Freight Transportation: Strategies Needed to Address Planning and
Financing Limitations (19-DEC-03, GAO-04-165).			 
                                                                 
The strong productivity gains in the U.S. economy have hinged in 
part on transportation networks working more efficiently. The	 
nation's ports, which handle 95 percent of overseas freight	 
tonnage, are a key link in this network, and efficient intermodal
links between ship, rail, and highways are vital to continued	 
productivity gains. GAO was asked to address (1) the challenges  
to freight mobility, (2) the limitations key stakeholders have	 
encountered in addressing these challenges, and (3) strategies	 
that may aid decision makers in enhancing freight mobility. GAO's
work was based on a synthesis of previous studies and a review of
conditions at 10 ports and surrounding areas that handle almost  
two-thirds of all containers moving in and out of the country.	 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-04-165 					        
    ACCNO:   A09022						        
  TITLE:     Freight Transportation: Strategies Needed to Address     
Planning and Financing Limitations				 
     DATE:   12/19/2003 
  SUBJECT:   Federal aid for transportation			 
	     Federal funds					 
	     Freight transportation operations			 
	     Strategic planning 				 

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GAO-04-165

United States General Accounting Office

GAO

Report to the Committee on Environment

                         and Public Works, U.S. Senate

December 2003

FREIGHT TRANSPORTATION

        Strategies Needed to Address Planning and Financing Limitations

                                       a

GAO-04-165

Highlights of GAO-04-165, a report to the Committee on Environment and
Public Works, U.S. Senate

The strong productivity gains in the U.S. economy have hinged in part on
transportation networks working more efficiently. The nation's ports,
which handle 95 percent of overseas freight tonnage, are a key link in
this network, and efficient intermodal links between ship, rail, and
highways are vital to continued productivity gains. GAO was asked to
address (1) the challenges to freight mobility, (2) the limitations key
stakeholders have encountered in addressing these challenges, and (3)
strategies that may aid decision makers in enhancing freight mobility.
GAO's work was based on a synthesis of previous studies and a review of
conditions at 10 ports and surrounding areas that handle almost two-thirds
of all containers moving in and out of the country.

GAO recommends that the Secretary of Transportation take steps to
facilitate state and local planners' use of better methods and tools to
make freight transportation investment decisions. These methods and tools
include better freight-related data, consistent and sound evaluation
approaches, and greater consideration of alternatives to capital
construction. The Department of Transportation reviewed the draft of this
report and generally agreed with the facts presented, but did not take a
formal position on the recommendations.

www.gao.gov/cgi-bin/getrpt?GAO-04-165.

To view the full product, including the scope and methodology, click on
the link above. For more information, contact JayEtta Hecker at (202)
512-2834 or [email protected].

December 2003

FREIGHT TRANSPORTATION

Strategies Needed to Address Planning and Financing Limitations

The major challenges to freight mobility share a common theme- congestion.
National studies point to such problems as overcrowded highways and
freight-specific "chokepoints" that stifle effective intermodal transfer
of cargoes. All 10 ports GAO studied faced similar congestionrelated
problems. For example, many of the ports are in dense urban areas,
limiting the ability to expand rail yards, roadways, and other
infrastructure. Increased port security measures may exacerbate congestion
if new controls drastically slow the movement of goods.

Stakeholders encounter two main limitations in addressing freight mobility
challenges. The first relates to the limited visibility that freight
projects receive in the process for planning and prioritizing how
transportation dollars should be spent. The planning process often lacks a
comprehensive evaluation approach, such as a cost-benefit framework that
might result in the implementation of freight improvements to better
ensure that systemwide, multimodal solutions are considered and adopted
where appropriate. The second relates to limitations of federal funding
programs, which tend to dedicate funds to a single mode of transportation
or a nonfreight purpose.

Two strategies may help address these limitations. One is to ensure that
transportation planning cuts across modes and individual jurisdictions,
includes coordination with freight stakeholders representing an intermodal
perspective, and includes sound analytical approaches and meaningful data
needed to compare the benefits of freight and passenger projects. The
second is to develop a multifaceted funding approach that includes
improved access of freight projects to existing funding sources and
support for programs that emphasize better use of existing infrastructure.
If integrated in these strategies, three principles could better assure
that the freight infrastructure system provides the level of capacity and
performance that makes the greatest contribution to the nation's economic
well-being. These principles include promoting efficiency by embracing a
"user pay" approach, establishing performance measures, and aligning
incentives for planning agencies to adopt best practices.

Truck Congestion near the Port of New York/New Jersey

Contents

  Letter

Results in Brief
Background
Challenges to Freight Mobility Center on Congestion
Planning and Financing Limitations Pose Difficulties in Addressing

Freight Mobility Challenges Two Key Strategies Could Help Address Freight
Planning and

Financing Limitations Conclusions Recommendations for Executive Action
Agency Comments and Our Evaluation

1 2 6 8

19

34 54 55 56

Appendixes

Appendix I:

Appendix II:

Appendix III:

Appendix IV:

Appendix V: Appendix VI: Objectives, Scope, and Methodology

Summary of the Administration's 2003 Surface Transportation
Reauthorization Proposal Freight-related Provisions and Observations

Summary of Freight-related Recommendations Developed by the Transportation
Research Board

Summary of the Freight-related Reauthorization Proposals Developed by
Stakeholders

Assessment of Stakeholder Proposals

GAO Contacts and Staff Acknowledgments

GAO Contacts
Staff Acknowledgments

58

60

65

67

72

73 73 73

Tables	Table 1: Table 2: Table 3: Table 4: Table 5: Table 6:

Key Elements of Evaluations Used in a Public
Decision-making Process 25
Types of Data Collected and the Additional Data Needs for
Freight Mobility Planning 28
Federal Funding and Financing Sources Providing
Eligibility for Some Freight Projects 33
Examples of Stakeholder Proposals to Expand Eligibility
Criteria to Include Freight Projects 44
Description of Nonbuild Alternatives and Relevant
Stakeholder Proposals 50
Coverage of Strategy Elements in the Most Extensive
Reauthorization Proposals 72

                                    Contents

Figures	Figure 1: Figure 2: Figure 3: Figure 4:

Figure 5: Figure 6: Figure 7: Figure 8: Figure 9:

Congestion-related Challenges Are the Dominant
Constraint to Freight Mobility 9
Trucks and Cars on Congested I-710 near the Ports of Los
Angeles and Long Beach 10
Examples of Freight-related Congestion at Six Large
Gateway Ports and the Surrounding Areas 12
Connector to the Elizabeth New Jersey Port Authority
Marine Terminal: Intersection of North Fleet Street and
Corbin Street 15
At-Grade Rail Crossing Near Ports of Seattle/Tacoma-
before and after Construction of Overpass 16
Examples of Infrastructure with Limited Expansion
Potential 17
Focus of Planning and Funding Processes Limit
Consideration of Freight Improvements 20
Reasons for Limited Private-Sector Participation in the
Planning Process 24
Key Strategies and Principles to Address Planning and
Financing Limitations 35

Contents

Abbreviations

CMAQ Congestion Mitigation and Air Quality
CMS Congestion Management System
DOT Department of Transportation
FAF Freight Analysis Framework
FAIR Fast and Intertwined Regular Lanes
FAST Freight Action Strategy
FHWA Federal Highway Administration
FMSIB Freight Mobility Strategic Investment Board
HOT high-occupancy toll
HOV high-occupancy vehicle
ISTEA Intermodal Surface Transportation Equity Act
ITS Intelligent Transportation System
MPO metropolitan planning organization
NHS National Highway System
RRIF Rail Revitalization and Improvement Funding
STP Surface Transportation Program
TEA-21 Transportation Equity Act for the 21st Century
TIFIA Transportation Infrastructure Finance and Innovation Act
TRB Transportation Research Board

This is a work of the U.S. government and is not subject to copyright
protection in the United States. It may be reproduced and distributed in
its entirety without further permission from GAO. However, because this
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copyright holder may be necessary if you wish to reproduce this material
separately.

A

United States General Accounting Office Washington, D.C. 20548

December 19, 2003

The Honorable James M. Inhofe
Chairman
The Honorable James M. Jeffords
Ranking Minority Member
Committee on Environment and Public Works
United States Senate

Globalization has had a dramatic effect on the U.S. economy, resulting in
a
greater reliance on international trade and the efficient movement of
goods
within the United States. Continued development and efficient
management of the vast transportation system of highways and rail lines
that connect seaports, airports, and intermodal facilities are all
important
factors contributing to the nation's economic growth and productivity.
Because more than 95 percent of our nation's overseas trade tonnage
moves by water, container ports are key gateways for our nation's imports
and exports and, therefore, play a particularly critical role in moving
goods
into and across the country. Increasing congestion at these seaports and
the surrounding metropolitan areas is a growing national concern and
represents a threat to the efficient flow of the nation's goods.

Planning and funding of projects to improve the efficiency of freight
movement in the transportation system are becoming increasingly
important. At the federal level, the Intermodal Surface Transportation
Efficiency Act of 1991 and its successor legislation, the Transportation
Equity Act for the 21st Century, establish much of the structure of
federal
assistance for surface transportation projects. Under this structure,
planning and funding of federally assisted projects is carried out
primarily
by local metropolitan planning organizations and by state departments of
transportation. Reauthorization of this legislation-an issue currently
before Congress-presents an opportunity to reexamine ways to enhance
planning and financing activities that improve freight movement at the
local level and to consider whether adjustments should be made in current
policies and programs.

This report responds to your request to provide information on issues
related to moving freight through the nation's largest container ports and
surrounding metropolitan areas and federal efforts to assist and enhance
freight mobility efforts at these locations. As agreed with your offices,
we
identified (1) the national challenges to freight mobility and how these
challenges were evident at selected container ports and surrounding

metropolitan areas, (2) the existing limitations to effectively addressing
these challenges, and (3) strategies that may help public decision makers
improve freight mobility, including a discussion of relevant provisions of
selected proposals related to reauthorization of federal surface
transportation programs.

To identify the challenges to freight mobility, the limitations to
advancing freight improvements, and strategies to enhance freight
mobility, we conducted an evaluation synthesis of public- and
private-sector reports, studies, and proposals related to freight movement
issues. To determine whether these challenges and limitations were evident
at the nation's largest container ports and surrounding metropolitan
areas, we conducted site visits and interviews of a wide range of public
and private transportation officials in six metropolitan areas that
collectively contain 10 ports that handle two-thirds of the containers
moving in and out of the country each year.1 To identify strategies that
may aid decision makers in enhancing freight mobility, we analyzed the
results of our review of the challenges and limitations and built on the
perspectives gained from our past work in transportation and
infrastructure systems and federal investment strategies. 2 We assessed
various reauthorization proposals developed by key stakeholders, including
the administration, within the context of these strategies. (See app. I
for more information on the scope and methodology.) We conducted our work
from October 2002 to November 2003 in accordance with generally accepted
government auditing standards.

Results in Brief	Freight mobility is most affected by congestion-related
challenges. Freight traffic on roadways has increased fourfold over the
last two decades, and both rail and highway congestion are particularly
severe in urban areas

1The six metropolitan areas are Charleston, SC; Seattle/Tacoma, WA; Los
Angeles/Long Beach, CA; San Francisco/Oakland, CA; Houston, TX; and New
Jersey/New York. Except for Charleston and Houston, each of the areas has
two ports. The percentage is based on the number of 20-foot equivalent
container units (TEUs), a standard measurement of container volume.

2U.S. General Accounting Office, Surface and Maritime Transportation:
Developing Strategies for Enhancing Mobility: A National Challenge,
GAO-02-775 (Washington, D.C.: Aug. 30, 2002); U.S. General Accounting
Office, Marine Transportation: Federal Financing and a Framework for
Infrastructure Investments, GAO-02-1033 (Washington, D.C.: Sept. 9, 2002);
and U.S. General Accounting Office, U.S. Infrastructure: Agencies'
Approaches to Developing Investment Estimates Vary, GAO-01-835
(Washington, D.C.: July 20, 2001).

where container ports for international trade are located. Such congestion
was evident at all six locations we visited. In Oakland, for example,
truck traffic on key access highways to the port increased by 50 to 100
percent from 1996 to 2000. Congestion on rail lines is also an issue. In
the Los Angeles area, two mainline freight railroads are already
experiencing 30minute delays per train; freight traffic is projected to
more than double along these rail lines by 2025. Severe congestion also
regularly occurs at freight-specific "chokepoints" or bottlenecks, which
exist at entrances to port facilities, at-grade rail crossings where
highways and rail lines intersect, and roads connecting interstate
highways and rail lines to ports and intermodal facilities.3 The area
around the Port of Seattle located in the heart of the downtown area, for
example, has considerable congestion due to at-grade rail crossings, which
slow freight trains and trucks moving in and out of the port. Old and
inadequate infrastructure in and around gateway seaports-such as
underpasses, tunnels, and bridges with insufficient clearance-is another
source of congestion. The ability to expand or improve this infrastructure
is often limited by geography or by surrounding development. For example,
about 90 percent of the freight moved through the Port of New York/New
Jersey is carried by truck. Dense commercial and residential development
adjacent to key routes in the area limits highway expansion in most areas
and makes upgrades to tunnels and overpasses very expensive. Moreover,
existing rail lines in the area have high-density usage due to heavy use
by freight, commuter, and intercity passenger trains. Another potential
source of congestion-which has not yet materialized-centers on tighter
security measures being adopted in and around gateway seaports. The impact
of future security measures, such as stricter container inspections and
port access controls, could have a major impact on the efficient flow of
goods at seaports and surrounding metropolitan areas, depending how such
measures are applied and implemented.

The fundamental limitation to overcoming freight mobility challenges is
that the public-sector process at the state and local levels for planning
and financing transportation improvements is not well suited to address
freight projects. On the planning side, consideration of freight
improvement projects as part of the local planning process is limited
because the process is oriented to projects that clearly produce public
benefits, such as

3For the purposes of this report, intermodal freight transportation refers
to the transport of goods in containers that can be moved on land by rail
or truck and on water by ship or barge.

passenger-oriented projects. While freight projects also may produce
public benefits by reducing freight congestion, generally, public planners
are wary of providing public support for projects that directly benefit
the private sector. In addition, the planning process often does not
consider the regional nature of freight mobility and is subject to long
lead times to plan and implement projects, a factor which deters valuable
private sector participation in the process. These limitations were
evident at the locations we visited. For example, planning officials in
Southern California indicated that improvements to a key freight
interstate route from the ports of Los Angeles and Long Beach clearly
would have benefits that extend beyond the jurisdiction of the planning
body. Instead of funding this type of freight improvement, however,
planning bodies tend to allocate funding to nonfreight projects, which
clearly benefit the local constituents. In New York, state officials said
that the long planning horizons associated with the public planning
process and the perception by the freight industry that it was not
benefiting from the process have limited participation by the freight
sector. In addition, freight projects are disadvantaged in the planning
process because many local planning bodies have not applied rigorous
evaluation approaches, such as a cost-benefit framework, or do not have
good data to evaluate freight projects relative to other projects and to
better ensure that multimodal solutions to enhance freight mobility are
considered. Financing limitations pose another difficulty in advancing
freight improvements. Freight projects can often have difficulty securing
public funding because they may generate substantial private-sector
benefits and are intermodal in nature, while funding sources often
restrict access to private firms and focus on a single mode. For example,
gaining access to funding sources-even those federal programs specifically
targeted for freight projects, such as the National Corridor Planning and
Development Program and the Coordinated Border Infrastructure Program-has
been limited because, according to the Federal Highway Administration
(FHWA), these programs are oversubscribed and much of the funding for
these programs has been allocated to congressionally designated projects.
Also, because of private ownership and other issues, certain freight
projects, most notably rail projects, are especially difficult to fund
through federal programs because of restrictions in using public funds for
infrastructure that is privately owned.

