Intermodal Transportation: Challenges to and Potential Strategies
for Developing Improved Intermodal Capabilities (15-JUN-06,	 
GAO-06-855T).							 
                                                                 
Mobility--that is, the movement of passengers and goods through  
the transportation system--is critical to the nation's economic  
vitality and the quality of life of its citizens. However,	 
increasing passenger travel and freight movement has led to	 
growing congestion in the nation's transportation system, and	 
projections suggest that this trend is likely to continue.	 
Increased congestion can have a number of negative economic and  
social effects, including wasting travelers' time and money,	 
impeding efficient movement of freight, and degrading air	 
quality. U.S. transportation policy has generally addressed these
negative economic and social effects from the standpoint of	 
individual transportation modes and local government involvement.
However, there has been an increased focus on the development of 
intermodal transportation. Intermodal transportation refers to a 
system that connects the separate transportation modes--such as  
mass transit systems, roads, aviation, maritime, and		 
railroads--and allows a passenger to complete a journey using	 
more than one mode. This testimony is based on GAO's prior work  
on intermodal transportation, especially intermodal ground	 
connections to airports, and addresses (1) the challenges	 
associated with developing and using intermodal capabilities and 
(2) potential strategies that could help public decision makers  
improve intermodal capabilities.				 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-06-855T					        
    ACCNO:   A55560						        
  TITLE:     Intermodal Transportation: Challenges to and Potential   
Strategies for Developing Improved Intermodal Capabilities	 
     DATE:   06/15/2006 
  SUBJECT:   Federal aid for transportation			 
	     Ground transportation				 
	     Intergovernmental relations			 
	     Strategic planning 				 
	     Transportation industry				 
	     Airports						 
	     Intermodal transportation				 

******************************************************************
** This file contains an ASCII representation of the text of a  **
** GAO Product.                                                 **
**                                                              **
** No attempt has been made to display graphic images, although **
** figure captions are reproduced.  Tables are included, but    **
** may not resemble those in the printed version.               **
**                                                              **
** Please see the PDF (Portable Document Format) file, when     **
** available, for a complete electronic file of the printed     **
** document's contents.                                         **
**                                                              **
******************************************************************
GAO-06-855T

                 United States Government Accountability Office

Testimony

GAO

Before the Subcommittee on Highways, Transit, and Pipelines, Committee on
          Transportation and Infrastructure, House of Representatives

For Release on Delivery Expected at 10:00 a.m. EDT Thursday, June 15, 2006

INTERMODAL TRANSPORTATION

Challenges to and Potential Strategies for Developing Improved Intermodal
                                  Capabilities

Statement of Katherine Siggerud, Director Physical Infrastructure Issues

  GAO-06-855T

INTERMODAL TRANSPORTATION

Challenges to and Potential Strategies for Developing Improved Intermodal
Capabilities

  What GAO Found

A number of financing, planning, and other challenges play significant
roles in shaping transportation investment decisions and the development
of intermodal capabilities. Significant challenges to the development of
intermodal capabilities are the lack of specific national goals and
funding programs. Federal funding is often tied to a single transportation
mode; as a result it may be difficult to finance projects, such as
intermodal projects, that do not have a source of dedicated funding. In
addition, federally funded transportation projects, including intermodal
projects, face a number of planning challenges. These challenges include
limits on the uses of federal funds, ensuring that widespread public
participation is reflected in decisions, physical and geographic land
constraints, and the difficulty coordinating among multiple jurisdictions
in transportation corridors. Finally, intermodal capabilities, while
offering benefits to mobility, may need to develop a demand over time.

Two general strategies developed from GAO's prior work would help public
decision makers improve intermodal capabilities. Both strategies are based
on a systematic framework that includes identifying national goals,
defining the federal role, determining funding approaches, and evaluating
performance. The first strategy would increase the flexibility of current
federal transportation programs to encourage a more systemwide approach to
transportation planning and development, but would leave project selection
with state and local decision makers. The second strategy is a fundamental
shift in federal transportation policy's focus on local decision making by
increasing the role of the federal government in order to develop more
integrated transportation networks. While the first strategy would most
likely lead to a continued focus on locally determined and developed
transportation projects, the second strategy could develop more integrated
transportation networks, either nationwide or along particularly congested
corridors. The second strategy could be costly, and high benefits, which
may be difficult to achieve, would be needed to justify this investment.

    Two Examples of Intermodal Connections for an Airline Passenger

      Local scenario

Home Airport shuttle Airport Flight Airport Light rail Destination

      Nationwide scenario

  Home Car Nationwide rail Airport Flight Airport Nationwide rail Destination

Source: GAO.

