertise, or in some cases, authority to effectively identify
and implement mobility improvements across modes or types of travel. They
suggested that transportation planning by all entities

focus more closely on regional issues and highlighted the importance of
cooperation and coordination among modal agencies at the federal, state,
and local level, between public and private transportation providers, and
between transportation planning organizations and other government and
community agencies to address transportation issues. For example, several
panelists said that the Alameda Corridor in Los Angeles is a good example

of successful cooperation and coordination among agencies. This corridor
is designed to improve freight mobility for cargo coming into the ports of
Los Angeles and Long Beach and out to the rest of the country. Planning,

financing, and building this corridor required cooperation among private
railroads, the local port authorities, the cities of Los Angeles and Long

50 MPOs are organizations of city, county, state, and federal officials
that provide a regional forum for transportation planning.

Beach, community groups along the entire corridor, the state of
California, and the federal government.

Several panelists said that a greater understanding of the full life-
cycle costs and benefits of various mobility improvements is needed to
take a more systemwide approach to transportation planning and funding.
The

panelists said the cost- benefit frameworks that transportation agencies
currently use to evaluate various transportation projects could be more
comprehensive in considering a wider array of social and economic costs
and benefits, recognizing transportation systems* links to each other and
to other social and financial systems.

Many panelists advocated a systemwide, rather than mode- specific,
approach to transportation planning and funding that could also improve
focus on outcomes that users and communities desire from the
transportation system. For example, one panelist described a performance
oriented funding system, in which the federal government would first
define certain national interests of the transportation system* such as

maintaining the entire interstate highway system or identifying freight
corridors of importance to the national economy* then set national
performance standards for those systems that states and localities must
meet. Federal funds would be distributed to those entities that are

addressing national interests and meeting the established standards. Any
federal funds remaining after meeting the performance standards could then
be used for whatever transportation purpose the state or locality deems
most appropriate to achieve state or local mobility goals. Another
panelist expanded the notion of setting national performance standards to
include a recognition of the interactions between transportation goals and
local economic development and quality of life goals, and to allow
localities

to modify national performance goals given local conditions. For example,
a national performance standard, such as average speeds of 45 miles per
hour for highways, might be unattainable for some locations given local

conditions, and might run contrary to other local goals related to
economic development. Some panelists described several other types of
systems that could focus on outcomes. For example, one panelist suggested
a system in which federal support would reward those states or localities
that apply federal money to gain efficiencies in their transportation
systems, or tie transportation projects to land use and other local
policies to achieve

community and environmental goals, as well as mobility goals. Another
panelist described a system in which different federal matching criteria
for

different types of expenditures might reflect federal priorities. For
example, if infrastructure preservation became a higher national priority
than building new capacity, matching requirements could be changed to a 50
percent federal share for building new physical capacity and an 80

percent federal share for preservation. Other panelists suggested that
requiring state and local governments to pay for a larger share of
transportation projects might provide them with incentives to invest in
more cost- effective projects. If cost savings resulted, these entities
might have more funds available to address other mobility challenges. Some
of the panelists suggested reducing the federal match for projects in all
modes

to give states and localities more fiscal responsibility for projects they
are planning. Other panelists also suggested that federal matching
requirements should be equal for all modes to avoid creating incentives to
pursue projects in one mode that might be less effective than projects in
other modes.

Use a Full Range of Tools to Many panelists emphasized that using a range
of various tools to address

Address Mobility Challenges mobility challenges may help control
congestion and improve access. This

involves a strategic mix of construction, corrective and preventive
maintenance, rehabilitation, operations and system management, and
managing system use through pricing or other techniques. Many of the
panelists said that no one type of technique would be sufficient to
address mobility challenges. Although these techniques are currently in
use, panelists indicated that planners should more consistently consider a
full range of techniques.

Build New Infrastructure Building additional infrastructure is perhaps the
most familiar technique for addressing congestion and improving access to
surface and maritime transportation. Several panelists expressed the view
that although there is a lot of unused capacity in the transportation
system, certain bottlenecks and key corridors require new infrastructure.
However, building new

infrastructure cannot completely eliminate congestion. For example,
according to the Texas Transportation Institute, it would require at least
twice the level of current road expansion to keep traffic congestion
levels constant, if that were the only strategy pursued. In addition,
while adding lanes may be a useful tool to deal with highway congestion
for states with relatively low population densities, this option may not
be as useful or possible for states with relatively high population
densities* particularly in urban areas, where the ability to add lanes is
limited due to a shortage of available space. Furthermore, investments in
additional transportation capacity can stimulate increases in travel
demand, sometimes leading to

congestion and slower travel speeds on the new or improved infrastructure.

Increase Infrastructure Other panelists said that an emphasis on enhancing
capacity from existing

Maintenance and Rehabilitation infrastructure through increased corrective
and preventive maintenance and rehabilitation is an important supplement
to, and sometimes a substitute for, building new infrastructure. In 1999,
the President*s

Commission to Study Capital Budgeting reported that, because
infrastructure maintenance requires more rapid budgetary spending than new
construction and has a lower visibility, it is less likely to be funded at
a sufficient level. 51 However, one panelist said that for public roads,
every dollar spent on preventive maintenance when the roads are in good
condition saves $4 to $5 over what would have to be spent to maintain
roads in fair condition or $10 to maintain roads once they are in poor
condition. Maintaining and rehabilitating transportation systems can
improve the speed and reliability of passenger and freight travel, thereby
optimizing capital investments.

Improve Management and Better management and operation of existing surface
and maritime Operations

transportation infrastructure is another technique for enhancing mobility
advocated by some panelists. Improving management and operations may allow
the existing transportation system to accommodate additional travel
without having to add new infrastructure. For example, the Texas
Transportation Institute reported that coordinating traffic signal timing
with changing traffic conditions could improve flow on congested roadways.
In addition, according to an FHWA survey, better management of work zones*
which includes accelerating construction activities to minimize their
effects on the public, coordinating planned and ongoing

construction activities, and using more durable construction materials*
can reduce traffic delays caused by work zones and improve traveler
satisfaction. 52 Also, according to one panelist, automating the operation
of

locks and dams on the inland waterways could reduce congestion at these
bottlenecks. Another panelist, in an article that he authored, noted that
shifting the focus of transportation planning from building capital
facilities 51 Report of the President*s Commission to Study Capital
Budgeting, President*s Commission to Study Capital Budgeting (Washington,
D. C.: Government Printing Office, February 1999).

52 Federal Highway Administration, Moving Ahead: The American Public
Speaks on Roadways and Transportation in Communities, FHWA OP- 01- 017
(Washington, D. C.: U. S. Department of Transportation, February 2001).

to an *operations mindset* will require a cultural shift in many
transportation institutions, particularly in the public sector, so that
the organizational structure, hierarchy, and rewards and incentives are
all focused on improving transportation management and operations. 53 He

also commented on the need to improve performance measures related to
operations and management so that both the quality and the reliability of
transportation services are measured. Several panelists suggested that
contracting out a greater portion of operations and maintenance activities
could allow public transportation agencies to focus their attention on
improving overall management and developing policies to address mobility
challenges. This practice could involve outsourcing operations and
maintenance to private entities through competitive bidding, as is
currently done for roads in the United Kingdom. In addition, by relieving
public agencies of these functions, contracting

could reduce the cost of operating transportation infrastructure and
improve the level of service for each dollar invested for publicly owned
transportation systems, according to one panelist.

Developing comprehensive strategies for reducing congestion caused by
incidents is another way to improve management and operation of surface
and maritime transportation modes. According to the Texas Transportation
Institute, incidents such as traffic accidents and breakdowns cause
significant delays on roadways. One panelist said that some local
jurisdictions are developing common protocols for handling incidents that
affect more than one mode and transportation agency, such as state

transportation departments and state and local law enforcement, resulting
in improved communications and coordination among police, firefighters,
medical personnel, and operators of transportation systems. Examples of
improvements to incident management include employing roving crews to

quickly move accidents and other impediments off of roads and rail and
implementing technological improvements that can help barges on the inland
waterways navigate locks in inclement weather, thereby reducing delays on
that system.

