This plan would doubtless entail a dramatic boost in investment. Indeed, Moving Cooler found that scaling up deployment of intelligent technology in the transportation system would require substantial government outlays. And since U.S. gasoline demand may have already peaked, according to recent projections by Cambridge Energy Research Associates and ExxonMobil (the link is to last year's outlook but a friend assures me this year's projection won't look much different) we come back to the elephant in the room for many of our discussions: With declining gasoline tax revenues, how will we pay for all of this?

While on the topic of projections, we should remember that development patterns (and much else) could change a great deal. I was reminded of this fact when I saw Haya El Nasser's latest USA Today article, about "boomburg" suddenly becoming a misnomer in many places. I've heard John Horsley of AASHTO make this point most forcefully, saying something like "We can't build for the next fifty years like we did for the last fifty." I saw in a presentation today that Horsley also echoes a quote (author unknown) that Richard Mudge might enjoy: "We didn't prosper economically and then build the highway system. We built the highway system and then prospered economically."

We should think carefully, and deeply, about the next fifty years, and then design transportation policy that helps us achieve a preferred, more prosperous future.

But the study should surely be reviewed on it merits, without regard to the policies of “the web site of the organization that published it, the Cascade Policy Institute”.

We try to shed light on controversial issues — if they were not controversial, Lisa would not ask us to discuss them. Is it conducive to our work to describe entities we disagree with as being “blatantly biased”?

Some of my best friends are biased, but I do not call them that, at least not in public. And I hope I try to learn from them.

 I worry, however, that this debate will divert us from the broader truth – that transportation investment and our national transportation network  have a vital role to play in generating economic growth.  History shows this.  Indeed, the economic history of the US cannot be told without the history of transportation.  Examples abound, from the Corps of Engineers opening up the Ohio and Mississippi Rivers at the start of the 19th Century, to the Transcontinental railroads, the start of the modern highway movement (“get the farmers out of the mud”) and the Interstate Highway System.  These examples have several things in common (they were done on a national or regional scale, large parts were build in anticipation of demand, and the business model varied widely (in terms of mode, finance, and the role of public versus private sectors).  Each one also helped to generate new industries, stimulated productivity gains in existing industries, and generated long-term economic growth.  Important regional examples include the early development of the subway and commuter rail systems in NY and other major cities.

Much of the debate on this and other blogs seems to come from advocates for a particular solution, who then define the problem we face as a way to justify that solution.   This level of debate is entertaining but I believe we risk losing sight of the big picture.  What transportation system should we build today in order to stimulate the economy of the 21st Century?  For an economy and society that relies on “just in time” everything, I believe that transportation may be more important today than in the past.  Reliability and predictability are key and perhaps we should look for a system that offers the user “No Surprises.”  The nature of this system will not repeat past models.  My personal belief is that we should build a system that integrates transportation with technology and telecommunications.  This will likely combine new capacity with real-time information systems and pricing. 

We also need to remember the vital role that an effective transportation network plays in stimulating economic growth.  This calls for new measures of success.  My favorite is to rate transportation investments and operations by their ability to improve overall accessibility to labor and jobs.  Accessibility also reflects research findings in the US and Europe about how transportation stimulates economic productivity.  This approach is mode neutral and reflects shifts in land use.  But it also forces us to look at the reality of where people work and live today rather than assumptions about where they should live and work.

However, based on the web site of the organization that published it, the Cascade Policy Institute, and the steeply slanted, alarmist site advertised at the top of their home page, I'm pretty certain I will want more opinions. Hopefully from less blatantly biased academic, government or other sources.

What we first need is a national transportation policy with clear goals.  Such a policy must incorporate passenger and freight interests and must reflect the diversity of the U.S. and its different types of transportation: rural, metropolitan, intercity and international (and the fact that these are often interconnected).  Seen in this light, while VMT is interesting to track and it can help point to important trends about vehicle use, on its own it says very little about whether or not an important mix of national goals is achieved (it might actually help achieve one--say reducing GHG emissions--while impeding another--say economic competitiveness).

In my own view, similar to Gabriel's, the best way to achieve success is to take advantage of the market's efficient pricing mechanism.  By better aligning the societal costs of using transportation with the price  paid for its use, many of the outcomes desired by contributors to this blog would be achieved. As testament to this point, the data debated here this week prove one thing with certainty: the price of fuel over the last year has impacted the use of transportation just as it would if we priced it more appropriately in the future.

As we consider rather dramatic reforms in transportation I believe we should focus on several key points before we debate a tactical sixth inning situation:

1. What are the goals of our national transportation policy? (e.g., safety, economic competitiveness, environment, and access)

2. As we look to pricing models, what external costs should be included in the price we pay for using transportation? (e.g., congestion, GHG emissions, accident).

3. How should we reform our planning and our process for weighing alternatives to better align local, state, regional, and national investments with our national goals? (e.g., mode neutrality, better inclusion of freight interests, mega-region planning).

4. What set of transportation responsibilities should be subsidized or borne by the public sector? (e.g., transit operations, air traffic control, rural transportation).

and 5. Where should we invest in infrastructure, operations and people to best achieve our goals?

I suspect there would be a diversity of opinions on these five points as well but I do believe the debate and any decisions arising from the debate would be more productive.

Steve Van Beek

Mr. Pozdena's report was prepared for NTPP, as one of several research papers that informed the final NTPP report.  Mr. Pozdena's paper does not reflect the opinions of the Members or of the staff of NTPP.  We did not release the paper, as a BPC publication, nor do we intend to do so.  We commissioned Mr. Pozdena's research, because we wanted to learn more about the issue of economic growth and VMT, since NTPP's work emphasizes both economic growth and energy/climate change, as important goals of national transportation policy.

Mr, Pozdena's report draws very careful conclusions about the possible causal connections between VMT and economic growth.  While there appears to be correlation between the two, as the author indicates, the method that he uses "does not prove causality, but it does establish a case for it."  Mr. Pozdena also qualifies his conclusions by noting the data challenges that are presented.  

Mr. Pozdena's policy conclusions advocate strongly for market pricing, as a solution to the climate problem and notes that such a pricing program would reduce VMT, but increase overall economic benefits.  His paper does not argue that reducing VMT is bad economically in all cases, and he does not perform a comprehensive economic evaluation of every possible case. 

NTPP was informed by Mr. Podzena's paper and by other research.  We felt that there was a strong enough link between economic growth and VMT, so that we should not recommend VMT reduction, as a goal or performance measure.  The metrics that NTPP recommended included reduction of greenhouse gas emissions and of petroleum consumption, since these relate directly to the national goals at the core of the NTPP report.  Our feeling was that, if states and localities could show reductions in these areas, while also demonstrating gains in economic growth (through other metrics), it was not relevant whether VMT was increased or reduced.

This question is one that should be central to all current discussions regarding the next surface transportation bill. The economic opportunity and prosperity that our nation has enjoyed since the creation of the Interstate Highway System are at risk.

Each day, congestion continues to worsen in virtually every major city and freight corridor, the number of motorists killed and seriously injured in traffic accidents remains at unacceptable levels, and wasteful CO2 emissions from cars stuck in traffic jams continues to pollute our air. Even conservative estimates place the economic cost of congestion and traffic crashes at more than $1 billion each day.

We know that we cannot build our way out of this crisis. Most urban areas simply don’t have any more space to build bigger roads and bridges, even under good economic conditions. Regardless of the various views on land use and VMT policies, I think we can all agree that we need to do a better job of managing our existing transportation system to improve efficiency and achieve greater performance results.

Technologies and operational strategies are here today that can help reduce congestion and emissions, improve safety, and achieve greater system efficiency. In addition, a range of real-time data collection technologies are available that can provide traffic engineers and the traveling public with improved traffic, transit, road and bridge condition, weather, and even parking information to improve system management, reduce maintenance costs, and provide the public with real-time travel information including multimodal commuter options.

According to U.S. DOT data, each dollar invested in technologies like synchronized or adaptive traffic signals returns as much as $40 to the public in time and fuel savings, while reducing emissions by up to 22 percent. When combined with transit signal priority systems, smart intersections can reduce fuel consumption for transit buses by up to 19 percent and bus emissions by up to 30 percent.

Commercial vehicle systems like PrePass, which electronically verified the safety, credentials and weight of more than 55 million trucks last year, were found to reduce delays by over 4.6 million hours, eliminate nearly 111,000 metric tons of emissions, conserve more than 11 million gallons of fuel, and save truckers an estimated $486 million last year alone.

An electronic toll system in Orlando has reduced delays by 57 percent for express lane customers and by 50 percent for cash customers, while decreasing the number of vehicle crashes by over 20 percent. 

A smart parking system being deployed in San Francisco will help Bay Area commuters find available parking quickly using a convenient location and payment system, reducing congestion on city streets caused by the estimated 30 percent of motorists who are circling looking for a parking space.

Future systems like IntelliDriveSM combine leading edge technologies like advanced wireless communications, vehicle sensors and on-board computer processing to provide the next generation of advanced safety, mobility, environmental and e-commerce applications.

In the last transportation reauthorization bill, the House-passed version of SAFETEA-LU included funding for deployment of intelligent transportation system.   Unfortunately, the funding was removed in conference and we lost a critical opportunity to provide state and local officials with resources to adopt these time-, life-, and money-saving solutions.  

In the meantime, other nations are already making strong commitments to ITS technology. China, for example, is further challenging our economic competitiveness by making massive investments in highway construction and ITS solutions throughout its major cities and transportation corridors.

Congress needs to move America forward in the new transportation bill by making a greater investment in 21st Century technologies and innovations that can boost our economic competitiveness and help the U.S. reclaim its leadership role in addressing our congestion, safety and environmental problems. 

The reauthorization of the surface transportation bill provides Congress with this important opportunity.

####

It all makes sense now, seeing as the anti-highway crowd were arguing for similar urban planning solutions many years before the global warming issue heated up.

Given the last post, I'm greatly relieved, James et al, that these social goals are not designed to coerce people into living the way you want them to live.  So you simply want to help people live the way they wanted to live all along, right?

If so, I assume you would reject policies that would limit the choice of new homes that can be zoned and built, force people to pay to park in front of their home, add high tolls to their car trips, require paid parking at suburban shopping centers, divert their taxes, and involve the federal government in local land use planning, right?  Afterall, these unfortunate souls do not need to be punished for living how they were forced to live, right?

We are in total agreement in fact -- Americans should be free to live where the want to live, work where they want to work, and shop where they want to shop.   And as they choose freely without armtwisting from the federal government, we should provide the transportation system that is finanically, politically, and environmentally sustainable to support that free choice.  We could start our plan with the one mode of transportation that could theoretically support itself with a reasonably set gas tax paid by its users.

There are many ways to boost existing transportation system efficiency. The most effective combine performance-focused system pricing (such as pay-as-you-drive insurance and time and place based road user charges and parking fees), smart infrastructure and service management (such as bus rapid transit and intelligent transportation systems), people-oriented urban and street design to expand travel choices, and smart growth policies that enhance proximity and access without requiring high cost mobility. These enhance the freedom to travel by making cities more efficient. Global experience shows that these approaches can support robust economic development while slowing or capping traffic growth and saving households money.

I recently returned from two weeks in Manila, where severe congestion and lack of travel system efficiency measures curtailed my freedom to get around the city. I would have welcomed a BRT network, time-of-day road pricing, and parking management systems, along with a pedestrian environment that offered direct safe connections to nearby transit and activity centers. Instead, I was met with a transport system that emphasizes roads, flyovers without sidewalks or pedestrian underpasses, and a disconnected, unmanaged transit system. The cost of that was high – I was nearly killed crossing one highway and my eyes burned from pollution.