United States Government Accountability Office

Mr. Chairman and Members of the Subcommittee:

Mobility-that is, the movement of passengers and goods through the
transportation system-is critical to the nation's economic vitality and
the quality of life of its citizens. Mobility provides people with access
to goods, services, recreation, and jobs; provides businesses with access
to material, markets, and people; and promotes the movement of personnel
and material to meet national defense needs. However, increasing passenger
and freight travel has led to growing congestion in the nation's
transportation system, and projections of future passenger travel and
freight movement suggest that this trend is likely to continue. For
example, the number of airplane passengers using U.S. airports is expected
to grow from over 746 million in 2005 to almost 1 billion by 2015 and,
since most travelers use cars, whether privately owned or taxis, to get to
the airport, local cities and communities will face increased congestion
on their airport access roads and highways. In addition, freight traffic
on roadways has increased fourfold over the last two decades, and both
rail and highway congestion are particularly severe in urban areas where
ports for international trade are located. For example, in the Los Angeles
area, freight traffic is projected to more than double along the two
mainline freight railroads from 2003 to 2025. Increased congestion can
have a number of negative economic and social effects, including wasting
travelers' time and money, impeding efficient movement of freight, and
degrading air quality. These effects are especially problematic in areas
and transportation corridors that are already heavily congested. Such
congestion may be relieved by intermodal transportation options-that is a
system that connects the separate transportation modes and allows a
passenger or freight to complete a journey using more than one mode, such
as bus, air, rail, and waterways.

Our past work has shown that the development of intermodal capabilities
can provide a range of benefits. Those benefits include potentially
reduced travel times and costs for travelers and freight by providing
alternative transportation options and eliminating freight "chokepoints"
or bottlenecks at entrances to freight facilities, and reduced road
congestion with the potential for an associated reduction in vehicle
emissions and improved air quality. Intermodal transportation capabilities
are typically initiated by state and local transportation agencies,
including some combination of state departments of transportation, local
transportation planning bodies (i.e., metropolitan planning
organizations), airports, seaports, and local transit agencies. The
federal government's role is primarily one of funding and oversight
through separate transportation programs within the Department of
Transportation (DOT). My testimony

Page 1 GAO-06-855T

today is based on our prior work on intermodal transportation, and
addresses (1) the challenges associated with developing and using
intermodal capabilities and (2) potential strategies that could help
public decision makers improve intermodal capabilities. In particular, I
will be drawing a number of examples from our July 2005 report on ground
access and intermodal connections at airports.1 (See Related GAO
Products.)

In summary:

     o Financing, planning, and other challenges play important roles in
       shaping transportation investment decisions and the development and
       use of intermodal capabilities. Significant challenges are the lack of
       specific national goals and funding programs to develop intermodal
       capabilities. Federal funding is often tied to a single transportation
       mode; as a result it may be difficult to finance projects, such as
       intermodal projects, that do not have a source of dedicated funding.
       This may also make it difficult to use federal funds to finance the
       best transportation investment, regardless of mode, to improve
       mobility. In addition, federal transportation projects, including
       intermodal projects, face a number of planning challenges that include
       limits on the uses of federal funds, ensuring that widespread public
       participation is reflected in decisions, physical and geographic land
       constraints, and the difficulty in coordinating among multiple
       jurisdictions in transportation corridors. Finally, intermodal
       capabilities, while offering benefits to mobility, may need to develop
       a demand over time. For example, in the case of ground access to
       airports, most passengers may prefer to use private vehicles to access
       airport over transit options.
     o Two general strategies could help public decision makers improve
       intermodal options. Both of these strategies are based on a systematic
       framework that includes identifying the federal interest in and
       national goals for transportation, defining the federal role,
       determining funding approaches, and evaluating performance. In the
       first strategy, Congress would increase flexibility within current
       federal transportation programs to encourage the development of
       intermodal capabilities and transportation investments that offer the
       best mobility improvements by shifting federal transportation funding,
       which is generally focused on individual transportation modes, to a
       more systemwide approach across all modes and types of travel. This
       strategy would include having the

GAO, Intermodal Transportation: Potential Strategies Would Redefine
Federal Role in Developing Airport Intermodal Capabilities, GAO-05-727
(Washington, D.C.: July 26, 2005).

Page 2 GAO-06-855T

                                   Background

federal government develop approaches to target funding on transportation
investments that better focus on outcomes related to national goals and
promote better coordination between jurisdictions. The second strategy is
a fundamental shift in federal transportation policy's long-time focus on
state and local decisionmaking by increasing the role of the federal
government in planning and funding intermodal projects in order to develop
more integrated transportation networks, either nationwide or along
particularly congested corridors. To develop a nationwide intermodal
system, the federal government could take on a role similar to its efforts
to develop the interstate highway system. A more active federal government
role might also require additional federal funding responsibilities. For
example, if the federal government were to take a more active role in
developing airport intermodal capabilities that included enhancing or
expanding rail service or developing high-speed rail corridors, it might
also need to increase its funding role, and the role of other
beneficiaries of the service, due to its high cost.