Based on our past work and the work of transportation experts, we have
identified two key strategies that we believe are needed to effectively
address the freight planning and financing limitations. The first strategy
involves promoting a more systemwide perspective in planning
transportation projects. Such a perspective involves several facets in

planning projects. For one, our case studies have demonstrated that
successful intermodal projects-such as the Freight Action Strategy (FAST
Corridor) project in Washington state4-are those that are coordinated
across various transportation modes and planning jurisdictions and include
close coordination among multiple sets of stakeholders. Also, active
participation by the private sector in partnership with the public sector
often helps to ensure a successful outcome. The private sector often can
bring a more global view of freight needs to the planning process, can
help identify and implement projects, and can provide new data for making
more informed decisions. An integral part of this strategy is also
ensuring that sound analytical approaches are being applied locally and
meaningful data are available, not only to evaluate and prioritize
infrastructure investments but also to determine whether public support is
justified by considering a wider array of social and economic costs and
benefits. The second strategy involves determining the appropriate federal
role and providing a wider range of financing and related options to
enhance freight mobility. Expanding the eligibility criteria for existing
programs to cover a broader range of freight projects is one way to
accomplish this. For example, one of the administration's current
proposals is to expand the eligibility of one relevant program to include
public or private freight rail facilities and intermodal freight transfer
facilities. Another way could involve expanded support for alternative
financing mechanisms, such as federal loan programs, and new sources of
revenue, such as truck toll lanes, to appropriately blend public and
private funds to match public and private costs and benefits. Finally,
promoting low cost alternatives to expand capacity through the more
efficient use of existing transportation infrastructure may be a way to
address congestion with limited funds. These alternatives include a
diverse mix of measures, including corrective and preventive maintenance,
operations and systems management, and new technology. The administration
and freight stakeholders have developed a variety of reauthorization
proposals to broaden eligibility criteria, expand alternative funding, and
promote low cost alternatives that, taken together, could represent key
components of the two strategies we identified. While one aspect of the
administration's reauthorization proposal encourages coordination and
cooperation of planning agencies across jurisdictional boundaries and
various transportation modes, more fundamental, bolder steps to change the
way projects are planned and

4Through various partnerships, the FAST Corridor is a project that has
identified solutions to problems where transportation systems meet along
the freight corridor between Everett and Tacoma.

financed may be necessary to overcome widely recognized limitations with
the process. Some transportation experts contend that more far-reaching
solutions, such as establishing a federally administered program to
identify and fund freight projects having national significance, are
needed to overcome local disincentives currently impeding such
cooperation.

We are making specific recommendations to the Secretary of Transportation
to facilitate the use by state and local planners of better methods to
make freight-related and other transportation investment decisions. These
methods include increasing efforts to collect and maintain more complete
and useful freight-related data and using consistent and sound analytical
methods and evaluation approaches. The Department of Transportation
reviewed a draft of this report, provided technical comments, and
generally agreed with the facts presented in this report. We made changes,
as appropriate, to ensure the accuracy of our report. The department did
not take a formal position on GAO's recommendations.

Background	The economic significance of gateway ports is related both to
consumer demand for imported products, which has fueled the United States'
increasing dependence on international trade, and to significant shifts in
business and logistics trends. Businesses, to remain globally competitive,
have reduced costs by moving production facilities overseas and by
developing improved practices that highlight reliability, efficiency, and
quality of service. For example, more companies are practicing
multinational production, which involves manufacturing or assembling goods
or components overseas and importing them into the United States. Also,
the time-dependent manufacturing practice, which minimizes inventories to
reduce warehousing costs, has resulted in the need for smaller, more
frequent shipments of goods.

Effective implementation of these new business practices is dependent on
an integrated, intermodal transportation system to provide efficient and
reliable freight movement. Within the ports, quick movement of imports and
exports relies on ready transfer between ships and other transportation
modes, particularly highway and rail. Outside the ports themselves,
freight shares the transportation system with passenger traffic. However,
the transportation system also includes some infrastructure that is more
freight-specific, such as rail yards, intermodal connectors, and some
exclusive rail rights-of-way that allow trains to move quickly without
contributing to congestion.

Freight infrastructure projects are essentially a joint enterprise of both
the private and public sectors and are typically intermodal in nature.
Virtually all freight transportation carriers are private companies and
conduct most of the actual transportation of cargo. Private sector players
include shipping lines, terminal operators, trucking companies, railroads,
airlines, and pipeline companies that often compete with each other for
shipping business. These entities typically make key routing, operating,
and equipment investment decisions. The public sector provides
infrastructure such as highways, waterside and upland port/intermodal
facilities, harbor development, channels, navigation aids, and locks and
dams on inland waterways. For the most part, the supporting transportation
infrastructure for freight transportation is publicly owned, with the
exception of rail infrastructure.

The Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA) and
its successor legislation, the Transportation Equity Act for the 21st
Century (TEA-21), established federal funding and financing programs for
surface transportation projects. Federal support for freight
transportation infrastructure projects mainly occurs through the federal
surface transportation programs, which include a number of programs
targeted for specific modes and purposes. Other programs have been
established at the federal level to build, maintain, and operate inland
waterways and enhance and maintain harbors.

Revenues collected and disbursed through the surface transportation
program are derived mainly from user tax receipts credited to the Highway
Account of the Highway Trust Fund. The user taxes include excise taxes on
motor fuels (gasoline, gasohol, diesel, and special fuels) and
truckrelated taxes on truck tires and sales of trucks and trailers. FHWA
distributes highway program funds to the states through annual
apportionments according to statutory formulas that consider a variety of
factors, including vehicle miles traveled on the interstate system and
motor fuel usage by each state's highway users. The federal share for
project funding is usually 80 percent but can vary among programs, road
types, and states. State and local governments then match federal funds
from other sources, such as state and local revenues.

States have primary responsibility for selecting projects and for building
and maintaining roads. Innovations in ISTEA and TEA-21 allowed states more
flexibility to use federal funds for freight projects, established
publicprivate partnerships, and allowed the expenditure of federal aid on
nonhighway freight projects in certain circumstances. For example, with

the passage of ISTEA, it was possible through the Congestion Mitigation
and Air Quality program (CMAQ) for states to fund intermodal freight
projects that included improvements to rail lines and port facilities.
With the passage of TEA-21, public-private partnerships were made possible
through programs like the Transportation Infrastructure Finance and
Innovation Act (TIFIA), a loan and loan guarantee program. However,
because surface transportation infrastructure is mainly funded through
highway user fees and is based on a user-pays principle, revenues
generated from these fees generally are targeted for highway or transit
projects. 5

Challenges to Freight Mobility Center on Congestion

Congestion-related challenges are among the dominant constraints for
freight mobility. Congestion on our nation's highways and at intermodal
connectors to rail lines, terminals, and port facilities threaten the
efficiency and reliability of the freight transportation system, both
locally and nationally. Locally, the most acute impacts of congestion are
traffic slowdowns, noise, and air pollution, which threaten freight and
passenger mobility alike. Just as significant is the impact that an
inefficient, congested transportation system has on the national economy
and on international trade. For example, the ports of Los Angeles, Long
Beach, and Oakland together account for over 40 percent of the container
traffic coming into and going out of the United States; over half of the
cargo coming into those three ports is destined for locations throughout
the nation, including New York City and Atlanta.6

Several major sources of congestion can impede efficient freight flow.
(See fig. 1.) One is the current high level of traffic on roadways and
rail lines, which is particularly severe in metropolitan centers near
gateway ports for international trade, and which shows no signs of
abating. Moreover, freight-specific chokepoints exist at rail crossings
and roads connecting intermodal terminals, seaports, and airports. In
urban areas, limited expansion potential and infrastructure deficiencies,
such as poorly

5A portion of highway user revenues is dedicated to mass transit.

6According to information provided by the Port of Los Angeles, slowdown of
this cargo in the Los Angeles area can have an economic ripple effect for
the nation as a whole. For example, the Los Angeles Economic Development
Corporation released estimates as part of a study, placing the total trade
disruption cost at $6.28 billion. However, the Bureau of Transportation
Statistics notes that costs of the shutdown have ranged from $1.67 billion
to $19.4 billion, depending on the provider of the estimate.

designed access roads and insufficient rail and roadway clearances for
bridges and tunnels, further contribute to congestion and impede the
efficient flow of goods. Tighter security measures being adopted in and
around large gateway seaports may also directly impact the efficient flow
of goods. While security measures adopted thus far have not apparently
disrupted the efficient flow of goods to and from seaports, the impact of
future security measures on goods movement, such as stricter container
inspections and tighter access controls to port facilities, is largely
unknown and is a growing concern of freight industry stakeholders.

Figure 1: Congestion-related Challenges Are the Dominant Constraint to
Freight Mobility

Current Levels of Congestion Are Already Significant and Will Likely Grow
with Increasing Traffic Volumes

One major challenge to freight mobility is the existing high demand on the
transportation infrastructure, which is increasing in large urban areas
near international gateway ports. Overall, highway congestion for
passenger and commercial vehicles traveling during peak driving periods
doubled from 1982 through 2000. Freight traffic is adding to this
congestion at a faster rate than passenger traffic. For example, from 1993
through 2001, truck traffic on urban highways increased more than twice as
much as passenger traffic.7 This is particularly relevant for freight
mobility, since trucks carried over 70 percent of all tonnage and must
share the highways with other road users. (See fig. 2.)

Figure 2: Trucks and Cars on Congested I-710 near the Ports of Los Angeles
and Long Beach

7Trucks include both single unit trucks (six tires or more) and
combination trucks (trailers and semitrailers).

As a group, the six regions we studied had varying degrees of highway
congestion. According to a study by the Texas Transportation Institute,
driver delay times8 for the locations we visited ranged from 26 hours per
year in Charleston, South Carolina, to nearly 140 hours per year in Los
Angeles-the latter representing more than twice the average of 62 hours
for the locations included in the study.9 Officials in the large gateway
ports we visited cited numerous examples of how congestion affects the
movement of freight in and around the ports and surrounding urban areas.
(See fig. 3.)

8Delay times for passenger and freight are measured in average annual
peak-person hours of delay. Annual person-hours of delay is equal to daily
vehicle hours of incident plus recurring delay times 250 working days per
year times 1.25 persons per vehicle.

9Texas Transportation Institute, The 2002 Urban Mobility Study,
http://mobility.tamu.edu, Texas A&M University (June 2003).

Figure 3: Examples of Freight-related Congestion at Six Large Gateway
Ports and the Surrounding Areas

While congestion affects roads, it was also present on other transport
modes. In Southern California, for example, rail freight operations move
along the main lines of two railroads; parts of these tracks are shared by
both commuter and intercity passenger rail. Currently, freight trains are
experiencing daily delays on the lines averaging about 30 minutes per
train. In 2000, these lines handled up to 59 freight trains per day.
Unless more tracks are added and key at-grade rail crossings are
eliminated, the average delay per train will likely escalate because the
number of freight trains is projected to increase to as many as 130 per
day by 2025.

Specific Intermodal Chokepoints Exacerbate Congestion as Traffic Volumes
Increase

While the freight industry shares many congestion problems with other
users of the transportation system, some sources of congestion have a more
severe impact on freight mobility. In large urban gateway areas, severe
freight congestion regularly occurs at roads connecting main highway and
port landside facilities10 and where rail lines and highways intersect.
These bottlenecks or chokepoints are an important indicator of those
locations where the transportation system has reached capacity.

Chokepoints on highway intermodal connectors and access roads are a major
source of congestion and concern among freight stakeholders. Examples of
such connectors include exit ramps from major highways, as well as local
access roads that link highways to the port facilities and intermodal
yards. Although these connectors represent less than 1 percent of total
National Highway System11 (NHS) mileage, they provide critical
connectivity between highways and primary roadways, rail yards, airports,
and seaports. According to FHWA officials, investment to improve
intermodal connectors is expected to be a key component in reducing
freight chokepoints.12 Because these connectors were not originally
designed to handle large volumes of freight traffic, they typically have
higher rates of deterioration than other roads and highways. Further, the
size of current equipment (e.g., trucks and trailers) has often surpassed
what the connectors were designed to handle, with the result that roadways
are too narrow, turning radii are tight, and turning lanes are lacking.
(See fig 4.) All of these factors slow freight movement and cause

10These are port facilities located on land, such as terminals including
warehouses, storage facilities, and intermodal connectors.

11The NHS is approximately 160,000 miles of roadway including the
Interstate Highway System, as well as other roads important to the
nation's economy, defense, and mobility. The Department of Transportation
(DOT), in cooperation with the states, local officials, and metropolitan
planning organizations developed the NHS.

12U.S. Department of Transportation, Federal Highway Administration, The
Role of the National Highway System Connectors: Industry Context and
Issues (Washington, D.C.: February 1999).

safety and operational problems along these connectors. Improving the
condition of many of these connectors is not being addressed by local
transportation departments because other passenger-oriented roadways often
have a higher priority.13

Another major chokepoint for freight mobility often occurs where the
railroads meet highways. At-grade rail crossings, where rail lines
intersect with roadways, can be especially problematic. (See fig. 6.)
At-grade crossings have a double effect on both trucks and trains. At
these locations, automobiles and trucks must often stop to allow a train
to pass, but trains must often slow down as well.

13U.S. Department of Transportation, NHS Intermodal Freight Connectors: A
Report to Congress (Washington, D.C.: July 2000).

Figure 4: Connector to the Elizabeth New Jersey Port Authority Marine
Terminal: Intersection of North Fleet Street and Corbin Street

Officials at some of the locations we visited view at-grade rail crossings
as a serious freight transportation problem and are putting forth
considerable effort and resources to develop solutions. For example,
around the ports of Seattle, Tacoma, and Everett, officials have targeted
the elimination of key at-grade crossings as part of a large project to
address freight mobility needs in the area. (See fig. 5.) Phase 1 of this
project is implementing a total of 15 infrastructure improvements, 11 of
which are rail/highway separations.

Figure 5: At-Grade Rail Crossing Near Ports of Seattle/Tacoma-before and
after Construction of Overpass

Other rail challenges identified at the gateway container ports we visited
include a lack of alternative train routes to prevent train blockages on
major roadways, substandard crossing warning devices, and the need for
rail upgrades to handle heavier cars. For example, in some locations the
rail industry has increased the load capacity of rail cars from 263,000 to
286,000 pounds on main rail lines. Officials in Charleston said that this
has affected their dockside short rail-requiring upgrades so they can
withstand the heavier cars.

Much Inadequate Infrastructure Has Limited Expansion Potential

Infrastructure that is old and inadequate-such as underpasses or tunnels
with insufficient clearance-often carries limited expansion potential;
thus, mitigating this source of congestion and enhancing the efficiency of
goods movement by accommodating newer, longer, and heavier freight
configurations becomes more difficult. According to the Transportation
Research Board (TRB) and FHWA, insufficient and aged infrastructure is a
major contributor to freight congestion and bottlenecks on U.S. freeways
and highways and on the connectors to area ports. Even when expansion is
possible, the growing costs of infrastructure projects, stagnant highway
spending, and long delivery times (5 to 15 years) for completing
infrastructure projects have slowed the development of infrastructure and
prevented it from keeping up with demand.

Officials at the metropolitan area ports we visited pointed to many
examples where there are few alternatives for expansion due to
geographical constraints or surrounding development. (See fig. 6.) Port
and rail terminals are often located in densely populated urban areas,
where space is already at a premium and where commercial developers are
competing for available space. Additional space for piers, container

storage, railroad tracks, and truck roads is being pursued and developed,
but slowly and at a high cost.

Figure 6: Examples of Infrastructure with Limited Expansion Potential

Heightened Security Concerns Also Must Be Taken into Account

Security concerns are one additional matter that needs to be considered in
addressing congestion challenges. Many of the studies included in our
evaluation synthesis were conducted in 2001 or earlier and did not raise
security as a major issue. However, since the terrorist events of
September 11, 2001, security has become an important consideration,
particularly to the transportation infrastructure in and around ports. The
likely impact of disrupting this infrastructure-either to the economy
generally or to military deployments-is substantial. For example, the
Brookings Institution has reported that if a weapon of mass destruction
were shipped into a port by container and successfully discharged, the
immediate damage and the resulting disruption to the economy could cost as
much as $1 trillion.14

Security and freight mobility are not mutually exclusive goals, but they
can potentially conflict, adding to congestion. Access in and out of ports

14Michael E. O'Hanlon et al., Protecting the American Homeland: A
Preliminary Analysis (Washington, D.C.: Brookings Institution Press,
2002).

represents perhaps the highest potential for conflict between these two
goals. Based on value, the Office of Intermodalism estimates that about 90
percent of world water commerce moves by intermodal cargo container.
Ensuring that containers do not contain weapons of mass destruction or
other dangerous materials requires comprehensive security inspections of
these cargoes. Thus far, security measures taken to control port access
and to evaluate containers have not materially slowed freight movement to
and from seaports, according to officials at the locations we visited.
However, developing and effectively implementing future solutions that can
accomplish security goals while still allowing efficient movement of
goods, particularly at ports, is a matter of substantial concern for many
freight industry stakeholders we interviewed.

