DOT provides billions of dollars to states and other grantees annually to improve the nation’s highway and transit infrastructure and safety. Most of this federal funding is provided by FHWA, FTA, and NHTSA. FHWA provides the vast majority of federal surface transportation funds—about $40 billion each year to states to design, construct, and maintain the nation’s roadway and bridge infrastructure through the federal-aid highway program. This program includes the nation’s National Highway System, which consists of approximately 220,000 miles of the nearly 1- million miles of roadways eligible for federal aid, including the 47,000-mile Interstate Highway System. Historically, most surface transportation funds are distributed through annual apportionments established by statutory formulas that take into account a number of factors, including the estimated share of taxes highway users in each state contribute to the Highway Trust Fund. We have previously reported that these formulas have only an indirect relationship to infrastructure needs, and many have no relationship to outcomes or grantees’ performance. MAP-21 addresses several of our past recommendations—by articulating national goals and adopting a performance-based approach to funding surface transportation projects. The act established seven national surface transportation goals for the federal-aid highway program: Safety—to achieve a significant reduction in traffic fatalities and serious injuries on all public roads. Infrastructure condition—to maintain the highway infrastructure asset system in a state of good repair. Congestion reduction—to achieve a significant reduction in congestion on the National Highway System. System reliability—to improve the efficiency of the surface transportation system. Freight movement and economic vitality—to improve the National Highway Freight Network, strengthen the ability of rural communities to access national and international trade markets, and support regional economic development. Environmental sustainability—to enhance the performance of the transportation system while protecting and enhancing the natural environment. Reduced project delivery delays—to reduce project costs, promote jobs and the economy, and expedite the movement of people and goods by accelerating project completion through eliminating delays in the project development and delivery process, including reducing regulatory burdens and improving agencies’ work practices. The act and its implementing regulations set forth a three-stage process for the performance-based surface transportation transformation across multiple modes: 1. Rulemaking: DOT must establish performance measures and 2. Set and track performance targets: states, MPOs, and other grantees must set annual or multi-year targets based on these performance measures and states report on their progress on meeting such targets to DOT, and 3. Evaluate performance: DOT must evaluate whether states have met or made significant progress toward their targets. States have one year from the effective date of the performance measure final rules to establish their own performance targets for those measures. MPOs then have 180 days after the respective state’s DOT sets its targets to establish their own targets or agree to support the state’s target. If states do not make significant progress toward meeting some targets, they must report action they will undertake to achieve their targets. Generally, the targets established will cover a 4-year reporting period and will be reported biennially. MAP-21 also mandated that states begin reporting their progress toward targets to DOT no later than October 2016. In addition, the legislation directed DOT to report to Congress in October 2017 on the effectiveness of performance-based planning as a tool for guiding transportation investments and the effectiveness of the performance-based planning process of each state. The performance-based approach remains essentially unchanged in the FAST Act—the most recent surface transportation reauthorization measure—enacted in December 2015. In administering approximately $40 billion a year to grantees for the federal-aid highway program, FHWA manages a variety of grant programs that provide funding for the development of infrastructure projects, and jointly with FTA, administers the implementation of the statewide and metropolitan planning requirements carried out by states and MPOs, discussed below. FHWA oversees the federal-aid highway program primarily through its 52 division offices located in each state, the District of Columbia, and Puerto Rico. To help lead the agency’s efforts to implement a performance-based approach, FHWA established the office of Transportation Performance Management in 2013 to help oversee the rulemaking process and the agency’s implementation efforts. Regulatory agencies, such as DOT, have authority and responsibility for developing and issuing regulations. The basic rulemaking process is spelled out in the Administrative Procedures Act. Among other things, the act establishes procedures and broadly applicable federal requirements for informal rulemaking. In addition, the act generally requires agencies to publish a notice of proposed rulemaking in the Federal Register. After giving interested persons an opportunity to comment on the proposed rule by providing “written data, views, or arguments,” and considering those comments, the agency may then publish the final rule. In our prior work, we found that rulemakings can range from 1 to nearly 14 years to complete, depending on a number of