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

Letter

Background

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.

Project Goals Vary, Most Projects Have Been Reviewed and Received Funding, Highway Projects Predominate, and Funds Are Used for Various Activities

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.

Projects Funded by the Programs Have a Variety of Goals

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.

Most Projects Have Been Reviewed and Funds Have Been Distributed, but Some States Have Not Requested Funds for Certain Projects

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.

Federal Share of Contributions to Total Project Costs Varies by Type of Program

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.

Majority of Projects Are for Highway Improvements

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).

Project Funds Are Used for Various Activities and Purposes

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.

Stakeholders Cited Advantages Less Often Than Challenges Associated with DOT’s National and Regional Programs

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.

Stakeholders Cited Advantages Related to the Programs’ Funding

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.

Stakeholders Cited Several Challenges Associated with DOT’s National and Regional Programs

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.

Key Program Enhancements Include Defining a Clear Federal Role and a Criteria-Based, Competitive Project Selection Process

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).

The Federal Government Lacks a Clear Definition of Its Role in Surface Transportation

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.

Approaches Available for Restructuring Programs Have Advantages and Disadvantages

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.

Criteria-Based Competition and a More Clearly Defined Federal Role in Transportation May Provide Best Opportunity to Enhance These Programs

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.

Conclusions

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.

Matters for Congressional Consideration

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.

Agency Comments

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.

Appendix I: Objectives, Scope, and Methodology

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.

Appendix II: Stakeholder-Identified Advantages of the National and Regional Infrastructure Programs

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.

Appendix III: Stakeholder-Identified Challenges of the National and Regional Infrastructure Programs

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.

Appendix IV: Stakeholder-Identified Enhancements

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.

Appendix V: PNRS, NCIIP, and CBI Projects and Their Funding

Appendix V: PNRS, NCIIP, and CBI Projects and Their Funding Not available.

Not available.

Not available.

Appendix VI: GAO Contact and Staff Acknowledgments

Staff Acknowledgments

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.