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entitled 'Federal-Aid Highways: Federal Requirements for Highways May 
Influence Funding Decisions and Create Challenges, but Benefits and 
Costs Are Not Tracked' which was released on December 12, 2008.

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Report to Congressional Requesters: 

United States Government Accountability Office: 
GAO: 

December 2008: 

Federal-Aid Highways: 

Federal Requirements for Highways May Influence Funding Decisions and 
Create Challenges, but Benefits and Costs Are Not Tracked: 

GAO-09-36: 

GAO Highlights: 

Highlights of GAO-09-36, a report to congressional requesters. 

Why GAO Did This Study: 

As highway congestion continues to be a problem in many areas, states 
are looking to construct or expand highway projects. When a state 
department of transportation (DOT) receives federal funding for highway 
projects from the Federal Highway Administration (FHWA), the projects 
must comply with the National Environmental Policy Act (NEPA), the 
Davis-Bacon prevailing wage requirement, the Disadvantaged Business 
Enterprise (DBE) program, and the Buy America program. While complying 
with these requirements, states must use limited transportation dollars 
efficiently. As requested, GAO addressed (1) the types of benefits and 
costs associated with these requirements for federal-aid highway 
projects; (2) the influence of these federal requirements on states’ 
decisions to use nonfederal or federal funds for highway projects; and 
(3) the challenges associated with the federal requirements and 
strategies used or proposed to address the challenges. To complete this 
work, GAO reviewed 30 studies, surveyed DOTs in all states and the 
District of Columbia, and interviewed transportation officials and 
other stakeholders. 

What GAO Found: 

Several of the studies GAO reviewed describe the benefits of 
environmental requirements for highway projects, such as better 
protection for wetlands, but none attempted to quantify these benefits. 
Some studies quantified certain types of environmental costs, such as 
costs for administering NEPA. In general, however, quantitative 
information on environmental benefits and costs is limited because 
states do not generally track such information. Several studies 
attempted to quantify the benefits and costs of the Davis-Bacon 
prevailing wage requirement; however, these studies did not focus on 
transportation projects specifically. Furthermore, while the studies 
reviewed did not identify the benefits of the DBE program, 
transportation officials identified some benefits of the program, such 
as providing greater opportunities for DBE firms. One study we reviewed 
identified the benefits of the Buy America program, including 
protecting against unfair competition from foreign firms. The studies 
reviewed also identified, and in some cases quantified, the costs of 
the DBE and Buy America programs, including administrative costs and 
the use of higher priced iron and steel in projects. 

Of the 51 state DOTs GAO surveyed, 39 reported that, in the past 10 
years, federal requirements had influenced their decision to use 
nonfederal funds for highway projects that were eligible for federal 
aid. Thirty-three of these state DOTs reported that NEPA factored into 
their decision to use nonfederal funds, while the other three 
requirements GAO reviewed were a factor only in a few states. State 
officials said that they use nonfederal funds for certain projects to 
avoid project delays or costs associated with the federal requirements 
or because of other factors, such as requirements imposed by a state 
legislature. A state’s funding decision may depend on whether the state 
has requirements similar to these federal requirements. The decision 
may also take into consideration the availability of nonfederal and 
federal funds. For example, officials from one state said that they 
have limited nonfederal funds available, and as a result, like other 
states GAO interviewed, rely on the federal funds to finance their 
highway projects. 

According to transportation officials and contractors, administrative 
tasks associated with the federal requirements pose challenges. 

For example, analyzing impacts and demonstrating compliance with NEPA 
requires extensive paperwork and documentation. State officials also 
said that coordinating with multiple government agencies on 
environmental reviews is challenging, in part because these agencies 
may have competing interests. Furthermore, according to state DOTs, 
some provisions of the federal requirements may be outdated. For 
example, the $2,500 regulatory cost threshold for compliance with the 
Buy America program for purchasing domestic steel and $750,000 
regulatory personal net worth ceiling of the DBE program have not been 
updated since 1983 and 1999, respectively. All of these challenges may 
cause delays and increase project costs. Some government agencies have 
implemented strategies to address these challenges and these strategies 
have had varied success in decreasing project costs and delays. 

What GAO Recommends: 

The Department of Transportation should re-evaluate the Buy America 
threshold and the DBE personal net worth ceiling, and modify them, if 
necessary. The Department of Transportation provided technical comments 
on the report, but took no position on the recommendation. 

To view the full product, including the scope and methodology, click on 
[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-09-36]. For more 
information, contact David J. Wise at (202) 512-2834 or wised@gao.gov. 

[End of section] 

Contents: 

Letter: 

Results in Brief: 

Background: 

Several Types of Benefits and Costs Are Associated with Federal 
Requirements for Highway Projects, but Quantitative Estimates Are 
Limited: 

Federal Requirements, among Other Factors, Influence State Funding 
Decisions: 

Government Agencies and Contractors Face Challenges Associated with 
Federal Requirements, and Some Are Using Strategies to Address These 
Challenges: 

Conclusions: 

Recommendations for Executive Action: 

Agency Comments and Our Evaluation: 

Appendix I: Objectives, Scope, and Methodology: 

Appendix II: GAO Survey of State Departments of Transportation: 

Appendix III: Strategies Used or Proposed by Federal and State Agencies 
to Address Challenges Associated with Federal Requirements: 

Appendix IV: GAO Contact and Staff Acknowledgments: 

Figures: 

Figure 1: Typical Amount of Time Involved in Planning, Approving, and 
Building a Major New Highway Project: 

Figure 2: Percentage of States Using Nonfederal Funds for Highway 
Projects because of the Federal Requirements, and the Requirements that 
Factored into States' Decisions: 

Figure 3: Median Times, in Months, Taken to Complete an Environmental 
Impact Statement (EIS) or an Environmental Assessment (EA) for Federal- 
Aid Highway Projects, Fiscal Years 2003 to 2008: 

Abbreviations: 

AASHTO: American Association of State Highway and Transportation 
Officials: 

ACHP: Advisory Council on Historic Preservation: 

DBE: Disadvantaged Business Enterprise: 

DOL: Department of Labor: 

DOT: Department of Transportation: 

EA: environmental assessment: 

EDTS: Environmental Document Tracking System: 

EIS: environmental impact statement: 

Environment VFG: Vital Few Environmental Streamlining and Stewardship 
Goal: 

EPA: Environmental Protection Agency: 

ETDM: Efficient Transportation Decision Making: 

FHWA: Federal Highway Administration: 

ICC: Inter-County Connector: 

MPO: metropolitan planning organization: 

NCHRP: National Cooperative Highway Research Program: 

NEPA: National Environmental Policy Act: 

NPDES: National Pollutant Discharge Elimination System: 

SAFETEA-LU: Safe, Accountable, Flexible, Efficient, Transportation 
Equity Act: A Legacy for Users: 

SBA: Small Business Administration: 

SHPO: State Historic Preservation Office: 

SHRP2: Strategic Highway Research Program 2: 

USACE: U.S. Army Corps of Engineers: 

[End of section] 

United States Government Accountability Office:
Washington, DC 20548: 

December 12, 2008: 

The Honorable Tom Davis: 
Ranking Member: 
Committee on Oversight and Government Reform: 
House of Representatives: 

The Honorable Bill Sali: 
House of Representatives: 

The nation's highways are critical not only to mobility--the free flow 
of passengers and goods through the transportation system--but also to 
sustaining America's economic growth. The growth of the U.S. economy 
will depend, in part, on the soundness and adequacy of the nation's 
transportation system. As demand for and congestion of our highways is 
increasing, states and localities are proposing highway construction or 
expansion projects, yet transportation dollars are limited. Federal, 
state, and local governments are facing financing challenges, and the 
future of the Highway Trust Fund--which supports highway construction 
and maintenance, highway safety, and transit--is uncertain. 
Consequently, using limited transportation dollars as efficiently as 
possible will be critical. 

The United States has about 4 million miles of roads, including 47,000 
miles of interstate highways. Most of the nation's roads and highways 
are not owned by the federal government but rather by state and local 
governments. Since Congress passed the Federal-Aid Road Act in 1916, 
the federal government has supported states' investment in highway 
construction, and in 1956, Congress established the Highway Trust Fund, 
which supports investment in highway construction via a grant-based 
cost reimbursement funding strategy. Under this strategy, the federal 
government reimburses states for a portion of their highway expenses 
after states incur the expenses. Generally, the federal share of 
expenses for a federal-aid highway project is 80 percent, while the 
state and local share is 20 percent. States rely on federal funding to 
construct, rehabilitate, and maintain their highway and road systems. 

When a state accepts federal funding for a highway project, it is 
subject to several federal requirements. For example, states must 
ensure that: 

* projects go through an environmental review process, established 
under the National Environmental Policy Act (NEPA); 

* highway contractors pay their employees at least the Davis-Bacon 
prevailing wage, in accordance with 23 U.S.C. § 113; 

* minority-and women-owned firms are not discriminated against in the 
award and administration of highway projects via the Disadvantaged 
Business Enterprise (DBE) program (23 U.S.C. § 140; 23 C.F.R. part 230; 
49 C.F.R. part 26); and: 

* highway contractors use American-made iron and steel to comply with 
the Buy America program, established under 23 U.S.C. § 313.[Footnote 1] 

These requirements are intended to protect the environment, enable 
highway workers to earn a prevailing wage, assist members of 
disadvantaged populations in overcoming the effects of discrimination, 
and help the American iron and steel industry compete in the global 
economy. Some of these requirements apply to transportation projects, 
while others apply generally to any type of construction project that 
uses federal funds. While recognizing the value of these requirements, 
some state highway officials and highway contractors are concerned that 
they may increase project costs by, among other reasons, delaying 
projects for environmental reviews or increasing the state's 
administrative responsibilities. In addition, the inflation that occurs 
during project delays reduces the purchasing power of federal funds 
allocated to the states. As a result, according to some state 
transportation officials, states have sometimes sought to use 
nonfederal funds for projects to avoid the costs or delays involved in 
complying with federal requirements. 

You asked us to examine issues related to the benefits and costs of the 
various requirements that the federal government places on states that 
accept federal highway funding. Although many requirements apply to 
federally funded highway projects, our review focused on NEPA, the 
Davis-Bacon prevailing wage requirement, the DBE program, and the Buy 
America program. We selected these requirements on the basis of initial 
interviews with federal agency officials and industry experts and 
because these requirements are project-specific. This report discusses 
(1) the types of benefits and costs associated with these requirements 
for federal-aid highway projects; (2) the influence of these federal 
requirements on states' decisions to use nonfederal or federal funds 
for highway projects; and (3) the challenges associated with the 
federal requirements and strategies that federal, state, and local 
government agencies and contractors have used or proposed to address 
these challenges. 

To address these issues, we gathered information from a literature 
review, a nationwide survey of state transportation department 
officials and structured interviews with some of these officials, case 
studies of selected states, and interviews with other industry 
stakeholders. Specifically, we reviewed 30 studies that address the 
benefits or costs of one or more of the federal requirements addressed 
in our review. For each of the studies we identify in this report, we 
reviewed its methodology, including the study's datasets, sample size, 
and data collection techniques, and concluded that the methodology is 
sufficiently reliable; however, we did not independently verify the 
results of these studies. We received survey responses from the 
departments of transportation (DOT) in all 50 states and the District 
of Columbia, which we refer to collectively in this report as state 
DOTs, and we conducted follow-up interviews with officials from 10 
judgmentally selected state DOTs to obtain additional information on 
their survey responses. The survey used for this study is reproduced in 
appendix II. We selected the states for interviews on the basis of 
their responses to the survey, their funding levels, and geographic 
dispersion. We also selected five states (California, Florida, Idaho, 
Maryland, and Texas) as case studies based on recommendations from 
officials at industry associations, funding levels, and other factors. 
[Footnote 2] We visited and conducted interviews with officials in 
California, Idaho, Maryland, and Texas, and conducted phone interviews 
with officials in Florida. At each state, we interviewed federal, 
state, and local government officials; highway contractors; and 
metropolitan planning organizations (MPO).[Footnote 3] Finally, we 
interviewed officials from the headquarters offices of several federal 
agencies and industry groups. See appendix I for more information on 
our scope and methodology. 

We conducted this performance audit from October 2007 through November 
2008 in accordance with generally accepted government auditing 
standards. Those standards require that we plan and perform the audit 
to obtain sufficient, appropriate evidence to provide a reasonable 
basis for our findings and conclusions based on our audit objectives. 
We believe that the evidence obtained provides a reasonable basis for 
our findings and conclusions based on our audit objectives. 

Results in Brief: 

According to the studies we identified, the types of benefits 
associated with the federal environmental, labor, and construction 
requirements for highway projects we reviewed include increased 
environmental protection, payment of prevailing wages for skilled 
workers, and increased protection for minority firms. These studies 
identified the types of costs associated with the federal requirements 
as inflation due to project delays, costs due to environmental 
mitigation, and administrative costs. However, quantitative estimates 
of their value are limited because many of these benefits and costs are 
not quantified or tracked. Specifically, several of the studies we 
identified describe benefits of the environmental requirements for 
highway projects, such as better protection for wetlands, but none 
attempted to quantify these benefits. Three studies we reviewed 
attempted to quantify some types of costs associated with the 
environmental review process, such as costs for administering NEPA. 
Quantitative information on environmental benefits and costs is limited 
because states have not generally tracked such information.[Footnote 4] 
In addition, we found several studies that estimated the impact on 
administrative costs due to the Davis-Bacon prevailing wage 
requirement, but the studies did not focus on transportation projects 
specifically. Furthermore, while the studies we reviewed did not 
identify the benefits of the DBE program, transportation officials 
identified some benefits of the program, such as providing greater 
opportunities for minority-and women-owned firms on federally funded 
projects. Separately, one study identified the benefits of the Buy 
America program, including protecting against unfair competition from 
foreign firms. The studies we reviewed also identified, and in some 
cases quantified, the costs of the DBE and Buy America programs. For 
example, a 2001 GAO report that attempted to identify the costs of the 
DBE program surveyed states to determine the program's costs to each 
state in fiscal year 2000, and state responses for administrative costs 
ranged from $10,000 to $4.5 million.[Footnote 5] However, state 
officials acknowledged that these figures were estimates and that they 
did not track other information such as contract costs. We also found 
studies that identified the types of costs of the Buy America program, 
including the use of higher priced iron and steel in projects and 
reduced bidding competition, but no studies that attempted to quantify 
the costs of the program. Although the studies we reviewed were, in 
some instances, sponsored or authored by organizations or individuals 
with a known point of view or interest that could have influenced the 
work, we concluded from our review of the studies' methodologies that 
the studies were sufficiently reliable for the purposes of our report. 
As noted, however, we did not independently verify the results of the 
studies. 

Transportation officials from most states told us that the federal 
requirements we reviewed are among the factors that influence their 
decisions to use nonfederal or federal funds for highway projects. More 
specifically, 39 of the 51 state DOTs we surveyed reported that, in the 
past 10 years, federal requirements had influenced their decision to 
use nonfederal funds for highway projects that were eligible for 
federal aid. Thirty-three of these 39 state DOTs reported that the NEPA 
requirement factored into their decision to use nonfederal funds, while 
5 or fewer of the same 39 state DOTs reported that the Davis-Bacon 
prevailing wage requirement, the DBE program, or the Buy America 
program factored into their decision to use nonfederal funds. State DOT 
officials we interviewed told us that they use nonfederal funds instead 
of federal funds for certain projects to avoid costs, including delays, 
associated with the federal requirements. State officials also told us 
other factors can contribute to their decisions to use nonfederal 
funds. For example, officials from one state told us that their 
legislature passed transportation revenue packages in 2003 and 2005 
that required them to use state funding for selected projects. 
Nevertheless, even though states may use nonfederal funds for certain 
projects to potentially save time or costs, some states told us they 
prefer to use federal funds to avoid certain limitations associated 
with nonfederal funds or to obtain certain benefits associated with 
using federal funds. For example, one limitation associated with using 
nonfederal funds is that using these funds and not complying with 
federal requirements can preclude states from obtaining federal funds 
later. However, states may want to use federal funds for some projects 
because, according to some state officials, it can be more efficient 
for the state to have the Federal Highway Administration (FHWA) 
coordinate the many federal agencies responsible for the various 
environmental requirements, rather than have the state use nonfederal 
funds and coordinate directly with the federal agencies. In general, 
the type of funding a state chooses to use--nonfederal or federal-- 
varies and depends on the circumstance in the state. For example, 16 
states and the District of Columbia have environmental planning and 
review requirements similar to NEPA, 32 states and the District of 
Columbia have state prevailing wage laws similar to the Davis-Bacon 
prevailing wage requirement, and some states also have requirements 
similar to the DBE and Buy America programs. These state requirements 
may eliminate some advantages in time or costs the states might 
otherwise gain by using nonfederal funds. In general, a state's 
decision to use nonfederal or federal funds is influenced by the 
relative availability of these funds. For example, officials from 
Hawaii DOT said that they have limited nonfederal funds available, and 
as a result, like other states we interviewed, rely on federal funds to 
finance their highway projects. 

