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Report to the Committee on Environment and Public Works, U.S. Senate:

December 2003:

FREIGHT TRANSPORTATION:

Strategies Needed to Address Planning and Financing Limitations:

GAO-04-165:

GAO Highlights:

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

Why GAO Did This Study:

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.

What GAO Found:

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 
congestion-related 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 system-wide, 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.

What GAO Recommends:

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 heckerj@gao.gov.

[End of section]

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: 

Appendixes:

Appendix I: Objectives, Scope, and Methodology: 

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

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

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

Appendix V: Assessment of Stakeholder Proposals: 

Appendix VI: GAO Contacts and Staff Acknowledgments: 

GAO Contacts: 

Staff Acknowledgments: 

Tables: 

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

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

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

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

Table 5: Description of Nonbuild Alternatives and Relevant Stakeholder 
Proposals: 

Table 6: Coverage of Strategy Elements in the Most Extensive 
Reauthorization Proposals: 

Figures: 

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

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

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

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

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

Figure 6: Examples of Infrastructure with Limited Expansion Potential: 

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

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

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

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: 

Letter: 

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.[Footnote 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.[Footnote 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 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 30-minute 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.[Footnote 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 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 state[Footnote 4]--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 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 truck-related 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 public-private 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.[Footnote 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.[Footnote 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 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:

[See PDF for image]

[End of figure]

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.[Footnote 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:

[See PDF for image]

[End of figure]

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 times[Footnote 8] 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.[Footnote 
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.):

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

[See PDF for image]

[End of figure]

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 facilities[Footnote 10] 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 System[Footnote 11] (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.[Footnote 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 
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.[Footnote 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.

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

[See PDF for image]

[End of figure]

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:

[See PDF for image]

[End of figure]

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:

[See PDF for image]

[End of figure]

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.[Footnote 14]

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

[See PDF for image]

[End of figure]

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.[Footnote 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.[Footnote 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 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.[Footnote 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 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.[Footnote 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.):

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

[See PDF for image]

[End of figure]

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.[Footnote 
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 
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 Consistently Applying Sound Analytical 
Methods and Evaluation Approaches:

Our past work on best practices for capital decision-making[Footnote 
22] found that establishing a decision-making framework that is 
supported by proper financial, technical, and risk analysis is a 
critical factor in making sound 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.

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

Type of evaluation: Prospective evaluation; 

Key elements: 

* 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; 

* 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; 

* 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; 

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

Type of evaluation: Retrospective evaluation; 

Key elements: 

* A retrospective evaluation of completed projects should be 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.

[End of table]

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, FHWA[Footnote 
23] said that planners lack the tools to evaluate freight projects with 
nonfreight projects. TRB studies[Footnote 24] 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.[Footnote 25] 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 cross-
modal 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 Sufficient Data to Evaluate Freight 
Investment Decisions:

Transportation studies by us and by others have found that sufficient 
data and information systems are essential to make sound 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:

Location: Charleston; 

Examples of types of data used: Freight Analysis Framework (FAF)[A], 
census data, commodity flow data, travel demand model; 

Key limitations cited by planners: 

* Accessible data are generalized to state and national level; 
specific localized data is not available; 
* Some of the data from private companies are confidential and 
proprietary and, therefore, lack sufficient detail for accurate 
freight planning purposes.

Location: Houston; 

Examples of types of data used: A variety of national, state, and 
local data that includes freight flows, emissions, vehicle miles 
traveled, truck counts, purchased data from consultants; 

Key limitations cited by planners: 

* The validity of some of the national, state, and local data are 
questionable, and it is difficult to get the data in detail at the 
local level; 
* Data purchased from consultants are expensive.

Location: Los Angeles/Long Beach; 

Examples of types of data used: A variety of national and state data 
including commodity flow data; demand model that incorporates heavy 
trucks included in regional transportation plan; 

Key limitations cited by planners: 

* Useful freight data are generally unavailable; 

* Available commodity flow data are not detailed enough (i.e., county 
or by zip code) for accurate freight planning.

