Urban Partnership Agreements: Congestion Relief Initiative Holds Promise; Some Improvements Needed in Selection Process
Published: 2009-03-25T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: As part of a broad congestion relief initiative, the Department of Transportation awarded about $848 million from 10 grant programs to five cities (Miami, Minneapolis, New York, San Francisco, and Seattle) in 2007 as part of the Urban Partnership Agreements (UPA) initiative. The UPA initiative is intended to demonstrate the feasibility and benefits of comprehensive, integrated, and innovative approaches to relieving congestion, including the use of tolling (congestion pricing), transit, technology, and telecommuting (4Ts). Congestion pricing involves charging drivers a fee that varies with the density of traffic. This report addresses congressional interest in (1) how well the department communicated UPA selection criteria, (2) whether it had discretion to allocate grant funds to UPA recipients and consider congestion pricing as a priority selection factor, and (3) how it is ensuring that UPA award conditions are met and results are assessed. GAO reviewed departmental documents, statutes and case law, and interviewed department officials and UPA applicants.
section_title: What GAO Found
paragraphs: Although GAO did not assess the merits of the UPA initiative's design, it has reported on its support for integrated approaches to help reduce congestion. With minor exception, the department did a good job communicating the criteria it would use to select urban partners and how much funding was available, but it did not clearly communicate the relative priority of the criteria or extend the same outreach to all applicants. The department clearly communicated 10 of the 11 selection criteria--such as the political and technical feasibility of projects--that it used to decide which cities to select as urban partners, but it did not publicize which criteria, other than the 4Ts, were most important. In addition, over time, the department provided information indicating that about $852 million was available for these projects--a figure short of the actual $1.02 billion but sufficient to give applicants a rough idea of the program's size. Clearly communicating selection criteria, their relative priority, and the available funding allows applicants to make informed decisions when preparing their applications. GAO also found that the department told two semifinalists for being named urban partners how to revise their applications to make them more competitive, but did not do so for the other semifinalists. Both were ultimately selected as urban partners. However, in the absence of government-wide or departmental guidance, it is unclear how to assess the appropriateness of this assistance. The department acted within its authority to allocate about $848 million of its fiscal year 2007 appropriation under 10 grant programs to five UPA cities. Typically these funds have been awarded through congressional direction (earmarks) to thousands of jurisdictions; but the department's 2007 funds were not subject to such directives. In addition, the department had authority to consider congestion pricing as a priority selection factor when awarding funds because the underlying statutes either explicitly permit it or provide the department with the authority to do so. However, GAO found that the department likely did not comply with statutory requirements of the Transportation, Community, and System Preservation program by failing to require applicants to meet all five statutory factors in order to receive "priority consideration," but this may not have affected the selection outcome. The department has developed a framework to ensure that UPA award conditions are met and the initiative's results will be evaluated. The department is monitoring urban partners' completion of award conditions, such as obtaining congestion-pricing authority, and has already acted when conditions have not been met, such as by taking away New York City's funding when it could not obtain congestion pricing authority from the state. In addition, the department plans to evaluate urban partners' strategies for, and results in, reducing congestion. The evaluation, to be conducted by To view the full product, including the scope Battelle Memorial Institute, is in its early stages.

section_title: Letter
paragraphs: Mobility on our nation’s roads is essential for a strong economy. These  roads provide businesses with access to materials, markets, and people  and provide people with access to goods, services, jobs, and recreation.  According to the Department of Transportation (the department),  congestion is one of the single largest threats to our economic prosperity  and way of life. In addition, the department states that congestion and the  growing unreliability of the highway system impose severe costs on the  quality of life of millions of Americans. We have reported that the nation’s  transportation infrastructure is under great strain and that congestion is  significant and expected to worsen. Furthermore, federal funds are often  tied to a single transportation mode, which may limit the use of these  funds to finance the greatest improvements in mobility. The department  also has recognized that these “modal funding silos” present challenges in  combating congestion, and in May 2006 it issued a strategy to reduce  congestion that, among other things, called for    entering into urban partnership agreements (UPA) under which the  department would give priority consideration for funding from existing  programs to cities, designated as urban partners, that had developed and  were standing ready to quickly implement a comprehensive, integrated,  and innovative performance-oriented approach designed to reduce  congestion through the use of the “4Ts”—tolling (more specifically,  congestion pricing), transit, technology, and telecommuting—rather than  relying on unintegrated efforts to relieve congestion;   establishing a Corridors of the Future (Corridors) program as a model for  adopting a multistate approach to planning, developing, constructing,  operating, and maintaining nationally and regionally significant  transportation corridors that would be designated to reduce congestion  and increase freight system reliability; and reducing barriers to private-sector investment in the construction,  ownership, and operation of transportation infrastructure.
In our prior work, we have supported integrated, performance-based  approaches to reducing congestion. In addition, we have reported that  public-private partnerships show promise—but also risk—as a strategy to  provide new infrastructure and funding for transportation needs.
In February 2007, Congress enacted a continuing resolution for fiscal year  2007. The continuing resolution funded the department at 2006 levels but  did not include spending directives (earmarks) for the department’s grant  programs. According to the department, the continuing resolution gave it  the opportunity to make funding decisions based on programmatic criteria  and merit, rather than devoting funds to projects specifically directed by  Congress that, in the department’s view, may have had fewer  transportation benefits or that otherwise would have been ineligible for  funding. Given this flexibility, the department decided to further its 2006  congestion-reduction initiative by making available about $1 billion of its  2007 appropriation for its UPA initiative, through grants made under 13  existing highway, transit, and technology grant programs. This was a  major undertaking over a short time to develop an integrated approach  from separately existing programs. The department set aside the bulk of  these funds to support its UPA initiative and, in August 2007, conditionally  awarded about $848 million from 10 of the 13 programs to five cities:  Miami, Florida; Minneapolis, Minnesota; New York City, New York; San  Francisco, California; and Seattle, Washington.
As part of an integrated approach to reducing congestion, many UPA  applicant cities proposed to implement a tolling (congestion-pricing)  project. To address the other three “Ts,” urban partners coupled their  congestion pricing projects with transit, technology, and telecommuting  projects. Transit projects included expanded bus service (and sometimes  ferry service), including providing additional buses and bus stops, express  bus routes, and park-and-ride facilities. Technology uses included such  things as providing real-time traveler information on tolls being charged  and opportunities for rerouting traffic to alternative travel routes.  Telecommuting involved increasing the number of telecommuters.  Applying for the UPA initiative required no small effort on the part of  applicants because many public stakeholders were involved and some  cities faced political opposition to congestion-pricing projects. For  example, New York City was unable to obtain authority from the state  legislature to implement a congestion-pricing approach. In accordance  with the terms of the department’s agreement with New York City, the  department therefore cancelled the city’s UPA and in 2008 awarded the  funds to Chicago, Illinois; Los Angeles, California; and Seattle,  Washington. In addition to awarding funds to cities for integrated  approaches to reducing congestion that could be implemented quickly, the  department saw another major benefit of UPAs as providing an incentive  for state and local transportation stakeholders to work together toward  transportation solutions. Beyond breaking down stovepipes in devising  approaches to reduce congestion, UPAs, according to department officials,  helped break down stovepipes within the department as different  transportation administrations increased collaboration in addressing  congestion-reduction strategies, where before they may have acted  separately.
In response to the department’s dedication of about $1 billion to its  congestion-reduction initiatives and its focus on funding a small number of  cities through the UPA initiative, Congress, in the conference report for  the department’s fiscal year 2008 appropriation and in a separate letter  from the Senate and House leadership responsible for transportation  matters, requested that we review certain aspects of the UPA initiative. To  do this, we examined (1) the department’s communication and application  of the selection criteria and funding devoted to the UPA initiative, (2) the  department’s authority to allocate substantial grant funds to support the  UPA initiative and to consider congestion pricing as a priority factor in  selecting urban partner awardees for underlying grant programs, and (3)  steps the department is taking to ensure that UPA award conditions are  being met and that results will be evaluated. These activities are the main  focus of this report. In addition, in response to your interests, we  examined how the department selected awardees for its Corridors of the  Future program, the department’s efforts to promote public-private  partnerships, and the extent to which previous recipients of grants from  programs that funded the UPA initiative and Corridors were awarded  funds from those programs in fiscal year 2007. (See apps. I to III.) We did  not assess the merits of the UPA initiative or Corridors program design.
To carry out our work, we reviewed the department’s communication of  the criteria for selecting UPA awardees and the funding amounts to be  devoted to the initiative through notices in the Federal Register and UPA  initiative outreach materials, such as presentation slides and handouts. We  also discussed these activities with senior department leaders, department  staff who reviewed UPA applications, and 14 of the 26 UPA applicants.  We also reviewed all of the 26 UPA applications. In determining good  grants practices, we reviewed the department’s, as well as other  government agencies’, grant policies. Furthermore, we researched and  analyzed the department’s legal authority to allocate substantial grant  funds to support the UPA initiative and to consider congestion pricing as a  selection factor for allocating individual grant funds to support UPAs, by  reviewing relevant statutes, case law, and department records, and by  obtaining the department’s legal views. Finally, we reviewed documents  and interviewed department officials on their actions to monitor UPA  award conditions and plans to evaluate each urban partner’s projects to  reduce congestion. Specifically, we reviewed urban partner term sheets  and grant or cooperative agreements that list the conditions to receive  federal funds. We conducted this performance audit from February 2008  through March 2009 in accordance with generally accepted government  auditing standards. Those standards require that we plan and perform the  audit to obtain sufficient, appropriate evidence to provide a reasonable  basis for our findings and conclusions based on our audit objectives. We  believe that the evidence obtained provides a reasonable basis for our  findings and conclusions based on our audit objectives. (See app. IV for  additional discussion of our scope and methodology.)
subsections: section_title: Background
paragraphs: In May 2006, the department announced its National Strategy to Reduce  Congestion on America’s Transportation Network (the “congestion  initiative”), a comprehensive national initiative to reduce congestion on  the nation’s roads, rails, runways, and waterways. A major component of  this initiative is the UPA initiative, under which the department gives  selected cities special consideration for funding from existing programs.  To qualify for selection, a city had to develop and be ready to quickly  implement a comprehensive, integrated, and innovative approach to  reducing congestion through the use of the 4Ts.
On December 8, 2006, the department issued a Federal Register notice  soliciting proposals by cities to enter into UPAs with the department.  According to the notice, the department planned to fund the agreements  through several existing grant programs and lending and credit support  programs. This cross-cutting approach was designed to enable the  department to fund the greatest improvements in mobility in a coordinated  manner across its modal operating administrations. The notice further  indicated that the department would support its urban partners with  regulatory flexibilities and dedicated expertise and personnel. Applicants  wishing to become urban partners had to submit their applications by  April 30, 2007. The notice stated that the department would consider  applications filed after this date to the extent practicable. In addition,  applicants had to apply to any underlying grant program from which they  sought funding. They could do so by submitting a single application that  covered each of the grant programs as long as the application was  responsive to the requirements of each program. To achieve this, the  department published several Federal Register notices between December  2006 and March 2007, requesting that UPA applicants apply to the  underlying programs.
The Federal Register notice also set forth requirements for the UPA  application. Under the UPA initiative, the department and the urban  partner would agree to pursue the 4Ts to reduce traffic congestion. The  department sought projects with congestion pricing to help shift some  rush-hour traffic to off-peak times, coupled with new or expanded transit  services. In this way, buses could move more freely through previously  congested roadways and could provide more reliable service. To further  reduce congestion, the urban partner could use cutting-edge  technologies—such as providing travelers with real-time transportation  information—to improve transportation performance and secure  agreements from area employers to expand telecommuting programs. (See  fig. 1.) Finally, the department’s solicitation stated that neither the  procedures nor the criteria identified in the notice would be binding on the  department.
Aside from publishing the UPA initiative notice in the Federal Register, the  department took a number of steps intended to (1) generate interest in the  initiative, (2) encourage cities to develop fresh ideas, and (3) provide  information to potential applicants. First, before publishing the December  2006 Federal Register notice, department officials met separately with  officials from three urban areas—Seattle; northern Virginia; and Portland,  Oregon—and presented information on congestion pricing and UPAs.  Then, after publishing the notice, at the request of New York City,  department officials met with the New York state legislature; conducted  national workshops in Atlanta, Georgia; Denver, Colorado; and  Washington, D.C. that were open to any interested UPA applicant; made  presentations at transportation conferences; and held a Webinar for city  officials who could not attend the national workshops. In the workshops  and the Webinar, department officials discussed congestion pricing and  supporting strategies, political and public outreach techniques that might  be used to gain support for congestion-pricing initiatives, and potential  funding opportunities under UPA. According to the department, it  conducted a number of other outreach activities including (1) establishing  a Web page with information for such applicants, (2) giving speeches on  the UPA initiative, and (3) sending information on congestion pricing to e- mail listservs. In its Federal Register notice, the department stated that it  reserved the right to solicit, and was actively soliciting, by means other  than the notice certain cities the department had determined to be  candidates for UPA award consideration.
The department received 26 UPA applications and created a multistep  review process to select PUPs (announced in June 2007) and then urban  partners (announced in August 2007). First, a review team, composed of  staff from several modal administrations, used several technical  criteria—such as innovation, the comprehensiveness of the 4Ts, cost- effective use of federal dollars, and the feasibility and likelihood of  implementation—to perform a technical review of the UPA applications  and rank them for the department’s senior leaders. Second, the senior  leaders reviewed the review team’s rankings in light of broader  department goals and recommended nine PUPs to the Secretary, which  according to department officials, the Secretary approved. The PUPs then  each presented their proposals, first to the Secretary and Deputy Secretary  and afterward to officials from the modal administrations involved in the  UPA initiative. Following these presentations, the department, in some  cases, asked for additional detail or clarification from the applicant. Third,  using this information, the review team created funding scenarios—for  example, one scenario provided funding for New York City and four other  urban partners while another scenario did not provide funding for New  York City, but did do so for seven other urban partners. Finally, using UPA  applications and funding scenarios, the Secretary selected five urban  partners—Miami, Minneapolis, New York City, San Francisco, and Seattle.  The Federal Register notice stated the department would select up to 10  urban partners.
The urban partner designation did not include funds for the urban  partners, but did give them special consideration in obtaining department  resources such as funding from grant programs and administrative  flexibilities, including streamlined environmental reviews. Between  December 2006 and April 2007, the department issued several Federal  Register notices describing the amount of funding available to urban  partners. Initially, the Federal Register notice stated that up to $100  million, over 3 years, was available from 1 grant program, but this amount  was expanded to about $1 billion from 13 grant programs when the  President signed the 2007 Revised Continuing Appropriations Resolution.  Unlike previous years, the department’s appropriation was not subject to  congressional directives that funds be dedicated for particular  transportation projects. As a result, urban partners applied for and were  eventually awarded funds from 10 grant programs for 94 projects totaling  $848.1 million. (See table 1.) This report focuses on the 5 urban partners,  94 projects, and $848.1 million in awards announced in August 2007. As the  department negotiated with the prospective urban partners, the numbers  of urban partners, projects, and awards were reduced somewhat.