Federal, state, and local government agencies and contractors face 
several specific challenges associated with the federal requirements 
that can cause delays and increase project costs. However, many of 
these stakeholders have used or have proposed strategies to address 
these challenges. According to transportation officials we met with and 
interviewed, the challenges are related to administrative tasks and 
coordination with multiple government agencies, and to particular 
provisions of the federal requirements. For example, among the 
administrative challenges, state officials cited a resource-intensive 
process associated with NEPA requiring extensive paperwork and 
documentation. In addition, state and local transportation officials 
said that it is challenging to coordinate multiple government agencies 
on environmental review responsibilities because these government 
agencies have limited funding and staffing levels, responsibilities and 
priorities beyond transportation projects, and may have competing 
interests. Our previous work also identified similar challenges and 
some strategies that state governments are using to address these 
challenges, such as paying for staff at federal and state agencies to 
expedite environmental reviews.[Footnote 6] According to state 
government officials and contractors we met with, particular provisions 
of the federal requirements appear to be outdated, narrowly defined, or 
unclearly defined, and these shortcomings make it difficult for them to 
implement the requirements and potentially increase project costs and 
delays. Specifically, officials from some state DOTs we visited pointed 
out that the $2,500 regulatory cost threshold for the Buy America 
requirement for purchasing domestic steel has remained unchanged since 
the program began in 1983, making more projects subject to Buy America 
requirements. Furthermore, some state officials we met with said that 
the $750,000 regulatory ceiling on a DBE contractor's personal net 
worth was outdated, making it difficult to find contractors who meet 
the program's criteria. Some federal and state agencies we spoke with 
have used strategies to address these challenges beyond simply using 
nonfederal funds, and these strategies have had varying success in 
decreasing highway project costs and delays. FHWA's effort to measure 
the performance of environmental review processes for highway projects 
is one example of these strategies. More specifically, FHWA developed a 
performance measure to track the time it takes for projects to complete 
the environmental review process so that FHWA and the states can work 
to reduce project delays. FHWA has yet to meet its goals for this area. 

In light of these findings, we are recommending that the Secretary of 
Transportation re-evaluate the $2,500 regulatory threshold for the Buy 
America program and the $750,000 regulatory personal net worth ceiling 
of the DBE program, and modify them, if necessary, through appropriate 
rulemaking. We provided a draft of this report to the U.S. Army Corps 
of Engineers (USACE), the Advisory Council on Historic Preservation 
(ACHP), the Department of Labor (DOL), U.S. DOT, and the Environmental 
Protection Agency (EPA) for their official review and comment. USACE, 
ACHP, U.S. DOT, and EPA provided technical comments, which we 
incorporated into the final report where appropriate. U.S. DOT took no 
position on our recommendation regarding the Buy America program 
threshold and DBE personal net worth ceiling. DOL officials notified us 
that they had no comments on this report. 

Background: 

The Highway Trust Fund is a fund supported by taxes highway users pay 
on fuel, tires, truck purchases, and the use of heavy vehicles. The 
revenue from these taxes supports highway construction and maintenance, 
highway safety, and transit. FHWA administers the Federal-Aid Highway 
Program and apportions trust fund revenues to state highway departments 
or transportation authorities, which oversee the construction of the 
individual projects. Once FHWA notifies a state that a particular 
highway project has been approved, a state can submit receipts to FHWA 
after it has incurred expenses. FHWA approves reimbursements to the 
state for its expenses, usually for 80 percent of a project's costs; 
the state and local governments are responsible for the other 20 
percent. Federal reimbursements from the Highway Trust Fund have risen 
from around $15 billion in 1990 to more than $35 billion in 2006, the 
last year for which data are available. The federal reimbursements that 
states receive vary by state; however, in general, in fiscal year 2006, 
the federal government provided about 35 percent of the money that 
states and local governments spent on highway projects. While the 
federal government provides most funding from the Highway Trust Fund 
directly to the states and the states oversee the use of these funds, 
by statute, states must provide some trust fund revenues to other 
organizations, such as MPOs, for planning purposes. 

Federally funded highway projects are typically carried out in four 
phases: planning, preliminary design and environmental review, final 
design and right-of-way acquisition, and construction. In the planning 
phase, state and local highway planners look at transportation 
alternatives and work with the public to choose projects that make the 
most sense for their areas. According to FHWA, this phase can take up 
to 5 years for a major highway project. During the preliminary design 
and environmental review phase, states identify engineering issues, 
roadway alignment alternatives, transit options, project costs, and 
other details. In addition, the proposed project and any alternatives 
are examined for potential impacts on the environment, public health, 
and welfare. This process can take 1 to 5 years, according to FHWA, 
depending on the complexity of the design and possible environmental 
considerations that must be considered. During the final design and 
right-of-way acquisition phase, states develop detailed engineering 
plans consistent with the results of the environmental review phase and 
acquire the right-of-way needed to construct the project. This phase 
typically takes from 2 to 3 years for a major new highway construction 
project, according to FHWA. Finally, during the construction phase, the 
state evaluates bids from contractors and then oversees the selected 
contractor's construction of the project. The construction of a major 
project typically takes, according to FHWA, 2 to 6 years. See figure 1 
for a more detailed description of the types of activities and 
stakeholders included in the phases of a highway project. 

Figure 1: Typical Amount of Time Involved in Planning, Approving, and 
Building a Major New Highway Project: 

[Refer to PDF for image] 

Project phase: Planning; 
Potential agencies involved: 
* Metropolitan planning organizations; 
* State departments of transportation; 
* Federal Highway Administration; 
* Land management agencies (such as Bureau of Land Management and U.S. 
Forest Service); 
Typical steps: 
* Assess transportation purpose and need• Solicit public comment; 
* Gain approval to be included in the state’s 20-year plan, with 
expectation that funds will be available; 
* Gain approval to be included in the state’s short-term plan (at least 
3 years) for projects that are to be implemented, with expectation that 
funds will be available; 
* Secure funding; 
Time frame: Length of phase: 4-5 years. 

Project phase: Final design and right-of-way acquisition; Project 
phase: Preliminary design and environmental review; 
Potential agencies involved: 
* State departments of transportation; 
* State environmental resource agencies; 
* State historic preservation office; 
* Advisory Council on Historic Preservation; 
* Environmental Protection Agency; 
* Federal Highway Administration; 
* Land management agencies; 
* U.S. Army Corps of Engineers; 
* U.S. Coast Guard; 
* U.S. Fish and Wildlife Service; 
Typical steps: 
* Consider alignment issues and required lanes; 
* Identify alternatives, including not building the project, to 
minimize potential harm to the environment and historic sites; 
* Select preferred alternative; 
* Identify project cost, level of service, and construction location; 
* Prepare a preliminary design of the highway; 
* Solicit comments on the project and its potential effects from the 
public and from local governments; 
* Gain concurrence from federal agencies from which environmental and 
historic preservation is required; 
Time frame: Length of phase: 1-5 years. 

Project phase: Final design and right-of-way acquisition; 
Potential agencies involved: 
* State departments of transportation; 
* State environmental resource agencies; 
* Environmental Protection Agency; 
* Federal Highway Administration; 
* Land management agencies; 
* U.S. Army Corps of Engineers; 
Typical steps: 
* Finalize design plans; 
* Appraise and acquire property; 
* Relocate utilities and affected citizens before construction, if 
necessary; 
* Finalize project cost estimates; 
Time frame: Length of phase: 2-3 years. 

Project phase: Construction; 
Potential agencies involved: 
* State departments of transportation; 
* State environmental resource agencies; 
* Federal Highway Administration; 
* Land management agencies; 
Typical steps: 
* Advertise and evaluate bids; award contracts; 
* Begin construction; 
* Resolve unexpected problems; 
* Accept delivery; 
Time frame: Length of phase: 2-6 years. 

9-19 total years from planning to completion. 

Note: The duration of the phases is approximate. The preliminary design 
and environmental review steps and the final design and right-of-way 
acquisition steps often overlap. 

[End of figure] 

The federal, state, and local governments all have a role in the 
construction of federally financed highway projects. However, the state 
DOT is the focal point for these activities. It is responsible for 
setting a state's transportation goals and for planning safe and 
efficient transportation between cities and towns in the state. The 
state DOT also designs most projects, acquires right-of-way for highway 
construction, and awards contracts to build projects. Local governments 
also carry out many transportation planning functions, such as 
scheduling improvements and maintenance for local streets and roads. At 
the federal level, FHWA is the primary agency involved in 
transportation project decision making and oversight. FHWA oversees the 
transportation planning and project activities of state DOTs by 
approving state transportation plans and certifying that states have 
met all legal requirements associated with accepting federal funding. 

According to FHWA, over 70 requirements may apply to states that accept 
federal funding for highway projects. Some of these requirements are 
transportation specific, such as requirements under the DBE program and 
the Buy America program, while others, such as NEPA, are general 
requirements that can apply to other construction projects, such as 
federal building construction. FHWA officials stated that they identify 
all requirements that states must meet in the documentation FHWA 
provides to states when funding for a project is approved. States in 
turn communicate these requirements to potential bidders, so the 
contractors know, for example, what wages they must pay or whether they 
must buy American-made iron and steel. 

The requirements for analyzing the environmental impact of federally 
funded highway projects originated in NEPA, enacted in 1969. This 
legislation requires agencies to consider and, if possible, avoid or 
mitigate potential environmental degradation from federally funded 
infrastructure projects before these projects moved forward. FHWA 
ensures that federally funded projects go through an environmental 
review process, as prescribed in NEPA and its implementing regulations. 
FHWA officials stated that under FHWA's NEPA implementation process, 
the lead agency must demonstrate that it will implement the project 
consistently with several environmental laws. Laws under FHWA's NEPA 
"umbrella" include, but are not limited to: 

* the Clean Water Act, protecting water quality and ensuring protection 
of wetlands; 

* the Clean Air Act, protecting air quality; 

* the Endangered Species Act, protecting threatened and endangered 
species and their habitats; 

* Section 138, Title 23 of the U.S. Code, preventing the use of 
parkland or recreational areas in the development of highway projects, 
except where no feasible and prudent alternative exists; and: 

* the National Historic Preservation Act of 1966, identifying historic 
properties that may be damaged by the construction of infrastructure 
projects, and determining ways to avoid, minimize, or mitigate such 
damage. 

If no federal funds are used on a project or if a project does not 
require federal approval, NEPA is generally inapplicable; however, 
these projects still must comply with all applicable federal 
environmental laws, which can include the Clean Water and Clean Air 
Acts. 

While FHWA is generally the lead agency in ensuring that states comply 
with NEPA on federally financed highway projects, other federal 
agencies have responsibilities under these laws. These agencies 
include: 

* EPA (air and water quality, wetlands preservation); 

* the Fish and Wildlife Service (terrestrial threatened and endangered 
species) within the Department of the Interior; 

* the National Marine Fisheries Service (marine threatened and 
endangered species, effects on fish and spawning grounds) within the 
Department of Commerce; 

* USACE (effects on U.S. waters, including wetlands); and: 

* ACHP (effects on historic properties). 

According to FHWA, under the NEPA process, FHWA decides how extensive 
an environmental review a federally funded highway project will 
undergo. This decision is based on the size and complexity of the 
project, as well as the project's expected environmental impact. For 
example, FHWA may deem a project that is expected to have no 
significant environmental impact to be categorically excluded, meaning 
that the project will not need an environmental assessment (EA) or an 
environmental impact statement (EIS) to comply with NEPA. A project 
whose environmental impact is unknown or may be potentially significant 
will undergo an EA to determine if the impact could be significant and 
thus require an EIS. A project that is expected to have a significant 
environmental impact will require an EIS, which will determine the 
particular environmental impacts of the project and include plans for 
mitigating these impacts. States usually have only a few EISs under way 
at any one time, since they are performed generally for the largest 
highway projects, which pose significant impacts to the environment. 
For projects undergoing an EIS, FHWA issues a Record of Decision when 
the process is complete. The Record of Decision indicates whether a 
project complies with environmental laws and determines changes to the 
project for environmental mitigation, such as the creation of 
additional wetlands to mitigate the loss of wetlands or a change in 
route to avoid environmental impacts. EPA is responsible for reviewing 
and commenting on all major federal actions for which an EIS is 
required and for working with FHWA to ensure compliance with 
environmental statutes. FHWA has the final approval authority and 
determines when the EIS is in compliance with applicable environmental 
laws and other requirements. 

Outside the environmental arena, states must meet requirements for 
paying a prevailing wage for construction work when accepting federal 
highway funding. The Davis-Bacon prevailing wage requirement mandates 
that workers on all federal-aid highway projects receive at least the 
local prevailing wage for their work. The law stems from a Depression- 
era practice of transporting workers from a lower-paying area to bypass 
local workers who would demand a higher wage. The Davis-Bacon 
prevailing wage requirement prevented this practice by ensuring that 
workers on federal projects are paid at least the local prevailing 
local wage. DOL sets the minimum wage that must be paid in each county 
in the United States for various job categories, such as sheet metal 
worker or concrete finisher. DOL sets these minimum wage rates based on 
periodic surveys it conducts of employers in each county. To show they 
have paid the prevailing wage to their employees, highway contractors 
must provide their payroll data to the state DOT and certify that they 
have complied with the Davis-Bacon prevailing wage requirement. All 
subcontractors must provide this documentation to the lead contractor 
on a project, known as the prime contractor, who in turn provides it to 
the state DOT. The state then reviews the documentation to ensure 
compliance; if the state discovers noncompliance, the contractor must 
pay the employees supplemental wages to cover the difference between 
what was paid and the original agreed-to prevailing wage. If the 
contractor still does not comply with wage requirements, the state DOT 
may use contractual remedies, such as withholding progress payments, to 
ensure compliance. FHWA occasionally spot-checks the documentation to 
further ensure compliance with the Davis-Bacon prevailing wage 
requirement. 

The DBE program requires that states attempt to expend a portion of the 
funds they receive from U.S. DOT for highways, transit, and other 
transportation-related contracts to firms owned by members of 
disadvantaged populations. The intent of this program is to remove 
barriers to participation in federal contracting and ensure 
nondiscrimination in awarding federal contracts. Legislation, executive 
action, and judicial decisions have resulted in modifications to the 
initial program. U.S. DOT presumes disadvantaged population groups to 
include African-Americans, Hispanics, Asians, Native Americans, and 
other minorities found to be disadvantaged by the Small Business 
Administration.[Footnote 7] To be eligible to participate in the DBE 
program, firms must be at least 51 percent owned by a member or members 
of these groups. Where there is a contract goal on a particular 
contract (not all U.S. DOT-funded contracts must have contract goals), 
the state tells the prime contractor to subcontract a set percentage of 
the project's work to a DBE subcontractor or, if unsuccessful, to 
demonstrate that a "good faith effort" was made to find a DBE 
subcontractor.[Footnote 8] 

Each state has a process for certifying firms that wish to participate 
in the DBE program. States use several criteria, established by U.S. 
DOT, to determine whether a firm can participate in the DBE program, 
including verifying that the owner of the DBE firm has a personal net 
worth under $750,000. Under the DBE rules, a DBE firm's participation 
counts toward a goal only if the firm performs a "commercially useful 
function" to ensure that the firms are not hired simply to meet the 
program's goals. FHWA works with states to ensure that they meet the 
program's goals on highway projects and also periodically audits 
individual state programs to ensure that the programs are operating 
within the law. Other U.S. DOT entities, such as the Federal Transit 
Administration, ensure that the DBE program's goals are met in other 
transportation areas. The U.S. DOT Inspector General investigates cases 
of possible fraud, such as where firms misrepresent themselves as 
minority-owned. 