Location: New Jersey; 

Examples of types of data used: National data such as the FAF, some 
state data, in-house modeling, purchased data from a consultant; 

Key limitations cited by planners: 

* Modeling data are available, but results are often unreliable 
because of questionable assumptions on routes for trucks; 
* Reconciling similar data from different sources is also a problem; 
combining data and developing new data sets is time consuming and 
resource intensive.

Location: New York; 

Examples of types of data used: Commodity flows and volumes, origin 
and destination data, truck counts; 

Key limitations cited by planners: 

* Proprietary issues make it difficult to obtain detailed data that 
are useful; 
* Often there is a time lag in the data received, and the data may not 
necessarily reflect the current environment.

Location: Oakland; 

Examples of types of data used: State and local data, travel demand 
models, roadway monitoring including car and truck counts; 

Key limitations cited by planners: 

* There is a need for more interstate import and export data and more 
freight-specific data.

Location: Seattle/Tacoma; 

Examples of types of data used: FAF and Bureau of Transportation 
Statistics data, marine cargo forecasting, modeling data, state-level 
data, trucking data; 

Key limitations cited by planners: 

* There is a need for better information on trip reliability or 
predictability. Metropolitan traffic models do a poor job of 
reflecting "real world" traffic delays. 

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

[A] FHWA has created the FAF. This framework was developed from various 
government and private-sector databases including the commodity flow 
database and the highway capacity dataset.

[End of table]

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.[Footnote 26] 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 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 Sound Evaluation Procedures Have Been 
Limited:

The variation in local planning evaluation approaches and data 
gathering among MPOs is not surprising given the wide latitude that 
planning jurisdictions have under the law and the limited guidance 
provided at the federal level by DOT and its various transportation 
agencies. Under TEA-21 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.[Footnote 27] Almost all of the officials said they wanted 
more help in obtaining sufficient data for 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.[Footnote 28]

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.[Footnote 29] Table 3 shows the federal 
programs established in ISTEA and TEA-21 that are available as funding 
sources for freight projects.

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

Funding source: Congestion Mitigation and Air Quality Program (CMAQ); 

Applicability: 
* Can be used to fund a wide range of freight improvement projects, 
including rail and other nonhighway transportation projects; 
* Project must reduce carbon monoxide or other specified air 
pollutants in a nonattainment or maintenance area as specified in the 
Clean Air Act; 
* Freight projects are required to show reduced air emissions.

Funding source: Surface Transportation Program (STP); 

Applicability: 
* Can be used for highway-related freight projects, such as roadway 
improvements to facilitate truck-freight movement or accommodate other 
modes, raising bridges, at-grade rail separations, and improvements to 
intermodal connectors; 
* Project must be related to federal-aid highway system.

Funding source: National Highway System (NHS); 

Applicability: 
* Can be used to improve intermodal connectors; 
* Project must be identified as a NHS priority highway or a connector 
linking the NHS to key intermodal facilities.

Funding source: National Corridor Planning and Development Program and 
Coordinated Border Infrastructure Program (Corridors and Borders); 

 Applicability: 
* Can be used to fund projects related to planning and construction on 
major corridors that have been identified; 
* These programs are oversubscribed, and much of the funding is 
allocated to congressionally designated projects.

Funding source: Transportation Infrastructure Finance and Innovation 
Act (TIFIA); 

Applicability: 
* Can be used for publicly owned, intermodal, surface freight 
transportation facilities (other than seaports and airports) located 
adjacent to the NHS; 
* To qualify for assistance, projects must be valued at over $100 
million.

Funding source: Rail Revitalization and Improvement Funding Program 
(RRIF); 

Applicability: 
* Targeted specifically at providing credit for rail infrastructure 
and equipment; 
* 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.