Increase Investment in Several panelists also suggested that increasing
public sector investment in

Technology technologies* known as Intelligent Transportation Systems
(ITS)* that are designed to enhance the safety, efficiency, and
effectiveness of the

53 Joseph M. Sussman, *Transitions in the World of Transportation: A
Systems View,* Transportation Quarterly 56 (2002): 21- 22.

transportation network, can serve as a way of increasing capacity and
mobility without making major capital investments. DOT*s ITS program has
two major areas of emphasis: (1) deploying and integrating intelligent

infrastructure and (2) testing and evaluating intelligent vehicles. ITS
includes technologies that improve traffic flow by adjusting signals,
facilitating traffic flow at toll plazas, alerting emergency management
services to the locations of crashes, increasing the efficiency of transit
fare payment systems, and other actions. Appendix IV describes the
different

systems that are part of DOT*s ITS program. Other technological
improvements suggested by panelists included increasing information
available to users of the transportation system to help people avoid
congested areas and to improve customer satisfaction with the system. For
example, up- to- the- minute traffic updates posted on electronic road
signs or over the Internet help give drivers the information necessary to
make choices about when and where to travel. It was suggested that the
federal government could play a key role in facilitating

the development and sharing of such innovations through training programs
and research centers, such as the National Cooperative Highway Research
Program, the Transit Cooperative Research Program, and possible similar
programs for waterborne transportation. However, panelists cautioned that
the federal government might need to deal with some barriers to investing
in technology development and implementation. One panelist said that there
are few incentives for agencies to take risks on new technologies. If an
agency improves its efficiency, it may result in the agency receiving
reduced funding rather than being able to reinvest the

savings. Use Demand Management Finally, another approach to reducing
congestion without making major Techniques

capital investments is to use demand management techniques to reduce the
number of vehicles traveling at the most congested times and on the most
congested routes. For public roads, demand management generally means

reducing the number of cars traveling on particularly congested routes
toward downtown during the morning commuting period and away from downtown
during the late afternoon commuting period. One panelist, in a

book that he authored, said that *the most effective means of reducing

peak- hour congestion would be to persuade solo drivers to share
vehicles.* 54

One type of demand management for travel on public roads is to make
greater use of pricing incentives. In particular, many economists have
proposed using congestion pricing that involves charging surcharges or
tolls to drivers who choose to travel during peak periods when their use
of the roads increases congestion. Economists generally believe that such

surcharges or tolls enhance economic efficiency by making drivers take
into account the external costs they impose on others in deciding when and
where to drive. These costs include congestion, as well as pollution and
other external effects. The goal of congestion pricing would be to charge
a toll for travel during congested periods that would make the cost
(including

the toll) that a driver pays for such a trip equal or close to the total
cost of that trip, including external costs. These surcharges could help
reduce congestion by providing incentives for travelers to share rides,
use transit, travel at less congested (generally off- peak) times and on
less congested routes, or make other adjustments* and at the same time,
generate more revenues that can be targeted to alleviating congestion in
those specific corridors. According to a report issued by the
Transportation Research Board, technologies that are currently used at
some toll facilities to automatically charge users could also be used to
electronically collect congestion surcharges without establishing
additional toll booths that would cause delays. 55 Peak- period pricing
also has applicability for other

modes of transportation. Amtrak and some transit systems use peak- period
pricing, which gives travelers incentives to make their trips at less
congested times.

In addition to pricing incentives, other demand management techniques that
encourage ride- sharing can be useful in reducing congestion. Ridesharing
can be encouraged by establishing carpool and vanpool staging areas,
providing free or preferred parking for carpools and vanpools,

subsidizing transit fares, and designating certain highway lanes as high
occupancy vehicle (HOV) lanes that can only be used by vehicles with a
specified number of people in them (two or more). HOV lanes can provide an
incentive for sharing rides because they reduce the travel time for a

54 Anthony Downs, Stuck in Traffic: Coping with Peak- Hour Traffic
Congestion (The Brookings Institution: Washington, D. C.: 1992) p. 64. 55
National Research Council, Transportation Research Board, Curbing
Gridlock: PeakPeriod Fees to Relieve Traffic Congestion (Washington, D.
C.: 1994).

group traveling together relative to the time required to travel alone.
This incentive is likely to be particularly strong when the regular lanes
are heavily congested. Several panelists also recommended use of high
occupancy toll (HOT) lanes, which combine pricing techniques with the HOV
concept. Experiments with HOT lanes, which allow lower occupancy vehicles
or solo drivers to pay a fee to use HOV lanes during peak traffic

periods, are currently taking place in California. HOT lanes can provide
motorists with a choice: if they are in a hurry, they may elect to pay to
have less delay and an improved level of service compared to the regular
lanes.

When HOT lanes run parallel to regular lanes, congestion in regular lanes
may be reduced more than would be achieved by HOV lanes. Demand management
techniques on roads, particularly those involving pricing, often provoke
strong political opposition. Several panelists said that instituting
charges to use roads that have been available *free* is

particularly unpopular because many travelers believe that they have
already paid for the roads through gasoline and other taxes and should not
have to pay *twice.* Other concerns about congestion pricing include
equity issues because of the potentially regressive nature of these
charges (i. e., the surcharges constitute a larger portion of the earnings
of lower income households and therefore impose a greater financial burden
on

them). 56 In addition, some people find the concept of restricting lanes
or roads to people who pay to use them to be elitist because that approach
allows people who can afford to pay the tolls to avoid congestion that
others must endure. Several of the panelists suggested that tolls might
become more acceptable to the public if they were applied to new roads or
lanes as a demonstration project so that the tolls* effectiveness in
reducing

congestion and increasing commuter choices could be evaluated. Provide
Options for Several panelists indicated that targeting the financing of
transportation to Financing Mobility achieving desired mobility outcomes,
and addressing those segments of Improvements and Consider

transportation systems that are most congested, would require more
Additional Sources of options for financing surface and maritime
transportation projects than are currently available, and might also
require more sources of revenue in the Revenue future.

56 Proponents of congestion pricing, however, such as the Committee for
Study of Urban Transportation Congestion Pricing of the Transportation
Research Board, have noted that all income groups can benefit if there is
an appropriate distribution of the revenues obtained through congestion
pricing.

Increase Funding Flexibility According to many panelists, the current
system of financing surface and maritime transportation projects limits
options for addressing mobility challenges. For example, several panelists
said that separate funding for each mode at the federal, state, and local
level can make it difficult to consider possible efficient and effective
ways for enhancing mobility, and providing more flexibility in funding
across modes could help address this limitation. In addition, some
panelists argued that *earmarking* or designation by the Congress of
federal funds for particular transportation

projects bypasses traditional planning processes used to identify the
highest priority projects, thus potentially limiting transportation
agencies* options for addressing the most severe mobility challenges.
According to

one panelist, bypassing transportation planning processes can also result
in logical connections or interconnections between projects being
overlooked. Expand Support for Alternative

Several panelists acknowledged that the public sector could expand its
Financing Mechanisms financial support for alternative financing
mechanisms to access new sources of capital and stimulate additional
investment in surface and maritime transportation infrastructure. These
mechanisms include both

newly emerging and existing financing techniques such as 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
surface and maritime transportation infrastructure (see app. V for a
description of alternative financing methods). The panelists emphasized,
however, that these mechanisms currently provide only a small portion of
the total funding that is needed for capital investment and are not, by
themselves, a

major strategy for addressing mobility challenges. Furthermore, they
cautioned that some of these mechanisms, such as Grant Anticipation
Revenue Vehicles, 57 could create difficulties for state and local
agencies to address future transportation problems, because agencies would
be reliant on future federal revenues to repay the bonds. Consider New
Revenue Sources Many panelists stated that a possible future shortage of
revenues presents a

fundamental limitation to addressing mobility challenges. 58 Some
panelists 57 Grant Anticipation Revenue Vehicles allow states to pay debt
financing costs with future anticipated federal highway funds. 58 However,
one panelist believed that increased spending on transportation would
never alleviate congestion and that such spending increases would reduce
the funds available for dealing with other problems.

said that, because of the increasing use of alternative fuels, revenues
from the gas tax are expected to decrease in the future, possibly
hindering the public sector*s ability to finance future transportation
projects. In addition, one panelist explained that MPOs are required to
produce financially constrained long- range plans, and the plans in the
panelist*s organization indicate that future projections of revenue do not
cover the rising costs of planned transportation projects.

