Surface Transportation: Clear Federal Role and Criteria-Based Selection Process Could Improve Three National and Regional Infrastructure Programs
Published: 2009-02-06T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: To help meet increasing transportation demands, the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU) created three programs to invest federal funds in national and regional transportation infrastructure. As requested, this report provides (1) an overview of the goals, funding status, and types of projects and activities funded by the three programs; (2) advantages and challenges identified by program stakeholders; and (3) potential program enhancements. GAO reviewed pertinent federal laws and rules; examined plans for selected projects; conducted site visits; and interviewed officials, stakeholders, and experts.
section_title: What GAO Found
paragraphs: The goals of the projects funded by the three national and regional infrastructure programs--Projects of Regional and National Significance (PNRS), the National Corridor Infrastructure Improvement Program (NCIIP), and the Coordinated Border Infrastructure (CBI) program--are varied, most projects have been reviewed and funded, most projects are for highway improvements, and funds have been applied toward various related activities. PNRS and NCIIP funds were distributed by congressional directive, and CBI funds were distributed by formula. The states GAO visited or whose officials GAO interviewed had established a variety of project goals, including increasing capacity and enhancing mobility. As of December 2008, the Federal Highway Administration had reviewed most projects submitted by states and had obligated $1.2 billion, or about 33 percent of the $3.6 billion authorized for the three programs through September 30, 2008. However, some states had not initiated efforts to obtain available funding. The officials GAO interviewed cited various reasons for not pursuing the funds, such as trying to complete an environmental impact statement and trying to identify a project that met the program's funding criteria. The programs' contributions to projects' estimated total costs varied, from less than 30 percent of the estimated total costs for the majority of reviewed PNRS projects and about half of the reviewed NCIIP projects to 80 percent or more of the estimated total costs for almost half of the reviewed CBI projects. Furthermore, for high-cost projects--those expected to cost over $500 million--the programs' funding contributions ranged from about 4 to 13 percent of the estimated total project cost. States have used the program funds mainly for highway projects and for various related activities, such as conducting environmental studies and expanding ongoing projects. In discussing the three programs, stakeholders cited advantages less often than challenges. The most frequently cited advantage was the funding the programs provided to support and move projects forward. The most commonly cited challenge also involved funding and included funding uncertainty. This was a challenge because project sponsors did not know whether they would receive additional federal funds to complete their projects--especially high-cost projects. According to GAO's interviews and prior work, clearly defining the federal role in surface transportation is an important step in enhancing these programs. Two historical approaches could then be used to distribute federal funds--a criteria-based competition or a formula-based distribution. GAO's interviews and prior work suggest that a criteria-based competition could enhance these programs. Some interviewees also called for a wide range of other enhancements, from broad proposals to increase investment in different transportation modes to specific suggestions, such as using cost-benefit analysis in selecting projects. The Department of Transportation generally agreed with the report's information and conclusions and offered to work with Congress on GAO's three proposed matters.

section_title: Letter
paragraphs: As traffic congestion increases and our nation’s transportation  infrastructure ages, governments at the federal, state, and local levels face  growing demands for infrastructure improvements. To help address these  demands, the Safe, Accountable, Flexible, Efficient Transportation Equity  Act: A Legacy for Users (SAFETEA-LU), enacted in August 2005,  established three federal transportation programs to target funds to  infrastructure projects that have high costs, involve national or regional  impacts, and cannot easily or specifically be addressed within existing  federal surface transportation programs. The programs, which the Federal  Highway Administration (FHWA) administers, are as follows:    The Projects of National and Regional Significance (PNRS) program  provides funding for high-cost transportation projects that are of national  or regional importance in enhancing the surface transportation system.
The National Corridor Infrastructure Improvement Program (NCIIP)  provides funding for highway construction projects in corridors of  national significance to promote economic growth and international or  interregional trade by enhancing freight mobility.
The Coordinated Border Infrastructure (CBI) program provides funding to  support the safe movement of motor vehicles across the land borders of  the United States with Canada and Mexico.
To fund these three programs, SAFETEA-LU authorized spending of over  $4.5 billion from the federal Highway Trust Fund during fiscal years 2005  through 2009. According to the latest data available from FHWA, these  three programs have contributed federal funds to 153 projects in 35 states  and the District of Columbia. The act did not define the terms “projects of  national or regional importance” or “corridors of national significance,”  but it established a competitive, criteria-based process for FHWA to follow  in selecting PNRS and NCIIP projects. However, this process was never  implemented because, in different sections of SAFETEA-LU, all of the  available funds for these two programs were directed to 24 PNRS and 31  NCIIP projects. CBI funds were distributed to 15 border states, by formula,  for these states to allocate to projects that met CBI criteria described in  SAFETEA-LU. As of September 30, 2008, states had allocated CBI funds to  98 projects. The projects that received federal funds through the three  programs vary in complexity and size—from replacing a major highway  bridge to rehabilitating a highway rest area. While CBI differs in some  ways from PNRS and NCIIP, we included it in our analysis at your request  and because it provides federal funds to improve transportation  infrastructure projects on our borders with Canada and Mexico. Such  projects could have national and regional implications.