[End of table]

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.[Footnote 30] 
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 nonattainment[Footnote 31] 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,[Footnote 32] 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, 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:

[See PDF for image]

[End of figure]

The administration and system stakeholders have developed a variety of 
reauthorization proposals to address the planning and financing 
limitations.[Footnote 33] (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 
performance-based 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:

Our past work has shown that planning should be viewed from a 
systemwide perspective.[Footnote 34] 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.

Coordination Across Transportation Modes and Jurisdictions:

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 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 cross-jurisdictional 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 cross-jurisdictional 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.[Footnote 35] 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.[Footnote 36] 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 TEA-21 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 Stakeholders Are Effectively Involved:

Since a systemwide approach to transportation planning will require 
more focus on issues that cross jurisdictions, securing the 
participation of the 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.

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.[Footnote 37] 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.[Footnote 38] This program would 
require states to designate a freight transportation coordinator 
responsible for fostering 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 Approaches and Collecting Sufficient Data:

As part of a systemwide approach to planning, standard evaluation 
methods and sufficient data will also be needed to support public 
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.[Footnote 39] 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 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:

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,[Footnote 40] 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.

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

Transportation experts generally agree that determining the appropriate 
scope of government involvement and level of subsidization in freight-
related 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.

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, cost-benefit 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.[Footnote 41] 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.[Footnote 42] 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-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)."[Footnote 43] 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 for Existing Federal Programs:

A concern voiced by national stakeholder groups and raised through our 
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 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: Administration; 

Proposal: 
* 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; 
* Expands the types of private activities that can be financed with 
tax-exempt private activity bonds to include surface freight transfer 
facilities; 
* Expands the eligibility of the Transportation Infrastructure Finance 
and Innovation Act to include public or private freight rail 
facilities and intermodal freight transfer facilities. 

Stakeholder: Freight Stakeholders Coalition; 

Proposal: 
* Expands eligibility guidelines by dedicating funds for National 
Highway System connectors and expanding the Corridors and Borders 
Program to include gateways. 

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

[End of table]

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 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.

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:

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 tax-exempt private 
activity bonds to include freight-related projects.[Footnote 44] 
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.[Footnote 45] 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.

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.

* 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.[Footnote 46] 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.

* 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.[Footnote 47] A 
number of 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 high-occupancy 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.[Footnote 48] 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: Increased maintenance and rehabilitation; 
Description: 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; Examples of 
proposals: 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.

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

Type of alternative: Developing and using new technology; Description: 
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; Examples of 
proposals: 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.

[End of table]

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.

* 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.[Footnote 49] 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.

* 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 
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.

* 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.[Footnote 
50] 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 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 freight-related 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 Executive Action:

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

* 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.

* 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 [Hyperlink, http://www.gao.gov] http://
www.gao.gov.

Signed by:

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

JayEtta Z. Hecker: 
Director, Physical Infrastructure:

Signed by JayEtta Z. Hecker: 

[End of section]

Appendixes: 

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 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:

[End of section]

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 ˝ 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 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 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.

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.

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.

[End of section]

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.

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.

[End of section]

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;[Footnote 51] (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 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 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)[Footnote 52] 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.

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;[Footnote 53] 
(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 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.

[End of section]

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, a "Yes" 
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:

Reauthorization proposal: Administration's 2003 surface transportation 
reauthorization proposal; 
Elements of planning strategy: Coordination: Yes; 
Elements of planning strategy: Private involvement: Yes; 
Elements of planning strategy: Data and tools: Yes; 
Elements of financing strategy: Expand eligibility: Yes; 
Elements of financing strategy: Alternative finance: Yes; 
Elements of financing strategy: Nonbuild tools: Yes.

Reauthorization proposal: Freight Stakeholders Coalition; 
Elements of planning strategy: Coordination: Yes; 
Elements of planning strategy: Private involvement: Yes; 
Elements of planning strategy: Data and tools: No; 
Elements of financing strategy: Expand eligibility: Yes; 
Elements of financing strategy: Alternative finance: Yes; 
Elements of financing strategy: Nonbuild tools: No.

