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Strategic Issues Facing Transportation, Volume 5: Preparing State Transportation Agencies for an Uncertain Energy Future (2014)

Chapter: Chapter 2 - State DOT Roles, Mandates, Funding, and Operations

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Suggested Citation:"Chapter 2 - State DOT Roles, Mandates, Funding, and Operations." National Academies of Sciences, Engineering, and Medicine. 2014. Strategic Issues Facing Transportation, Volume 5: Preparing State Transportation Agencies for an Uncertain Energy Future. Washington, DC: The National Academies Press. doi: 10.17226/22378.
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Suggested Citation:"Chapter 2 - State DOT Roles, Mandates, Funding, and Operations." National Academies of Sciences, Engineering, and Medicine. 2014. Strategic Issues Facing Transportation, Volume 5: Preparing State Transportation Agencies for an Uncertain Energy Future. Washington, DC: The National Academies Press. doi: 10.17226/22378.
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Suggested Citation:"Chapter 2 - State DOT Roles, Mandates, Funding, and Operations." National Academies of Sciences, Engineering, and Medicine. 2014. Strategic Issues Facing Transportation, Volume 5: Preparing State Transportation Agencies for an Uncertain Energy Future. Washington, DC: The National Academies Press. doi: 10.17226/22378.
×
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Suggested Citation:"Chapter 2 - State DOT Roles, Mandates, Funding, and Operations." National Academies of Sciences, Engineering, and Medicine. 2014. Strategic Issues Facing Transportation, Volume 5: Preparing State Transportation Agencies for an Uncertain Energy Future. Washington, DC: The National Academies Press. doi: 10.17226/22378.
×
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Suggested Citation:"Chapter 2 - State DOT Roles, Mandates, Funding, and Operations." National Academies of Sciences, Engineering, and Medicine. 2014. Strategic Issues Facing Transportation, Volume 5: Preparing State Transportation Agencies for an Uncertain Energy Future. Washington, DC: The National Academies Press. doi: 10.17226/22378.
×
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Suggested Citation:"Chapter 2 - State DOT Roles, Mandates, Funding, and Operations." National Academies of Sciences, Engineering, and Medicine. 2014. Strategic Issues Facing Transportation, Volume 5: Preparing State Transportation Agencies for an Uncertain Energy Future. Washington, DC: The National Academies Press. doi: 10.17226/22378.
×
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Suggested Citation:"Chapter 2 - State DOT Roles, Mandates, Funding, and Operations." National Academies of Sciences, Engineering, and Medicine. 2014. Strategic Issues Facing Transportation, Volume 5: Preparing State Transportation Agencies for an Uncertain Energy Future. Washington, DC: The National Academies Press. doi: 10.17226/22378.
×
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Suggested Citation:"Chapter 2 - State DOT Roles, Mandates, Funding, and Operations." National Academies of Sciences, Engineering, and Medicine. 2014. Strategic Issues Facing Transportation, Volume 5: Preparing State Transportation Agencies for an Uncertain Energy Future. Washington, DC: The National Academies Press. doi: 10.17226/22378.
×
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Suggested Citation:"Chapter 2 - State DOT Roles, Mandates, Funding, and Operations." National Academies of Sciences, Engineering, and Medicine. 2014. Strategic Issues Facing Transportation, Volume 5: Preparing State Transportation Agencies for an Uncertain Energy Future. Washington, DC: The National Academies Press. doi: 10.17226/22378.
×
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Suggested Citation:"Chapter 2 - State DOT Roles, Mandates, Funding, and Operations." National Academies of Sciences, Engineering, and Medicine. 2014. Strategic Issues Facing Transportation, Volume 5: Preparing State Transportation Agencies for an Uncertain Energy Future. Washington, DC: The National Academies Press. doi: 10.17226/22378.
×
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Suggested Citation:"Chapter 2 - State DOT Roles, Mandates, Funding, and Operations." National Academies of Sciences, Engineering, and Medicine. 2014. Strategic Issues Facing Transportation, Volume 5: Preparing State Transportation Agencies for an Uncertain Energy Future. Washington, DC: The National Academies Press. doi: 10.17226/22378.
×
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Suggested Citation:"Chapter 2 - State DOT Roles, Mandates, Funding, and Operations." National Academies of Sciences, Engineering, and Medicine. 2014. Strategic Issues Facing Transportation, Volume 5: Preparing State Transportation Agencies for an Uncertain Energy Future. Washington, DC: The National Academies Press. doi: 10.17226/22378.
×
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Suggested Citation:"Chapter 2 - State DOT Roles, Mandates, Funding, and Operations." National Academies of Sciences, Engineering, and Medicine. 2014. Strategic Issues Facing Transportation, Volume 5: Preparing State Transportation Agencies for an Uncertain Energy Future. Washington, DC: The National Academies Press. doi: 10.17226/22378.
×
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Suggested Citation:"Chapter 2 - State DOT Roles, Mandates, Funding, and Operations." National Academies of Sciences, Engineering, and Medicine. 2014. Strategic Issues Facing Transportation, Volume 5: Preparing State Transportation Agencies for an Uncertain Energy Future. Washington, DC: The National Academies Press. doi: 10.17226/22378.
×
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Suggested Citation:"Chapter 2 - State DOT Roles, Mandates, Funding, and Operations." National Academies of Sciences, Engineering, and Medicine. 2014. Strategic Issues Facing Transportation, Volume 5: Preparing State Transportation Agencies for an Uncertain Energy Future. Washington, DC: The National Academies Press. doi: 10.17226/22378.
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13 Under any plausible energy future, including continued reliance on petroleum, state DOTs will likely undergo insti- tutional, financial, and structural change to adapt to evolving conditions, demands, and constraints. The nature of these changes and the resulting long-term impacts on decision making remain uncertain and will most likely vary from one state to the next. To better understand how changes in transportation fuels and vehicle propulsion technologies and prices could affect state DOTs in the coming decades, this chapter surveys cur- rent DOT roles, mandates, funding, and operations and con- siders their evolution over time. This exercise is fundamental to the research effort, providing the context for identifying potential impacts of alternate energy futures and suggesting the utility of including certain elements within the plausible future scenarios developed later in the report. For example, understanding that most DOTs rely on fuel taxes for a sig- nificant share of their highway revenue, and that such taxes are commonly levied on a cents-per-gallon basis, indicates that it would be helpful for the scenarios to consider potential changes in vehicle fuel economy in the coming decades. The information presented in this chapter draws on a review of state DOT publications, national datasets, and current lit- erature. This includes the 2008 report prepared by ICF Inter- national, Long Range Strategic Issues Facing the Transportation Industry: Final Research Plan Framework, which identified pressing future issues to be investigated as part of the NCHRP Project 20-83 research series. The material in this chapter was further refined through a series of interviews with state DOTs and national thought leaders. While this chapter aims to provide an overview of state DOTs, it should be stressed from the outset that each state DOT is unique. The current organization and responsibilities in each state DOT are products of the historical development, economy, constitutional structure, infrastructure and assets, and travel patterns and demands on the transportation system within that state. As a result, it can be challenging to accurately characterize the roles, mandates, funding, and operations of state DOTs as a group. The approach in this chapter is to offer high-level summary information relevant to state DOTs in general, while occasionally highlighting developments in cer- tain states to illustrate specific themes, issues, or variations. To provide additional context for the study, this chapter opens with a brief historical review of how energy trends and developments have affected or influenced state DOTs in pre- vious decades. Next, the chapter presents a detailed review of current state DOT roles, mandates, funding, and operations and considers how these have shifted and changed over time. The chapter then closes by highlighting several broader themes relating to the evolution of state DOTs in recent decades and the challenges to be confronted in coming decades. 2.1 Historical Effects of Energy Trends on State DOTs As public institutions, state DOTs must evolve and adapt to changing travel demand, emerging technologies, current policy priorities, and shifting external economic and develop- ment patterns. Relative to other state agencies, DOTs also tend to be more visible and must be more responsive to the traveling public. DOTs have been asked to address energy issues, including potential shifts in energy supplies, at various junctures over the last few decades. Current public debates over energy con- cerns and the appropriate roles and actions for DOTs center on such issues as energy security, the economic effects of fuel prices on growth and prosperity, and the threat of climate change from the combustion of fossil fuels. State DOTs must also be internally responsive to energy issues since variations in fuel and construction material prices can affect budgets for maintenance, operations, and capital programs. These are largely long-term issues reflecting supply and demand trends and the dominance of petroleum-based motor fuels. This report considers future energy scenarios in which petroleum C H A P T E R 2 State DOT Roles, Mandates, Funding, and Operations