While demands for transportation infrastructure investment are  increasing, the purchasing power of revenues to the Highway Trust Fund  continues to erode with inflation and the introduction of more fuel- efficient and alternative-fuel vehicles. In addition, federal surface  transportation programs are due for reauthorization at the end of fiscal  year 2009. Hence, Congress will soon face the challenge of allocating  federal resources to meet demands for a wide range of surface  transportation infrastructure projects. You asked us to review the three  programs established in SAFETEA-LU and to identify possible  enhancements that could be applied to future authorizations. To do so, we  addressed the following questions: (1) What are the goals, funding status,  and types of projects and activities funded for the three programs?   (2) What advantages and challenges did stakeholders say were associated  with these three programs? (3) What approaches are available for  enhancing the three programs?
To address these questions, we (1) reviewed federal law, proposed  regulations, and a Department of Transportation (DOT) report on the  PNRS program; (2) reviewed pertinent documentation, including some of  the project proposals, plans, and information submitted to DOT for  projects funded by these programs; and (3) interviewed officials from 56  “stakeholder” entities to understand the programs’ advantages, challenges,  and possible enhancements. Stakeholders broadly have interest and  expertise in one or more of the three programs, in a specific transportation  project funded by one of these programs, or in federal surface  transportation policy generally. The stakeholders we interviewed included  officials from the following entities:    DOT headquarters in Washington, D.C., including the Office of the  Secretary; FHWA; the Federal Railroad Administration (FRA); and the  Maritime Administration (MARAD), as well as FHWA division offices in  eight states for a total of 12 DOT entities; and   16 state transportation departments, 16 local government agencies, and 12  transportation associations or other expert organizations. We conducted  some of these interviews as part of our site visits to eight states— California, New York, New Jersey, Connecticut, Illinois, Wisconsin,  Washington, and Oregon—where we met with officials who manage  projects funded through the three programs. The 16 state transportation  departments we selected for interviews included 14 states that collectively  accounted for 86 projects funded by the three programs and 2 states,  Florida and Wyoming, that did not have projects funded by these three  programs.
In selecting our sites, we considered geographic diversity, the funding  authorized by states for these programs, and the characteristics of the  projects funded. In addition, for comparison, we contacted Transport  Canada, the transportation department of the federal Canadian  government, and the Ministry of Transportation and Infrastructure of the  Canadian province of British Columbia, to obtain information about  similar infrastructure investment programs. (See app. I for a full list of the  entities we contacted during our work on this report.)
We also reviewed FHWA’s data on amounts authorized, appropriated, and  obligated for PNRS, NCIIP, and CBI. To assess the reliability and quality of  FHWA’s financial data, we analyzed related documentation and  interviewed knowledgeable agency officials. Through these efforts, we  determined that the data were sufficiently reliable for this report. We  conducted this performance audit from December 2007 to February 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. I for further details  about our objectives, scope, and methodology.)
subsections: section_title: Background
paragraphs: While PNRS, NCIIP, and CBI all provided federal funds for transportation  infrastructure projects, they differed somewhat in their goals, methods  used for selecting projects, and methods used for distributing the federal  funds to states, as indicated in table 1. (See app. V for a list and  description of the 153 projects funded by the three programs.)
SAFETEA-LU authorized different funding levels for the three programs in  each fiscal year of the 5-year authorization period, as shown in table 2;  however, the amounts ultimately distributed to the states for those years  were adjusted downward for several reasons.
The funds authorized for these programs, which come from the federal  Highway Trust Fund, represent funds that can be made available to the  Secretary of Transportation, acting through FHWA, to carry out these  programs. These funds are subject to limitation through the annual  appropriations process and deductions may be made for rescissions,  among other things. In fiscal years 2005 and 2006, the funding for these  three programs was 14 percent less than the authorizations for those 2  years and in fiscal years 2007 and 2008 the funding was 8 percent less than  the authorizations for those years. After funds are allocated for these  programs and FHWA has reviewed project documentation for  completeness and consistency with congressional language, funds may be  obligated, or set aside, for the projects. These three programs, like most  federal-aid highway programs, distribute federal funds by reimbursement  to the states. States spend other funds for eligible project expenses and  submit claims to FHWA for review and approval before they receive the  federal funds under these programs as reimbursement.
Before federal funds are distributed to a state for a project under these  three programs, the state must submit a proposal for a PNRS or an NCIIP  project, or a project eligibility form for a CBI project, to FHWA. FHWA  compares information about the project against the project description  included in SAFETEA-LU for PNRS or NCIIP projects and against  eligibility criteria as defined in SAFETEA-LU for CBI projects. In addition,  FHWA follows the normal steps for reviewing a project application for the  use of federal-aid highway program funds. For example, FHWA ensures  that the state agrees to apply federal laws as a condition of receiving funds  under these and other federal-aid highway programs, such as the  environmental assessment provisions of the National Environmental  Policy Act (NEPA)  and the Davis-Bacon Act’s prevailing wage  requirements.