One method of raising revenue is for counties and other regional
authorities to impose sales taxes for funding transportation projects. A
number of counties have already passed such taxes and more are being
considered nationwide. However, several panelists expressed concerns that
this method might not be the best option for addressing mobility
challenges. For example, one panelist stated that moving away from
transportation user charges to sales taxes that are not directly tied to
the use of transportation systems weakens the ties between transportation

planning and finance. Counties and other authorities may be able to bypass
traditional state and metropolitan planning processes because these sales
taxes provide them with their own sources of funding for transportation. A
number of panelists suggested increasing current federal fuel taxes to
raise additional revenue for surface transportation projects. In contrast,
other panelists argued that the federal gas tax could be reduced. They
said that, under the current system, states are receiving most of the
revenue raised by the federal gas tax within their state lines and
therefore there is little need for the federal government to be involved
in collecting this revenue, except for projects that affect more than one
state or are of national significance. However, other panelists said that
this might lead to a decrease in gas tax revenues available for
transportation, because states may have incentives to use this revenue for
purposes other than

transportation or may not collect as much as is currently collected. Given
that freight tonnage moved across all modes is expected to increase by 43
percent during the period from 1998 to 2010, new or increased taxes or
other fees imposed on the freight sector could also help fund mobility
improvements. For example, one panelist from the rail industry suggested
modeling more projects on the Alameda Corridor in Los Angeles, where
private rail freight carriers pay a fee to use infrastructure built with
public financing. Another way to raise revenue for funding mobility
improvements would be to increase taxes on freight trucking. According to
FHWA, heavy trucks (weighing over 55, 000 pounds) cause a disproportionate
amount of

damage to the nation*s highways and have not paid a corresponding share

for the cost of pavement damage they cause. This situation will only be
compounded by the large expected increases in freight tonnage moved by
truck over the next 10 years. The Joint Committee on Taxation estimated
that raising the ceiling on the tax paid by heavy vehicles to $1,900 could
generate about $100 million per year. 59

Another revenue raising strategy includes dedicating more of the revenues
from taxes on alternative fuels, such as gasohol, to the Highway Trust
Fund rather than to the U. S. Treasury*s General Fund, as currently
happens. Finally, panelists also said that pricing strategies, mentioned
earlier in this report as a tool to reduce congestion, are also possible
additional sources of revenue for transportation purposes.

Agency Comments and We provided DOT, the Corps of Engineers, and Amtrak
with draft copies

Our Evaluation of this report for their review and comment. We obtained
oral comments

from officials at DOT and the Corps of Engineers. These officials
generally agreed with the report and provided technical comments that we
incorporated as appropriate. In addition, officials from the Federal

Railroad Administration within DOT commented that the report was timely
and would be vital to the dialogue that occurs as the Congress considers
the reauthorization of surface transportation legislation. Amtrak had no
comments on the report.

Our work was primarily performed at the headquarters of DOT and the Corps
of Engineers (see app. VI for a detailed description of our scope and
methodology). We conducted our work from September 2001 through August
2002 in accordance with generally accepted government auditing standards.

As agreed with your offices, unless you publicly announce the contents of
this report earlier, we plan no further distribution until 30 days after
the date of this report. At that time, we will send copies of this report
to the congressional committees with responsibilities for surface and
maritime

transportation programs; DOT officials, including the Secretary of
Transportation, the administrators of the Federal Highway Administration,
59 See U. S. General Accounting Office, Highway Financing: Factors
Affecting Highway Trust Fund Revenues, GAO- 02- 667T (Washington, D. C.:
May 9, 2002).

Federal Railroad Administration, Federal Transit Administration, and
Maritime Administration, the Director of the Bureau of Transportation
Statistics, and the Commandant of the U. S. Coast Guard; the Commander and
Chief of Engineers, U. S. Army Corps of Engineers; the President of
Amtrak, and the Director of the Office of Management and Budget. We will
make copies available to others on request. This report will also be
available on our home page at no charge at http:// www. gao. gov. If you
have any questions about this report, please contact me at heckerj@ gao.
gov or Kate Siggerud at siggerudk@ gao. gov. Alternatively, we can be
reached at (202) 512- 2834. GAO contacts and acknowledgments are

listed in appendix VII. JayEtta Z. Hecker Director Physical Infrastructure
Issues

Appendi xes Expenditures for Capital, Operations, and

Appendi x I

Maintenance Comparing the proportion of public spending devoted to various
purposes across modes is difficult due to differences in the level of
public sector involvement and in the definition of what constitutes
capital versus operations and maintenance expenses in each mode. For
example, the operation of public roads is essentially a function of
private citizens operating their own vehicles, while operations for mass
transit includes

spending for bus drivers and subway operators, among other items. In
addition, maintenance expenditures can differ greatly from one mode to
another in their definition and scope. For example, maintenance for a

public road involves activities such as patching, filling potholes, and
fixing signage, while maintenance for channels and harbors involves
routine dredging of built up sediment and disposal or storage of the
dredged

material. Given these significant differences in scope, different modes
classify and report on maintenance expenses in different ways. For public
roads, capital expenditures (which includes new construction, resurfacing,
rehabilitation, restoration, and reconstruction of roads) constituted
about one- half of total annual public sector expenditures over the last
10 years, with small increases in recent years. Of total capital

expenditures in fiscal year 2000, 52 percent was used for system
preservation, such as resurfacing and rehabilitation, while 40 percent was
used for construction of new roads and bridges and other system
expansions. These percentages have fluctuated somewhat throughout the
1990s. However, as shown in figure 8, the percentage of capital outlays
spent on system preservation expenses increased from 45 percent to 52

percent between fiscal years 1993 and 2000, while construction of new
roads and bridges and other system expansions declined from 49 percent to
40 percent over the same period.

Figure 8: Purposes for Capital Outlays for Public Roads, Fiscal Years 1993
and 2000

Source: Federal Highway Administration.

For transit, capital expenditures accounted for about 26 percent of total
annual public sector expenditures in 1999. The federal government spends
more heavily on capital than on operations for transit. The federal share
of capital expenditures fluctuated throughout the 1990s but in fiscal year
2000

stood at about 50 percent, the same as it was in fiscal year 1991. The
federal share of total operating expenses declined from about 5 percent in
fiscal year 1991 to about 2 percent in fiscal year 2000. 60 Federal
government support to Amtrak for operating expenses and capital
expenditures has fluctuated throughout the 1990s. Annual operating grants
fluctuated between $300 and $600 million and capital grants between $300
and $500 million. In addition to these grants, the Taxpayer Relief Act of

60 Because some capital funds from the federal Urbanized Area Formula
program were used to pay for operating expenses, the 2 percent operating
expense figure may be somewhat understated and the 50 percent capital
expenditure figure may be somewhat overstated.

1997 61 provided Amtrak with $2.2 billion for capital and operating
purposes in fiscal years 1998 and 1999. Federal support declined in fiscal
years 2000 and 2001, however, with the federal government providing grants
to Amtrak of $571 and $521 million, respectively.

For water transportation, spending by the U. S. Army Corps of Engineers
(Corps of Engineers) for construction of locks and dams for inland
waterway navigation 62 fell while expenditures for operations and
maintenance remained at around $350 to $400 million, as shown in figure 9.

Figure 9: Federal Expenditures for Construction and Operations and
Maintenance of Locks and Dams, Fiscal Years 1991- 2000

Source: U. S. Department of Transportation, Bureau of Transportation
Statistics (2002), Government Transportation Financial Statistics
(Preliminary Data), Washington, D. C.

61 P. L. 105- 34 (Aug. 5, 1997). 62 Locks and dams serve other purposes in
addition to navigation, including irrigation, flood control, and
recreation.

By contrast, Corps of Engineers expenditures for the construction,
operations, and maintenance of federal channels and harbors have increased
over the past decade. During fiscal years 1991 through 2000,

construction expenditures increased from $112 million to $252 million (in
2000 dollars), while operations and maintenance expenditures increased
from $631 million to $671 million (in 2000 dollars). In addition to the
Corps of Engineers, the U. S. Coast Guard and the Maritime Administration
also spend significant amounts for water transportation, although these

agencies have limited responsibility for construction or maintenance of
water transportation infrastructure.

Appendi x II

Travel Forecast Methodologies Demographic factors and economic growth are
the primary variables influencing national travel projections for both
passenger and freight travel. However, the key assumption underlying most
of these travel projections is that the capacity of the transportation
system is unconstrained; that is, capacity is assumed to expand as needed
in order to accommodate future traffic flows. 63 As a result, national
travel projections

need to be used carefully in evaluating how capacity improvements or
increasing congestion in one mode of transportation might affect travel
across other modes and the entire transportation system.

Passenger Travel on Future travel growth will be influenced by demographic
factors. A travel Public Roads forecast study conducted for the Federal
Highway Administration (FHWA) used economic and demographic variables such
as per capita income and

population to project a 24.7 percent national cumulative increase in
vehicle miles traveled for passenger vehicles on public roads between 2000
and 2010. The study estimated that for every 1- percent increase in per
capita income or population, vehicle miles traveled would increase nearly
1

percent. 64 This forecast is unconstrained, however, in that it does not
consider whether increased congestion or fiscal constraints will allow
travel to grow at the rates projected. In part to deal with this
limitation, FHWA uses another model to forecast a range of future vehicle
miles traveled based on differing levels of investment. These projections
recognize that if additional road capacity is provided, more travel is
expected to occur than if the capacity additions are not provided. If
congestion on a facility increases, some travelers will respond by
shifting to alternate modes or routes, or will forgo some trips entirely.
These projections are not available at this time but will be included in
the U. S. Department of Transportation*s (DOT) 2002 report to Congress
entitled Status of the Nation*s Highways, Bridges, and

Transit: Conditions and Performance.