The department awarded New York City $354.5 million (42 percent) of the  $848.1 million. San Francisco was awarded $158.7 million (19 percent),  Minneapolis $133.3 million (16 percent), Seattle $138.7 million (16  percent), and Miami $62.9 million (7 percent). In addition, although San  Diego was not selected as an urban partner, the department awarded it $15  million under the Bus and Bus-Related Facilities Capital Investment  Grants (Bus and Bus Facilities) program and $3 million under the  Intelligent Transportation Systems-Operational Testing to Mitigate  Congestion (ITS-OTMC) program for a project element of its UPA  application. Departmental senior leaders and officials believed that San  Diego’s project to demonstrate the safety and efficiency of cutting-edge  separation and braking technologies on narrow lanes was meritorious.
Each urban partner proposed to implement a tolling project with  congestion pricing that would be supported by projects primarily from at  least two of the other three Ts—transit and technology. (See table 2.)  According to department officials, telecommuting projects received less  emphasis from the urban partners and the department because it was  generally beyond the control of the city to influence many employers and  because they received telecommuting proposals in few applications.
Each UPA was subject to several terms and conditions. One significant  condition was that no urban partner could expend federal funds until it  had obtained the legal authority necessary to implement congestion  pricing for the applicable highway or parking area. To date, three urban  partners have the necessary authority for congestion pricing—Miami,  Minneapolis, and San Francisco—and Seattle needs to obtain it by  September 2009. However, New York City failed to meet its April 2008  deadline for obtaining congestion pricing authority from the state  legislature. As a result, in accordance with the terms of the department’s  UPA with New York City, the department cancelled New York City’s  agreement and awarded about $364 million to Chicago and Los Angeles  through the department’s Congestion Reduction Demonstration Program.
As its name indicates, the Congestion Reduction Demonstration Program,  established in 2007, is a successor to the UPA initiative.  This program’s  goals and selection criteria are similar to the UPA initiative’s. For example,  the Federal Register notice solicited applications that would support  congestion-pricing, transit, and technology strategies to reduce  congestion. Like the UPA initiative, the Congestion Reduction  Demonstration Program allows the department to partner with applicants  to support congestion reduction using the department’s discretionary  funds. In addition, in July 2008, the Secretary announced a new  administration plan to create a more sustainable way to pay for and build  roads and transit systems. This plan includes a proposal for creating a  Metropolitan Mobility Program. Among other things, this proposal  envisions financial support for innovative approaches to reduce traffic  congestion.
section_title: The Department Communicated Most Selection Information to Applicants, but Gave Two Applicants Assistance over Others
paragraphs: The department clearly communicated 10 of the 11 criteria it used to select  urban partners, but it could have better communicated to applicants the  relative weights it would assign to the selection criteria and the amount of  funding available under the UPA initiative. We also found that the  department provided additional attention to two applicants after they were  selected as PUPs, but in the absence of government-wide guidance it is  unclear on how to assess the appropriateness of this attention.
subsections: section_title: Nearly All Selection Criteria Were Communicated Clearly to Applicants but the Department Could Have Better Communicated the Weights Assigned to the Criteria
paragraphs: According to grants policies and guidance, funding announcements that  clearly state the criteria that will be used to evaluate applications promote  competition and fairness in the selection of grantees. For example, an  Office of Management and Budget policy directive states that an agency’s  funding announcements must clearly describe all criteria and if they vary  in importance, the relative priority, or weights, assigned to the criteria.  Similarly, the Federal Highway Administration’s (FHWA) assistance  agreement procedures manual states that evaluation criteria must be  prepared before a funding announcement is published and should be  available to both applicants and reviewers. These procedures allow  applicants to make informed decisions when preparing their applications  and help ensure the selection process is as fair and equitable as possible.  Like the Office of Management and Budget’s guidance, the FHWA manual  identifies good grants making practice but it does not strictly apply to the  UPA initiative, since four of the grant programs under the initiative were  not FHWA programs. The department does not have agency-wide guidance  that mirrors the Office of Management and Budget guidance.
The UPA initiative was not funded like a traditional grant program, since  there was no UPA-specific funding. Instead, the department gave urban  partners special consideration when allocating funds from as many as 13  individual grant programs. However, we believe grant-making practices  such as those prescribed in the Office of Management and Budget’s  guidance are relevant to the initiative because they can increase the  likelihood that the department will receive applications that best further  agency goals.
The department used 11 criteria to select urban partners. (See fig. 2.) We  found that the department clearly communicated 10 of these to potential  applicants in the December 2006 Federal Register notice. For example,  this notice made it clear to applicants that the department wanted  applicants to incorporate the 4Ts and explained how the different parts of  the 4Ts strategy would interact to reduce congestion (synergy of 4Ts). This  notice also stated the department sought proposals that would affect the  most surface transportation travelers, include congestion pricing, be cost  effective, and demonstrate innovative technology applications. The notice  also made it clear the department sought proposals that were likely to be  implemented, and requested that applicants submit information on  political support for their proposal.
The remaining criterion—political boldness—however, was not  communicated at all to applicants. As a result, the applicants we spoke  with had varying levels of awareness and understanding of this criterion.  Senior department officials considered the political boldness of a city’s  projects when selecting urban partners. The department defined this  criterion as the level of boldness of the congestion-pricing component  relative to the level of political acceptance of congestion pricing in the  applicant’s particular region. Senior department officials told us they  viewed projects that were politically bold positively, and took into  consideration that although a particular congestion-reduction strategy  might not be new nationally, it could be politically bold in the applicant’s  region. This criterion was not stated in the Federal Register, on the  department’s Web site, or in presentations. The department subsequently  told us that political boldness was the same as political and technical  feasibility. However, in our view, proposals can be politically feasible  without being bold and the department was looking for bold proposals.
Nine of the 14 applicants we spoke with said they were not aware of this  selection criterion, while another 5 applicants told us they thought the  department implied it was seeking politically bold proposals.
The department’s March 2007 Federal Register notice indicated the  criteria could change.  It stated that neither the procedures nor the criteria  set out in the notice would be binding on the department. Our search for  language of this sort in Federal Register notices found that it is unique.  The department indicated it might have needed to change both the criteria  and the procedures to gain more participation in the initiative.
The department’s Federal Register notice announcing the selection  criteria for the UPA initiative also fell short of the Office of Management  and Budget’s policy guidance in that it did not communicate the relative  weights of the selection criteria, as the guidance directs. Department  officials and six of eight reviewers told us they viewed congestion pricing  measures as the most important criterion in selecting urban partners. The  department identified congestion pricing as the most important of the 4Ts  in a document posted on its Web site 4 weeks before applications were  due—and about 16 weeks after the original Federal Register notice  appeared. Although some applicants we spoke with were aware of the  department’s emphasis on congestion pricing in general, none knew the  relative weights of the selection criteria. Nine of the 14 applicants we  spoke with about the impact of the weighting information on their  applications said that having weighting information would have changed  their applications, while the remaining 5 said it would not. For example,  an official from San Diego noted that knowing the weights of the selection  criteria would have helped him to decide which projects to include and  exclude, and would have resulted in a more focused application.
The department’s incomplete communication to applicants of UPA  selection criteria and weights may have had little, if any, effect on the final  selection, since four of the five urban partners were rated high for  technical merit and the fifth one, while rated lower, was seen as innovative  because it would be the first in the country to convert high-occupancy  vehicle (HOV) lanes to high-occupancy toll (HOT) lanes while  simultaneously increasing HOV eligibility from two to three occupants.
section_title: The Department Communicated Much of the Funding Availability as It Became Known
paragraphs: Grant announcements should fully describe the funding opportunity to  give applicants a sense of the scope of the funding, and to assist them in  prioritizing and developing their proposed projects. To this end, an Office  of Management and Budget policy directive requires an agency to publish  the full programmatic description of the funding opportunity, to  communicate to applicants the areas in which funding may be provided,  and to describe the agency’s funding priorities. FHWA’s procedures  manual reflects the Office of Management and Budget’s directive to  include a description of the funding opportunity in the grant  announcement. Communicating the funding opportunity was important for  the UPA initiative, since the funding motivated cities to do the  comprehensive planning and serious consideration of congestion pricing  the department wanted cities to reflect in their applications.
As stated previously, an awardee’s selection as an urban partner meant the  department would give the awardee priority consideration when allocating  funding from as many as 13 individual grant programs. The original  December 2006 UPA initiative announcement indicated that up to $100  million was available to urban partners through the ITS-OTMC program.  (See fig. 3.) After more funds became available for the department’s  discretionary use, the department decided sometime between February 15,  2007, and April 2007 to dedicate about $1 billion to the UPA initiative. As a  result, the department solicited applications for the 13 discretionary  programs through Federal Register notices over a period of 4 months  (December 2006 through March 2007).
Although funding for UPA was available under 13 grant programs, the  department published the amount of funding available in the Federal  Register for 5 of these programs and distributed funding information for  12 at conferences and through its Web site. Between February 15, 2007,  and April 30, 2007 (the date when UPA applications were due), the  department communicated the amount of funding available for UPAs to  applicants in two ways: First, the department solicited applications for the  13 grant programs through Federal Register notices. (See table 3.) For 5 of  these grant programs, the department published the amount of funding  available in the notices. The amount available for UPAs through these 5  grant programs totaled $852 million and ultimately accounted for 77  percent of the funds awarded to urban partners. However, of this $852  million amount, $716 million (about 65 percent of the approximate $1.1  billion that was ultimately made available) was announced less than 6  weeks before the UPA application deadline. By the time this additional  funding was announced, applicants may have already substantially  completed their applications, and in some cases, obtained the approval of  their stakeholders. According to a department official, it took the  department several weeks to issue a Federal Register notice. For the  remaining 8 grant programs, the Federal Register notices contained no  information on the amount of funding available. A department official told  us he does not know why these Federal Register notices did not include  funding information.
The department disagreed with our assessment that the applicants could  have benefited if funding information had been communicated more than  6 weeks before applications were due. The department indicated that it  typically provides 2 months for the submission of applications and cited  several grant programs in which this was the case. For example, the  department said 2 months was adequate time to file Bus and Bus Facilities  program applications. However, because of its complexity, the UPA  application could be expected to take longer to complete than applications  for more traditional grant programs, such as the Bus and Bus Facilities  program.
Second, the department developed a funding handout that listed the  amounts available for UPAs through 12 of the 13 grant programs. These  amounts totaled almost $1.1 billion. The department updated this  document several times with new funding information and posted the  document on the department’s Web site sometime between February 15,  2007, and April 2007. In addition, department officials handed out this  document at conferences.
Applicants’ understanding of the funding available under the UPA initiative  varied, and several applicants told us that if they had had more complete  funding information, they would have changed their applications. Of the 14  applicants we spoke with about funding, 6 told us they had the funding  handout, which included information on the availability of funding by  program (see table 3), while the other 8 said they did not have this  handout when they were developing their applications. Of the applicants  that did not have complete funding information, 6 told us they were aware  of the total funding available but not the amounts available for each  program, while 2 told us that they did not know the amount of funding  available under the initiative when they were applying to the program. Of  the 2 UPA applicants that said they did not know the amount of funding  available to the initiative, 1 applicant said it thought the total amount of  funding available was the $100 million initially identified under the ITS- OTMC program. Half of the 8 applicants we spoke with that did not have  the funding handout told us if they had had better information on the  funding available under the UPA initiative, they would have changed their  applications and been able to scope their projects better. While  communicating the complete amount would have been desirable as a  means of eliciting applications that were optimally responsive to the  initiative’s goal of congestion reduction, the $852 million amount, in our  opinion, provided potential applicants with a rough understanding of the  program’s size.
section_title: The Department Treated Two Applicants Differently from Others While Evaluating Applications
paragraphs: After the department selected nine cities as PUPs, it used various methods  to select and determine funding for the final 5 urban partners. The  department invited officials from the nine PUP cities to Washington, D.C.,  to present their applications and asked them to provide additional  information, when needed, about their congestion-reduction initiative.  Department officials then explored ways to fund UPAs by identifying the  PUPs’ core projects that were most in the spirit of the initiative. Next,  department staff developed funding scenarios, including options with and  without New York City, reflecting the department’s concerns that the New  York state legislature might not pass the congestion-pricing legislation  necessary to allow the New York City projects to move forward. At this  time, department officials told us that, in some cases, they were also  contacting PUPs to have them submit new grant applications because  PUPs had submitted applications for more funding than was available  under some grant programs and because PUPs could submit applications  for the same uses under other, undersubscribed programs.
However, in two cases, the department went beyond asking UPA  applicants to submit applications for the same projects under other  funding programs. In these instances, the department contacted the UPA  applicants to request substantive changes to the applications.
Miami indicated in its application that it would run bus rapid transit, but  did not provide details on the project, or state its cost. Miami officials told  us they did not intend to purchase buses or improve bus facilities through  the UPA initiative. However, after Miami’s selection as a PUP, the  department encouraged the city to apply for funding from the Bus and Bus  Facilities program and suggested specific measures (such as bus branding,  hybrid buses, bus facility improvements, and transit signal priority  technology) for city officials to include in the proposal. As a result, Miami  submitted a Bus and Bus Facilities application 4 weeks after the  application deadline and was awarded $19.5 million in these funds.  According to department officials, this was reasonable, since Miami’s  original UPA application had contained bus elements, even though Miami  had not originally requested funds to purchase buses or improve bus  facilities.
According to officials from the Minnesota Department of Transportation,  after Minneapolis was selected as a PUP, the department asked it to  include fewer projects in its UPA application to make the application more  competitive for limited funding. According to Minneapolis officials, this  allowed Minneapolis to better describe some projects and create more  accurate cost estimates.
The officials from the remaining seven PUPs told us the department did  not contact them to suggest specific ways of strengthening their  applications.
Department officials told us that, after the nine PUPs presented their  proposals, all of the PUPs’ congestion-reduction plans were meritorious  and all nine PUPs were worthy of being designated as urban partners.  Because time was of the essence in reaching a decision and announcing  the urban partner designations, department officials told us that they  provided special attention to the PUPs they felt were likely to be selected  as urban partners—rather than spending time with PUPs that were  unlikely to be selected—in order to craft the strongest congestion- reduction proposals possible. They said that working with only certain  PUPs to develop stronger congestion-reduction efforts was appropriate  because prior interactions with other PUPs indicated that those PUPs  were less likely to make meaningful changes to their proposals. Finally,  they said that if at any time negotiations failed with designated urban  partners, the department would be able to offer urban partner designation  to another PUP.