SAFETEA-LU directed all of the PNRS and NCIIP funds to specific  projects. SAFETEA-LU also contained other provisions that set forth a  criteria-based, competitive process for selecting PNRS and NCIIP projects;  however, this process was superseded by the congressional directives.  According to SAFETEA-LU’s competitive process, PNRS projects selected  for federal funding were to have national and regional significance and  benefits that the act described as improving economic productivity by  facilitating international trade and relieving congestion, among other  things. The criteria for selecting NCIIP projects were that they be located  in “corridors of national significance” and that their selection be based on  the extent to which a corridor links two existing segments of the Interstate  System, is able to facilitate major multistate or regional mobility, and  promotes economic growth. Additional criteria for NCIIP funding included  the value of commercial vehicle traffic cargo in the corridor and economic  costs arising from congestion.
Federal funds distributed through the CBI program to states had to be  used generally for infrastructure or operational improvements on  highways within 100 miles of a border with Canada or Mexico. In addition,  states can transfer up to 15 percent or $5 million (whichever is less) of the  state’s yearly amount of CBI funds to the General Services Administration  (GSA), which owns and leases facilities at U.S. land border ports of entry.  GSA can use these funds for CBI-eligible projects on its property. Border  states can also propose to use CBI funds on projects located in Canada or  Mexico that facilitate cross-border movement at an international port of  entry in the border region of the state.
section_title: Project Goals Vary, Most Projects Have Been Reviewed and Received Funding, Highway Projects Predominate, and Funds Are Used for Various Activities
paragraphs: States established goals for their projects to address capacity, congestion,  economic and safety issues. According to the latest data available from  FHWA, most PNRS, NCIIP, and CBI projects had been reviewed by FHWA,  and funds had been distributed to states; however, some states had not  initiated efforts to obtain federal funds for their projects under these  programs. The federal contributions to estimated total project costs varied  by program. States have used the program funds mainly for highway  projects, although some rail and intermodal projects were funded under  PNRS. Furthermore, states have used the project funds for various  activities and purposes.
subsections: section_title: Projects Funded by the Programs Have a Variety of Goals
paragraphs: The 14 states we reviewed established a variety of goals for the national  and regional projects funded by the three programs. In broad terms, these  goals included increasing transportation capacity, enhancing passenger  and freight mobility, reducing congestion, promoting economic  development, and improving safety. Table 3 identifies more detailed goals  for some projects.
section_title: Most Projects Have Been Reviewed and Funds Have Been Distributed, but Some States Have Not Requested Funds for Certain Projects
paragraphs: As of December 2, 2008, FHWA had received project descriptions for and  reviewed and distributed funds for most of the projects funded by  congressional directive (46 of 55 projects) under PNRS and NCIIP, as  shown in table 4.
As of September 30, 2008, 14 of 15 border states had initiated efforts to  obtain CBI funds by submitting required descriptions of proposed projects  to FHWA. These 14 states had received funds for 98 CBI projects.
Since SAFETEA-LU was passed in August 2005, FHWA has distributed  most of the funds appropriated for these programs to the states for use on  reviewed projects; however, FHWA has set aside, or obligated, only a  portion of these funds for specific projects. As shown in table 5, as of  September 30, 2008, FHWA had obligated nearly $1.2 billion, or about 33  percent of the $3.6 billion authorized under the three programs through  that period.
Although FHWA has obligated about a third of the authorized funds for  reviewed projects, many of these projects are generally still in preliminary  stages. As we have previously reported, FHWA has determined that it  typically takes from 9 to 19 years to plan, gain approval for, and construct  a new, major, federally funded highway project that has significant  environmental impacts. As many as 200 major steps can be involved in  developing such a project, from identifying the need for it to starting  construction.
While states have submitted complete project descriptions to FHWA for  most projects and have received funds for them, some states have not  done so, including the following:    Three states had not submitted descriptions or requested funds for 3 of the  24 PNRS projects, as of December 2, 2008. Transportation officials in  Michigan and Minnesota told us they were waiting to complete the  environmental impact statement before submitting a project description  and requesting PNRS funds for 2 of these projects (Blue Water Bridge  Border/Port Huron Plaza project in Michigan and the Union Depot  Multimodal Transit Facility in Minnesota). FHWA also did not receive a  project description for the PNRS project involving improvements to I-80 in  Pennsylvania.
Three states and the District of Columbia had not submitted project  descriptions or requested funds for 4 of 31 NCIIP projects, as of December  2, 2008. Officials we interviewed in two of those states offered varied  reasons for not using the funds. For example, Arizona DOT officials said  they did not submit a description for the State Route 85 project because  they were trying to identify an appropriate project segment that could  meet the NCIIP funding criteria. Wisconsin DOT officials told us they had  not yet requested the NCIIP funds for the U.S. 41 project since the NCIIP  funds do not have to be used by a specified date. In addition, FHWA has  not received NCIIP project descriptions for the Frederick Douglas  Memorial Bridge in the District of Columbia and I-80 improvements in  Indiana.