Reauthorization proposal: American Association of State Highway and 
Transportation Officials; 
Elements of planning strategy: Coordination: No; 
Elements of planning strategy: Private involvement: Yes; 
Elements of planning strategy: Data and tools: No; 
Elements of financing strategy: Expand eligibility: Yes; 
Elements of financing strategy: Alternative finance: Yes; 
Elements of financing strategy: Nonbuild tools: No.

Reauthorization proposal: Association of American Railroads; 
Elements of planning strategy: Coordination: No; 
Elements of planning strategy: Private involvement: No; 
Elements of planning strategy: Data and tools: No; 
Elements of financing strategy: Expand eligibility: Yes; 
Elements of financing strategy: Alternative finance: Yes; 
Elements of financing strategy: Nonbuild tools: No.

Reauthorization proposal: American Trucking Associations; 
Elements of planning strategy: Coordination: Yes; 
Elements of planning strategy: Private involvement: Yes; 
Elements of planning strategy: Data and tools: No; 
Elements of financing strategy: Expand eligibility: No; 
Elements of financing strategy: Alternative finance: No; 
Elements of financing strategy: Nonbuild tools: Yes.

Reauthorization proposal: Association of Metropolitan Planning 
Organizations; 
Elements of planning strategy: Coordination: No; 
Elements of planning strategy: Private involvement: No; 
Elements of planning strategy: Data and tools: Yes; 
Elements of financing strategy: Expand eligibility: Yes; 
Elements of financing strategy: Alternative finance: Yes; 
Elements of financing strategy: Nonbuild tools: Yes.

Reauthorization proposal: American Road and Transportation Builders 
Association; 
Elements of planning strategy: Coordination: No; 
Elements of planning strategy: Private involvement: No; 
Elements of planning strategy: Data and tools: No; 
Elements of financing strategy: Expand eligibility: No; 
Elements of financing strategy: Alternative finance: Yes; 
Elements of financing strategy: Nonbuild tools: Yes. 

Source: GAO analysis of selected system stakeholder reauthorization 
proposals.

[End of table]

[End of section]

Appendix VI: GAO Contacts and Staff Acknowledgments:

GAO Contacts:

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

Staff Acknowledgments:

In addition to those individuals named above, Jack Burriesci, Jay 
Cherlow, Tom Collis, Sarah Eckenrod, David Hudson, Elizabeth McNally, 
Albert Schmidt, Sharon Silas, Stan Stenerson, and Stacey Thompson made 
key contributions to this report.

(544058):

FOOTNOTES

[1] The 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.

[2] U.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).

[3] For 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.

[4] Through 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.

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

[6] According 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.

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

[8] Delay 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.

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

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

[11] The 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.

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

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

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

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

[16] Previous GAO studies on this issue include U.S. General Accounting 
Office, Transportation Security: Federal Action Needed to Enhance 
Security Efforts, GAO-03-1154T (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-03-1155T (Washington, D.C.: Sept. 9, 2003).

[17] Federal 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).

[18] Federal 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.

[19] Federal 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). 

[20] Federal 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).

[21] Transportation 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.

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

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

[24] 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).

[25] This 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 
project-level, 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. 

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

[27] For 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.

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

[29] U.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).

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

[31] EPA 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.

[32] GAO-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). 

[33] National 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.

[34] GAO-02-775.

[35] Title VI, Section 6001, subsection 5203(e)(4).

[36] Title I, Section 1806(f)(1).

[37] The 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.

[38] Title I, section 1205.

[39] Title I, Section 1503(i)(3)(A).

[40] Speech 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."

[41] 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).

[42] According 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.

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

[44] Title IX, Section 9004.

[45] GAO-02-1126T.

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

[47] GAO-03-735T.

[48] Tolling 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.

[49] Transportation 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.

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

[51] The 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.

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

[53] The 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.

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