There is little if any government-wide or Department of Transportation  guidance that would shed light on when and if it is appropriate to provide  proactive assistance to grant applicants to help them create stronger  applications. Thus, while the assistance could cause concerns, it is unclear  how to assess the appropriateness of the department’s actions toward  Miami and Minneapolis, where the grant-making agency sees the  applicants as such strong candidates that they are likely to be selected.
section_title: The Department Had the Authority to Allocate Funds to the UPA Initiative, and to Consider Congestion Pricing as a Priority Selection Factor for Underlying Grant Programs
paragraphs: The department had the legal authority to allocate appropriated funds to  the UPA initiative as long as the funds were spent for the purposes  authorized in the appropriations legislation, and the department complied  with the restrictions and requirements of the underlying grant statutes.  The department also had authority to consider congestion pricing as a  priority factor in making grant selections. Each of the nine grant statutes  either explicitly permitted the consideration of congestion pricing or  afforded the department discretion to consider congestion pricing because  it is rationally related to statutory objectives. Because of an error in the  department’s technical evaluation for the Ferry Boat program, the  department’s initial documentation suggested that the department had  improperly favored congestion pricing over statutory priorities. The  Secretary did not rely on this documentation in awarding Ferry Boat  grants, however, and the corrected information confirmed that the urban  partners in fact met statutory priorities, and that the Secretary was within  her discretion to apply congestion pricing as a discriminating factor.
Finally, in one instance the Transportation, Community, and System  Preservation (TCSP) program the department likely did not comply with  all of the statutory requirements in evaluating the grant applications.  Based on available information, it is not clear that this failure affected the  ultimate grant award decisions. The statute required that “priority  consideration” be given to applicants meeting five specified factors, and  the department instead gave such consideration to applicants (including  urban partners) that met just one such factor. Because “priority  consideration” does not entitle an applicant to selection as a grantee, only  to a bona fide and careful review and because the department terminated  its evaluation after confirming applicants met only one factor, it is not  possible to determine whether any applicant met all five factors and thus  deserved the required bona fide “hard look.”
subsections: section_title: The Department Had the Authority to Allocate Appropriated Funds to the UPA Initiative
paragraphs: Agencies generally have considerable discretion in choosing how to  allocate lump-sum appropriations—appropriations that are available to  cover a number of programs, projects, or items—to specific programs and  activities. In the past, the department’s discretion had been circumscribed  by congressional directives that earmarked most of its appropriations for  particular projects, but this changed for fiscal year 2007. The department’s  fiscal year 2007 appropriation, enacted in the 2007 continuing resolution,  funded the department based on 2006 levels and authorities but removed  earmarks contained in the 2006 committee reports (the continuing  resolution stated that such earmarks shall have no legal effect). In  addition, the continuing resolution did not include congressional  directives that funds be dedicated or earmarked for particular projects and  stated that earmarks contained in 2006 committee reports shall have no  legal effect. The department interpreted this language as permitting it to  allocate its appropriations to various grant programs in order to fund its  UPA initiative. Specifically, the department drew from three lump-sum  appropriations for (1) payment of obligations incurred in carrying out the  provisions of bus-related statutes, (2) federal-aid highways and highway  safety construction programs, and (3) necessary expenses of the Research  and Innovative Technology Administration.
We concluded that the department’s appropriations were available to carry  out the discretionary grant programs identified in each of these lump-sum  appropriations. The department had broad discretion in choosing how to  allocate funds among those programs. For example, the “Federal-aid  highways and highway safety construction programs” lump-sum  appropriation was available to fund several grant programs, and absent  any other statutory restriction, the department could choose how much, if  any, of that appropriation to allocate to each of the grant programs. In  carrying out each individual grant program, the department, of course, was  required to comply with the restrictions and requirements of the  underlying grant statutes and to award funding to grantees in accordance  with the statutory provisions. In the discussion that follows, we address  whether the department complied with these underlying provisions.
section_title: The Department Had Authority to Consider Congestion Pricing as a Priority Selection Factor for Each of the Grant Programs, but Improperly Awarded “Priority Consideration” in the TCSP Program Based on a One-Factor Approach
paragraphs: As discussed earlier, in determining which cities would receive the urban  partner designation, the department gave special consideration to those  that had, or had committed to obtaining, authority to use congestion  pricing. The department then awarded grant funds under 10 of its grant  programs to the five urban partners. The impact of this sequential process  was to give congestion pricing priority as a selection factor not only for  the UPA initiative but for the individual grant programs as well.
The specific terms of the authorizing statute for each grant determine  whether the department has the authority to give priority to congestion  pricing as a selection factor in making grant decisions.  According to  department officials, they considered congestion pricing as a priority or  priority consideration selection factor for only 9 of the 10 programs  (excluding the Alternative Analysis program). As a result our analysis  focused on the 9 remaining programs. We concluded that the authorizing  statutes for the 9 grant programs used to fund urban partners either  explicitly permit the consideration of congestion pricing or afford the  department discretion to consider congestion pricing as a factor because it  was rationally related to program objectives. (See table 4.) In particular, 2  of the 9 grant-authorizing statutes permit the Secretary to consider  congestion pricing as a selection factor by express mention: ITS-OTMC  and Value Pricing Pilot programs. The remaining 7 grant-authorizing  statutes (Bus and Bus Facilities; Ferry Boat Discretionary; Innovative  Bridge; Interstate Maintenance Discretionary; New Fixed Guideway  Facilities (specifically Very Small Starts); Public Lands Highway  Discretionary; and TCSP programs) grant the department discretion to use  congestion pricing as a priority consideration selection factor because  tolling has a rational connection to statutory objectives, such as mobility  and reduced congestion.
Although we believe the department had authority to consider congestion  pricing as a selection factor, with respect to the Ferry Boat program, the  department’s initial technical evaluation documentation suggested (albeit  incorrectly) that the department had exceeded its authority. This technical  evaluation documentation made it appear that the department had  overridden the statute by rejecting nonurban partners that lacked  congestion pricing but met one or more statutory priorities in favor of  urban partners that had congestion pricing but met no statutory priorities.  In making the final award decision, however the Secretary relied on  correct information showing the urban partners in fact met statutory  priorities. The Secretary therefore was within her discretion to apply  congestion pricing as a selection factor. Specifically:    Using congestion pricing as a priority selection factor, the department  awarded grants totaling $40.2 million under the Ferry Boat program to  New York City, San Francisco, and Seattle as urban partners. Under this  program, the department is authorized to award grants for the  construction of ferry boats and ferry terminal facilities in accordance with  statutory eligibility criteria. The Ferry Boat grant statute lists three  permissible “priority” selection factors for Ferry Boat program grants that  the department must apply. Priority is required for ferry systems that will  (1) provide critical access to areas not well served by other modes of  surface transportation, (2) carry the greatest number of passengers and  vehicles, or (3) carry the greatest number of passengers in passenger-only  service.
Although the Ferry Boat statute does not explicitly identify congestion  pricing as a priority selection factor, the department believes it had  discretion to use congestion pricing to discriminate between grant  applicants. The department makes a connection between congestion  pricing and the second Ferry Boat statutory priority (carrying large  numbers of passengers and vehicles), which it believes reflects  congressional support for activities that increase mobility and reduce  congestion. We agree that the department had discretion to use congestion  pricing as a discriminating factor under the Ferry Boat statute, because  there is a rational connection between congestion pricing, mobility, and  congestion.
The department could not, however, apply congestion pricing in a way that  would fail to comply with the statutory priority factors—that is, it could  not reject nonurban partners that met statutory priorities simply because  they lacked congestion pricing in favor of urban partners that had  congestion pricing but did not meet statutory priorities. The department’s  technical evaluation documentation incorrectly suggested that such a  situation occurred in the case of one grant, Seattle’s High-Speed, Ultra- Low Wake Passenger-Only Ferry project. Although the department’s  technical review team evaluator appeared to have determined that this  Seattle project failed to meet two statutory priority selection criteria— carrying large numbers of passengers and vehicles, and carrying a large  number of passengers in passenger-only service—the department  nevertheless awarded the project $2 million based on Seattle’s urban  partner designation, passing over nonurban partners the technical review  team had determined to have met one or more of the statutory priorities.  The technical review team evaluator apparently reached this conclusion  by incorrectly relying on the total number of passengers carried by  individual projects, not the total number of passengers carried by the ferry  system as a whole as required by statute. In fact, Seattle’s ferry system  carries the greatest number of passengers of all ferry systems in the  country, and therefore was entitled to “priority.”
In addition, in one instance—the TCSP program, under which the  department awarded $50.4 million in grants to urban partners—we  concluded that although the department had discretion to use congestion  pricing as a discriminating priority factor, it likely did not apply statutory  “priority consideration” factors correctly, in the way the statute requires.  However, “priority consideration” entitles an applicant only to a bona fide  and careful review, not to guaranteed selection. Furthermore, based on  available information, it is not clear that the department’s incorrect  evaluation approach affected the ultimate outcome of its selections. As a  result, we are not recommending that the department re-evaluate the more  than 500 grant applications it received for fiscal year 2007 for this  program. Specifically:    Using congestion pricing as a priority selection factor, the department  awarded three grants totaling $50.4 million under the TCSP program to  urban partner applicants—Minneapolis, San Francisco, and Seattle. The  statute requires that the department give “priority consideration” only to  applicants that meet five separate factors, none of which explicitly relates  to congestion pricing and all five of which must be satisfied. The statute  provides that priority consideration shall be given to applicants that (1)  have instituted preservation or development plans and programs; (2) have  instituted other policies to integrate TCSP practices; (3) have preservation  or development policies that include a mechanism for reducing potential  impacts of transportation activities on the environment; (4) demonstrate a  commitment to public and private involvement, including the involvement  of nontraditional partners in the project team; and (5) examine ways to  encourage private-sector investments.
The department believes that the term “priority consideration” does not  require the department to award grants to applicants that meet the above  criteria; instead, the department believes priority consideration entitles an  applicant only to precedential or careful deliberation or thought before  competing alternatives. We agree with the department that, unlike  “priority,” “priority consideration” does not guarantee an applicant  selection. However, the department’s reading, as we understand it, is too  narrow. We believe “priority consideration” entitles an applicant to special  attention and a careful and bona fide review, not just consideration earlier  in the evaluation process. Nonetheless, ultimately, the department had  discretion to grant awards to applicants that did not meet priority  consideration criteria, based on other factors, such as congestion pricing,  found to be rationally connected to statutory objectives.
The remaining issue is whether, before the department applied congestion  pricing as a selection factor, it followed the statute and gave any  applicants qualifying for “priority consideration” the bona fide review  Congress required. The answer is not clear. The statute lists five factors,  with the last two joined by the conjunctive “and,” indicating all five factors  must be met in order for an applicant to receive priority consideration.  Department review team officials told us they rated grant applicants as  meeting statutory priority consideration criteria so long as just one factor  was met (essentially the reviewers treated the “and” in the statute as an  “or”). We disagree with the department’s interpretation and believe the  “and” is used in its ordinary sense, requiring applicants to meet all five  factors. Once the department found that an applicant met one factor, it  terminated its evaluation. The effect of this error is unknown since, from  the current record, it is not possible to determine whether any applicant  met all five factors.
Appendix V contains a complete analysis of these legal issues and our  conclusions about the department’s compliance.
section_title: The Department Has a Framework to Ensure That Award Conditions Are Being Met and That Results Will Be Evaluated
paragraphs: The department is tracking urban partners’ progress in completing the  conditions of their awards, such as obtaining their authority to use  congestion pricing where needed. In addition, the department has  contracted with Battelle Memorial Institute to evaluate the outcomes of  UPA projects, such as the extent to which congestion is mitigated. While  progress is being made in these two areas, we did not attempt to assess  the overall reasonableness of these efforts because they are in early  stages.
subsections: section_title: The Department Is Monitoring Urban Partners’ Completion of Award Conditions
paragraphs: The department’s UPA initiative management team monitors urban  partners’ completion of award conditions by tracking each urban partner’s  progress in implementing congestion-reduction projects. According to a  department official, the UPA initiative management team meets weekly in  an effort to obtain and track real-time data from urban partner sites and  address issues as they occur. Typical meetings consist of reports from  department officials on the status of each urban partner’s planning efforts,  federal fund obligations, and environmental reviews. The UPA initiative  management team identifies and monitors the award conditions of UPAs  in the following ways:    Term sheet. Each urban partner entered into a term sheet, or  memorandum of understanding, with the department that includes the  urban partner’s award conditions. Each term sheet describes the  congestion-reduction projects funded by the department, the amount of  funding to be obligated, and the responsibilities of the parties. A  department official told us that although not legally binding, the term  sheets formalize both the department’s and the urban partners’  understanding of project requirements and deadlines, and provide the  department with a mechanism to track urban partners’ progress in meeting  the award conditions.
Funding agreements. Each urban partner has proposed to implement  several projects to reduce congestion. These projects are tied to funding  agreements that establish the amounts of funding to be provided by the  department, the grant programs that serve as the sources of funding, and  the conditions that must be met to ensure obligation of federal funds. The  content of these funding agreements varies and is dependent on statutory  and contractual requirements associated with each funding source.
Implementation matrix. The UPA initiative management team has  created an implementation matrix spreadsheet to track and update  progress in meeting requirements from the UPA term sheets and funding  agreements. For example, each urban partner’s implementation matrix  spreadsheet tracks the following conditions contained in urban partner  funding agreements: (1) the completion of preconditions for obligating  federal funds, (2) UPA project funding sources, and (3) the dates federal  funds were (or were expected to be) obligated. The implementation matrix  also tracks award conditions contained in each UPA term sheet, including  initiative-driven conditions, such as legislative authority for congestion  pricing, and project-related award conditions, such as environmental  approval, planning, design, development, evaluation requirements, and  completion dates.
Project management documentation. The UPA initiative management  team requires that each urban partner adhere to project management  processes and protocols. The department has requested that each urban  partner provide standard project management documentation that follows  project management standards, including project management plans,  project charters, baseline schedules and budgets, and progress reports.  These items will be tracked by the UPA initiative management team.  According to department officials, only Miami’s UPA projects have  progressed far enough to require a significant amount of tracking, and  Miami officials have begun to provide project management  documentation. Seattle also has provided a draft project management plan  in support of its UPA. However, in anticipation of the other urban partners  entering the project implementation phase, the department is exploring  the use of software applications that fulfill project management standards  and can be used to track the urban partners’ adherence to project  management documentation requirements.
The department has already taken steps to ensure that urban partners  complete their award conditions. For example, in April 2008, New York  City was unable to obtain the legal authority to do congestion pricing,  which was a selection condition of its UPA. As a result, New York City lost  its designation as an urban partner and the funding for its congestion- reduction projects. In addition, in May 2008, the department determined  that the congestion-pricing project identified in San Francisco’s term sheet  might not achieve the department’s congestion-reduction goals. As a  result, the department decided not to release about $100 million of San  Francisco’s UPA funding from several grant programs until the city  adopted a congestion-pricing project that was acceptable to the  department. (San Francisco did so in October 2008.) A department official  has indicated that the UPA initiative management team will continue to  monitor urban partners’ completion of award conditions throughout the  implementation of UPA initiative congestion-reduction projects.