Protecting our nation's transportation network against attacks is a
formidable challenge because our land and maritime transportation systems,
in particular, are designed to be open and accessible. Unfortunately,
these systems concentrate freight flows in ways that can make them
vulnerable to terrorist attacks. Moreover, the sheer size of the network
presents a daunting security challenge. Given the enormity and
accessibility of this network, protecting it through traditional means,
such as guards, guns, and gates, seems unlikely. Rather, transportation
experts, such as TRB, believe that transportation security can best be
achieved through well-designed security systems that are integrated with
transportation operations. 15 Opportunities for such integration can occur
in many forms. For example, during the design of new facilities-such as
bridges and intermodal facilities-or the remodeling of existing ones,
costeffective protective features can be incorporated. These features
could include improved lighting, blast-resistant structures, emergency
evacuation routes, and open spaces that provide broad fields of vision.
Where free access is not required, such as at a rail yard, fences, police
patrols, and other perimeter protections can be added. Also, the
application of certain technologies, such as cameras and sensors that
detect chemical and biological agents, can further strengthen overall
security of transportation infrastructure. Taken together, elements such
as these can provide a multitiered security system that not only deters
and protects but also improves safety, thus potentially making the system
more efficient. Such integration will require the concerted and
coordinated efforts of federal, state, and local law enforcement
authorities, the many public and private

15Transportation Research Board, Special Report 270: Deterrence,
Protection, and Preparation: The New Transportation Security Imperative
(Washington, D.C.: 2002).

entities that plan, develop, own, and operate transportation
infrastructure and assets, and various federal agencies responsible for
port and border security and freight movement.

We and others are involved in separate ongoing studies of numerous public
and private efforts to develop and implement transportation security
enhancements.16 Because of these ongoing studies and the enormity and
complexity of evaluating the security issues involved in protecting the
transportation system, in this report we did not address barriers that
agencies and others face to implement sound security measures or evaluate
options offered by others or efforts under way to strengthen
transportation security. These issues will be more fully addressed as part
of other ongoing and future studies.

Planning and Financing Limitations Pose Difficulties in Addressing Freight
Mobility Challenges

Studies examining freight mobility point primarily to planning and funding
issues as the main limitations in efforts to help address challenges to
the system, and our work has confirmed their relevance at the ports and
surrounding areas we visited. (See fig. 7.) On the planning side, the
limitations center on two areas. First, consideration of freight
improvement projects as part of the local planning process is limited
because the process is oriented to projects that clearly produce public
benefits, such as passenger-oriented projects. While freight projects also
may produce public benefits by reducing freight congestion, generally,
public planners are wary of providing public support for projects that
directly benefit the private sector. In addition, the planning process
often does not consider the regional nature of freight mobility and is
subject to long lead times to plan and implement projects, factors that
deter valuable private sector participation in the process. Second, the
planning process often lacks a comprehensive evaluation approach, such as
a cost-benefit framework, that might result in the selection and
implementation of freight improvements and to better ensure that
systemwide, multimodal solutions-as opposed to a focus on a single
transportation mode-are considered and adopted where appropriate. On the
funding side, even

16Previous GAO studies on this issue include U.S. General Accounting
Office, Transportation Security: Federal Action Needed to Enhance Security
Efforts, GAO-031154T (Washington, D.C.: Sept. 9, 2003); U.S. General
Accounting Office, Aviation Security: Progress Since September 11, 2001,
and the Challenges Ahead, GAO-03-1150T (Washington, D.C.: Sept. 9, 2003);
and U.S. General Accounting Office, Maritime Security: Progress Made in
Implementing Maritime Security Act, but Concerns Remain, GAO-031155T
(Washington, D.C.: Sept. 9, 2003).

when freight projects rise to the level of warranting public-sector
involvement, federal assistance can be hampered by difficulties in
accessing funding sources because federal programs are often structured
such that they dedicate funds on a modal basis. Freight projects have
these difficulties because they are frequently intermodal, while most
federal funding sources are focused on one mode, and because the projects
may have private benefits, raising questions about whether and how to
provide public support.

Figure 7: Focus of Planning and Funding Processes Limit Consideration of
Freight Improvements

Freight Priorities Have Difficulty Competing in the Transportation
Planning Process

According to several studies examining freight mobility, the
transportation decision-making process does not lend itself well to
regional freight mobility planning.17 Under ISTEA and TEA-21, much of this
planning process takes place at the local level through metropolitan
planning organizations (MPOs) and at the state level through state
departments of transportation.18 These planning agencies focus on the
needs and issues within their areas of jurisdiction. Although the
transportation planning process is set up to address freight
transportation improvements and include private-sector freight interests,
in practice, freight projects have difficulty competing with other
projects for a number of reasons. For one, the public planning process by
its nature focuses largely on projects that clearly produce public
benefits. Although reducing freight congestion may also produce a
collateral public benefit, public planners are wary of providing public
support for projects that would also yield direct private benefits. Within
this focus, public-sector attention tends to be directed to
freight-related projects only when there is considerable public benefit as
well. For example, a project that adds lanes to a crowded freeway is
likely to help both passengers and freight haulers, while a roadway
enhancing freight access to a port facility would likely be perceived as
having limited public benefit.

Another factor that can limit consideration of freight improvements is
that local planning bodies may not sufficiently address key freight needs
that extend beyond their local areas. Addressing freight infrastructure
needs often involves projects along a freight corridor that cut across the
jurisdictions of several transportation planning agencies and, in many
cases, even states. Although state departments of transportation work to
address freight mobility challenges on a statewide basis, many corridors
cross state boundaries and, unless states are part of a multistate
coalition, states do not usually address projects that involve
multijurisdictional

17Federal Highway Administration, Office of Freight Management and
Operations, Freight Financing Options for National Freight Productivity
(Washington, D.C.: April 2001) and Federal Highway Administration,
Addressing Freight in the Transportation Planning Process (Washington,
D.C.: October 2001).

18Federal law requires the creation of MPOs for any urbanized area with a
population greater than 50,000. Composed of representatives from local
government and transportation authorities, MPOs are charged with
developing a comprehensive metropolitan long-range transportation plan and
transportation improvement program that consider other interests in the
planning process through cooperative partnerships with stakeholders. MPOs
receive federal funding in addition to other sources to conduct their
operations.

corridors. According to reports issued by FHWA, getting the cooperation of
and coordinating with multiple agencies and communities-each with its own
priorities-to address freight projects within a relatively large area
presents a challenge that makes the planning and implementation of this
type of freight project difficult.19 Some MPOs and states, for example,
may view a highway connector project for freight movement as benefiting
only a small segment of their constituent population, with most of the
benefits dispersed outside their jurisdiction. The New York and New Jersey
region and the Southern California region serve as examples of the
difficulties associated with addressing freight issues within a
jurisdiction when the benefits extend beyond the jurisdiction. For
example, officials representing the New York and New Jersey region are
exploring the possibility of shifting some of the cargo from the highly
congested roadways to railroads. However, the infrastructure limitations
of rail tunnels in Baltimore, Maryland-outside of the jurisdiction of the
states of New York and New Jersey-are a significant impediment to doing
so. In Southern California, freight projects that would clearly have
benefits beyond the jurisdiction of the MPO, such as addressing the
congestion on the I-710 corridor, have more difficulty competing for
funding against more localized projects that clearly benefit the
constituents within the jurisdiction. At the locations we visited, we did
find some examples in which officials found ways to deal effectively with
projects that crossed jurisdictional boundaries. As we will discuss in
more detail later, they formed multistate, multijurisdictional, and
private- and public-sector coalitions outside the conventional public
planning process to identify regionally significant freight transportation
improvement projects. However, we found that few such coalitions exist.

Finally, certain aspects inherent in the local planning process can deter
participation by the private sector stakeholders in the process. According
to transportation studies, private sector participation can help local
planners identify and address needed freight transportation improvements
and provide expertise and data to make informed decisions. According to
state and local officials, one reason for limited participation by the
private sector stems from their perception that freight projects proposed
through the transportation planning process do not offer sufficient
benefits to

19Federal Highway Administration, Addressing Freight in the Transportation
Planning Process (Washington, D.C.: October 2001) and Federal Highway
Administration, Office of Freight Management and Operations, Freight
Financing Options for National Freight Productivity (Washington, D.C.:
April 2001).

warrant their involvement. This is not to say that private-sector freight
interests were totally disengaged from the planning process. There were
notable examples-discussed later in this report-in which the private
sector became involved in planning for freight projects because the
project held a clear, direct, and tangible benefit for the freight
industry. However, public officials indicated that, even when
freight-related projects were being considered by transportation planners,
if the private sector did not perceive that the projects would meet their
specific needs or the benefits were not clearly defined, private sector
participation in the conventional transportation planning process was not
as evident.

Another factor that can also limit participation by freight interests
involves the differing planning horizons of the public and private
sectors. According to FHWA, the public-sector process for planning and
delivering freight improvements is slow and inflexible compared with
private-sector needs and expectations.20 According to these same studies,
private firms operate in a faster-paced, competitive environment that is
subject to fluctuations in demand for its services because of economic
conditions. Similarly, ongoing business mergers sometimes make it
difficult for private-sector officials to predict their company's
infrastructure needs in 15 to 20 years because they are unsure whether
their company will be active at that time in particular markets. Several
MPO officials told us that their planning horizons extend over longer-term
periods, sometimes as much as 20 years and that such a planning time frame
is necessary to conduct impact studies or obtain funding. Several MPO and
state department of transportation officials said that even when
private-sector interests initially express a willingness to work with the
public sector, they soon lose interest or become frustrated because of
these long horizons.

The experience of ports and surrounding areas we reviewed generally
mirrors the limited private-sector participation noted in studies of the
larger transportation network. (See fig. 8.)

20Federal Highway Administration, Office of Freight Management and
Operations, Freight Financing Options for National Freight Productivity
(Washington, D.C.: April 2001) and Federal Highway Administration,
Addressing Freight in the Transportation Planning Process (Washington,
D.C.: October 2001).

Figure 8: Reasons for Limited Private-Sector Participation in the Planning
                                    Process

Better Analytical Methods and Sufficient Data Needed for Transportation
Planning at the Local Level

Transportation research recognizes the importance of using a sound
evaluation approach, such as a cost-benefit framework, to take a more
systemwide, multimodal approach to transportation planning. 21 However,
our review at the locations we visited showed that many state and local
transportation planners were not consistently and systematically applying
analytical methods as part of their investment decision-making process to
evaluate freight-specific and other transportation projects. They also
lacked sufficient data to identify and define current and future freight
transportation problem areas and potential solutions to address them. Lack
of data and sound evaluation techniques reduce the likelihood that the
relative merits of freight transportation proposals can be adequately
judged with passenger projects-a potentially serious consequence for
freight projects, which already tend to receive low visibility. Also,
without good cost-benefit studies, transportation planners may find it
more difficult to determine the extent that public investment is required
and to

21Transportation Research Board, Special Report 271: Freight Capacity for
the 21st Century (Washington, D.C.: 2002); Transportation Research Board,
Special Report 252: Policy Options for Intermodal Freight Transportation
(Washington, D.C.: 1998); and

GAO-02-775.

understand trade-offs and relationships among alternative solutions
involving different transportation modes. More focused federal direction
and support for states and MPOs could better ensure that sound evaluation
approaches are incorporated into the local investment decision-making
process for freight projects and that meaningful data are collected and
used.

State and Local Planners Are Not Our past work on best practices for
capital decision-making22 found that Consistently Applying Sound
establishing a decision-making framework that is supported by proper
Analytical Methods and financial, technical, and risk analysis is a
critical factor in making sound Evaluation Approaches capital investment
decisions. Transportation experts have echoed the need

for such a framework. Key elements we and others have defined as being
important for evaluations used in the public decision-making process are
shown in table 1. 23

 Table 1: Key Elements of Evaluations Used in a Public Decision-making Process

Type of
evaluation Key elements

Prospective evaluation

o  Cost-benefit analyses should be used, especially for projects involving
trade-offs among freight mobility benefits, passenger benefits, and
environmental protection. Transportation benefits should be evaluated in
terms of users' willingness to pay for the change. Estimating the demand
response to changes in transportation cost is necessary.

o  Cross-modal and low cost noncapital alternatives, including traffic
control improvements and congestion pricing, should be actively considered
and analyzed in lieu of capital improvements.

o  External benefits and the value of avoiding external costs (like air
pollution and congestion) should be quantified to the extent possible in
the cost-benefit analysis.

o An analysis of risks and sources of uncertainty, including uncertainty
in traffic projections and strategies for reducing risk should be
included.

Retrospective  o A retrospective evaluation of completed projects should
be

evaluation	performed according to established guidelines. These
evaluations allow public planners to learn from experience, provide
incentives to achieve results, and hold planners accountable for their
decisions.

Source: GAO summary of elements presented in TRB's Policy Options for
Intermodal Freight Transportation and Freight Capacity for the 21st
Century.

22U.S. General Accounting Office, Executive Guide: Leading Practices in
Capital Decision-Making, GAO/AIMD-99-32 (Washington, D.C.: December 1998).

23Transportation Research Board, Policy Options for Intermodal Freight
Transportation (Washington, D.C.: 1998) and Transportation Research Board,
Freight Capacity for the 21st Century (Washington D.C.: 2002).

In recent studies, TRB and FHWA have noted that in making freight-related
investment decisions, local MPOs and state DOTs are not applying many of
these evaluation elements. For example, FHWA24 said that planners lack the
tools to evaluate freight projects with nonfreight projects. TRB studies25
have shown, in general, that evaluation procedures for setting project
priorities for state highway programs throughout the United States are
often defined in terms of engineering criteria rather than economic
criteria. According to TRB, an important change needed to improve
intermodal freight efficiency involves conducting better evaluations of
the direct benefits of transportation improvements. These
evaluations-which are now largely absent at the local level-would entail
applying proper methods of identifying needs for connectors to ports and
other intermodal terminals. Also, government transportation agencies do
not routinely consider facility management alternatives to physical
expansion as a means to increase capacity, according to TRB.

Our case study work generally confirmed these findings and demonstrated
unevenness in the application of sound methods and evaluation approaches
across the country. Most locations we visited use some form of
cost-benefit analysis, but the sophistication and elements used in the
analysis differ significantly. For example, an MPO official in Charleston
told us that they do not conduct formal cost-benefit analyses on
transportation projects because they do not have access to those tools or
resources. In contrast, the Houston MPO conducts a variety of cost-benefit
analyses using economic criteria, travel delays, and vehicle miles
traveled reductions. The Puget Sound Regional Council (the Seattle MPO)
utilizes a cost-benefit approach for evaluating freight projects separate
from passenger projects but is working on a more sophisticated approach.
26

24Federal Highway Administration, Addressing Freight in the Transportation
Planning Process (Washington, D.C.: October 2001).

25Transportation Research Board, Special Report 252: Policy Options for
Intermodal Freight Transportation (Washington, D.C.: 1998) and
Transportation Research Board, Special Report 271: Freight Capacity for
the 21st Century (Washington, D.C.: 2002).

26This process involves solicitation of freight projects from potential
public agency sponsors that are then screened, ranked, and then jointly
advanced for state and federal funding partnerships (together with local,
port, and railroad funds). Within this process, a projectlevel, weighted
point system is used, in combination with a documented team review of all
applications, that includes potential funding sources and a project
narrative that includes looking at reduced delays, cost effectiveness, and
cost alternatives. Once advanced to the state, the Freight Mobility
Strategic Investment Board (FMSIB) reviews projects to be put forward as
part of a statewide list to the legislature for project selection and
funding.