One of 15 border states (New Hampshire) had not used any of its  distribution of CBI funds, as of September 30, 2008. An FHWA official told  us that New Hampshire has only one border crossing, and it is not always  open; therefore, the New Hampshire DOT is trying to identify a suitable  project that meets CBI funding criteria.
section_title: Federal Share of Contributions to Total Project Costs Varies by Type of Program
paragraphs: The federal share of contributions relative to the estimated total project  costs varies widely between the PNRS and NCIIP programs and the CBI  program, as shown in table 6. For example, under PNRS, the federal  funding contributions represented less than 30 percent of the estimated  total project cost for the majority of reviewed projects (i.e., for 15 of 19  PNRS projects). Under NCIIP, the federal funding contributions  represented less than 30 percent of the estimated total project cost for  about half of the reviewed NCIIP projects (i.e., for 13 of 27 NCIIP  projects). The federal shares for the congressionally directed PNRS  projects that received funding from FHWA varied widely, ranging from  about 2 percent for the construction of I-73 between North and South  Carolina to 104 percent for a project to relocate freight rail operations  from El Paso, Texas, to New Mexico. In contrast, CBI funds represented  80 percent or more of the estimated total project cost for almost half (44 of  98) of reviewed CBI projects selected by the states. Generally, CBI  program funds were often used by states for smaller-scope, lower-cost  projects—such as resurfacing highway pavement, rehabilitating rest areas,  refurbishing tollbooths, or installing guardrails.
For high-cost projects—those whose estimated total costs equaled or  exceeded $500 million (11 of 19 PNRS projects, 11 of 27 NCIIP projects,  and 1 of 98 CBI projects)—PNRS funds averaged about 8 percent of  estimated total costs, NCIIP funds averaged about 4 percent of estimated  total costs, and CBI funds averaged about 13 percent of estimated total  costs. For non-high-cost projects, the range and the average federal share  of contributions as a percentage of estimated total project costs is similar  for each program. Table 7 presents information on the range and average  percentage of estimated total project costs provided by federal funds, by  program.
section_title: Majority of Projects Are for Highway Improvements
paragraphs: States have used the funds from the three national and regional programs  mainly for highway projects. As shown in table 8, 137 of 144 total reviewed  projects, or 95 percent, involved highways.
While some sections of SAFETEA-LU restricted funds from all three  programs to highway projects, another section of SAFETEA-LU directed  some PNRS funds to nonhighway projects. (See app. V for complete lists  of PNRS, NCIIP, and CBI projects.) These nonhighway PNRS projects  included an intermodal project in Chicago (the CREATE program) and a  rail project in New York (the Cross Harbor Freight Movement project).
section_title: Project Funds Are Used for Various Activities and Purposes
paragraphs: States have used their PNRS, NCIIP, and CBI project funds for a variety of  activities, including conducting environmental studies, planning,  preliminary engineering, design, right-of-way acquisition, and  construction. Moreover, these project funds can be used for diverse  purposes, such as expanding ongoing projects, covering cost increases or  revenue shortfalls, or initiating projects and attracting nonfederal funds.  The following examples from projects in table 3 illustrate how states have  used their project funds:    Oregon DOT officials told us PNRS funds enabled the state to undertake  additional I-5 bridge repair projects beyond those possible with the  previous level of state funding. Because I-5 is the only north-south  interstate highway linking Oregon to California and Washington, upgrading  the bridges is expected to improve the flow of freight through all three  states.
Connecticut DOT officials told us that NCIIP funds provide the necessary  momentum to continue the Pearl Harbor Memorial Bridge project.  Without these federal funds, the officials said, other transportation  projects would have had to be postponed until Connecticut could finish  this project. Officials stated that Connecticut actively seeks federal  funding for large transportation projects so that it can direct state funds to  other transportation projects.
Finally, some states have used the program funds to initiate projects and  attract other state and local funds. For example, the California DOT used a  portion of its CBI funding to attract state funds for the Brawley Bypass  project. According to California DOT officials, if federal funds had not  been distributed to this project, it would have not have qualified for state  funds—under California law, a project sponsor must obtain nonstate  matching funds before it can obtain state funds—and the project would  have been more difficult to complete.
section_title: Stakeholders Cited Advantages Less Often Than Challenges Associated with DOT’s National and Regional Programs
paragraphs: In discussing the three programs, stakeholders discussed a wide variety of  both advantages and challenges, but they cited advantages less often than  challenges. Specifically, in our interviews with 56 stakeholders, there were  47 instances in which stakeholders cited advantages of these programs  and 66 instances in which they cited challenges. The advantages were  primarily related to the benefits of the programs’ funding, while the more  numerous challenges included funding issues but also addressed problems  in complying with federal requirements and in not using the criteria-based  competitive process established in SAFETEA-LU to select projects.
subsections: section_title: Stakeholders Cited Advantages Related to the Programs’ Funding
paragraphs: When asked about the advantages of the three programs, the stakeholders  we interviewed focused primarily on the funding the programs provided.  (See app. II for a complete list of these advantages and the number of  interviews in which each advantage was mentioned by a stakeholder  group.) The most frequently cited advantage was the support the programs  provided to initiate projects and to advance those that were already under  construction. For example, as stated earlier, Connecticut DOT officials  told us that NCIIP funds allowed them to continue work on the Pearl  Harbor Memorial Bridge project without having to stop other  transportation projects that would otherwise have had to be postponed  until the bridge could be completed.