14 remains dominant, along with scenarios in which other alter- native fuels and vehicle propulsion technologies achieve sig- nificant market share. To consider how the roles, mandates, finances, and operations of DOTs might change in the future given significant shifts in energy supplies, it is instructive to consider past examples. In the 1970s, energy figured prominently in the national debate, driven by concerns over fuel prices and availability after supply disruptions during the 1973 oil embargo. The political focus on energy issues prompted federal policy innovations and state DOT responses that continue to shape transportation today. In 1974 and 1975, in response to oil price shocks, several important pieces of federal legislation were introduced. These included a trial period of year-round daylight savings time, a national 55-mph speed limit, adoption of corporate average fuel economy (CAFE) standards, the National Mass Transpor- tation Assistance Act, and Highway Fuel Economy Test stan- dards and vehicle emissions rating programs. Some state-level actions were taken as well. In 1973, for example, the governor of Florida introduced proposals to further reduce the speed limit on state government cars to 50 mph and to stagger work hours for state employees to help offset the effects of energy prices on state coffers [Associated Press (AP) 1973]. Also in 1973, the State of California adopted legislation enabling the creation of “special lanes for buses in metropolitan areas” as incentives for commuters to reduce energy consumption by shifting to transit (The Daily Union Democrat 1973). And in 1974, the State of Washington’s Energy Policy Council recommended creating an integrated state department of transportation to better address future energy issues (Spokane Daily Chronicle 1974). Some of these approaches lasted only as long as fuel shortages persisted, while others have become fundamental components of today’s transportation regulation and policy framework. Transportation energy concerns eased through the 1980s and 1990s as fuel prices stabilized, with most state action centering instead on fuel-tax rates and declining revenues. Over the past decade, fuel prices have surged and become volatile once again, prompting sharp cutbacks in driving reflected in unprece- dented declines in national vehicle miles traveled during 2007 and 2008. Federal and state responses to energy challenges in recent years have been more tempered than those that occurred 30 years earlier. This may be because many immediately fea- sible demand management and operations-based responses have already been instituted. More technically, financially, or socially challenging solutions—such as the development and adoption of alternative fuels to mitigate fuel price volatility, significant expansion of transit capacity to offer more alterna- tives to driving, or the use of greenhouse gas emissions pricing schemes to promote lower-carbon fuels—face much longer adoption time frames. Over the 30-to-50 year horizon considered in this report, it is not certain that changes in energy supplies or prices will be as abrupt as those of the 1970s. That period in history does demonstrate, however, the strong and ongoing connection between state DOTs and transportation energy and highlights the fact that energy issues can bring about long-term institu- tional change in the roles, responsibilities, and operations of state DOTs. The remainder of this chapter provides a sum- mary overview of state DOT roles, mandates, funding, and operations, highlighting the energy context where relevant. 2.2 State DOT Roles State DOTs have historically been responsible for planning, constructing, and maintaining state highways and bridges and providing oversight of local roads and multimodal systems. Over time they have evolved from highway-centric depart- ments primarily focused on engineering and construction to more integrated transportation agencies with increasing responsibilities across modes, activities, and functions. 2.2.1 Historical Evolution of State DOTs State agencies with the power to construct or regulate roads, bridges, canals, railways, and private transit providers emerged in the early decades of the 20th century. These agencies focused mainly on the provision of state highways and bridges, with most roads remaining under local jurisdiction. Over the next half century, these agencies assumed greater responsibilities, often merging with other mode-specific departments and taking on greater involvement in safety, commerce, and urban development. Through the 1960s and into the 1970s, many state highway departments were officially renamed state transportation agencies, reflecting the evolution of intermo- dal mandates and responsibilities. Today, state DOTs generally have expansive responsibilities to operate, or at least oversee, intrastate transportation systems, including highways, rail, aviation, waterborne transportation systems, and transit infra- structure. In addition, DOT activities have evolved beyond engineering and construction to include roles in financing, planning, safety, freight, economic development, environ- mental protection, archeology, and other emphasis areas. For many state DOTs, however, the primary focus, measured in budgetary terms, remains on highways. DOT roles have changed over time in response to emerging issues, changes in federal and state mandates, technological advancements, and the evolving expectations and demands of their customers—the users of a state’s transportation systems. In some cases, agency responsibilities have expanded. For example, the Colorado High Performance Transportation Enterprise Board was created within the DOT to leverage new innovative finance mechanisms. Washington State DOT cre- ated new interagency offices and funded staff positions through its Sustainable Transportation and Climate Change program

15 to further that state’s commitment to sustainability goals. And the Minnesota DOT has in recent years become increasingly active in freight and passenger rail planning efforts and initia- tives. In other cases, fiscal pressures and changing workforce dynamics have led DOTs to scale down direct involvement in engineering and construction activities and adopt more over- sight roles through expanded reliance on contractors (Warne 2003). Many state agencies such as the Ohio DOT are out- sourcing more services traditionally provided by the state, such as rest area operation and maintenance, aerial survey- ing, and traffic data collection. State DOTs have traditionally focused on activities related to roadways and vehicles. Planning and construction of the Interstate highway system dominated DOT attention through the 1950s and 1960s. Not until the 1970s and 1980s did state DOTs begin to significantly expand their roles in other trans- portation modes. Deregulation of the airline industry in the late 1970s, accompanied by an increase in federal funding for aviation planning, necessitated that state DOTs support local airport authorities and help provide service to smaller communities. In the same time period, restructuring in the railroad industry resulted in state DOTs assuming responsi- bility for abandoned lines and even acquiring small short-line railroads. With declines in federal funding for urban transit through the 1980s, many state DOTs became more involved in planning, funding, and providing technical assistance to urban and rural mass transit providers (Goetz et al. 2004). Other states, such as Alaska, Washington, and Florida, have long had roles in the operation of public ferries or other water transportation systems. State roles in intermodal transportation have increased, particularly since the passage of the 1991 Intermodal Surface Transportation Efficiency Act, and continue to expand today. Relative to the amount of staff, resources, and activities that DOTs dedicate to highways and bridges, however, the respon- sibilities for other transportation modes are of a much smaller scale. As of 2011, just eight states had full-time employees whose primary function was transit, 15 states had employees dedicated to aviation, and 19 states had employees dedicated to water transportation (U.S. Census Bureau 2012a). These employees may or may not be included within the state DOT, but the data provide some light on the relative involvement of state DOTs in other modes. Additionally, while states do play an important role in financing public transit services, just 6% of all state government transportation-related expenditures in 2010 were dedicated to transit (U.S. Census Bureau 2012b). Highways are likely to continue to be the focus of many states, given the volume of vehicle travel and relative financial needs of these systems. DOT roles and responsibilities will no doubt continue to evolve as transportation needs and service models change. The DOT of the future will likely look and act more like a private-sector business, with a greater focus on the customer, performance, and financial sustainability (Lockwood 2006). 2.2.2 Today’s DOT The exact organizational structure, service model, author- ity, mandated responsibilities, and scope of activities of DOTs varies considerably from state to state. In an effort to catalog the variety of DOT roles and responsibilities across the nation, the research team reviewed the organizational structures, divisional responsibilities, and major activities of a selection of state DOTs, including Alaska, California, Colorado, Dela- ware, Florida, Idaho, Kentucky, Louisiana, Maryland, New York, North Carolina, Ohio, Texas, and Washington. The review was structured to include both large and small agen- cies and states with diverse multimodal systems, along with states that are mainly dominated by highway transportation. The review also included state DOTs that have recently reor- ganized or that have relatively distinct organizational struc- tures. Descriptions of key roles and responsibilities, based on organizational structure, were synthesized. While the nomen- clature, organization, and management of state DOTs vary widely, core roles and functions (listed in Table 2.1) are gen- erally consistent. Table 2.1 organizes DOT core functions and illustrates the roles of a generic state agency. DOTs generally have sig- nificant responsibilities for the development and operation of transportation systems. Development roles may include coor- dination or oversight of activities across modes, policy devel- opment, planning activities, and a range of pre-construction responsibilities (e.g., review, permitting, programming, and development). Operations roles include research and develop- ment for materials and design standards, engineering and con- struction oversight and supply, and ongoing maintenance and operations activities. Agencies also perform various adminis- trative roles, both internal to the organization, such as manage- ment and human resources, and external, such as contracting and communications. Finally, in most states, there are shared organizational roles, or at least close relationships, between the DOT departments or divisions responsible for traffic safety and law enforcement and for driver licensing and vehicle registration. 2.3 Federal and State Mandates on State DOTs Construction and maintenance of the National Highway System, inland water navigation facilities, aviation facilities, and other federally regulated interstate commerce or trans- portation systems have been largely delegated to the states, with financial support and technical assistance provided through the U.S. Department of Transportation and other