Finally, FHWA's Buy America program establishes requirements related to 
purchasing materials. Specifically, the Buy America program requires 
that federally funded highway projects use steel manufactured in the 
United States. FHWA officials said the goal of the program is to 
protect the U.S. steel industry from foreign competition.[Footnote 9] 
FHWA has the statutory authority to grant waivers to states when 
domestic iron or steel is unavailable or when there is another 
compelling public interest to use imported iron or steel, and FHWA has, 
through regulation, established a program threshold limiting the 
program to projects costing over $2,500. In addition, under an 
alternative bid procedure, states may use foreign iron and steel if the 
lowest total project bid using domestic materials exceeds the lowest 
total bid using foreign materials by 25 percent. Contractors working on 
federally funded highway projects must provide documentation and a 
certification regarding the country in which the iron and steel 
originated. All manufacturing of the iron and steel must take place in 
the United States. If any part of the manufacturing occurs outside the 
United States, the iron or steel is considered foreign. State DOTs spot-
check iron and steel, and the appropriate certifications, to ensure 
compliance. FHWA must approve the procedures that states use to verify 
compliance and can also perform spot checks. If a state DOT or FHWA 
finds that foreign iron or steel was used in a highway project, the 
contractor must remove the offending iron or steel. This can delay the 
project and add costs, although in these cases, the contractor is 
responsible for the additional costs to correct the mistake. 

Several Types of Benefits and Costs Are Associated with Federal 
Requirements for Highway Projects, but Quantitative Estimates Are 
Limited: 

Many of the 30 studies we reviewed concluded that there are different 
types of benefits and costs linked to federal requirements for highway 
projects. However, only a few of these studies attempted to quantify 
these benefits or costs. For federal environmental requirements, the 
most visible and measurable benefits are fewer adverse impacts to the 
environment. The benefits also include improvements in air and water 
quality and preserving wetlands, among other things. While providing 
benefits, federal environmental requirements can also increase 
projects' overall costs. Studies have quantified some of these costs, 
such as those for administering NEPA, but have not quantified other 
types of costs, such as those that occur when projects are delayed for 
environmental reviews. In general, quantitative information on 
environmental benefits and costs is limited because states have not 
tracked such information; however, some states are beginning to do so. 
The information on the benefits and costs of the Davis-Bacon prevailing 
wage requirement identifies benefits due to creating a level playing 
field for contractors and ensuring a prevailing wage for skilled 
workers and costs due to administering the requirement. However, the 
literature we reviewed is not exclusive to transportation or highway 
projects. Finally, although none of the studies we reviewed identified 
benefits of the DBE program, transportation officials identified some 
benefits of the program, such as providing greater opportunities for 
minority-and women-owned firms on federally funded projects. The 
studies we reviewed did identify benefits of the Buy America program, 
including protecting against unfair competition from foreign firms and 
costs of the DBE and Buy America programs, such as increased 
administrative costs to states and U.S. DOT due to participation in the 
DBE program and potentially higher iron and steel costs. However, none 
of the studies we reviewed separately estimated the costs of the Buy 
America program's requirements. Despite the potential for bias in 
studies with economic and political implications, such as those we 
reviewed, we concluded from our review of the studies' methodologies 
that the studies were sufficiently reliable for the purposes of our 
report. As noted, however, we did not independently verify the results 
of the studies. 

Studies Found Benefits and Costs Associated with the Federal 
Environmental Requirements, but Quantitative Estimates Are Limited: 

Several of the studies we identified described the benefits and costs 
of federal environmental requirements for highway projects. However, 
the studies generally did not attempt to quantify the benefits and only 
quantified some types of costs, such as mitigation costs and costs for 
administering NEPA. An FHWA benefit-cost study is one of the few we 
found that attempted to describe the costs and benefits of 
environmental requirements. For example, it noted that federal 
environmental requirements, including those associated with NEPA, have 
benefits that can reduce adverse effects on the human and natural 
environment.[Footnote 10] These benefits can include measured 
improvements in air and water quality and noise pollution levels; the 
preservation of water supplies and of historic, cultural, park, and 
natural resources; and increased protection of wetlands. However, the 
FHWA benefit-cost study indicated that assessing these benefits in 
economic terms and measuring them in dollars is difficult because the 
valuation of environmental benefits is highly subjective. The study 
also indicated that government agencies are not required to track and 
quantify these benefits and, therefore, generally do not attempt to do 
so. 

Other studies we reviewed also found that, while federal environmental 
requirements produce benefits, these requirements also can cause states 
to incur costs.[Footnote 11] In their NEPA documents, state DOTs must 
include plans for complying with environmental laws, as well as 
consider mitigating any environmental damage. According to a study FHWA 
commissioned in 2006, these mitigation efforts--for example, replacing 
wetlands, building sound walls to insulate surrounding areas from 
highway noise, or changing the route of a project to avoid 
environmental damage--can create costs.[Footnote 12] Some of the 
studies that we reviewed attempted to quantify mitigation costs. A 2003 
study by the Washington DOT evaluated a sample of 14 projects and 
concluded that mitigation efforts and costs vary from project to 
project.[Footnote 13] Furthermore, a 2003 study published by the 
National Cooperative Highway Research Program (NCHRP), an effort 
sponsored by the American Association of State Highway and 
Transportation Officials (AASHTO) in cooperation with FHWA, calculated 
that the environmental review process adds costs to highway projects 
for environmental mitigation activities and that more in-depth reviews 
add more costs than less detailed reviews. For example, categorical 
exclusions on average added 1.1 percent to a project's overall 
construction cost, EAs on average added 1.4 percent, and projects 
requiring EISs on average added 2.3 percent.[Footnote 14] The 2006 FHWA 
study, which was conducted by TransTech Management, a management 
consulting company, reached similar conclusions about environmental- 
related cost increases, including costs to process NEPA documents and 
mitigation costs.[Footnote 15] In this study, TransTech consultants 
conducted case studies of six highway and bridge projects in Maryland, 
Montana, New Jersey, Oregon, Utah, and Washington. The study concluded 
that overall environmental costs for these projects--which included 
replacing bridges and interchanges and widening and upgrading arterial 
highways from two lanes to four lanes---ranged from 2 to 12 percent of 
total project costs and accounted, on average, for 8 percent of total 
project costs.[Footnote 16] The study attributed some of this cost to 
requirements for completing NEPA documentation, which involves 
coordinating with other agencies, performing a detailed review of 
project alternatives, acquiring permits, and conducting public 
outreach. In addition, the study identified costs for the construction 
of stormwater facilities, mitigation of wetland losses, erosion 
control, and landscaping to mitigate likely harms to the environment 
from the projects. 

When a highway project is delayed, inflation and additional 
administrative and labor expenses increase its costs, and environmental 
requirements are one of several potential causes of project delays we 
identified. A 2003 GAO study reported that according to FHWA, for 
projects requiring an EIS and for which FHWA approved the EIS in 2001, 
the environmental review took an average of approximately 5 years to 
complete.[Footnote 17] Furthermore, environmental reviews can take up a 
significant portion of projects' overall time frames. For example, 
FHWA's 2001 baseline report stated that for projects constructed in the 
last 30 years, environmental review for projects requiring an EIS 
accounted for an average of 3.6 years, or approximately 28 percent of 
the overall time for project completion.[Footnote 18] In addition, a 
study jointly sponsored by FHWA and AASHTO reported that right-of-way 
acquisition is a major cause of delay in highway projects, and where 
relocation is required, it takes an average of 1 to 2 years to purchase 
a right-of-way after negotiations have begun.[Footnote 19] Because 
states generally cannot begin to acquire right-of-way until the NEPA 
process is complete, the additional time needed for these purchases has 
the potential to further delay completion of a highway project. The 
study also cited efforts to accommodate and relocate utilities as 
another cause of delays during the design and construction phases of 
highway projects. While several state DOT officials told us that delays 
can increase the overall cost of a project, none could estimate how 
much they add to a project's costs, and the studies we reviewed did not 
estimate the costs attributable to environmental-related project 
delays. 

In general, we found that environmental cost data are not routinely 
collected. For example, the 2003 NCHRP report found that (1) no 
complete and consistent data on environmental costs were available at 
the state level and (2) a majority of states do not track environmental 
costs separately from overall project costs and no state has an 
environmental accounting system that tracks these costs.[Footnote 20] 
Additionally, in its benefit-cost study, FHWA concluded that none of 
the 32 state DOT environmental officials that responded to a survey in 
the 2003 NCHRP report had studied or tracked planning, design, and 
environmental costs related to environmental review activities. 
[Footnote 21] 

According to its benefit-cost study, FHWA is taking steps to strengthen 
its own environmental cost-tracking efforts, by conducting a multiphase 
effort to measure the impact of NEPA and identify trends. As noted 
above, in 2001, FHWA completed a comprehensive baseline study that 
assessed the impact of the NEPA process on the total time and costs 
involved in completing highway projects. Phase one of the study will be 
used to assess future environmental streamlining efforts, including an 
ongoing detailed analysis of the time required to complete FHWA's EIS 
documents.[Footnote 22] However, for phase two of the study, data 
limitations, such as a lack of centrally located official completion 
dates for projects that have gone through the NEPA process have 
prevented FHWA from analyzing the costs associated with NEPA compliance 
efforts.[Footnote 23] Furthermore, recognizing the need to improve 
environmental cost estimating methodologies for transportation 
projects, including highway projects, NCHRP is creating guidelines for 
developing such improved methodologies. These guidelines are scheduled 
to be completed in late 2008.[Footnote 24] Additionally, four states 
(Montana, Washington, Oregon, and Wisconsin) have begun or plan to 
begin efforts to quantify the environmental costs associated with 
transportation project delivery. For example, an Oregon DOT official 
told us that his department has been tracking annual overall 
environmental costs for project development since 2000, as required by 
the Oregon legislature. These costs have consistently averaged 4.5 
percent of overall project costs. 

Studies Included Information on the Benefits and Costs of the Davis- 
Bacon Prevailing Wage Requirement but Did Not Specifically Focus on 
Highway Projects: 

Several studies we reviewed attempted to quantify benefits and costs of 
the Davis-Bacon prevailing wage requirement, but these studies did not 
provide data exclusive to transportation or highway projects. According 
to FHWA's benefit-cost study, benefits associated with the Davis-Bacon 
prevailing wage requirement include (1) creating a level playing field 
for honest contractors, (2) ensuring that skilled workers are paid 
wages that prevail in the communities where the work is performed, and 
(3) minimizing predatory contracting practices that could undercut 
local contractors. FHWA's benefit-cost study also found that the 
requirement also promotes more training for labor, resulting in more 
experienced and qualified contractors working on highway projects. 
[Footnote 25] In addition, the National Alliance for Fair Contracting, 
a labor-management organization, and the Construction Labor Research 
Council, an organization that researches construction labor costs, 
conducted studies in 1995 and 2004, respectively, which concluded that 
higher prevailing wages under the Davis-Bacon prevailing wage 
requirement contributed to higher productivity on federal highway 
projects. The studies concluded that the cost per mile for highway 
construction was inversely related to the hourly wage paid to 
contractors--specifically, that a higher wage rate resulted in a lower 
highway cost per mile--which could indicate a positive effect of the 
Davis-Bacon prevailing wage requirement. According to the report, 
higher wages attracted high-quality, highly skilled labor; enhanced 
productivity; and possibly offset potential labor cost savings from 
lower wages. 

Some studies we reviewed also focused on the costs of the Davis-Bacon 
prevailing wage requirement in general but did not separately estimate 
costs for highway or transportation projects. For example, a 2004 
University of Missouri-Kansas City study, commissioned by a labor- 
management organization, estimated a total economic loss to the state 
of Missouri (lost wages, sales, and income taxes) of over $300 million 
if Davis-Bacon prevailing wage laws were repealed.[Footnote 26] Also, a 
1995 University of Utah study commissioned by a labor union estimated 
that the Davis-Bacon prevailing wage requirement caused construction 
costs to increase, but also estimated that the federal government would 
incur costs from lost income tax revenue by repealing the Davis-Bacon 
prevailing wage laws.[Footnote 27] Furthermore, a 1996 study in the 
Journal of Labor Research by a consulting economist estimated that the 
federal government would experience savings in wage costs if Davis- 
Bacon prevailing wage laws were repealed. This study also estimated 
that if the state and local governments subsequently repealed their 
prevailing wage laws, all levels of government (federal, state, and 
local) could experience savings in administrative and enforcement 
costs.[Footnote 28], [Footnote 29] 

Studies Did Not Identify Benefits Arising from the DBE Program but Did 
Identify Benefits of the Buy America Program and Costs of the DBE and 
Buy America Programs: 

While we did not find any studies that identified benefits of the DBE 
program, FHWA and state DOT officials we spoke with said that benefits 
include remedying discrimination and inequality, promoting equal 
opportunity in the highway design and construction industry, and 
helping DBE firms grow their business. A U.S. DOT official agreed and 
said that the achievements of states in using DBE firms are indicative 
of the benefits of the program in providing greater opportunities for 
DBE firms on federally funded contracts. The U.S. DOT official also 
said that in 2006, DBE participation in the federal-aid highway program 
totaled at least $2 billion. While the studies we reviewed did not 
quantify the benefits of the Buy America program, the types of 
potential benefits related to this program, according to literature 
cited in FHWA's benefit-cost study, include protecting domestic 
employment through national infrastructure improvements that can 
stimulate economic activity and create jobs; protecting against unfair 
competition from foreign firms as a result of foreign government 
subsidies; and maintaining national security interests through the 
continued use and development of certain industries within the U.S. 
economy, like the iron and steel industries. 

In terms of costs, a 2001 GAO report indicated that U.S. DOT, states, 
and local transportation agencies incur costs in implementing and 
administering the DBE program.[Footnote 30] For example, U.S. DOT 
estimated that it incurred about $6 million in costs, including 
salaries and training expenses, to administer the DBE program for 
highway and transit authorities in fiscal year 2000. Sixty-nine percent 
of the states and transit authorities that responded to GAO's survey 
for the 2001 report estimated that they incurred a total of about $44 
million in costs to administer the DBE program in fiscal year 2000. For 
individual state respondents, these administrative costs ranged from a 
high of $4.5 million to a low of about $10,000. However, U.S. DOT, 
states, and local transportation agencies had not studied or analyzed 
other DBE-related program costs. For example, according to the 2001 GAO 
study, states and transit authorities had said that the DBE program 
increased project costs, but 99 percent of the states and 
transportation agencies surveyed for the report had not conducted a 
study or analysis to quantify whether the DBE program has an impact on 
their contract costs. We reported that U.S. DOT had also not conducted 
such an analysis. 

Finally, none of the studies we reviewed attempted to quantify the 
costs of Buy America program requirements. One study--FHWA's benefit- 
cost study--identified higher iron and steel prices, higher overall 
project costs, reduced bidding competition, and project delays as the 
major types of costs that federally funded transportation projects 
could incur in complying with Buy America program provisions, but the 
study did not attempt to quantify these costs. 

Federal Requirements, among Other Factors, Influence State Funding 
Decisions: 

According to our survey results, the federal requirements we reviewed 
are among the factors that influence states' decisions to use 
nonfederal or federal funds for highway projects. Most state 
transportation officials we interviewed told us that the federal 
requirements may encourage them to use nonfederal funds for certain 
highway projects eligible for federal aid because they may be able to 
save time and costs, but they also told us that other factors influence 
their decisions to use nonfederal funds. Conversely, some state 
officials we interviewed told us they may use federal funds to avoid 
certain limitations associated with nonfederal funds or to obtain 
certain benefits associated with using federal funds. In general, the 
type of funding a state chooses to use--nonfederal or federal--varies 
and depends on the circumstance in the state. Some states, for example, 
have requirements similar to the federal requirements we are reviewing. 
This may reduce some of the time or cost savings states might otherwise 
realize by using nonfederal funds. Furthermore, a state's decision to 
use nonfederal or federal funds is generally influenced by the relative 
availability of these funds. 