The second most frequently cited advantage was the opportunity the  programs provided to address high-cost projects and issues the  stakeholders considered to be of national importance. For example, one  stakeholder said that PNRS funding enabled it to address a high-cost  project that required multiple funding partnerships, and another  stakeholder said the CBI funding allowed it to undertake a project that  serves regional and national needs by facilitating cross-border commercial  truck traffic.
Two additional advantages, both related to the programs’ funding, were  the third most frequently cited. These included the direction of PNRS  funds to nonhighway projects and the ability of the program funds to  attract additional nonfederal funds, as follows:    Stakeholders viewed the direction of some PNRS funds to nonhighway  projects as an advantage in addressing some states’ transportation  priorities because such projects would not otherwise have been eligible  for PNRS funds under current law.
Some stakeholders cited the ability of PNRS or NCIIP funds to attract  additional nonfederal funds. For example, some stakeholders mentioned  that because federal funds were directed toward a specific project,  nonfederal funds were distributed by the state and local government to  satisfy the state and local match requirements.
section_title: Stakeholders Cited Several Challenges Associated with DOT’s National and Regional Programs
paragraphs: While stakeholders cited some advantages, there were more instances in  which stakeholders cited challenges associated with these three programs.  (See app. III for the list of challenges and the number of instances that  each challenge was cited in a stakeholder interview.) The challenges most  frequently cited were related to funding, including the uncertainty of  future federal funding, the relatively limited amounts of funding provided  for large projects, and the impact of inflation.
Funding uncertainty presents a challenge because almost all PNRS and  NCIIP projects were funded below their full cost and project sponsors do  not know whether they will receive additional federal funds beyond fiscal  year 2009 to complete their projects. According to one stakeholder, states  need a reliable funding stream in order to plan and obtain nonfederal  funding. As a result, some stakeholders told us they planned to seek  additional federal funds beyond fiscal year 2009 to complete their projects.
The percentage of total estimated project costs provided by the three  programs also presents a challenge to projects’ completion. As noted,  under the PNRS program, the federal funding contributions represented  less than 30 percent of the estimated total project costs for the majority of  reviewed projects. Under the NCIIP program, the federal funding  contributions represented less than 30 percent of the estimated total  project costs for about half of the reviewed projects. For high-cost  projects, PNRS funds averaged about 8 percent of the estimated total  costs, and NCIIP funds averaged about 4 percent of the estimated total  costs. According to some stakeholders, certain projects will be placed on  hold unless they receive additional federal funds.
Inflation poses a challenge because it reduces the value of the federal  funds from these programs over time. One stakeholder reported that the  rising cost of right-of-way acquisition has increased project planning  uncertainty. Some stakeholders reported that inflation has also greatly  increased the cost of construction materials over time. According to the  Bureau of Labor Statistics, the producer price index for highway and  street construction increased by about 41 percent from August 2005 to  August 2008 (the latest month for which these data are available).
The second most frequently cited challenge was difficulty in complying  with federal requirements. For example, the stakeholders who cited  compliance with federal and environmental requirements as a challenge  noted the additional time and expense involved. In the view of some state  and local transportation officials, these requirements may be too onerous  to justify the use of the program funds. One stakeholder stated that the  environmental review process, established under NEPA, takes a long time  and that the Davis-Bacon prevailing wage requirements require higher- than-market wages, resulting in increased project costs. Stakeholders  also reported that it can be difficult to obtain state and local funds to  match the federal funds, as required. One stakeholder reported that it was  still trying to obtain enough state and local funding to meet the matching  requirements.
The third most frequently cited challenge was not using the criteria-based  competitive process in SAFETEA-LU to select PNRS and NCIIP projects.  According to the stakeholders, it was difficult to determine whether the  congressionally directed projects addressed national and regional  priorities because the projects were not evaluated against the act’s  criteria. For example, DOT officials said not using the criteria-based  competitive process made it difficult to assess the national transportation  system across modes to determine where strategic improvements should  be made.
section_title: Key Program Enhancements Include Defining a Clear Federal Role and a Criteria-Based, Competitive Project Selection Process
paragraphs: According to our interviews with program stakeholders and our prior  work on federal surface transportation programs, clearly defining the  federal role in surface transportation is an important step toward focusing  these three programs. Once the federal role has been clarified, two  approaches that have been used in the past could be used to distribute  federal transportation funds to projects that are consistent with that role— criteria-based competition or formula-based distribution. Both approaches  have a range of characteristics; however, our interviews with stakeholders  and our prior work suggest that a criteria-based competition could  enhance these programs by targeting federal investments in accordance  with a more clearly defined federal role and directing funds to stated  program goals. In addition, Congress could still direct funds to specific  projects as it did in two of the three programs. Some stakeholders we  interviewed also suggested a wide range of both broad and specific  program enhancements (see app. IV).
subsections: section_title: The Federal Government Lacks a Clear Definition of Its Role in Surface Transportation
paragraphs: Stakeholders from all the groups we spoke with for this engagement said  that a clear definition of the federal role in transportation could help guide  federal investments toward achieving national transportation priorities.  Stakeholders mentioned several different ways the federal role could be  better defined—from reducing the federal role in transportation  infrastructure financing by giving more responsibility to individual states  for the transportation system, to focusing more resources on fewer  transportation programs, to concentrating federal resources on large  transportation projects that affect multiple states.