Compare that with Singapore, where congestion pricing has been in place since 1975, first for the city center, then for the city's beltway. With full toll automation in 1998, the city was able to reduce the tolls for many hours of the week while continuing to meet its traffic management and traffic speed efficiency goals. Today, continuous monitoring of arterials and motorways is used by engineers to adjust the tolls at over 70 charging points on arterials and motorways every several months. If traffic starts to get congested in a particular hour of the week, the toll gets raised for that hour at the right locations. If traffic flows are light, the tolls may be trimmed or eliminated for that hour at one or more locations. A world-class public transport system and investments in social housing, both funded in part by motorist fees, gives people access to jobs and public facilities without so much need to drive. While incomes have risen more than ten-fold, boosting motor vehicle ownership three-fold, congestion has not followed. Thanks to various travel efficiency policies and investments to expand travel choices, the share of trips by public transportation has grown from 40% to over 67% over several decades. Traffic in the central area remains at half the level it was in 1974. Singapore has grown into a world-class economic powerhouse, competing with the United States in fields like high technology, medical and bio-tech, and services, and drawing skilled migrants from across the world. America would do well to learn from Singapore’s experience.

Properly applied, time-of-day congestion pricing can curb pressure to build new roads by preventing the loss of up to half the throughput capacity of highways when they go to stop-and-go conditions during rush hours, delivering close to 24/7/365 reliability and travel time savings. And congestion pricing can spur use of and fund improvements in walking, cycling, public transportation, and ridesharing. Experience in Stockholm and London shows public acceptance of tolling of existing roads when it delivers significantly better performance and expanded travel choices. In both of those cities, two-thirds of resident opposed congestion pricing as it was implemented. But two-thirds came to favor congestion pricing once they experienced the benefits: a 15% to 20% drop in traffic in central areas, leading to 30% to 50% higher traffic and bus public transport speeds, with less pollution and safer, healthier, and more delightful conditions for walking and cycling. But it takes leadership to win those benefits.

It is worth focusing on how US trends have changed in the past decade compared to earlier decades. Recent real estate market research by Chris Leinberger and others shows a large unmet market desire in the US for transit accessible housing, with the market for car-oriented housing being saturated. And while VMT per person had been growing at more than 1% a year for many decades, this pattern was broken 10 years ago. US Gross Domestic Product nearly doubled between 1995 and 2008, while VMT per person remained flat starting in 1999. VMT per unit of GDP rose at an increasingly slow pace before falling in the recent economic downturn.

Travel efficiency policies can help households cut transportation costs that are a large part of most household budgets. Transportation costs are lower for households in more livable communities with greater access to a variety of transportation options, including public transportation. Such households can spend less than 10 percent of their income on transportation, while households in areas without transportation options beyond auto travel can spend more than 25 percent. Moreover, inefficient land use patterns and development have been shown to increase the cost of housing by 8 percent, or $13,000 per dwelling unit.

Travel efficiency in freight systems can cut the share of empty or half-empty truck loads, boost the use of intermodal systems to shift some freight from highways to more efficient rail or water modes, and improve overall logistics and sourcing.

Such changes to freight systems and efficiency changes to passenger transportation - will flow from better information, better pricing, and better system integration and choices. Opponents of change pretend that there are calls for the federal government to impose decisions about where people can live and how they can travel, but there are no such calls anywhere in the policy realm.

Travel efficiency policies should be at the core of future federal legislation on transportation, economic recovery, and climate policy and be a key element of state and local transportation plans and programs. America can’t afford to throw scarce money blindly at new infrastructure expecting that to solve our traffic, environmental, or economic challenges. It’s time to focus on expanding travel choices and managing the systems we’ve already got for high performance, learning from places like Singapore, the Netherlands, Denmark, and Sweden, and various American regions which are growing their economies with less traffic, more intelligence, and creating more livable communities.

The growth rate for Vehicle Miles Traveled (VMT) continues to have a very strong correlation to the growth rate for Gross Domestic Product (GDP). In general the correlation has grown stronger since 1992  until the 2008 gas price spike and the correlation in growth of VMT and GDP was nearly perfect.

Calculating a 10-year (1998-2007) Pearson-R correlation coefficient is .9679 and when squared becomes an R-square value of 93.7% (which indicates the predictive value between the two variables VMT and GDP).  This is also a very strong correlation by any academic interpretation.

While this is not a comprehensive cost-benefit analysis, the Moving Cooler report did look at two important components of such an analysis: Cost savings from reduced vehicle use -- fewer trips to the repair shop and gas station, for example -- and government outlays required to implement the measures analyzed (some of which are in Lisa's list above). The projections show that while substantial investment would be required, especially in the early years, the consumer vehicle cost savings soar as time advances.

Personally, I'm not surprised. After we moved to a walkable neighborhood near a transit stop the costs of driving our car plummeted. It was liberating (for my family's budget and wellbeing).

And freedom is precisely the point, at the macro and micro level. The nation can be unshackled from reliance on gasoline, and therefore oil. Individually, many more of us can be unshackled from our car once we have actual choices when traveling.

That is precisely why it is imperative that we shift the historical pattern of transportation investment in America. For the last 50 years our federal transportation policy has created a transportation “monoculture,” with driving often the only way to conveniently get from Point A to Point B. The inefficiencies of this car-centered monoculture are apparent every day: congested roads that cost us time; gasoline prices that tax our household budgets; and an over-dependence on petroleum that leaves our economy at the mercy of the world oil market. By depriving us of a diversity of viable alternatives, this monoculture has severely restricted our freedom to choose the mode of transportation best suited to our particular needs.  

As we seek to build a new transportation system for the 21st century, it is imperative that we enhance the freedom of mobility of all Americans by providing a variety of options for reaching our destinations, including driving, walking, biking and public transportation.

Providing this range of transportation choices expands – rather than restricts – our freedom of mobility. And among the primary beneficiaries of this expansion of options are those who choose to drive, for the quality of their journey will certainly improve if others freely choose to avoid clogged roadways by using other modes of transportation.

If we are truly serious about freedom of mobility, we should adopt a two-pronged approach to future transportation investment. First, we must ensure that the road systems that we have already built are maintained in a state of good repair. Second, we must build-out the neglected half of our transportation system through smart investments in walking, biking and public transportation.

It is only by creating a truly balanced transportation system that we can give all Americans the freedom to travel as they choose.  

VMT and GDP: 1960 - 2008

Data Sources: US DOT, BTS, Table 1-32: US Vehicle Miles, BEA National Income and Product Account Table, Table 1.1.6 Real GDP, Chained (2005) Dollars

This decoupling is even more apparent when we consider disposable income per capita and VMT per capita.

Indexed VMT/capita & Disposable Income/capita, 1960 - 2008

Data Sources: US DOT, BTS, Table 1-32: US Vehicle Miles, BEA National Income and Product Account Table, Table 2.1 Personal Income and it's Disposition

As we work to get out of this economic recession, it will be critical to assess how best transportation policies can optimize use of existing infrastructure and minimize future investments in maintenance and capacity expansion. Travel efficiency policies can slow growth in VMT with net economic benefits as documented in a recent CCAP paper. As CCAP will document in more detail in "Growing Wealthier," slowing growth in VMT can reduce roadway wear and tear, lower fuel use, cut GHG emissions, improve safety and reduce health costs (with more walkable communities and reduced air pollution). Now, that's bang for our hard-earned bucks.

I also point you back to the graph in my previous post showing that states with lower per capita VMT have higher per capita GDP. As states look to grow and diversify their economies, this strikes me as a rather important finding.

Finally, improving accessibility and increasing travel choices will give people more options and flexibility - sounds like a pretty good definition of freedom to me. As documented by numerous academic researchers and real estate industry experts, there is growing and unmet market demand for walkable communities, which is reinforced by demographic shifts and higher fuel prices. Transportation policy in the United States should rise to the occasion to meet this demand for more travel choices and more livable communities.

VMT per Dollar of GDP, 1970-2030

Source: Dan Klein, CCAP, based on data from DOT, BEA and EIA

More research is necessary to better understand this decoupling, though I suspect that structural economic changes away from energy-intensive manufacturing to more of an information and internet-based economy has played an important role. The economic benefits of travel efficiency measures at the state and local level could lead to even further decoupling of VMT and GDP.

Note that the VMT/GDP trends vary for different states and metro areas. For example, we see clear decoupling trends in California and Washington state (perhaps due to Silicon Valley and Microsoft?) and continued coupling in Florida and Missouri (perhaps due to the tourism economy in FL and more traditional agriculture and industry based economy in MO). See my presentation, "VMT & the Economy: What's Going on Here?"

A simple regression analysis shows that states with lower per capita VMT have higher per capita GDP (see graph below).

State-Level Per Capita GDP vs Per Capita VMT (2007)

Also, Richard, thanks for raising mobility vs. accessibility considerations. I'll hold off on getting into detail here, but recommend it to Lisa for a future blog topic. It's a rich and critical area as it gets to the core "why" of our transportation system and policy. One point I will raise is that given that non-work and 'discretionary' trips comprise the majority of VMT, that employment accessibility is a crucial factor, but not the only one to consider.

The use of the word travel efficiency appears misleading, since the real focus seems to be to decrease use of the automobile – and indeed decrease the use of transportation in general.  It is not clear to me that such policies are good for our economy and they may not even decrease our overall expenditures on transportation.  The only sure way to do that is to shrink the economy – witness the recent drop in transportation logistics as a fraction of GDP (see the Annual State of Logistics Report published by the Council of Supply Chain Management Professionals). 

Policy is often developed based on “war stories” or one-off examples and some good ones are mentioned in this blog.  But transportation is a network industry (as are telecommunications, the internet and most of public works) and the full economic and social value comes from taking a systems view – best done at the national or super regional level.  Done properly, network industries are more than the sum of their individual parts.  Examples include the internet, the Interstate Highway System and the NYC subway system.   The reason these examples are so powerful is that they provide access to a broad array of economic and social resources along with the individual freedom to take advantage of these resources.  In sum, this makes it possible to develop new ways of doing business, new markets, and new industries rather than simply making shifts along our current demand and supply curves.

The US economy has benefited from flexibility in where we live and work.   While footloose industries and a mobile population create local winners and losers, overall they also create significant gains in economic productivity – as well as the benefits of personal freedom.  I worry that many of the options I hear proposed as ways to improve transportation also make the implicit assumption that people will live and work in the same general areas.  This strikes me as bad economics.

One final comment: this week’s question mentions improving accessibility to transportation options.  This is really about mobility – or more accurately the potential to move.  Having more options sounds positive, but in reality most of us use only one mode for particular trips (modes that vary depending on where and when we need to travel).  Accessibility is an important concept, but I would rather see it applied in terms of access to jobs or business access to labor.  This concept does not presume a single mode, but rather looks at the network as a whole – and can reflect shifts in land use as well.  There is a growing list of research that shows a direct link between increased access to labor and general improvements in economic productivity (a benefit that swamps the costs and benefits of the individual examples mentioned elsewhere).  It would be interesting to examine the list of ideas presented in this week’s question and those suggested by others in terms of their likely impact on overall access to labor/jobs.

What data support your assertion that "obesity and respiratory illness are dramatically reduced in more walkable, less car-dependent communities"?

There are far too many "walkable, less car-dependent communities" whose members suffer from appalling health conditions and short life expectancy.

Are you urging the federal government to force Americans to revert to such conditions?

Gabriel

Less frequently discussed are the more immediate and micro benefits. The impact on individual health and health costs is immense. Obesity and respiratory illness are dramatically reduced in more walkable, less car-dependent communities. In addition to having healthier individuals, it can also lead to lower health costs for businesses.

Smart Growth America has found that productivity goes up when employees arrive at work after a walk or transit ride, or brief automobile commute. We have all seen the stress level of colleagues after an hour commute and worries about being on time for an important meeting. Also, productivity starts to go down for employees that face a long, frustrating commute home, including concerns about being home in time for a family dinner.