63 The exception is the national projection of passenger miles traveled on
transit, which is actually an aggregate of local projections that are
capacity- constrained and may consider interactions among modes. 64 A
separate model was developed for buses, using population growth as the
independent variable.

While it is clear that travelers choose between modes of travel for
reasons of convenience and cost, among other things, none of the FHWA
travel forecasts consider the effects of changes in levels of travel on
other modes, such as transit or rail. FHWA officials said that they would
like to have a data system that projects intermodal travel, but for now
such a system does not exist. The models also cannot reflect the impact of
major shocks on the system, such as natural disasters or the terrorist
attacks of September 2001.

Passenger Travel on The Federal Transit Administration (FTA) makes
national- level forecasts for growth in transit passenger miles traveled
by collecting 15- to 25- year

Transit forecasts developed by metropolitan planning organizations (MPO)
65 in the 33 largest metropolitan areas in the country. 66 FTA calculates
a national weighted average using the MPO forecasts and regional averages.
67 MPOs

create their forecasts as part of their long- range planning process. 68
Unlike the first forecast for road travel discussed above, the 1999
Conditions and Performance report 69 stated that the MPO forecasts for
vehicle miles traveled and passenger miles traveled incorporate the
effects of actions that the MPOs are proposing to shape demand in their
areas to attain air

quality and other developmental goals. The MPO plans may include transit
expansion, congestion pricing, parking constraints, capacity limits, and
other local policy options. MPO forecasts also have to consider funding
availability.

65 MPOs are organizations of city, county, state, and federal officials
that provide a regional forum for transportation planning. 66 According to
FTA, the 33 metropolitan areas account for approximately 90 percent of the
nation*s transit use, so they should provide a reasonable approximation of
national- level forecasts. 67 There is no forecast for New York City, so
FTA substituted the average growth rate for the other major east coast
cities, which is 1. 32 percent.

68 Methodologies used by the MPOs to derive their forecasts vary, although
officials at FTA told us that there are two common types. One type uses a
standard four- step modeling process involving data on how many trips
people make, where people are going, the modal

split of trips, and actual routes. The second type is econometric, in
which regional forecast data on income and demographics are fed into a
model to derive travel projections. 69 Federal Highway Administration and
Federal Transit Administration, 1999 Status of the Nation*s Highways,
Bridges, and Transit: Conditions and Performance (Washington, D. C.: U. S.
Department of Transportation, 2000).

Intercity Passenger Amtrak provided us with systemwide forecasts of
ridership, which are

Travel based on assumed annual economic growth of between 1 and 1. 5
percent, fare increases equal to the national inflation rate, and
projected ridership

increases on particular routes, including new or changing service on
certain routes scheduled to come on line over the forecast period. For
short- distance routes, Amtrak uses a model that estimates total travel
over a route by any mode, based on economic and demographic growth. The

model then estimates travel on each mode competing in the corridor based
on cost and service factors in each mode. For long distance routes, Amtrak
uses a different model that projects future rail ridership using variables
that have been determined to influence past rail ridership, such as
population, employment, travel time for rail, and level of service for
rail. This model does not consider conditions on other competing modes.

Freight Travel Across In forecasting growth in national freight travel,
models developed by

Modes FHWA and the U. S. Army Corps of Engineers (Corps of Engineers) use

growth in trade and the economy as key factors driving freight travel.
Projected growth in each particular mode is determined by growth in the
production of the specific mix of commodities that historically are
shipped on that mode. Therefore, any projected shift in freight movement
from one mode to another is due to projected changes in the mix of
commodities, or projected changes in where goods are produced and
consumed.

Because current or future conditions and the capacity of the freight
transportation system cannot be factored into the national forecasts, a
number of factors* including growing congestion, as well as the benefits
of specific projects that might relieve congestion* are not considered in
the projections. 70 In addition, future trends in other factors that
affect shippers* choices of freight modes* such as relative cost, time, or
reliability* are not easily quantifiable and are also linked to each
system*s capacity and the congestion on each system. As such, these
factors are not included in

FHWA*s or Corps of Engineers* national forecasting models. Underlying the
commodity forecasts used by FHWA and the Corps of Engineers are a number
of standard macro- economic assumptions

70 Local freight travel forecasts done by the Corps of Engineers* district
offices for use in specific project feasibility studies do consider
possible diversion to other alternative modes as a result of increasing
congestion.

concerning primarily supply side factors, such as changes in the size of
the labor force and real growth in exports due to trade liberalization.
Changes in border, airport, and seaport security since September 11 may
affect assumptions that are imbedded in these commodity forecasts. For
example, increased delays and inspections at the border or at a port may

create problems for shippers to meet just- in- time requirements, possibly
resulting in a short- term shift to an alternative mode, or a limiting of
trade.

Although current national freight forecasts are not capacity- constrained,
FHWA is developing a *Freight Analysis Framework* to provide alternative
analyses, assessing certain capacity limitations. The main impediment to
developing this capability is determining capacity on each mode. There are

commonly accepted measures of road capacity that are being incorporated,
but rail and waterway capacity is not as easily measured.

State Forecasts of FHWA provided us with state- level forecasts of total
vehicle miles traveled

on public roads from 2000 to 2010, derived from data in the Highway
Vehicle Miles Traveled Performance Monitoring System (HPMS) sample data
set. 71 This data set contains state- reported data on average annual
daily traffic for

approximately 113,000 road segments nationwide. For each sample section,
HPMS includes measures of average annual daily traffic for the reporting
year and estimates of future traffic for a specified forecast year, which
is generally 18 to 25 years after the reporting year. It should be noted
that the HPMS sample data do not include sections on any roads classified
as local roads or rural minor collectors.

Because the individual HPMS segment forecasts come from the states, we do
not know exactly what models were used to develop them. According to
officials at FHWA, the only national guidance comes from the HPMS Field
Manual, which says that future average annual daily traffic should come

from a technically supportable state procedure or data from MPOs or other
local sources. The manual also says that HPMS forecasts for urbanized
areas should be consistent with those developed by the MPO at the
functional system and urbanized area level.

71 HPMS also includes data from the District of Columbia and Puerto Rico.

Table 1: Projected Average Annual Growth Rates for Vehicle Miles Traveled,
20002020 Rural

Urban State total State (%) (%) (%)

Alabama 2.94 3.18 3.06 Alaska 2.34 2.12 2.23 Arizona 1.60 1.42 1.48
Arkansas 2.54 2.23 2.43 California 3.09 2.25 2.42 Colorado 2.22 1.94 2.05
Connecticut 1.71 1.28 1.38 Delaware 1.33 0.86 1.05 District of Columbia N/
A 1.69 1.69 Florida 1.85 1.63 1.69 Georgia 0.60 0.86 0.75 Hawaii 1.62 1.46
1.51 Idaho 3.07 3.08 3.08 Illinois 1.17 1.36 1.30 Indiana 3.07 2.69 2.88
Iowa 1.95 2.24 2.06 Kansas 1.88 2.14 2.00 Kentucky 2.90 2.12 2.55
Louisiana 1.93 1.73 1.84 Maine 0.31 0.58 0.39 Maryland 2.82 2.56 2.64
Massachusetts 1.02 1.06 1.05 Michigan 2.22 1.63 1.86 Minnesota 2.23 2.09
2.16 Mississippi 2.77 2.71 2.75 Missouri 1.67 1.96 1.82 Montana 2.49 2.75
2.55 Nebraska 2.48 2.08 2.33 Nevada 2.16 2.08 2.11 New Hampshire 2.10 2.24
2.16 New Jersey 1.77 1.25 1.36 New Mexico 2.29 1.28 1.93 New York 1.76
1.83 1.81 North Carolina 2.68 2.64 2.66

(Continued From Previous Page)

Rural Urban

State total State (%) (%) (%)

North Dakota 1.76 2.31 1.90 Ohio 1.64 1.23 1.39 Oklahoma 2.21 2.32 2.26
Oregon 2.19 1.91 2.06 Pennsylvani a 2.90 2.49 2.66 Rhode Island 1.28 1.09
1.12 South Carolina 2.44 2.28 2.38 South Dakota 1.47 1.48 1.47 Tennessee
2.18 2.37 2.29 Tex as 2.63 2.27 2.40 Utah 3.25 3.54 3.43 Ver mont 1.62
1.04 1.48 Virginia 2.60 2.01 2.27 Washington 1.80 2.03 1.96 West Virginia
2.80 2.32 2.67 Wisconsin 2.21 2.21 2.21 Wyoming 2.07 1.06 1.83 Puerto Rico
2.30 1.67 1.83

Total 2. 27 1. 97 2. 09

Source: Federal Highway Administration, as reported by states in the
Highway Performance Monitoring System database.