16 of federal funds. Transportation-related mandates are inter- preted and implemented—that is, applied to state and local agencies subject to the mandates—by the U.S. Department of Transportation and other federal agencies. The Federal Highway Administration’s Policy and Guid- ance Center has established a framework for federal transpor- tation mandates along a spectrum of enforceability that spans legislation, regulation, policy, guidance, and information. Legislation (e.g., the National Environmental Policy Act) involves an act of law that creates enforceable mandates. In some cases the mandates may be enforced for any state DOT projects or activities, while in others they may be enforced only as a condition for the receipt of federal aid. Regulations are administrative or agency statements with the full force of law that are typically intended to implement legislation; examples include executive orders or rules codified in the Code of Federal Regulations (CFRs). Policies are agency state- ments, such as FHWA’s Value Engineering Policy Directive, that establish a course of action or procedure on regulatory or technical issues with the expectation that states will adhere without deviation. Guidance includes agency statements pro- viding advice or assistance on regulatory or technical issues intended to influence decisions and actions to achieve an expected program outcome. The implied agency expectation is that guidance will be considered in decision making. Infor- mation is provided purely for educational purposes without implied or explicit agency expectations (FHWA 2012). Examples of enforceable federal mandates are the Clean Air Act of 1963 and the Americans with Disabilities Act of 1990, both of which include requirements for state regulation of public and private transportation facilities regardless of the contribution of federal funds to a project. Other federal federal agencies. At the state level, DOTs have the primary responsibility for constructing, operating, and maintaining intrastate highway and transportation systems and provid- ing for the administration and oversight of regional and local transportation facilities. In carrying out these responsi- bilities, state DOTs are subject to conditions, restrictions, and duties imposed by both federal and state laws. These man- dates are typically intended to further national or state goals in the areas of civil rights, education, environmental protec- tion, public safety and security, economic development, and others. Federal mandates can affect state DOT decision mak- ing in many ways, such as requirements or funding incentives to follow prescribed planning processes for transportation investments or environmental protection or to comply with certain standards or targets, as with the national drinking age limit and certain highway safety provisions. State mandates may direct state DOTs to adhere to additional state planning processes, to support state environmental or energy conser- vation goals, or to meet certain performance and level-of- service standards. 2.3.1 Federal Mandates in State Transportation Decision Making Federal transportation policies and regulations are pro- mulgated through requirements included within major pub- lic laws, presidential executive orders, or agency rulemaking. The Congressional Budget Office (CBO) defines a federal mandate as any provision in legislation, statute, or regulation that imposes an enforceable duty on state or local govern- ments (CBO 2010). Some federal mandates carry the force of law, while others are imposed as a condition of the receipt Table 2.1. Catalog of generalized state DOT roles and functional areas. Systems Development Systems Operations Policy and planning Intermodal systems Environment and permitting Programming Finance Right-of-way Information management Design Materials Engineering Construction Maintenance Facilities and equipment Management and operations Tolling Agency Administration Agency Affiliates Budget and finance Public relations Human resources Information technology Executive management Safety and enforcement Motor carrier services Motor vehicle and driver licensing

17 gram, or through prohibitions on certain finance options, such as restrictions on the tolling of existing capacity on federal-aid highways. Rules and regulations may also dictate performance standards for certain state DOT operations, including conformity standards for regional intelligent trans- portation systems architecture or work-zone safety programs. Table 2.2 provides examples of major legislation, codified regulations, agency policy directives, and agency guidance pertaining to major issue areas (FHWA 2012). 2.3.2 State Mandates in Transportation Decision Making Mandates adopted by state legislatures confer exact and enforceable requirements on state DOTs that include plan- ning requirements, financing authority, modal or regional responsibility, and program requirements. Legislative man- dates vary considerably from state to state, given the scope of authority granted to the DOT and the range of activities undertaken by an agency. States may also exert authority over DOTs through legislative committees or executive appoint- ment of agency directors and executives, as well as through formal state transportation commissions. State mandates may restrict or enable the funding mecha- nisms available to the DOT, the ability of the DOT to enter into public–private partnerships, or the ability to govern the disposition of transportation funds. Other laws may impose project prioritization or performance standards on the DOT in terms of the state of good of repair of bridges and highways. For example, in 1994 the Washington State legislature passed statutes that directed the DOT to implement a priority proj- ect prioritization system, based on factual needs and life-cycle costs and benefits (Revised Codes of Washington 47.05.010). State laws may also codify additional requirements beyond federal mandates, for example requiring that state goals or planning factors be reflected in federally required state trans- portation plans. In 2011, Vermont revised its statutes gov- erning transportation planning such that “complete streets” principles would be integral to the transportation policy of the state (Vermont House Bill 198). In some cases, states may also mandate that a DOT pursue a certain infrastructure proj- ect or invest state funds in priority or intermodal projects. In 2003, the Florida legislature created the Strategic Intermodal System requiring certain annual allocation of state transpor- tation funds to priority investments across all modes (Florida Statutes XXVI.339.61). State legislative actions impose any number of mandates on DOTs, from seemingly small and detailed requirements to significant infrastructure investment projects, studies, or programs. The following is a summary of recent energy and envi- ronmental mandates adopted by states that directly affect the decision making of DOTs. The examples highlighted regulations, such as the National Historic Preservation Act of 1966 and the National Environmental Policy Act of 1969, are conditional on the use of federal-aid highway funds and may be enforced through the withholding of those funds for non- compliance. For example, the National Maximum Speed Law passed in 1974 (repealed in 1995) required states to reduce speed limits to or enact them at 55 miles per hour on major arterial roads. This was enforced as a condition of receipt of the federal-aid highway funds. In 1986, Nevada ignored this mandate and posted a 70 mph speed limit on a stretch of Interstate 80. The FHWA promptly informed the state that it could no longer approve projects and was withholding funds until the state was in compliance [Supreme Court of the United States (SCOTUS) 1989]. While the conflict was quickly resolved, this incident does demonstrate the power of the federal government in mandating certain state actions, in the sense that any state choosing to forgo federal funding would face significant difficulties in raising sufficient trans- portation revenue on its own. With the exception of certain major laws concerning civil rights or the environment, the federal government primarily sets policy and influences decision making at the state level for highways, safety, and transit through the funding mecha- nisms of surface transportation authorization acts, such as the Moving Ahead for Progress in the 21st Century Act of 2012 (MAP-21). States are subject to the regulations and requirements of funding authorizations and other federal acts governing environmental review, air quality non-attainment, waterborne commerce, freight common carriers, intercity bus and rail service, aviation safety and security, and highway safety, among many others. It would require significant effort to catalog each regulation, policy, or program within MAP-21 and prior transportation authorization acts along with any other federal regulations, policies, or directives that impose requirements on state DOTs. For the sake of this discussion it is assumed that most states participate in most significant federal transportation programs and, therefore, choose to comply with most federal guidelines. Mandates embedded in federal surface transportation policy have influenced the organizational models, roles and responsibilities, and operations of state DOTs. Indeed, the organization of DOTs often reflects the major federal man- dates and requirements that they must address, with offices or coordinator positions focused on such issues as intermodal planning and policy functions, performance measurement, environment, historical preservation, bicycle and pedestrian planning, road maintenance and bridge inspections, and motor vehicle and commercial carrier safety, enforcement, and licensing. Federal mandates may also influence program- ming and financing decisions through dedicated funding for certain programs, such as the Transportation Alternatives or Congestion Mitigation and Air Quality Improvement Pro-