The benefits of travel efficiencies impact so many other areas. Research in education, for example, indicates students who walk to school do better than those who are driven. Housing affordability is directly impacted by transportation costs. Many foreclosures are the result of major transportation costs on top of mortgages and other expenses. Transportation costs are likely to become even more dramatic once the world recession is over, when per gallon gasoline could return to $4 or more.

Yes, transportation policy will most frequently be decided on the important macro issues of sustainability and climate change. It is the impact on health, business costs, education and housing affordability that will have the most day-to-day impact on the average citizen.

However, we can look at different measures to get a sense of what this might look like. APTA publishes a monthly calculator comparing the savings from using transit versus car usage. While this calculator does not capture the full tax costs of either the transit infrastructure or the roadway, it is a way to measure savings at an individual level. As transportation is the second largest household cost behind housing, this is certainly a legitimate approach.

This sort of user-based approach extrapolated to an entire system is best tracked in Washington State through its Commute Trip Reduction Program. Many research studies have been based on this program regarding commuter choice and cost analysis. Washington State has shown a lower rate of VMT growth than the national average since the inception of the program, which presumably would lower overall maintenance and infrastructure costs as well as reduce the consumption of motor fuels and emissions of pollutants. The Washington State investment is also leveraging a significant investment on the part of the state’s major employers, on the order of more than 18:1 (CTR Task Force 2005 Report to the Washington State Legislature). Employers reported that this investment made business sense, as it contributed to employee performance in a number of areas. This is the premise behind HR 3517, The Commute LESS Act, introduced by Rep. Albio Sires, to include employers in this overall analysis of funding and project decision-making.

Work by the Center for Urban Transportation Research at the University of South Florida as well as the Victoria Transportation Policy Institute has attempted to create this direct link in capturing overall costs and benefits. This work has done a good job of capturing the categories of costs and benefits that would need to be captured in order to have a truly neutral comparison of all travel activities. However, to date the dollars spent on highway and transit infrastructure have been so much larger than those spent on demand management activities and infrastructure that it is impossible to do anything other than looking for the potential benefits at the individual level and how those would roll up on a system-wide basis. Given the individual savings, however, it is worth including support for those measures that support individual commuting and mobility choices in any jobs bill that moves forward in the next few months as well as the eventual transportation authorization bill.

But societies based on free choices rely on other criteria to distinguish the fruitful from the wasteful: We generally consider acceptable those activities for which users pay all the costs, and less desirable those for which users do not pay the costs. Application of this yardstick to travel leads to the conclusion that travel for which users (or beneficiaries) cover the costs is acceptable, and travel for which users do not pay is unacceptable. Therefore, while seeking to ensure that travelers pay the costs arising from their choices can be a legitimate government objective, “reducing vehicle miles traveled” cannot be.

It follows that the measures listed in this question do not necessarily “improve the efficiency of the existing surface transportation system”. Reducing VMT increases welfare only to the extent that it reduces travel not paid for by those who undertake it. Reducing travel for which users are prepared to pay is likely to cause major harm by inhibiting employment, trade, and other activities basic to economic growth and the pursuit of happiness.

CCAP is preparing a follow-up study, “Growing Wealthier: the economic benefits of smart growth,” to more thoroughly assess the net economic costs and benefits of development and transportation investments. Initial findings show that there is compelling evidence that smart growth provides significant net economic benefits via avoided infrastructure costs, leveraged private investment, increased economic activity, reduction in household travel costs, job creation, public health improvements, energy and water use efficiency.

Some examples:

• The Sacramento region’s smart growth plan is projected to reduce CO2 emissions by 7.2 MMTCO2, with $9.4 billion savings from avoided infrastructure costs. Under this scenario, transit operating costs would increase by about $120 million per year and annual consumer fuel expenditures would decrease by $380 million. CCAP calculates the net present value of the increased transit costs, fuel cost savings and avoided infrastructure costs to be $1.4 billion (yielding a net savings of $198 per ton CO2).  
• In Atlanta, CCAP calculates that the Atlantic Station infill project will reduce CO2 by a total of 0.63 MMTCO2 over 50 years at a net cost savings, because municipal tax revenues from the project will be greater than what is required to pay back the initial project loan.
• A McKinsey analysis for Georgia concludes that strategic investments in transit, demand management, and freight could yield net economic benefits of over $400 billion over 30 years and 320,000 jobs over 20 years. CCAP calculates associated transportation GHG savings of 18 MMTCO2.
• The Rails-to-Trails Conservancy calculates that increased bicycling infrastructure in Portland could reduce GHGs by 0.73 MMTCO2 by 2040, with a net economic benefit of $1.4 billion from fuel and health care cost savings. 
• The Center for Transit Oriented Development reports that Little Rock, Arkansas spent $20 million of public money on the Little Rock Streetcar, which helped leverage $200 million in private investment; Tampa, Florida spent $60 million in public money in the TECO Streetcar, which helped leverage $1 billion in private investment.
• A Brookings Institution study shows that shifting to per-mile car insurancepricing could cut VMT and related GHGs by 8 percent yielding insurance cost savings for two thirds of households, averaging $270/vehicle/year and annual societal savings of $50-60 billion.
• The Center for Neighborhood Technology analysis concludes that due to better accessibility and travel choices, working families in central cities spend 16-22% of their household budget on transportation, vs. 26-37% for working families residents away from employment centers, with no significant increase in housing costs.

It is important to note that infill development can result in higher upfront costs, including adding capacity (for utilities, roads, and other infrastructure), acquiring additional permits (time consuming and complex), updating zoning ordinances, and conducting associated public participation efforts. But consider the Sacramento's case: even if upfront costs were as high as $1 billion, the net savings would be $70 per ton CO2. This underscores the policy case for making it easier to build infill and mixed-use projects given their compelling net economic benefits.

Let’s keep these broad economic benefits in mind as we move forward on national climate and transportation legislation.

What does this development mean for the rail industry? Buffett presumably expects the demand for freight transportation to rebound, but any number of variables could thwart rail's resurgence (such as losing its antitrust exemption, not getting the investment tax credit it wants, lack of a national intermodal freight program -- not to mention the repercussions if Congress enacts climate change legislation or if the recession deepens). What other variables are in play and what questions did the Buffett deal raise in your mind?

Inbound or Outbound?

Berkshire Hathaway is a patient investor. Low leverage, large cash reserves, and a reliance on fundamentals allow it to buy and hold investments for long periods. On its surface, Berkshire Hathaway appears to be the ideal landing place for a long-lived capital-intensive railroad, but for years, Berkshire Hathaway has avoided capital intensive railroad investments. Why now? Many have speculated on the rationale for Berkshire Hathaway investment in railroads. Is it a bet on the US economy, growth in China, energy/coal, or the fundamental efficiency of rail transportation? Others ponder the, “What about me?” question. Will Berkshire Hathaway’s Midwestern roots provide compassion for lower grain rates? Will labor benefit from now deeper pockets. Is the price too high or too low?

More provocative speculation ponders what if Carl Icahn, TCI, or a SWF had offered to buy BNSF? At a minimum, a Dubai Ports spectacle would have raged in Congress fearing that speculators or foreign investment objectives would be ruinous to US rail transportation -- contrast that expected over reaction with the welcoming that Berkshire Hathaway has earned in the marketplace. But as noted above, do we really know Berkshire Hathaway’s objectives and how it will run the railroad? BNSF is one of the best run railroads in the country, a trait that Berkshire Hathaway looks for in its acquisitions. So it is unlikely that Berkshire Hathaway has any plans to radically improve operating efficiency ala TCI and CSX. Even if Berkshire Hathaway is relying on the economy and rails’ natural advantages for earnings, how will we know if this “all-in bet” is paying off for investors and freight transportation? 

Look for changes in railroad capital expenditures.

RR executives for years have rationed capital expenditures because Wall Street analysts/investors were critical of spending on long-lived assets that offered slow paybacks. The railroad industry reports that there are $39B in capital expenditures needed over the next 25 years that investors in publicly traded railroads are unwilling to fund. Berkshire Hathaway makes an apparent perfect fit for BNSF; and, in recent years BNSF has invested $2.2 billion per year in capital expenditures and has paid dividends of $500 million per year. 

But will competition for capital within Berkshire Hathaway be any easier than on Wall Street? As a public company, BNSF had to only achieve risk-adjusted average returns and it did so routinely with Overweight” and “Buy” recommendations. Capital allocation within a firm of overachievers is likely to leave mere average performers behind. Stated another way, BNSF’s cost of equity capital has just increased and fewer projects now provide adequate returns. Combine this with the long-lived railroad assets and the need for Warren Buffett’s successor to show early performance, there’s a risk that railroad capital spending may not grow to meet these capital shortfalls. Ironically, private ownership may make tax and other incentives more necessary than ever to achieve our freight transportation goals. 

How will Berkshire Hathaway run the railroad? Watch capital spending and how the $500 million per year in dividends is spent in the future.

Samuel Staley, the libertarian Reason Foundation's land use expert (we have Reason's transportation expert, Bob Poole, on this blog), has an interesting post on the BNSF sale on the foundation's Web site. Check it out:

http://reason.org/blog/show/atlas-shrugged-railroads-and-w

Matt Rose's contribution to the National Surface Transportation Policy and Revenue Study Commission is also worth noting.  That landmark report put the railroad contribution to the movement on people and goods on the same agenda as our highway and transit investments, and paved the way toward a more intermodal view of the system as well as to the possiblity of public-private partnerships to leverage the capabilities of the rail system for multiple goals.  That's something the BNSF has been doing well for many years and we can hope the direction continues.

As Warren Buffett stated, “Our country’s future prosperity depends on its having an efficient and well-maintained rail system.” And we can accomplish a lot of our national policy objectives by realizing the strengths of freight rail.

Rail brings tremendous environmental and economic value to our society in terms of reducing highway congestion, fuel efficiency and reducing emissions. These efficiencies reduce supply chain costs, allowing American business to be more competitive in the global market.

Today, railroads provide significant value to our economy and society, and they will provide even more value in the future. As our nation’s demand for transportation continues to increase, rail is an obvious solution to meet the growing demand. For these reasons, BNSF and the rail industry are a safe bet for our future.

CURE represents the class of rail customers that is dependent on railroad transportation because other transportation either isn't economically viable or doesn't exist.  More specifically, the rail customers in our group, at least for some of their operations, are "captive" to a single railroad for their service. As such, they find themselves in a "take it or leave it" situation with their railroad carrier with regard to price and service.  Our members are unhappy that the railroads are exempt from the antitrust law in the area where the Surface Transportation Board (Board) has regulatory jurisdiction. No other federally regulated industry has this exemption.  Our members are also unhappy with the failure of the Board to protect captive rail customers effectively from monopoly abuse.

One of our complaints is that the Board consistently underestimates the financial health of the freight railroads, resulting in Board tolerance of extraordinarily high rail rates to captive customers - often at levels 5 or 6 times the direct cost to the railroad of moving the customer's freight.  So, against this backdrop, what do we think of the proposed purchase of the Burlington Northern by Berkshire Hathaway?

First, we think this major investment  undercuts stated railroad concerns about removing antitrust exemptions and reforming the practices of the Board.  In opposing these bills, the railroads normally have stated that changes in current law will result in reduced investment in the railroad industry.  Since we presume that Berkshire Hathaway made its investment on the worst case assumption that the legislation described above will be adopted, this major investment in the BN seems to undercut the railroad arguments against changes in current law.

Second, we note that this aggressive investment by Berkshire Hathaway came within a month after the Board found that the
BN is "revenue inadequate" meaning that the BN isn't earning enough to attract investors.  Berkshire Hathaway not only seeks to increase its investment in BN, it proposes to buy all the outstanding stock of BN at a 30% premium.  We believe this  purchase proves our contention that the Board underestimates the earning power of the major railroads.

Third, unlike other regulatory bodies, the Board often has allowed in past railroad acquisitions the "acquisition premium", here at least 30%, to inflate the asset base of the railroad for future regulatory purposes, which increases the level of captive rates tolerated by the Board. This purchase brings this problem into focus; it needs to be addressed.