Appendi x I II

Factors Influencing Future Travel Local and Intercity For both local and
intercity passenger travel, population growth is Travel expected to be one
of the key factors driving overall travel levels. Where that growth will
occur will likely have a large effect on travel patterns and mode choices.
According to the U. S. Census Bureau, the U. S. population will grow to
almost 300 million by 2010. 72 Although this represents a slower growth
rate than in the past, it would still add approximately 18.4 million

people to the 2000 population, and will likely also substantially increase
the number of vehicles on public roads as well as the number of passengers
on transit and intercity rail. The Census Bureau reported that since 1990,
the greatest population growth has been in the South and West. According
to one panelist, these regions* metropolitan areas traditionally have
lower central city densities and higher suburban densities than the
Midwest and East. These areas are therefore harder to serve through
transit than metropolitan areas with higher population densities, where
transit can be more feasible. However, according to some transportation
experts, it may not be possible to build

new transit infrastructure in these areas due to environmental or other
concerns. The population growth that is expected in suburban areas could
lead to a larger increase in travel by private vehicles than by transit
because suburban areas generally have lower population densities than
inner cities, and also have more dispersed travel patterns, making them
less easy to serve through conventional public transit. Although overall
population

growth will likely be greatest in suburban parts of metropolitan areas,
high rates of growth are also predicted for rural areas. As is the case in
suburbs, these rural areas are difficult to serve with anything but
private automobiles because of low population densities and geographical
dispersion of travel patterns, so travel by private vehicle may increase.

Immigration patterns are also expected to contribute to changes in travel
levels, but the extent will depend on immigration policies. For example,
according to a senior researcher with the American Public Transportation
Association, higher rates of immigration tend to increase transit use.

In addition to overall population growth, another demographic trend that
will likely affect mode choices is the aging of the population. According
to data from the U. S. Census Bureau, the number of people aged 55 and
over is projected to increase 26 percent between 2001 and 2010. The most
rapidly growing broad age group is expected to be the population aged 85
72 These projections have not yet been updated with data from the 2000
Census.

and older, which is projected to increase 30 percent by 2010. According to
the Federal Highway Administration and Federal Transit Administration*s
1999 Conditions and Performance report, 73 the elderly have different
mobility issues than the nonelderly because they are less likely to have
drivers* licenses, have more serious health problems, and may require
special services and facilities. According to a report prepared for the
World Business Council for Sustainable Development (Mobility 2001), 74
cars driven by the elderly will constitute an increasing proportion of
traffic, especially in the suburbs and rural areas, where many elderly
people tend to reside. Increases in the number of older drivers can pose
safety problems, in that the elderly have a higher rate of crashes per
mile driven

than younger drivers, and that rate rises significantly after age 85. The
Mobility 2001 report also says that the driver fatality rate of drivers
over 75 years of age is higher than any other age group except teenagers.
Growth of the elderly population may therefore increase the importance of
providing demand- responsive transit services 75 and improving signs on
public roads to make them clearer and more visible. Along with population
growth, the increasing affluence of the U. S. population is expected to
play a key role in local and intercity passenger travel levels and in the
modes travelers choose. The 1999 Conditions and Performance report states
that rates of vehicle ownership are lower in lowincome households, leading
those households to rely more on transit systems. According to Federal
Transit Administration (FTA) officials and Mobility 2001, transit use*
particularly use of buses* generally decreases as income increases.
Increasing affluence also influences intercity travel

levels. The 1999 Conditions and Performance report says that people with
high incomes take approximately 30 percent more trips than people with low
incomes, and the trips tend to be longer. Long- distance travel for
business and recreation increases with income. Also, as income increases,

73 Federal Highway Administration and Federal Transit Administration, 1999
Status of the Nation*s Highways, Bridges, and Transit: Conditions and
Performance (Washington, D. C.: U. S. Department of Transportation, 2000).
74 Massachusetts Institute of Technology and Charles River Associates,
Inc., Mobility 2001: World Mobility at the End of the Twentieth Century
and Its Sustainability (World Business Council for Sustainable
Development, August 2001).

75 According to the American Public Transportation Association, demand
response modes are passenger cars, vans, or buses with fewer than 25 seats
operating in response to calls from passengers or their agents to the
transit operator, who then dispatches a vehicle to pick up the passengers
and transport them to their destinations.

travel by faster modes, such as car and air, increases, and travel by
intercity bus tends to decrease. Several participants in our surface and
maritime transportation panels (see app. VI) also indicated that
improvements in communication technology will likely affect the amount and
mode of intercity travel, but the direction and extent of the effect is
uncertain. One panelist said that there is no additional cost to
communicating over greater distances, so

communications will replace travel to some extent, particularly as
technologies improve. However, two other panelists said that communication
technology might increase travel by making the benefit of travel more
certain. For example, the Internet can provide people with current and
extensive information about vacation destinations, potentially

increasing the desire to travel. According to Mobility 2001, it is unclear
whether telecommunications technology will substitute for the physical
transportation of people and goods. Telecommuting and teleconferencing are
becoming more common, but technological improvements would have to be
significant before they can substitute for actual presence at work or in
face- to- face meetings. In addition, while home- based workers do not
have to commute, they tend to travel approximately the same amount as
traditional workers, but differ in how their travel is distributed among
trip

purposes. The terrorist attacks on the United States on September 11,
2001, are expected to have some effect on passenger travel levels and
choices about which mode to use, but U. S. Department of Transportation
(DOT) officials and participants in the panels did not believe the long-
term changes would

be significant, provided that no more attacks occur. Federal Highway
Administration and Federal Railroad Administration officials speculated
that increased delays in air travel due to stricter security procedures
might

shift some travel from air to other modes, such as car or rail, although
they expected this effect to be negligible in the long term unless
additional incidents occur.

Finally, changes in the price (or perceived price), condition, and
reliability of one modal choice as compared with another are also likely
to affect levels of travel and mode choices. For example, changes in the
petroleum

market that affect fuel prices, or changes in government policy that
affect the cost of driving or transit prices, could result in shifts
between personal vehicles and transit; however, it is difficult to predict
the extent to which these changes will occur. According to Mobility 2001,
automobiles offer greater flexibility in schedule and choice of
destinations than other modes

of transportation, and often also provide shorter travel times with lower
out- of- pocket costs. However, if heavy and unpredictable road congestion
causes large variations in automobile travel time, there could be a shift
to transit or a decrease in overall travel.

Freight Travel According to several reports by DOT and transportation
research organizations, increasing international trade, economic growth,
the increasing value of cargo shipped, and changes in policies affecting
certain commodities are expected to influence future volumes of freight
travel and

the choice of mode by which freight is shipped. Increasing international
trade and national trade policies are expected to affect commodity flows,
volumes, and mode choice. 76 According to the Transportation Statistics
Annual Report 2000, 77 the globalization of businesses can shift
production of goods sold in the United States to locations outside of the
country, increasing total ton- miles 78 and changing

the average length of haul of shipments. This shift in production could
also affect freight mode choice, with more commodities being shipped by
multiple modes as distances increase. According to Mobility 2001, truck
transportation tends to be cheaper, faster, and more energy efficient than
rail and barges for shipping high- value cargo. However, as distances
increase, rail and intermodal transportation (linking rail and truck
travel) become more cost- efficient options. Various trade policies also
affect

freight flows and volumes. For example, the North American Free Trade
Agreement has contributed to the increased volume of trade moving on rail
and highways. According to data from the Bureau of Transportation
Statistics* Transborder Surface Freight Database, between 1996 and 2000,
tonnage of imports by rail from Mexico and Canada increased by about 25

76 The U. S. economy has become increasingly integrated with the global
economy, as domestic and foreign companies manage worldwide production and
distribution systems. For example, auto manufacturers may locate their
factories and warehouses in separate countries or continents from their
retail outlets. See Characteristics and Changes in Freight Transportation
Demand: A Guidebook for Planners and Policy Analysts, prepared for the
National Cooperative Highway Research Program, Project 8- 30 Phase II
(Washington, D. C.: Transportation Research Board, June 19, 1995). 77
Bureau of Transportation Statistics, Transportation Statistics Annual
Report 2000

(Washington, D. C.: U. S. Department of Transportation, 2001). 78 Ton-
miles are calculated by multiplying the tons of commerce being moved by
the number of miles moved.

percent, and imports by truck increased 20 percent. In the maritime
sector, expanding trade with the Pacific Rim increased traffic at west
coast container ports.

According to the Transportation Statistics Annual Report 2000, economic
growth results in a greater volume of goods produced and consumed, leading
to more freight moved. As the economy grows, disposable income per capita
increases and individual purchasing power rises, which can

cause businesses to ship more freight per capita. According to the report,
freight ton- miles per capita increased more than 30 percent, from 10,600
in 1975 to 14,000 in 1999.