Other locations often relied on a variety of methods to evaluate and
prioritize freight and other passenger-related projects, such as weighted
systems that assign additional points if the project benefited freight
mobility. Weighted systems allow freight projects to better compete with
passenger-oriented projects under consideration.

While many of the sites we visited performed cost-benefit studies to some
degree, the specific elements of the analysis varied considerably. For
example, some of the locations include low cost or cross-modal
alternatives and external costs-two key best practice elements in our
capital decision-making framework-during the decision-making process.
However, while many locations considered these elements, MPO stakeholders
typically did not apply these elements in a consistent and systematic
manner. Instead, elements were considered in general through a process of
negotiation among MPO stakeholders. Furthermore, none of the locations
conducted retrospective evaluations. Some of the MPO officials stated they
would like to conduct retrospective evaluations, and others said they did
not have the data nor the resources to do so.

The use of cost-benefit analyses and the application of best practices
evaluation elements at the state level mirrored the MPO experience for the
most part. Most states we visited conduct some form of cost-benefit
analysis, but in varied forms. For example, California conducts a number
of cost-benefit analyses based on economic, safety, and highway
maintenance information, while other states, such as such as New Jersey
and Texas, mainly conduct cost-benefit analyses as a component of their
environmental studies. Some states did not consistently look at crossmodal
or low cost noncapital alternatives. For example, officials in Texas said
they had not advanced to the point of evaluating management alternatives,
although they were beginning to consider alternative financing mechanisms
and user fees. Officials from New Jersey and New York said they have
discussed user fees and tolls, but these discussions usually have occurred
outside the planning process.

Transportation Planners Lack Transportation studies by us and by others
have found that sufficient data

Sufficient Data to Evaluate and information systems are essential to make
sound investment decisions.

Freight Investment Decisions	However, according to recent TRB and FHWA
studies, state and local transportation planners do not have data to
sufficiently evaluate freight infrastructure proposals. Some
transportation companies may consider data on private freight movement to
be proprietary. However, such data can often be used to identify heavily
traveled highways and intersections and possible measures to mitigate
intermodal freight bottlenecks. TRB

case studies of transportation projects show that planning agencies
sometimes lack data and proper modeling techniques to compare the benefits
of alternative solutions-such as operations and management
alternatives-with proposals for physical expansion, such as adding new
roadways or highway lanes. According to these studies, data are also
needed that would allow state and local planners to evaluate forecasts of
transportation demand, forecasts of the effect a project would have on
diverting traffic to or from other transportation modes, or estimates of a
project's effect on congestion or pollution.

At the locations we visited, most state and local planners confirmed that
they did not have sufficient data to accurately and effectively evaluate
freight projects as part of the planning and investment decision-making
process. Table 2 summarizes the types of data being collected by each
location and additional data needed.

Table 2: Types of Data Collected and the Additional Data Needs for Freight
Mobility Planning

Examples of types of Location data used Key limitations cited by planners

Charleston Freight Analysis  o  Accessible data are generalized to
Framework (FAF)a, census state and national level; specific data,
commodity flow data, localized data is not available. travel demand model 
o  Some of the data from private companies are confidential and
proprietary and, therefore, lack sufficient detail for accurate freight
planning purposes.

Houston	A variety of national, state,  o  The validity of some of the
national, and local data that state, and local data are questionable,
includes freight flows, and it is difficult to get the data in detail
emissions, vehicle miles at the local level. traveled, truck counts,  o 
Data purchased from consultants are purchased data from expensive.
consultants

Los Angeles/Long A variety of national and  o  Useful freight data are
generally

Beach	state data including unavailable. commodity flow data;  o  Available
commodity flow data are not demand model that detailed enough (i.e.,
county or by zip incorporates heavy trucks code) for accurate freight
planning. included in regional transportation plan

(Continued From Previous Page)

Examples of types of Location data used Key limitations cited by planners

          New Jersey  National data such as   o  Modeling data are available, 
                                        the                       but results 
                     FAF, some state data,    are often unreliable because of 
                     in-                    
                            house modeling,       questionable assumptions on 
                                                                   routes for 
                     purchased data from a                            trucks. 
                                 consultant o  Reconciling similar data from  
                                            different                         
                                            sources is also a problem;        
                                            combining                         
                                            data and developing new data sets 
                                            is                                
                                                  time consuming and resource 
                                                                   intensive. 

            New York   Commodity flows and      o  Proprietary issues make it 
                                                                 difficult to 
                       volumes, origin and      obtain detailed data that are 
                                                                      useful. 
                     destination data, truck  o  Often there is a time lag in 
                                                                     the data 
                                      counts received, and the data may not   
                                             necessarily reflect the current  
                                                                 environment. 

Oakland	State and local data, travel  o  There is a need for more
interstate demand models, roadway import and export data and more
monitoring including car freight-specific data. and truck counts

Seattle/Tacoma	FAF and Bureau of  o  There is a need for better
information Transportation Statistics on trip reliability or
predictability. data, marine cargo Metropolitan traffic models do a poor
forecasting, modeling data, job of reflecting "real world" traffic
state-level data, trucking delays. data

Sources: Highlights of information collected by GAO from the metropolitan
planning organizations for these locations.

aFHWA has created the FAF. This framework was developed from various
government and privatesector databases including the commodity flow
database and the highway capacity dataset.

While many MPOs struggle to obtain sufficient data to make freight
mobility planning decisions, some state and local planners are working
toward collecting and maintaining databases to better evaluate freight
projects. The New Jersey Transportation Planning Authority (an MPO in New
Jersey), for example, in cooperation with the International Intermodal
Transportation Center (IITC) at the New Jersey Institute of Technology
(NJIT) has undertaken a comprehensive data gathering and research
initiative designed to strengthen the evaluation process for freight
planning and decisionmaking.27 As part of this initiative, IITC developed
goods movement indicators and a freight planning framework and modeling
program to forecast the impact of selected freight mobility strategies for

27Freight Planning Support System, Final Summary Report (New Jersey
Institute of Technology, July 2003).

northern New Jersey region. For example, the model can be used to forecast
the decrease in truck delay resulting from a strategy that considers
adding truck-only lanes to selected highway segments. Also, IITC has
summarized data collection practices used by selected MPOs throughout the
United States.

Federal Efforts to Encourage The variation in local planning evaluation
approaches and data gathering Sound Evaluation Procedures among MPOs is
not surprising given the wide latitude that planning

                               Have Been Limited

jurisdictions have under the law and the limited guidance provided at the
federal level by DOT and its various transportation agencies. Under TEA21
and existing regulations, MPOs and state departments of transportation
have a great deal of latitude in how they evaluate projects and make
investment decisions. DOT officials told us they viewed their role in this
regard as facilitators rather than being prescriptive in dictating an
evaluation process. For example, FHWA officials said they try to enhance
consideration of freight issues through such efforts as the Freight
Professional Development Program, which includes seminars by industry
experts; technical assistance through peer exchanges and an online list of
experts; and the FAF database program, which can be used to estimate trade
flows and identify areas of potential improvement. DOT officials said
their limited oversight efforts are directed at ensuring that states and
MPOs keep broad goals in mind in designing their process, such as choosing
projects that support economic vitality, increase safety and
accessibility, promote efficiency, protect the environment, and promote
energy conservation.

Although DOT's approach is consistent with giving planning bodies wide
latitude in how to operate, there are strong signs from the planning
bodies themselves that they would prefer more guidance and support in this
area. State and MPO officials with whom we talked said they would welcome
more help in designing an evaluation approach for making transportation
investment decisions for a variety of reasons. One official, for example,
said more specific policies and procedures were needed to better ensure
that they were in compliance with planning requirements.28 Almost all of
the officials said they wanted more help in obtaining sufficient data for

28For example, ISTEA and TEA-21 require the Department of Transportation,
through the FHWA and FTA, to review and certify that all metropolitan
areas with a population of 200,000 or more meet certain transportation
planning requirements, including developing a Congestion Management System
(CMS). Some transportation officials said more detailed guidance was
needed on how to implement a CMS that meets specific requirements.

evaluating transportation proposals. Much of the available freight data,
they said, are usually at a macro level, privately held, cost-prohibitive
to acquire, and of limited use because of proprietary and reliability
concerns.

Other groups have also urged DOT to do more. Several transportation
studies have noted the limited amount of guidance and oversight and the
need for better evaluation approaches and have recommended that DOT take
steps to provide better guidance and support in this area. The TRB, for
example, has recommended that DOT actively promote states' use of economic
evaluation methods in transportation programs that receive federal aid,
particularly highway aid programs. TRB also recommended that, as a means
of promoting more useful evaluation at the federal and state levels,
Congress establish a clearinghouse within DOT devoted to evaluation
methods, so that DOT program agencies and local and state governments
could share and compare methods and examples of evaluations.

Intermodal Nature of Freight Projects and Access Limitations to Federal
Programs Can Hamper Planners in Funding Freight Improvements

A variety of factors in the way federal transportation programs are
structured and used as funding sources for infrastructure projects hamper
MPOs and states in advancing freight improvement projects. For one,
freight improvement projects are more complicated to fund than
traditional, modally oriented projects, both because of the intermodal
nature of most freight projects and the challenge in balancing public and
private benefits. For example, a traditional, modally oriented project,
such as a project to widen a highway, typically involves only one mode and
yields public benefits. This makes the planning and development of
traditional transportation projects fairly clear-cut-there is a single
sponsor (e.g., an MPO) and a clearly defined funding source (e.g., one of
several highway programs). In contrast, freight improvement projects tend
to be more complicated because they are frequently intermodal, which means
that a clear sponsor for the project may not exist, discussions among
multiple sponsors are usually required, and it may require consideration
of multiple sources of funding. Also, the project can result in private
benefits, which raises questions about whether and how to provide public
support for private infrastructure. For example, an intermodal connector
linking a port to an intermodal rail yard has no clear sponsor. Such a
project may be viewed as the responsibility of the port, the railroad, or
even the MPO. When such a project becomes the responsibility of the MPO,
the project must also overcome the limitations to advancing freight
improvements in the planning process described earlier. Moreover, because
federal programs are often structured such that they dedicate

funds on a modal basis, MPOs may make decisions based on the mode eligible
for federal funding, which puts freight projects at a disadvantage.29

Aside from the greater complexities associated with funding intermodal
freight projects, gaining access to funding sources more specifically
targeted for freight projects is often difficult as well. For example, two
programs-the National Corridor Planning and Development Program and the
Coordinated Border Infrastructure Program (hereafter referred to as the
Borders and Corridors programs)-were created by TEA-21 to better address
freight transportation needs. They are federal grant programs that share
an annual funding allocation of up to $140 million. Although considered a
good source of funding for freight projects, the most significant
limitation with these programs is that they are oversubscribed, and much
of the funding for these programs is allocated to congressionally
designated projects, according to FHWA. Two other credit programs
established in TEA-21-TIFIA and the Rail Revitalization and Improvement
Funding program (RRIF) provide loans, loan guarantees, and lines of credit
for projects. The TIFIA program, for example, can leverage federal funds
by attracting additional private investments in infrastructure projects.
However, according to stakeholders, the eligibility criteria for the TIFIA
program limit some freight projects, as the program does not allow
assistance to privately owned facilities, such as privately owned rail
infrastructure. Further, to qualify for assistance, TIFIA projects must be
valued at over $100 million, which, according to many stakeholders, may
exclude many freight projects that are valued at less than this amount. In
addition, stakeholders have indicated that shortcomings with the RRIF
program include the up-front fee applicants must pay in order to receive
the loan and the length of time applicants must wait before receiving a
decision. These shortcomings have proven to be a disincentive to use the
program, according to DOT.30 Table 3 shows the federal programs
established in ISTEA and TEA-21 that are available as funding sources for
freight projects.

29When MPOs make infrastructure decisions based on the mode eligible for
federal funding, this can potentially result in greater funding for one
mode over another.

30U.S. Department of Transportation, Federal Highway Administration,
Office of Freight Management and Operations, Transportation Policy:
Evolution of Federal Freight Transportation Policy (Washington, D.C.:
2001).

Table 3: Federal Funding and Financing Sources Providing Eligibility for
Some Freight Projects

                          Funding source Applicability

Congestion Mitigation and Air  o  Can be used to fund a wide range of
freight Quality Program (CMAQ) improvement projects, including rail and
other nonhighway transportation projects.

o  Project must reduce carbon monoxide or other specified air pollutants
in a nonattainment or maintenance area as specified in the Clean Air Act.

o  Freight projects are required to show reduced air emissions.

Surface Transportation Program  o  Can be used for highway-related freight
projects, (STP) such as roadway improvements to facilitate truckfreight
movement or accommodate other modes, raising bridges, at-grade rail
separations, and improvements to intermodal connectors.

o  Project must be related to federal-aid highway system.

National Highway System (NHS)  o  Can be used to improve intermodal
connectors.

o  Project must be identified as a NHS priority highway or a connector
linking the NHS to key intermodal facilities.

National Corridor Planning and  o  Can be used to fund projects related to
planning
Development Program and and construction on major corridors that have been
Coordinated Border Infrastructure identified.
Program (Corridors and Borders)  o  These programs are oversubscribed, and
much of

the funding is allocated to congressionally designated projects.

Transportation Infrastructure  o  Can be used for publicly owned,
intermodal,

Finance and Innovation Act (TIFIA)	surface freight transportation
facilities (other than seaports and airports) located adjacent to the NHS.

o  To qualify for assistance, projects must be valued at over $100
million.

Rail Revitalization and  o  Targeted specifically at providing credit for
rail
Improvement Funding Program infrastructure and equipment.
(RRIF)  o  Applicants must pay an up-front fee in order to

receive the loan, are subject to the lengthy application process, and must
first be turned down by a bank or credit institution.

Source: FHWA.

Because of private ownership and other issues, certain freight
transportation projects are especially difficult to fund or finance
through federal programs, even when they are identified as priorities
within the transportation planning process. For example, rail projects in
particular are difficult to fund even when considered a priority in the
public planning process largely because rail infrastructure is privately
owned. According

to a report issued by FHWA, although public support under existing
programs can be used to fund or finance rail, the projects are usually
only eligible for purpose-oriented programs, such as CMAQ, or through
financing programs such as RRIF.31 However, even with these programs,
there are certain restrictions. For example, in the case of CMAQ, unless a
project has a positive impact on air quality in a nonattainment32 or
maintenance area, it would not be eligible for CMAQ funds. In the case of
TIFIA, a project must be publicly owned, which excludes many rail
infrastructure projects as rail infrastructure is often privately owned
and in the case of RRIF, applicants must pay an up-front fee in order to
qualify, creating a disincentive to use the program.

One example that typified the complexities associated with funding freight
projects under existing programs occurred recently on a major project
undertaken at the Port of Tacoma (Washington). This project, the D Street
overpass, which involved widening a road and relocating rail tracks to
better facilitate road and rail freight flow, was delayed because the
project involved two different modes, and the funding for one was
available but funding for the other was not. Highway funds were available
for the road portion, but private-sector funding for the rail portion was
not readily available. Financing limitations such as this can delay needed
freight improvement projects or prevent them from occurring all together.

Two Key Strategies Could Help Address Freight Planning and Financing
Limitations

The upcoming reauthorization of TEA-21 provides an opportunity to consider
ways in which federal policies and programs might be adjusted to help
address the planning and funding limitations described above. Using the
work of transportation experts and our own experience in evaluating
transportation mobility projects,33 we identified two key strategies that
hold promise for addressing the planning and financing limitations that
surfaced from our work. The first strategy addresses planning limitations,

31U.S. Department of Transportation, Federal Highway Administration,
Freight Financing Options for National Freight Productivity (Washington,
D.C.: April 2001).

32EPA uses six criteria pollutants as indicators of air quality. When an
area does not meet the air quality standard for one of the criteria
pollutants, it may be designated as a nonattainment area.