Fourth, we understand that, both despite and because of, the nature of this major acquisition of a railroad, the Board has no jurisdiction over  the transaction.  Thus, no public record will be made by the Board regarding a wide range of issues that should be of interest to the public and rail customers in particular.  Perhaps there is a "gap" in law that should be addressed.  Also, what if the acquiring entity in this situation were a government-dominated foreign corporation?

Finally, we are concerned that Berkshire Hathaway proposes to take BN private.  We know of no precedent for a freight railroad of this size to be in private ownership.  At a minimum, an opaque company is likely to become even  more opaque.  After purchase, BN may not be required to make the detailed SEC filings that it must make today.  The full implications of a freight railroad of this size in private ownership need to be identified and understood.

At this point we have no concerns about reduced competition in the railroad industry or any anti-trust implications.  We agree that this purchase is a major bet on the future of the domestic economy and the role of railroads in general, and the BN in particular, in that economy.  Since many investors are followers, this major investment by Berkshire Hathaway may bring more investors into the freight railroad market, which rail customers agree is a very good development.  Rail customers need robust, healthy freight railroads that compete for their business.

As has already been mentioned in earlier postings, the AAA Foundation for Traffic Safety has undertaken important work to try to better understand our traffic safety “culture” and figure out ways to change it. The Foundation published its first-annual Traffic Safety Culture Index, a nationwide survey examining the attitudes and actions of people across the country, in 2008. The results were both alarming and telling. More than 60 percent of respondents rated road safety as a serious national problem. But the research found that motorists often were engaging in the very behavior that they abhor.

For instance, despite rating drunken driving as the most serious traffic safety issue, nearly one in 10 respondents admitted to driving in the previous month while they thought they might have been legally intoxicated. Over 80 percent of respondents rated distracted driving as a serious problem, yet over half admitted to talking on a cell phone while driving. Three in four drivers rated speeding as a safety threat, but 40 percent of those same drivers admitted to driving at least 15 mph over the speed limit on highways.

I believe we can change the nation’s safety culture to achieve safer drivers, safer vehicles, and safer roads. Traffic safety organizations have published comprehensive materials documenting dozens of safety measures that could reduce traffic deaths and serious injuries by as much as 50 percent. Listed below are just a handful of the many known strategies that are proven to reduce roadway fatalities, but are not yet used to their potential.

Car manufacturers can make a difference by implementing solutions that have been tested in the real world and shown to save lives. Electronic stability control (ESC) is an innovative technology that selectively applies brakes when a car is about to go out of control, and can decrease deaths in single-vehicle crashes by nearly 56 percent. The federal government will not mandate the use of ESC in new vehicles until 2012, but automakers may expedite vehicle improvements like ESC to begin saving lives today. 

Roadway improvements such as rumble strips at the edge and centerline of roads, and cable median barriers are quite effective in preventing vehicles from drifting out of travel lanes, which accounts for 25,000 deaths each year. Missouri’s adoption of these technologies has resulted in a 25 percent reduction in lane-departure fatalities and a 96 percent reduction in median crossing deaths. These are low-cost and easy-to-install countermeasures on which road authorities can act.

Comprehensive graduated driver licensing systems can help keep teen drivers safer through various provisions, such as a minimum learner’s permit age, supervised driving practice, nighttime driving restrictions and passenger restrictions. Elected officials can enact such policies designed to prevent injuries on our roadways – they just need the political will to act.

Of course, we can make a big difference by changing our own behavior. How many of us have engaged in the actions discussed on the blog this week? Motorists can greatly reduce the likelihood of being in a fatal crash by adopting commonsense behaviors: always buckle up; don’t drive while drunk, drowsy or distracted; and obey the speed limit (just to name a few). It appears as though everyone who has responded to this week’s blog agrees that we can and should do more. We need to band together and make sure this consistent voice is heard in Congress, DOTs, and in state legislatures across the country. 

The problem of distracted driving is just that, a problem in need of a fundamental shift in the way drivers view their responsibilities to each other while in transit. For example, the campaign to “Buckle Up” was aimed at the same groups of people, seeking the same change in the way drivers behave. Initially, we saw some resistance to the concept and, in truth, there is still some resistance to the concept of a primary seat belt law for a variety of reasons. However, the success of the education campaign affecting the frequency with which drivers use their seat belts cannot be denied.

And that is exactly what many COGs and MPOs, in partnership with their local elected officials, are creating in their regions. The transportation professionals continue to leverage scarce resources to develop programs educating their citizens, aimed at both adult and youth driving populations, about the dangers of distracted driving. As the unit of government closest to the people, the ability of local elected officials across the nation to develop priorities and strategies that are tailored to address the specific problems their regions face is a strength of the regional planning process that should not be overlooked. When planning any transportation project, all safety concerns such as emergency response, evacuation planning, fuel leakage, etc, must be considered. In past years, those issues have been an after thought.

The federally mandated MPO process is an important linkage to drivers that goes well beyond engineering solutions and should continue to be prioritized and recognized as an important tool for the federal government to disseminate safety related education campaigns.

“Why do we persist in believing that public information and education are going to change traffic safety outcomes when, after decades of this stuff, we’re still killing approx. 40,000 people every year?”

But Bill’s answers — and those of some others — miss a critical factor – financial incentives. Over a million people are killed worldwide every year, but those to blame are often not held financially accountable.

One way to bring financial accountability to bear would be to require insurers to test and license the drivers and vehicles they insure. Placing this responsibility on insurers is common in maritime transport, where safety is taken very seriously: Ships and ships’ officers are tested and licensed by Lloyds and other insurers.

Insurers have compelling incentives to avoid unsafe drivers and vehicles, and are likely to do a better job than the government departments currently responsible for those vital responsibilities.

For example, an October 2007 report by Maryland’s Office of Legislative Audits determined that Maryland’s Motor Vehicle Administration did not properly enforce Maryland’s Ignition Interlock program, which requires those convicted of drunken driving to have their vehicles equipped with devices which prevent them starting if excessive alcohol levels are detected. Can one envisage an insurance company, with millions of dollars at risk from vehicle accidents, failing to enforce such an important program?

Furthermore, competing insurers would have incentives to find ways of insuring even high-risk customers: They could, for example, insist on ignition interlock programs for reformed alcoholics, or on the use of special slow-moving vehicles as a condition for insuring the very young and the very old.

We cannot expect government to reverse its own mistakes — such as legislating CAFE regulations to force the production of less-safe cars. But could it not use its influence to introduce a pilot program, maybe starting with trucks, to have insurers test and license the drivers and vehicles they insure? 

One  fast and low cost method to reducing death and injury among the traveling public would be to have wireless internet connectivity on all public transportation.

1.     It would reduce distracted driving-related accidents by providing an alternative for those who are currently driving and communicating with friends, family, and work colleagues while driving,

2.     It  would attract new public transit riders, reducing VMTs and therefore all types of vehicle-related accidents, by offering a significant and long-term competitive advantage of transit over personal driving. Accidents per passenger mile on transit are dramatically lower than those completed by car.

It’s a two-fer!

Distracted driving also goes beyond the use of electronic devices. Tom Vanderbilt illustrates in his book “Traffic” that many accidents happen because drivers are not giving the road their full attention. According to Vanderbilt, 80 percent of crashes occur due to just three seconds of inattentiveness. To that end, Dennis Christiansen of the Texas Transportation Institute is right on target in his call for a “shift in safety culture” that makes safe driving more valued and universal.

But the discussion about transportation safety cannot stop there. Thousands of Americans die preventable deaths every year due in large part to how we design our transportation system in general and our roads in particular, and how we allocate funding.

The problem is that many communities have engineered physical activity out of their very design.  Managing traffic is a vital goal for transportation planners and traffic engineers, but it cannot simply continue to accommodate more traffic and higher speeds at the expense of good sidewalks, crosswalks and other amenities that make walking and biking safe and accessible. More than 43,000 Americans have died from preventable pedestrian deaths since 2000.

As Congress takes up a re-authorization of SAFETEA-LU, the federal transportation bill, “completing the streets” so that roads are designed to accommodate all users - pedestrians, bicyclists, transit vehicles and motorists alike - needs to be a top priority. Complete streets do not simply help recreational pedestrians and bikers. They also provide a lifeline to seniors, children, the disabled and low-income Americans who do not drive or do not have access to an automobile.  Senator Tom Harkin and Representative Doris Matsui each introduced Complete Streets legislation that would significantly advance these concepts and make them part of a new way of doing business in transportation planning and funding.

Making our streets safer also means reforming federal spending to prioritize projects according to outcomes and performance. The National Transportation Objectives Act, HR 2724, introduced by Representatives Rush Holt, Russ Carnahan and Jay Inslee would help achieve this needed accountability by setting strong performance measures that ensure new projects are safe, clean and smart, specifically by setting a goal of reducing traffic crashes by 50 percent over the next 20 years.

Lastly, I want to echo Carol Carmody’s comment about the need to continue speaking out on this critical issue. Long overdue cultural and policy shifts will never happen unless we keep safety and transportation on the front burner, and that’s what our growing coalition intends to do.

A “Lack of Awareness” …? I think not. Rather, it is a lack of will and a lack of leadership that sustains our appalling highway (un)safety record. Has there ever been a Secretary of USDOT or a NHTSA Administrator that wasn’t “aware” of the problem? After 40+ years, can either of these two agencies – or anyone else – honestly assert that the “problem” is due to a lack of data or that we need more research?

What we really need is a someone with a spine. More honesty and commonsense would help, too.

Okay, in the spirit of the comedian Steven Wright, here are just a few aspects of our current approach to traffic safety I find difficult to reconcile:

§         Why is it that every car sold in the U.S. is capable of exceeding the highest posted speed limit in the country by at least 40 mph (and, in some cases, by more than 100 mph)?

§         Why do highway engineers, who tell us that the design of the road determines the speed people will drive (the 85th percentile thing), use a “design speed” that is higher than the planned posted speed?

§         Why do we have laws to take away their license (and make it a felony) if a driver drives away without paying for the gas they just pumped ... but they will only get (at most) a ticket if they happen to hit and kill a pedestrian as they exit the gas station?

§         Why do some traffic engineers set the timing for traffic lights so you will keep getting a green light if you drive faster than the posted speed limit? [Hey, I’m not making this stuff up!]

§         We do we persist in believing that public information and education are going to change traffic safety outcomes when, after decades of this stuff, we’re still killing approx. 40,000 people every year?

What if, instead of all of this stuff, we declared a war on bad driving/drivers? What if we embraced the Vision Zero concept – “The Vision Zero policy is not a figure; it is a shift in philosophy. Normal traffic policy is a balancing act between mobility benefits and safety problems. The Vision Zero policy refuses to use human life and health as part of that balancing act; they are non negotiable.”

Okay, make me Traffic Safety Czar and here’s what I’ll do (and you can’t dis my ideas unless you’ve got a better one to replace it with!) –

 1.       Eliminate NHTSA (what has it accomplished?) and make the “new” FHWA (and the State DOTs) accountable for reducing MV-related deaths and injuries.

2.       Define/establish a “standard of care” for MV operators and hold them strictly accountable for the consequences of their actions (and inactions).

3.       Identify bad drivers, get them off the road, and keep them off the road.

4.       Hold Transportation Engineers professionally accountable for designing streets and highways that have an 85th percentile speed equal to the posted speed limit.

5.       Us all available means and measures to regulate/control MV speeds.

6.       Make full and active use of EDRs for enforcement and adjudication, and enhance the existing systems by integrating a positive identification of who the operator is (perhaps by requiring inserting their MV operators permit in the dash and entering a password).

7.       Reject once and for all the absurd claim to “privacy” when operating a MV on the public right-of-way – what a joke!

Okay, there it is, now, let’s get ‘er done.