Federal Requirements May Encourage States to Use Nonfederal Funds for 
Certain Highway Projects, but Other Factors Also Influence Their 
Decision: 

Most state transportation officials told us that costs and delays 
associated with the federal requirements we reviewed have, in certain 
instances, encouraged them to use nonfederal funds for certain highway 
projects eligible for federal aid; however, other factors, such as a 
state legislature's requirements and the availability of nonfederal 
funds, also contribute to a state's decision to use nonfederal funds. 
More specifically, 39 of the 51 state DOTs we surveyed reported that, 
in the past 10 years, the federal requirements had, in at least one 
instance, influenced their decision to use nonfederal funds for highway 
projects that were eligible for federal aid.[Footnote 31] A majority 
(33 states) of these 39 states reported that the NEPA requirement 
factored into their decision to use nonfederal funds rather than 
federal funds for highway projects. Some of the 39 states also reported 
that the other requirements we reviewed also influenced their decision 
making: 5 states noted that the Davis-Bacon prevailing wage requirement 
factored into their decision to use nonfederal funds; 2 states noted 
that the DBE program factored into their decision to use nonfederal 
funds; and 5 states noted that the Buy America program factored into 
their decision to use nonfederal funds.[Footnote 32] See figure 2 for 
more information on how many states reported using nonfederal funds and 
the reasons behind these decisions. The survey used for this study is 
reproduced in appendix II. 

Figure 2: Percentage of States Using Nonfederal Funds for Highway 
Projects because of the Federal Requirements, and the Requirements that 
Factored into States' Decisions: 

[Refer to PDF for image] 

This figure contains a pie-chart and vertical bar graph depicting the 
following data: 

Percentage of states that made a decision to use nonfederal funds on a 
highway project eligible for federal aid because of the federal 
requirements, in the last 10 years: 
Decided to use nonfederal funds (39 states): 76.5%; 
Decided not to use nonfederal funds (12 states): 23.5%. 

Number of states that indicated that the requirements we reviewed 
factored into their decision to use nonfederal funds rather than 
federal funds: 

Federal requirement: NEPA; 
Number of states: 33. 

Federal requirement: Davis-Bacon; 
Number of states: 5. 

Federal requirement: DBE; 
Number of states: 2. 

Federal requirement: Buy America; 
Number of states: 5. 

Note: For the figure on the left, the states that decided not to use 
federal funds include 11 states and the District of Columbia. 

[End of figure] 

Some state DOT officials we interviewed stated that by using nonfederal 
funds instead of federal funds for certain projects, they avoided 
project delays and costs associated with the federal requirements. 
Maine DOT officials, for example, told us that if they had used federal 
funds for several particular state-only funded projects, the projects 
would have been delayed by one or more construction seasons due 
primarily to a requirement designed to protect parklands and 
recreational areas.[Footnote 33] Instead, Maine DOT used state 
resources and worked with the State Historic Preservation Officer to 
expedite critical bridge improvements through an accelerated review 
process. Maine DOT officials told us that although they cannot finance 
major EIS projects using only state funds, they are confident that if 
they used only state funds for these projects, planning studies at the 
EIS level could be expedited by a year or more without any major 
changes in the outcome. According to the Maine officials, state 
legislation outlines steps necessary in a transportation decision- 
making process that consider impacts to the human, social, and natural 
environment that are as precise or more as NEPA, but do not contain the 
added federal administrative responsibilities. 

A few states reported in our survey that the Davis-Bacon prevailing 
wage requirement and Buy America program also factored into their 
decision to use nonfederal funds on certain projects. A New Hampshire 
DOT official that we interviewed told us that the Davis-Bacon 
prevailing wage requirement can slow a project because it imposes 
payroll processing requirements that create additional administrative 
responsibilities, particularly for small highway contractors who may 
not understand what they must do to comply. As a result, the state 
official told us they use state funds for many small resurfacing 
projects to reduce the administrative responsibilities for contractors. 
Similarly, Washington DOT officials we interviewed said that they used 
nonfederal funds for the Tacoma Narrows Bridge project--which cost 
nearly $850 million--and saved $30 million to $35 million by purchasing 
foreign steel instead of domestic steel. Had they used federal funds 
for the project, they would have had to spend these funds for domestic 
steel under the Buy America program. 

Some states have minimized project delays by using nonfederal funds for 
certain aspects of a project. For example, some states have used 
nonfederal funds to acquire the right-of-way for a project--the rights 
to the land over which the highway will pass--so that they could 
conduct the NEPA review at the same time. Generally, federal funds 
cannot be used to acquire a right-of-way until FHWA completes the NEPA 
process.[Footnote 34] Some state DOT officials told us that because 
states cannot conduct certain NEPA activities concurrently with other 
project activities, such as developing an EIS and acquiring right-of- 
way, projects can face delays. Ohio DOT officials said that there are 
risks in acquiring right-of-way before the NEPA review has been 
finalized. For example, after acquiring the right-of-way, the NEPA 
document may not be approved or may be significantly modified to 
require a right-of-way in a different location. Ohio DOT officials 
said, however, that deciding on a right-of-way alternative after 
obtaining sufficient information and involving the public involvement 
lessens this risk. By using state funds for right-of-way purchases, 
Ohio DOT officials said that they are able to reduce project costs 
because they avoid the impact of inflation (which would raise property 
and construction costs) and complete the project faster. However, these 
officials had not tracked or quantified the savings resulting from this 
practice. FHWA officials said that states have the option of acquiring 
right-of-way with nonfederal funds but that states that do this will 
not be eligible to have those acquisition costs reimbursed with federal 
funds. Agreeing with Ohio DOT officials, FHWA officials also said that 
the state bears the risk in acquiring right-of-way before the NEPA 
process is completed. 

In addition to the federal requirements, some state officials noted 
that other factors play a role in their decisions to use nonfederal 
funds for some projects. For example, Washington DOT officials informed 
us that their state legislature passed transportation revenue packages 
in 2003 and 2005 requiring them to use state funding for selected 
projects.[Footnote 35] They had wanted to use federal funding for some 
of these projects, particularly those that already have federal agency 
involvement due to environmental issues such as a need for permits to 
build in a wetland area, but the legislature denied the request. 
Sometimes, although not generally, a state may use nonfederal funds for 
projects because it has a significant amount of nonfederal funds 
available to it. For example, in California, more than 85 percent of 
funding available for transportation, including highways, originates 
from nonfederal sources. As a result, California funds many projects 
with state and local funds. However, California DOT officials explained 
that they use state and local funds for these projects--not because of 
the federal requirements--but because state funds are more available 
than federal funds. 

States May Use Federal Funds to Avoid Certain Limitations of Nonfederal 
Funds or to Obtain Certain Benefits Associated with Federal Funds: 

States may face a number of limitations when they use nonfederal 
funding for highway projects and may use federal funds to avoid these 
limitations, or they may use federal funds because they can obtain 
certain benefits by using these funds. Some states told us that one 
limitation associated with using nonfederal funds for projects is that 
using these funds and not complying with certain federal requirements 
can preclude or delay states from obtaining federal funds later if 
needed. More specifically, if a state uses nonfederal funds for a 
specific highway project, this project is not required to meet certain 
federal requirements, such as the federal design standards. 
Consequently, if state officials need additional funding for the 
project during its later stages, they may find it difficult to obtain 
federal funds because federal requirements were not previously met. 
However, some state officials we interviewed said that they follow or 
try to follow federal requirements even if they use nonfederal funds 
for a project because they then have the flexibility to add federal 
funds to the project at any stage. Furthermore, Ohio DOT officials 
explained that using state funds for highway projects depletes state 
funds that could be used to match federal funds for other highway 
projects or other state priorities. Finally, according to Ohio DOT 
officials, if nonfederal funds are used on projects, public involvement 
in projects may be limited or environmental issues may not undergo 
systematic reviews since these projects do not have to comply with the 
public and environmental review processes under NEPA. However, as noted 
below, some states have environmental requirements that are similar to 
NEPA's requirements, which could lessen the impact of this limitation. 

Transportation officials in two states told us they often prefer to use 
federal funds because they can obtain certain benefits associated with 
using these funds. Washington DOT officials told us, for example, that 
if they use federal funds for a highway project, FHWA serves as the 
lead agency under NEPA and is responsible for coordinating the many 
federal agencies that are responsible for the various federal 
environmental requirements. However, if they use only nonfederal funds, 
states still must comply with federal environmental laws (such as those 
involved with protecting air and water quality) but must coordinate 
directly with the federal agencies that are responsible for those 
requirements, and need not go through the NEPA process. In some 
instances, according to the Washington DOT officials, they preferred to 
partially fund a state project with federal funds because they have a 
good working relationship with FHWA. Furthermore, FHWA can be more 
effective than the state in coordinating environmental issues at the 
federal level. Also, Massachusetts DOT officials said that federal 
agencies are more inclined to cooperate with and respond to another 
federal agency, such as FHWA, than to the state DOT, and such 
cooperation and responsiveness can contribute to a project's success. 
For example, FHWA can obtain Coast Guard permit exemptions that state 
DOTs cannot, allowing some federally funded projects to proceed faster 
than comparable nonfederal projects. 

Some States Consider Differences between Federal and State Requirements 
When Deciding Whether to Use Nonfederal or Federal Funds for Highway 
Projects: 

Some states have requirements similar to the four federal requirements 
we reviewed, and some state officials told us that they consider the 
differences between these requirements when deciding whether to fund 
highway projects with nonfederal or federal funds. Furthermore, having 
state requirements that are similar to the federal requirements may 
reduce some of the time or cost savings states might otherwise gain by 
using nonfederal funds. 

According to the Council on Environmental Quality, a federal agency 
that oversees NEPA, 16 states and the District of Columbia have 
environmental planning requirements similar to NEPA requirements. Other 
states, including New Hampshire and Illinois, have state environmental 
requirements that address specific environmental issues, such as 
wetlands protection, but do not have an environmental planning law like 
NEPA that provides for an environmental review process. FHWA's benefit- 
cost study noted that the extent to which state environmental 
requirements overlap with federal requirements varies from state to 
state.[Footnote 36] The study also noted that state requirements that 
parallel NEPA requirements could be more than, less than, or just as 
stringent as the federal requirements. FHWA officials agreed, noting 
that, while some environmental processes--such as California's 
Environmental Quality Act--are fairly stringent like NEPA, other state 
environmental processes may not be. Furthermore, in some cases, a 
federal agency can authorize a state to use its own state environmental 
requirement to meet the federal requirement. For example, in the 
National Pollutant Discharge Elimination System (NPDES) stormwater 
permit program, EPA has approved most state NPDES permit programs and 
allows these approved states to administer permits, in lieu of EPA, to 
allow discharges into U.S. waters. 

In addition to state environmental requirements, some states have 
requirements that are roughly equivalent to the Davis-Bacon prevailing 
wage, DBE, and Buy America requirements we reviewed: 

* According to FHWA's benefit-cost study, 32 states and the District of 
Columbia have active prevailing wage laws. State prevailing wage laws 
may require higher or lower wages than Davis-Bacon prevailing wages. 
For example, state DOT officials told us that in certain portions of 
Utah and Oregon, the federal Davis-Bacon prevailing wage rate is higher 
than the state prevailing wage rate; however, Maryland officials told 
us that for many projects, Maryland's prevailing wage rate is higher 
than the federal Davis-Bacon prevailing wage rate. Furthermore, some 
contractors said that they pay their employees wages that are higher 
than the federal Davis-Bacon prevailing wage. Similarly, Hawaii DOT 
officials said that they, with little or no exception, award their 
federal-aid highway construction contracts to unionized contractors and 
that union wages in Hawaii are typically higher than Davis-Bacon 
prevailing wage rates. 

* Some states have laws to encourage participation from minority-owned 
enterprises in transportation projects.[Footnote 37] For example, in 
Maryland, there are federal and state DBE programs. FHWA officials told 
us that state DBE programs may or may not mirror the federal DBE 
program and that state DBE programs vary. For example, some state 
programs have residency requirements to encourage local businesses, 
while other states do not. 

* Some states have laws that require the use of domestically made steel 
and other materials. State requirements that are parallel to Buy 
America requirements are often noted in a state's standard 
specifications, which are included in the bid documents provided to 
highway contractors. For example, West Virginia has a standard 
specification that requires that projects use aluminum, glass, steel, 
and iron products that are domestically fabricated. Texas also has a 
steel preference provision. This provision notes that a contract 
awarded by Texas DOT that does not use federal aid must contain the 
same preference for steel and steel products as required by the federal 
Buy America program. 

In terms of environmental requirements, some state officials said they 
consider the differences between state and federal requirements, while 
other officials may not. For example, Hawaii DOT officials told us that 
the differences between the state and federal environmental 
requirements may influence their funding decision making because the 
state process is less rigorous, less time-consuming, or both, and as a 
result, the state process is less costly than the NEPA process. 
Washington DOT officials noted, however, that a project employing 
nonfederal funds may not realize time and cost savings because projects 
that use these funds still have to comply with a number of federal 
environmental laws that require coordination among and the involvement 
of federal agencies to, for example, provide permits to impact 
wetlands. Accordingly, Washington DOT officials may or may not consider 
the differences between federal and state environmental requirements 
when deciding whether to use nonfederal or federal funds for a highway 
project. 

In considering prevailing wage requirements, states may choose to use 
nonfederal or federal funds for projects when federal Davis-Bacon 
prevailing wage rates are higher than the state's prevailing wage rate. 
For example, in an interview, Utah DOT officials told us that Davis- 
Bacon prevailing wages are higher than market wages in portions of 
Utah. Consequently, Utah DOT tries to fund complete road reconstruction 
projects--which are labor-intensive--with nonfederal funds so that 
state dollars can be stretched further. Conversely, they use federal 
funds--and, therefore, pay the Davis-Bacon prevailing wage rates--for 
smaller rehabilitation or preservation projects. This lowers Utah DOT's 
overall costs, but Utah DOT officials were unable to quantify savings. 
Similarly, Oregon DOT officials noted that in some areas of Oregon, the 
federal Davis-Bacon prevailing wage is higher than the state prevailing 
wage. However, the Oregon officials told us that state law requires 
that--when federal funds are involved--contractors compare the federal 
Davis-Bacon prevailing wage rates and the state prevailing wage rates 
and pay the higher of the two. 

The Availability of Nonfederal and Federal Funds Also Influences 
States' Funding Decisions: 

Regardless of whether states decide to use nonfederal or federal funds 
for their highway projects, their decisions are generally influenced by 
the relative availability of these funds. Officials from many states 
told us that their nonfederal funds are more limited than their federal 
funds. Hence, the extent to which states use nonfederal funds to avoid 
the federal requirements is limited. Our survey responses indicate that 
37 states did not often use nonfederal funds on highway projects to 
avoid federal requirements. More specifically, these 37 states reported 
that they used nonfederal funds to avoid the federal requirements less 
than 50 percent of the time. Officials from one of these 37 states, 
Hawaii, said that they have limited nonfederal funds available. As a 
result, the officials said that they do not often use nonfederal funds 
to avoid federal requirements and that they have to rely on federal 
funds to finance their highway projects. Similarly, other states we 
spoke with also rely on federal funds to finance their highway 
projects. 

In our interviews, officials from some states that rarely use 
nonfederal funds to avoid federal requirements told us that if they had 
more nonfederal funds available, they would use those funds for highway 
projects more frequently in order to expedite projects. Utah is one 
state that has a significant amount of nonfederal funds available for 
highway projects, and it uses these funds to expedite projects. 
[Footnote 38] Utah obtains about 75 percent of the funds for its 
highway program from the state and about 25 percent from the federal 
government. Because Utah has such a high proportion of state funds 
available, Utah officials reported on our survey that they use 
nonfederal funds to avoid the federal requirements more than 50 percent 
of the time, but not always. Officials we spoke with also told us that 
because Utah has abundant state funding, the state tries to fund its 
smaller projects with federal funds and its larger, more complex 
projects with nonfederal funds. Utah officials also noted that using 
state funds has the benefit of generally reducing the time and cost to 
complete a project, though they have not quantified or tracked this 
information. 