Historically, federal transportation policy has generally focused on
individual modes rather than intermodal connections between different
modes. Federal transportation funding programs are overseen by different
modal offices within DOT-the Federal Aviation Administration (FAA),
Federal Transit Administration (FTA), Federal Railroad Administration, and
Federal Highway Administration (FHWA). No specific federal funding
programs have been established that target intermodal projects for either
passengers or freight although a few federal programs offer flexibilities
that would allow these types of projects.

Intermodal transportation refers to a system that connects the separate
transportation modes-such as mass transit systems, roads, aviation,
maritime, and railroads-and allows a passenger or freight to complete a
journey using more than one mode. For example, an efficient intermodal
capability at an airport would provide a passenger with convenient,
seamless transfer between modes; the ability to connect to an extended
transportation network; and high frequency of service among the different
modes. As shown in figure 1, an intermodal connection at an airport might
involve a passenger arriving at the airport by private shuttle service,
flying to another airport, and then transferring to local rail service2 or
a nationwide system, such as Amtrak, to reach a final destination. Similar
to airline passengers, an intermodal freight transportation system relies
on

2

Local transit rail includes commuter rail, light rail, subway systems, and
trolleys.

Page 3 GAO-06-855T

ready transport of cargo between ships and other transportation modes,
particularly highway and rail.

Figure 1: Two Examples of Intermodal Connections for an Airline Passenger

Source: GAO.

The scope and nature of intermodal passenger connections is further
illustrated by ground access to airports. In 2005, we reported that most
major U.S. airports have direct intermodal ground connections to either
local transportation systems or nationwide bus or rail networks.3
Sixtyfour of the 72 airports4 that we surveyed reported having direct
connections5 to one or more local transportation systems in their area,
such as local bus or rail service, with 26 airports reporting having both.
The most common type of public transportation system available to and from
the airport is local bus service. Sixty-four airports reported having a
direct connection to a local bus service. However, the level of bus
service varies depending on the airport. For example, Seattle-Tacoma
International Airport has five public bus routes that serve the
surrounding

3GAO-05-727.

4

We surveyed all 68 large and medium hub U.S. airports, and those small hub
airports (4 in total) that are located in the same metropolitan
statistical area as one or more large or medium hub airports.

5

We considered a transfer point (such as a bus stop or rail station) to be
a direct connection to the airport if (1) it was convenient for an average
adult with luggage to walk to the transfer point from any of the airport's
terminals; (2) the airport had an automated people mover that transports
passengers from the transfer point to any of the airport's terminals; or
(3) there was regular, fixed-route shuttle service from the transfer point
to any of the airport's terminals.

Page 4 GAO-06-855T

communities, while General Mitchell International Airport in Milwaukee has
only one route that serves the airport. Twenty-seven airports reported
having a direct connection to a local rail system, such as light rail,
commuter rail, or subway. (See fig. 2.)

  Figure 2: Major U.S. Airports with Direct Connections to Local Rail Systems

Source: GAO summary of data from 72 airports.

While most major U.S. airports are located in metropolitan areas that have
stations for nationwide transportation systems, such as Greyhound or
Amtrak, 20 airports reported having direct connections to nationwide bus
service or nationwide passenger rail service. Twelve of the 20 airports
reported having direct connections to nationwide bus service, and 14
airports reported having a direct connection to Amtrak rail service. (See
fig. 3.) All 14 airports provide shuttle service to transport passengers
to Amtrak stations that serve the metropolitan area. One of the 14
airports- Newark's Liberty International Airport-reported that passengers
could also access the Amtrak station by an automated people mover. In
addition, the accessibility of Amtrak to Newark airport has allowed
Continental

Page 5 GAO-06-855T

Airlines to establish a code share agreement with Amtrak, whereby
passengers can purchase one ticket for a journey that includes travel by
both air and rail.6 This agreement has allowed Continental Airlines to
eliminate some short-haul flights from Newark.7

Figure 3: Major U.S. Airports with Direct Connections to Amtrak's
Nationwide Rail Systems

Amtrak

National rail access by shuttle

National rail access by automated people mover

Source: GAO.

6

Code sharing refers to the practice of airlines applying their own names
and selling tickets to flights or rail service operation by other
carriers.

7

Continental officials stated that in April 2003, they reinstated limited
air service between Newark and Philadelphia because of market demand.

Page 6 GAO-06-855T

  Several Significant Challenges Affect the Development and Use of Intermodal
  Capabilities

While there is no single federal funding source for rail to airport
projects, we found that local governments, airports, and transit systems
were able to tap and package a variety of federal funds to pay for recent
rail connections to airports. These included direct appropriations, the
New Starts program for fixed guideway transit systems, two federal aid
highway categories-the Congestion Mitigation and Air Quality Improvement
Program and the Surface Transportation Program-and passenger facility
charges at airports. Appendix I describes these programs.