18 in the West Coast Green Highway Initiative. This partner- ship involving Washington, Oregon, California, and British Columbia is intended to speed adoption and use of electric vehicles by providing a network of public-access recharg- ing locations along the I-5 corridor. • In 2009, Connecticut passed legislation requiring its DOT to develop a plan for implementing a zero-emission bus fleet, including the technological, facility, and financial arrangements necessary for converting bus fleets and locating hydrogen refueling stations along state highways (Public Act No. 09-186). • In 2008, Pennsylvania passed legislation requiring its DOT to certify the availability of on-road diesel infrastructure to successfully handle, store, blend, and distribute biodiesel- blended fuels (Act 78). In response, the DOT conducts infrastructure assessment surveys of pipeline fuel terminal operators and the commonwealth offers grant programs for necessary upgrades. here focus on mandates for which the state DOT has direct implementation responsibility and that are directly related to energy concerns. Alternative fuel and vehicle infrastructure. Nearly every state provides consumer or producer incentives, such as rebates or access to high-occupancy vehicle (HOV) lanes, to promote the adoption of alternative fuel and vehicle technologies [Office of Energy Efficiency and Renewable Energy (EERE) 2012]. Several states promote changes in fleets by investing in neces- sary infrastructure such as refueling and charging stations or fuel distribution networks. The following examples highlight a range of state mandates in relation to alternative fuels and vehicle technologies: • In 2009, Washington State passed legislation requiring the DOT to install charging outlets for electric vehicles in areas such as rest stops and maintenance facilities (Second Sub- stitute House Bill 1481) as part of the state’s participation Table 2.2. Examples of federal mandates and implementing regulations. Issue Area Legislation Regulation U.S. DOT Policy U.S. DOT Guidance Air quality Clean Air Act of 1963, Section 176(c) as amended by SAFETEA-LU. Conformity of Transportation Plans, Programs, and Projects Developed, Funded or Approved Under Title 23 United States Code (U.S.C.) or the Federal Transit Laws U.S. Environmental Protection Agency (EPA) Area Designations for the Revised 24- Hour Fine Particle National Ambient Air Quality Standard Guidance for Quantifying and Using Emissions Reductions from Best Workplaces for Commuter Programs in State Implementation Plans and Transportation Conformity Determinations, 2007 Environment The National Environmental Policy Act of 1969 Executive Order 13274: Environmental Stewardship and Transportation Infrastructure Project Reviews Policy Statement on Bicycle and Pedestrian Accommodation Regulations and Recommendations, 2010 Environment and Planning Linkage Processes Legal Guidance, 2005 Pavement and materials N/A N/A Final Policy Statement: Life- Cycle Cost Analysis, 1996 Pavement Preservation Definitions, 2005 Planning SAFETEA-LU Section 1927 Title 23, CFR Part 450: Subpart C - Metropolitan Planning U.S. DOT, Accommodating Bicycle and Pedestrian Travel: A Recommended Approach , 2008 Recreational Trails Program Compliance Memorandum, 2009 Safety Title 23, U.S.C. Section 148: Highway Safety Improvement Program Title 23, CFR Part 1208: National Minimum Drinking Age U.S. DOT, Formal Speed Policy and Implementation Strategy, 1997 Guidance Regarding Use of Funding Flexibility in Highway Safety Improvement Program, 2006

19 gas emissions in transportation planning and programming (ICF 2008). As of 2012, four states had adopted targets for the reduction of vehicle miles of travel (C2ES 2012), while 19 states had instituted comprehensive growth management policies to link land use and transportation planning as of 2010 (Bhatt, Peppard, and Potts 2010). The following exam- ples identify states with definitive regulations or require- ments for DOTs relating to energy intensity and emissions from the entire transportation sector. • In 2008, Washington State passed legislation requiring its DOT to develop strategies for achieving an 18% reduc- tion in annual per-capita vehicle miles traveled by 2020, a 35% reduction by 2035, and a 50% reduction by 2050 (Engrossed Second Substitute House Bill 2815). • In 2008, Massachusetts approved legislation setting an economy-wide greenhouse gas emissions reduction target of 80% by 2050 (Senate Bill No. 2540). The act requires state agencies to formulate plans to achieve targeted reductions through specific strategies. In response, the Massachusetts DOT adopted the GreenDOT Initiative in 2010, which includes policies for incorporating sustainability in DOT activities and strategies for reducing GHG emissions in the transportation sector by 7.3% below 1990 emission levels by 2020 and by 12.3% by 2050 (Massachusetts DOT 2010). • In 2008, California passed the Sustainable Communities and Climate Protection Act, often referred to as SB (Sen- ate Bill) 375, an innovative measure to link regional land use and transportation planning with the express goal of reducing GHG emissions from passenger vehicles. SB 375 requires metropolitan planning organizations (MPOs), working with the state Air Resources Board and local com- munities, to set emission reduction targets and identify implementation strategies in adopted sustainable com- munities strategy documents. Efficiency of transportation system operations. State legis- lation mandating that DOTs implement programs or actions aimed at improving transportation system efficiency and opera- tions has been relatively uncommon in the past. Increasingly, though, states are directing agencies to examine or implement programs such as congestion tolling, mileage-based user fees (MBUFs), and other user fees intended to mitigate congestion and promote more efficient use of the system. By increasing the marginal price for using a facility to more closely align with the marginal costs imposed by that use, including the cost of provid- ing and maintaining the infrastructure as well additional costs such as congestion delays or harmful emissions, such fees cre- ate an incentive for travelers to ration their least-valued trips, in turn helping to reduce congestion and improve the economic efficiency of the system (Wachs 2003). • In 2004, by executive order, California committed to sup- port hydrogen as a potential fuel source for transportation through a variety of actions (Executive Order S-7-04). Specific actions included the designation of the California Hydrogen Highway Network and the deployment of a net- work of hydrogen fueling stations. Energy efficiency of public agencies. Many states pursue policies in the spirit of leading by example through the intro- duction of energy efficiency technologies and practices in state operations, facilities, and fleets. All but five states have now instituted energy conservation targets for state agencies. As of 2010, 19 of these states had enacted definitive energy efficiency standards or requirements for state-owned vehicle fleets (Molina et al. 2010). The following examples provide a selection of significant energy-efficiency policies with direct implications for DOTs. • In 2009, Washington State passed legislation requiring state agencies to satisfy 100% of fuel needs for all state fleet ves- sels, vehicles, and construction equipment from electricity or biofuels by 2015. In 2008, the Washington State DOT completed a pilot program studying the feasibility of biodiesel for use by the state ferry system, which consumes 18 million gallons of traditional diesel each year (Washington State University et al. 2009). • In 2007, Utah passed legislation requiring state agencies to actively manage their vehicle fleets for energy efficiency objectives [House Bill 110, Statute 63A-9-401.5(3)]. Imple- mentation includes plans and programs to decrease the overall volume of fuel used, increase fleet fuel economy, and improve vehicle maintenance practices. • In 2007, by executive order, New Mexico established a statewide goal of reducing energy consumption per capita 20% by 2020 (Executive Order 053). The order requires executive branch agencies, including the DOT, to achieve a 20% reduction below 2005 levels in state fleet and transportation-related activities by 2015, based on the aver- age transportation-related energy usage per state employee. • In 2005, by executive order, Minnesota required state agencies to reduce the petroleum consumption of fleet vehicles 50% by 2015 (Executive Order 04-10). The same order mandated that 75% of new purchases of state-owned vehicles be powered by biodiesel, ethanol, or hydrogen. Energy intensity of the transportation sector. Relatively few states have instituted mandates that explicitly address energy use across the broader transportation system, though many DOT policies seek to influence this issue indirectly. The goal of reducing energy intensity is often targeted through the measurement of and reduction in greenhouse gas emissions levels. As of 2008, nine states were considering greenhouse