Government Agencies and Contractors Face Challenges Associated with 
Federal Requirements, and Some Are Using Strategies to Address These 
Challenges: 

The federal, state, and local government agencies and contractors we 
interviewed said that they face a number of challenges complying with 
the federal requirements associated with federal highway projects and 
that these challenges contributed to increased project costs and 
delays. The challenges deal with (1) administrative requirements and 
coordination with multiple government agencies and (2) provisions that 
state transportation officials and contractors say make it difficult 
for them to implement the requirements as efficiently as possible. 
Officials are implementing a number of strategies to address these 
challenges, including federal-level programs that provide states with 
guidance and opportunities to participate in streamlining pilot 
programs, as well as state initiatives to make their compliance 
processes more efficient. 

State Transportation Departments and Highway Contractors Face 
Challenges Related to Administrative Requirements and Coordination with 
Stakeholders: 

Some state and local transportation officials and contractors stated 
that the federal requirements we reviewed add to their administrative 
requirements, such as preparing detailed documentation, which require 
substantial resources, adding to project costs and delays. They also 
claimed that coordinating with the multiple stakeholders involved in 
planning a highway project can be challenging because agencies may have 
competing interests and lack enforceable time frames. 

Managing Administrative Requirements: 

Some state and local transportation officials and contractors told us 
that the amount of documentation they prepare to comply with federal 
requirements can add to their administrative requirements. For example, 
state transportation officials we interviewed told us that lawsuits 
challenging environmental decisions can cause delays and increase 
costs, in part because they sometimes prepare more documentation to 
satisfy federal agencies that are taking precautions to avoid lawsuits. 
FHWA officials told us that documentation requirements are intended to 
enable time savings later in the highway project process. Additionally, 
at a September 2008 Transportation Research Board conference, several 
state and local transportation planners said that federal agencies 
encourage them to develop multiple alternative project designs that 
they think will never be selected just to satisfy specific federal 
agencies and environmental groups and to avoid lawsuits from opponents 
of the project.[Footnote 39] According to FHWA guidance, however, the 
identification, consideration, and analysis of alternatives are 
important components of the NEPA process and contribute to objective 
decision making. Furthermore, the guidance states that the 
consideration of alternatives leads to a solution that satisfies the 
transportation need, while at the same time protecting environmental 
and community resources. 

Separately, according to an AASHTO study, most EIS documents exceed 300 
pages and some may even exceed 1,000 pages, even though federal 
regulations state that this document should normally be no more than 
150 pages and those associated with complicated projects no more than 
300 pages.[Footnote 40] Idaho DOT officials said that for some projects 
designated as categorical exclusions, where the projects were expected 
to have no significant impact, they had to prepare the same amount and 
level of documentation as for projects requiring more complex EAs, 
which requires a longer and more detailed process than categorical 
exclusions because the environmental impact, if any, needs to be 
determined. FHWA officials, however, said that they are not aware of 
any recent changes in documentation trends for categorical exclusions. 

According to many state transportation officials, redundancy in the 
requirements also increases the amount of documentation they must 
prepare. For example, Florida DOT officials told us that when states 
have requirements similar to the federal requirements, officials 
frequently must prepare separate documentation for both sets of 
requirements, raising administrative costs. However, Maryland DOT 
officials told us that their state and federal requirements are 
combined into one process in order to meet both obligations and are 
supportive of each other. As a result, Maryland DOT officials indicated 
that there did not appear to be project delays or increased project 
costs due to redundancies. Separately, state DOT officials said that 
redundancies in the federal requirements can increase their 
administrative costs. For instance, officials from two states told us 
that the documentation required for a section of the National Historic 
Preservation Act is very similar to documentation for the requirement 
aimed at protecting parklands and recreational areas, but the paperwork 
prepared for one does not always satisfy the other, potentially 
increasing the states' administrative responsibilities. 

According to federal, state, and local transportation officials we 
spoke with, requirements related to the Davis-Bacon prevailing wage 
requirement can also impose administrative responsibilities on states 
and contractors that can raise costs. For example, the Davis-Bacon 
prevailing wage requirement requires contractors to submit all weekly 
payrolls for all employees and any requests for new job classifications 
to their state DOTs and ultimately to DOL. Contractors that we spoke 
with submit both by hard copy because they were under the impression 
that DOL requires a manual signature for payroll certification. As a 
result, according to officials from some state DOTs, states handle a 
large amount of related paperwork, which may add to project costs. 
Texas DOT, for example, estimates that they receive over 4,000 
certified payrolls each week from their active contractors and 
subcontractors, and is responsible for reviewing 10 percent of all 
payrolls submitted for each contract. State and local transportation 
officials said that electronic submission of weekly payroll statements 
and certifications would make Davis-Bacon prevailing wage paperwork 
processing more efficient and more thorough and would decrease 
administrative responsibilities. Recognizing that online processing 
would be useful, DOL created a pilot program for selected contracting 
agencies and contractors to submit Davis-Bacon prevailing wage payroll 
statements and certifications online, and FHWA encouraged contracting 
agencies, such as state DOTs, to participate in the program. (See 
appendix III for more information.) 

Additionally, some state transportation officials told us that the 
Davis-Bacon prevailing wage classifications have not been established 
for common highway jobs, which contributes to additional paperwork. 
These officials and contractors also told us that even though the Davis-
Bacon prevailing wage tables are outdated, they must still complete 
paperwork to comply with the requirement. For example, in the wage 
table for Tampa, Florida, heavy construction does not include wages for 
two basic classes of jobs for bridge construction, concrete finisher 
and pile driver operator. Some state transportation agency officials 
said that if a job classification is not listed on the wage tables, 
contractors submit requests for a wage determination to DOL for each 
contract that involves that type of work. State transportation 
officials said that this requirement increases their paperwork 
responsibilities, which in turn increase costs because fulfilling these 
responsibilities requires an extensive amount of staff resources. For 
example, officials at Florida DOT said that when a new classification 
is added on a contract, it is only good on that particular contract and 
that they process hundreds of these requests each year. In general, DOL 
officials stated that the job classifications are sufficient. Regarding 
the wage tables, officials from Florida also said that the Davis-Bacon 
prevailing wage surveys that DOL uses to develop the wage tables are 
outdated. For example, DOL bases Davis-Bacon prevailing wages for 
highway construction in some counties in Florida on 1993 wage surveys. 
As a result of the outdated surveys, Florida DOT officials said that 
contractors typically pay higher wages than the federal Davis-Bacon 
prevailing wages to attract and keep employees. The Florida officials 
said that although contractors pay higher wages than the Davis-Bacon 
prevailing wage, they still must show compliance to the Davis-Bacon 
prevailing wage requirement on federal projects. As such, Florida 
officials stated the compliance process is an "exercise in paperwork." 
Contractors in Idaho agreed with Florida DOT officials, stating that 
although they pay employees the market rate (which is higher than the 
Davis-Bacon prevailing wage rate), they still have to adhere to Davis- 
Bacon prevailing wage paperwork requirements, which is costly and time- 
consuming to complete and submit.[Footnote 41] DOL officials stated 
that the process they use for updating wage tables is appropriate. 
These officials also said that they update the wage tables at their 
discretion, but not on a set schedule, and that they take into account 
the age of the previous survey, anticipated construction volume in a 
state, and other factors in deciding when to update a wage table. 

Managing Multiple Project Stakeholders: 

Some state DOT officials said that interagency coordination is a 
challenge in the NEPA process--both in getting all the government 
agencies to coordinate on a project's design and obtaining necessary 
permits. FHWA, along with federal agencies with environmental review 
responsibilities (known as resource agencies),[Footnote 42] relevant 
state agencies, and other planning stakeholders participate in and 
review detailed assessments of environmental impacts, in accordance 
with their responsibilities under federal or state laws. Florida DOT 
officials noted that they may coordinate with as many as 23 different 
entities in planning, reviewing, and constructing highway projects. The 
Safe, Accountable, Flexible, Efficient Transportation Equity Act: A 
Legacy for Users (SAFETEA-LU) amended the law to require transportation 
agencies to engage government agencies and other planning stakeholders 
to collaborate during the initial project planning and throughout the 
NEPA process.[Footnote 43] However, numerous federal, state, and local 
transportation officials said that it is challenging to coordinate 
these government agencies and planning stakeholders because these 
entities (1) have limited funding and staff, (2) have responsibilities 
and priorities beyond transportation projects, and (3) may have 
competing interests and missions that can be difficult to resolve. Our 
previous report on highways and the environment also found similar 
challenges. More specifically, this report found that resource agency 
officials viewed their core regulatory duties as their main 
responsibility and that resource constraints, according to these 
officials, hampered the resource agencies' ability to take on extra 
responsibilities. These constraints may limit their ability to fully 
participate in the early stages of environmental reviews.[Footnote 44] 
Furthermore, competing interests and missions can increase the time 
frame of a project. For example, Florida DOT officials said that on a 
historic bridge project, the Coast Guard wanted to build a new bridge 
for navigational purposes, but other federal and state agencies who 
were responsible for historic bridges wanted to save the historic 
integrity of the bridge by rehabilitating it rather than constructing a 
new one. The disagreement between the two parties caused delays in the 
development of the EIS, causing the EIS to take about 5 years to 
complete. 

Several state transportation officials and FHWA officials told us that 
while they collaborate with each other and the resource agencies to set 
deadlines, once they identified the agencies that will need to be 
involved in the project, approval and permitting agencies routinely 
miss deadlines, often delaying projects. For example, a project must 
receive a permit from USACE if the project involves the discharge of 
dredged or fill material into water. Several state DOT officials told 
us that this permitting process can be particularly time-consuming. One 
Idaho transportation official told us that for a bridge project in 
Idaho, Three Cities Rivers Crossing, it took an additional 1.5 years to 
review the EIS, partly due to USACE missing its deadline for issuing 
comments. FHWA officials said that there is no consequence to resource 
agencies or relief to transportation agencies if the resource agencies 
fail to meet the deadline. USACE officials said that requests for 
highway project reviews are evaluated in a timely manner, given that 
USACE has many applicants requesting authorization to impact U.S. 
waters, including other state and federal agencies and the general 
public. 

State Government Agencies and Contractors Face Challenges Complying 
with Some Provisions of Federal Requirements: 

According to some state transportation officials and contractors, 
certain provisions within the federal requirements we reviewed appear 
to be outdated, narrowly defined, or unclearly defined, resulting in 
difficulties in implementing the requirements, and potentially 
increasing project costs and delays. In general, FHWA or other federal 
government officials did not agree with the state officials' assessment 
that the provisions are outdated, narrowly defined, or unclearly 
defined. 

Several state DOT officials told us that, in their opinion, the $2,500 
regulatory cost threshold for compliance with the Buy America program 
and the $750,000 regulatory personal net worth ceiling for the DBE 
program were outdated.[Footnote 45] FHWA established the Buy America 
threshold to avoid burdening states with administrative 
responsibilities for small projects but has not revised the threshold 
since 1983. FHWA officials said that they have not revised the 
threshold because limited staff resources and other potential statutory 
program changes have delayed scheduled revisions. State DOT officials 
said that the cost of steel for most projects, even small ones, falls 
above this threshold, given recent increases in steel prices. As a 
result, states may not obtain the administrative relief the law 
intended for small projects. FHWA officials agreed that the threshold 
should be re-evaluated or updated, and officials at one state DOT 
suggested that the threshold be adjusted for inflation. 

Additionally, according to some state transportation officials we met 
with, the DBE program's $750,000 ceiling on personal net worth is 
outdated. According to the state DOT officials, the ceiling does not 
meet current economic standards and has not kept up with current 
inflation rates. U.S. DOT established this ceiling in 1999 to ensure 
that wealthy individuals are not allowed to participate in the program. 
U.S. DOT established the $750,000 limit based on what they believed to 
be a well-established and effective part of the Small Business 
Administration's (SBA) assistance programs for small disadvantaged 
businesses and because the $750,000 figure provided for a reasonable 
middle ground in view of the wide range of suggestions calling for 
higher or lower ceilings. However, U.S. DOT officials said that they 
have not revised this ceiling since 1999 because SBA has not adjusted 
the thresholds for its SBA programs. Furthermore, according to a U.S. 
DOT official, since courts look closely at whether the DBE program is 
"over-inclusive" (i.e., serving people that it is not intended for), 
the ceiling has become important to the constitutional defense of the 
program as several federal court decisions have cited the existence of 
the ceiling as one of the factors leading them to uphold the program's 
constitutionality. California transportation officials said that one 
challenge with an outdated personal net worth ceiling for the DBE 
program is that the low ceiling makes it difficult to recruit new DBEs 
for certification and retain them in the DBE program. U.S. DOT reviewed 
the ceiling in 2005 when they reviewed the DBE airport concessions 
rule. At that time, the U.S. DOT concluded that the $750,000 cap was 
appropriate, as it ensured that wealthy individuals did not participate 
in the program. FHWA officials agreed, however, that the personal net 
worth ceiling should be adjusted for inflation. 

According to officials at some state government agencies and 
contractors, the Buy America program's definition of foreign steel may 
be too narrowly defined, which they say has caused delays or has 
increased project costs. More specifically, FHWA regulations for the 
Buy America program state that all manufacturing processes that modify 
a product's physical size, shape, or chemical content must occur in the 
United States. For example, if steel materials are sent to a foreign 
country to be rolled or if a piece of machinery includes one small 
component of foreign steel, that product is considered to be foreign 
made and is not in compliance with Buy America. Florida DOT officials 
said one challenge with this definition is that it is difficult for 
them to find domestic manufacturers of mechanical systems for certain 
movable bridges. Florida DOT officials and contractors told us that the 
time they spend searching or waiting for domestic materials to be 
produced adds to project delays. State DOT officials also said that the 
Buy America provision can cause construction delays if it is discovered 
that the requirement is not being met after construction begins. 
Construction delays are generally the result of the domestic product 
not being available in sufficient quantities to meet project schedules 
or if the domestic product is not regularly produced. Furthermore, 
Florida DOT officials also told us that for the movable bridges, there 
are many components that require some level of work in a foreign 
manufacturing shop that then renders the entire component as foreign, 
even though the majority was domestically produced. In such cases, a 
waiver can be requested from FHWA. However, FHWA officials said that 
domestic suppliers are found for the majority of waiver applications. 
If FHWA does not grant a waiver, the design of the project needs to be 
corrected or the foreign components need to be replaced with domestic 
components. 

Lastly, some state transportation agency officials also said that the 
waiver provisions in the Buy America program are not clearly defined, 
and as a result, the waiver process may be inconsistently interpreted 
or applied at the federal level. Some state transportation agency 
officials told us that they often do not apply for Buy America waivers 
because the process lacks defined criteria and has led to inconsistent 
FHWA approvals. According to state transportation officials, waivers 
could help state transportation agencies reduce project costs by using 
potentially less expensive foreign steel. FHWA recently started posting 
notice of waiver requests on its Web site for public comment for a 15- 
day period and also published notices of findings on waiver requests in 
the Federal Register.[Footnote 46] These notices include more detailed 
justification for approving the waiver. Officials from the American 
Iron and Steel Institute, an industry trade association, told us they 
think these changes will result in more transparent approvals; however, 
FHWA officials said these new notification processes will add more time 
to projects because additional time is needed to receive and respond to 
public comments, especially when there are potential domestic 
manufacturers of products that oppose the waiver. In addition, FHWA 
officials said that the process of publishing a notice of findings in 
the Federal Register requires additional time and could delay a project 
if a waiver is requested after construction has already begun. 