The increasing value of cargo and the continuing shift toward a more
service- oriented economy and more time- sensitive shipments has affected
the volume of freight shipments and the choice of modes on which freight
is shipped. According to the Transportation Statistics Annual Report 2000,
there is a continuing shift toward production of high- value, lowweight

products, which leads to changes in freight travel levels and mode choice.
For example, it takes more ton- miles to ship $1,000 worth of steel than
it does to ship $1, 000 worth of cell phones. High- value cargo, such as
electronics and office equipment, tends to be shipped by air or truck,
while

rail and barges generally carry lower- value bulk items, such as coal and
grain. 79 According to Mobility 2001, the growth of e- commerce and just-
intime inventory practices depend upon the ability to deliver goods
quickly and efficiently. A report prepared for the National Cooperative
Highway Research Program 80 states that the effects of just- in- time
inventory practices are to increase the number of individual shipments,
decrease their length of haul, and increase the importance of on- time
delivery. Both reports indicate that such practices may shift some freight
from slower 79 The Mobility 2001 report states that inland waterways can
move very large shipments of grain or lumber with a minimal expenditure of
energy. For example, on the lower Mississippi River, 40 or more 10- ton
barges can be lashed together into a single tow for movement down the
river. Rail is also cost- efficient for shipping low- value bulk

commodities long distances. However, because both of these modes are
slower than truck travel on highways, and are limited to fixed waterways
or tracks, trucks are more often used for transporting high- value goods
and for local deliveries. Ocean shipping is the dominant

mode for overseas freight tonnage because extremely large ships operating
with small crews can move great tonnages vast distances at minimal costs.
80 *Characteristics and Changes in Freight Transportation Demand: A
Guidebook for Planners and Policy Analysts,* prepared for the National
Cooperative Highway Research Program, Project 8- 30 Phase II (Washington,
D. C.: Transportation Research Board, June 19, 1995).

modes, such as rail, to faster modes, such as truck or air. In addition,
the

Mobility 2001 report states that as the demand for specialized goods and
services grows, the demand for smaller, more specialized trucks increases.
Items ordered from catalogs or on- line retailers are often delivered by

specialized trucks. Policies affecting particular commodities can have a
large impact on the freight industry. For example, policies concerning
greenhouse gas emissions can affect the amount of coal mined and shipped.
Because coal is a primary good shipped by rail and water, reduction in
coal mining would

have a significant effect on tonnage for those modes. Changes in the type
of coal mined as a result of environmental policies* such as an increase
in mining of low- sulfur coal* can also affect the regional patterns of
shipments, resulting in greater ton- miles of coal shipped. Also,
increasing emissions controls and clean fuel requirements may raise the
cost of operating trucks and result in a shift of freight from truck to
rail or barge. For example, according to Mobility 2001, recently released
rules from the Environmental Protection Agency implementing more stringent
controls

for emissions from heavy- duty vehicles are predicted to increase the
purchase price of a truck by $803. Other environmental regulations also
affect the cost of shipping freight, as when controls on the disposal of
material dredged from navigation channels increase the costs of expanding
those channels. Policies regarding cargo security may also affect the flow

of goods into and out of the United States. For example, several of our
panelists indicated that implementing stricter security measures will
increase the cost of shipping freight as companies invest in the personnel

and technology required. Tighter security measures could also increase
time necessary to clear cargo through Customs or other inspection
stations.

Appendi x V I Intelligent Transportation Systems The U. S. Department of
Transportation*s (DOT) program of Intelligent Transportation Systems (ITS)
offers technology- based systems intended to improve the safety,
efficiency, and effectiveness of the surface transportation system. The
ITS program applies proven and emerging technologies* drawn from computer
hardware and software systems, telecommunications, navigation, and other
systems* to surface

transportation. DOT*s ITS program has two areas of emphasis: (1) deploying
and integrating intelligent infrastructure and (2) testing and evaluating
intelligent vehicles. Under the first area of emphasis, the intelligent
infrastructure program is composed of the family of technologies that can
enhance operations in three types of infrastructure: (1) infrastructure in
metropolitan areas, (2) infrastructure in rural areas, and (3) commercial
vehicles. Under the ITS program, DOT provides grants to states to support
ITS activities. In practice, the Congress has designated

the locations and amounts of funding for ITS. DOT solicits the specific
projects to be funded and ensures that those projects meet criteria
established in the Transportation Equity Act for the 21st Century.

Metropolitan intelligent transportation systems focus on deployment and
integration of technologies in urban and suburban geographic areas to
improve mobility. These systems include:

 Arterial management systems that automate the process of adjusting
signals to optimize traffic flow along arterial roadways;  Freeway
management systems that provide information to motorists and detect
problems whose resolution will increase capacity and minimize congestion
resulting from accidents;

 Transit management systems that enable new ways of monitoring and
maintaining transit fleets to increase operational efficiencies through
advanced vehicle locating devices, equipment monitoring systems, and fleet
management;

 Incident management systems that enable authorities to identify and
respond to vehicle crashes or breakdowns with the most appropriate and
timely emergency services, thereby minimizing recovery times;

 Electronic toll collection systems that provide drivers and
transportation agencies with convenient and reliable automated
transactions to improve traffic flow at toll plazas and increase the
operational efficiency of toll collection;

 Electronic fare payment systems that use electronic communication, data
processing, and data storage techniques in the process of fare collection
and in subsequent recordkeeping and funds transfer;

 Highway- rail intersection systems that coordinate traffic signal
operations and train movement and notify drivers of approaching trains
using in- vehicle warning systems;

 Emergency management systems that enhance coordination to ensure the
nearest and most appropriate emergency service units respond to a crash; 
Regional multimodal traveler information systems that provide road and
transit information to travelers to enhance the effectiveness of trip
planning and en- route alternatives;

 Information management systems that provide for the archiving of data
generated by ITS devices to support planning and operations; and

 Integrated systems that are designed to deliver the optimal mix of
services in response to transportation system demands.

Rural Intelligent Transportation Systems are designed to deploy high
potential technologies in rural environments to satisfy the needs of a
diverse population of users and operators. DOT has established seven
categories of rural intelligent transportation projects. They are as
follows:

 Surface Transportation Weather and Winter Mobility - technologies that
alert drivers to hazardous conditions and dangers, including wide- area
information dissemination of site- specific safety advisories and
warnings;

 Emergency Services - systems that improve emergency response to serious
crashes in rural areas, including technologies that automatically mobilize
the closest police, ambulances, or fire fighters in cases of collisions of
other emergencies;  Statewide/ Regional Traveler Information
Infrastructure * system components that provide information to travelers
who are unfamiliar with the local rural area and the operators of
transportation services;

 Rural Crash Prevention * technologies and systems that are directed at
preventing crashes before they occur, as well as reducing crash severity;

 Rural Transit Mobility * services designed to improve the efficiency of
rural transit services and their accessibility to rural residents;

 Rural Traffic Management * services designed to identify and implement
multi- jurisdictional coordination, mobile facilities, and simple
solutions for small communities and operations in areas where utilities
may not

be available; and

 Highway Operations and Maintenance * systems designed to leverage
technologies that improve the ability of highway workers to maintain and
operate rural roads. The Commercial Vehicle ITS program focuses on
applying technologies to improve the safety and productivity of commercial
vehicles and drivers, reduce commercial vehicles* operations costs, and
facilitate regulatory processes for the trucking industry and government
agencies. This is primarily accomplished through the Commercial Vehicle
Information

Systems and Networks* a program that links existing federal, state, and
motor carrier information systems so that all entities can share
information and communicate with each other in a more timely and accurate
manner.

The second area of emphasis in DOT*s ITS program* testing and evaluating
intelligent vehicles* is designed to foster improvements in the safety and
mobility of vehicles. This component of the ITS program is meant to
promote traffic safety by expediting the commercial availability of
advanced vehicle control and safety systems in four classes of vehicles:
(1) light vehicles, including passenger cars, light trucks, vans, and
sport utility

vehicles; (2) commercial vehicles, including heavy trucks and interstate
buses; (3) transit vehicles, including all nonrail vehicles operated by
transit agencies; and (4) specialty vehicles, including those used for
emergency response, law enforcement, and highway maintenance.

Appendi x V

Alternative Financing Methods Transportation officials at all levels of
government recognize that funding from traditional sources (i. e., state
revenues and federal aid) does not always keep pace with demands for new,
expanded, or improved surface and maritime transportation infrastructure.
Accordingly, the U. S. Department of Transportation (DOT) has supported a
broad spectrum of emerging or established alternative financing mechanisms
that can be used to augment traditional funding sources, access new
sources of capital and

operating funds, and enable transportation providers to proceed with major
projects sooner than they might otherwise. These mechanisms fall into
several broad categories: (1) allowing states to pay debt financing costs
with future anticipated federal highway funds, (2) providing federal
credit assistance, and (3) establishing financing institutions at the
state level. In addition, state, local, and regional governments engage in
public/ private partnerships to tap private sector resources for
investment in transportation capital projects. The federal government
helps subsidize

public/ private partnerships by providing them with tax exemptions. The
federal government allows states to tap into Federal- aid highway funds to
repay debt- financing costs associated with highway projects through the
use of Grant Anticipation Revenue Vehicles (GARVEE). Under this program,
states can pledge a share of future obligations of federal highway funds
toward repayment of bond- related expenses, including a portion of the
principal and interest payments, insurance costs, and other costs. A
project must be approved by DOT*s Federal Highway Administration to be
eligible for this type of assistance.