According to transportation research, planning officials, and our prior
work, a number of financing, planning, and other challenges play important
roles in shaping transportation investment decisions and the development
of intermodal capabilities. Significant challenges to the development of
intermodal capabilities are the lack of specific national goals and
funding programs. Federal funding is often tied to a single transportation
mode; as a result it may be difficult to finance projects, such as
intermodal projects, that do not have a source of dedicated funding.
Federal legislation8 and federal planning guidance all emphasize the goal
of establishing a systemwide, intermodal approach to addressing
transportation needs. However, the reality of the federal funding
structure-which directs most surface transportation spending to highways
and transit and is more oriented to passengers than freight- plays an
important role in shaping local transportation investment choices.9 In
addition to the focus on highways and transit over other investment
choices, we found limited instances in which investment decisions involved
direct trade-offs in choices between modes or users- such as railroad
versus highway or passenger versus freight.10

8

The Intermodal Surface Transportation Efficiency Act of 1991; the
Transportation Equity Act for the 21st Century, enacted in 1998; and the
Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy
for Users, enacted in 2005.

9

While most federal funding sources and programs are linked to highway or
transit uses, some funding flexibility between highway and transit is
allowed under programs such as the National Highway System, Surface
Transportation Program, and Congestion Mitigation and Air Quality
Improvement Program. Federal programs provide limited support for
investment in railroad infrastructure.

10

GAO, Surface Transportation: Many Factors Affect Investment Decisions,
GAO-04-744 (Washington, D.C.: June 30, 2004).

Page 7 GAO-06-855T

A significant challenge to developing certain intermodal connections is
the difficulty of securing funding within the mode-specific federal
funding structure. The cost of intermodal projects can vary widely,
depending on the complexity and scope of the project. In addition,
measuring and forecasting the benefits from individual projects can be
hard to quantify, and we found only anecdotal evidence of benefits for the
16 intermodal projects we examined.11 The costs of rail projects are
typically substantial and can include costs to construct a station, as
well as track and other infrastructure to support the rail network. Table
1 provides examples of the costs of intermodal projects at airports and
funding sources. We found that many intermodal projects at airports fit
the funding criteria for one or more federal programs focused on surface
transportation or aviation. For example, FTA's New Starts program is a
significant source of funding for intermodal capabilities at airports that
are part of a rail transit system. However, the rigorous rating process
and increasing demands for its limited funds make the New Starts program
time-intensive and competitive in nature and has made it difficult for
local transportation agencies to secure this funding, according to local
officials that we spoke with. Federal funding programs, like the New
Starts program, will contribute only a portion of the total project costs,
subject to local matching funds, which can be derived from local agencies
such as metropolitan transportation authorities, transit agencies, and
airport authorities.12 However, local transportation officials said it can
be difficult to secure local funds for intermodal projects at airports
because these agencies could potentially have different funding
priorities, making it difficult to build the unified local support
necessary to secure funding.

11

Our case study airport locations were Baltimore-Washington International,
General Mitchell International, John F. Kennedy International, La Guardia,
Los Angeles International, Metropolitan Oakland International, Miami
International, Minneapolis/St. Paul International, Newark Liberty
International, Norman Y. Mineta San Jose International, Ontario
International, Portland International, Ronald Reagan Washington National,
San Francisco International, Seattle-Tacoma International, and Washington
Dulles International. The airports were selected to provide a range of
airport sizes (medium and large), planned or existing types of intermodal
service, and geographic locations.

12

For selected New Starts projects, a maximum of 80 percent federal
contribution to total project costs can be funded, but projects that
request a maximum federal share of 60 percent of the project's total cost
receive higher priority.

Page 8 GAO-06-855T

       Table 1: Examples of Intermodal Project Costs and Funding Sources

Dollars in millions

Capital Project description costsa Funding sources

Construction of a new Amtrak rail station $6.8b  o  Two separate annual
federal appropriations adjacent to and serving Milwaukee's General  o 
Wisconsin Department of Transportation Mitchell International Airport, and
improvements to the existing rail line, which already provided service
between Milwaukee and Chicago

5.5-mile light rail line (Metropolitan Area Express) extension to existing
rail line to provide service between city center and Portland (Oregon)
International Airport

$154c  o  Tri-Met (local transit agency)

o  Airport passenger facility charges

     o City of Portland
     o Cascades Development Corporation (a private land development
       corportation)

New light rail system (Hiawatha Light Rail) providing service between
downtown Minneapolis and the Mall of America, with two stations located at
Minneapolis/St. Paul airport

$715.3d  o  New Starts

o  Congestion Mitigation and Air Quality grant

     o Hennepin County Regional Rail Authority
     o Metropolitan Airports Commission

Source: GAO analysis of interviews conducted with, and documents provided
by, airport and transportation officials.

a

Capital costs are approximations as reported by airport or local
transportation officials.

b

Amount is expressed in 2005 dollars and includes the construction of a new
building, boarding platform, canopy, parking facility, and several miles
of rail improvements, including upgraded rail technology.

c

Amount is expressed in 2001 dollars and includes engineering, design,
vehicle acquisition, and construction and system installation.

d

Amount is expressed in nominal dollars (1999-2004) and includes costs for
the engineering, design, acquisition of 24 vehicles, construction and
12-mile system installation, 17 stations, and tunnel construction to
access the two airport stations.