We did not evaluate whether the implementation tracking was reasonable  or whether the award conditions were fulfilled, because projects have not  progressed far enough to make this determination.
section_title: The Department Plans to Evaluate Urban Partners’ Strategies for Reducing Congestion
paragraphs: To oversee the development and implementation of the UPA evaluation,  the department created an evaluation subteam within the UPA initiative  management team. In April 2008, the department hired Battelle to evaluate  three urban partners: Minneapolis, San Francisco, and Seattle. Battelle  also was hired to provide technical assistance to New York City and  Miami, which both agreed to contract for and fund their own evaluations.  From these individual urban partnership evaluations, including Miami,  Battelle will develop a national evaluation of the UPA initiative to generate  conclusions about the effectiveness of various types of congestion- reduction strategies.
The evaluation subteam manages Battelle’s development and  implementation of the UPA evaluation process. For example, the UPA  evaluation subteam will approve central parts of Battelle’s evaluation  framework, such as the site test plans that will detail data collection and  analysis activities for each urban partner site. In addition, a department  official has told us that for each urban partner site, the evaluation subteam  will coordinate with site officials and Battelle to ensure the evaluation  effort receives adequate support and is appropriate for each site’s projects.
The urban partnership evaluation will be completed in four phases. For  each phase, Battelle will produce a product that the UPA evaluation  subteam must approve. (See table 5.) According to Battelle, phase one— the initial evaluation strategy formulation—is complete, and phase two is  underway.
The department identified four questions to be used in the urban  partnership evaluation. (See table 6.) As part of phase one, Battelle then  developed a number of evaluation analyses from these questions that it  presented to the department in an initial strategy briefing. Battelle rated  the evaluation potential of each urban partner using these analyses, based  on the analyses’ applicability and feasibility. Battelle defined applicability  as the likelihood that each site will be able to provide significant answers  to the four evaluation questions and feasibility as the likelihood that  Battelle will be able to measure the impact of project strategies to reduce  congestion and determine that those strategies are the cause of any  improvement found. Since Battelle will be relying on data collected by  each urban partner site to perform its evaluation, the department is  working with urban partners to ensure they will devote sufficient  resources to data collection.
Battelle has delivered a draft national evaluation framework as part of  phase two of the evaluation process. The national evaluation framework  will act as a guide for site-specific evaluations and defines the entire  evaluation process. The department is reviewing the draft framework. The  national evaluation framework will be followed by site-specific evaluation  plans that provide a high-level view of data collection, analyses to be  performed, roles and responsibilities of stakeholders, and schedules for  urban partner sites. Minneapolis and Seattle are the first sites scheduled,  and the remaining sites will follow. While Battelle is still working on  finalizing future deliverables, phase three will include the collection of pre-  and postdeployment data, and phase four will conclude the evaluation  with Battelle’s report of findings. As of December 2008, the department  had not decided whether to release the reports as they are completed or in  a consolidated format at the end of the evaluation.
Miami proposed to fund and perform its urban partnership evaluation.  According to Florida Department of Transportation officials, Miami did  this to make its UPA application more competitive and because at the  time, Miami did not know that the department would provide funding for  this activity. Miami’s UPA evaluation will also answer the four evaluation  questions. In September 2008, Miami provided the department with a  master transit evaluation matrix, which Miami officials have described as a  crosswalk between the variables Miami will measure and the department’s  evaluation questions. In addition, to date, Miami has hired a contractor to  perform transit surveys and create lessons-learned reports for its transit  projects under the UPA initiative. Miami will receive technical assistance  from the department and from Battelle, and will work with the University  of South Florida’s Center for Urban Transportation Research to complete  its evaluation. Battelle and the department have noted that the urban  partner evaluations will differ somewhat, since all urban partners have  different congestion-reduction plans.
We did not determine whether the evaluation methodologies proposed by  Battelle or Miami were reasonable, because these methodologies have not  been fully developed.
section_title: Conclusions
paragraphs: We support performance-based integrated approaches—such as the one  the department employed for the UPA initiative—because of the potential  for a greater impact than can be achieved by operating the component  programs in a stand-alone mode. Moreover, the initiative was a highly  complex activity undertaken relatively quickly to take advantage of  flexibilities allowed under the 2007 Revised Continuing Appropriations  Resolution and to produce results in a relatively short period of time.
With minor exceptions, the department did a good job of letting applicants  know which criteria it would use in selecting urban partners and of the  funding available for the initiative. However, the department could have  done a better job of letting applicants know which of the dozen selection  criteria it considered most important so that applicants could tailor their  applications accordingly.
The department acted within its legal authority in funding individual grant  programs to support the UPA initiative, and using congestion pricing as a  priority or priority consideration selection factor in making award  decisions under the individual grant statutes. In one instance—the TCSP  program—the statute required that “priority consideration” be given to  applicants meeting five specified factors, and the department instead gave  such consideration to applicants (including urban partners) that met just  one such factor. Because of the department’s approach, it is not possible  to determine from the documentation we reviewed whether any of the  applicants in fact qualified for priority consideration. However, because  “priority consideration,” unlike “priority,” entitles an applicant only to a  bona fide and careful review, not to guaranteed selection, and because the  department ultimately had discretion to use congestion pricing as a  discriminating priority factor, we are not recommending that the  department re-evaluate the more than 500 grant applications it received for  fiscal year 2007 for this program. Rather, in the future, the department  should evaluate these grant applications in accordance with the statute, by  awarding priority consideration only to applicants that meet all five  factors.
The department has promoted UPA goals and concepts in its proposed  successors to the UPA initiative—the Congestion Reduction  Demonstration and the Metropolitan Mobility programs. To the extent  that the department moves forward to select communities to receive funds  for these proposed initiatives and to allocate funds to them, it must look  back on the lessons learned from the UPA initiative to ensure that the  missteps identified in this report are not repeated. This is especially  important when the department employs a relatively novel framework as  an umbrella to integrate the underlying programs that may fund these  initiatives.
section_title: Recommendations for Executive Action
paragraphs: We are making two recommendations. First, to better ensure that potential  applicants for future congestion relief initiatives are aware of the criteria  for assessing the applications, we recommend that the Secretary of  Transportation communicate all selection criteria—and the relative weight  to be given to the criteria—to potential applicants. Second, for the  Transportation, Community, and System Preservation program, we  recommend that the Secretary direct the Administrator, FHWA, to give  priority consideration only to applicants that meet all five statutory  factors, as required by the grant statute.
section_title: Agency Comments and Our Evaluation
paragraphs: The department reviewed a draft of our report and generally agreed with  most of its findings. The department indicated that it was considering the  recommendations; however, it indicated that the recommendation  concerning the Transportation, Community, and System Preservation  program will require careful legal analysis by the agency.
Overall, the department told us that it views performance-based initiatives,  such as the UPA initiative, as critical tools for applying its limited  discretionary funding to achieve the greatest possible congestion  reduction. The department said that the UPA initiative also made use of  other best practice approaches. For example, the department incorporated  an intermodal perspective for assessing program applicants based on  established and publicized criteria. Intermodal teams assessed the merits  and viability of proposals under the leadership of the Office of the  Secretary to ensure that funding was awarded in a manner consistent with  statute and regulation, to those projects that offered the most significant  congestion relief benefits. The department also emphasized that it used  extensive outreach to potential participants, because the program’s  dynamic environment made it particularly important to ensure clear,  consistent, and effective communication. The department indicated that it  made its expertise available to all potential applicants on an ongoing basis  from the outset of the program. Finally, the department stated that the  UPA initiative incorporates elements for assessing results, so that  information can be obtained for consideration in future efforts of this type.
Our draft report stated that the department appeared to give Minneapolis  proactive assistance in crafting a stronger application before the  department selected the city as a preliminary urban partner. We concluded  that this action was inappropriate and tendered a draft recommendation  on this issue. The department took exception to our discussion that it  provided Minneapolis assistance at this point of the evaluation process.  The department maintained that it did everything possible to ensure these  interactions were consistent and fair to all applicants, and did not agree  that its discussions with Minneapolis or any potential applicants were  either unfair or inappropriate. As a result, we had additional discussions  with Minneapolis officials and reviewed documentary evidence which  showed that the department provided assistance to Minneapolis after it  was selected as a preliminary urban partner, similar to Miami. As a result,  we revised our draft report accordingly and removed the draft  recommendation.
The department offered several technical comments, which we have  incorporated where appropriate.
We are sending copies of this report to other congressional committees  and subcommittees with responsibility for highway mobility issues; the  Secretary of Transportation; the Administrator, Federal Highway  Administration; the Administrator, Federal Transit Administration; the  Administrator, Research and Innovative Technology Administration; and  the Director, Office of Management and Budget. This report will be  available at no charge on the GAO Web site at http://www.gao.gov.
If you have any questions about this report, please contact either Susan  Sawtelle, Managing Associate General Counsel at (202) 512-6417 or  sawtelles@gao.gov; or me at (202) 512-2834 or siggerudk@gao.gov. Contact  points for our Offices of Congressional Relations and Public Affairs may  be found on the last page of this report. Staff who made key contributions  to this report are listed in appendix VI.
section_title: Appendix I: Department of Transportation Actions to Select Corridors of the Future and Ensure Transportation Benefits
paragraphs: In May 2006, the Department of Transportation (the department)  established Corridors of the Future (Corridors) as a demonstration  program to accelerate the development of multistate transportation  corridors to reduce congestion. In designating such corridors, the  department followed criteria that it communicated to potential applicants.  In addition, the department has established a framework to ensure that  states will work together and that Corridor projects will come to fruition  and produce transportation benefits.
subsections: section_title: Background
paragraphs: In September 2006, the department issued a Federal Register notice  soliciting applications for Corridors, which is a major component of its  congestion-reduction initiative. This program is to accelerate the  development of multistate transportation corridors, for one or more  transportation modes, in need of investment to reduce congestion. The  department also encouraged participation by sending an e-mail to  transportation groups and by citing the program’s benefits in speeches.  According to department officials, another purpose of the demonstration  program is to encourage states to work together, rather than acting  separately, to reduce congestion along major transportation corridors.
The department solicited applications for Corridors in two phases. For  phase one, the department asked for proposals containing general  information about the proposed corridor, such as its location, purpose,  preliminary design features, and estimated capital costs. The department  received 38 proposals and established a review team comprising  representatives from the department’s surface transportation  administrations, with expertise in finance, environment and planning, and  infrastructure. In accordance with the review team’s recommendations,  the department announced it had selected eight potential corridors to  submit applications for phase two. The phase two applications were more  detailed than the phase one proposals and supplied information on the  corridor’s physical description, congestion-reduction goals, mobility  improvements, economic benefits and support of commerce, value to  users, innovations in project delivery and finance, environmental  stewardship, finance plan, and proposed project timeline. Several state  officials told us that the process of completing proposals or applications  for Corridors fostered cooperation between states and began discussions  about multistate efforts to reduce congestion that would not have  happened otherwise.
On September 14, 2007, relying on the recommendations of the review  team, the department announced its selection of six corridors: Interstate  95, Interstate 15, Interstate 5, Interstate 10, Interstate 70, and Interstate 69.  (See fig. 4.)
Designation as a corridor did not include an award of funds, but did give  individual corridors priority access to department resources such as  funding from grant programs and administrative flexibilities, such as  environmental streamlining. Each corridor proposed a series of  improvement projects that collectively totaled about $106 billion and  individually ranged in cost from about $8.5 million to $63 billion. However,  because of funding limitations, the department strategically chose where  to best utilize funds and only selected one or two projects per corridor.  For example, Interstate 10 proposed about $6.7 billion in high-priority  projects in several areas: security, incident management, traveler  information systems, traffic management, multiagency coordination, and  capital projects. Following Interstate 10’s designation as a corridor, the  department provided $8.6 million in funding for two projects within this  corridor. (See table 7.) In all, the department provided $66.2 million in  funding from five grant programs for 10 projects in the six corridors.
The department is developing agreements for how the states along each  corridor will work together to develop their corridor. As of February 2009,  the department finalized agreements for three corridors. According to a  department official, the department is working to finalize the remaining  three agreements by the end of December 2009.
section_title: The Department Selected Awardees for Corridors by Following Its Published Criteria
paragraphs: Beyond the general information requested for phase I proposals, the  September 2006 Federal Register notice provided nine criteria for  reviewing phase two applications. Specifically, the proposals and  applications were to include    a description of the corridor,    proposed strategies for reducing congestion,    expected economic benefits and support of commerce,    estimated value to users of the corridor,  innovative project delivery and financing features,   evidence of exceptional environmental stewardship,    a finance plan and opportunities for private-sector participation, and    a proposed project timeline.
In reviewing both the phase one proposals and phase two applications, the  department applied the criteria stated in the Federal Register and,  according to the department, gave equal weight to all the criteria.  According to the Office of Management and Budget policy directive  described earlier in this report, since the selection criteria for Corridors  did not vary in importance, it was not necessary for the department to  describe the weights of the criteria in its funding announcements.
section_title: Amount of Funding Available under Corridors Was Unclear and Most Funds Awarded to Projects Were Requested in Applications
paragraphs: As discussed earlier in this report, grant announcements should provide a  complete description of the funding opportunity to give applicants a sense  of the scope of the funding, and to assist them in prioritizing and  developing proposals for projects. The September 2006 Federal Register  notice did not state a specific amount of funding available to corridors  through grant programs. However, the Federal Register notice did state  that (1) if a corridor was selected for participation in the Corridors  program, the department would work with the corridor to identify possible  funding sources and (2) the department would select up to five corridors  (although six were ultimately selected). The Federal Register notices  soliciting Corridors proposals and applications were issued before  February 15, 2007, when the President signed the department’s fiscal year  2007 appropriation without any congressional directives that funds be  dedicated for particular projects. Therefore, department officials told us  that, at the time Corridors proposals and applications were solicited, the  department did not know to what extent funds would be available for  allocation to Corridors projects.
Department officials told us that in April 2007, the department sent out an  e-mail to phase two applicants stating that $329 million, from eight Federal  Highway Administration (FHWA) grant programs, was available to  applicants that met the grant programs’ respective statutory criteria and  emphasized the proposed projects’ highway safety and congestion- reduction benefits. However, it was not clear in this document what  portion of the $329 million would be dedicated to Corridors. According to  the department, the level of funding that would be allocated to Corridors  was unknown at this time. In July 2007, the department set aside $66.2  million for Corridor designees and funded 10 projects. This sum  represented the amount remaining after funds were set aside for  congressionally directed activities, urban partnership agreements (UPA),  and other grant programs. Department officials told us that after  identifying the six corridors, they called each corridor to solicit projects  that could be funded.