The federal government also provides credit assistance in the form of
loans, loan guarantees, and lines of credit for a variety of surface and
maritime transportation programs, as follows:

 Under the Transportation Infrastructure Finance and Innovation Act of
1998 (TIFIA), the federal government provides direct loans, loan
guarantees, and lines of credit aimed at leveraging federal funds to
attract nonfederal coinvestment in infrastructure improvements. This

program is designed to provide financing for highway, mass transit, rail,
airport, and intermodal projects, including expansions of multi- state
highway trade corridors; major rehabilitation and replacement of transit
vehicles, facilities, and equipment; border crossing infrastructure; and
other investments with regional and national benefits.  Under the Rail
Rehabilitation and Improvement Financing Program (RRIF), established by
the Transportation Equity Act for the 21st

Century (TEA- 21) in 1998, the federal government is authorized to provide
direct loans and loan guarantees for railroad capital improvements. This
type of credit assistance is made available to state and local
governments, government- sponsored authorities, railroads, corporations,
or joint ventures that include at least one railroad. However, as of June
2002, no loans or loan guarantees had been granted

under this program.

 Under Title XI of the Merchant Marine Act of 1936, known as the Federal
Ship Financing Guarantees Program, the federal government provides for a
full faith and credit guarantee of debt obligations issued by (1) U. S. or
foreign shipowners for the purpose of financing or refinancing U. S. or
eligible export vessels that are constructed, reconstructed, or
reconditioned in U. S. shipyards; and (2) U. S. shipyards for the purpose

of financing advanced shipbuilding technology. A third way that the
federal government helps transportation providers finance capital projects
is by supporting State Infrastructure Banks (SIB). SIBs are investment
funds established at the state or regional level that can

make loans and provide other types of credit assistance to public and
private transportation project sponsors. Under this program, the federal
government allows states to use federal grants as *seed* funds to finance

capital investments in highway and transit construction projects. The
federal government currently supports SIBs in 39 states.

In addition to these alternative financing mechanisms directly supported
by the federal government, state, local, and regional governments
sometimes engage in public/ private partnerships to tap private sector
resources for investment in transportation capital projects. The federal
government also helps subsidize public/ private partnerships by providing
them with tax subsidies. One such subsidy is specifically targeted towards
investment in ground transportation facilities* the tax exemption for
interest earned on state and local bonds that are used to finance high-
speed rail facilities and government- owned docks, wharves, and other
facilities. In addition, a Department of the Treasury study indicates that
the rates of tax

depreciation allowed for railroads, railroad equipment, ships, and boats
are likely to provide some subsidy to investors in those assets. 81

Partnerships between state and local governments and the private sector
are formed for the purpose of sharing the risks, financing costs, and
benefits of transportation projects. Such partnerships can be used to
minimize cost by improving project quality, maintaining risk- management,
improving efficiency, spurring innovation, and accessing expertise that
may

not be available within the agency. These partnerships can take many
forms; some examples include:

 Partnerships formed to develop, finance, build, and operate new toll
roads and other roadways;

 Joint development of transit assets whereby land and facilities that are
owned by transit agencies are sold or leased to private firms and the
proceeds are used for capital investment in, and operations of, transit
systems;

* Turnkey* contracts for transit construction projects whereby the
contractor (1) accepts a lower price for the delivered product if the
project is delayed or (2) receives a higher profit if the project is
delivered earlier or under budget; and

 Cross- border leases that permit foreign investors to own assets used in
the United States, lease them to an American entity, and receive tax
benefits under the laws of their home country. This financing mechanism
offers an *up front* cost savings to transit agencies that are acquiring
vehicles or other assets from a foreign firm.

81 A subsidy is provided when the tax deductions that investors are
permitted to claim for depreciation of assets are larger (in present value
terms) than the amount of true economic depreciation of those assets.
Although economic depreciation is difficult to estimate, the Department of
the Treasury study suggests that tax depreciation exceeds economic
depreciation for certain transportation assets. (See Department of the
Treasury, Report to the Congress on Depreciation Recovery Periods and
Methods, July 2000.)

Appendi x VI

Scope and Methodology Our work covered major modes of surface and maritime
transportation for passengers and freight, including public roads, public
transit, railways, and ports and inland waterways. To determine trends in
public expenditures for surface and maritime transportation over the past
10 years, we relied on U. S. Department of Transportation (DOT) reports
and databases that document annual spending levels in each mode of
transportation. We analyzed trends in total public sector and federal
expenditures across modes during the 10- year period covering fiscal years
1991 through 2000,

and we compared the proportion of public expenditures devoted to capital
activities versus operating and maintaining the existing infrastructure
during that same time period. We adjusted the expenditure data to account
for inflation using separate indexes for expenditures made by the federal
government and state and local governments. We used price indexes from the
Department of Commerce*s Bureau of Economic Analysis* National Income and
Products Accounts.

To determine projected levels of freight and passenger travel over the
next 10 years, we identified projections made by DOT*s modal
administrations, the U. S. Army Corps of Engineers, and Amtrak for the
period covering calendar years 2001 through 2010. We interviewed officials
responsible for the projections and reviewed available documentation to
identify the methodology used in preparing the projections and the key
factors driving

them. We also obtained data on past levels of freight and passenger
travel, covering fiscal years 1991 through 2000, from DOT*s modal
administrations, the U. S. Army Corps of Engineers, and Amtrak. We
analyzed the factors driving the trends for three types of travel* local,
intercity, and freight* that have important distinctions in the types of
vehicles and modes used for the travel.

To identify mobility challenges and strategies for addressing those
challenges, we primarily relied upon expert opinion, as well as a review
of pertinent literature. In particular, we convened two panels of surface
and maritime transportation experts to identify mobility issues and gather
views about alternative strategies for addressing the issues and
challenges to implementing those strategies. We contracted with the
National

Academy of Sciences (NAS) and its Transportation Research Board (TRB) to
provide technical assistance in identifying and scheduling the two panels
that were held on April 1 and 3, 2002. TRB officials selected a total of
22 panelists with input from us, including a cross- section of
representatives from all surface and maritime modes and from various
occupations involved in transportation planning. In keeping with NAS
policy, the panelists were invited to provide their individual views and
the panels were

not designed to build consensus on any of the issues discussed. We
analyzed the content of all of the comments made by the panelists to
identify common themes about key mobility challenges and strategies for
addressing those challenges. Where applicable, we also identified the
opposing points of view about the challenges and strategies.

The names and backgrounds of the panelists are as follows. We also note
that two of the panelists served as moderators for the sessions, Dr.
Joseph M. Sussman of the Massachusetts Institute of Technology and Dr.
Damian J. Kulash of the Eno Foundation, Inc.

 Benjamin J. Allen is Interim Vice President for External Affairs and
Distinguished Professor of Business at Iowa State University. Dr. Allen
serves on the editorial boards of the Transportation Journal and Transport
Logistics, and he is currently Chair of the Committee for the

Study of Freight Capacity for the Next Century at TRB. His expertise
includes transportation regulation, resource allocation, income
distribution, and managerial decisionmaking and his research has been
published in numerous transportation journals.

 Daniel Brand is Vice President of Charles River Associates, Inc., in
Boston, Mass. Mr. Brand has served as Undersecretary of the Massachusetts
Department of Transportation, Associate Professor of City Planning at
Harvard University, and Senior Lecturer in the Massachusetts Institute of
Technology*s Civil Engineering Department. Mr. Brand edited Urban
Transportation Innovation, coedited Urban Travel Demand Forecasting, and
is the author of numerous monographs and articles on transportation.

 Jon E. Burkhardt is the Senior Study Director at Westat, Inc., in
Rockville, Md. His expertise is in the transit needs of rural and small
urban areas, in particular, the needs of the elderly population in such
areas. He has directed studies on the ways in which advanced technology
can aid rural public transit systems, the mobility challenges for older
persons, and the economic impacts of rural public transportation.

 Sarah C. Campbell is the President of TransManagement, Inc., in
Washington, D. C., where she advises transportation agencies at all levels
of government, nonprofit organizations, and private foundations on
transportation issues. Ms. Campbell is currently a member of the Executive
Committee of the TRB. She was a founding director of the

Surface Transportation Policy Project and currently serves as chairman of
its board of directors.