Additionally, intermodal capabilities at airports can be funded with
passenger facility fees, commonly referred to as PFCs.13 Local
transportation officials also described difficulties in securing the use
of PFCs. In particular, requirements that PFC funds be used for projects
on airport property, among other criteria, are seen as limiting their use
for intermodal projects. Moreover, airlines support these restrictions on
the use of PFC funds, believing that these funds are for airport
development and capacity improvements, and not ground-access projects.
However, even with this restriction, we reported in July 2005 that four
airport

13

PFCs are fees up to $4.50 paid by airport passengers, which are used to
finance airport capital improvements.

Page 9 GAO-06-855T

authorities were using PFC funds to develop or contribute to intermodal
projects at airports, as shown in table 2.

Table 2: Selected Examples of Intermodal Rail Projects Funded by Passenger
Facility Charges (PFC)

                              Dollars in millionsa

Funding amounts Location Project description from PFCs

Portland, Ore. Light rail extension and new station at Portland $43
International Airport

Newark, N.J. People mover system 1-mile connection from $357 Newark
Liberty International Airport to new Northeast Corridor rail station

New York, N.Y. People mover system 3-mile connection from $1,326 John F.
Kennedy International Airport to two transit rail stations

St. Louis, Mo. On-airport transit station at St. Louis Lambert $4 Field
International Airport

Source: GAO analysis of FAA data.

Note: These projects have been approved by FAA and airports have begun
collecting PFC funds. FAA has approved the use of PFC funds for additional
projects for which airports have not yet started collection PFC funds.

a

Funding amounts are rounded to the nearest million.

In addition to the limits on the use of federal funds, federal
transportation projects, including intermodal projects, face a number of
planning challenges including the following:

     o Decision makers must ensure that wide-ranging public participation is
       reflected in their deliberations and that their choices take into
       account numerous views. During the planning of an intermodal project,
       the lead local agency's responsibilities include soliciting public
       comment regarding the most appropriate project to select for the area.
       This public participation can introduce considerations such as quality
       of life and other issues that are difficult to quantify in making
       transportation choices. It also puts decision makers in the position
       of balancing different public agendas about funding and values.
     o The physical constraints of an area may present a challenge to
       building intermodal facilities. The development of intermodal
       capabilities at airports provides an example of this challenge. On the
       one hand, our work has found that densely populated urban areas offer
       few alternatives for expansion or new project development. On the
       other hand, it is these same densely populated urban areas where rail
       connections to airports are more

                              Page 10 GAO-06-855T

likely to generate benefits that will justify the costs, as these areas
may have high levels of congestion and larger numbers of people willing to
use public transportation to access airports as a result. For example,
since the proposed light rail line into the Minneapolis/St. Paul
International Airport crossed land owned by various federal agencies, the
process to gain the needed right-of-way was a multiagency effort that
required significant coordination, adding somewhat to the project planning
time and costs.

o  Multijurisdictional transportation corridors present special challenges
in coordinating investment decisions. Getting the cooperation of and
coordination between these different officials can make the planning and
implementation of multistate and multiregional projects difficult. For
example, during the planning of the Seattle light rail, Sound Transit
officials noted that the alignment from downtown Seattle to the
Seattle-Tacoma International Airport ran through a number of surrounding
cities and required three local cities to approve permits for the
construction of the project.

The effective use of passenger rail as an intermodal option along heavily
traveled air and highway corridors also poses challenges due to
limitations of the existing nationwide rail network. For example, Amtrak's
passenger rail network does not support air-rail service requirements
because rail lines do not go near some airports, passenger train schedules
in some parts of the country are not frequent enough to effectively link
to airline flight schedules, and transferring from air to rail poses
inconveniences that limit consumer demand. As we discussed previously,
although 14 airports reported having a direct connection to Amtrak's
passenger rail service, 1 reported that passengers could access the
station by automated people movers-others required boarding a shuttle. In
addition, although Amtrak track lines are adjacent to the Cleveland
Hopkins International Airport, Amtrak officials stated that Amtrak trains
run only twice a day along this line, which is not frequent enough to
establish a code share agreement with an airline.

Furthermore, transportation industry experts and European transportation
officials have pointed out that high-speed passenger rail, including
connections to congested airports, has provided an alternative for air
travel in short-haul markets in Europe. There has been a reduction of air
service between Paris, France, and Brussels, Belgium-a popular short
distance city pair for travelers-due, in part, to the high-speed train
service linking Paris Charles de Gaulle Airport and downtown Paris with
Brussels. In the United States, few efforts have been made to use rail
service to complement air service in this manner because, in part, the
cost

Page 11 GAO-06-855T

of establishing service is not likely to justify its benefits given that
some distances are too great for rail to provide an attractive alternative
transportation mode.