Project Stakeholders Have Developed and Are Using Strategies to Address 
Challenges, with Varying Success: 

Congress and federal and state government agencies have developed 
strategies to address many of the challenges federal and state 
transportation agencies and contractors face in completing highway 
projects and complying with federal requirements. According to various 
agency officials and highway contractors, some of these initiatives are 
resulting in decreased project costs and delays, though they could not 
quantify the cost savings or delay reductions. Specifically, Congress 
has attempted to improve project delivery time frames. As we have 
previously reported,[Footnote 47] with SAFETEA-LU, Congress made a 
number of changes to the environmental review processes required of 
state and local transportation agencies. For example, SAFETEA-LU 
Section 6004 amended title 23 of the U.S. Code to allow state DOTs to 
assume FHWA's responsibility for determining whether certain highway 
projects can receive categorical exclusions, in accordance with 
criteria to be established by FHWA. If a state assumes this 
responsibility, FHWA would no longer approve categorical exclusions and 
serve more in a monitoring role. This change made by SAFETEA-LU was 
intended to facilitate more efficient reviews of transportation 
projects, expediting completion without diminishing environmental 
protections. Additionally, in 2002, the President issued an executive 
order for expedited environmental reviews.[Footnote 48] This executive 
order directs executive departments and agencies to accelerate their 
environmental reviews for permits and approvals for transportation 
infrastructure projects designated by the Secretary of Transportation 
to be "high priority." FHWA and state transportation agency officials 
said that the executive order has helped expedite the NEPA process. 
Separately, FHWA has taken initiatives to provide guidance and 
opportunities to better streamline compliance with the federal 
requirements. For example, FHWA has developed a database--the State 
Environmental Streamlining and Stewardship Practices Database--that 
provides opportunities for states to share examples of streamlining and 
stewardship practices. This database is available to all state DOTs 
through FHWA's Web site. EPA is also using electronic or online 
processes to assist them in streamlining projects. For example, they 
are using systems to allow stormwater permittees to electronically file 
permitting information, which reduces the amount of time that EPA needs 
to receive and process this information. Separately, in 2003, DOL 
created, and FHWA is facilitating, a pilot program for selected state 
DOTs to test software that provides for a Web-based format for the 
submission of Davis-Bacon prevailing wage payroll statements and weekly 
contractor certifications. The software was designed to eliminate the 
paperwork burden associated with labor compliance requirements for 
contractors and state DOTs. Other federal agencies, together with 
industry associations, have also offered guidance and training to state 
and local transportation officials and contractors to help them build 
better practices to streamline compliance activities. According to some 
state transportation officials, some of these federal efforts have 
helped states reduce project costs and delays. 

FHWA has recognized that project delays impede transportation system 
improvements and that streamlining environmental reviews and 
documentation is essential to mitigate the delays and implement highway 
projects more quickly and cost-effectively. Accordingly, FHWA has 
developed a performance measure--known as the Vital Few Environmental 
Streamlining and Stewardship Goal (Environment VFG)--to track the time 
it takes for projects to go through EAs and EISs, so that FHWA can 
improve the timeliness of environmental review processes, and 
ultimately, reduce project delays. Furthermore, by tracking time frames 
for environmental reviews, FHWA should be able to develop a better 
understanding of the key impediments to, or shortcomings in, the 
environmental review process, and address congressional, state, and 
other concerns about the process. In fiscal years 2007 and 2008, the 
goal of the Environment VFG was to decrease the median time to complete 
EAs and EISs to 12 and 36 months, respectively.[Footnote 49] In 
developing these goals, FHWA advised state DOTs to establish deadlines, 
through negotiation with FHWA division offices and resource agencies, 
and track data to measure success through FHWA's Environmental Document 
Tracking System (EDTS). 

Despite this framework, FHWA has not met its goals for the Environment 
VFG performance measure. As figure 3 illustrates, since fiscal year 
2004, the median time for completing EISs has increased by almost 26 
percent, while FHWA's goal for completing EISs has decreased. 
Furthermore, in fiscal year 2007, the median time to complete EISs 
reached 68 months--almost 89 percent above FHWA's goal of 36 months. 
The median time to complete EAs in the same fiscal year was about 67 
percent greater than FHWA's goal of 12 months. FHWA officials told us 
that progress in meeting their goals has been slow because delays arise 
from federal and state governments' need to address issues that emerge 
during project development, such as those issues that are mentioned in 
this report. Some state DOT officials also said that environmental 
issues that are discovered during the environmental review or changes 
in environmental rules established by EPA or at other federal agencies 
also contribute to delays. Furthermore, according to FHWA, the federal 
environmental review process, as well as state and local impediments 
such as funding and local controversy, can cause project delays. 
Additionally, as noted earlier, FHWA officials noted that there are no 
legal consequences for missing deadlines. Nonetheless, to improve the 
time frames, FWHA has analyzed the reasons for why environmental time 
frames have not been met and is attempting to improve the time frames 
by improving the environmental review process, as required by section 
139, 23 U.S.C., since modified by SAFETEA-LU Section 6002, and by 
developing additional streamlining initiatives. 

Figure 3: Median Times, in Months, Taken to Complete an Environmental 
Impact Statement (EIS) or an Environmental Assessment (EA) for Federal- 
Aid Highway Projects, Fiscal Years 2003 to 2008: 

[Refer to PDF for image] 

This figure contains two combination vertical bar and line graphs 
depicting the following data: 

Environmental assessments (EA): 

Fiscal year: 2003; 
EA Target, Median number of months to complete: 17; 
EA Actual, Median number of months to complete: 26. 

Fiscal year: 2004; 
EA Target, Median number of months to complete: 16; 
EA Actual, Median number of months to complete: 25. 

Fiscal year: 2005; 
EA Target, Median number of months to complete: 15; 
EA Actual, Median number of months to complete: 25. 

Fiscal year: 2006; 
EA Target, Median number of months to complete: 14; 
EA Actual, Median number of months to complete: 34. 

Fiscal year: 2007; 
EA Target, Median number of months to complete: 12; 
EA Actual, Median number of months to complete: 20. 

Fiscal year: 2008; 
EA Target, Median number of months to complete: 12; 
EA Actual, Median number of months to complete: [Empty]. 

Environmental impact statements (EIS): 

Fiscal year: 2003; 
EA Target, Median number of months to complete: 51; 
EA Actual, Median number of months to complete: 68. 

Fiscal year: 2004; 
EA Target, Median number of months to complete: 48; 
EA Actual, Median number of months to complete: 54. 

Fiscal year: 2005; 
EA Target, Median number of months to complete: 45; 
EA Actual, Median number of months to complete: 60. 

Fiscal year: 2006; 
EA Target, Median number of months to complete: 40; 
EA Actual, Median number of months to complete: 61. 

Fiscal year: 2007; 
EA Target, Median number of months to complete: 36; 
EA Actual, Median number of months to complete: 68. 

Fiscal year: 2008; 
EA Target, Median number of months to complete: 36; 
EA Actual, Median number of months to complete: [Empty]. 

Source: GAO analysis of FHWA data. 

Note: According to FHWA officials, FHWA developed the Environment VFG 
in fiscal year 2002 and began setting EA and EIS targets in fiscal year 
2003. FHWA developed EA and EIS goals for fiscal year 2008, but actual 
times are not available. FHWA officials said that for fiscal year 2009, 
the median target time to complete EISs is 60 months, effective as of 
October 1, 2008. 

[End of figure] 

In addition to the federal government, several state transportation 
agencies are implementing strategies to expedite compliance with the 
federal requirements we are reviewing. These initiatives include 
streamlining agreements, called programmatic agreements, that state 
DOTs have reached with federal government agencies responsible for 
environmental approvals and permits. For example, Texas DOT has a 
programmatic agreement with FHWA, the Texas State Historic Preservation 
Officer, and ACHP to ensure that compliance with the National Historic 
Preservation Act is streamlined. Under this agreement, Texas DOT acts 
as FHWA's agent to carry out its responsibilities under the National 
Historic Preservation Act, allowing the state to make findings and 
determinations on whether there is an adverse effect to historic 
properties and to complete the consultation requirements required by 
the act. Some state transportation officials told us that they can save 
time by entering into agreements with FHWA and resource agencies to 
spell out broad categories of projects that can be advanced under 
preagreed conditions, with little or no need for individualized review. 
Separately, to help resolve staffing shortages at resource agencies, 
some state DOTs fund positions for additional staff at federal and 
state agencies to perform environmental review activities, including 
approval and permitting actions for transportation projects. As we have 
previously reported,[Footnote 50] while some states approve of the 
practice of funding positions at federal and state resource agencies 
for environmental reviews, other states believe the resource agencies 
should fund their own activities. USACE officials said that it is 
helpful to them to have stable positions at their office, funded by a 
state, to focus specifically on transportation issues and permitting 
because such a strategy helps the permitting process move more quickly 
and consistently. Finally, some state DOTs have developed ways to 
streamline the processing of the federal requirements. For example, 
Florida DOT officials developed the Efficient Transportation Decision 
Making process to address challenges they were facing in coordinating 
resource agencies during the NEPA process. This process seeks input 
from the resource agencies through an online interactive database for 
major projects throughout the NEPA process. According to a Florida DOT 
review of the Efficient Transportation Decision Making process, the 
process has yielded improved decision making and improved interagency 
relationships, among other benefits. See appendix III for more 
information on the initiatives mentioned in this section. 

Conclusions: 

As the demand for highway capacity has increased and as project costs 
have risen, the demand for nonfederal and federal highway funds has 
grown, making it essential that states and localities use these funds 
as efficiently as possible. The four federal requirements we reviewed 
have important economic and environmental benefits, but the steps 
involved in compliance may add time and costs to projects. Federal and 
state strategies have helped to address some of the challenges involved 
in compliance. However, quantitative information is limited. For 
example, we found little information quantifying the benefits, delays, 
and costs of the requirements we reviewed, though some states are 
beginning to track environmental costs incurred during highway 
projects. Without quantitative information, agencies cannot compare 
costs and benefits or assess the impact of their actions on project 
time and costs. With state and local governments constructing and 
expanding roads at a time when transportation dollars are limited, it 
is critical that states use federal dollars efficiently to finance 
their highway projects. 

In addition, some outdated provisions in the federal requirements we 
reviewed can limit states' ability to spend transportation dollars as 
effectively as possible. The $2,500 regulatory threshold for the Buy 
America requirement no longer serves its original purpose of exempting 
states from the administrative burden associated with this requirement 
for small projects. This administrative burden may increase the costs 
of small projects, and it reduces the resources available for other 
projects. Finally, the $750,000 regulatory personal net worth ceiling 
of the DBE program has not changed since 1999, and according to state 
transportation officials, increasing this threshold could facilitate 
the hiring of minority-and women-owned firms. 

Recommendations for Executive Action: 

To address the challenges associated with the federal requirements we 
reviewed, to better ensure that federal funds are used as efficiently 
as possible, and to assist states in minimizing project delays and 
costs associated with federal requirements, we recommend that the 
Secretary of Transportation re-evaluate the $2,500 regulatory threshold 
for the Buy America program and the $750,000 regulatory personal net 
worth ceiling of the DBE program, and modify them, if necessary, 
through appropriate rulemaking. 

Agency Comments and Our Evaluation: 

We provided a draft of this report to USACE, ACHP, DOL, U.S. DOT, and 
EPA for their official review and comment. USACE, ACHP, U.S. DOT, and 
EPA provided technical comments, which we incorporated into the final 
report where appropriate. U.S. DOT took no position on our 
recommendation regarding the Buy America program threshold and DBE 
personal net worth ceiling. DOL officials notified us that they had no 
comments on this report. 

We are sending copies of this report to interested congressional 
committees, the Secretaries of Transportation and Labor, the 
Administrator of EPA, the Chief of Engineers at USACE, and the 
Executive Director of ACHP. The report is also available at no charge 
on the GAO Web site at [hyperlink, http://www.gao.gov]. 

If you or your staffs have any questions, please contact me at (202) 
512-2834 or wised@gao.gov. Contact points for our Offices of 
Congressional Relations and Public Affairs are on the last page of this 
report. GAO staff who made contributions to this report are listed in 
appendix IV. 

Signed by: 

David J. Wise: 
Acting Director, Physical Infrastructure Issues: 

[End of section] 

Appendix I: Objectives, Scope, and Methodology: 

The objectives of this report were to review (1) the types of benefits 
and costs associated with selected federal requirements for federal-aid 
highway projects; (2) the influence of these federal requirements on 
states' decisions to use nonfederal or federal funds for highway 
projects; and (3) the challenges associated with the federal 
requirements and strategies that federal, state, and local government 
agencies and contractors have used or proposed to address these 
challenges. 

Although many requirements apply to federally funded highway projects, 
our review focused on four federal requirements: the National 
Environmental Policy Act (NEPA), the Davis-Bacon prevailing wage 
requirement, the Disadvantaged Business Enterprises (DBE) program, and 
the Buy America program. We selected these four requirements for our 
review on the basis of (1) initial interviews with officials in the 
headquarters offices of the Federal Highway Administration (FHWA), the 
U.S. Army Corps of Engineers (USACE), the Environmental Protection 
Agency (EPA), the Department of Labor's Wage and Hour Division, and the 
Advisory Council on Historic Preservation's Office of Federal Agency 
Programs; and (2) interviews with experts at industry associations, 
including the National Conference of State Legislatures, the American 
Highway Users Alliance, the American Association of State Highway and 
Transportation Officials (AASHTO), the Associated General Contractors 
of America, the American Road and Transportation Builders Association, 
and the American Iron and Steel Institute. Furthermore, rather than 
focusing our review on broader requirements associated with 
transportation planning, such as requirements for developing a 
transportation improvement program, we focused our review on project- 
specific requirements. 

To identify the types of costs and benefits associated with these 
requirements for federal-aid highway projects, we reviewed published 
research and studies. We identified 30 relevant studies by searching 
bibliographic databases, using as our criteria studies or reports that 
identified benefits, costs, challenges, and strategies used to address 
the challenges of complying with the federal requirements. After 
identifying the studies, we reviewed each one to determine its 
relevance and applicability to our objectives. The studies we reviewed 
included reports on highway requirements issued by the Congressional 
Research Service and the Congressional Budget Office, as well as 
studies issued by state departments of transportation (DOT), AASHTO, 
and the National Cooperative Highway Research Program. We also reviewed 
GAO reports that addressed agencies' tracking of costs and benefits of 
certain federal regulations. Finally, we reviewed an FHWA report 
entitled, The Costs of Complying with Federal-aid Highway Regulations. 
For each of the studies we identify in this report, we reviewed its 
methodology, including the study's datasets, sample size, and data 
collection techniques, and concluded that the methodology is 
sufficiently reliable for the purposes of our report; however, we did 
not independently verify the results of these studies. 

To determine the influence of these federal requirements on states' 
decisions to use nonfederal or federal funds for highway projects, we 
surveyed state DOT officials in all 50 states and the District of 
Columbia. In the survey, which appears in appendix II, we asked the 
officials how the selected federal requirements factored into their 
funding decisions for highway projects eligible for federal aid. After 
we drafted the survey, we pretested it in one state to ensure that the 
questions were clear and unambiguous, the terminology was used 
correctly, the survey did not place an undue burden on agency 
officials, the information could be feasibly obtained, and the survey 
was comprehensive and unbiased. We found the results of the pretest 
sufficient to administer the survey to the other states. To administer 
the survey, we obtained from FHWA the appropriate points of contact for 
transportation officials at each state DOT. Beginning on March 31, 
2008, we e-mailed the survey to these transportation officials. We 
received a survey response from every state DOT, thereby achieving a 
100 percent response rate. Because this was not a sample survey, it has 
no sampling errors. However, the practical difficulties of conducting 
any survey, such as problems in interpreting a response to a particular 
question or entering data into a spreadsheet, may introduce nonsampling 
errors. To minimize such errors, we pretested the survey, as noted, and 
verified the accuracy of the data keyed into our data collection tool 
by comparing the data with the corresponding survey. The survey used 
for this study is reproduced in appendix II. 