In our prior work, we have frequently called for more clearly defining the  federal role in surface transportation. We have found that multiple federal  roles can be inferred from the variety of surface transportation programs  the federal government funds, but there is no single definition or set of  priorities to use to focus federal surface transportation spending. In 2008,  we called for a fundamental reexamination of the nation’s surface  transportation system, noting that the federal goals are unclear, the federal  funding outlook for surface transportation is uncertain, and the efficiency  of the transportation system is declining. We have also found that the  lack of a defined federal role in transportation is a reason why many  current federal transportation programs are ineffective in addressing key  transportation challenges, and we have identified federal transportation  funding as a high-risk area. Additionally, in a May 2007 forum convened  by the Comptroller General on transportation policy, participating experts  stated that the nation’s transportation policy has lost focus and that a  better definition of overall transportation goals is needed to better meet  current and future infrastructure needs.
section_title: Approaches Available for Restructuring Programs Have Advantages and Disadvantages
paragraphs: The two primary approaches that are available and have been used  historically to distribute federal funds to transportation infrastructure  projects—criteria-based competition and formula-based distribution— have a range of characteristics that include both advantages and  disadvantages. Table 9 shows the characteristics of each approach as  identified by stakeholders we interviewed and through our prior work.
Regardless of the approach selected, Congress could still direct funds to  individual transportation projects as it did in two of the three programs.  According to some stakeholders, congressional directives circumvent the  established state transportation planning process and may indirectly divert  nonfederal resources as states and others reprioritize their funds in order  to use the directed federal funds. However, other stakeholders described  congressional directives as a way to distribute federal funds more quickly  than through a competition and as a way to provide funds for projects that  might otherwise not receive funding through the established state  transportation planning process.
section_title: Criteria-Based Competition and a More Clearly Defined Federal Role in Transportation May Provide Best Opportunity to Enhance These Programs
paragraphs: According to stakeholders we interviewed and our prior work, a criteria- based, competitive approach, such as the competitive process included in  SAFETEA-LU for PNRS and NCIIP, could provide the best opportunity to  enhance these programs by better targeting federal investments in  transportation infrastructure. Such targeting is important for these three  programs because they were designed to direct federal funds toward  projects for enhancing transportation infrastructure that has national and  regional impacts. While this approach has a range of characteristics,  including some disadvantages, stakeholders stated that it allows each  project to be evaluated on its merits, and it incorporates stakeholders’  views and input. We have previously testified that a fiscally sustainable  surface transportation program will require targeted investments in the  transportation system from federal and nonfederal stakeholders.  Moreover, with regard to freight transportation, we recommended in our  prior work that DOT define the federal role for the use of federal funds,  establish clear roles for stakeholders, and focus federal funding to support  the federal role in a cost-effective manner. In addition, we have found  that having more federal programs operate competitively could help tie  funds to performance.
Canada’s Asia-Pacific Gateway and Corridor Initiative (APGCI) offers an  example of how the three programs discussed here could be restructured  as criteria-based, competitive programs. The Canadian government’s  vision for its program is to invest in critical freight transportation projects  that facilitate the movement of freight from Asia to Canada and through to  the United States. Transport Canada, the federal Canadian government’s  transportation agency, identifies key transportation projects through  analytical studies or decides to fund projects submitted by provinces or  towns using program criteria and freight transportation data. The criteria  that were developed focused on objectives in support of the program’s  vision, such as enhancing efficiency, safety, and security and minimizing  environmental impacts. According to a Transport Canada official, using  data on freight flows assisted Transport Canada in determining the extent  to which specific projects would support international trade with Asia.  The official further noted that the specific criteria enabled Transport  Canada to take a rigorous approach, be selective, and thus deliver on the  key objectives. Additionally, the official said, previous programs had less  focused objectives, allowing a considerably wider variety of projects to be  funded.
Transport Canada works with public and private stakeholders to define  what a project will entail, identify other nonfederal funding sources,  complete a cost-benefit analysis, monitor the project, and evaluate the  impact of the project after it is complete. Since October 2006, APGCI has  leveraged a federal investment of $860 million into a total federal and  nonfederal investment of $2.3 billion in 20 transportation projects. The  federal share for these projects has ranged between 33 and 50 percent of  total project costs.