33GAO-02-775, GAO-02-1033, Transportation Research Board, Special Report
252: Policy Options for Intermodal Freight Transportation (Washington,
D.C.: 1998) and Transportation Research Board, Special Report 271: Freight
Capacity for the 21st Century (Washington, D.C.: 2002).

and the second strategy addresses financing limitations. In addition, we
identified certain overarching, economic and management principles for
consideration as the Congress and other transportation decision makers
develop and implement strategies to enhance freight mobility. (See fig.
9.)

Figure 9: Key Strategies and Principles to Address Planning and Financing
Limitations

The administration and system stakeholders have developed a variety of
reauthorization proposals to address the planning and financing
limitations. 34 (See apps. II-IV for an overview of proposals made by
different freight stakeholders.) For example, to address planning
limitations, most of the proposals seek to improve coordination, encourage
private sector involvement, and/or improve data and analysis tools to
evaluate freight projects. In the area of financing, most of the proposals
seek to either expand the eligibility of federal programs to include
specific freight projects, encourage the use of alternative financing, or
allow for the use of nonbuild tools to reduce congestion. While all of the
proposals address planning and financing limitations-and involve at least
some aspects of our two strategies-a balanced strategy that addresses the
broad range of limitations we identified will likely be required to
significantly advance freight mobility. (See app. V for a summary of how
stakeholder proposals relate to our two broad strategies.) Optimum results
could be furthered if three overarching principles are applied in the
development and refinement of reauthorization provisions. These include
promoting efficiency by embracing "user pay" principle, maximizing a
performancebased program, and aligning the incentives for planning
agencies and other decision makers to focus on efficiency and results.

First Strategy: Emphasizing a Systemwide Approach to Transportation
Planning

Coordination Across Transportation Modes and Jurisdictions

Our past work has shown that planning should be viewed from a systemwide
perspective.35 Such a perspective includes taking multiple transportation
modes and jurisdictions into account-rather than considering each one
separately-to better ensure the involvement of freight stakeholders in the
private sector. In addition, such a perspective includes developing
meaningful data and sound analytical methods for making decisions about
how best to apply available resources and to determine the extent of
public involvement.

As one means to ensure that freight perspectives are included in public
planning and programming decisions, coordination across the various
transportation modes and planning jurisdictions is important. Intermodal

34National stakeholders include the Freight Stakeholders Coalition, the
American Association of State Highway and Transportation Officials, Local
Officials for Transportation, Association of American Railroads, American
Trucking Associations, Association of Metropolitan Planning Organizations,
American Road and Transportation Builders Association, and U.S. Conference
of Mayors.

35GAO-02-775.

freight movements involve such matters as moving goods from ships to
trucks or railroad cars for distribution throughout the country. Freight
improvement projects must address congestion at these transfer points as
well as congestion on the roads and railroad tracks that carry freight
throughout the country. At the same time, extensive coordination between
multiple sets of stakeholders representing the various modes is needed
because of the intermodal nature of projects. When such projects affect
not only multiple transportation modes, but also areas that extend beyond
the jurisdiction of a single local planning body, the amount of
coordination becomes even more complex. Our case studies showed that
successful intermodal projects involved a high degree of intermodal and
crossjurisdictional coordination. For example, the FAST project in
Washington state, a series of related but independent projects intended to
improve freight mobility in the Everett-Seattle-Tacoma region, crossed
multiple jurisdictions and modes and involved multiple stakeholders. The
program included port access improvements and railroad grade crossing
improvements to improve safety and increase mobility. While funding for
the project comes from various public sources and the private railroads,
the FAST members selected and prioritized projects for funding. The
coordination of projects and the cooperation of the multiple stakeholders
have resulted in the elevation and acceleration of freight improvement
projects along the corridor.

Such coordination is not automatically a part of the transportation
planning process; in fact, our reviews of successful projects like the
FAST Corridor program found that they typically occurred outside of the
conventional transportation planning process for several reasons. First,
it is easier to address freight improvements when they do not have to
compete with nonfreight projects in the transportation planning process.
Also, it is easier to build consensus among the multiple stakeholders when
the focus is solely on issues of freight mobility. As our review revealed,
attempts to advance freight improvements within the conventional process
are often hindered by limited cross-modal communication and limited
crossjurisdictional coordination. Thus, ensuring that a freight strategy
includes sufficient modal coordination and stakeholder participation, and
cooperation continues to be a challenge for public-sector decision makers.

A number of proposals developed by stakeholders are directed at greater
coordination across modes and jurisdictions. For example, the
administration's 2003 surface transportation reauthorization proposal
(hereafter referred to as the administration's proposal) encourages MPOs
to coordinate their planning process with officials responsible for other

types of planning activities that are affected by transportation.36 The
administration's proposal also encourages states and other jurisdictions
to work together to develop plans for multimodal and multijurisdictional
transportation decision making through allocations for planning studies.37
This approach, which encourages more cooperation, but does not
specifically place requirements on the parties in the planning process, is
consistent with the premise of ISTEA and TEA-21 that states and MPOs are
best positioned to make decisions on transportation planning and project
selection to best address local concerns. However, while ISTEA and TEA21
have encouraged an emphasis on freight in the planning process for over a
decade, our review highlighted the many disincentives for such a focus
with the result that MPOs typically have not used their transportation
resources on projects that benefit areas outside of their jurisdictions.

Ensuring That Private-sector Since a systemwide approach to transportation
planning will require more

Stakeholders Are Effectively focus on issues that cross jurisdictions,
securing the participation of the

Involved 	private sector, which tends to have a more national and global
view of the transportation system than public-sector planners, will be
necessary. Greater participation by the private sector can also be helpful
in supplying necessary data for making informed decisions and expertise to
effectively identify and implement improvements across modes and
jurisdictions. However, our work has shown that participation by the
private sector in the public planning process is often limited.

Several of the projects we studied offer insights as to how the private
sector might be effectively engaged in the planning process. For example,
the Alameda Corridor project in Los Angeles serves as an example of a
project that involved private sector participants in the planning and
implementation phases of the program. Specifically, the project
consolidated port traffic from four separate branch lines into a 20-mile
railroad express line connecting the ports of Los Angeles and Long Beach
to the transcontinental rail network east of downtown Los Angeles. The
express line eliminated approximately 200 street-level railroad crossings,
relieving congestion and improving freight mobility. This project
succeeded because state and local stakeholders, the ports, and the
railroads all had a financial incentive to relieve congestion and the
commitment and ability to bring the necessary financial resources to bear.

36Title VI, Section 6001, subsection 5203(e)(4). 37Title I, Section
1806(f)(1).

Our review also showed that when the particular needs or interests of the
private sector were not addressed, private-sector participation could be
limited or absent altogether. As noted earlier, the FAST Corridor and the
Alameda Corridor projects are examples of bringing diverse stakeholders
together to forge a partnership to advance needed freight projects. Both
projects yielded benefits for the stakeholders. The Alameda Corridor East
project, however, serves as an example of what could happen when a project
yields limited private benefits. This proposed project, extending east
from Los Angeles through the San Gabriel Valley, focuses on safety
improvements and congestion relief for the surrounding communities by
providing grade separations at rail and highway crossings along the route.
Unlike the original Alameda Corridor project, this project provides no new
track capacity for the rail carriers and would not materially speed
freight movement along the route. Therefore, according to MPO officials,
the rail carriers see little benefit for them and currently are not
actively involved in or committed to the project.

Several of the proposals made by freight stakeholders would address
private-sector involvement. For example, the Freight Stakeholders
Coalition has recommended the formation of a group composed of freight
transportation providers from all modes, as well as shippers and state and
local planning organizations, to provide industry input to DOT.38
Providing a national perspective through such a group could provide
information that would help to identify critical freight bottlenecks
within the nation's transportation system and options to balance the state
and local perspective. Further, the Freight Stakeholders Coalition has
suggested that states and MPOs receive additional funds for expert staff
positions dedicated to freight issues. Hiring and training professional
freight planners could ultimately result in improved coordination of
resources and better transportation investment decisions leading to
improved freight mobility. The administration's proposal also addresses
private-sector involvement through a program that would address freight
transportation gateways and intermodal connections.39 This program would
require states to designate a freight transportation coordinator
responsible for fostering

38The Freight Stakeholders Coalition is composed of the American
Association of Port Authorities, the American Trucking Associations, the
Association of American Railroads, the Coalition for America's Gateways
and Trade Corridors, the Intermodal Association of North America, the
National Association of Manufacturers, the National Industrial
Transportation League, the U.S. Chamber of Commerce, and the World
Shipping Council.

39Title I, section 1205.

public and private sector collaboration needed to implement solutions to
freight-related problems. However, unless states are able to overcome the
limitations to private-sector participation, this type of provision may do
little in garnering private-sector participation.

Applying Sound Analytical As part of a systemwide approach to planning,
standard evaluation

Approaches and Collecting methods and sufficient data will also be needed
to support public

Sufficient Data	transportation investment decisions. Methodologically
sound evaluations and basic freight-related data are both necessary to
support public transportation investment decisions; to evaluate viable
alternative solutions, including facility management alternatives; and to
ensure that intermodal solutions to enhance freight mobility are
considered and adopted where appropriate. Transportation experts with whom
we collaborated on past mobility work cited the importance of considering
all modes and travel types in addressing mobility challenges-as opposed to
focusing on a single mode-to achieve desired results. Sound evaluation
approaches, such as a comprehensive cost-benefit framework, are a
necessary prerequisite for doing this.

Various proposals have been made for strengthening this part of the
process. For example, the administration's proposal includes a
modification to the planning provisions that would require states to
address data issues by targeting part of the state apportionments for
state planning and research.40 This set-aside is intended to be used for
the collection and reporting of strategic surface transportation data to
provide information about the extent, condition, use, performance, and
financing of the nation's highways for passenger and freight movement.
This set-aside represents somewhat of a departure from current core
transportation legislation, which leaves such decisions on the use of
federal transportation funds to states and MPOs; however, it might
increase freight data collection efforts and elevate freight issues in the
planning process. The TRB proposed a different approach involving
recommendations at both the national and MPO levels. At the national
level, TRB recommended the creation of a clearinghouse devoted to
evaluation methods, which DOT program agencies and local and state
governments could use for sharing and comparing methods and examples of
evaluations. At a more localized level, TRB recommended that programs in
successor legislation should contain requirements for evaluating the
performance of programs and that state and local governments should
conduct evaluations to test the

40Title I, Section 1503(i)(3)(A).

economic rationale for both existing projects and proposed projects
requiring new government involvement in transportation investments.

Second Strategy: Providing a Wider Range of Funding and Related Options

Determining the Appropriate Federal Role and Apportioning the Cost Burden
among Beneficiaries

The second strategy addresses the other main limitation identified by our
own reviews and other researchers as a common obstacle to progress in
resolving freight and overall congestion issues-financing and funding. In
the current budgetary environment, along with long-range fiscal challenges
confronting the country,41 substantial increases in current funding
sources for all transportation projects will require a high level of
justification. Yet, as our work has shown, intermodal freight projects
that involve both public and private interests and may help foster both
economic efficiency and growth have difficulty competing for limited
transportation resources. Therefore, determining how federal policies and
programs might be adjusted to address the limitations to funding freight
projects raises the fundamental policy question of defining the
appropriate scope of government involvement in freight improvements. When
public subsidization of freight projects is determined to be appropriate
through proper analysis, approaches such as expanding eligibility
guidelines for existing federal programs, developing or expanding the
range of funding and financing mechanisms that appropriately blend public
and private funds to match public and private costs and benefits, and
making maximum use of low-cost "nonbuild" approaches could be considered
to address limitations in advancing freight improvements.

Transportation experts generally agree that determining the appropriate
scope of government involvement and level of subsidization in
freightrelated and other projects is an important step in making
transportation investment decisions. The underlying principle guiding the
scope of government involvement is that such involvement should occur only
to the degree that the private sector will not undertake a project needed
to improve transportation mobility, and yet the project is deemed to be
economically viable. There are a number of reasons why the private sector
may not participate in such projects-for example, they may generate
significant external or social benefits associated with reducing
congestion and air pollution from which those in the private sector who
would make the investment would receive no economic benefits.

41Speech made by the Comptroller General of the United States on September
17, 2003 entitled "Truth and Transparency: The Federal Government's
Financial Condition and Fiscal Outlook."

Determining the scope of government involvement entails three basic steps:
(1) determining that the project is worthwhile by applying a rigorous
cost-benefit study; (2) justifying that government involvement is
necessary based on known criteria; and (3) deciding on the level of
subsidization required by the public sector reflecting the interests and
benefits on a local, state, regional, or national level. As we have
discussed previously, costbenefit frameworks that transportation agencies
currently use to evaluate various transportation projects could be more
comprehensive in considering and quantifying a wider array of social and
economic costs and benefits to determine whether public support is
justified. Developing sound justifications and determining appropriate
subsidy levels can be undermined by an absence of rigorous evaluation
approaches, and there is broad consensus among transportation stakeholders
that state and local planners need to improve their evaluation
capabilities.

Justifying government involvement for freight transportation
infrastructure projects involves having clear guidelines specifying the
conditions under which public involvement is warranted. TRB has provided
such guidelines in two recent reports.42 According to TRB, public support
for freight infrastructure projects must be established on a project basis
to determine if the project possesses certain characteristics, such as
reducing the external costs of transportation, yields efficiencies in the
transportation system beyond those recognized by the private sector,
and/or meets some public safety need.43 TRB contends that if government
involvement cannot be justified on one of these grounds, the private
sector should undertake the project.

Once the justification is established for public involvement in freight
and other projects, the next critical decision involves deciding on the
level of public subsidy. While in most cases, government involvement is
often assumed to mean subsidization of a project, such involvement need
not necessarily imply the need for, or appropriateness of federal
subsidization. For example, a government agency might plan a project to be
entirely self

42Transportation Research Board, Special Report 252: Policy Options for
Intermodal Freight Transportation (Washington, D.C.: 1998) and
Transportation Research Board, Special Report 271: Freight Capacity for
the 21st Century (Washington, D.C.: 2002).

43According to TRB, public support for freight infrastructure projects is
appropriate if a project possesses certain characteristics, such as (1)
reducing external costs of transportation, (2) producing external economic
development benefits, (3) providing offsetting subsidies, (4) meeting a
national defense need, and/or (5) is an established government
responsibility.

supporting from user fees and private sector participant contributions; in
this case, no government subsidy is involved. However, when public
subsidization is being considered, particularly for freight infrastructure
projects, the appropriate scope of government involvement must carefully
be considered because of the public-private nature of these projects.

When public subsidization has been deemed appropriate, apportioning the
cost burden among participants, or the beneficiaries of the project is the
next critical step. This means identifying the beneficiaries and
determining the level of benefits they are likely to derive from the
project. According to TRB, "the candidates for paying for an intermodal
freight transportation project are users (through tolls or other fees),
other direct beneficiaries (e.g., owners of property adjacent to the
development), the local public (through subsidies from local general tax
revenues or tax concessions), the national public (through use of federal
grants or tax-exempt bond finance), or indirect beneficiaries (e.g.,
application of road user fee revenues to rail transport on the grounds
that rail use relieves road congestion)."44 TRB further noted that, for
some projects, these beneficiaries should pay the costs commensurate with
the cost of providing the service to the user. For example, when users are
the direct beneficiaries of the project, user fees, which involve each
user paying a fee for the cost of the service provided, are the preferred
method that should be considered for projects that directly benefit the
users. On the other hand, when external benefits, such as the reduction of
pollution or congestion, result from a project, a case can be made that
public support be provided for the project, and the direct users should
pay the net cost of the use of the service after deducting the public
benefit. Further, if public beneficiaries are largely local (e.g.,
reducing suburban congestion), efficiency principles would call for the
public subsidy to be at a local rather than federal level. Again, as in
other aspects of the decision-making process, sound evaluations and the
ability of local planners to quantify the benefits and their distribution
are critically important to making good decisions.