20 in developing the transportation elements of broader state climate action plans (AASHTO, undated). In 2007, Wash- ington State DOT completed an agency greenhouse gas emis- sions inventory that examined energy usage of DOT fleets and facilities (Landsberg 2009). More than 10 state DOTs have climate adaptation activities underway to identify vul- nerable transportation facilities and needs for protecting or retrofitting transportation facilities, an emerging responsibil- ity for states. State and regional agencies are also beginning to develop capabilities to model energy consumption and greenhouse gas emissions or to coordinate climate change planning with other state agencies, MPOs, and regional and local governments (AASHTO, undated). These activities add to DOT roles and responsibilities and may constrain agency decision making or investment prioritization. 2.4 State Transportation Funding While states raise and expend revenue to support various modes of transportation, the majority of funds have historically been invested in highway programs. As of 2008 (the last year for which complete data are available), for example, roughly 70% of state and local transportation expenditures—$178 billion out of $255 billion—was directed to highway investment. Another 20% was allocated to transit, with the remainder divided mostly between aviation and water transport (BTS 2012). Given this focus, much of the discussion in this section centers on highway revenue and expenditures. Motor-fuel and vehicle taxes and fees are the mainstay of federal and state highway programs and a major contribu- tor to transit funding, and will likely continue to be for the foreseeable future. Fuel and vehicle taxes account for all rev- enues dedicated to the federal Highway Trust Fund (HTF) along with a major share of state highway revenue [Office of Highway Policy Information (OHPI) 2012a]. Both the HTF and state fuel-tax funding, however, face serious near-term challenges. The value of fuel-tax revenues—measured in real revenue per vehicle mile of travel—is eroding because the cents-per-gallon rate structure does not automatically keep pace with inflation or improved vehicle fuel economy, and elected officials have found it increasingly challenging to raise fuel-tax rates to offset these factors. Coupled with construc- tion and operating cost escalations above the rate of general inflation, the purchasing power of DOT fuel-tax revenue has been steadily declining. The estimated costs to maintain the nation’s existing infrastructure and transportation assets and to make needed investments in new capacity, operations, and infrastructure upgrades far exceed current revenue forecasts (Cambridge Systematics et al. 2006). Recent calculations suggest that the shortfall in combined federal, state, and local funding needed to simply maintain the nation’s transportation networks falls Currently there are at least 22 operationalized congestion pricing projects in 11 states, with more than a dozen studies underway [Value Pricing Pilot Program (VPPP) 2012]. The National Conference of State Legislatures (NCSL) reports that MBUF trials led by states, regions, and universities have been conducted in 18 states to date, and at least 11 states have now considered legislation to study or implement MBUFs (Shinkle, Rall, and Wheet 2012), often with the aim of collecting user fees from alternative-fuel vehicles (AFVs). Sorensen, Ecola, and Wachs (2012) review a variety of potential implementation approaches that are being explored in Oregon, Minnesota, Colorado, Nevada, Texas, and Washington. Other policies con- sidered by states in recent years to promote more efficient sys- tem use, and in some cases to raise revenue, include increased registration fees for vehicles in urban areas, increased regis- tration fees for heavier vehicles, weight-distance truck tolls, regional congestion-relief document fees, and state approval for pay-as-you-drive (PAYD) insurance policies (NCSL 2012). The following examples highlight recent state legislative action in this area. • In 2011, legislation in Hawaii was introduced authorizing the DOT to establish an MBUF pilot program to evaluate the use of mileage fees as an alternative to the existing state and county fuel-tax system (Senate Bill 819.201). Legisla- tion is pending in committee. In 2009, Colorado autho- rized a similar mileage-fee study, and in 2001, Oregon authorized its Road User Fee Task Force to examine alter- native revenue mechanisms, including mileage fees. • In 2009, Maine passed legislation directing its DOT to study transportation policies and develop recommendations for reducing energy use and promoting efficient operations in major transportation corridors (HP 582, LD 846). Recom- mendations must meet the state objective of saving energy by maintaining arterial functions, improving system effi- ciency, facilitating transit development, and using other land use and transportation strategies designed to reduce growth in vehicle miles traveled. • In 2009, Oregon passed legislation requiring its DOT to implement one or more congestion pricing pilot programs in the Portland metropolitan area (Chapter 865, Section 3, Jobs and Transportation Act). Approaches currently under consideration include time-of-day tolls, on-ramp tolls, and citywide parking management proposals. • In 2008, California passed legislation allowing for a high- occupancy/toll (HOT) lanes value pricing program to be administered and operated on State Highway Route 110 and Interstate 10 in Los Angeles County (SB 1422). Energy and climate planning. As of 2010, only one state, Vermont (VTrans 2008), had produced a DOT-specific cli- mate action plan, though other DOTs have been involved

21 • Indirect fixed-cost user fees. This category includes fixed fees that are indirectly related to travel but do not vary in proportion to system use. Some of the revenue sources in this category, such as sales taxes on the purchase of new cars, trucks, or trailers, are levied on a one-time basis. Others, such as annual registration and licensing fees or heavy vehicle use taxes, are levied on a recurring basis. • Beneficiary fees and value capture. Revenue mechanisms in this category are intended to apportion some of the cost for building and maintaining transportation facilities to other parties who benefit from the investments, such as land owners or developers. Examples include special assess- ment districts, developer impact fees, and tax increment financing. • General revenue sources. States also draw on a variety of transportation funding sources that are largely unrelated to the transportation system. Common examples are gen- eral fund transfers or specifically earmarked portions of income or sales taxes. Others are visitor taxes, document stamp taxes, and leases, concessions, or other revenue derived from private use of state assets. Note that states may also issue bonds to raise funds to help pay for infrastructure projects. Such bonds, however, will ultimately need to be repaid based on revenue from one or more of the mechanisms outlined. General obligation bonds, for example, are repaid from a state’s general fund. States exhibit considerable variation in terms of the mech- anisms they employ to raise highway revenue as well as in the share of funding that they receive from the federal govern- ment and, in a few cases, from transfers from local jurisdic- tions. While state-by-state data are not available for all of the specific revenue mechanisms listed previously, the FHWA’s Highway Statistics series (OHPI 2012a) does provide useful information for categorizing the main sources of highway funding used by states. In 2010, state DOTs expended more than $150 billion on highways. Table 2.3 presents data for the share of this fund- ing that states received in transfers from the federal govern- ment (primarily from the HTF), that states raised on their own, and that states received in transfers from local govern- ments. It also considers the total share of state highway fund- ing derived from the combination of federal and state user fees (specifically, HTF funds plus state fuel taxes, vehicle and motor-carrier taxes, and tolls). To provide some indication of the variation among states, the table lists the national aver- age for each of these measures, along with three or four states with the highest percentage scores. (In cases where two states were tied for fourth place, only three states are listed.) Table 2.4 examines the degree to which states relied on different revenue mechanisms as a share of highway revenue raised at the state level in 2010. Specifically, it presents the in the range of $57 billion to $118 billion per year, while the shortfall in funding needed to improve the nation’s transpor- tation networks falls in the range of $113 billion to $185 bil- lion per year [National Surface Transportation Infrastructure Financing Commission (NSTIFC) 2009]. States wishing to adequately maintain and improve their transportation systems will need to adopt revenue strate- gies to close this growing gap between available revenues and funding needs. Increasing fuel-tax rates and surcharges would appear to offer the most straightforward, if politically challenging, near-term solution for raising highway revenue, but higher federal fuel economy standards in future years combined with a potential shift to alternative fuels suggest that continued reliance on conventional fuel taxes may prove increasingly challenging. Maximizing other current revenue sources, including vehicle registration fees, tolls, value cap- ture strategies, and general levies, may also generate some additional revenue, though perhaps not at the scale neces- sary to offset fuel-tax declines. Tolling schemes, public– private partnerships, and innovative finance methods are being employed in a number of states to enable construction of new capacity, but these are often used to fund specific proj- ects rather than a broader capital program. Over the longer term, states may choose to adopt more innovative funding mechanisms such as mileage-based user fees. Future revenue and investment strategies have been looked at extensively in recent years, and there is a substantial body of current literature dedicated to this topic [see, for example, Cambridge Systematics et al. 2006, National Surface Trans- portation Policy and Revenue Study Commission (NSTPRSC) 2007, NSTIFC 2009, and Government Accountability Office (GAO) 2012]. In the text that follows, summary information on the current sources and allocations of state transportation revenues is presented, including information on variations from state to state. 2.4.1 State Transportation Revenue Sources State DOTs rely on a diverse set of federal, state, and (to a more limited degree) local revenue sources to fund transpor- tation systems across different modes. Focusing on highway programs, common revenue mechanisms can be grouped in several categories: • Direct user fees. This category includes fees that are based on actual use of the system. Examples are facility tolls, congestion tolls, weight-distance truck tolls, and possibly mileage-based user fees at some point in the future. • Indirect marginal-cost user fees. The fees in this category are indirectly related to use of the system and, like direct user fees, increase in proportion to the amount of travel. Examples are taxes on motor fuels, tires, and lubricants.