factors. More specifically, we found that a rulemaking takes an average of 4 years to complete, based on a sample of 16 major or other significant rulemakings from four federal agencies, including DOT. TPM will be carried out as part of the transportation planning process prescribed by statute for state DOTs and MPOs. This process addresses both urbanized and nonmetropolitan areas of the state and includes planning and coordination for both highway and transit needs jointly administered by FTA and FHWA. Under this process, states engage in continuing cross-agency coordination and planning that requires periodic updates of specific plans. For example, states develop a variety of plans for overall transportation programs, including a long-range statewide transportation plan and a state transportation improvement program. In urbanized areas, MPOs are also required to produce a long-range transportation plan, referred to as a metropolitan transportation plan, and a transportation improvement program. While MAP–21 left the basic framework of the transportation-planning process largely untouched, the act introduced critical changes to the process by requiring grantees such as states, MPOs, and transit agencies to move toward more performance-based highway and transit programs, and linking investment priorities to the achievement of performance targets. Under the new TPM approach, states and MPOs must coordinate on the target-setting and transportation-planning process, and states are required to integrate performance targets into both existing planning processes and plans. TPM also seeks to ensure that the transportation-planning process provides a performance-based approach to decision-making in support of national goals. FHWA has recently completed the first of the three-stage TPM implementation process—rulemaking, setting and tracking performance targets, and evaluating performance—issuing all six interrelated rules that establish both the performance measures focused on the national transportation goals and the overarching performance-management framework (see fig.1). The agency issued the first of the six rules in March 2016. In January 2017, the last two rules were issued and became effective in May 2017, with part of one rule delayed indefinitely. Completing the rulemaking process was a substantial undertaking for FHWA, as none of the rules had been completed when we last reported on this topic in 2015. With the completion of the six final rules, the framework for a performance-based approach to highway transportation management is now in place. FHWA is responsible for six rules related to the condition and performance of the federal highway system, one of which is administered jointly with FTA (see table 1). These six rules are interrelated because some establish specific performance measures while others relate to the transportation-planning processes or specific federal programs related to the performance measures. For example, three rules established the national performance measures (17 measures in total) to be used by state DOTs and MPOs, including rules focused on specific infrastructure condition measures, while other rules outline how the performance-based approach will be carried out through the transportation-planning process that occurs between states and MPOs. The 17 performance measures focus on key indicators of (1) safety, (2) pavement and bridge condition, and (3) performance of the surface transportation system (reliability, congestion, freight movement, and air quality). Generally, these performance measures correspond to national federal-aid highway program goals and performance areas set forth in MAP-21. For example, one performance measure—the percentage of pavements on the Interstate System in good condition—corresponds to the “pavement condition on the Interstate System” performance area and to the national goal to “maintain the highway infrastructure asset system in a state of good repair.” See appendix I for additional information on the 17 performance measures and the corresponding goals and performance areas. Many of these measures are fundamentally new to states while a few other measures are similar to information some states already have experience analyzing and tracking. For example, in 2015 we found that only 20 to 40 percent of states had adopted performance management practices in the areas of congestion, air quality and freight. In contrast, states have been working to develop safety performance measures in highway safety grant programs since 2008. The final System Performance measure rule establishes six measures based on MAP-21 requirements to assess the performance of the Interstate and non- Interstate National Highway System, traffic congestion, freight movement, and emissions. For example, two of these measures are to carry out the National Highway Performance Program, including a measure of the percent of person-miles traveled on reliable Interstate system roadways. The Pavement and Bridge rule establishes six measures and contains minimum thresholds for pavement and bridge conditions, and if a state falls below those thresholds it must spend a portion of its annual federal funding for improvements. While DOT began the rulemaking process shortly after MAP-21 was enacted, it has taken several years for the rules to be developed and move through the process, resulting in the recent issuance of the final rules. For example, DOT completed the first two rules in March of 2016 and issued the last two of the six rules in January 2017. The last two rules took effect on May 20, 2017.