Finally, intermodal capabilities, while offering benefits to mobility, may
need to develop a demand over time. For example, the development and use
of intermodal connections at airports can be limited by the inability of
the ground connections to meet the preferences of airline passengers,
therefore, the majority of passengers still use private vehicles to access
airports even when transit service is available. Passenger preferences can
include seamless transitions from one mode to another; a simplified
process to handle baggage; transit schedules that meet consumer demands;
and clear, easy-to-follow information on accessing transportation
options-including signs at airports and information at hotels on accessing
transit to airports. In addition, passengers, particularly those traveling
with children and large amounts of luggage, may not consider using transit
or rail systems to complete their travel plans due to inconvenience.

Two General Strategies Could Help Address Intermodal Financing and 
Planning Challenges

Two general strategies could help public decision makers improve
intermodal options. These strategies are based on a systematic framework
that has the following three components:

  

o  Set national goals for the system. These goals, which would establish
what federal participation in the system is designed to
accomplish, should be specific and measurable.

 

     o Clearly define the federal role relative to the roles of state and
       local transportation agencies and the private sector. The federal
       government is one of many stakeholders involved in the development of
       intermodal capabilities. This component is important to help ensure
       that the federal role supplements and enhances the participation of
       other stakeholders and appropriately balances public investment when
       the benefits flow in part to the private sector.
     o Determine which funding approaches-such as alternatives to investment
       in new infrastructure and those approaches that reward projects that
       advance national/federal goals-will maximize the impact of any federal
       investment. This component can help expand the ability to leverage
       funding resources and promote shared responsibilities. Given the
       current budgetary environment, and the long-range fiscal challenges
       confronting

Page 12 GAO-06-855T

the country, substantial increases in funding for transportation projects
will require a high level of justification.

In addition, either strategy would be enhanced by a process for evaluating
performance periodically to determine if the anticipated benefits from
federally-funded projects are accruing as expected.

In the first strategy, Congress could encourage the development of
intermodal capabilities by increasing the flexibility with current federal
transportation programs, which are largely focused on individual
transportation modes, to a more systemwide approach across all modes and
types of travel. To promote intermodal development, the federal government
could consider several alternatives for transportation planning and
funding that might better focus on these outcomes and promote better
coordination between jurisdictions. These alternatives include the
following:

     o Increasing the flexibility of federal transportation funding programs
       to help break down the current funding stovepipes.
     o Applying different federal matching criteria for different types of
       expenditures in order to provide a higher level of federal matching
       for projects that reflect federal priorities.
     o Establishing performance-oriented funding or a reward-based system
       that would favor those entities that address the national interest and
       meet established intermodal goals.
     o Expanding support for alternative financing mechanisms-such as
       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 intermodal capabilities-to access new sources
       of capital and stimulate additional investment in intermodal
       capabilities.
     o Aligning incentives for planning agencies to adopt best practices and
       to achieve expectations.

While this strategy would involve changes in federal transportation
policy, it would most likely not involve a major shift in the federal
role, which would continue to be focused on funding and oversight of
locally determined and developed transportation projects. However, since
this strategy would include the goal of establishing a more systemwide
approach to transportation planning, the federal government would need

Page 13 GAO-06-855T

to determine the scope of its involvement in encouraging such an approach.

The second strategy is a fundamental shift in federal transportation
policy's long-time encouragement of state and local decision making by
increasing the role of the federal government in planning and funding
intermodal projects in order to develop more integrated intermodal
networks, either nationwide or along particularly congested corridors.
This strategy could be similar to the strategy the federal government used
in the 1950s to develop the interstate highway system. Under this
strategy, Congress could establish national goals for the development of
intermodal capacities that could include not only the development of
facilities and connections, but also the development of a supporting
transportation network to improve the ability of either passengers or
freight companies to reach their final destination. The role of the
federal government would change, with the federal government taking a more
active role in setting priorities and planning of intermodal connections
between the individual transportation modes. Similar to the development of
the interstate highway system, the federal government's role could include
providing project specific oversight, laying out routes, overseeing
construction, and ensuring that the system is adequately maintained.

For the federal government to take a more active role in developing
intermodal capabilities, it might also need to take on additional funding
responsibilities. An example would be if a federal policy were established
to develop a transportation system that promoted connections between
airports and high-speed rail networks, as in Europe.14 To accomplish
improved air-rail connections, the federal government would have to
increase its funding role due to the high costs of enhancing or expanding
rail service or developing high-speed rail corridors or tap others that
would benefit from such service, including the region, its airport, and
businesses associated with the airport as possible funding sources. The
full costs of this policy would be dependent on how integrated and
expansive such an intermodal network would be and whether it would include
additional high-speed rail or be focused on conventional passenger rail
service. We have shown in the past that both of these choices are

In several cases, European national governments have established policies
to reduce the number of short-haul flights at their major airports and
have supported these policies by funding high-speed rail infrastructure.