22 2009; Wheet and Rall 2011; Wheet, Rall, and Workman 2012; and Durkay and Rall 2013), for example, there were at least 12 states that considered legislation to increase fuel- tax rates in 2009, at least seven in 2010, at least eight in 2011, and at least five in 2012. Such efforts remain politi- cally challenging; only Oregon, Rhode Island, Vermont (in 2009) and Connecticut (in 2011) were successful in their efforts to increase fuel-tax rates. (Several other states elimi- nated certain fuel-related tax subsidies or exemptions, for example on ethanol blends.) State legislatures have also sought, with some success, to increase revenue from other sources, such as vehicle registration fees or tolls. • Increasing revenue from alternative sources. While not likely to be significant sources, other alternative revenue streams such as advertising are being pursued. The Geor- gia DOT covers annual operating costs of $2 million for its Highway Emergency Response Operator and 511 Traf- fic Information programs through corporate sponsorship. The Pennsylvania DOT is seeking federal permission to sell advertising on electronic highways signs, with revenues valued at $150 million annually. share of state-raised highway funds provided by motor-fuel taxes, motor-vehicle and motor-carrier taxes, tolls, and other sources generally unrelated to use of the system (including appropriations from general funds, other state imposts, and miscellaneous sources). Here again the table lists the national average along with three or four states with the highest per- centage scores for each of the categories. Note that the per- centage computations do not include bond proceeds because these can vary considerably from one year to the next and must ultimately be backed by other revenue sources. In response to the growing gap between available revenue and investment needs, states are seeking to increase funding from current sources and to develop new, alternative revenue sources. Examples of recent state activity to address revenue shortfalls include: • Increasing revenue from primary sources. State efforts to increase revenue from existing sources, typically by raising rates, have been relatively common in recent years. Based on recent reviews of major state transportation legislation from the National Conference of State Legislatures (Hobbs Federal Transfers as a Share of Total State Highway Funding State Revenue as a Share of Total State Highway Funding Local Transfers as a Share of Total State Highway Funding Federal and State User Fees as a Share of Total State Highway Funding National Avg. 26% National Avg. 72% National Avg. 2% National Avg. 63% Top States Top States Top States Top States Montana 66% New Jersey 90% Nebraska 37% Hawaii 95% Wyoming 62% Massachusetts 84% Minnesota 9% Maine 94% Alaska 60% Washington 84% Mississippi 9% Tennessee 93% South Dakota 60% Maryland 83% West Virginia 93% Source: Author computations based on data from OHPI (2012a). Table 2.3. Federal, state, and local share of state highway funds, 2010. Motor-Fuel Taxes as a Share of State-Raised Highway Revenue Vehicle Fees and Motor-Carrier Taxes as a Share of State-Raised Highway Revenue Tolls as a Share of State-Raised Highway Revenue Other Sources as a Share of State-Raised Highway Revenue National Avg. 36% National Avg. 27% National Avg. 10% National Avg. 27% Top States Top States Top States Top States South Carolina 72% Colorado 62% New Jersey 49% Dist. of Col. 96% Alabama 66% Vermont 54% Delaware 43% Wyoming 73% Tennessee 66% Oregon 53% Maine 29% Rhode Island 70% Hawaii 50% Maryland 25% Massachusetts 63% Source: Author computations based on data from OHPI (2012a). Table 2.4. Sources of state-raised highway revenue, 2010.

23 tions and agency roles or devolve responsibility for certain assets to local governments. Given the vast scope of federal mandates and the range of critical functions and support activities that DOTs provide, opportunities to significantly cut expenditures in absolute terms are not clear. Of the $104.6 billion that states expended on highways in 2010, 64% was devoted to capital outlays for right-of-way, construction, and system preservation and maintenance. Remaining expenditures included 9% for high- way traffic services, operations, snow removal, and other ser- vices; 8% for research, planning, and administration; and 8% for safety and enforcement (OHPI 2012b). These represent national averages, and the expenditure shares may differ con- siderably from one state to the next. Given state and federal performance requirements govern- ing physical maintenance and system preservation of bridges and roadways, along with other required activities such as safety and enforcement services, nearly one-half of the average DOT budget could be described loosely as nondiscretionary. The remaining budget allocations, including construction, trans- portation enhancement programs, planning, and research, represent areas of current emphasis that could theoretically decline in the future absent sufficient funding. DOT leadership currently see a clear trend in focusing greater federal resources on maintenance and preservation of the current asset base, with proportionally less emphasis on capacity expansion. Already, excluding federal funds, growth in state expenditures for high- way maintenance and operations has outpaced spending on capital outlays. In 2004, state and local spending (excluding federal funds) for operations and maintenance totaled $58.5 bil- lion, greater than the $40.6 billion spent on capital expenditures (CBO 2007). 2.5 State DOT Operations DOT operations are generally viewed as including any programs and efforts aimed at optimizing the performance, reliability, safety, and security of existing infrastructure. Oper- ational approaches often cut across agency roles and responsi- bilities and include a wide variety of programs able to address multiple state goals or intended performance outcomes. Operations strategies are increasingly being implemented by state DOTs to address the impacts of growing congestion and to adjust to changing travel demands. Advanced data and management systems are also being pursued in recognition of the shift toward greater performance-based planning of systems and agencies. This current emphasis is likely to con- tinue under plausible future energy scenarios that result in increased congestion, greater urban travel demand, or reduced state revenues. While operations strategies may be implemented in different areas or corridors for different specific reasons, they generally • Pursuing innovative financing mechanisms. States are actively pursuing new project financing techniques such as public–private partnerships and bonding authorization for transportation purposes, although neither of these options should be viewed as revenue streams. Public–private partnerships are a project delivery vehicle that sometimes involves financing by the private sector (ultimately paid by the public sector), and bonds are simply cash-flow manage- ment techniques. • Adopting new revenue mechanisms. As discussed earlier, congestion pricing is receiving increasing attention for its potential role in managing traffic congestion and, to a lesser extent, raising revenue. Applications of congestion pric- ing, most commonly in the form of HOT lanes or express lanes, have been gaining rapid momentum in the United States over the past decade. States are also examining, via studies or pilot tests, new funding mechanisms with much greater revenue potential, including truck-only toll lanes, weight-distance truck tolls (Kentucky, New Mexico, New York, and Oregon already levy such fees, but other states do not), expanded use of tolling on existing infrastructure, and mileage-based user fees. The robust decision-making framework developed for this study considers a series of strategies to mitigate the poten- tial revenue impacts associated with substantial shifts in fuel economy or fuel type, including direct user fees, indirect marginal-cost user fees, indirect fixed-cost user fees, ben- eficiary fees, general revenue sources, and private capital. Though these all could be effective in increasing available rev- enue, they differ considerably in terms of other policy advan- tages and shortcomings. These trade-offs are explored more in subsequent chapters and appendices. 2.4.2 State Transportation Expenditures Changes in future energy prices and sources are likely to affect the costs of delivering infrastructure and services, potentially leading DOTs to re-prioritize their investment decisions. Many DOTs are already limited in their ability to maintain existing assets and foresee shifting greater resources to maintenance expenditures, with little remaining for new capacity or operational improvements. All DOTs are fac- ing pressure to scale back total expenditures and to be more strategic and more focused on priority investments. Current agency interest in asset management, performance measure- ment, and transportation system management and opera- tions approaches reflects these realities. However, states may reach a point where pared-down capital budgets and oper- ational efficiencies alone will not free enough resources to meet investment needs. It is useful to consider that at some point, DOTs might have to defund accessory support func-