Bill Wilkinson

Bill has been involved with transportation planning and policy for nearly 40 years. He claims to have mellowed a lot since “retiring” as executive director of the National Center for Bicycling & Walking in June 2008. Today, he does a bit of consulting and spends a lot of time with his grandchildren.

If our goal is to significantly reduce fatalities and injuries, I believe we must try a new approach.  We should move in the direction recommended by the National Surface Transportation Policy and Revenue Commission.  The Commission recommended that the US Department of Transportation establish national safety goals, beginning with an ambitious but reachable goal to cut surface transportation fatalities in half from current levels by 2025.  States and local governments would develop strategies and projects for meeting these goals.  The decision-making process would be transparent, with input from the general public.  The strategies would include engineering, enforcement and education.  Once adopted, the strategies, and the projects implementing the strategies, would be evaluated to ensure that progress is being made toward meeting the goals. In other words, States and local governments would ultimately be held accountable for reaching the goals, but they would have the flexibility to fashion the strategies and projects in a way that worked best in their area and for their citizens.  Reflecting the importance of transportation safety, the Federal share of funding for qualifying safety projects should be 90 percent of the project cost.

Ambitious but reachable national goals.  State and local flexibility.  Adequate resources. Accountability.  Enforcement.  These are the elements of  a new approach that would significantly  raise awareness of transportation safety and would could achieve significant safety benefits.  There would be far fewer fatalities and injuries on our surface transportation systems.  We can do it.  We must do it.

Anne McCartt, senior vice president, research at the Insurance Institute for Highway Safety sent us the following post:

The problem with distracted driving is not awareness. Surveys show that most people agree that drivers should not use cellphones and drive, even many of those who also admit they do so. The problem is how to make laws effective in changing driver behavior. 

 The cumulative evidence from various types of studies points to cellphone use as a risk factor for crashes and impaired driving performance. While studies have reached different estimates of the magnitude of the risk, well-controlled research that verified phone use in large samples of crash-involved drivers found that the risk of crashing was 4 times higher when a driver was talking on either a hand-held or hands-free phone.

Seven states and the District of Columbia have banned hand-held cellphone use while driving, but the effects of these laws on hand-held use is mixed. Moreover, the effect on safety isn’t clear. Many drivers still use hand-held phones where use is banned, and other drivers may switch to hands-free devices, which doesn’t help, since the crash risk with either type of device is about the same. Preliminary data from insurance claims for collision suggest no apparent reduction in crash risk after states enacted hand-held bans.

The research supports a ban on all cellphone use behind the wheel, but enforcement is problematic.  Police officers, for example, can’t readily ascertain that a driver is using a hands-free device.  Experience shows that laws that aren’t strongly and visibly enforced won’t be effective.  The public isn’t well served by rushing to proposed solutions that may not work.

Before policymakers can make sound decisions about what countermeasures to adopt, we need better evidence on several issues: the discrepant estimates of the risk of phone use; the risks of different types of hands-free phones relative to other devices; the number of crashes attributable to phone use, and whether this has changed as drivers’ phone use increased.  But the most serious deficit in our knowledge is that we don’t know whether laws banning drivers’ phone use have reduced the frequency of crashes. Before we encourage or require that more states pass bans, we need to establish whether they enhance traffic safety.  

http://fastlane.dot.gov/

So, what does everyone think of this effort?

Roger Wentz, CAE, President and CEO of the American Traffic Safety Services Association, sent us the following response:

Commendably, Secretary LaHood has repeatedly stated that safety is the number one priority for U.S.-DOT. But he is right on another point as well. Far too many people die on America’s road; on average, 40,000 individuals die each year in car crashes. Yes, distracted driving is an issue that deserves serious and thoughtful consideration and action in order to reduce distractions and enhance a driver’s ability to focus on the road.

However, there is roadway safety infrastructure that can implemented right now on our nation’s roads to immediately make the road safer for all who travel on it. Secretary LaHood even mentioned one of these devices in his statement to the Senate Commerce, Science, and Transportation Committee distracted driving hearing held on October 28. In his remarks, the Secretary mentioned that rumble strips could be used to alert distracted drivers about impending road departure. Other features, such as pavement markings, barrier, and rumble stripes, have proven to drastically reduce roadway departures and assist drivers in remaining on the road and in their lane. ATSSA commends U.S-DOT, Congress, and the transportation industry in highlighting the need for increased safety in all modes of transportation.

Upon reading the responses to the question Lisa posed, it is evident to me at least that as long as one remains immersed in the present transportation paradigm (i.e. inside “the box”) the best we can do is recycle platitudes.  In fact, the current transportation system is the result of a steady evolution from a its ancestral root, the horse and buggy – it is time let go of some of the vestigial characteristics that continue to lead to failing systems over and over.  

Of course we are driving more distracted than ever before – our culture has, for better or worse, evolved through technological innovation, to the point where multitasking has become almost innate.  To ask people to turn off their eagerly acquired multiple brains in the comfort of their private roving environments is asking too much – the genie is out of the bottle.

As past president for MADD-Central Maryland, I am keenly aware of the ability to shift public behavior through a steady public relations drum beat.  I also feel that in some ways MADD focused too much on legislation and PR and not enough on enforcement.  A Tennessee study, I believe in the mid-1990’s demonstrated that a blitzkrieg of random checkpoints had an immediate and profound impact on drunken driving and fatalities.   I think the problem very much lies with the presumption that somehow democracy and the American independent spirit is embodied in what is in reality a mundane public utility, our roadways.  (We have to be constantly reminded that driving is a privilege not a right.) But does the answer lie in a constant battle between citizen and state? This paradigm needs to change and can be changed.

While we as individuals have eagerly been drinking the technology kool-aid, the transportation network remains a glorified and grotesquely dolled-up version of the horse and buggy system.  Technology seems to stop a at our doorstep.  If the transportation community can get past rearranging the deck chairs, there is a remedy – personal rapid transit, PRT.  This discussion is not the venue to reel out the long list of benefits to mankind and the planet afforded by what has been deemed, the “Internet for transportation“  (Google "personal rapid transit" for the results of many of well-respected studies as well as  examples of systems actually under construction such as at London’s Heathrow airport to become operational this spring). But one key attribute of PRT is that the melding of existing computer technology with a novel and inexpensive vehicle transportation network will essentially break the deadly and schizophrenic duality of “distracted citizen traveler” verses “heavy mechanized equipment operator”.

Selling the concept to transportation officials is almost a lost cause – even in this new era of supposed enlightenment.  There are too many entrenched interests that see any upstart as a threat.  Of course in reality PRT is an enabling technology, not a threat, for it acts as the “glue” that ties the heavy modes  (rail, air travel) to the light (walking, bicycling).   (As a typical example of dysfunction, in the state of Maryland there is no public transportation between its major international airport, Marshall-BWI to the state capitol in Annapolis less than 20 miles away.)

Because Americans can not distinguish between themselves and the cars they drive, selling PRT to the public will not be easy either. It will be like prying a rigid death grip from a steering wheel.  Traveling via PRT is as unglamorous as a ride in an elevator – one punches in a “floor” and your “lift” travels horizontally rather than vertically to any destination available to an expandable network of raised guide-ways.  One is free to snooze, keyboard, snack, watch a video, work and yes, even sip a Martini without adding to the carnage on our failed roadways.  Again, Americans thrive on the phony wild-west hype pumped out by the auto industry – PRT will need to use a different angle to gain public acceptance.

Fortunately PRT is inherently scalable and, because of this acceptance, can be fine-tuned to be self fulfilling.  A small “local network” serving an airport or college or industrial campus can easily be expanded to serve a neighboring community or municipality.  Such pilot sub-networks will, through envy, begin to pop up like mushrooms. Interconnections between them with more and more redundancies will occur until, like the world wide web, it reaches a tipping point of acceptance.  Of course, as has become the norm with the “leader of the free world”, Europe and Asia will be at least a decade ahead of the US as is evidenced by PRT systems now under development. Current reliance on the automobile remains the last bastion of resistance to the techno tidal wave; PRT is a pathway toward embracing and exploiting it for the good of society and the safety of its citizens.

While airline travel has become ever safer, automobile travel continues to  be extremely hazardous. Jacqueline Gillan’s recent post makes the point that motor vehicle crashes are the leading cause of death for Americans between the ages of 3 and 33.

Some Americans are indifferent to the risks they face because they do not know the extent of the carnage on our highways. Many more are  concerned, but are discouraged by the disappointing willingness of local, state and national leaders to ignore safety in favor of popularity. And many more seem to have simply renounced the concept of a common good, and prefer to endanger themselves and others rather than obey the laws regarding speeding, reckless driving, drinking and cell phone use.

On any journey north to south on I 95 – or any other interstate – the number of drivers exceeding the speed limit easily exceeds the number honoring it. In 2007 Virginia – in an effort to reduce accidents and raise revenue – proposed substantial increases in fines for speeding and other traffic violations. There was a firestorm of reaction and the new rules were soon rescinded. And despite the fact that speed both kills people and wastes energy, the Congress has shown no serious interest in re-establishing and enforcing a national speed limit.

As Pogo famously observed “We have met the enemy and he is us”. For whatever reason, we are prepared to expend both time and treasure to prevent major aviation, maritime and rail accidents but are unwilling to assign responsibility for the lack of motor vehicle safety to our political leaders, to spend what’s needed to properly maintain and optimally engineer our highways or to support vigorous enforcement of existing laws regarding driver behavior.

Making our roads safer should really be quite easy.

We need to make clear to those we elect that the current level of highway deaths is not acceptable and that we expect them to get serious about controlling driver behavior. Put more police on the roads. Reduce maximum speeds, outlaw driver use of cell phones, get seriously tough on mixing alcohol and gasoline, use lots more cameras in urban areas, strictly enforce all other traffic laws and dramatically increase penalties. And, as Greg Cohen suggests, we need to insist that government get back into the business of properly maintaining and optimally engineering our highways.

We’d save thousands of lives every year, reduce medical costs and save lots of gasoline. What’s not to like??  

While the ability of the operator to perform fundamental tasks is certainly impaired by outside distractions introduced into the vehicle such as drinking and texting, performance can also be potentially impaired by distractions that are built into or brought legally in vehicles.  These include bluetooth technologies that enable cellphone use, GPS systems that provide real-time routings and directions, and the type of corporate oriented programs used by the Northwest/Delta pilots. Measuring the cumulative impact these potential distractions have on safety is important if we are serious about improving safety.

As we explore the increasing use of ITS and other technologies, it is imperative that we do so in a way that does not overburden the operator.  In short, we need to focus on how real people use technologies in real situations instead of the way the ideal operator uses them.  

One other note: we also need to be vigilant about distractions outside of the vehicle.  The growing propensity of some localities to permit digital billboards that draw away the attention of drivers is just one example of a practice that has not been adequately examined for its impact of safety.

Steve Van Beek

As Peter Kissinger, President and CEO of the AAA Foundation for Traffic Safety promotes, we need to change the traffic safety culture in this country. As Kissinger states on his own blog on traffic safety, findings from this year’s AAA Foundation Traffic Safety Culture Index survey found 80 percent of drivers agree that distracted driving is a serious threat to their safety, but 67% of drivers also admitted to talking on a cell phone while driving in the past month. According to Kissinger, “This ‘Do as I say, Not as I do’ attitude is one of the things we must change to push toward a positive culture of safety.”

But changing attitudes and behaviors are not enough. As policy makers in Washington take up the issue of distracted driving it is important for them to be aware that distractions often lead to road departure – the #1 contributing factor in highway deaths. We need to minimize distractions, but when you make a mistake behind the wheel, you should not be killed, paralyzed, or severely injured. Roadway safety countermeasures such as median and roadside barriers, clear shoulders, rumble strips, bright signs, and reinforced bridge railings can help prevent these crashes or significantly lessen their severity. 