For 9 of the 10 funded Corridors projects, we found corresponding  projects listed in the respective Corridors applications. However, the  Corridors application for Interstate 10 did not include an Arizona project  to widen a section of this highway. Officials from the Florida and Texas  Departments of Transportation who served as the points of contact for the  Interstate 10 Corridors project told us they did not receive telephone calls  from the department soliciting projects for funding in the Interstate 10  corridor. Rather, these officials told us that Arizona received Corridors  funding for a project that was not listed in the Interstate 10 Corridors  application and therefore was not a priority for the corridor. According to  the department, it was not necessary for a project to be listed in a  Corridors application for the project to be funded. Instead, the department  said, it gave priority consideration in its funding decisions to parties  designated as corridors. In our opinion, this approach appears to act at  cross purposes to the department’s goal of encouraging multistate  collaboration to address pressing congestion along corridors.
section_title: The Department Plans to Ensure Award Conditions Are Met and Assess the Results
paragraphs: The department is developing an agreement for each corridor on how the  states will work together to plan, develop, finance, construct, and maintain  the corridor. As of February 2009, the department had finalized  agreements for three corridors. According to a department official, the  department is working to finalize the remaining three agreements by the  end of December 2009. Each agreement will establish the objectives for  developing the respective corridor. The department is asking the signatory  states to use the following objectives as the guiding principles for  development:    Promote innovative national and regional approaches to congestion  mitigation.
Address major transportation investment needs.
Illustrate the benefits of alternative financial models that involve private- sector capital.
Promote a more efficient environmental review and project development  process.
Develop corridors that will increase freight system reliability and enhance  the quality of life for citizens.
Demonstrate the viability of a transportation investment model based on  sound economics and market principles.
Each agreement will require that the signatory states develop a multistate  approach to developing and managing the corridor. The department is  asking that the states execute a memorandum of understanding among  themselves, with the department’s concurrence, that sets forth how the  states will collaborate to support each other in corridor activities. To  ensure that the signatory states are speaking with one voice, the  department is asking each corridor to establish a committee that can  represent the states and negotiate on behalf of the corridor with the  department.
Each agreement also will include specific requirements for developing and  operating the corridor. The department is asking the signatory states to  develop a process under which each project will be subject, as applicable,  to specific development goals to ensure coordinated planning, financing,  construction, operation, maintenance, and performance of the corridor.  The department is also encouraging the signatory states to cooperatively  develop a method to select projects and establish a schedule for project  delivery. The department would like the signatory states to create and  maintain a schedule that will establish priorities for undertaking projects  and obtaining funding from different sources.
Lastly, each agreement will address the development of a performance  plan for the corridor, including operations and management performance  goals and expectations, and methods to measure travel time and reliability.  Beginning 1 year after the effective date of the agreement and regularly  thereafter, the department will ask the signatory states to report to the  department on the corridor’s performance and progress.
section_title: Appendix II: The Department Actively Promotes Public-Private Partnerships to Reduce Highway Congestion
paragraphs: In February 2008, we reported that the department encourages and  promotes the use of highway public-private partnerships through policy  and practice, including the development of experimental programs that  waive certain federal regulations and encourage private investment. The  department believes that public-private partnerships have the potential to  reduce highway congestion, among other things.
Since our report, the department has taken additional steps to promote  highway public-private partnerships through programs and practice. This  appendix updates our prior report on the activities the department has  used to promote public-private partnerships.  We did not assess these new  efforts.
subsections: section_title: Departmental Programs Promote Public-Private Partnerships
paragraphs: Since our February 2008 report, the department has extended credit and  credit support under the Transportation Infrastructure Finance and  Innovation Act program to two public-private partnerships. This act  authorizes the department to provide secured (direct) loans, lines of  credit, and loan guarantees to public and private sponsors of eligible  surface transportation projects. For example, in December 2007, under the  Transportation Infrastructure Finance and Innovation Act, the department  allocated $589 million for Virginia’s Capital Beltway high-occupancy toll  lanes project, which will use congestion pricing to ensure reliable traffic  flow on one of the nation’s most congested highways. In addition, in  March 2008, the department allocated $430 million for segments of Texas  state highway 130, which will form part of a new 91-mile tollway intended  to relieve congestion on Interstate 35. Both transactions involved a  partnership between private borrowers and a state.
In addition, as of December 2008, the department had allocated about $9.2  billion in private activity bonds to eight public-private partnerships. The  Safe, Accountable, Flexible, Efficient Transportation Equity Act—A  Legacy for Users (SAFETEA-LU) amended the Internal Revenue Code to  add qualified highway or surface freight transfer facilities to the types of  privately developed and operated projects for which tax-exempt facility  bonds (a form of private activity bonds) may be issued. For example, the  department allocated $980 million for private activity bonds to a group of  private companies that are planning to build a tunnel connecting the Port  of Miami on Dodge Island with Watson Island and Interstate 95 on the  Florida mainland. However, according to a department official, not all of  the $9.2 billion allocated in private activity bonds has been issued. In  addition, according to this official, the department is currently reviewing  applications for additional private activity bond allocations to other  public-private partnerships.
Finally, the department plans to study projects that use methods of  procurement that integrate risk and streamline project development.  SAFETEA-LU established the Public-Private Partnership Pilot Program,  known as Penta-P, to evaluate the benefits of forming public-private  partnerships for new construction projects. In 2007, the department  executed agreements for three pilot projects: the first is a single contract  for the construction of two light rail lines in Houston, Texas, that will  ultimately serve the city’s two main airports; the second is a contract in  Denver, Colorado, for two rail projects that will serve the Denver airport  and northwest Denver; and the third is a contract in Oakland, California,  for a transit system that will connect the Oakland International Airport  with the San Francisco Bay Area Rapid Transit District’s Coliseum Station.  According to a department official, construction on the projects has not  begun. Denver is contemplating an innovative contract that increases risk  sharing between the private partner and the local, state, and federal  governments. In this agreement, the Denver Regional Transportation  District will ask its private partner to assume a degree of risk by  contributing equity capital to the project. This capital will be at risk until  the project is operating and collecting revenue. In addition, the  Metropolitan Transit Authority of Harris County, Texas, is contemplating  an innovative contract under which a “facility provider” will share risk  with the vehicle provider, construction firm, and operator. Also, the  project’s development will be streamlined, since the private partner will  coordinate all work with the contractor, vehicle provider, and operator. As  these projects proceed, the department will study how public-private  partnerships affect completion times, projections of project costs and  benefits, and project performance. Lastly, the San Francisco Bay Area  Rapid Transit District plans to use an innovative contract where a  consortium of private firms will assume the risk to design, build, operate,  maintain, and finance the project.
section_title: The Department Promotes Public- Private Partnerships through Multiple Practices
paragraphs: The department has promoted public-private partnerships in the following  ways:    Developing publications. In July 2008, the department published a report  that describes the use of public-private partnerships by transportation  authorities and updates the department’s 2004 report to Congress on  public-private partnerships.
Drafting model legislation for states to consider highway public-private  partnerships within their jurisdiction. The model legislation addresses  such subjects as bidding, agreement structures, reversions of the facilities  to the state, remedies, bonds, federal funding, and property tax  exemptions, among other things. In July 2008, the department published a  framework for overhauling the way transportation decisions and  investments are made. Specifically, the framework recommends the use  of public-private partnerships, expansion of Transportation Infrastructure  Finance and Innovation Act program capacity, and removal of the $15  billion cap on private activity bonds administered by the department. In  addition, the department is currently developing guidance on the use of  public-private partnerships by procurement agencies. This guidance will  describe how federal, state, and local officials have structured public- private partnerships.
Maintaining a public-private partnership Internet Web site. This Web  site serves as a clearinghouse for information to states and other  transportation professionals about public-private partnerships, pertinent  federal regulations, and financing options.
Making public presentations. Department officials have made public  speeches and written at least one letter to a state in support of highway  public-private partnerships. Officials of the department also have testified  before Congress in support of highway public-private partnerships. Since  February 2008, the department has conducted workshops on the structure  and rationale for public-private partnerships. For example, in October  2008, the department gave a presentation at a transit conference on how  public-private partnerships can be used to address funding shortages in  highway infrastructure projects.
Making public-private partnerships a key component of congestion  mitigation. Two major parts of the department’s May 2006 national  strategy to reduce congestion are the UPA initiative and Corridors. In  August 2007, the department awarded funds to five urban partners that  would make congestion pricing a key component of congestion mitigation.  Such a strategy could act to promote highway public-private partnerships,  since tolls provide a long-term revenue stream, key to attracting investors.  In September 2007, the department awarded funds to six interstate routes  for use in developing multistate corridors to help reduce congestion.  These six interstates were selected for their potential to use private  resources to reduce traffic congestion within the corridors and across the  country.
Encouraging public-private partnerships in its reform proposal to  Congress. In July 2008, the Secretary announced the administration’s new  plan to create a more sustainable way to pay for and build roads and  transit systems. This plan includes a proposal for leveraging federal  resources. Among other things, this proposal encourages states and  metropolitan areas to explore innovative transportation financing  mechanisms by expanding the use of public-private partnerships. For  example, the administration’s plan proposes that all federal aid projects  with a total cost of over $250 million would not receive federal assistance  unless the project sponsor first compared the project’s lifecycle costs  under the most cost-effective form of conventional public procurement  with the project’s lifecycle costs if procured using a public-private  partnership (assuming state law allows for public-private partnership  procurement).
section_title: Appendix III: Extent to Which Previous Recipients of Grant Programs Received UPA Initiative and Corridors Funding
paragraphs: This appendix provides information on the extent to which previous  recipients of grants provided through 11 programs received funds under  the UPA initiative and Corridors. To develop this information, we  compared the amounts of funds states were allocated during fiscal years  2004 through 2006 with the amounts awarded for the UPA initiative and  Corridors in fiscal year 2007.
Urban partners were awarded about 26 percent of the funding provided  through the 11 grant programs in fiscal year 2007, while Corridors states  were awarded 2 percent of the funding provided through those grant  programs. (See fig. 5.) For fiscal years 2004 through 2006, about $6.9  billion was allocated through the 11 grant programs to 50 states and the  District of Colombia, in amounts ranging from about $319 million on  average per year (California) to $2.4 million on average per year  (Wyoming). The top 10 states, in descending order of grant size, were  California, New York, Illinois, New Jersey, Washington, Pennsylvania,  Colorado, Maryland, Arizona, and North Carolina. Three of the top 10  states had urban partners (California, New York, and Washington), and  two of these states were involved in a Corridors project that received  funding (California and Washington) in fiscal year 2007. In fiscal year 2007,  about $2.8 billion was awarded through the 11 grant programs. Of this  amount, about $715 million was awarded to urban partners and about $66  million was awarded to Corridors states through grants ranging from  about $328 million (New York) to $1.1 million (Arkansas).
Arizon($ million)
Florid($6 million)
Mrylnd ($96 million)
Colordo ($9 million)
Washington ($79 million)
Pennylvni($109 million)
Minneot($111 million)
Washington ($120 million)
Cliforni($14 million)
New Jerey ($19 million)
New York ($ million)
Illinoi($164 million)
All other ($2.1 illion)
New York ($221 million)
Cliforni($19 million)
All other ($92 million)
Arksas ($1 million)
Missri ($2 million)
Indi($ million)
Arizon($4 million)
Lo($5 million)
Cliforni($5 million)
Nev($10 million)
Washington ($15 million)
North Crolin($22 million)
Urban partners were awarded about 22 percent of the funding provided  through the two largest grant programs, Bus and Bus-Related Facilities  Capital Investment Grants (Bus and Bus Facilities) and New Starts/Small  Starts, in fiscal year 2007. (See fig. 6.) For fiscal years 2004 through 2006,  about $6.4 billion was allocated through Bus and Bus Facilities and New  Starts/Small Starts to 50 states and the District of Colombia, in amounts  ranging from about $307 million on average per year (California) to  $900,000 on average per year (Wyoming). The top 10 states, in descending  order of grant size, were California, New York, Illinois, New Jersey,  Pennsylvania, Washington, Colorado, Maryland, Arizona, and North  Carolina. Three of the top 10 states had cities designated as urban partners  (California, New York, and Washington) and 3 of the top 10 states were  part of a Corridors project that received funding (Arizona, California, and  Washington) in fiscal year 2007. In fiscal year 2007, about $2.4 billion was  awarded through the Bus and Bus Facilities and New Starts/Small Starts  programs. Of this amount, $530 million was awarded to urban partners in  grants ranging from about $326 million (New York) to $19.5 million  (Florida). In fiscal year 2007, no funding was awarded for Corridors  projects from Bus and Bus Facilities and New Starts/Small Starts.
Arizon($7 million)
Washington ($41 million)
Mrylnd ($91 million)
Cliforni($5 million)
Colordo ($9 million)
Minneot($6 million)
Washington ($104 million)
New York ($26 million)
Pennylvni($105 million)
New Jerey ($15 million)
Illinoi($162 million)
All other ($1.9 illion)
New York ($21 million)
Cliforni($07 million)
All other ($770 million)
Urban partners were awarded about 54 percent of the funding provided  through the remaining 9 grant programs in fiscal year 2007, while  Corridors states were awarded about 21 percent of the funding provided  through those programs. (See fig. 7.) In fiscal years 2004 through 2006,  about $547 million was awarded through the remaining 9 grant programs  to 50 states and the District of Colombia, in amounts ranging from about  $17 million on average per year (Washington) to about $500,000 on  average per year (New Hampshire). The top 10 states, in descending order  of grant size, were Washington, Alaska, California, Utah, Kentucky,  Nevada, Colorado, Mississippi, Texas, and Alabama. Two of the top 10  states had cities designated as urban partners (California and Washington)  and 3 of the top 10 states were part of a Corridors project that received  funding (California, Nevada, and Washington) in fiscal year 2007. In fiscal  year 2007, about $315 million was awarded through the 9 grant programs.  Of this amount, about $169 million was awarded to urban partners and  about $66 million was awarded to Corridors states through grants ranging  from about $61 million (California) to $1.1 million (Arkansas).
section_title: Appendix IV: Scope and Methodology
paragraphs: To determine the extent to which the department communicated  information about the selection criteria and funding for the UPA initiative,  applied the criteria, and selected applicants for grant awards, we analyzed  department publications, such as Federal Register notices on the UPA  initiative and its underlying grant programs, and UPA initiative outreach  materials, such as presentation slides and handouts. To understand how  UPA applicants understood this information about the selection criteria  and funding, we interviewed representatives of 14 of the 26 UPA  applicants, including all of the 9 preliminary urban partners and 5 of the 17  unsuccessful UPA applicants, which we selected at random. Because the  department did not track which applicants received particular outreach  materials, we had to rely on these interviews with applicants to analyze  the extent to which the department communicated information about the  selection criteria and funding. Additionally, we spoke with representatives  of five randomly selected cities that did not apply to the UPA initiative but  had been identified by the department’s Volpe National Transportation  Systems Center as having extreme or high levels of congestion. We also  spoke with officials of three national professional transportation groups  about their role, if any, in communicating information on the UPA  initiative to potential applicants and their understanding of UPA selection  criteria and funding.
In determining good grants practices, we reviewed grants policies from the  department and its agencies—particularly FHWA—as well as other  government agencies, such as the Departments of Energy, Commerce, and  Labor. Furthermore, we reviewed several of our reports on competitive  discretionary grants and grants guidance from the Office of Management  and Budget and the Guide to Opportunities for Improving Grant  Accountability developed by the Domestic Working Group Grant  Accountability Project.