24 Many operations approaches are also closely tied to the energy conservation goals of state DOTs. Strategies such as transportation demand management, signal coordina- tion, ramp metering, intelligent transportation system (ITS) deployments, and freight demand management may be undertaken with the intended outcome, among others, of reducing transportation-related energy use. As energy condi- tions change, potentially increasing the relative prioritization of DOTs for mitigating congestion, addressing revenue short- falls, and improving highway safety, operational strategies could assume an increasingly important role. While operations solutions have been applied successfully in a wide variety of contexts across the nation, DOTs do face some challenges in adopting ever-more sophisticated strate- gies. Operational improvements often represent significant near-term investments, such as complex management soft- ware tools or the upgrading of facilities to enable advanced serve to further state and national goals in the broader areas of performance, reliability, safety, and security. Operations strategies, by their nature, tend to involve integration, col- laboration, proactivity, a strong systems orientation, and a focus on performance. Table 2.5 offers a synthetic, high-level overview of common operations approaches, along with the broad goals that they can support. The FHWA’s Office of Operations identifies more than 20 distinct program areas (FHWA Office of Operations 2011), and other national coalitions, research institutions, and state and regional transportation officials use a variety of wording to describe the full range of specific operations strategies in existence. In the table are listed 20 common and broad categories of operations approaches. This is not intended to be an exhaus- tive list, but rather to demonstrate the breadth of operations strategies and their general ability to address multiple goals together. Operations Strategies Policy Goals Performance Reliability Safety Security Road Network Management Active freeway lane management Arterial and corridor traffic management Traffic signal coordination Electronic toll payment collection Work-zone management Traffic incident management Emergency and natural hazard response systems Intelligent transportation systems deployment Travel Information and Demand Management Transportation demand management Real-time traveler information services Road and weather information services Transit Management Practices Transit priority integration Active transit fleet management and dispatching Freight Management Practices Commercial vehicle programs Vehicle permitting and inspection Freight demand management Truck-only toll lanes or facilities Agency Management Practices Maintenance management systems Performance measurement and reporting Asset management systems Table 2.5. Common operations strategies and policy goals.

25 roles and responsibilities of DOTs for other modes could continue to expand. Broader array of policy concerns. The spectrum of policy goals that state DOTs have been asked or required to address has broadened over time as well. A primary focus for DOTs in earlier decades was to plan, fund, construct, and operate well-engineered roads to serve the public’s rapidly expand- ing needs for automobility and efficient goods movement via trucks. The goal of safety has also been a motivating fac- tor in the development of certain design and engineering standards. In more recent decades, however, the negative side effects of automobile dependency and automobile- centric development patterns have become increasingly apparent—neighborhoods divided and degraded by freeway construction, extreme traffic congestion, harmful air pollu- tion, reduced physical activity, dependence on oil from for- eign nations, and the threat of climate changed posed by the combustion of fossil fuels. In turn, many DOTs have been asked to incorporate related policy goals in their decision making, including such issues as economic development, equity, local air quality, greenhouse gas emissions, and liv- ability. Additionally, DOTs are now further bolstering their efforts to promote safer travel. Greater emphasis on operating the system efficiently. Most DOTs face major funding shortfalls that shape and con- strain their options for accommodating the increases in travel stemming from growth in population and the economy, among other factors. During the height of the Interstate con- struction era in the late 1950s, 1960s, and early 1970s, draw- ing on adequate state revenue streams along with a generous federal match from the HTF, states were often able to provide new freeway capacity in anticipation of future travel demand. Over the last several decades, however, federal and state fuel taxes have been allowed to stagnate, while construction costs have risen more rapidly than the general rate of inflation. This has resulted in greater transportation funding shortfalls for many states, making it more difficult to adequately main- tain existing facilities, let alone to provide new capacity. In turn, growth in travel has far outpaced increases in system capacity in recent decades, contributing to significantly worse traffic congestion in cities and suburbs across the nation. Faced with tight funding constraints, DOTs have devoted much greater attention to other means for addressing growth in traffic, such as transportation demand management mea- sures and strategies for operating the system at higher levels of efficiency. In other words, a core emphasis for state DOTs has shifted—in large part due to funding challenges—from seeking to expand the system to meet unrestrained demand to actively managing demand and pursuing operating strate- gies aimed at greater efficiency. Note that parallels to this shift can be observed in other economic sectors as well, such as the trend among electric utilities of promoting energy efficiency ITS implementation. While costly in the near-term, invest- ments in operational strategies can provide long-term savings—such as by reducing traffic congestion and improv- ing safety outcomes, in turn reducing or delaying the need for costly capacity enhancements or expansions. An agency may also need to expand its technical expertise and capac- ity to deliver services such as electronic payment collection systems, information management and technology services, or advanced communication and data transfer networks. Full adoption of some approaches may also require that DOTs reengineer business processes, change internal culture, or undergo organizational restructuring. 2.6 The Changing State DOT It is still unclear to what degree alternative fuels and advanced vehicle technologies will be adopted and what the broader direction of transportation systems and services in the 21st century will be. What is more certain is that state DOTs as public institutions will continue to adapt and con- front shifting trends, resolve challenges, and provide solutions. The material presented in this chapter has offered a detailed look at current state DOT roles, mandates, funding, and oper- ations and how they have changed over time. Before continu- ing on to examine potential impacts of evolving fuel sources and technologies in subsequent components of the analysis, it may be helpful to distill several broader themes that have characterized the recent evolution of DOTs and that may con- tinue to unfold in the coming years. Additionally, in a study intended to develop insights and findings to inform the long- range planning efforts of individual state DOTs, it is useful to consider the significant variations in contextual factors that exist for different states across the country. Such variations will likely influence the manner in which different state DOTs are affected by shifts in fuel sources and vehicle propulsion technologies and play a role in determining the most appro- priate and feasible responses. 2.6.1 Broader Themes in the Evolution of State DOTs Looking back over the past few decades, one can discern several major trends in the evolution of state DOTs, as follows. Greater involvement in additional modes of transpor- tation. Expanding on their early focus on highway travel, many DOTs have become more involved with other trans- portation modes, such as transit, rail, aviation, marine, and multimodal goods movement. In contrast to their central responsibility for building, operating, and maintaining high- ways, state DOTs often assume a more collaborative support role for other modes, assisting with such functions as plan- ning, oversight, and funding. It is possible, though, that the