To supplement the survey, and to give respondents an opportunity to 
elaborate on their survey responses, we selected 10 states for follow- 
up telephone interviews. In determining which states to select for 
interviews, we excluded the 5 states we used as case studies-- 
California, Florida, Idaho, Maryland, and Texas--and chose our sample 
from the remaining states. We also based our selection of these 10 
states on their responses to the survey, their funding levels, and 
geographic dispersion. The 10 states we selected for follow-up 
interviews with DOT officials were Hawaii, Illinois, Maine, 
Massachusetts, New Hampshire, Ohio, Oregon, Utah, Virginia, and 
Washington. 

To identify the challenges associated with the federal requirements and 
strategies that various highway project stakeholders have used or have 
proposed to address these challenges, we visited and interviewed 
officials in California, Idaho, Maryland, and Texas, and interviewed 
officials in Florida by telephone. To select these states, we 
considered a number of factors. We identified a nongeneralizable sample 
based on whether a state (1) participated in the Surface Transportation 
Project Delivery Pilot Program, which allowed states to assume NEPA 
review authority, or (2) had projects designated for streamlined 
environmental review, pursuant to Executive Order No. 13274. In 
addition, we interviewed officials from federal agencies and 
representatives from industry associations such as AASHTO. These agency 
officials and industry association representatives identified states 
that had initiated notable streamlined transportation planning and 
project development processes. Finally, we included in our sample 
states that had received varying levels of federal funding. At the five 
states in our sample, we interviewed officials from FHWA division 
offices; other federal organizations, such as USACE and EPA division 
offices; state and local transportation offices; and metropolitan 
planning organizations, as well as private industry contractors and 
consultants who worked on federally funded highway projects. To 
understand the strategies used to address challenges, we reviewed 
public and private sector research, studies, agreements, and proposals 
on methods and programs to streamline strategies at the federal, state, 
and local levels. 

We conducted this performance audit from October 2007 through November 
2008 in accordance with generally accepted government auditing 
standards. Those standards require that we plan and perform the audit 
to obtain sufficient, appropriate evidence to provide a reasonable 
basis for our findings and conclusions based on our audit objectives. 
We believe that the evidence obtained provides a reasonable basis for 
our findings and conclusions based on our audit objectives. 

[End of section] 

Appendix II: GAO Survey of State Departments of Transportation: 

United States Government Accountability Office: 
GAO: 

Survey of State Departments of Transportation and their Decisions on 
Funding Highway Projects: 

Introduction: 

The U.S. Government Accountability Office (GAO), the research arm of 
the United States Congress, is studying how federal requirements factor 
into states' funding decisions for highway projects eligible for 
Federal Aid Highway Program funds. As part of this study, GAO is 
surveying state Departments of Transportation. 

Please help us report the most accurate information to Congress by 
responding to this brief survey. This survey asks for minimal 
information and should take approximately 5 minutes to complete. 

Please complete this survey even if your state uses federal funding 
only for highway projects. We are interested in all projects that are 
eligible for Federal Aid Highway Program (FAHP) funds. 

Please complete this survey and email it to us by April 11, 2008. 

Instructions: 

This questionnaire can be completed using Microsoft Word. Please save 
this document to your computer and attach it to an e-mail message to 
DaveR@gao.gov. If you prefer, you may print a copy of this 
questionnaire, complete it by hand, and fax it to us at 202-512-8774 to 
the attention of Roshni Dave. Please call us at 202-512-6516 to alert 
us that a fax is being sent). 

* Please use your mouse to navigate by clicking on the field or check 
box you wish to answer. 

* To select a check box simply click on the center of the box. You can 
uncheck the box by simply clicking on the check box again. 

* To answer an open-ended question, click on the response field	and 
begin typing. The box will expand to accommodate your answer. 

If you have arty questions about this questionnaire, please contact 
Roshni Dave at 202-512-6516 or DaveR@gao.gov. 

Funding Decisions: 

1. In the last ten years, has your state made a decision to use 
nonfederal funds for a highway project eligible for federal aid because 
of federal requirements? (Mark only one response) 
Yes: 
No: SKIP to Question #4. 

2. Did the following federal requirements factor into your decision to 
use nonfederal funds rather than federal funds? (Mark only one response 
for each row) 

National Environmental Policy Act (NEPA): 
Yes: 
No: 

Davis-Bacon Act: 
Yes: 
No: 

Disadvantaged Business Enterprises (DBE) program: 
Yes: 
No: 

Buy America Act: 
Yes: 
No: 

Other (please specify below): 

3. How often does your state use nonfederal funds rather than federal 
funds for highway projects to avoid federal requirements? (Mark only 
one response) 
100% of the time: 
More than 50% of the time but less than 100%: 
About 50% of the time: 
Less than 50% of the time but more than never: 
Never: 

4. What are the positive outcomes on highway projects of using 
nonfederal funds instead of federal funds? 

5. What are the negative outcomes on highway projects of using 
nonfederal funds instead of federal funds? 

6. Who coordinated the completion of this survey?
Name: 
Position title: 
Telephone number: 
E-mail address: 

7. Who is most familiar with funding decisions in your state and most 
knowledgeable of the selected federal requirements associated with 
highway projects that we should contact if a follow-up interview is 
needed? 
Name: 
Position title: 
Telephone number: 
E-mail address: 

[End of section] 

Appendix III: Strategies Used or Proposed by Federal and State Agencies 
to Address Challenges Associated with Federal Requirements: 

Federal and state agencies have implemented or proposed the following 
strategies to address the challenges associated with federal 
requirements for highway projects.[Footnote 51] 

Implementing or authorizing organization: 
White House; 
Strategy: Environmental Stewardship and Transportation Infrastructure 
Project Reviews, Exec. Order No. 13274; 
Details: The 2002 executive order authorizes the Secretary of 
Transportation to designate infrastructure projects for expedited 
environmental reviews. Since these reviews were authorized, 19 projects 
have been selected for expedited review, including 15 highway or bridge 
projects. Three of our case study states--California, Texas, and 
Maryland--have had projects designated for expedited reviews and placed 
on the order's project list. State officials in California, Maryland, 
and Texas reported mixed results on the effectiveness of the executive 
order in expediting environmental reviews. Maryland transportation 
officials told us that placing their Inter-County Connector (ICC) 
project on the executive order's project list helped move the project 
forward. Previously, during the 1980s and 1990s, the project was 
stalled by high levels of controversy over environmental issues, lack 
of support for the project from state government leaders, and 
difficulty in getting stakeholders to collaborate on the project. 
Putting the ICC on the project list in 2003 enabled Maryland DOT to 
build on renewed support for the project from state government leaders 
by formalizing a collaborative process among stakeholders that sped up 
the project's delivery. This collaborative process involved the 
creation of an interagency workgroup through which staff-level 
stakeholders resolved disagreements over environmental issues before 
the issues were elevated to higher-level government agency authorities. 
Once placed on the executive order project list, the ICC moved from the 
planning stage to a final Record of Decision in 2006 for environmental 
issues in 3 years. By contrast, California DOT officials said that the 
executive order raised agency awareness for the projects placed on the 
list in their states. 

Implementing or authorizing organization: White House; 
Strategy: Council on Environmental Quality Modernizing NEPA Task Force; 
Details: The task force, which formulated in 2002, is comprised of 
representatives from a variety of different federal agencies, such as 
the Environmental Protection Agency (EPA) and the U.S. Forest Service. 
This task force reviews current National Environmental Policy Act 
(NEPA) implementing practices and procedures and recommends 
improvements to make NEPA more effective, efficient, and timely. The 
task force developed several products, including a handbook, 
Collaboration in NEPA - A Handbook for NEPA Practitioners, published in 
October 2007, to improve the NEPA process through collaboration. State 
DOT officials were familiar with this task force; however, we heard 
varied responses from these officials on whether the products produced 
by the task force helped streamline environmental review processes. 

Implementing or authorizing organization: Congress; 
Strategy: The Safe, Accountable, Flexible, Efficient Transportation 
Equity Act: A Legacy for Users (SAFETEA-LU) Section 6002: Efficient 
Environmental Reviews for Project Decision-making; 
Details: SAFETEA-LU Section 6002 (23 U.S.C. §139) established a new 
process to promote efficient project management by federal agencies and 
enhanced opportunities for coordination with the public and other 
agencies. Several changes were made to the environmental review 
process, including a new requirement for a coordination plan for public 
and agency participation. We previously reported that changes in the 
review process can result in better project decisions; however, some 
state transportation officials told us that the process may not 
necessarily be more efficient, since extra steps required to comply 
with the provision adds time to environmental review. Section 6002 also 
changed the law to allow a 180-day limit on lawsuits challenging final 
federal agency environmental decisions--such as the approval of an 
environmental impact statement-- on highway projects, when notices of 
those decisions are published in the Federal Register. We previously 
reported state transportation officials' opinions that this could lead 
to cost savings because it limits lawsuits to a period when it would 
not cost as much to change project plans and, after this period, work 
can proceed on a project without the risk of a lawsuit. 

Implementing or authorizing organization: Congress; 
Strategy: SAFETEA-LU Section 6004: State Assumption of Responsibility 
for Categorical Exclusions; 
Details: SAFETEA-LU Section 6004 (23 U.S.C. §326) changed the law to 
allow state DOTs to assume responsibility for determining whether 
certain highway projects can receive categorical exclusions, in 
accordance with criteria to be established through a Memorandum of 
Understanding between the U.S. Department of Transportation's Federal 
Highway Administration (FHWA) and the state. If a state assumes this 
responsibility, FHWA does not approve categorical exclusions but does 
monitor whether the state is adequately applying FHWA's criteria. A 
state can assume this responsibility after waiving its sovereign 
immunity. To date, only two DOTs, California DOT and Utah DOT, have 
assumed this authority, and only Alaska DOT is seeking it. Some state 
transportation officials we spoke with told us that they did not pursue 
this approval authority because they already have agreements in place 
with FHWA that streamline approvals for categorical exclusions. State 
officials also identified the requirement to waive sovereign immunity 
as an obstacle to their taking advantage of the categorical exclusions 
approval authority. California DOT reported to FHWA that, as a result 
of Section 6004, they saved a median of about 28 days and a mean of 7 
days for categorical exclusion determinations statewide due to 
administrative efficiencies and time savings associated with 
consultations and coordination with federal resources agencies. FHWA 
officials said that, in general, agreements between state DOTs and FHWA 
Division Offices are valuable and they can entail shorter or defined 
time frames for reviews and responses. However, we previously reported 
that, according to one resource agency, the state assumption of 
responsibility for categorical exclusion reviews could decrease the 
input from resource agencies in addressing environmental issues.[A] 
Although overall interest in Section 6004 is limited, states may be 
experiencing similar time savings with their own streamlining 
agreements with FHWA. 

Implementing or authorizing organization: Congress;
Strategy: SAFETEA-LU Section 6005: Surface Transportation Project 
Delivery Pilot Program; 
Details: SAFETEA-LU Section 6005 (23 U.S.C. §327) established a pilot 
program that gave five states--Alaska, California, Ohio, Oklahoma, and 
Texas--the opportunity to assume FHWA's environmental responsibilities 
for highway projects under NEPA and other federal environmental laws, 
after waiving sovereign immunity and entering into a Memorandum of 
Understanding with FHWA. FHWA continues to provide oversight. This 
program is designed to provide information on whether delegating these 
responsibilities to the state will result in more efficient 
environmental reviews, while meeting all federal requirements for these 
reviews. California, whose state DOT assumed this responsibility in 
July 2007, is the only state participating in the program, although 
Alaska has expressed interest to FHWA in applying for this in the 
future. The other three states declined the opportunity for various 
reasons, including the restriction on using state funds to acquire 
right-of-way for highway projects prior to the NEPA decision and the 
inability of the states to obtain approval from their legislatures to 
waive sovereign immunity, which is required for the program. 
Furthermore, as we previously reported, states are concerned about the 
amount of work required to set up such a program and want to see how 
the program works in California. California DOT officials told us that 
the time to conduct environmental reviews has decreased for the 
projects that have undergone the NEPA process since California assumed 
this authority. They told us that the median review and approval times 
for draft environmental documents and final environmental documents was 
shorter for pilot program projects compared to prepilot program 
projects. For example, they said it took prepilot program projects a 
median time of 6.1 months to complete draft environmental documents, 
while it took pilot program projects a median of 1.6 months, a savings 
of 4.5 months, to complete. Additionally, they said it took a median 
time of 2.0 months to complete final environmental documents for 
prepilot program projects and 0.8 months for pilot program projects, a 
savings of 1.2 months. Part of the time savings, they say, occurs 
because FHWA has reduced its review. FHWA published its first audit on 
September 23, 2008. The audit reviewed fundamental processes and 
procedures the state put in place to carry out the assumptions of the 
roles and responsibilities, but it did not report on the program's 
impact on environmental review time frames because it was the first 
audit that FHWA has conducted. Overall, FHWA found that the California 
DOT has made reasonable progress in implementing the startup phase of 
Pilot Program operations and is learning how to operate the program 
effectively. FHWA's second audit was held in July 2008, and the results 
are forthcoming in the Federal Register. In this audit, FHWA examined 
performance measures. Specifically, FHWA examined changes in the time 
states spent on completing environmental documents. 

Implementing or authorizing organization: Congress; 
Strategy: SAFETEA-LU Strategic Highway Research Program 2 (SHRP 2); 
Details: SAFETEA-LU authorized funding for SHRP 2, a research program 
that FHWA, AASHTO, and the Transportation Research Board jointly 
conduct to obtain information on highway safety, renewal, reliability, 
and capacity. Some of the research focuses on approaches and tools for 
systematically integrating environmental considerations into project 
analysis and planning. One project involves developing a collaborative 
decision-making framework for transportation planners to use to enhance 
collaboration from project planning through project development. The 
study includes 25 case studies of the challenges faced by state and 
local transportation officials when trying to manage multiple 
stakeholders. The report is currently in draft. 

Implementing or authorizing organization: U.S. DOT; 
Strategy: Refocus. Reform. Renew: A New Transportation Approach for 
America (Proposed); 
Details: To better streamline federal requirements, in 2008, U.S. DOT 
has proposed to (1) allow state requirements to satisfy "substantially 
similar" federal requirements, (2) exempt projects with less than 10 
percent federal funding from federal requirements, and (3) pilot a 
project for some states to opt out of federal requirements under titles 
23 and 49 (except the Davis-Bacon prevailing wage requirement) in 
exchange for a reduction in the percentage of federal funding they 
would otherwise receive. The proposal also includes several specific 
reforms to the NEPA process: clarifying what constitutes a reasonable 
alternative, reducing FHWA documentation requirements by allowing the 
final environmental impact statements to be combined with the Record of 
Decision into one document to simplify the process, and broadening 
categorical exclusion assignment authority to states. This proposal has 
not been finalized. 

Implementing or authorizing organization: FHWA; 
Strategy: State Environmental Streamlining and Stewardship Practices 
Database; 
Details: This database contains information on streamlining and 
stewardship practices used by states as ways to efficiently and 
effectively fulfill their NEPA obligations. FHWA officials said that 
they regularly update the database with state-nominated practices and 
all are available to the public on the Internet. For example, for 
Maryland, FHWA has 30 practices listed, including a workshop to address 
working relationships between participating agencies in environmental 
reviews, various copies of programmatic agreements (described later in 
this appendix), and templates for evaluating categorical exclusions. 
FHWA officials said that this database provides states with examples 
and enables states to share practices for streamlining the 
environmental review process. Maryland DOT officials said that this 
database is helpful in that it helps them acquire information more 
efficiently and that it expands their thinking in the development of 
their environmental streamlining agreements--which can ultimately 
reduce project costs and delays. Officials at California DOT said, 
however, that it is difficult for them to implement solutions from 
another state that does not have to comply with as many state 
environmental laws and regulations as California. Other states say that 
the database has not helped them decrease projects costs or delays. 