Page 14 GAO-06-855T

  Concluding Observations

costly and increased federal involvement could require the implementation
of a dedicated funding source.

However, even if a revenue source is established, this new funding would
face many of the same revenue challenges that other transportation
systems, such as highways, are facing now as revenues sources are eroded.
Additionally, given the high costs of this strategy, benefits high enough
to justify investment in intermodal facilities would likely be anticipated
in a limited number of places.

Increasing passenger travel and freight movement have led to growing
congestion, and decision makers face the challenge of maintaining the
nation's mobility while preventing congestion from overwhelming the
transportation system. Successfully addressing mobility needs in the face
of growing congestion requires both strategic and intermodal approaches.
However, the current system for planning and financing transportation is
not well-suited to advancing intermodal transportation projects- including
both passenger and freight transportation-calling for fundamental changes
that use a broader, systemwide approach to transportation investment
decisions. A federal strategy of encouraging a more systemwide approach to
transportation planning, including alternative funding mechanisms, could
encourage transportation officials to consider the development of
additional intermodal connections in the context of other transportation
investment decisions. At the same time, it is clear that more quantitative
evaluations of the costs and benefits of intermodal capabilities could
help to better inform state and local, as well as federal decision makers,
as they attempt to determine which projects to develop with their limited
resources.

Mr. Chairman, and members of the Subcommittee, this concludes my prepared
statement. I would be pleased to answer any questions you or other members
of the Subcommittee might have.

  GAO Contact and Acknowledgments
  
 For information on this testimony, please contact Katherine Siggerud at 
(202) 512-2834 or [email protected]. Individuals making key Staff
contributions to this testimony are Teresa Spisak and Tim Schindler.

  

Page 15 GAO-06-855T

Appendix I: Federal Programs That Can Fund Intermodal Projects at Airports

Program          Description                      Example of use at        
                                                     airports                 
                    Selects worthy fixed guideway    Bay Area Rapid Transit   
New Starts (FTA) transit projects for             extension south of the   
                                                     San                      
                    funding by congressional         Francisco International  
                    appropriations. Projects         Airport into San Mateo   
                                                     County                   
                    can include heavy, light, and    New light rail system    
                    commuter rail and certain bus    (Hiawatha Light Rail)    
                    transit projects (such as bus    providing service        
                    rapid transit). To be eligible   between downtown         
                    for funding, projects must,      Minneapolis and the Mall 
                    among other things, be justified of America, with two     
                    based on a comprehensive review  stations located at      
                    of mobility improvements,        Minneapolis/St. Paul     
                                                     International Airport    
                    environmental benefits, cost     
                    effectiveness, and               
                    operating efficiencies, as well  
                    as being supported by            
                    an acceptable degree of local    
                    financial commitment.            
                    The program funding match is at  
                    most 80 percent                  
                    federal and 20 percent local.a   
                    In fiscal year 2006, this        
                    program was funded at $1.2       
                    billion.                         
Congestion       Funds transportation projects    Hiawatha Light Rail      
                    and programs in order            service between downtown 
Mitigation and   to reduce transportation-related Minneapolis and the      
Air              emissions in                     Minneapolis/St. Paul     
                                                     International            
Quality          localities with poor air         Airport                  
Improvement      quality. To be eligible for      
Program (joint   funding, projects must be        
FHWA and FTA)    transportation related, in       
                    nonattainment or maintenance     
                    areas, b and reduce              
                    transportation-related           
                    emissions. The program           
                    funding match is 80 percent      
                    federal and 20 percent           
                    local. In fiscal year 2006, this 
                    program was funded at            
                    $1.7 billion.                    

Surface        Provides funding to states and   Miami Intermodal Center at 
                  localities for projects          the Miami International    
Transportation on any federal-aid               Airport                    
                  highway-including transit        
                  capital                          
Program (FHWA) projects and local and           
                  nationwide bus terminals and     
                  facilities. The program funding  
                  match is 80 percent              
                  federal and 20 percent local. In 
                  fiscal year 2006, this           
                  program was funded at $6.3       
                  billion.                         

Transportation Infrastructure Finance and Innovation Act of 1998 (joint
FHWA/FTA) Provides federal credit assistance for surface transportation
projects. Project sponsors may include public, private, state, or local
entities. Projects eligible for federal assistance through existing
surface transportation programs, including passenger bus and rail
facilities, are eligible for credit assistance under this program. The
amount of federal credit assistance may not exceed 33 percent of the
reasonably anticipated project cost. In fiscal year 2006, this program was
funded at $130 million.