Expanding Eligibility Guidelines A concern voiced by national stakeholder
groups and raised through our

for Existing Federal Programs	evaluation synthesis was that federal
program eligibility requirements do not always lend themselves to certain
types of freight improvement projects. For example, rail projects are
eligible for federal aid funding or grants only if the project has a
positive impact on air quality in a

44Transportation Research Board, Special Report 252: Policy Options for
Intermodal Freight Transportation (Washington, D.C.: 1998).

nonattainment area, involves modifying a rail line to accommodate a
federal aid highway project, or results in specified improvements in
safety. While carefully tailored eligibility assures only projects
generating public benefits receive subsidies, these programs do not appear
to be sufficiently fluid to allow support for the full range of freight
projects, which might generate substantial public benefits. One way to
address this concern might be to expand eligibility criteria to cover a
broader range of freight projects-by adding specific types of freight
projects to the guidelines of existing programs-to make it easier for
states and MPOs to fund freight projects identified as priorities through
the transportation planning process. However, unless a determination is
made that the project meets the criteria or characteristics that justify
government involvement, public support for freight projects may result in
more significant needs going unmet.

A number of proposals have been made to expand eligibility criteria to
include freight projects, including the following examples. (See table 4.)

Table 4: Examples of Stakeholder Proposals to Expand Eligibility Criteria
to Include Freight Projects

                              Stakeholder Proposal

Administration  o  Allows the use of Surface Transportation Program funds
for publicly owned intermodal freight transfer facilities and National
Highway System funds for routes connecting to intermodal freight
terminals.

o  Expands the types of private activities that can be financed with
taxexempt private activity bonds to include surface freight transfer
facilities.

o  Expands the eligibility of the Transportation Infrastructure Finance
and Innovation Act to include public or private freight rail facilities
and intermodal freight transfer facilities.

Freight  o  Expands eligibility guidelines by dedicating funds for
National Stakeholders Highway System connectors and expanding the
Corridors and Coalition Borders Program to include gateways.

Sources: The administration's surface transportation reauthorization
proposal and the Freight Stakeholders Coalition proposal.

The provisions within the administration's proposal to expand eligibility
generally leave decisions about whether to advance projects to the states
and MPOs. The extent to which eligible freight projects actually received
support would depend on the priority they received in these local funding
decisions. While there are specific implications of each suggested
modification, these options retain the basic funding flexibility framework

of ISTEA and TEA-21, which enables states and MPOs to determine their
needs and identify the projects that are needed. This approach, however,
may not go far enough in overcoming the difficulties in advancing freight
improvements when their scope extends beyond the purview of individual
states or MPOs. In such cases, many researchers and stakeholders have
observed that public planners are wary about giving priority to freight
projects when the costs are borne locally, but the benefits accrue
nationally. Moreover, this approach does not recognize the intermodal
nature of freight projects, since existing funding mechanisms tend to be
modally focused. In addition, the administration's proposal contains one
provision that would establish a mandatory set-aside of NHS funds to
address intermodal connectors. Since this would provide a dedicated pool
of funding for intermodal connectors, these projects would no longer have
to compete with other nonfreight priorities. However, a set-aside runs
counter to the flexibility that ISTEA and TEA-21 allow to MPOs and states
and could result in other needs going unmet.

While expanding the eligibility of existing programs to cover a broader
range of freight projects has benefits, it would not, in itself, provide a
systemwide approach to addressing freight mobility improvements. Another
option, however, would largely mitigate this planning limitation-
establishing a federally administered program to address freight projects
of national significance. A federal program to address freight projects of
national significance offers another way to address freight corridors that
are regional in nature and achieve a systemwide approach for planning
freight improvements, taking multiple transportation modes and
jurisdictions into account. This program could be structured either
through a "top-down" approach, under which a federal agency actively
identifies, develops, and evaluates freight projects, or a "bottom-up"
approach, under which local governments and private parties develop
proposals and compete for federal support. This approach would provide a
dedicated pool of funding for freight projects and, thus, would reduce,
although not totally eliminate, the competition at the local level for
available funding with nonfreight projects.

In structuring such a program, suggestions have been made by various
stakeholders. The Freight Stakeholders Coalition, for example, proposed a
tenfold increase in funding for the Borders and Corridors programs. They
also proposed expanding the eligibility guidelines of the Borders and
Corridors programs to include gateways. Therefore, prioritizing projects
based on a qualification threshold, such as volume and congestion, would
be needed to focus funding on critical corridors, gateways, and intermodal

Using Financing Mechanisms or Developing New Revenue Sources to Ensure a
Blending of Public and Private Funds to Match Public and Private Costs and
Benefits

infrastructure. As noted above, to date, much of the funding for the
Borders and Corridors programs has been allocated to congressionally
designated projects, and the need has far surpassed the available funding
for the programs, according to FHWA.

FHWA describes a federally administered program as one that could
complement the decisions made at the state and local levels, not replace
them. In other words, the program would not remove MPOs from considering
and approving freight projects within their respective areas of
jurisdiction; rather, it would augment the current process by addressing
those freight projects of national significance that crossed the
boundaries of local jurisdictions. In terms of the revenue sources for
such a program, some have suggested a more indirect federal role in
subsidizing the program's projects. For example, TRB has said that the
government's most effective role in subsidizing freight projects of
national significance would be as a provider of backup credit and as an
absorber of risk rather than as a source of grants. This, according to
TRB, would make the project accountable for its performance and would tend
to improve project selection. Also, FHWA suggests that such a program
would need to be a discretionary, as opposed to a formula-driven program,
to allow greater flexibility for the federal government to identify and
fund projects as the need arises.

Many stakeholders have argued that the level of transportation funding is
insufficient to adequately address the challenges to freight mobility
described earlier in this report. While more funding might appear to be an
obvious solution, in the current budgetary environment, many stakeholders
believe that other methods must be explored. One alternative would be to
expand support for alternative financing mechanisms to access new sources
of capital and stimulate additional investment in freight improvements. A
closely related strategy involves raising new revenue through tolling and
pricing strategies.

Alternative financing mechanisms include techniques such as loans and loan
guarantees, providing credit assistance to state and local governments for
capital projects, and using tax policy to provide incentives to the
private sector for investing in freight improvements through, for example,
bonds. When public transportation investment decisions are made based on
sound evaluations, these mechanisms can lead to an appropriate blend of
public and private funds to match public and private costs and benefits.
Such mechanisms, however, currently provide only a small portion of the
total

funding that is needed for capital investment and are not, by themselves,
a major financing strategy for addressing freight mobility challenges.

The administration's proposal, for example, seeks to expand the
eligibility of the TIFIA program, which provides loans, loan guarantees,
and lines of credit. The proposal expands the eligibility of the program
to include private freight rail facilities, access to intermodal freight
transfer facilities, and allows for the grouping of projects. In addition,
the loan threshold would be lowered from $100 million to $50 million. In
addition, the administration's proposal would amend the Internal Revenue
Code by expanding the eligibility of private activities that can be
financed with taxexempt private activity bonds to include freight-related
projects.45 Eligibility would be expanded to include all federal-aid
eligible surface transportation projects and surface freight transfer
facilities, such as intermodal rail yards.

Alternative financing mechanisms involve a careful evaluation of
trade-offs involving their use. On one hand, expanding eligibility could
encourage development of new funding sources for transportation projects
by attracting private-sector participation in projects that serve both
public and private ends. Also, they may be necessary tools for freight
infrastructure; many freight operators are private entities, which
currently makes it impossible or inappropriate to provide funding for them
through direct federal grants. On the other hand, despite potential
benefits, these mechanisms could result in higher costs to the U.S.
taxpayer. For example, when we compared direct appropriations for
transportation infrastructure projects with methods such as TIFIA loans or
state and local tax-exempt or tax credit bonds, we concluded that a direct
appropriation had the lowest combined cost to state, local, and federal
governments for a given amount of transportation investment.46 The U.S.
Treasury has drawn similar conclusions. Further, because these approaches
would allow public support for private infrastructure, it will be
important that evaluations are conducted to prospectively test the
economic rationale for government involvement in such projects and
retrospectively evaluate whether intended benefits have been achieved.

45Title IX, Section 9004. 46GAO-02-1126T.

A related feature of alternative financing approaches is the strategy for
generating revenue from various tolling approaches, which can provide new
sources of funding to address the increasing freight-related and other
infrastructure needs. Tolling is often associated with alternative
financing tools since nearly all require a dedicated revenue stream to
repay borrowed funds. According to TRB, a greater reliance on tolls allows
capacity to be more self-adjusting by rationing use, providing funds for
expansion, and providing an indication of where expansion should occur in
the long run. In concept, tolling on highways and major access roads is
consistent with the premise that the users of the transportation
facilities should pay the cost of those facilities. Also, to the extent
that the private sector participates in building and maintaining toll
roads or intermodal facilities, tolling can bring new funding sources into
the financing mix, thus potentially reducing funding contributions of the
public sector.

Tolling can take many forms, but two approaches are particularly
relevant-tolling mainly to raise revenues and tolling instituted at peak
driving times to reduce congestion.

o 	Tolling as a revenue-generating source. Tolling on some roads is done
as a way of generating new revenues to pay for needed infrastructure
rather than to reduce congestion. The Reason Foundation has suggested
freight-specific tolling through self-financing toll truckways.47 Toll
truckways, solely for use by large trucks, could be custom-built and
designed for use by longer and heavier trucks. Separating large trucks
from other vehicles would improve safety along with transportation
efficiency. In its study, the Reason Foundation concludes that trucking
firms would be willing to pay a toll up to one-half of the cost saving
that would be generated from the use of the truckways.

o 	Tolling for congestion pricing. Not only can pricing strategies
generate revenue to help fund transportation investment, our past work has
shown that this approach can potentially reduce congestion by providing
incentives for drivers to shift trips to off-peak periods, use less
congested routes, or use alternative modes, thereby spreading out demand
for available transportation infrastructure. 48 A number of

47Reason Foundation, Toll Truckways: A New Path Toward Safer and More
Efficient Freight Transportation (Washington, D.C.: June 2002).

48GAO-03-735T.

congestion pricing projects are in place in surface transportation, both
here and abroad. For the most part, they demonstrate that congestion
pricing can be successful. Congestion pricing also has the potential to
generate sufficient revenue to help fund operations-and sometimes fund
other transportation investment as well. For example, in San Diego, where
users pay a toll to use a less crowded freeway lane, some of the revenues
are used to operate a new express bus service, providing commuters with
more travel options.

In one possible form of congestion pricing for public roads, tolls would
be set on an entire roadway or road segment during periods of peak use. In
another form, sometimes known as value pricing, peak-period tolls would be
set on only some lanes of a roadway, allowing drivers to choose between
faster tolled lanes and slower nontolled lanes. High-occupancy toll (HOT)
lanes, under which drivers of single-occupancy vehicles are given the
option of paying a toll to use lanes that are otherwise restricted to
highoccupancy vehicles, are an example of value pricing. A more freight
specific alternative, such as truck toll lanes, may also be a way to
reduce congestion, expand capacity, and generate revenues.

Possible challenges to implementing congestion pricing include current
statutory restrictions limiting the use of congestion pricing and concerns
about equity and fairness across income groups. For example, tolls are
prohibited on the Interstate Highway System, except for roads that already
had tolls in place when they became part of the system or where exceptions
have been made for pilot programs. Also, equity and fairness issues for
low income and other groups have been raised, but there is evidence that
these issues can be mitigated. Some projects have shown substantial usage
by low-income groups, and other projects have used revenues generated to
subsidize a low-income transportation option. In addition, some recent
proposals for refining congestion pricing techniques have incorporated
further strategies for overcoming equity concerns. For example, the Fast
and Intertwined Regular (FAIR) lanes proposal in New York suggests
crediting users of the nontolled lanes to partially pay for them to use
public transportation, or to use the express lanes on other days.

The administration's proposal allows for the use of such alternatives in
the form of variable toll pricing. The administration's proposal
encourages the use of a variable toll pricing provision that would permit
a state or public authority to toll any highway, bridge, or tunnel to
manage existing high levels of congestion or reduce emissions. The
administration's proposal

would also allow low-occupancy vehicles or solo drivers to pay a fee to
use high-occupancy vehicle (HOV) lanes during peak travel periods.

Using Nonbuild Alternatives	Finally, a number of low cost alternatives can
be used to expand the capacity and efficient use of existing
infrastructure. These alternatives are a diverse mix, including corrective
and preventative maintenance and rehabilitation, operations and system
management, and new technology.49 Keeping up with growth within the
constraints that will be imposed on the transportation system in the
future will not be possible through capital improvements alone; operators
must also extract more service and capacity from existing facilities.
Although many of these techniques are currently in use, public planners
can more consistently consider a full range of techniques. Table 5 briefly
describes the types of alternatives available with examples of stakeholder
proposals that apply to each. While the administration's proposal allows
for the use of all of the nonbuild alternatives, many of the provisions do
not require the consideration and analysis of these noncapital
alternatives in evaluating capital projects.

Table 5: Description of Nonbuild Alternatives and Relevant Stakeholder Proposals

Type of alternative Description Examples of proposals

Increased maintenance and rehabilitation This entails having a regular and
a systematic corrective and preventive maintenance program at the state
and local level to maintain the integrity of existing infrastructure and
prevent or forestall major rehabilitation or replacement. Such a program
can improve the speed and reliability of freight travel. In the
administration's proposal, maintenance and rehabilitation is addressed
through the establishment of a new program-the Infrastructure Performance
and Maintenance Program-which focuses on projects that preserve existing
highway facilities or alleviate traffic chokepoints.

49Tolling for congestion pricing, discussed earlier as an alternative
financing approach, is another nonbuild alternative. Congestion pricing
can spread out demand on existing infrastructure, thereby reducing
congestion and expanding system capacity.

                         (Continued From Previous Page)

             Type of alternative Description Examples of proposals

               Improving This involves using       The administration's       
                         existing                  proposal                   
          management and infrastructure more       requires transportation    
                         efficiently,              plans to                   
              operations      which adds capacity.    contain operational and 
                         Examples include           management strategies. It 
                         installing                                      also 
                            modern traffic control  encourages transportation 
                                           systems 
                         and developing strategies    agencies to collaborate 
                         to                                               and 
                         handle traffic accidents    coordinate on a regional 
                         and                                        level for 
                                       breakdowns.           improved systems 
                                                                   management 
                                                              and operations. 

Developing and using new technology

This includes Intelligent Transportation Systems (ITS) that are designed
to enhance the safety, efficiency, and effectiveness of the transportation
network. ITS can serve as a way of increasing capacity and mobility
without making major capital investments.

The administration's proposal addresses ITS through an Intelligent
Transportation Systems Performance Incentive Program. The goal of the
incentive program is to accelerate the integration and interoperability of
ITS to improve the performance of the surface transportation system in
metropolitan and rural areas. Funding would be directly tied to criteria
that reflect each state's performance outcomes with respect to established
criteria for enhanced safety, operations, and mobility.

         Source: GAO and the administration's reauthorization proposal.

Building in Basic Economic and Management Principles into Reauthorization
Strategies and Provisions Could Enhance Capacity and Performance of
Freight Mobility

Congress will formulate a new national transportation policy when it
reauthorizes TEA-21. Our past work and our review of numerous studies by a
diverse group of transportation experts show that the planning and
financing processes established by core transportation legislation make it
difficult for freight mobility projects to compete with nonfreight
projects. Our work has also led us to identify sound principles that, if
integrated into the transportation planning and financing strategies and
provisions of the new legislation, would better assure that the freight
infrastructure system provides the level of capacity and performance that
makes the greatest contribution to the nation's economic well-being.