In examining how the department applied UPA selection criteria, we  reviewed and analyzed department documents such as the 26 UPA  applications, the department’s instructions for UPA application reviewers,  the results of the reviewers’ assessments of applications, and  documentation of the reviews conducted by senior department officials.  We compared the department’s review of UPA applications, particularly  the criteria used, with the criteria listed in Federal Register notices and  reviewed other materials made available to applicants, such as a UPA  frequently asked questions document. We also spoke with senior  department officials about their application of the UPA selection criteria  and their UPA funding decisions. Additionally, we also spoke with 8 of the  11 department officials who served on the UPA application review team  and with senior department officials about their reviews of UPA  applications.
To assess whether the department had authority to allocate grant funds to  support the UPA initiative and give priority consideration in allocating  individual grants to support projects that involve congestion pricing, we  analyzed the department’s fiscal year 2006 appropriation, the fiscal year  2007 revised continuing resolution, the applicable authorizing legislation,  and relevant case law and other legal authorities. We obtained the  department’s legal position regarding its authority in these areas through  formal and informal correspondence and through discussions with the  department’s General Counsel and other senior department officials. We  reviewed the department’s documentation of its technical evaluation team  application review for several grant programs: the Intelligent  Transportation Systems-Operational Testing to Mitigate Congestion;  Interstate Maintenance Discretionary; Ferry Boat Discretionary; Public  Lands Highway Discretionary; and Transportation, Community, and  System Preservation programs. We also spoke with department staff  members that manage the four grant programs to determine how they  reviewed and ranked applications. We selected these grant programs  because their statutes authorize the department to give priority or priority  consideration to certain categories of applicants.
To describe the steps the department is taking to ensure that award  conditions are met and that results will be evaluated, we reviewed  documents on the department’s actions to monitor UPA award conditions  and plans to evaluate each urban partner’s projects to reduce congestion.  Specifically, we reviewed urban partners’ term sheets (or memorandums  of understanding) with the department and grant and cooperative  agreements that list the conditions to receive federal funds. We also  reviewed documents from Battelle Memorial Institute’s plans to evaluate  UPAs. In addition, we interviewed officials from the department, Battelle  Memorial Institute, and Miami about their plans for implementing and  evaluating projects.
To determine how the department applied the criteria and selected  applicants for grant awards for Corridors, we reviewed all phase one and  phase two applications, the September 2006 Federal Register notice, and  the guidance given to review team members. In addition, we spoke with 10  of the 38 Corridors applicants. Of these, 5 applied to phase one and were  not invited to apply to phase two, 1 applied to phase two but was not  selected, and 4 were designated as corridors. To understand the  department’s review of Corridors applications, we spoke with six of eight  review team members. In addition, to describe the steps the department is  taking to ensure that selection conditions are met and results are assessed,  we reviewed Corridors development agreements, which state performance  objectives and the conditions for receiving federal funds. We also spoke  with the department officials responsible for managing five grant  programs to understand how the program managers will monitor and  evaluate Corridors projects.
To determine what actions the department has taken to support public- private partnerships to reduce highway congestion, we reviewed several  documents, such as the department’s 2006 National Strategy to Reduce  Congestion on America’s Transportation Network, documents on the  department’s public-private partnership Web site, and our reports on  public-private partnerships. We also interviewed department officials on  actions the department has taken.
To identify the previous recipients of funding from the 13 discretionary  grant programs used to fund the UPA initiative and Corridors, we  collected funding information for fiscal years 2004 through 2007 from  FHWA and the Federal Transit Administration and compared the  recipients of those funds and the amounts they received for fiscal years  2004 through 2006 with UPA and Corridors recipients and the amounts  they received in 2007. We assessed the reliability of the data by  interviewing knowledgeable department officials about data collection  methods, particularly those pertaining to funds allocated to states for  fiscal years 2004 through 2007 from the 13 grant programs. We determined  that the data were sufficiently reliable for the purposes of this report.
section_title: Appendix V: The Department’s Legal Compliance in Awarding Grants to Support the UPA Initiative
subsections: section_title: Introduction and Summary of Conclusions
paragraphs: As part of our review of the department’s National Strategy to Reduce  Congestion on America’s Transportation Network, we examined  whether, for fiscal year 2007, the department had legal authority to  allocate its lump-sum appropriations to 10 existing discretionary grant  programs in order to “fund” the UPA initiative, and if so, whether the  department could use tolling (specifically, congestion pricing) as a priority  or priority consideration factor in deciding which applicants would be  awarded grants under those programs.
We conclude that because there were no statutory designations of funding  for specific projects or programs in fiscal year 2007—no legally binding  “earmarks” or other directives—the department had authority to allocate  its lump-sum appropriations to its existing discretionary grant programs.  The department’s appropriations were available to carry out the programs  identified in each of the lump-sum appropriations, and the department had  discretion in choosing how to allocate funds among those programs.
We conclude further that, for nine of the 10 grant programs that were used  to fund UPA projects, the department had authority to use congestion  pricing as a discriminating priority or priority consideration factor to  select among otherwise equally qualified grant applicants. Each of the  grant statutes underlying these 9 programs either explicitly permitted  consideration of tolling or afforded the department discretion to consider  tolling because it was rationally related to program objectives. For 8 of  these 9 grant programs, it is clear that the department then applied  congestion pricing in this way, although in the Ferry Boat program, the  department’s technical evaluation documentation initially suggested the  department had improperly supplanted statutory priorities with tolling by  allegedly awarding a $2 million grant to an urban partner that did not meet  any statutory priority criteria (but had congestion pricing) while passing  over a number of nonurban partners that met at least one priority criterion  (but lacked congestion pricing). The technical evaluation was incorrect,  however, and was not relied on by the Secretary in making the final grant  decision. The Secretary relied on corrected information showing the urban  partners in fact met statutory priorities. The Secretary therefore was  within her discretion to apply congestion pricing as a discriminating  factor.
With respect to the remaining grant program—the Transportation,  Community, and System Preservation (TCSP) program—we conclude that  the department likely did not apply statutory “priority consideration”  factors consistent with the requirements of the statute. Because priority  consideration does not entitle an applicant to grant selection, only to a  bona fide and careful review, and because the department had discretion  to use congestion pricing as a rational discriminating priority factor, the  department’s action may not have affected the outcome of its grant  awards. Although not free from doubt, we believe the statute allows the  department to give priority consideration only to cities that meet all five  statutory criteria, while the department believes an applicant must meet  only one factor, and rated applicants accordingly. Because the department  used a one-factor rating approach, it is not possible to determine from the  current record whether any of the applicants satisfied all five criteria and  thus deserved a bona fide “hard look.” Given that the department had  ultimate discretion to select applicants that were not entitled to priority  consideration, we do not recommend reevaluating the more than 500  project applications and possibly reawarding the fiscal year 2007 TCSP  grants. We note also that all TCSP grant funding has been obligated.  Instead, the department should ensure that all future TCSP program  discretionary grant awards are carried out in accordance with the statute,  that is, by giving priority consideration only to applicants that meet all five  of the factors.
section_title: Background
paragraphs: The department received a number of lump-sum appropriations for fiscal  year 2006. These included     approximately $36 billion “for Federal-aid highways and highway safety  construction programs” administered by FHWA, see Pub. L. No. 109-115,  119 Stat. 2396, 2402 (2005);   $1.5 billion “or payment of obligations incurred in carrying out the  provisions of 49 U.S.C. 5305, 5307 5308, 5309, 5310, 5311, 5317, 5320, 5355,  5339, and 5340 . . .” for bus and transit-related programs administered by  the Federal Transit Administration, id.,119 Stat. at 2417; and    approximately $5.8 million “or necessary expenses of the Research and  Innovative Technology Administration. . .,” id., 119 Stat. at 2423.
Although the fiscal year 2006 appropriations act itself made these sums  available for a number of programs, the accompanying conference report  contained designations—so-called “earmarks”—directing how substantial  amounts of these appropriations should be spent. For fiscal year 2007,  however, Congress enacted a $463 billion continuing resolution, giving  budget authority to federal agencies based on the same 2006 levels, but  removing the nonstatutory earmarks: “ny language specifying an  earmark in a committee report or statement of managers accompanying an  appropriations Act for fiscal year 2006 shall have no legal effect with  respect to funds appropriated by this division.” Revised Continuing  Appropriations Resolution, 2007, Pub. L. No. 110-5, sec. 112 (Feb. 15,  2007).
The department interpreted this language as permitting it to allocate the  above lump sums to discretionary grant programs administered by FHWA,  the Federal Transit Administration, and the Research and Innovative  Technology Administration, in order to “fund” policy initiatives such as the  UPA initiative. April 2008 DOT Letter at 2. Accordingly, following passage  of the fiscal year 2007 continuing resolution, the department announced in  the Federal Register that it was soliciting applications by metropolitan  areas to enter into UPAs with the department. 71 Fed. Reg. 71231 (Dec. 8,  2006). Under the UPA initiative, cities would agree to demonstrate  innovative strategies that would reduce traffic congestion. In order to be  designated as an urban partner, applicants had to demonstrate their ability  to implement the 4Ts: tolling/congestion pricing, transit, technology (use  of cutting-edge approaches to improve system performance), and  telecommuting (expansion of telecommuting and flexible work  schedules). The urban partner designation itself would not entitle a city to  any grant funding; urban partners (as well as other cities) had to apply and  qualify for grants under the department’s existing discretionary grant  programs. Designation as an urban partner, however, would entitle a grant  applicant to “preferential treatment” as the department made its individual  grant decisions. 71 Fed. Reg. at 71233-34.
The department received 26 applications for the UPA initiative and well  over 1,300 project applications from urban partner applicants and others,  for grants under various discretionary programs. After narrowing the 26  applicants to 9 potential urban partners, the department selected Miami,  Minneapolis, New York City, San Francisco, and Seattle as urban partners  in August 2007. In the meantime, the department solicited applications  under 13 grant programs, and in almost all instances, explained the  department would give “priority consideration” to cities selected as urban  partners in deciding which cities would be awarded such grants. As  announced, the department then gave priority consideration to these 5  urban partners in awarding them approximately $848 million in grants for  94 different projects under 10 discretionary grant programs administered  by FHWA, the Federal Transit Administration, and the Research and  Innovative Technology Administration. The department also awarded $18  million in grants to preliminary urban partner San Diego under two of  these programs. All told, the department awarded approximately 98  percent of the total $866 million in grant funding under these 9 programs  to urban partners.
section_title: Analysis
subsections: section_title: The Department’s Authority to Allocate Lump-Sum Appropriations to the UPA Initiative
paragraphs: A lump-sum appropriation is one that Congress intends to cover a number  of programs, projects, or items. By contrast, a line-item or an earmarked  appropriation refers to funds that Congress has designated for specific and  particular purposes. See GAO, Principles of Federal Appropriations Law,  Vol. II, 3d ed., GAO-06-0382SP (Washington, D.C.: Feb. 2006), at 6-5.  Agencies have considerable discretion in choosing how to allocate lump- sum appropriations to specific programs and activities. As the Supreme  Court recognized in Lincoln v. Vigil, 508 U.S. 182 (1993), “as long as the  agency allocates funds from a lump-sum appropriation to meet permissible  statutory objectives,  gives the courts  no leave to intrude.” Id. at 193. The Supreme Court in Lincoln found that  the allocation of funds from a lump-sum appropriation is an example of an  administrative decision generally committed to agency discretion, noting  “the very point of a lump-sum appropriation is to give an agency the  capacity to adapt to changing circumstances and meet its statutory  responsibilities” “in what  sees as the most effective or  desirable way.” 508 U.S. at 192 (citing, among other authorities, GAO,  Principles of Federal Appropriations Law).
After the fiscal year 2007 continuing resolution removed the fiscal year  2006 report earmarks (and even before), the department’s appropriations  were available to carry out the discretionary grant programs identified in  the each of the lump-sum appropriations. The department had broad  discretion in choosing how to allocate funds among those programs; for  example, because the $1.5 billion lump-sum appropriation was available to  fund various bus and other transit-related programs under a dozen  different statutes, absent any other statutory restriction, the department  could choose how much of that appropriation to allocate to each of the  dozen programs. See Illinois Environmental Protection Agency v. United  States Environmental Protection Agency, 947 F.2d 283, 291-92 (7th Cir.  1991) (EPA could set aside a portion of discretionary air pollution grant  funds for its own air pollution control activities; EPA appropriation for  “Abatement, Control and Compliance” was available for these activities).  In carrying out each individual grant program, the department, of course,  was required to comply with the restrictions and requirements of the  underlying grant statutes and to award funding to grantees in accordance  with the statutory provisions. We address below whether the department  complied with these underlying provisions.
section_title: The Department’s Authority to Use Congestion Pricing as a Priority Selection Factor
paragraphs: As detailed in this report, the single most important factor in determining  which cities would be designated as urban partners was whether a city  had, or had committed to obtaining, authority to implement tolling  (congestion pricing). Except for nonurban partner San Diego, the  department then awarded all of the funding under the 10 programs to the  five urban partners. Because congestion pricing was the most important  factor in selecting the urban partners, and because urban partners were  placed “at the head of the line” in receiving grant awards, concerns have  been raised about whether congestion pricing was an inappropriate  “superpriority” factor in making grant selections.
Whether the department had authority to use congestion pricing in this  manner depends on the specific terms of each grant statute. Duncan v.  Walker, 533 U.S. 167, 172 (2001) (“Our task is to construe what Congress  has enacted. We begin, as always, with the language of the statute.”). But  before we evaluate how the department applied the terms of each statute,  it will be helpful to address the general scope of agency discretion in  making grant awards.
The scope of an administrative agency’s authority to award federal  assistance funding depends on the specific terms of the authorizing  statutes. “‘When Congress passes an Act empowering administrative  agencies to carry on governmental activities, the power of those agencies  is circumscribed by the authority granted.’” State Highway Comm’n of  Missouri v. Volpe, 479 F.2d 1099, 1107 (8th Cir. 1973), quoting Stark v.  Wickard, 321 U.S. 288, 309-10 (1944). In the case of statutory earmarks and  formula grants, for example, agencies have little or no discretion in  making awards. By contrast, agencies are given considerable flexibility in  making so-called discretionary grants. See generally GAO, Principles of  Federal Appropriations Law, Vol. I, 3d ed., GAO-04-261SP (Washington,  D.C.: Jan. 2004), at 3-40 to 3-52. Some discretionary grant statutes require  agencies to make awards on a competitive basis, while others do not.   Agencies have greater (but not unlimited) flexibility in making  noncompetitive grants. In such instances, it is well settled that where an  agency does not have sufficient appropriations to fund all applicants for a  program and the legislation does not establish priorities or guidance, the  agency may, within its discretion, establish selection priorities,  classifications, and/or eligibility requirements, so long as it does so on a  rational and consistent basis. Id. at 3-49 to -52. However, “in such a case  the agency must, at a minimum, let the standard be generally known so as  to assure that it is being applied consistently and so as to avoid both the  reality and appearance of arbitrary denial of benefits to potential  beneficiaries.” Morton v. Ruiz, 415 U.S. 199, 231 (1974).