26 2. Population growth. States with rapidly growing popu- lations are more likely to face certain potential future impacts, such as worsening traffic congestion. At the same time, population growth translates to increased develop- ment activity, so states experiencing significant growth pressures may have more opportunity to make use of some of the strategies considered in this study, such as more inte- grated land use and transportation planning, than states with stagnant or declining populations. 3. Major goods-movement facilities and corridors. Some of the potential impacts and strategies considered in this report relate to the goods movement system. These will be most relevant for states that are home to major goods- movement facilities, such as ports, distribution hubs, border crossings, and major trucking corridors. Finally, it is worth noting that some of the strategies con- sidered in this study, such as congestion pricing, promise significant benefits but also face major barriers in terms of public acceptance and other factors. Others, such as expanded deployment of more traditional travel demand measures, offer more modest benefits at the margins but face lower barriers. While prevailing political attitudes within a state—in particular, the relative receptiveness to fees, taxes, or regulations—have little bearing on the potential utility of certain strategies, such attitudes most definitely affect their political viability. Accordingly, the study considers multi- ple strategies for addressing any given policy objective that states might consider based on their needs, preferences, and constraints. References AASHTO. Undated. State/Local/MPO Activities. AASHTO Transporta- tion and Climate Change Resource Center. http://climatechange. transportation.org/state_local_mpo/ (accessed September 27, 2012). AP. 1973 (November 16). “Senate Rejects Rationing Requirement.” Daytona Beach Morning Journal. Bhatt, N., C. Peppard, and S. Potts. 2010. Getting Back on Track: Aligning State Transportation Policy with Climate Change Goals. Natural Resources Defense Council and Smart Growth America, New York. BTS. 2012. Table 3-35 – Transportation Expenditures by Mode and Level of Government from Own Funds, Fiscal Year. National Trans- portation Statistics. http://www.rita.dot.gov/bts/sites/rita.dot.gov. bts/files/publications/national_transportation_statistics/html/ table_03_35.html (accessed March 11, 2013). Cambridge Systematics, Mercator Advisors, A. E. Pisarski, and M. Wachs. 2006. NCHRP Web-Only Document 102: Future Financ- ing Options to Meet Highway and Transit Needs. Transportation Research Board of the National Academies, Washington, D.C. CBO. 2007. Trends in Public Spending on Transportation and Water Infrastructure, 1956 to 2004. CBO. 2010. A Review of CBO’s Activities in 2009 Under the Unfunded Mandates Reform Act of 1995. as a cost-effective strategy for reducing the need for new gen- erating capacity. Exploration of innovating funding mechanisms. Finally, growing budget shortfalls, deteriorating traffic conditions, and rapid advances in enabling technologies have in recent years stimulated increasing experimentation among states with a range of innovative user-fee funding mechanisms capable of both raising revenue and promoting greater system efficiency. Examples include electronic tolling, conges- tion tolls, automated weight-distance truck tolls, and mileage- based user fees. Some of these innovations, such as variably priced HOT or express lanes, appear to be gaining momentum rapidly. Others, such as mileage-based user fees, are still in the early experimentation stages, and it is too early to determine whether they will prove to be cost-effective and acceptable to the public. If such innovative strategies prove successful and are adopted on a widespread basis in future decades, however, it could have a profoundly positive effect on DOT funding as well as operational efficiency. 2.6.2 Contextual Variations Among States As shifting energy technologies place increasing or new pressures on DOTs, agencies will continue to change and adopt new approaches. Some of these strategies may be improvements over existing ideas, while others may rep- resent entirely new ways of rethinking how transportation services are delivered, how the transportation system is man- aged, and how transportation agencies are organized. The robust decision-making framework introduced in subse- quent chapters is intended to provide state leadership with decision support tools and clear strategic directions to use to consider future changes and robust responses to a shifting but deeply uncertain transportation energy future. In developing such guidance, however, the research team recognized that there are important contextual variations among states that may affect the degree to which DOTs are affected by certain trends and influences or that constrain suitable policy responses. To illustrate, states vary in terms of their size, geography, population, economic structure, pre- vailing political preferences, and many other characteristics. Based on the analysis conducted in this study, three specific factors appeared to be most important: 1. Urban versus rural. Some of the potential impacts asso- ciated with certain plausible futures, such as continued growth in travel and worsening traffic congestion, are likely to be much more problematic for states with signifi- cant urban populations than for largely rural states. Cor- respondingly, some strategies, such as congestion pricing or investment in significant transit improvements, would be less relevant for largely rural states.

27 NSTPRSC. 2007. Transportation for Tomorrow: Report of the National Surface Transportation Policy and Revenue Study Commission. OHPI. 2012a. Table SF-1: Revenues Used By State for Highways. High- way Statistics 2010. http://www.fhwa.dot.gov/policyinformation/ statistics/2010/sf1.cfm (accessed March 12, 2013). OHPI. 2012b. Table SF-4C. Disbursements for State-Administered Highways – 2010. Classified by Function. Highway Statistics 2010. http://www.fhwa.dot.gov/policyinformation/statistics/2010/sf4c. cfm (accessed March 18, 2013). SCOTUS. 1989. State of Nevada, Petitioner V. Samuel K. Skinner, Secretary of Transportation, et al., No. 89-696. Shinkle, D., J. Rall, and A. Wheet. 2012. On the Move: State Strategies for 21st Century Transportation Solutions. National Conference of State Legislatures, Washington, D.C. Sorensen, P., L. Ecola, and M. Wachs. 2012. Mileage-Based User Fees for Transportation Funding: A Primer for State and Local Decisionmakers. RAND Corporation, Santa Monica. 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Strategic Issues Facing Transportation, Volume 5: Preparing State Transportation Agencies for an Uncertain Energy Future Get This Book
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TRB’s National Cooperative Highway Research Program (NCHRP) Report 750: Strategic Issues Facing Transportation, Volume 5: Preparing State Transportation Agencies for an Uncertain Energy Future examines how the mandate, role, funding, and operations of state departments of transportation (DOTs) will likely be affected by changes in energy supply and demand in the next 30 to 50 years.

The report also identifies potential strategies and actions that DOTs can employ to plan and prepare for these effects.

In addition, the report describes how robust decision-making techniques can be used to help navigate the potential risks and rewards of different policy and management responses under differing surface transportation energy supply-and-demand scenarios.

An extended summary of NCHRP Report 750, Volume 5 is available for download. A 4-page brochure and a 2-page brochure that further summarize the research results are also available for download.

NCHRP Report 750, Volume 5 is the fifth in a series of reports being produced by NCHRP Project 20-83: Long-Range Strategic Issues Facing the Transportation Industry. Major trends affecting the future of the United States and the world will dramatically reshape transportation priorities and needs. The American Association of State Highway and Transportation Officials (AASHTO) established the NCHRP Project 20-83 research series to examine global and domestic long-range strategic issues and their implications for state departments of transportation (DOTs); AASHTO's aim for the research series is to help prepare the DOTs for the challenges and benefits created by these trends.

Other volumes in this series currently available include:

• NCHRP Report 750: Strategic Issues Facing Transportation, Volume 1: Scenario Planning for Freight Transportation Infrastructure Investment

• NCHRP Report 750: Strategic Issues Facing Transportation, Volume 2: Climate Change, Extreme Weather Events, and the Highway System: Practitioner’s Guide and Research Report

• NCHRP Report 750: Strategic Issues Facing Transportation, Volume 3: Expediting Future Technologies for Enhancing Transportation System Performance

• NCHRP Report 750: Strategic Issues Facing Transportation, Volume 4: Sustainability as an Organizing Principle for Transportation Agencies

• NCHRP Report 750: Strategic Issues Facing Transportation, Volume 6: The Effects of Socio-Demographics on Future Travel Demand

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