I also serve as the Executive Director of the Roadway Safety Foundation (RSF), a 501(c)(3) nonprofit, educational and charitable organization whose mission is to reduce the frequency and severity of motor vehicle crashes, injuries and fatalities through improvements to roadway systems and their environments. We currently have several public awareness campaigns in the works that promote such safety countermeasures as median cable barriers and rumble strips. For more information I encourage you to visit www.roadwaysafety.org.

And this Thursday on Capitol Hill we will recognize 14 noteworthy roadway safety programs from across the country at our bi-annual awards luncheon with the Federal Highway Administration. We are honored that U.S. Transportation Secretary Ray LaHood will be our featured speaker.

In summary, distracted driving is a growing epidemic which needs to be addressed with all the tools in our arsenal. This includes all of the four Es: education, enforcement, emergency services, AND ENGINEERING.

-          Continue to conduct relevant research to better understand the problems we face. To get the right answers, it is essential that we ask the right questions. This is especially true when the issue involves human behavior. At TTI, we have worked for decades to better understand the actions and motivations of all drivers, and in some cases more specifically, those of distinct groups like teenage drivers, through our Teens in the Driver Seat Center. Understanding fully what separates such distinct groups from the rest of the driving population is essential to improving safety not only for that group, but for all who share the roadways.

-          Support the development of public policy that improves transportation safety. Even the most substantial and groundbreaking findings of research are of little or no value if they sit on a shelf. Knowledge must be shared with everyone who may benefit from it, and this is especially true where public policy is concerned. We are proud that TTI researchers have on numerous occasions – often through formal testimony before Congress and the Texas Legislature – shared important findings that have supported the development or refinement of public policy.

-          Promote a shift in safety culture in which safe driving habits are valued and practiced universally. The Texas Legislature in 2001 created the Center for Transportation Safety at TTI, in part to conduct focused research, but also “to foster public awareness of the importance of roadway safety to the economy of this state.” Texas lawmakers then and now recognize the connection between transportation safety, sustainability, and our future prosperity. To a great extent, our fortunes depend upon our behavior, and our collective behavior will depend greatly on our understanding of how vitally important safety is to our future – not only as individuals, but as a society as well.

The persistent problem of transportation safety can only be addressed by a multi-faceted approach, and that is an approach to which we will always remain committed.

http://www.nytimes.com/2009/11/02/technology/02texting.html?_r=1&th&emc=th

Rather than being complacent about the risks and dangers of multi-tasking in the car while driving, the American public for the most part has been kept in the dark about the dangers. Only recently have government and opinion leaders been honest with the public about the serious consequences. The recent release of a 2003 NHTSA-sponsored study on cell phone use resulting from a lawsuit filed by Public Citizen and the Center for Auto Safety, an investigative report on distracted driving by the New York Times, several public opinion surveys on cell phone use, and a growing body of research have all shown that crash risk increases dramatically when a driver uses a cell phone, hands-free or hand-held, and is texting. In addition, similar to the drunk driving movement that was forever changed and energized with the founding of MADD, the victims and survivors of distracted driving crashes and deaths are influencing the public policy debate with compelling stories and commonsense solutions.

This safety issue now has the attention of state and federal leaders and it’s these individuals who must not become complacent in addressing the problem with readily available solutions. It is clear from past efforts tackling other serious traffic safety challenges that certain countermeasures work to change driving behavior and others do not. Essentially, the formula for success is enactment of effective laws in every state, combined with public education and strong enforcement. And, the best approach to getting tough laws passed in every state to protect every motorist is the use of “sanctions,” or withholding federal highway dollars from states that don’t act. In the past 25 years, the threat of federal sanctions has been used successfully to encourage every state to enact a National Minimum 21 Drinking Age, a zero tolerance BAC law for underage drinking and driving, a .08% BAC law, and a uniform commercial driver license (CDL). In each case every state passed the law within the specified time frame and not one state lost a single dollar of federal-aid highway funds.

Offering states incentive grants has resulted in slow and sporadic state passage of primary enforcement seat belt and child booster seat laws. After five years and a $500 million incentive grant program encouraging enactment of primary enforcement seat belt laws, only ten states acted, leaving 21 still without this critical lifesaving law. As a result, the leaders of the House Transportation and Infrastructure Committee have included in the surface transportation authorization bill that was unveiled last June a sanction provision for states that do not pass a primary enforcement seat belt law within three years. Advocates applauds their leadership but we can’t keep delaying the passage of other important and effective traffic safety laws while the annual fatality toll of tens of thousands continues.

Transportation professionals, elected officials and public opinion leaders need to move forward on legislative solutions that will protect every person in every state from the deaths and injuries caused by distracted driving. Motor vehicle crashes are the leading cause of death for all Americans ages 3 to 33 and the public is well-aware of the dangers on our roads and highways. That’s why they want to buy safe vehicles, drive on safe roads and engage in safe driving behavior. If lawmakers lead the public will gladly follow even if it takes a ticket or two to get their full attention.

Without knowing the full details of the NTSB investigation, or pre-judging its outcome, I had a couple of thoughts as I read about the NW pilots and their “overflight” of their destination.

First, no matter how sophisticated the equipment, no matter how redundant the systems, humans make errors. We have seen time and time again that human missteps, or a string of them, can thwart any safety system. As we advance technically, we must not overlook the fallibilities of the operators. Fatigue, distraction, boredom, repetition of simple tasks, schedule pressure, relations with co-operators – all of these conditions are crucial to recognize, understand and try to accommodate in our safety regulations.

Second, I agree with Secretary LaHood’s view that pilots (or other operators) have no business with laptops or with hand-held devices, or personal cell phones when they are operating a public conveyance. We know enough to understand that these devices are major distractions. I would favor banning them in this circumstance. My personal view is that regulation is preferable to legislation, but I would support whatever works.

I believe it is important for safety officials, such as Secretary LaHood and Administrator Babbitt, and others, to continue to speak out on this subject, so that one day using cell phones or laptops while operating public transportation will be as taboo as drinking on duty is.

He also implies that it is cheaper to live in Texas where there hasn't been any smart growth than in Maryland where there has been. This depends on what you call "living." The relevant measure is what does housing plus transportation together cost in any given area.

Using the Center for Neighborhood Technology Housing+Transportation Affordability Index one can choose specific census tracts and see the percent of median income for that specific area that does towards housing alone, or housing plus transportation. In both Maryland and in Texas, it is clear that it is always cheaper (housing PLUS transportation) to live in denser urban areas where smart growth metrics are in place than in sprawled areas that are auto-dependent.

The private sector seeks to provide services at a profit. So it has to provide what customers wish to pay for. Is that bad?

But what does the public sector seek? Glendening mentions “reducing vehicle miles traveled and … focusing on transportation to increase walkability, housing affordability and economic prosperity”.

Most of us can walk as much as we want to, without help from government. As for “housing affordability”, there is plenty of evidence that “Smart Growth” policies increase, rather than decrease, accommodation costs. Housing is cheaper in Texas than in Maryland.

As for economic prosperity, there is worldwide evidence that travel increases prosperity by increasing opportunities for employment, trade and leisure activities. Reducing travel is thus likely to reduce economic prosperity and, for that reason alone, does not seem to be a worthy government objective.

And the reason that Comcast can restrict the use of its services is because the public sector gave it a monopoly.

Nor is she right to assert that private providers are interested only in profit. Many of the hundreds of toll roads provided by the private sector in the US and UK in the 19th century were barely profitable, or not at all. They were provided by local people wishing to improve their neighbourhoods.

Robin is however right that both private and public agencies can provide “high quality, well-maintained infrastructure”. The drawback of public sector provision is not the inability to launch splendid services, but the inability to close them down when customers are no longer prepared to pay for them.

But that is a lesson that the public sector is unlikely to learn until politicians cease to enjoy giving away other people’s money.

The private sector’s goal is to maximize profit and give you exactly what you’ve agreed to pay for. Contractual relationships are constructed to provide a particular prescribed service and precisely nothing more. Consider our wireline and wireless infrastructure. I pay Comcast every month for broadband access. My contract says that I can’t leave my router open and let any of my neighbors get Internet access. Why not? I paid for the service and I perceive there is excess capacity that I’m willing to share. Similarly, we know that many features on cellphone devices (paid for and now owned by me, the consumer) have features disabled to prevent me from using it to its capacity. Infrastructure use extensions, even in cases where such use would result in no additional costs, are prohibited since they represent a loss of potential revenue. 

Wherever and whenever possible, the private sector infrastructure contractually prevents a user’s ability to adapt the infrastructure for future use in novel and unexpected ways. Chicago’s privatization of its downtown onstreet parking and the Skyway for 75 and 99 year leases, have restricted that city from changing road use to other purposes the public might see fit to do some time in the future. For example, several lanes of traffic could not be converted to HOV, bus only, or fixed rail, nor could streets be closed or bike lanes introduced in a manner that will result in fewer parking spaces, despite some future perceived public benefits.

Thoughtful public infrastructure should seek to maximize (safe) use, encouraging the public to take advantage of such infrastructure in novel and unexpected ways. And where possible, this infrastructure should able to adapt quickly to changing circumstances that benefit the public’s need. Sidewalks and curb cuts were not designed with rolling suitcases in mind, yet this novel use is welcome and allowable.

Government’s technology infrastructure investments, in transportation, electric grid, health care, education, and emergency response among other uses, is an area in which requiring and demanding open, non proprietary networks, devices, and standards will serve the public enormously well. This, in contrast to the closed proprietary systems that are often seen to be in the best interests of private sector providers of the same services. You can read more about the benefits of openness, downsides of road privatization, and the negative implications of Chicago’s privatization of its parking.

Public officials must better appreciate the value of time in terms of prompt payment ( delay in payment is a real cost to the vendor), and in terms of prompt project completion. Often the official gives greater weight to the interests of the Agency over the welfare of the public. A case in point, shifting road construction to night hours costs the agency more but this is outweighed by the benefit to the motoring public.

The private sector operates with a separate capital budget and operating budget but the federal government operates with a single budget treating all kinds of expenditures the same. This works to the great detriment of capital intensive programs. Creation of an infrastructure bank may alleviate the problem somewhat.

Public officials enjoy the thrill of serving the public and providing essential services to society. They are talented and dedicated and often underappreciated by private folks. There are inherent difficulties working for a public agency- operating in a fishbowl, legislative reluctance to support incentive compensation for public employees and inability to hire and fire at will although that is fast becoming scarce even in the private sector.

The current status quo in transportation has resulted from historical evolution, from legal and regulatory requirements (including federal legislation), and from other impediments to the private sector’s ability to participate.

Consider roads: the earliest major roads were privately-built turnpikes, starting around 1792 in Pennsylvania. Private turnpike companies constructed toll roads, and that was often how new roads were developed. But over time, competition from other modes, government participation in rate-setting, changing population patterns, and the need for better rural roads for automobiles led to calls for a new federal role, beginning with the Federal-aid Highway Act of 1916, and the first federal fuel tax (one cent per gallon) in 1932.

Likewise, airports were largely privately-owned until World War II, but thereafter federal law actually came to preclude private ownership. And transit lines often began as private companies, and were later taken over by municipalities during the middle part of the last century. For example, the New York City subway system that today is by far the largest public transit system in the United States was largely privately designed, financed, and operated at its outset.

Presently, there is renewed interest in private sector participation in transportation infrastructure, such as roads, ports, and airports. As has regularly been chronicled by National Journal’s online experts, the new arrangements often take the form of partnerships between the public and private sector in which various project risks are transferred from the public to the private sector in order to reduce taxpayer exposure to these risks and introduce market incentives to businesses that have often functioned as exclusive government monopolies. While much of the recent U.S. interest relates to public funding scarcity, many of the most important benefits of private sector participation are expected to come from the potential for increased efficiency in the operation and use of the infrastructure.

If one thinks about privately-operated rail lines and pipelines, and publicly-operated airports, one thing they have in common is a need for in-route traffic control, such as the dispatch centers for rail and pipelines, and the FAA’s air traffic control for aviation. Which is more costly and which is more cost-effective? What makes them so?