Miami Intermodal Center at the Miami International Airport

Airport Improvement Program (FAA)

Provides grants to airports for planning and development projects. The
program is funded, in part, by aviation user excise taxes, which are
deposited into the Airport and Airway Trust Fund. In terms of promoting
intermodal capabilities, these funds may be used for access roads that are
on airport property, airport owned, and exclusively serve airport traffic.
The program funding match is 75 to 90 percent federal based on the number
of enplanementsc at the airport and the remainder is from local sources.
In fiscal year 2006, this program was funded at $3.5 billion.

            We found no example of its use for intermodal projects.

                              Page 16 GAO-06-855T

                 Program Description Example of use at airports

Passenger facility charges (FAA) Authorizes commercial service airports to
charge passengers a boarding fee-commonly called a passenger facility
charge-of up to $4.50, after obtaining FAA approval. The fees are used by
the airports to fund FAA-approved projects that enhance safety, security,
or capacity; reduce noise; or increase air carrier competition. In
calendar year 2005, $2.4 billion in fees were collected under this
program.

AirTrain automated people mover at New York's John

F. Kennedy International Airport and Newark's Liberty International
Airport

Light rail extension and new station at Portland International Airport

Source: GAO analysis of DOT information.

a

When evaluating New Starts proposals, FTA places greater priority on
projects that have a greater local matching share. Competitive New Starts
proposals often have a 40-50 percent local match.

b

Federal air quality standards exist for certain common air pollutants
(known as criteria pollutants). Geographic areas that have levels of a
criteria pollutant above those allowed by the standards are called
nonattainment areas. Areas that did not meet the standards for a criteria
pollutant in the past but have reached attainment are known as maintenance
areas.

C

An enplanement is defined as a passenger boarding a flight. Enplanements
include passengers boarding the first flight of their trip, as well as
passengers who board after connecting from another flight.

                              Page 17 GAO-06-855T

Related GAO Products

Freight Transportation: Short Sea Shipping Option Shows Importance of
Systematic Approach to Public Investment Decisions. GAO-05-768.
Washington, D.C.: July 29, 2005.

Intermodal Transportation: Potential Strategies Would Redefine Federal
Role in Developing Airport Intermodal Capabilities. GAO-05-727.
Washington, D.C.: July 26, 2005.

Highway and Transit Investments: Options for Improving Information on
Projects' Benefits and Costs and Increasing Accountability for Results.
GAO-05-172. Washington, D.C.: January 24, 2005.

Surface Transportation: Many Factors Affect Investment Decisions.
GAO-04-744. Washington, D.C.: June 30, 2004.

Freight Transportation: Strategies Needed to Address Planning and
Financing Limitations. GAO-04-165. Washington, D.C.: December 19, 2003.

Marine Transportation: Federal Financing and a Framework for
Infrastructure Investments. GAO-02-1033. Washington, D.C.: September 9,
2002.

Page 18 GAO-06-855T

  (540131)

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
work may contain copyrighted images or other material, permission from the
copyright holder may be necessary if you wish to reproduce this material
separately.

  GAO's Mission

The Government Accountability Office, the audit, evaluation and
investigative arm of Congress, exists to support Congress in meeting its
constitutional responsibilities and to help improve the performance and
accountability of the federal government for the American people. GAO
examines the use of public funds; evaluates federal programs and policies;
and provides analyses, recommendations, and other assistance to help
Congress make informed oversight, policy, and funding decisions. GAO's
commitment to good government is reflected in its core values of
accountability, integrity, and reliability.

The fastest and easiest way to obtain copies of GAO documents at no cost
is through GAO's Web site (www.gao.gov). Each weekday, GAO posts GAO
Reports and newly released reports, testimony, and correspondence on its
Web site. To have GAO e-mail you a list of newly posted products every afternoon, go to
www.gao.gov and select "Subscribe to Updates."

                             Order by Mail or Phone

The first copy of each printed report is free. Additional copies are $2
each. A check or money order should be made out to the Superintendent of
Documents. GAO also accepts VISA and Mastercard. Orders for 100 or more
copies mailed to a single address are discounted 25 percent. Orders should
be sent to:

U.S. Government Accountability Office 441 G Street NW, Room LM Washington,
D.C. 20548

To order by Phone: Voice: (202) 512-6000 TDD: (202) 512-2537 Fax: (202)
512-6061

  To Report Fraud, Contact:

Web site: www.gao.gov/fraudnet/fraudnet.htm

  E-mail: [email protected]

Federal Programs Automated answering system: (800) 424-5454 or (202)
512-7470

Gloria Jarmon, Managing Director, [email protected] (202) 512-4400 U.S.
Government Accountability Office, 441 G Street NW, Room 7125 Relations
Washington, D.C. 20548

Public Affairs
Paul Anderson, Managing Director, [email protected] (202) 512-4800
U.S. Government Accountability Office, 441 G Street NW, Room 7149
Washington, D.C. 20548

    PRINTED ON

RECYCLED PAPER
*** End of document. ***