section_title: Conclusions
paragraphs: Our national transportation network faces many challenges. As demands  for greater passenger and freight mobility increase and transportation  infrastructure continues to show signs of age, fatigue, and congestion,  governments at the federal, state, and local levels need to prioritize their  limited resources to meet these demands. The three programs established  in SAFETEA-LU were intended to address national and regional priorities  by helping to fund a range of high-cost infrastructure projects or could not  easily or specifically be addressed within existing federal surface  transportation programs. As Congress prepares for the reauthorization of  federal surface transportation programs in 2009, it will need to reexamine  the relative contributions of these three programs and all other surface  transportation programs to solving our nation’s transportation problems  and achieving federal goals. With regard to PNRS and NCIIP, the relatively  small federal share, especially for higher-cost projects, the number of  projects, and the distribution of projects across the country, have raised  concerns that the federal government did not maximize the impact of its  limited transportation funds. We have similar concerns about the CBI  program in that it was used by states for smaller-scope, lower-cost  projects. In addition, some of the program enhancements mentioned by  stakeholders could also improve all three programs. However, without a  clearly defined federal role and a competitive, criteria-based process for  distributing federal funds, it is unclear whether or how these programs can  meet national or regional transportation priorities or maximize the  benefits of investing increasingly scarce federal funds in our  transportation infrastructure.
section_title: Matters for Congressional Consideration
paragraphs: In order to enhance these three programs, we concluded that Congress  should consider taking the following three actions when considering the  reauthorization of federal surface transportation programs:    Define the federal role in surface transportation in accordance with the  national and regional transportation priorities that these three programs  are designed to meet.
Implement a criteria-based, competitive project selection process for these  three programs, in concert with other selection criteria.
Work with the Secretary of Transportation to develop any specific  program enhancements that could help these programs meet identified  priorities and achieve the highest return on federal investments.
section_title: Agency Comments
paragraphs: We provided a draft of this report to DOT for review and comment. On  January 22, 2009, we received comments on the report from DOT officials,  including FHWA, FRA, and MARAD officials, in an e-mail from DOT’s  Office of Audit Relations. The officials generally agreed with the  information in this report and stated that the department would be happy  to assist Congress as it considers the proposed matters. In addition, DOT  provided technical clarifications, which we incorporated in the report as  appropriate.
We are sending copies of this report to congressional committees with  responsibilities for transportation issues and to the Secretary of  Transportation. The report also is available at no charge on the GAO Web  site at http://www.gao.gov.
If you or your staff have any questions about this report, please contact me  at (202) 512-2834 or herrp@gao.gov. Contact points for our Offices of  Congressional Relations and Public Affairs may be found on the last page  of this report. GAO staff that made key contributions to this report are  listed in appendix VI.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: In this report, we assessed three federal transportation programs  established by the Safe, Accountable, Flexible, Efficient Transportation  Equity Act: A Legacy for Users (SAFETEA-LU), enacted in August 2005, to  target funds to infrastructure projects that have high costs, involve  national or regional impacts, and cannot easily or specifically be  addressed within existing federal surface transportation programs. The  programs, administered by the Federal Highway Administration (FHWA),  include the Projects of National and Regional Significance (PNRS), the  National Corridor Infrastructure Improvement Program (NCIIP), and the  Coordinated Border Infrastructure (CBI) program. As requested, we  addressed the following questions: (1) What are the goals, funding status,  and types of projects and activities funded for the three programs?   (2) What advantages and challenges did stakeholders say were associated  with these three programs? (3) What approaches are available for  enhancing the three programs?
In addressing these questions, our overall approach was to (1) review  federal law, proposed regulations, FHWA’s program guidance and  information, FHWA status reports on each program, and a Department of  Transportation (DOT) report on the PNRS program; (2) review pertinent  documentation, including some of the project proposals, plans, and  information submitted to DOT for projects funded by these programs; and  (3) interview officials from 56 “stakeholder” entities to understand the  programs’ advantages, challenges, and possible enhancements.  Stakeholders broadly have interest and expertise in one or more of the  three programs, in a specific transportation project funded by one of these  programs, or in federal surface transportation policy generally. The  stakeholders we interviewed included officials from the following entities,  which are also listed in table 10 at the end of this appendix:    DOT headquarters in Washington, D.C., including the Office of the  Secretary; FHWA; the Federal Railroad Administration (FRA); and the  Maritime Administration (MARAD); as well as FHWA division offices in  eight states, for a total of 12 DOT entities; and   16 state transportation departments, 16 local government agencies  (including port authorities and metropolitan planning organizations), and  12 transportation associations or other expert organizations. We  conducted some of these interviews as part of our site visits to eight  states—California, New York, New Jersey, Connecticut, Illinois,  Wisconsin, Washington, and Oregon—where we met with officials who  manage projects funded through the three programs.
In selecting our sites, we considered geographic diversity, the funding  authorized by states for these programs, and the characteristics of the  projects funded. The 16 state transportation departments we selected for  interviews included 14 states that collectively accounted for 86 projects  funded by the three programs and 2 states, Florida and Wyoming, that did  not have projects funded by these three programs. Also, for comparison,  we contacted Transport Canada, the transportation department of the  federal Canadian government, and the Ministry of Transportation and  Infrastructure of the Canadian province of British Columbia, to obtain  information about similar infrastructure investment programs.