If one thinks about the need for expanded traffic capacity in rail and roads, for example, which system is better set to identify such needs promptly? And which is more likely to base increased investment on rigorous measures of the benefits to accrue from doing so? (And which is more susceptible to political pressure and earmarking?) It is reasonable to ask whether measures like those used to assess new capital investment in rail and pipelines might be applied to roads and transit, for example.

In 1994, President Clinton replaced Executive Order 12803 with a new Executive Order 12893 titled “Principles for Federal Infrastructure Investment”, which applies to transportation infrastructure. President Bush and President Obama retained that order, which expressly calls for agencies to “seek private sector participation in infrastructure investment and management”. But where it is determined that the public sector is preferred as the owner or operator, EO 12893 focuses on “efficient management”, encouraging structures and tools to improve efficiency and net benefits. So one of the key issues for publicly-owned transportation infrastructure is to identify ways for the system to be utilized efficiently and for expansions to be the optimal use of available resources.

These considerations deserve an increased focus both by policy makers and those who operate our publicly-owned transportation systems.

How can policymakers strike the best balance between ensuring that the public gets a fair deal and making investment in infrastructure projects attractive to private capital? And how much funding for transportation projects is it realistic to expect from the private sector?

Transit Oriented Development (or TOD) is one example of what could be considered private investment in infrastructure, especially where it is a private developer that is financing the construction project for the commercial revenues and the transit service and amenities are built into the project.  These projects are working across the country to increase the availability of transit while supporting local development.

Another example would be the inclusion of business contributions, directly or through Transportation Management Associations, to local projects where there are mitigation or other traffic reduction activities that allow projects to be completed for less time or lower cost.  While it is a nearly impossible exercise to try and quantify those contributions across the country, ACT members are contributing to these projects to allow them to be completed and potentially for other projects to then be able to move forward.  This activity is one of the reasons why ACT supports HR 3517, The Commute LESS ACT, introduced by Rep. Sires (D-NJ) to encourage more of these joint efforts.

We need to be mindful of the different scales on different needs.  It's one thing to try and handle the financing on major new construction or reconstruction projects.  It's quite another to handle the financing on smaller, local projects.  And there are both public and private interests that can be served by respecting the different investment opportunities based on the scale of the project.

No! Your generalization is not correct.

You seem to have forgotten about the PFI (“Private Finance Initiative”)  contracts executed in the UK in the 1980s and 1990s. The private providers assumed all traffic risks, and all cost risks.

You and your students can read about them in Chapter 17, by Neil Roden, “Development of Highway Concessions on Trunk Roads in the United Kingdom”, in the award winning Street Smart — Competition, Entrepreneurship and the Future of Roads published in 2006 by Transaction Publishers for the Independent Institute and edited by

Gabriel Roth

You said, “These little-read contracts give far reaching power with effects that will continue long after the contracts end.” This prompts my question: What powerful effects will the contract have after the contract ends?

The following post was submitted byEllen Dannin, the Fannie Weiss Distinguished Faculty Scholar and Professor of Law at Penn State Dickinson School of Law:

Claims that infrastructure privatization shifts future financial risk from the public to the private contractor are not correct. That the claims are not correct is apparent to anyone who reads the contracts.

Infrastructure privatization contracts are filled with terms that mean money flows from the public to the private contractor when there are lower than anticipated revenues. In fact, these contracts tend to run on for over 100 pages because of all the provisions that mean the public, rather than private contractors, bears risks associated with infrastructure privatization. The proposed Pennsylvania Turnpike Agreement was close to 700 pages when its appendices and attachments are included.

These claims can only be accepted because so few people actually read these contracts. Who can blame them? Reading - and understanding - such very long contracts is no easy task. It requires checking every word against the definitions section to determine the words' actual meaning. It means stopping multiple times to read other sections that are incorporated by reference. It means understanding what appear to be ordinary words but that actually have special legal significance. It means holding all that in your head to understand the significance of that one paragraph. And finally, it means repeating that exercise for page after page.

Tedious, painstaking work, indeed. But what it reveals is that infrastructure privatization contracts give private contractors a quasi-governmental status. Here are some common examples found almost verbatim in contract after contract.

"Adverse Action" provisions are found, for example, in contracts for the California's South Bay Expressway (SR 125), the proposed Pennsylvania Turnpike, and the Northwest Parkway. They give private contractors direct and indirect power to object to new laws, judicial decisions, propositions voted on by the public, and other government actions that the contractor claims would decrease tolls and revenues.

For example, Virginia's Pocahontas Parkway contract entitles the contractor to compensation for failure of the state to "exercise all discretionary authority available to it under Laws, Regulations and Ordinances to prevent any other governmental or private entity from developing Competitive Transportation Facilities, including but not limited to connections to State Highways." On Sept. 28, 2009, Crain's Chicago Business reported that Chicago developers and businesses and the public "could be on the hook for millions of dollars" if they displace a metered parking space under "Mayor Richard M. Daley's controversial $1.16-billion deal to privatize the city's parking meters".

These terms will force governments to vet all laws and decisions for any effect on private infrastructure contractors and then decide whether the new law or action is worth the cost.

Noncompete provisions, which are also common, alter the relationship between government and the public interest. First, public officials lose options for serving the public's need for high quality transportation when they must either ensure that the toll road is the only alternative. Second, and far worse, the agreements constrain options for dealing with congestion, pollution, and climate change for the generations that these contracts will run. Because solutions to these problems will likely mean decreased highway traffic and thus tolls, mitigating each of these problems will mean reimbursing the contractor for lost revenue - or deciding that it costs too much to mitigate the problems.

So far there has been no public consideration or discussion as to the wisdom of giving private contractors this degree of power over decisions that affect the public interest and that are normally made by public officials or citizens. Before we proceed farther down this path of subcontracting democracy to private interests we must know about and have a public discussion on the true costs of financing public infrastructure. These little-read contracts give far reaching power with effects that will continue long after the contracts end.

The public deserves to know how these very long contracts affect vital national infrastructure, how these contracts hand power over basic public policy decisions to private interests, and how they let private profit trump democratic processes and the public welfare.

If you think these costs are merely theoretical, in September 2008, it was the State of Indiana that bore the risk of an Act of Nature when it reimbursed a private contractor $447,000 for tolls lost during emergency evacuations due to severe flooding.

Demand for both freight and passenger rail service will only increase in the coming years and successful partnerships between government and private companies will be critical to meeting this challenge.

The FRA Preliminary National Rail Plan released last week was a step in the right direction; recognizing the critical role that freight railroads play in our nation’s economic health. The plan urges states to develop ways to address the modal inequity that exists in the nation's surface transportation program noting that all railroad infrastructure is privately owned and maintained unlike other modes of freight transportation.

The reauthorization of SAFETEA-LU provides an excellent opportunity for policymakers to start leveling the playing field when it comes to modal equity.  To the extent that general funds are used to shore up highway trust fund revenues, rail infrastructure investment projects should be made eligible for funding.  This would give States the option to invest in projects that produce the greatest public benefits and help meet national goals such as improved safety, economic competitiveness, energy efficiency and reduced consumption.

Public-private partnerships with the nation’s freight railroads make sense and will provide a more balanced transportation system for our country.  

Let’s assume for a minute that we follow Bill’s advice. We allow Wall Street investment firms and foreign consortia to create new roads as an alternative to already-existing options. Let’s also assume that these new roads – which must be toll roads if the Wall Street firms and foreign consortia are to recoup their investment – are so productive, avoid so much congestion, and provide such high mobility benefits that they really catch on. Let’s assume that 10 or 20 years from now, we have 75,000 miles of new roads created by Wall Street investment firms and foreign consortia. And these 75,000 miles of new roads are so much safer and more efficient than existing roads and so attractive to motorists and truckers that Americans abandon the existing Interstate Highway System…and the federal highway trust fund that supports it. 

Bill, you may be on to something here. I thought we were far apart on the issue of toll roads. I think we see eye to eye on this one.

All of the highway authorization laws in the last two decades – ISTEA, TEA-21, and SAFETEA-LU – have provided states with increased flexibility to use tolling not only to manage congestion but also to finance infrastructure improvements.  The Surface Transportation Authorization Act of 2009 (STAA 2009) unfortunately goes in the opposite direction by making it harder for states to use tolling.  States need more funding flexibility today, not less. 

At first glance, the Office of Public Benefit (OPB) seems innocuous.  In reality, this office would pose huge obstacles to state and local governments that might wish to create financially self-sustaining transportation assets that could be brought into service much more quickly than a federally funded project. 

While promoters and detractors of major concession agreements may disagree about the merits of deals in Illinois, Indiana, Virginia, and Texas, each transaction was a product of, and subject to, intense local and statewide scrutiny and debate. Mary Peters has already expressed very clearly the range of opportunities and protections that states can build into P3 agreements. 

I don’t believe the House bill is intentionally antagonistic towards tolling and pricing.  But the likely consequence of OPB language is to force state and local governments that wish to use tolling to do so without seeking any federal funding rather than subject themselves to an office whose apparent job is to think differently about the merits of a local transaction, has the power to judge those merits, and whose simple existence would damage their ability to issue bonds. 

What part of the public will benefit from a provision in law that restricts the ability of states to charge tolls on their own highways to improve transportation within their own borders?  Part of the mission of the OPB is to weigh “reasonable” costs and tolls; but who is measuring the costs of our currently broken funding system? What is reasonable about the current strangled highway funding system that results in reduced safety, higher emissions, and billions of dollars in lost time due to congestion? What is reasonable about a system that creates huge opportunity costs in projects that are delayed for years, decades, or even generations because of slow and inadequate levels of federal funding? 

I can think of only one constituency that will benefit from the Office of Public Benefit: people who want crappy congested highways.  In other words, no one.  It’s a constituency that doesn’t exist. 

In the midst of a serious recession, compounded by an uncertain federal reauthorization, is it in the public interest for state and regional officials to continue to forego much needed maintenance in order to fund for new capacity? Is it in the public interest to continue deferring new capacity projects with the attendant costs to economic growth and mobility? Is it in the public interest to pay additional regional taxes to fill at least a few holes in capital programs?

These very tough state and regional policy decisions are the context into which Congress will wade with the next reauthorization. Would the federal government best protect the public interest by making the difficult jobs of local officials harder or easier? At the same time the federal government is denying sufficient funding to right the ship, should Congress be limiting options available outside the Beltway? Should they be finding an overriding federal interest in objecting to how Sacramento, Austin, Richmond or Tallahassee elects to solve their difficult problems, despite the responsiveness to their electorate?

As Mary Peters notes in her response below, public-private partnerships are viable and valuable niche tools that provide unique advantages in certain categories of circumstances. These tools are becoming increasingly sophisticated in response to the ever changing circumstances affecting project delivery and finance. States across the nation, just like provinces across Canada, are offering crucibles of experimentation, developing and implementing PPPs tailored for their specific needs. This flexibility has been one of the great hallmarks of our federalist form of government, allowing the states to learn lessons for the benefit of others to follow later.

The potential for mistakes with innovative approaches exists, just as it exists if we continue to rely on conventional, past approaches. I think it was Bill Gates who said that if we are not failing occasionally we are not progressing enough.

Yet as Bob Poole notes, best practices for protecting the public interest in PPP deals already exist. The National Surface Transportation Infrastructure Financing Commission detailed how the federal government can protect the public interest without getting in the way of the states and their ability to attract private interest to deliver critical infrastructure. Specifically the Commission addressed these issues:

   • Planning
   • Value-for-money (cost effectiveness) Assessment
   • Conflict of Interest
   • Transparency: Procurement Process and Proposals
   • Transparency: Agreements
   • Treatment of Unsolicited Proposals
   • Concession Term
   • Early Termination for Convenience
   • Environmental Approvals
   • Performance and Handback Standards
   • Facility Access
   • Competing Facilities
   • Toll Rate Setting
   • Revenue Allocation
   • Financial Reporting 

After a bipartisan debate, the Commission unanimously concluded that P3s can and should be an important tool in the toolbox and that the public interest can be protected largely through a best practices approach, not a heavy handed federal intrusion into state procurement and finance.