While not an all-inclusive list, we have synthesized three main guiding
principles, often mentioned by transportation experts, for use in
structuring federal support.

o 	Promote efficiency by embracing "user pay" principle. Public financial
support to individual private entities or transportation modes is best
structured so as to minimize distortion of any competition. Competition
will be enhanced and efficiency will be promoted when capital and
operating costs for infrastructure are paid from the revenues or fees
charged to the direct users or beneficiaries of the facilities. Reliance
on revenue from users will increase the likelihood that the most
worthwhile improvements will be implemented and that facilities will be
operated and maintained efficiently, according to transportation experts.
Fees assessed on each mode (user) need to be accurately aligned with the
costs each mode or vehicle imposes on the transportation system. Where
user fees and costs are not aligned, a mode may enjoy an advantage over
another in competing to transport goods. For example, according to TRB,
the heaviest combination trucks pay a smaller share of the expenditures
highway agencies incur to serve them.50 From an economic standpoint, this
level of taxation distorts the competitive environment with railroads and
other modes that could also move the goods by making it appear that these
heavier trucks are a less expensive means for shippers to transport their
goods than they really are. Better matching of fees to costs could provide
incentives for shippers to make modal choices and transportation options
based on true costs. Transportation experts recommend that, to ensure
market outcomes of competition between trucking and other modes are in the
public interest, adjusting user fees is preferable to providing
off-setting subsidies to competing modes, such as railroads.

o 	Establish performance measures and expectations and build in
accountability. Leading organizations have stressed the importance of
developing performance measures and linking investment decisions and their
expected outcomes to overall strategic goals and objectives. Doing so is
valuable in evaluating the effectiveness of investment decisions, and it
provides decision makers with valuable information for determining whether
intended benefits were achieved and whether goals, responsibilities, and
approaches should be modified. Establishing a framework for performance
and accountability involves three key components-setting expectations for
performance outcome, developing and maintaining an information system to
capture critical

50Transportation Research Board, Special Report 271: Freight Capacity for
the 21st Century (Washington, D.C.: 2002); Transportation Research Board,
Special Report 252: Policy Options for Intermodal Freight Transportation
(Washington, D.C.: 1998); and GAO-02-775.

performance-related data, and establishing a mechanism for evaluating and
reporting results. Transportation experts have suggested that such a
framework be built into legislation as a means of better ensuring
effective use of transportation dollars. The Brookings Institution, for
example, recently recommended that Congress should subject MPOs to
enhanced accountability measures and require states and MPOs to maintain
information systems on indicators of national significance, such as daily
vehicle miles traveled, improving air quality, lowering transportation
costs, and expanding transportation options. Brookings also recommended
establishing annual performance objectives and holding decision makers
accountable by establishing consequences for excellent and poor
performance. TRB has suggested similar measures including the need for
systematic and uniform retrospective evaluations after projects are
completed to assess the financial and economic performance of completed
projects and facilities in operation. As discussed above, none of the
states or MPOs in the locations we visited currently perform retrospective
evaluations. TRB also recommended developing benchmarks to evaluate
existing or proposed transportation facilities. The benchmarks would be a
systematic comparison of performance measures, such as physical
efficiency, cost, and rate of return; such benchmarks would be used to
evaluate a specific facility under construction with other similar
facilities, including state-of-the-art facilities abroad.

o 	Align incentives for planning agencies to adopt best practices and to
achieve expectations. Aligning incentives for existing and new programs or
approaches to facilitate the use of better freight transportation project
planning and financing options could improve the efficiency of federal
transportation programs in enhancing freight mobility. Better aligning
both intended and de facto incentives of federal programs could elevate
freight consideration in transportation planning and investment decisions
more effectively than rigid direction or mandatory programs and is
consistent with the ISTEA and TEA-21 premise of providing state and local
planners with broad flexibility to address the nation's transportation
needs. To be effective, incentives should be tangible and significant
enough to address the need and spur action. Incentive approaches can take
many different forms, as evidenced by varied suggestions from
transportation experts and stakeholders. FHWA has suggested, for example,
that to promote a more system-wide approach to planning freight
improvement projects, incentives could be offered to multistate or
regional coalitions or organizations. One such incentive would provide
funding to support

freight planning or financing for projects that meet certain criteria,
such as involving multiple states or modes. TRB has noted, for example,
that as an incentive for states to experiment with alternative financing
and management methods, Congress could set aside a fund dedicated to
projects on roads where the highway agency has implemented efficient
maintenance, traffic control, and other management measures, according to
specified definitions. TRB has also suggested that as part of the highway
program reauthorization, Congress should consider measures to reduce
obstacles and provide incentives to private participation in highway
development. Others have suggested that to promote the use of low cost,
noncapital alternatives to more efficiently use existing infrastructure, a
system could be established in which federal support would reward those
states and localities that apply federal money to gain efficiencies in
their existing transportation system. Different matching criteria would be
one way to provide these rewards. For example, to spur consideration of
preservation of existing infrastructure, matching requirements could be
changed to a 50 percent federal share for building new capacity and an 80
percent share for preservation. The Brookings Institution, for example,
has recommended consideration of other types of incentives-for example,
that Congress should allow DOT to maintain a small incentive pool to
reward states and MPOs that consistently perform at the exceptional level.
51 Ideally, an intentional alignment of the full range of existing
programs and policies would emerge from a rigorous retrospective
evaluation of both intended and de facto incentives provided by current
programs and policies.

Conclusions	The current system for planning and financing transportation
infrastructure projects is not well suited to advancing freight
transportation improvement projects, and fundamental changes are needed
that take a broader, systemwide approach to planning and financing freight
projects and that foster active participation by the private sector in
this process. Without such changes, growing congestion, coupled with a
doubling of freight volume in the next two decades, could overwhelm the
capacity of our nation's transportation infrastructure and

51The Brookings Institution, Improving Metropolitan Decision Making in
Transportation: Greater Funding and Devolution for Greater Accountability
(Washington, D.C.: October 2003).

thereby severely impede goods movement. This, in turn, would likely
negatively impact the nation's economic well-being and productivity.

Reauthorization of TEA-21 represents an opportunity to examine current
federal policies and programs and determine how best to address freight
mobility issues. The range of freight-related options proposed by various
freight stakeholders is broad and sometimes controversial, and selecting
among these options and splicing them together into a cohesive package
represents a significant challenge. A blend of measures offers promise in
two broad strategies: first, to promote a systemwide approach to planning
and transportation investment decision making, and, second, to provide an
array of flexible financing approaches and funding sources for
freightrelated infrastructure improvements. Taken together, these
strategies offer a balanced approach to enhancing freight mobility.
Optimum results could be furthered if three overarching economic and
management principles are applied in the development and refinement of
reauthorization provisions. These include (1) promoting efficiency by
enhancing "user pay" principle, (2) maximizing a performance-based
program, and (3) aligning the incentives for planning agencies and
investment decision makers to focus on efficiency and results.

One issue requires immediate attention because of its importance in the
process for both planning and financing transportation infrastructure.
State and local planners, in particular, need-but lack-sound, economically
based methods and approaches and sufficient freight-related data to
perform a variety of critical planning and financing functions. The
absence of these analytical methods and data undermines local planners'
abilities to develop evaluations essential to support public
transportation decisions; to assess viable alternative solutions,
including multimodal solutions; to justify government involvement in and
subsidy levels for projects; and to retrospectively assess projects and
hold planners accountable for their decisions. Because this issue is so
critical to the entire process, it is important that state and local
planners adopt sound, consistently applied methods and develop and enhance
data collection efforts.

Recommendations for 	To encourage the use of sound evaluation and data
collection efforts among state and local transportation planners, we
recommend that the

Executive Action Secretary of Transportation:

o 	Develop evaluation approaches for state and local planners to use in
making freight-related and other transportation investment decisions and
actively work with transportation planners to achieve implementation of
these approaches. In developing these approaches, DOT should promote the
incorporation of key elements of effective planning, including systematic
cost-benefit analyses, evaluation of noncapital alternatives, inclusion of
external benefits (e.g., congestion and pollution costs), and routine
performance of retrospective evaluations.

o 	Facilitate the collection of freight-relevant data that would allow
state and local planners to develop and use a broad range of evaluation
methods and techniques, such as demand forecasts, modal diversion
forecasts, estimates of effects of proposed investments on congestion and
pollution, and other factors, as they make transportation investment
choices.

Agency Comments and Our Evaluation

We provided a draft of this report to the Department of Transportation for
its review and comment. Generally, the department agreed with the facts
presented in the report. Department officials provided a number of
comments and clarifications, which we incorporated to ensure the accuracy
of our report. The department did not take a formal position on GAO's
recommendations. Department officials raised two points that were either
outside the scope of our work or were not addressed by freight
stakeholders at locations we visited or discussed in various reports
included in our evaluation synthesis. First, department officials noted
that expanding port business hours should be considered as a nonbuild
option to relieve congestion. Although we do not disagree with the
expansion of hours as a potential nonbuild option, it was not raised in
either our evaluation synthesis or expressed as a major congestion issue
during our case study work. Second, department officials indicated that
intermodal freight movement is larger than depicted in the report and
involves many transportation communities essential to productive freight
movement. These include shippers, receivers, warehouses, and trucking
companies. We recognize this point as well, but we were asked to focus on
international gateways around major containerized ports, since this is
where transportation congestion is often most acute and where intermodal
solutions are critically needed. In addition, while we do not explicitly
identify all of the various communities involved in freight movement, our
discussion of the private and public sectors is intended to encompass all
of the communities involved in freight movement. To this end, we have

described the key entities involved in freight movement in the background
section.

As agreed with your offices, unless you publicly announce the contents of
this report earlier, we plan no further distribution until 30 days from
the
report date. At that time, we will send copies of the report to the
Secretary
of Transportation. We also will make copies available to others upon
request. In addition, the report will be available at no charge on the GAO
Web site at http://www.gao.gov.

If you have any questions about this report, please contact me at
[email protected] or (202)512-2834 or Randall Williamson at
[email protected] or (206)287-4860. GAO contacts and
acknowledgments are listed in appendix VI.

JayEtta Z. Hecker
Director, Physical Infrastructure

Appendix I

                       Objectives, Scope, and Methodology

The objectives of this report were to identify (1) the national challenges
to freight mobility and how these challenges were evident at selected
container ports and surrounding areas, (2) the existing limitations to
effectively addressing these challenges, and (3) strategies that may help
public decision makers improve freight mobility, including a discussion of
relevant provisions of selected proposals related to reauthorization of
federal surface transportation programs. To address these objectives, we
conducted an evaluation synthesis of national reports and studies, an
analysis of proposals issued by numerous stakeholders addressing
reauthorization of TEA-21, and case studies at six international gateway
container ports.

We conducted an evaluation synthesis of research reports, analytical
studies, and proposals issued by numerous stakeholders to gain a national
perspective of freight mobility issues. This was done through an extensive
literature review and analysis of key categorical findings. Findings were
supplemented with interviews of key officials in federal agencies and
national association representatives to include, at the Department of
Transportation: the Office of Intermodalism, Office of Freight Operations,
the Federal Highway Administration, Federal Railroad Administration,
Maritime Administration, and stakeholders including the American Trucking
Association, Association of Metropolitan Planning Organizations, American
Association of Port Authorities, Association of American Railroads, and
the American Association of State Highway and Transportation Officials.

To identify challenges to freight mobility and the efforts to address
them, we also conducted case studies of international gateway ports and
their surrounding areas. We adopted a case study methodology because,
while the results cannot be projected to the universe of ports, case
studies are useful in illustrating the range and complexity of challenges
and projects implemented to address those challenges. Our efforts included
in-person interviews along with follow-up questions via telephone and
e-mail, visual observations of ports and their surrounding areas, and
collection of pertinent documents for analysis. The ports selected were
geographically representative and comprised more than 65 percent of U.S.
container traffic by volume. We conducted case studies of six regions
containing 10 container ports including Charleston, SC; Seattle/Tacoma,
WA; Los Angeles/Long Beach, CA; San Francisco/Oakland, CA; New York/New
Jersey; and Houston, TX. The information collected and analyzed may not be
representative of other types of ports, such as smaller container ports
and noncontainer ports. The information collected included information

Appendix I
Objectives, Scope, and Methodology

regarding the planning process, both at the state and local level; the
metropolitan organization's role, funding, and financing; private-sector
participation; data and use of nonbuild tools; and security. In the area
of security, we reviewed previous GAO studies on this issue, but because
of ongoing studies and the enormity and complexity of evaluating the
security issues involved in protecting the transportation system, we did
not address, in this report, barriers that agencies and others face to
implement sound security measures or evaluate options offered by others or
efforts under way to strengthen transportation security. These issues will
be more fully addressed as part of other ongoing and future studies.

To identify strategies that may aid decision makers in enhancing freight
mobility, we relied extensively on perspectives gained from our past work
in transportation and infrastructure systems and federal investment
strategies and other perspectives gained through our evaluation synthesis.
We assessed the reauthorization proposals developed by key stakeholders
within the context of these strategies.

We conducted our work from October 2002 to November 2003 in accordance
with generally accepted government auditing standards

Appendix II

Summary of the Administration's 2003 Surface Transportation
Reauthorization Proposal Freight-related Provisions and Observations

I. Planning

1.	State planning and research (Title I, Section 1503(i)(1)(B)). Two and
one-half percent of the sums apportioned to a state for state planning and
research to be made available for a number of activities, including
freight planning.

2.	Transportation planning (Title VI, Section 6001, subsection
5203(e)(4)). Metropolitan planning organizations (MPOs) are encouraged to
coordinate their planning processes with officials responsible for other
types of planning activities that are affected by transportation,
including freight.

3.	Multistate corridor planning program (Title I, Section 1806(f)(1)).
States and other jurisdictions are encouraged to work together to develop
plans for multimodal and multijurisdictional transportation decisionmaking
and to prioritize multimodal planning studies.

Observation: Although these provisions are consistent with Intermodal
Surface Transportation Efficiency Act (ISTEA) and Transportation Equity
Act of the 21st Century (TEA-21) in that they emphasize the importance of
freight transportation and continue the decentralized planning approach,
states and MPOs are best positioned to make decisions on transportation
planning and project selection; encouragement alone may not be enough to
overcome planning challenges.

4.	State planning and research (Title I, Section 1503(i)(3)(A)). Not less
than 20 percent of the dedicated state planning and research funds (2  1/2
percent of the sums apportioned to a state for state planning and
research) to improve the collection and reporting of strategic surface
transportation data to provide critical information about the extent,
condition, use, performance, and financing of the nation's highways
(including intermodal connectors) for passenger and freight movement.

Observation: Requiring a set-aside may increase freight data collection
efforts, which may lead to an elevation of freight issues in the planning
process. Requiring a set-aside, however, may be viewed as an unwelcome
mandate that negatively

Appendix II
Summary of the Administration's 2003
Surface Transportation Reauthorization
Proposal Freight-related Provisions and
Observations

affects the ability of states and MPOs to address their unique
transportation needs.

II. Financing

1.	Freight transportation gateways; freight intermodal connections (Title
I, Section 1205, subsection 325). Creates a new program that adds state
responsibilities and allows the use of Surface Transportation Program
(STP) and National Highway System (NHS) funds for freight-related
projects. (1) State responsibilities include ensuring that intermodal
freight transportation, trade facilitation, and economic development needs
are adequately addressed and fully integrated into the project development
process; designating a freight transportation coordinator responsible for
fostering public- and private-sector collaboration needed to implement
complex solutions to freight transportation and freight transportation
gateway problems; and encouraging the adoption of innovative financing
strategies for freight transportation gateway improvements. (2) Allows
states to obligate STP funds for publicly owned intermodal freight
transfer facilities, access to such facilities, and operational
improvements for such facilities. (3) Requires a set-aside of NHS funds
for NHS routes connecting to intermodal freight terminals.

Observation: Since the STP funds are part of the state apportionment and
the provision is not requiring the use of the funds for freight-related
projects, freight transportation projects would still have to compete with
other projects in the planning process. While the mandatory set-aside of
NHS funds for intermodal connectors would directly address the problems
associated with NHS intermodal connectors, it runs counter to the funding
flexibility established in ISTEA and TEA-21.

2.	Transportation Infrastructure Finance and Innovation Act (TIFIA)
amendments (Title I, Section 1304). Modifies the TIFIA program by (1)
expanding the eligibility to include a public or private freight rail
facility, an intermodal freight transfer facility, access to such
facilities, and service improvements for such facilities; or grouping of
such projects with the common objective of improving the flow of goods;
(2) reducing the threshold from $100 million to $50 million; and (3)
revising the lines of credit clause

Appendix II
Summary of the Administration's 2003
Surface Transportation Reauthorization
Proposal Freight-related Provisions and
Observations

by removing the requirement that TIFIA lines of credit be drawn upon as a
last resort.