In cases where the authorizing statute provides discretion, agencies are  deemed to act within their authority as long as there is a rational basis for  their decisions and their acts are not “arbitrary and capricious, an abuse of  discretion, or otherwise not in accordance with law.” 5 U.S.C. § 706(2)(A);  see Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402 (1971).  Under this standard, courts look to whether the agency’s decision was  “based on a consideration of the relevant factors and whether there has  been a clear error in judgment.” Overton Park, 410 U.S. at 416. Although  the factual inquiry is to be “searching and careful” and there must be a  “thorough, probing, in-depth review,” the ultimate standard of review “is a  narrow one.” Id. at 415-16. See, e.g., City of Grand Rapids v. Richardson,  429 F. Supp. 1087, 1094-95 (W.D. Mich. 1977) (denying request to halt grant  awards based on allegations of vague and unpublicized eligibility criteria;  while court was “tremendously sympathetic” to the losing applicant, “the  Court cannot say that the agency committed error, abused its discretion or  acted arbitrarily or capriciously within the meaning of . . . Overton Park,”  nor did agency violate “elementary fairness”).
One other introductory point is relevant before reviewing the department’s  use of congestion pricing in awarding grants under the 9 programs. As a  general rule, section 301 of Title 23 of the U.S. Code prohibits the  imposition of tolls on all roads, highways, bridges, tunnels, and other  transportation facilities constructed with federal funds. Thus in our view,  the department could not use any form of tolling, such as congestion  pricing, as a selection factor for a grant—whether made under Title 23  (FHWA and Research and Innovative Technology Administration grants)  or Title 49 (Federal Transit Administration grants)—if the tolling that was  the basis of the grant’s “priority” was prohibited by section 301. Congress  has enacted a number of exceptions to the tolling ban, however, and the  department has confirmed that all of the tolling, specifically congestion  pricing, activity supporting the grants at issue qualified under one or more  of these exceptions. October 2008 DOT Letter at 15-16.
subsections: section_title: Bus and Bus Facilities Program
paragraphs: Using congestion pricing as a priority selection factor, the department  awarded grants under the Bus and Bus-Related Facilities Capital  Investment Grants (Bus and Bus Facilities) program to all five urban  partners—New York City, San Francisco, Minneapolis, Seattle, and  Miami—and to San Diego, which was not designated as an urban partner.  The total funding was $433 million, the single largest amount allocated to  the 10 programs at issue and fully half of the $866 million awarded under  all of these programs. Under the Bus and Bus Facilities program, the  department “may make grants . . . to assist State and local governmental  authorities in financing capital projects to replace, rehabilitate and  purchase buses and related equipment and to construct bus-related  facilities . . ..” 49 U.S.C. § 5309(b)(3). The only explicit direction in the  statute concerning the selection of grantees is that the department “shall  consider the age and condition of buses, bus fleets, related equipment, and  bus-related facilities.” 49 U.S.C. § 5309(m)(8) (emphasis added). The  department is required only to “consider” this factor, however, not to give  it priority. “ welfare and vitality of urban areas, the satisfactory movement  of people and goods  within those areas, and the effectiveness of  programs aided by the United States  Government are jeopardized by  deteriorating or inadequate urban transportation service  and facilities, the intensification of traffic congestion, and the lack of coordinated,   comprehensive, and continuing development planning . . ..,” “ in the interest of the United States . . . to foster the development  and revitalization  of public transportation systems that—(1) maximize the . . . efficient mobility of  individuals; (2) minimize environmental impacts; and (3) minimize transportation-related  fuel consumption . . ..”
Id. § 5301(a) (emphasis added); see October 2008 DOT Letter at 7. The  department’s judgment is that congestion pricing supports all three of  these goals, and that one of these, mobility, will enhance the effectiveness  of the bus transportation system. “determine the procedure to be applied and the grants to be made. Within those  limitations the statute is permissive, provides only the broadest conceptual guidelines for  action, and requires highly developed expertise in the determination of the conditions  under which the grant of assistance will fulfill the broad congressional purposes.”
Id. at 438. Pullman therefore upheld as within the department’s broad  discretion a grant condition requiring the local applicant to use  competitive bidding for any subcontracts and to determine bid  responsiveness. The court found this requirement “consistent with the  statute’s encouragement of local responsibility in urban mass  transportation” and thus an appropriate exercise of the department’s  discretion. Id.
Like the department’s grant condition in Pullman, the department’s  congestion pricing grant condition here is consistent with the overarching  objectives of the Bus statute—to provide a public transportation system  that maximizes mobility and minimizes environmental impacts and  transportation-related fuel consumption. While the Pullman statute  arguably afforded even greater discretion (it allowed the department to  impose “such terms and conditions as  may prescribe,”  while the current statute authorizes the department to set “terms   conditions . . . that the Secretary determines to be necessary or  appropriate for the purposes of this section”), and while congestion  pricing may not be strictly “necessary” for 49 U.S.C. § 5309(c)(3) purposes  to achieve the objectives of the bus statute—a well-functioning bus system  does not “need” congestion pricing; congestion pricing “need”s a well- functioning bus system—we agree with the department that congestion  pricing is at least “appropriate” to achieve the larger statutory purposes.  See Town of Secaucus v. DOT, 889 F. Supp. 779, 789 (D.N.J. 1995)  (upholding grant award for construction of strengthened foundation  underlying mixed public transportation hub/commercial development  because project would “enhance the effectiveness of a mass transportation  project”); B-160204, Dec. 7, 1966 (GAO approval of grants to purchase city  buses used occasionally for charter service in off-peak hours, because  buses were needed for “an efficient and coordinated mass transportation  system”); see generally State Highway Comm’n of Missouri v. Volpe,  above, 479 F.2d at 1112 (a statute “should be construed according to its  subject matter and the purpose for which it was enacted.”). Other grant  statutes with similarly broad language have been found to provide broad  agency discretion. See, e.g., Illinois Environmental EPA v. USEPA,  above, 947 F.2d at 291 (authority to make grants “upon such terms and  conditions . . . necessary to carry out the purpose” of Clean Air Act  provision should be read broadly; grant statute’s purpose was to  implement air quality standards within states); LEAA, above, 605 F.2d 21,  22, 27 (1st Cir. 1979) (authority to make grants “according to the criteria  and on the terms and conditions the Administration determines consistent  with this chapter” provided “large discretion”).
section_title: Ferry Boat Program
paragraphs: “to those ferry systems, and public entities responsible for developing  ferries, that—(1)  provide critical access to areas not well-served by other modes of surface transportation;  (2) carry the greatest number  of passengers and vehicles; or (3) carry the greatest number  of passengers in passenger-only service.”
23 U.S.C. § 147(c).
Although congestion pricing is not explicitly identified as a priority  selection factor, the department believes it had discretion to apply  congestion pricing as a discriminating or “tie-breaking” factor to select  among otherwise equally qualified applicants, because congestion pricing  is rationally related to the purposes of the Ferry Boat program. April 2008  DOT Letter at 6, 9. The department reasons that Congress’s decision to  give priority to ferry systems that carry the greatest number of passengers  and vehicles reflects congressional support for increasing mobility and  reducing congestion. Id. at 6, note 1; see also id. at 8-9 (tolling and  congestion pricing are consistent with the department’s core mission  focusing on “mobility, safety, efficiency, convenience, and economic  growth.”); October 2008 DOT Letter at 9 (congestion pricing will shift  passengers from cars to ferries, maximizing “social yield” on the federal  government’s investment). The department therefore used congestion  pricing to select among applicants qualifying under one or more of the  statutory priorities.
We agree that the department had discretion to use congestion pricing as a  discriminating factor among equally qualified applicants based on the  rational connection between congestion pricing, mobility, and congestion.  However, the department did not have authority to override the statute by,  for example, rejecting applicants that lacked congestion pricing but met  one or more statutory priorities in favor of urban partners that had  congestion pricing but met no statutory priorities. The department’s initial  technical evaluation documentation for the fiscal year 2007 Ferry Boat  grant awards suggested (incorrectly) that this occurred for one grant,  Seattle’s grant for the High-Speed, Ultra-Low Wake Passenger-Only Ferry  project. According to the evaluation documentation, that project  application “oes not meet statutory priority selection criteria under 23  U.S.C. 147(c) of serving large number of passengers and vehicles, or large  number of passengers in passenger-only service.” (Emphasis added.) The  department’s technical evaluator rated the application as “qualified” rather  than “highly qualified,” in part because it did not “meet statutory  preference criteria.” The department nevertheless awarded a $2 million  grant for this project based on Seattle’s urban partner status, passing over  applications for at least 23 other projects from other jurisdictions that the  department’s technical evaluator determined met one or more of the  statutory priorities.
The initial technical evaluation was incorrect, however. As noted, the  statute requires priority for “ferry systems, and public entities  responsible for developing ferries”—not for individual projects—that carry  the greatest number of passengers and vehicles, and the ferry system in  Seattle carries the greatest number of passengers of all ferry systems in  the country (emphasis added). Thus all of the projects proposed by  Seattle should have been rated as meeting at least one of the statutory  priority criteria. October 2008 DOT Letter at 9-10. Yet the department  evaluator apparently focused (incorrectly) on whether an individual  project would carry the greatest number of passengers. October 2008 DOT  Letter at 9.
Equally important, the department told us that the Secretary did not rely  on (or see) the technical evaluation forms for the Seattle High-Speed  project (or any other project funded under the UPA initiative), but instead  relied on other department officials’ determinations that the recommended  grants “comply or would comply with the statutory requirements of the  FBD  program,” October 2008 DOT Letter at 10,  which would have included the statutory priorities. Accordingly, despite  the technical reviewer’s error, the Secretary was within her discretion to  apply congestion pricing as a discriminating factor and to select Seattle’s  High-Speed project for funding. See Mass. Dep’t of Correction v. Law  Enforcement Assistance Administration, 605 F.2d 21, 24-25 (1st Cir.  1979) (LEAA) (upholding grant decision despite errors in technical  evaluation process; “hatever was the case at the panel review level,  LEAA’s final decision did not rely on the discredited factors. It relied  exclusively on  . . . e do not believe these  beginning errors sufficiently infected the entire process . . . to warrant  setting aside a decision entrusted to LEAA’s discretion.”).
section_title: Transportation, Community, and System Preservation Program
paragraphs: Using congestion pricing as a priority selection factor, the department  awarded grants under the TCSP program totaling $50.4 million for projects  by urban partners Minneapolis, San Francisco, and Seattle. Under the  TCSP statute, enacted in 1998 as a “smart growth” initiative, the  department may award grants and other assistance to support local  strategies that integrate transportation projects with community and  system preservation “livability” plans and practices. The statute specifies  broad eligibility criteria: grants may be awarded for any project under the  federal-aid highway, bus, or transit-related programs or for “any other  activity relating to transportation, community, and system preservation  that the Secretary determines to be appropriate.” Pub. L. No. 109-59, sec.  1117(d), 23 U.S.C. §101 note (Aug. 10, 2005).
The statute also requires the department to give “priority consideration”  to applicants that meet specified criteria. See id. sec. 1117(e) (emphasis  added). “Priority consideration” is not a defined term; Congress added it in  2005 when it converted TCSP from a pilot program to a permanent  program. As originally enacted in 1998, the statute required the department  to give selection “priority” to applicants meeting specified criteria. Thus,  as under the Ferry Boat statute discussed above, the department did not  have discretion under the TCSP pilot program to pass over applicants that  met the “priority” criteria in favor of those that did not. In 2005, however,  Congress added the word “consideration” after “priority.” The legislative  history is silent on the reason for this change, but Congress must be  presumed to have intended a meaning different from “priority,” as well as  from mere “consider,” which it used in the Bus statute as discussed  above. Reiter v. Sonotone Corp., 442 U.S. 330, 339 (1979) (in construing a  statute, courts must give effect, if possible, to every word Congress used).  Thus at least in the context of grant selection criteria, it is possible  Congress intended a sort of hierarchy—consideration, priority  consideration, and priority—with priority requiring the greatest adherence  to named criteria.
Relying on dictionary definitions of “priority” and “consideration,” since  the terms are not defined in the statute, the department believes that  “priority consideration” does not require the department to award funds to  applicants that meet the criteria but “means only that the Secretary shall  give the applicants that meet one or more of the criteria in section 1117(e)  precedential or careful deliberation or thought before competing  alternatives . . ..” October 2008 DOT Letter at 13 (emphasis added).
We agree that the department likely is not required to select “priority  consideration” candidates, because this was the meaning of “priority”  before the statute was amended. But the department’s reading, as we  understand it, is too narrow. The department appears to argue that it must  simply give “careful deliberation” first to applicants that meet the criteria,  then to “competing alternatives” applicants that do not meet the criteria,  without giving substantive weight to the criteria themselves in selecting  grant recipients. This process-oriented interpretation does not account for  the fact that “priority” and “priority consideration” both appear in  selection “criteria” provisions (see notes 16-17 above), not in selection  process provisions. While a process-oriented interpretation has been  recognized in a number of court decisions, it is used there as a specialized  term—“a term of art in the jargon of federal employment law.” Pope v.  FCC, 311 F.3d 1379, 1381 (Fed. Cir. 2002). Moreover, when the  department analyzed the 1998 and 2005 statutes more contemporaneously,  it read both “priority” and “priority consideration” as pertaining to  selection criteria, not selection sequence, and indeed, according to the  department, this was how the fiscal year 2007 evaluations for TCSP grants  were performed. The department reviewers considered whether  applicants met priority consideration and other factors. Final selections  were made applying congestion pricing as a discriminating factor.
In our view, the fact that Congress changed “priority” to “priority  consideration” means the department was not bound to select applicants  that met the “priority consideration” factors. Because Congress retained  the phrase in the selection “criteria” provision, we also believe it relates to  more than simply the timing of an applicant’s consideration. Congress  singled out a class of candidates and mandated that the department give  them special attention and a careful and bona fide review. Ultimately,  however, the department had discretion to select applicants that were not  in the “priority consideration” class, or to select among multiple applicants  that were all in the class, based on other factors rationally connected to  the objectives of the statute. Congestion pricing was a factor rationally  related to the TCSP statute, in the department’s judgment, because the  stated purpose of the statute is to support development and  implementation of strategies to integrate transportation and community  plans for addressing, among other things, improving the efficiency of the  nation’s transportation system—which congestion pricing would help to  achieve. October 2008 DOT Letter at 10-11; see Pub. L. No. 109-59, §  1117(b)(1). We agree that the department could use congestion pricing as  a discriminating factor in selecting among otherwise qualified applicants.