“not just a way to fund projects”, but also “as a program delivery strategy deployed on the right projects.”

But she is too polite to challenge the premise of this week’s question, that “the public interest” needs to be protected from “private investment”.

While private investment can be misguided, even corrupt, the more urgent need today is to protect the public from errors in public investment, which can also be misguided and corrupt.

Private investment in transport projects is generally preferable because it has to respond to customers’ willingness to pay. Public investment, on the other hand, responds to politicians’ preferences, and to their ability to tax and regulate. As federal politicians can tax and regulate more than others, it is their preferences that merit the most scrutiny.

What is the best way for “policymakers” to “ensure that the public gets a fair deal”? How about getting all of transport infrastructure provided privately, like regulated public utilities? Mary Peters knows that we take them for granted in essential services such as electricity, telecommunications and water supply.

Given the substantial gap between the need for transportation investment and current (and even future) revenues, there is no question the private sector will play a significant role in helping us meet our funding needs.  However, it is critical that officials at the federal, state and local levels focus on the impact any public-private partnership has on all stakeholders. Chairman Oberstar’s proposal to establish an Office of Public Benefit within the Department of Transportation is a step in the right direction.

Currently, there are few mechanisms in place to ensure the public interest is protected when the government enters into a public-private partnership.  In the absence of a concrete set of criteria, the focus of the agreement largely centers on the financing of the deal and little else. While state governments generally try to mitigate the costs of a new project for the public, without a framework to guide the decision process, many other issues are overlooked. For example, state governments must take a strong look at how a public-private partnership will impact not only the users of a proposed infrastructure project, but also businesses that may find themselves operating under conditions imposed by a private businesses with less public accountability than a government entity. 

Chairmen Oberstar and DeFazio recognize the deficiencies in how public-private partnerships are evaluated. The Office of Public Benefit created in their surface transportation reauthorization proposal would give a voice to all stakeholders regarding a proposed private-sector investment. 

In turning over critical elements of our nation’s infrastructure to private companies, it is essential that the public sector carefully evaluate the costs and benefits of a proposed transaction, both in terms of monetary impacts as well as quality of life issues. 

That is why our construction industry recovery plan, "Build Now for the Future,", calls on Congress and the Administration to eliminate barriers to public private partnerships by giving states greater flexibility to allow for tolling.  Municipalities also should be able to more easily privatize airports and accept private investments in transit.  And we need to find creative new ways to expand eligibility for private investments in public buildings.  (A good example being the privately-funded U.S. Transportation Department headquarters building.)

Because one of the central characteristics of public private partnerships is that they allow the needs of commuters and shippers to prioritize transportation investments, instead of politically powerful special interests, some in Washington have resisted this potential source of revenue.  Under the guise of "protecting the public interest" there are even efforts underway to erect insurmountable regulatory obstacles to these kinds of transactions.  Given the level of sophistication most state transportation departments have in writing contracts (traditional or otherwise) that protect the public's interest, these new regulatory hurdles are likely to do more harm than good, however.  After all, while the private operators of Indiana's toll road suffer, the state's taxpayers are enjoying the benefits of one of the country's fewlly-funded ten year transportation plan.

That being said, we also need to be realistic about the limits of public private partnerships.  They represent a great opportunity to supplement the federal transportation program, not replace it.  There are too many vital shipping corridors that are essential to goods movement that don't generate the kind of traffic needed to interest private investors - think long stretches of I-10 or I-81.  The stark reality is our needs are so great that we also must restore the gas tax to the purchasing power it had in 1993 while beginning the multi-year process it will require to transition to a vehicle-miles traveled method of financing transportation projects.

On the question of what is the best method for meeting our future transportation needs, the simple answer is "all of the above."

The most pressing issues concerning private investment in infrastructure aren't about how easy it should be, but how much the public should give up in return.

While the business models for private investment in high speed rail and transit oriented development are still emerging, most private money has gone to toll road concessions. As our research has shown, the public has tended to give up far too much.

The public has lost out in four ways: (1) The cost of tolls promised to private investors tends to exceed the costs of public borrowing due to companies’ higher capital costs and their hefty fees and profit margins; (2) compromised public control because investors demand compensation for any future policies that might reduce the volume of toll-paying traffic; (3) reduced public transparency because private companies declare their deal-making information to be proprietary, and (4) subsidized financing and special tax breaks, including federal TIFIA subsidies and special tax rules that allow concession owners to write off the value of toll roads decades before they wear out.

The risks of privatizing transportation finance become steeper when combined with reduced federal oversight. As the GAO has noted, states generally lack the capacity to analyze, monitor, and enforce these deals. Cash-strapped local officials can be enticed by large up-front payouts, overlooking the likely problems that will likely emerge years later. Unsolicited bids for privately operated roads similarly subvert the long-term planning process. And it’s no accident that most states touting private toll concessions choose routes that disproportionately carry out-of-state travelers. Beggar-thy-neighbor financing is exactly the wrong circumstances to start devolving oversight away from the federal authorities.

In the wake of the mortgage and banking meltdown, T&I Committee Chairman Oberstar’s approach reflects an awareness of the dangers of “innovative” finance and the dangers of devolving responsibility for systematic long term risks. Federal oversight is needed to responsibly direct private capital while reining in problems like TxDOT’s hugely unpopular deals with hard-lobbying private toll companies – including Zachry that currently employs Ms. Peters. Likewise, the Chicago City Council has the right idea to introduce an ordinance that would increase transparency and accountability on future private infrastructure (see case study ).

The only thing America’s transportation system needs more than money is a better focus on advancing long-term goals. At the very moment when America most needs to follow national transportation objectives, Congress should not undermine its capacity to do so.

While I am largely in agreement with both Mary Peters and Greg Cohen on the importance of PPPs and protecting the public interest, neither adequately addressed the key question as we move into debating surface transportation reauthorization: What is the appropriate role of the federal government on this question?

Chairman Oberstar’s bill, with its creation of an Office of Public Benefit, would greatly expand the federal government’s role, not only in PPPs but also in tolling, by creating what amounts to a tolling-and-PPP czar at US DOT. This position would have to approve any and all toll agreements and PPP agreements anywhere on the federal-aid highway system. Not only would this be a major expansion of federal control over what would normally be state-level decisions; it would also turn back the clock to the pre-ISTEA days when federal law banned the use of tolling anywhere on the federal-aid system.

ISTEA began the process of liberalization, keeping federal limits on tolling solely on the Interstate system. Subsequent reauthorizations further liberalized the federal role, by permitting exemptions for various kinds of toll pilot projects on Interstates: HOT lanes, express toll lanes, rebuilding three Interstates with toll finance, and constructing up to three new Interstates with toll finance. The Chairman’s bill would scrap all these pilot programs in the name of streamlining and consolidation—but at the price of greatly expanded federal control.

Creating a federal toll czar is the wrong way to go. Micro-managing tolling and PPP agreements that need to be tailored to the specifics of each project would create impediments to the timely and cost-effective use of these important tools by state DOTs. And if states were required to submit negotiated PPP agreements to the federal czar for a yes-or-no decision, the uncertainty created by that requirement would very likely kill the private sector’s interest in spending millions of dollars preparing proposals and negotiating complex deals that could be killed by the stroke of a pen at the 11th hour. We’ve seen the equivalent occur in those states whose PPP enabling acts required legislative approval of negotiated deals: no such deals were ever proposed.

In February the National Surface Transportation Infrastructure Financing Commission released its report. Chapter 7 of this report addresses protection of the public interest in PPP deals. One of its principal recommendations is that “Congress should generally support the states’ primary role in overseeing private-sector arrangements and, to this end, should encourage the development of appropriate technical assistance and dissemination of best practices information.” I agree with that recommendation, and so does the National Governors Association, based on recent statements.

A consensus is emerging on best practices for protecting the public interest in PPP agreements. The Finance Commission report includes a summary in its Box 7-7. The Transportation Research Board has also released an excellent synthesis report, NCHRP synthesis 391, “Public Sector Decision Making for Public-Private Partnerships.” Recent toll concession agreements are generally in line with these recommendations.

All fast-growing states are woefully short of transportation funding, measured against the need for rebuilding and expanding our highway system to keep pace with growth and improve its often-dismal performance. Tolling and PPPs are essential tools for their toolboxes. Heavy-handed federal regulation could, de-facto, remove these tools at the very time when states need them more than ever.

From the motorists’ perspective, however, some additional public interest protections are important. It is logical that private investors would only consider spending capital on projects that are expected to have a good return. With most PPPs, highway users are expected to provide that return over time. So it is important that highway users’ such as the local AAA club, trucking association, local business group, and state highway users federation are well represented in PPP negotiations.

PPPs are diverse and some deserve the support of motorists – particularly when they enable a road to be built that could not be built otherwise. Among the many additional “public interest” questions worth asking are the following:

1. Is the main purpose of the PPP to build a new road or add new, privately operated lanes that will benefit the public? Or, is the primary goal to “monetize” existing capacity to raise state or local government funds?  
2. If the private investors offer the state or local government cash for the rights to privatize a road, how will that cash be spent? Will it benefit the users of that road or be diverted?
3. How will tolling be structured to ensure fairness? Will the tolls be reasonable for all modes and all types of travelers? Or will toll rates be designed to benefit some users and fleece others? (See I-80 "public-;ublic" partnership tolling plan, which will discriminate against long-distance motorists in Pennsylvania)
4. Will the PPP improve area highway safety or create new problems?  
5. What is the impact of the PPP on efficiently moving people and commerce over the national highway system? Will it enhance personal and freight mobility or create barriers to commerce?
6. What is the anticipated return to private investors?  In Europe, some PPPs have a cap on returns. When the cap is reached, the PPP is re-bid or road operations are returned to the public transport agency. 

Every PPP project is different and the motoring public should be deeply involved in PPP negotiations to ensure a fair deal.  One of the better PPPs are the local HOT lane projects along the Shirley Highway and Capital Beltway in Virginia.  The main purpose of these projects are to add capacity, provide alternatives, and generally benefit the users of those transportation corridors.

Congress, US DOT, and national organizations should also have an oversight role & veto power under certain circumstances when PPPs include non-compete agreements that affect public roads or involve changing the status of existing public highways that have received federal-aid. 

Policymakers can ensure the public gets a fair deal by taking steps to protect the public interest in the agreements. They can also ensure investment in infrastructure projects is attractive to private capital by appropriately defining and assigning risk in the public private partnerships (P3) agreements. The emphasis must be on the partnership between the public and private sectors.

In protecting public interest, the public sector will need to have the institutional capacity and expertise to perform due diligence in identifying appropriate P3 projects and conducting value for money analyses to determine if private investment is the best option. The procurement process for a P3 must be open, transparent from the onset, and information made broadly available to the public with the exception of truly proprietary information.

P3 agreements can and should contain key performance indicators such as travel time reduction, safety, condition, operation and hand-back condition, recognizing an asset management approach for the infrastructure project. Also the length of the agreement and the inclusion of any non-compete clauses should be openly discussed.

Risk should be appropriately defined and assigned to the party best able to manage the risk. The public sector is often better positioned to address risk associated with conducting environmental studies, acquiring rights of way, and obtaining permits from other public agencies. The private sector is most appropriate to manage risk associated with project development, financing, and overseeing construction, maintenance and operation.

The rate of return or profit earned by the private party should be related to the risk allocation, and recognizing the public benefit of building the project many years sooner than would otherwise have been possible.

Private investment through public private partnerships should be a key option in meeting our nation’s transportation system requirements. Public policy should encourage these important agreements - we can protect public interest and attract private capital.