Observation: (1) Adding "private freight rail facilities" would suggest
that rail lines would be eligible for TIFIA assistance. In such a case,
public funds could potentially be used for privately owned infrastructure.
The expanded definition would also allow for the grouping of projects,
which may enable smaller projects to be packaged together to meet the
eligibility project cost threshold requirement. (2) Lowering the loan
threshold would make many more projects eligible. (3) Expanded use of
TIFIA loans as a result of these changes could heighten federal risks.

3.	Private activity bonds (Title IX, Section 9004). Expands the
eligibility of private activities that can be financed with tax-exempt
private activity bonds to include surface freight transfer facilities,
defined as facilities for the transfer of freight from truck to rail or
rail to truck (including any temporary storage facilities directly related
to such transfers). The total amount of the bonds issued for highway
facilities and surface freight transfer facilities cannot exceed $15
billion.

Observations: Expanding eligibility could encourage development of new
funding sources for freight projects by attracting private-sector
participation in such projects. However, expanded eligibility could
potentially result in higher costs to the taxpayers. Bonds can be more
expensive than grants because the governments have to compensate private
investors for the risks that they assume.

III.Nonbuild Tools

1.	Infrastructure Performance and Maintenance Program (Title I, Section
1201). Creates a new program intended for projects that would preserve,
maintain, or extend the life of existing highway infrastructure elements
or provide operational improvements, including traffic management and
intelligent transportation system (ITS) strategies and limited capacity
enhancements, at points of recurring highway congestion.

Appendix II
Summary of the Administration's 2003
Surface Transportation Reauthorization
Proposal Freight-related Provisions and
Observations

2.	Transportation planning (Title VI, Section 6001, Subsection
5203(g)(2)(C)). A transportation plan will be required to contain, among
other things, operational and management strategies to improve the
performance of existing transportation facilities to relieve vehicular
congestion and maximize the safety and mobility of people and goods.

3.	Transportation systems management and operations (Title I, Section
1701, subsection 165(b)(3)). Allows the Secretary of Transportation to
assist and cooperate with other departments and agencies to improve
regional collaboration and real-time information sharing; issue, if
necessary, new guidance or regulations for the procurement of
transportation system management and operations facilities equipment, and
services; and approve for federal financial assistance support for
regional operations collaboration and coordination activities that are
associated with regional improvements.

Observation: While these provisions allow for the use of these tools,
there is no explicit requirement to evaluate the effectiveness of the
tools to discern whether intended benefits have been achieved.

4.	Intelligent Transportation Systems Performance Incentive Program (Title
I, Section 1703). In the area of ITS, the provision would allow funds to
be used for projects involving planning, deployment, integration, and
operation of ITS. The funding formula would be based on the following
criteria that reflect each state's (1) reductions in delay due to
incidents, (2) improvements in the operation and safety of signalized
intersections, (3) reductions in delay and improvements in safety of work
zones on the NHS, (4) improvements in the efficiency and reliability of
transit services, (5) overall improvement in integrated regional
transportation operations, (6) improvements in the quality and
availability of traveler information, (7) improved crash notification, and
(8) improvements in the safety and productivity of commercial vehicle
operations in the NHS.

Observation: Tying funding to performance outcomes increases the
likelihood that agencies will endeavor to improve performance.

Appendix II
Summary of the Administration's 2003
Surface Transportation Reauthorization
Proposal Freight-related Provisions and
Observations

5.	Toll programs (Title I, Section 1615). The provision would allow a
state or public authority to toll any highway, bridge, or tunnel,
including facilities on the Interstate Highway System, to manage existing
high levels of congestion or reduce emissions in a nonattainment area or
maintenance area. The tolls must vary in price according to time of day to
manage congestion or improve air quality. A state may also permit vehicles
with fewer than two occupants to operate in high-occupancy vehicle (HOV)
lanes as part of a variable toll pricing program.

6.	Use of HOV lanes (Title I, Section 1610). Responsible agencies may
permit vehicles that do not satisfy the established occupancy requirements
to use an HOV facility only if they charge such vehicles a toll. Any
agency electing to toll such vehicles shall also (1) establish a program
that addresses how motorists can enroll and participate; (2) develop,
manage, and maintain a system that will automatically collect the tolls
that vehicles must pay; (3) continuously monitor, evaluate, and report on
performance; (4) establish the policies and procedures for varying the
toll that is charged to manage the demand to use the subject facilities
and enforce violations; and (5) establish procedures that will limit or
restrict the use of such vehicles, as necessary, to ensure that the
performance of individual facilities or the entire system does not become
seriously degraded.

Observation: Pricing incentives such as these can enhance economic
efficiency by making users take into account the external costs they
impose on others.

Appendix III

Summary of Freight-related Recommendations Developed by the Transportation
Research Board

I. Planning

1.	Department of Transportation (DOT) data and analysis programs.
Continued support should be given to the development of DOT capabilities
for economic analysis of the federal aid highway program and federal
highway user fees and to the application of this analysis in support of
decisions.

2.	Evaluation methods. As one means of promoting more useful evaluation at
the federal and state levels, a clearinghouse devoted to evaluation
methods within DOT should be created where DOT program agencies and local
and state governments could share and compare methods and examples of
evaluations.

II. Financing

1.	Maintain and reinforce the principle of user financing by reforming the
structure of fees so that they more closely relate to costs each highway
user imposes.

2.	Provide funding adequate to ensure that the states have resources to
maintain the overall performance of the highway system.

3.	Programs in successor legislation should meet certain criteria. These
programs should (1) sustain the "user pays" principle, which involves
paying capital and operating costs from the revenues of fees charged to
the direct users of the facilities; (2) sustain the support of the
affected parties that the federal user fee financing system enjoys by
funding projects that fee payers recognize as having value to them; (3)
ensure that the market outcomes of competition between trucking and other
modes are in the public interest, primary reliance should be placed on
adjusting user fees rather than supply offsetting subsidies to the
competing modes; and (4) establish requirements for ongoing and
retrospective evaluation of the performance of the programs for federal
multimodal credit assistance programs.

4.	DOT should study the costs and market potential of exclusive truck
facilities.

Appendix III
Summary of Freight-related
Recommendations Developed by the
Transportation Research Board

5.	State and local governments should routinely conduct evaluations to
quantitatively test the economic rationale for government involvement in
their freight transportation infrastructure projects. Federal programs
should require such evaluations of projects receiving federal assistance.

Appendix IV

Summary of the Freight-related Reauthorization Proposals Developed by
Stakeholders

I. Proposals to Address Planning Barriers:

American Association of State Highway and Transportation Officials
proposed (1) the development of a freight planning capacity building
process jointly sponsored by Department of Transportation (DOT) and
American Association of State Highway and Transportation Officials
(AASHTO) wherein up to $10 million annually would be provided to support
an initiative through which DOT and the state DOTs would jointly develop
and implement a training and capacity-building program to strengthen the
ability of state and local transportation agencies to effectively address
freight transportation issues, (2) enacting an increase in the Federal
Highway Administration's (FHWA) research and technology program allowing a
greater emphasis on freight transportation research and creating a Freight
Transportation Cooperative Research Program, and (3) creating a Freight
Advisory Group to communicate with one voice to DOT on freight
transportation issues.

Local Officials for Transportation proposed (1) encouraging the
development of a seamless transportation system by connecting all modal
elements to ensure the efficient movement of people and goods and (2)
developing new approaches to help localities combat increasing urban
congestion.

Association of American Railroads proposed encouraging that freight issues
be given additional consideration in state and local transportation
planning.

American Trucking Associations proposed (1) producing a national Freight
Transportation Improvement Program (FTIP) that focuses on transportation
corridors with heavy freight usage relative to the national economy and
relative to regional populations and economic activity;1 (2) establishing
a Freight Advisory Board to review and comment on the FTIP; (3) requiring
that MPO governing boards include representatives from the freight
community; (4) setting aside a portion of the MPO funds for the salaries
and training of freight planning specialists; (5) establishing a Freight
Cooperative Research Program; (6) establishing a discretionary

1The American Trucking Associations proposed that the purpose of the FTIP
is to identify corridors that are currently deficient or are likely to
become deficient given projected freight transportation demands and
specific local system bottlenecks, including deficient intermodal
connectors.

Appendix IV
Summary of the Freight-related
Reauthorization Proposals Developed by
Stakeholders

program that provides research grants to states, MPOs, multijurisdictional
transportation planning groups, and private-sector groups; and (7) funding
and supporting multimodal research programs that benefit and improve the
safety and productivity of the trucking industry, as well as fostering
innovative partnerships with the private sector.

Association of Metropolitan Planning Organizations proposed

continuing efforts in the area of goods movement data and setting regional
priorities.

American Public Transportation Association proposed a pilot program that
will identify the benefits of shared use of freight rail corridors by
freight and light rail. Although shared use is common in Europe, Federal
Railroad Association (FRA) has a number of regulatory requirements that
restrict this practice. The proposals called for amending federal transit
law to provide for this pilot program to be carried out jointly by Federal
Transit Administration (FTA) and FRA. It would draw on European experience
with shared use of freight rail corridors to demonstrate that operations
can be safe, effective, and smooth. Separate funding would not be
available for the program. Instead, applicants would use existing
resources to support it. Conclusions drawn from the pilot program would be
the basis for FRA to revise its current regulatory framework.

II. Proposals to Address the Limitations with Existing Funding/Financing
Programs

American Association of State Highway and Transportation Officials
proposed (1) the use of existing innovative finance tools and new
financing mechanisms for investments in freight transportation
infrastructure such as lowering the Transportation Infrastructure
Financing and Innovation Act (TIFIA) project dollar threshold, expanding
the eligibility of freight projects and relaxing repayment requirements,
allowing pooling of modal funds, expanding the state infrastructure bank
(SIB) program to all states, creating tax incentives for freight rail and
intermodal infrastructure investment, and exploring the utility of a
Transportation Finance Corporation as a financing mechanism for freight
projects; (2) tailoring existing and proposed innovative financing
techniques to make increased investment in intermodal connectors possible
in combination with increases in core Transportation Equity Act for the
21st Century (TEA-21) programs; (3) focusing the National Corridor
Planning and Development Program and the Coordinated Border Infrastructure
Program more tightly on freight corridors and augmenting

Appendix IV
Summary of the Freight-related
Reauthorization Proposals Developed by
Stakeholders

funding from the Highway Trust Fund with innovative financing; (4)
clarifying the eligibility of freight projects for Congestion Mitigation
and Air Quality (CMAQ) funding; (5) increasing the funding for the highway
rail grade crossing program (section 130) 2 proportionate to the increase
in the overall highway program; and (6) expanding and reforming the Rail
Revitalization and Improvement Funding Program (RRIF).

Association of American Railroads proposed (1) providing tax incentives
and tax-exempt financing to companies making investments in intermodal
freight infrastructure; (2) allowing funding of rail infrastructure
through the issuance of tax-exempt indebtedness, increasing the amount of
low-interest loans and loan guarantees available through the RRIF program,
and removing overly restrictive regulatory requirements that have hindered
program implementation; (3) increasing funding for the section 130 grade
crossing program and allowing funds to be spent on maintenance activities;
(4) increasing funding and clarifying freight project eligibility for the
CMAQ program; and (5) increasing funding for the Corridors and Borders
program and liberalizing project eligibility criteria.

American Road and Transportation Builders Association proposed

increasing the amount of funding available nationally under TIFIA and
reducing the overly restrictive qualifications and criteria that
discourage expanded use of the tool.

American Trucking Associations proposed (1) ensuring that revenues are
dedicated to projects and programs that serve national economic, safety,
and research interests; (2) preventing further diversion of highway user
revenues to nonhighway projects; (3) creating new innovative financing
programs that allow states to fund extremely high-cost highway projects
designed to expedite the movement of freight; (4) opposing the adoption of
any new highway user fees on the trucking industry or increases in
existing user fees; (5) preventing further diversion of highway user
revenues to nonhighway freight projects; and (6) dedicating adequate
resources to the development of infrastructure and human resources along
the U.S. borders with Canada and Mexico in order to meet the challenges
associated with rapidly increasing trade growth.

2Section 130 is a program to enhance safety at highway-rail grade
crossings on public highways.

Appendix IV
Summary of the Freight-related
Reauthorization Proposals Developed by
Stakeholders

Association of Metropolitan Planning Organizations proposed (1) promoting
the use of innovative financing arrangements, through providing more
incentives, greater flexibility in regulations, and removal of barriers to
public-private joint development;3 (2) giving additional assistance to
metropolitan areas at major entry ports and intermodal hubs; (3) using
Highway Trust Fund or other federal funding sources in excess of current
authorizations to increase program capacity to support the safe and
efficient movement of goods in corridors that are crucial to national
economic security and vitality; and (4) broadening the eligibility of
freight project funding, providing incentives to attract private
investment, and allowing port access and gateways to be eligible for the
Corridors and Borders programs.

III.Proposals That Would Allow for the Use of Nonbuild Tools

American Road and Transportation Builders Association proposed

exploring new technologies to help meet system and mobility needs.

American Trucking Associations proposed elevating highway operations to a
level comparable to highway construction and maintenance with comparable
increases in funding for operations. As part of this increased focus on
operations, the DOT should continue to support and fund research into
improved highway operations.

Association of Metropolitan Planning Organizations proposed (1) managing
existing capacity better through traditional congestion management
techniques and ITS and (2) giving MPOs the responsibility for determining
which institution in their region should lead the development of
metropolitan-level management and operations plans.

Local Officials for Transportation proposed increasing funding for all
existing research and technology programs that directly benefit local
government.

U.S. Conference of Mayors proposed (1) suballocating surface
transportation funds to metropolitan areas for repair and maintenance of

3The Association of Metropolitan Planning Organizations provides the
following specific changes that should be considered: increasing direct
federal capitalization of infrastructure banks, making changes to
tax-exempt bond finance restrictions, removing barriers to public-private
joint development, and broadening eligibility rules and relaxing
thresholds on innovative financing tools already available.

Appendix IV
Summary of the Freight-related
Reauthorization Proposals Developed by
Stakeholders

existing urban highways while giving equal weight to other transportation
needs and (2) dedicating resources to combat increasing metropolitan
congestion through the expanded use of ITS technology.

Appendix V

                      Assessment of Stakeholder Proposals

Stakeholder proposals vary considerably in the degree to which they
address the various elements of the strategies to address planning and
financing limitations. Table 6 shows the most extensive proposals that
have been made, together with our assessment of which elements of the two
strategies are present in the proposal. (In the table, an "X" indicates
whether the proposal addressed this element in some manner; it does not
indicate the nature or extent of the action.) As the table shows, the
broadest representation of these elements is contained in the
administration's surface transportation reauthorization proposal.
Collectively, the proposals touch on all of the elements of these
strategies, although no single proposal currently contains the breadth of
elements that will be needed to address the multidimensional limitations
inherent in the public planning process and in federal funding/financing
programs.

  Table 6: Coverage of Strategy Elements in the Most Extensive Reauthorization
     Proposals Elements of planning strategy Elements of financing strategy
                     Reauthorization proposal Coordination

                              Private involvement

Data and tools

             Expand Alternative Nonbuild eligibility finance tools

      Administration's 2003 surface      X      X      X      X     X       X 
     transportation reauthorization                                     
                proposal                                                
     Freight Stakeholders Coalition      X      X             X     X   
      American Association of State             X             X     X   
       Highway and Transportation                                       
                Officials                                               
         Association of American                              X     X   
                Railroads                                               
            American Trucking            X      X                           X 
              Associations                                              
       Association of Metropolitan                     X      X     X       X 
         Planning Organizations                                         
            American Road and                                       X       X 
         Transportation Builders                                        
               Association                                              

 Source: GAO analysis of selected system stakeholder reauthorization proposals.

Appendix VI

                     GAO Contacts and Staff Acknowledgments

GAO Contacts	JayEtta Z. Hecker (202) 512-2834 Randall B. Williamson (206)
287-4860

Staff 	In addition to those individuals named above, Jack Burriesci, Jay
Cherlow, Tom Collis, Sarah Eckenrod, David Hudson, Elizabeth McNally,
Albert

Acknowledgments	Schmidt, Sharon Silas, Stan Stenerson, and Stacey Thompson
made key contributions to this report.

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