In addition, to address the first question on funding status, we reviewed  FHWA’s data on amounts authorized, appropriated, and obligated for  PNRS, NCIIP, and CBI. To assess the reliability and quality of FHWA’s  financial data, we analyzed related documentation and interviewed  knowledgeable agency officials. Through these efforts, we determined that  the data were sufficiently reliable for this report. We relied extensively on  our interviews with transportation stakeholders and our prior work on  surface transportation to identify not only the goals and types of projects  and activities funded by these programs and the characteristics of  individual restructuring approaches for them, but also a wide array of  program enhancements. To address the second question on advantages  and challenges, we analyzed our stakeholder interviews, and to respond to  the third question, we relied on both our prior work and our stakeholder  interviews to identify potential enhancements to the three programs.
We conducted this performance audit from December 2007 to February  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.
Finally, table 10 identifies the stakeholder entities included in our study.
section_title: Appendix II: Stakeholder-Identified Advantages of the National and Regional Infrastructure Programs
paragraphs: Number of instances in which the advantage was identified in an  interview (number in parenthesis is the total number of  interviewees in the group)
DOT (12)
States (16)
Local  governments  (16) and experts (12)
Total (56)
Addressed high-cost projects and issues of national  importance.
Directed some PNRS funds to nonhighway projects.
Made a broad array of project costs eligible for PNRS and  NCIIP funds.
Distributed CBI funds by formula or ability to use funds in  Canada.
Federal involvement helped enable interstate cooperation.
Made DOT think system wide instead of locally.
Funds did not reduce a state’s distribution of formula  funds or funding for other high-cost projects.
Allowed for geographically targeted funding.
Congressional directives reduce time to get funds to  projects.
States could use other funds for the state and local match  requirement.
Established no maintenance of effort requirement for  states.
section_title: Appendix III: Stakeholder-Identified Challenges of the National and Regional Infrastructure Programs
paragraphs: Number of instances in which the challenge was identified in  the an interview (number in parenthesis is the total number of  interviewees in the group)
DOT (12)
States (16)
Local  governments  (16) and experts (12)
Total (56)
Funding issues (such as uncertainty, small funding amounts  for large projects, and inflation).
Criteria-based competitive process in SAFETEA-LU for PNRS  and NCIIP was not used to select projects.
States had to reprioritize projects to use program funds.
Funds can only be used as indicated in the project description  for PNRS and NCIIP congressionally directed projects.
Use of cost-benefit analysis and performance measures is  limited.
Coordination among multiple stakeholders.
Project descriptions were not submitted for some PNRS and  NCIIP projects which delayed the release of funds.
section_title: Appendix IV: Stakeholder-Identified Enhancements
paragraphs: Number of interviews in which the enhancement was  identified (number in parenthesis in the heading is the  total number of interviewees in the group)
DOT(12) (16) (16) (12)
Implement PNRS and NCIIP as written in SAFETEA-LU using a  criteria-based competition with DOT recommending to Congress which  projects should be funded.
Use cost-benefit analysis to evaluate projects before investment and  performance metrics after investments.
Make the full amount of the authorization available in the first year to  get projects completed faster.
Retain or increase the program’s ability to invest in different modes.
Distribute more federal funds to the programs.
Reduce the number of federal programs.
Have different areas compete for different pots of funds to introduce  more equity between different-sized states or metro areas.
Establish a multimodal Highway Trust Fund account.
Require projects to be included in federally mandated state and local  transportation improvement plans.
Reduce the amount of nonfederal matching funds required to obtain  federal funds.
Use full funding grant agreements to increase the certainty of federal  funds for selected projects.
Allow CBI funds to be used for environmental reviews and for  multimodal projects and increase the amount of CBI funds that can be  transferred to the General Services Administration (GSA) in any given  year.
Focus more on core federal-aid highway programs.
Reduce federal rescissions to increase the amount of federal funds  that will go toward the selected projects.
Make some amount available for congressional directives.
Fund fewer projects with the same amount of funds.
Allow funds to be transferred between projects during the authorization  period as long as the full authorized amount is allocated by the end of  the authorization period to increase the flexibility of the funds.
Use a consistent definition of the border area to ensure states use CBI  funds consistently.
Number of interviews in which the enhancement was  identified (number in parenthesis in the heading is the  total number of interviewees in the group)
DOT(12) (16) (16) (12)
Freight fees, taxes, or tolls could go to a commission that would  identify freight projects.
Allow more states to conduct environmental impact statements.
High-cost projects need funding that spans acts.
High-cost projects should submit finance plans.
Increase the federal reimbursement rate to states.
Provide incentives to consider more than just “pavement.”
Establish an expiration date for federal funds to help ensure that  projects with firm plans and nonfederal commitments are selected and  to get projects completed faster.
section_title: Appendix V: PNRS, NCIIP, and CBI Projects and Their Funding
paragraphs: Appendix V: PNRS, NCIIP, and CBI Projects  and Their Funding Not available.
Not available.
Not available.
section_title: Appendix VI: GAO Contact and Staff Acknowledgments
subsections: section_title: Staff Acknowledgments
paragraphs: In addition to the individual named above, Rita Grieco, Assistant Director;  Amy Abramowitz; Derrick Collins; Elizabeth Eisenstadt; Gregory Hanna;  Carol Henn; Susan Irving; Bert Japikse; Thanh Lu; Sara Ann Moessbauer;  Michelle Sager; and Laura Shumway made key contributions to this report.