Implementing or authorizing organization: FHWA; 
Strategy: Pilot program to evaluate Web-based submission of Davis-Bacon 
prevailing wage weekly payroll statements and certification; 
Details: To reduce paperwork burdens described earlier in this report, 
in 2003, the Department of Labor (DOL) created and FHWA is facilitating 
this pilot program for selected state DOTs to submit Davis-Bacon 
prevailing wage weekly payroll statements and contractor certifications 
on the Internet. Software automatically downloads information from 
payroll processors and performs diagnostics (including issuing an alert 
if an employee rate is incorrect). Officials from the two participating 
state DOTs that we contacted--Arizona DOT and Wisconsin DOT--told us 
that the new process provided automatic electronic approval of payrolls 
and eliminated the need for staff to manually review payrolls. An 
Arizona DOT official told us that it reduced the amount of paperwork 
and repetitive steps and created consistency for payroll submission 
across contractors. Both state DOT officials told us that they have 
received positive feedback from some contractors. Although, the 
Wisconsin DOT official told us that large contractors had challenges 
formatting their payroll systems to input data into the software and 
that small contractors had problems if they did not have access to 
computers. Other challenges both states mentioned focused on 
programming the software and educating contractors. Neither state DOT 
has tracked cost savings. 

Implementing or authorizing organization: AASHTO; 
Strategy: Center for Environmental Excellence; 
Details: In consultation with FHWA, AASHTO developed the Center for 
Environmental Excellence to help streamline environmental review and 
transportation delivery processes and encourage environmental 
stewardship. It provides transportation professionals with guidance, 
training, and access to environmental tools, among other types of 
information. The center also provides practitioners with technical 
assistance, including on-call help. 

Implementing or authorizing organization: State DOTs; 
Strategy: Programmatic agreements; 
Details: State DOTs have taken the lead to enter into these formal 
agreements with FHWA and federal and state agencies to establish 
actions and processes for streamlining compliance with environmental 
regulations. The agreements often identify categories of projects that 
can be advanced under preagreed conditions, with little or no need for 
individualized review by those agencies. Agreements address a number of 
issues, such as compliance with the National Historic Preservation 
Act,[B] NEPA, the Endangered Species Act, and other requirements. For 
example, the Texas DOT entered into an agreement with FHWA and the 
State Historic Preservation Office (SHPO) in Texas. Under this 
agreement, Texas DOT acts as FHWA's agent to carry out responsibilities 
under the National Historic Preservation Act, allowing the state to 
make findings and determinations on whether there is an adverse effect 
to historic properties and to complete the consultation requirements 
required by the act.[C] According to FHWA officials, programmatic 
agreements have helped streamline the environmental review process. 
Officials at the Advisory Council on Historic Preservation also 
indicated that programmatic agreements have improved project delivery 
time frames. 

Implementing or authorizing organization: State DOTs; 
Strategy: DOT-funded positions to other agencies; 
Details: To help resolve staffing shortages at resource agencies, state 
DOTs began in the early 1990s to fund positions for additional staff at 
federal and state agencies to perform environmental review activities, 
including approval and permitting actions for transportation projects. 
Previous transportation legislation, the Transportation Equity Act for 
the 21st Century, gave states the option of using a portion of their 
federal-aid highway funds to pay for the positions to conduct 
environmental reviews and expedite NEPA activities. State DOTs must 
obtain the approval of FHWA division offices for such uses of these 
funds. According to a 2005 AASHTO survey, 68 percent of state DOTs (34 
states) fund positions. Two-thirds of these positions were at state 
agencies and the remainder were at federal agencies. SAFETEA-LU amended 
the law to allow states to pay for positions whose activities extended 
beyond NEPA, including planning activities that precede NEPA. As we 
have previously reported,[D] states have mixed views on using state 
funds for positions at federal agencies. While some states fund 
positions at the federal agencies for environmental reviews, other 
states believe the federal agencies should fund their own activities. 
USACE officials told us that it is helpful to them to have stable 
positions at their office--funded by a state--to focus specifically on 
transportation issues and permitting. 

Implementing or authorizing organization: Florida DOT; 
Strategy: Efficient Transportation Decision Making (ETDM); 
Details: ETDM, established in 2004, provides an interactive online 
database for government agencies to provide and review environmental 
and other information on a project. Florida DOT and multiple federal 
and state agencies developed ETDM to address difficulties in getting 
involved federal and state agencies to coordinate and provide timely 
responses for highway projects. The database provides information that 
these agencies need to make decisions, such as project descriptions and 
geographic information system maps showing locations of resources. ETDM 
asks agencies to concur at certain points in the process to help ensure 
their involvement throughout the process and reduce the likelihood that 
they will challenge the project later. Since its implementation, 332 
transportation projects have been screened through EDTM. Florida DOT 
conducted a review of how ETDM was functioning. District officials at 
Florida DOT reported several benefits using ETDM, including that ETDM 
(1) provided them with better understanding of environmental issues 
early in planning and project development, (2) improved decision making 
throughout the process, (3) improved interagency relationships, and (4) 
improved agency responsiveness. They also estimated that between 
October 2004 and March 2008, over 3 years, they have saved 600 months 
to complete NEPA-related review activities and around $16 million in 
project costs for all of their projects combined.[E] However, they said 
since ETDM has not been in place long enough and most projects have not 
been through the full project development cycle, project cost and time 
savings may not be fully realized. District officials also reported 
some challenges with ETDM. For example, they reported that some 
agencies commented on environmental reviews outside their 
jurisdictional areas and that ETDM increased project scrutiny. Other 
government agencies have also reported ETDM's benefits. For example, in 
2004, the U.S. Fish and Wildlife Service and EPA reported that since 
the implementation of ETDM, they have been able to review more projects 
and at a higher level of review. USACE reported in 2006 that ETDM 
improved their staffs' knowledge of all the various pieces of the 
transportation and planning process, and as a result, removed one of 
the barriers of communication between USACE and Florida DOT. However, 
some Florida contractors told us that ETDM is not as beneficial as it 
could be because not all Florida government agencies participate as 
actively as others. 

Implementing or authorizing organization: California DOT; 
Strategy: Standard Environmental Reference; 
Details: The Standard Environmental Reference is an online guidance 
document available for California transportation agencies to help them 
comply with NEPA and the California Environmental Quality Act. The 
document provides users with information on what documentation is 
needed in a user-friendly format. California DOT officials told us that 
the Standard Environmental Reference enables local transportation 
agencies to focus their resources on necessary elements and helps them 
to avoid any potential revisions later in the NEPA process. 

Source: GAO analysis of information provided by federal and state 
agencies. 

[A] [hyperlink, http://www.gao.gov/products/GAO-08-512R]. 

[B] The National Historic Preservation Act requires federal agencies to 
take into account the effects of their activities on historic 
properties and afford the Advisory Council on Historic Preservation an 
opportunity to comment on the effects of the activity. 

[C] State Historic Preservation Offices carry out the National Historic 
Preservation Act at the state level and consult with federal agencies 
during the review. 

[D] [hyperlink, http://www.gao.gov/products/GAO-08-512R]. 

[E] Florida DOT reported that one project in one of its Districts used 
the Efficient Transportation Decision Making process even though the 
project had already entered its planning phase. This project, unlike 
the other projects that used the Efficient Transportation Decision 
Making process, experienced increases in project costs and time. 

[End of table] 

[End of section] 

Appendix IV: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

David J. Wise, (202) 512-2834 or wised@gao.gov: 

Staff Acknowledgments: 

In addition to the contact named above, Kate Siggerud (Managing 
Director), Ray Sendejas (Assistant Director), Tim Bober, Roshni Davé, 
Anne Dilger, Bess Eisenstadt, Denise Fantone, Dave Hooper, Bert 
Japikse, Alex Lawrence, Ashley McCall, Patricia McClure, Elizabeth 
McNally, Amanda Miller, SaraAnn Moessbauer, Revae Moran, Josh Ormond, 
and Amy Rosewarne made key contributions to this report. 

[End of section] 

Footnotes: 

[1] The Buy America program referred to here is distinct from the Buy 
American program under the Buy American Act. The Buy America program 
requires that federally funded highway projects use iron and steel 
manufactured in the United States. The Buy American Act applies to 
federal contracting, including federal construction contracting. 

[2] No state was selected for both a case study and follow-up 
interview. 

[3] Metropolitan planning organizations are responsible for developing 
long-range, regional transportation plans. 

[4] The Federal Highway Administration and some states, such as Oregon, 
are beginning to track this information. 

[5] GAO, Disadvantaged Business Enterprises: Critical Information Is 
Needed to Understand Program Impact, [hyperlink, 
http://www.gao.gov/products/GAO-01-586] (Washington, D.C.: June 1, 
2001). 

[6] GAO, Highways and Environment: Transportation Agencies Are Acting 
to Involve Others in Planning and Environmental Decisions, [hyperlink, 
http://www.gao.gov/products/GAO-08-512R] (Washington, D.C.: Apr. 25, 
2008). 

[7] Persons who are not members of one of the above groups and own and 
control their business may also be eligible if they establish their 
"social" and "economic" disadvantage. 

[8] Prime contractors can also be DBE firms, though various state 
officials stated that the majority of firms participating in the DBE 
program are subcontractors. 

[9] According to FHWA and steel industry officials, the highway 
projects that involve the most iron and steel are generally bridge 
projects. 

[10] Battelle, The Costs of Complying with Federal-aid Highway 
Regulations, a study prepared at the request of FHWA, Washington, D.C., 
August 2008. 

[11] A project may incur costs related to compliance with environmental 
laws at all phases through its lifespan, including planning, 
environmental review, design, and construction. 

[12] TransTech Management, Inc., Costs Related to Compliance with 
Federal Environmental Laws: Case Studies in the Federal-Aid Highway 
Program, a study prepared at the request of FHWA, Washington, D.C., 
July 2006. This study indicated that costs to replace wetlands, control 
erosion, and construct stormwater management structures have a much 
bigger impact on total project costs than staff and consultant time 
spent on project studies and construction engineering. 

[13] Washington State Department of Transportation, Washington State 
Department of Transportation Project Mitigation Costs Case Studies (May 
2003). 

[14] National Cooperative Highway Research Program, Improving Project 
Costing and Incorporation of New Attributes - Highways and Transit, 
Report 20-24 (25) (Fairfax, Virginia, 2003). 

[15] TransTech Management, Inc., Costs Related to Compliance with 
Federal Environmental Laws: Case Studies in the Federal-Aid Highway 
Program. 

[16] These projects were selected for the study's sample because they 
are projects that are routinely undertaken by state DOTs. Furthermore, 
these types of projects experience mitigation and documentation costs. 
Mitigation is required to address the typical impacts on natural 
resources that can result from these types of projects. 

[17] GAO, Highway Infrastructure: Stakeholders' Views on Time to 
Conduct Environmental Reviews of Highway Projects, [hyperlink, 
http://www.gao.gov/products/GAO-03-534] (Washington, D.C.: May 23, 
2003). 

[18] Federal Highway Administration, Evaluating the Performance of 
Environmental Streamlining: Development of a NEPA Baseline for 
Measuring Continuous Performance (Washington, D.C., 2001). 

[19] Federal Highway Administration and the American Association of 
State Highway and Transportation Officials, Final Report: Strategies 
for Reducing Highway Project Delivery Time and Cost (December 2003). 

[20] National Cooperative Highway Research Program, Improving Project 
Costing and Incorporation of New Attributes - Highways and Transit. 

[21] Battelle, The Costs of Complying with Federal-aid Highway 
Regulations. 

[22] Battelle, The Costs of Complying with Federal-aid Highway 
Regulations. 

[23] A project's Record of Decision document records the official 
completion date for the NEPA process. 

[24] National Cooperative Highway Research Program, Improving Project 
Environmental Cost Estimates, Report 25-25 (39) (forthcoming). 

[25] Battelle, The Costs of Complying with Federal-aid Highway 
Regulations. Two studies that reference benefits and enhanced 
productivity are: (1) J. Petersen, "Health Care and Pension Benefits 
for Construction Workers: The Role of Prevailing Wage Laws," Industrial 
Relations, Vol. 39, No. 2, Oxford, UK (April 2000) and (2) The 
Construction Labor Research Council, The Impact of Wages on Highway 
Construction Costs: Updated Analysis, prepared for the Construction 
Industry Labor-Management Trust and the National Heavy and Highway 
Alliance, Washington, D.C., 2004. 

[26] Michael P. Kelsay, L. Randall Wray, and Kelly D. Pinkham, "The 
Adverse Economic Impact from Repeal of the Prevailing Wage Law in 
Missouri," prepared for the Council for Promoting American Business 
(University of Missouri-Kansas City, 2004). 

[27] Peter Philips, Garth Mangum, Norm Waitzman, and Anne Yeagle, 
Losing Ground: Lessons from the Repeal of Nine ''Little Davis-Bacon" 
Acts, University of Utah, 1995. This study estimated that the 
prevailing wage requirement caused construction costs to increase by an 
average of 3 percent for each project, but also estimated that the 
federal government would lose over $800 million in income tax revenue. 

[28] A.J. Thieblot, "A New Evaluation of Impacts of Prevailing Wage Law 
Repeal," Journal of Labor Research (Spring 1996). 

[29] Data cited in both the University of Utah and the Journal of Labor 
Research studies do not reflect current 2008 dollars. 

[30] [hyperlink, http://www.gao.gov/products/GAO-01-586]. 

[31] Some state officials told us that they use nonfederal funds for 
highway projects eligible for federal aid because of federal 
requirements other than the four requirements within our scope. For 
example, they may use nonfederal funds for certain projects to bypass 
delays due to State Transportation Improvement Plan processing and to 
avoid federal design standards that preclude some projects from being 
federally funded. 

[32] In the survey we provided to states, a state could select more 
than one requirement as factoring into its decision to use nonfederal 
funds rather than federal funds. See appendix II for the survey we 
provided to each of the states. 

[33] According to Maine DOT officials, since Maine's construction 
season is short compared to other states, it is possible for a delay of 
a couple of weeks to translate into more than a 12 month delay. 

[34] 23 C.F.R. § 771.113(a) and 23 C.F.R. § 771.117(d)(12). 

[35] The Washington DOT 2003 and 2005 revenue packages increased the 
state gas tax by $0.05 and $0.095 per gallon, respectively. 

[36] Battelle, The Costs of Complying with Federal-aid Highway 
Regulations. 

[37] State DBE programs are often identified as minority and women 
business enterprise (MBE/WBE) programs. 

[38] Utah DOT received a large increase in transportation funding from 
its legislature to fund its transportation needs. This funding comes 
from the state's general fund and sales tax revenues. According to Utah 
DOT officials, Utah DOT receives 83 percent of the state's sales tax 
revenues. 

[39] Transportation Research Board, "Meeting Federal Surface 
Transportation Requirements in Statewide and Metropolitan Planning: A 
Conference," September 3-5, 2008. 

[40] American Association of State Highway and Transportation 
Officials, Accelerating Project Delivery (August 2007). 

[41] If an interested party believes that a wage determination does not 
accurately reflect those prevailing in the area, the interested party 
can request reconsideration of a wage determination by presenting their 
request in writing accompanied by supporting data to DOL. 

[42] Federal resource agencies include, but are not limited to, USACE, 
the Fish and Wildlife Service, EPA, and ACHP. 

[43] SAFETEA-LU authorized funding for the federal surface 
transportation programs for highways, highway safety, and transit. 

[44] [hyperlink, http://www.gao.gov/products/GAO-08-512R]. 

[45] The Buy America requirement also applies if the cost of steel 
exceeds 0.1 percent of the total contract cost. 

[46] FHWA conducted these activities to comply with the Consolidated 
Appropriations Act, 2008 and the SAFETEA-LU Technical Corrections Act 
of 2008. The Consolidated Appropriations Act required the Secretary of 
Transportation to make informal public notices and comment 
opportunities on the intent to issue Buy America waivers and the 
reasons for the waivers. The Technical Corrections Act required that 
the Secretary publish in the Federal Register a detailed justification 
for Buy America waiver decisions and the reasons for the decisions, and 
provide for a public comment period. 

[47] [hyperlink, http://www.gao.gov/products/GAO-08-512R]. 

[48] Exec. Order No. 13274. 

[49] See figure 3 for the target goals prior to 2007. 

[50] [hyperlink, http://www.gao.gov/products/GAO-08-512R]. 

[51] This compilation of strategies is not comprehensive. 

[End of section] 

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