The remaining issue is whether, before the department applied congestion  pricing as a discriminating factor, it followed the statute and gave  applicants that qualified for priority consideration (if any) the bona fide  “hard look” that Congress required. The answer to this is not  straightforward. Department officials told us they treated applications as  qualifying for priority consideration if a candidate met just one of the five  statutory criteria, and looked no further. As discussed below, we believe  the better view is that the statute requires all five to be met. Because of the  department’s one-factor approach, however, it is not possible to determine  from the current record whether any of the applicants met all five factors.  Even if no urban partner had satisfied all five criteria but some other  applicants had done so, the outcome might not have changed. Because the  department had discretion, once it gave bona fide consideration to priority  consideration applicants, to make selections based on congestion pricing,  its announced key factor, it could well be that the same urban partners  would have been selected. It is also possible that having taken a hard look  at “true” priority consideration candidates, the department would have  selected applicants that were not urban partners instead. Given that the  department had ultimate discretion to select nonpriority-consideration  applicants, and that all TCSP grant funding has been obligated, we do not  recommend re-evaluating the more than 500 project applications and  possibly reawarding the fiscal year 2007 TCSP grants. Instead, the  department should ensure that all future TCSP discretionary grant awards  are carried out in accordance with the statute, that is, by giving priority  consideration only to applicants that meet all five of the factors, for the  reasons we now address.
Literally read, the statute requires that an applicant satisfy all five factors  in order to qualify for priority consideration. The statute lists five factors,  with the last two joined by the word “and.” The usual meaning of the  word “and” is conjunctive—”and” means “and”—unless the context  dictates otherwise. The presumption is that “and” is used in its ordinary  sense. See, e.g., Reese Brothers v. United States, 447 F.3d 229 (3d Cir.  2006); Zorich v. Long Beach Fire Dep’t and Ambulance Serv., 118 F.3d  682, 684 (9th Cir. 1997). Overall, we believe the TCSP program’s context  does not dictate otherwise. Several of the five factors have subparts,  providing different ways in which an applicant can satisfy that factor, and  these are separated by the word “or” rather than “and.” This shows that  when Congress intended to provide alternatives, it did so. On the other  hand, the five factors appear to overlap to some extent, for example in  referring to environmental protection, arguably indicating that just one  factor must be met. At least initially, however, environmental protection  was one of the key aims of the TCSP program, and thus requiring that it  be addressed in more than one area may be warranted. In addition, the  second factor refers to applicants that “ave other policies to integrate  transportation, community, and system preservation practices,” arguably  indicating this was intended as an alternative. In context, however, we  read this as simply a way to describe one in a list of five factors requiring  an applicant to have different types of plans, policies, and programs, to be  expected in a grant program focusing on planning rather than on  construction.
The department states that because the five criteria are “stated in a wide- sweeping manner” and because of the “broad context of the entire TCSP  statute” “with its inclusive purposes, wide eligibility requirements, and  extensive criteria for priority consideration . . . it was logical to conclude  that the applicants did not have to meet all five of the criteria . . ..” October  2008 DOT Letter at 12-13. We believe these factors show the opposite.  Given the extraordinary breadth of the eligibility requirements, it is logical  that Congress would provide criteria for narrowing the pool, by specifying  which applicants deserve special consideration. Only having to meet one  of the criteria would undercut the very concept of “priority,” because  virtually all applicants could satisfy one of these broad requirements.
The provision’s legislative history also supports the interpretation that all  factors must be met. As noted, when Congress made the TCSP program  permanent in 2005, it amended what were then two “priority” criteria  provisions (one for planning grants, another for implementation grants). It  combined them into a single provision and changed the requirement from  the department having to give “priority” to having to give only “priority  consideration.” At the same time, Congress amended the “purposes”  provision from a list of five purposes joined by the word “and” to a list of  roughly the same five purposes introduced by the term “one or more of the  following.” See Pub. L. No. 105-178, sec. 1221(c)(2) (1998 statute), Pub. L.  No. 109-59, sec. 1117(b) (2005 statute). Despite all of these changes,  Congress retained the “and” in the list of priority consideration factors.
This suggests that “and” was intentional, not a drafting oversight. The fact  that Congress was amending the statute to require only priority  consideration rather than priority also supports this reading—once the  department had this additional selection discretion, it would make the  provision be virtually meaningless if only one of the five factors had to be  met.
The overall purpose of the program and the department’s historic  descriptions of it also support the reading that all five factors must be met.  The TCSP program was established as a counterpoint to traditional  transportation grant programs that focus on new construction as a way to  improve mobility, without necessarily considering the effect on  surrounding communities and the environment. The TCSP program was  intended to encourage communities to think more strategically and to  integrate their transportation planning with community and regional  economic planning. As the department has noted on many occasions, the  TCSP program is intended to address the relationships among  transportation, community, and system preservation plans and practices— the so-called land use/transportation link—and to encourage the “use   transportation to build livable communities.” Giving priority to applicants  that meet all five factors supports this purpose by rewarding those that  integrate the greatest number of activities. The department itself has  recognized this focus on integration in numerous descriptions of the TCSP  program, literally underlining the “and” between the final two priority  factors and emphasizing that it will give priority to applicants that meet all  five program purposes (which roughly mirrored the priority factors).
Finally, the conjunctive “and” should be interpreted as a disjunctive “or”  only to avoid an incoherent reading of the statute or a reading that leads to  an irrational result. Sosa v. Chase Manhattan Mortgage Corp., 348 F.3d  979, 983 (11th Cir. 2003); OfficeMax v. United States, 428 F.3d 583, 589  (6th Cir. 2005). Reading these factors as conjunctive would not lead to  such a result, however, because an applicant can meet all five factors. The  department demonstrated this in recent discussions by outlining how it  believes the TCSP projects funded for Seattle, Minneapolis, and San  Francisco could have met all of the five factors.
section_title: Value Pricing Pilot Program
paragraphs: Using congestion pricing as a priority selection factor, the department  awarded grants totaling $20 million under the Value Pricing Pilot program  to urban partners Minneapolis, New York, San Francisco, and Seattle.  Under this program, the department is authorized to fund cooperative  agreements with up to 15 state and local governments to “establish,  maintain and monitor value pricing programs,” Pub. L. No. 109-59, sec.  1604, 23 U.S.C. § 149 note, and Value Pricing Pilot projects may include  tolling and other forms of congestion pricing on federally funded  highways.
We conclude that the department had authority to use congestion pricing  as a priority selection factor. Because the very purpose of the program is  to fund congestion pricing and tolling pilot projects, congestion pricing  clearly was a permissible selection factor.
section_title: Intelligent Transportation System-Operational Testing to Mitigate Congestion Program
paragraphs: “(1) enhance mobility and productivity through improved traffic management . . . [and]  toll collection . . .; (2) utilize interdisciplinary approaches to develop traffic management  strategies and tools to address multiple impacts of congestion concurrently;  . . . (3)  address traffic management . . .  toll collection traveler information with goals of . . .  reducing metropolitan congestion by not less than 5 percent by 2010 . . ..”
Pub. L. No. 109-59, sec. 5306(b) (emphasis added).
Because the statute specifically requires the department to give higher  priority to projects that enhance mobility through toll collection, and  focuses on reducing congestion—a goal that the department’s expert  judgment, is facilitated and enhanced by congestion pricing—the  department was clearly authorized to use congestion pricing as a priority  selection factor in awarding these grants.
section_title: New Fixed Guideway Facilities Program (Very Small Starts)
paragraphs: Using congestion pricing as a priority selection factor, the department  awarded a total of $112.7 million in grants to urban partner New York City  under the New Fixed Guideway Facilities (New Starts) program. The  funding consisted of a series of individual grants, each for less than $25  million, thus qualifying as Very Small Starts grants. October 2008 DOT  Letter at 4-5.
Under the general New Starts program, the department may award grants  “only if the Secretary, based on evaluations and considerations set forth in  paragraph (3), determines that the project is  . . .  justified based on a comprehensive review of its mobility improvements,  environmental benefits,  cost effectiveness,” see 49 U.S.C. §  5309(d)(2)(B). In making this determination, the department must  evaluate, among other things, “(i) congestion relief; (ii) improved mobility;  (iii) air pollution; (iv) noise pollution;  (v) energy consumption,” see  49 U.S.C. § 5309(d)(3)(D), as well as “other factors that the Secretary  determines to be appropriate to carry out this subsection,” 49 U.S.C. §  5309(d)(3)(K). The department has identified these “other factors” as  including congestion management/pricing strategies. See 72 Fed. Reg.  17981, 17982 (Apr. 10, 2007); 72 Fed. Reg. 30907, 30913 (June 4, 2007).
By contrast, grants made under the Very Small Starts program—a subset  of the New Starts program—are not currently subject to these or any other  specific selection criteria. The department therefore had discretion to use  selection criteria rationally connected to achieving the purposes of the  statute. The department states that it looked to the above New Starts  selection criteria for guidance in exercising this discretion, October 2008  DOT Letter at 5, and in the department’s judgment, congestion-pricing  measures meet several of the New Starts selection factors. Congestion  pricing reduces congestion by creating a price incentive for motorists to  keep off the roads in the most congested times of day and to use public  transit alternatives. Less congestion, in turn, improves mobility, reduces  environmental pollution, and reduces fuel consumption. October 2008  DOT Letter at 5; see also Department of Transportation, Fight Gridlock  Now, available at www.etc.dot.gov (accessed Nov. 14, 2008).
We conclude that the department had authority to use congestion pricing  as a priority factor in making these Very Small Starts grants. Based on the  department’s technical expertise in traffic management, we give deference  to the department’s position that congestion pricing supports and  enhances the achievement of several of the selection factors for this  program—reduced congestion, increased mobility, and reduced pollution.
section_title: Innovative Bridge Research and Deployment Program
paragraphs: Using congestion pricing as a priority selection factor, the department  awarded grants totaling $5.1 million under the Innovative Bridge Research  and Deployment program to urban partner Seattle. Under this program,  the department is authorized to award grants to “promote, demonstrate,  evaluate, and document the application of innovative designs, materials,  and construction methods in the construction, repair, and rehabilitation of  bridges and other highway structures.” 23 U.S.C. § 503(b)(1). The  department is required to “select and approve” grants for this program  “based on whether the project . . . meets the goals of the program  described in paragraph (2).” Id. § 503(b)(3)(B). Paragraph (2) provides a  nonexclusive list of the program’s goals; it states that “he goals of the  program shall include” eight different objectives, id. § 503(b)(2), none of  which is to reduce congestion or increase the use of congestion pricing.  Although congestion pricing is not explicitly identified as a selection  factor, the statute affords the department discretion to use congestion  pricing as a selection factor provided congestion pricing is rationally  related to the program’s objectives. The statute’s use of the term “include”  indicates that the list of goals was nonexclusive. Puerto Rico Maritime  Shipping Authority v. I.C.C., 645 F.2d 1102, 1112 (D.C. Cir.1981); Adams  v. Dole, 927 F.2d 771, 776 (4th Cir. 1991). The department suggests that the  statutory objective in 23 U.S.C. § 503(b)(2)(B) to reduce “traffic  congestion” supports the use of congestion pricing, see April 2008 Letter at  6, October 2008 Letter at 14, although this objective only pertains to  congestion during bridge construction. In our view, an even stronger  nexus is that congestion pricing would help achieve some of the policies  of the national transportation system reflected in the federal aid highway  program: “(i) national and interregional personal mobility (including  personal mobility in rural and urban areas) and reduced congestion;   (ii) flow of interstate . . . commerce and freight transportation . . ..” Id. §  101(b)(3)(C).
section_title: Interstate Maintenance Discretionary Program
paragraphs: Using congestion pricing as a priority selection factor, the department  awarded grants totaling $50 million under the Interstate Maintenance  Discretionary grant program to urban partners Miami and Minneapolis.  Under this program, federal set-aside funds are available “for resurfacing,  restoring, rehabilitating, and reconstructing any route or portion thereof  on the Interstate System . . . and any toll road on the Interstate System” not  subject to certain agreements. 23 U.S.C. § 118(c)(1). The statute requires  “priority consideration” of applicants proposing maintenance on high-cost  (above $10 million), high-volume (urban high-volume, or rural high-truck- volume) routes. 23 U.S.C. § 118(c)(3).
Although congestion pricing is not an explicit priority selection factor, we  conclude that the department had discretion to use it to discriminate  among otherwise equally qualified applicants. Miami qualified for statutory  priority consideration because it proposed a high-cost project on a high- volume route. Although Minneapolis may not have qualified for priority  consideration (its grant was only for $6.6 million), as discussed above  under the TCSP program; nonetheless, the department could select  Minneapolis based on congestion pricing if there was a rational nexus  between congestion pricing and the Interstate Maintenance Discretionary  program’s objectives or the general federal aid highway objectives. As  noted in discussing the Bridge program, this nexus exists with the federal  aid highway goals of mobility and reduced congestion; the Bridge program  priority for high-volume and urban routes also reflects a mobility focus  that would be enhanced by congestion pricing. See April 2008 DOT Letter  at 6. We therefore conclude the department had discretion to use  congestion pricing as a factor.
section_title: Public Lands Highway Discretionary Program
paragraphs: Using congestion pricing as a priority selection factor, the department  awarded a $47.3 million grant under the Public Lands Highway  Discretionary program to urban partner San Francisco. Under this  program, which improves access to and within public lands, the  department must allocate a portion of annual authorized funding on the  basis of state need “as determined by the Secretary,” and in making this  allocation, the Secretary is required to “give preference” to projects that  are “significantly impacted by Federal land” and “resource management  activities that are proposed by a State that contains at least 3 percent of  the total public land in the United States.” 23 U.S.C. § 202(b)(1)(A), (B)  (emphasis added). San Francisco met these preference criteria because  California has at least 3 percent of U.S. public lands and San Francisco’s  proposed grant project (either on the Golden Gate Bridge or Doyle Drive)  was deemed “significantly impacted” based on location, traffic volumes,  and access to the public land. According to a department official, the  department then applied congestion pricing to select San Francisco from  among the “preferred” applicants.
There is no explicit basis in the Public Lands grant statute to use  congestion pricing as a discriminating factor, and the department  acknowledges that there is not a specific congestion-reduction or mobility  component “associated with” the Public Lands program. April 2008 DOT  Letter at 6. Nonetheless, there was a rational nexus between congestion  pricing and program objectives. As the department notes, congestion  pricing will provide California with additional funds, “thereby leveraging  the federal investment,” and congestion pricing “is reasonably expected to  reduce emissions.” April 2008 DOT Letter at 6; October 2008 DOT Letter at  3-4. Furthermore, as with the other federal-aid highway program grants  discussed above, congestion pricing supports the general program goals of  mobility and reduced congestion. Thus we believe the department had  discretion to use congestion pricing as a factor in awarding this grant.
section_title: Appendix VI: GAO Contacts and Staff Acknowledgments
subsections: section_title: Staff Acknowledgments
paragraphs: In addition to the contacts named above, Richard Burkard, David Hooper,  Emily Larson, James Ratzenberger, Aron Szapiro, Donald Watson, Crystal  Wesco, Carrie Wilks, and Courtney Williams made key contributions to  this report.