 Christina S. Casgar is the Executive Director of the Foundation for
Intermodal Research and Education in Greenbelt, Md. Ms. Casgar*s expertise
is in transportation and logistics policies of federal, state, and local
levels of government, particularly in issues involving port authorities.
She has also worked with the TRB as an industry

investigator to identify key issues and areas of research regarding the
motor carrier industry.

 Anthony Downs is a Senior Fellow at the Brookings Institution. Mr.
Downs*s research interests are in the areas of democracy, demographics,
housing, metropolitan policy, real estate, real estate finance, *smart
growth,* suburban sprawl, and urban policy. He is the

author of New Visions for Metropolitan America (1994), Stuck in Traffic:
Coping with Peak- Hour Traffic Congestion (1992), and several policy
briefs published by the Brookings Institution.

 Thomas R. Hickey served until recently as the General Manager of the
Port Authority Transit Corporation in Lindenwold, N. J. Mr. Hickey has 23
years of public transit experience, and he is a nationally recognized
authority in the field of passenger rail operations and the design of
intermodal facilities.  Ronald F. Kirby is the Director of Transportation
Planning at the Metropolitan Washington Council of Governments. Dr. Kirby
is

responsible for conducting long- range planning of the highway and public
transportation system in the Washington, D. C., region, assessing the air
quality implications of transportation plans and programs, implementing a
regional ridesharing program, and participating in airport systems
planning in the region. Prior to joining the Council of Governments, he
conducted transportation studies for the Urban

Institute and the World Bank.

 Damian J. Kulash is the President and Chief Executive Officer of the Eno
Transportation Foundation, Inc., in Washington, D. C. Dr. Kulash
established a series of forums at the Foundation addressing major issues
affecting all transportation modes including economic returns on
transportation investment, coordination of intermodal freight operations
in Europe and the United States, and development of a U. S. transportation
strategy that is compatible with national global climate

change objectives. He has published numerous articles in transportation
journals and directed studies at the Congressional Budget Office and the
TRB.

 Charles A. Lave is a Professor of Economics (Emeritus) at the University
of California, Irvine where he served as Chair of the Economics
Department. Dr. Lave has been a visiting scholar at the Massachusetts
Institute of Technology and Harvard University, and he served on the Board
of Directors of the National Bureau of Economic Research from 1991 through
1997. He has published numerous articles on transportation pricing and
other topics.

 Stephen Lockwood is Vice President of Parsons Corporation, an
international firm that provides transportation planning, design,
construction, engineering, and project management services. Mr. Lockwood
is also a consultant to the American Association of State Highway and
Transportation Officials (AASHTO), the Federal Highway Administration
(FHWA), and other transportation organizations. Prior

to joining Parsons, he served as Associate Administrator for Policy at
FHWA.

 Timothy J. Lomax is a Research Engineer at the Texas Transportation
Institute at Texas A& M University. Dr. Lomax has published extensively on
urban mobility issues and he developed a methodology used to assess
congestion levels and costs in major cities throughout the United

States. He is currently conducting research, funded by nine state
transportation departments, to improve mobility measuring capabilities.

 James R. McCarville is the Executive Director of the Port of Pittsburgh
Commission. He also serves as the President of the trade association,
Inland Rivers* Ports and Terminals, Inc., and is a member of the Marine
Transportation System National Advisory Council, a group sponsored by the
U. S. Secretary of Transportation. Mr. McCarville previously served as a
consultant to the governments of Brazil, Uruguay, and Mexico on matters of
port organization, operational efficiency, and privatization.

 James W. McClellan is Senior Vice President for Strategic Planning at
the Norfolk Southern Corporation in Norfolk, Va., where he previously held
positions in corporate planning and development. Prior to joining

Norfolk Southern, he served in various marketing and planning positions
with the New York Central Railroad, DOT*s Federal Railroad Administration,
and the Association of American Railroads.

 Michael D. Meyer is a Professor in the School of Civil and Environmental
Engineering at the Georgia Institute of Technology and was the Chair of
the school from 1995 to 2000. He previously served as Director of
Transportation Planning for the state of Massachusetts. Dr.

Meyer*s expertise includes transportation planning, public works economics
and finance, public policy analysis, and environmental impact assessments.
He has written over 120 technical articles and has authored or co-
authored numerous texts on transportation planning and

policy.

 William W. Millar is President of the American Public Transportation
Association (APTA). Prior to joining APTA, he was executive director of
the Port Authority of Allegheny County in Pittsburgh, Pa. Mr. Millar is a
nationally recognized leader in public transit and has served on or as
Chair of the executive committees of TRB, the Transit Development
Corporation, APTA, and the Pennsylvania Association of Municipal

Transportation Authorities.

 Alan E. Pisarski is an independent transportation consultant in Falls
Church, Va., providing services to public and private sector clients in
the United States and abroad in the areas of transport policy, travel
behavior, and data analysis and development. He has served as an

advisor to numerous transportation and statistics agencies and
transportation trade associations. He has also conducted surface
transportation reviews for AASHTO and FHWA.

 Craig E. Philip is President and Chief Executive Officer of the Ingram
Barge Company in Nashville, Tenn. He has served in various professional
and senior management capacities in the maritime, rail, and intermodal
industries and has held adjunct faculty positions at Princeton University
and Vanderbilt University. Dr. Philip serves on the Executive Committee of
the American Waterways Operators

Association, the Marine Transportation System National Advisory Council,
and the National Academy of Sciences* Marine Board, and he is immediate
past Chairman of the National Waterways Conference.

 Arlee T. Reno is a consultant with Cambridge Systematics in Washington,
D. C. Mr. Reno has expertise in performance- based planning and
measurement, multimodal investment analysis, urban transportation costs,
alternative tax sources, and revenue forecasting for highway agencies. He
has conducted reviews for the FHWA, AASHTO, and numerous state
transportation agencies.

 Joseph M. Sussman is the JR East Professor in the Department of Civil
and Environmental Engineering and the Engineering Systems Division at the
Massachusetts Institute of Technology. Dr. Sussman is the author of
Introduction to Transportation Systems (2000) and specializes in
transportation systems and institutions, regional strategic

transportation planning, intercity freight and passenger rail, intelligent
transportation systems, simulation and risk assessment methods, and
complex systems and he has authored numerous publications in those areas.
He has served as Chair of TRB committees and as the Chairman of its
Executive Committee in 1994, and he serves on the Board of Directors of
ITS America and ITS Massachusetts.

 Louis S. Thompson is a Railways Advisor for the World Bank where he
consults on all of the Bank*s railway lending activities. Prior to joining
the Bank, Mr. Thompson held a number of senior positions in DOT*s

Federal Railroad Administration, including Acting Associate Administrator
for Policy, Associate Administrator for Passenger and Freight Services,
Associate Administrator for Intercity Services, and Director of the
Northeast Corridor Improvement Project. He has also served as an economics
and engineering consultant.

 Martin Wachs is the Director of the Institute of Transportation Studies
at the University of California, Berkeley and he holds faculty
appointments in the departments of City and Regional Planning and Civil
and Environmental Engineering at the university. Dr. Wachs has published
extensively in the areas of transportation planning and policy, especially
as related to elderly populations, fare and subsidy policies, crime in
public transit, ethics, and forecasting. He currently serves as Chairman
of the TRB and has served on various transportation committees for the

state of California.

Appendi x VII

GAO Contacts and Acknowledgments GAO Contacts JayEtta Z. Hecker (202) 512-
2834 Katherine Siggerud (202) 512- 2834 Acknowledgments In addition to the
above, Christine Bonham, Jay Cherlow, Helen

DeSaulniers, Colin Fallon, Rita Grieco, Brandon Haller, David Hooper,
Jessica Lucas, Sara Ann Moessbauer, Jobenia Odum, and Andrew Von Ah of
GAO, as well as the experts identified in appendix VI, made key
contributions to this report.

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Appendix I

Appendix I Expenditures for Capital, Operations, and Maintenance

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Appendix I Expenditures for Capital, Operations, and Maintenance

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Appendix II

Appendix II Travel Forecast Methodologies

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Appendix II Travel Forecast Methodologies

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Appendix III Factors Influencing Future Travel

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Appendix III Factors Influencing Future Travel

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Appendix III Factors Influencing Future Travel

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Appendix IV

Appendix IV Intelligent Transportation Systems

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Appendix IV Intelligent Transportation Systems

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Appendix V

Appendix V Alternative Financing Methods

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Appendix V Alternative Financing Methods

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Appendix VI

Appendix VI Scope and Methodology

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Appendix VI Scope and Methodology

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Appendix VI Scope and Methodology

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Appendix VI Scope and Methodology

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Appendix VI Scope and Methodology

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Appendix VII

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