The Vital Federal Role in Meeting the Highway Innovation Imperative (2019)

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1 Summary Rapidly advancing technology, new mobility services, increased urbaniza- tion, and the growing frequency of severe weather events are changing highway transportation in fundamental ways. Coupled with rising travel demand, growing traffic congestion, more than 35,000 annual motor vehicle fatalities, and constrained highway funding, these developments are causing state and local governments to depend increasingly on innovations to main- tain, repair, modernize, and operate their heavily used and aging highway assets. This report assesses whether the research, development, and technol- ogy (RD&T) programs of the Federal Highway Administration (FHWA) and the Intelligent Transportation Systems Joint Program Office (ITS JPO) are helping state and local governments meet this innovation imperative. To make this assessment, the report focuses on whether FHWA and ITS JPO programs are responsive to key criteria for RD&T in support of innovation as set forth by Congress. The report documents how the two programs are meeting these criteria and fulfilling their roles in delivering critical innovations to state and local governments. However, the report also explains why even more capable, effective, and responsive RD&T programs are needed. Key findings are that: • FHWA and ITS JPO RD&T programs are meeting the criteria established for them by Congress. They are effective, strategically organized programs that are helping meet the innovation impera- tive and improve highway system safety and performance. • Addressing emerging and fast-changing critical issues in transporta- tion is making RD&T even more vital than before, but the ability

2 VITAL FEDERAL ROLE IN HIGHWAY INNOVATION of FHWA and ITS JPO to fully respond is constrained by available resources for RD&T investments. FOSTERING INNOVATION Because they move the dominant share of freight and passengers, high- ways affect almost all aspects of the economy, society, and daily lives of Americans. These effects are highly beneficial but also involve costs. An ongoing stream of innovations is needed for the public-sector owners and operators of the nation’s highway to maximize these benefits and minimize these costs. Because of the broad impacts of highways, the investments in innovation must likewise be broadly based. The innovations must con- tribute to demands as diverse as increasing traffic safety, highway operat- ing performance, environmental protection, resilience, asset management, technological advancement, materials durability, and sources of funding, among many others. The federal government has a compelling interest in promoting innova- tion in highway transportation. FHWA and ITS JPO discharge this interest in highways, in part, by promoting innovation by the 50 states and nearly 40,000 local governments that own and operate highways. Private-sector innovation is also important, but it can be hindered by the many barriers to innovation in the public sector. These barriers include risk aversion, the “low bid” contracting process, limits on the use of proprietary and patented products, and others. Annual federal investments in highway-related RD&T to foster public- sector innovation are spread across four major programs authorized by Congress: FHWA RD&T, ITS JPO, State Planning and Research (SP&R), and University Transportation Centers (UTC) (see Figure S-1). The annual level of RD&T funding represents 0.3 percent of annual expenditures across all levels of government on roads and highways. This level of invest- ment is even more modest compared with the importance of highways to individuals, society, and the economy. RESPONSIVENESS TO CONGRESS In 23 USC 502(a), Congress has set forth several criteria that FHWA and ITS JPO RD&T must meet to foster innovation in highway transporta- tion. Among these criteria, the committee believes that allocating RD&T resources appropriately across the full innovation cycle, addressing gaps not covered by other programs, conduct of research on nationally significant topics, responsiveness to stakeholders, and award of RD&T funding based on competition and merit review are the most important. Based on the com- mittee’s awareness of the success of federally funded RD&T in meeting the

SUMMARY 3 latter two criteria, this report focuses on the first three criteria. In assessing whether FHWA and ITS JPO programs are meeting these congressional criteria, the committee does so in the context of the two other federally funded, highway-related RD&T programs because of their interrelation- ships and the similarity of topics addressed. Full Innovation Cycle Although innovation is often a non-linear, serendipitous process, innovation in the highway sector can be delineated in five stages: research, develop- ment, testing, technology transfer, and evaluation. These stages overlap and interrelate. Evaluation needs to apply to all of the stages in order for con- tinuous improvement to occur in the fostering and delivery of innovation. Consistent with the requirements of Congress, FHWA and ITS RD&T activities span the full innovation cycle. Almost 60 percent of FHWA’s/ITS JPO’s RD&T funding is allocated to applied research and development (R&D), although it appears that some of these funds could also be classi- fied as pilot testing and technology transfer. FHWA and ITS JPO classify just more than 40 percent of their RD&T funding as technology transfer, although it appears that share could be even larger based on the how pro- gram areas are described by FHWA and ITS JPO. The committee’s reading of the nature of the work funded in the R&D category suggests that the overall RD&T resource allocation is actually more heavily weighted to- ward technology transfer than R&D. Given that it generally costs more to FIGURE S-1 Authorized federal highway–related RD&T by program (Fiscal Year 2017).

4 VITAL FEDERAL ROLE IN HIGHWAY INNOVATION promote innovation in the public highway sector than to develop it, such emphasis on technology transfer appears appropriate. Fundamental Research Congress has also specified that FHWA’s RD&T should include “fundamen- tal, long-term research” to assist in the identification of promising future innovations. Investment in such high-risk research with its broad potential benefits is a clear federal responsibility. FHWA’s Exploratory Advanced Research (EAR) program has this focus, but its annual funding ($6 million) is modest and represents but 3 percent of FHWA RD&T. ITS JPO’s $18 million Emerging Technologies program is described as supporting funda- mental research, but much of the activity appears to be applied R&D, pilot tests, and demonstrations. Across all four of the federally funded highway- related RD&T programs reviewed in this report, almost all of the funding supports applied R&D, testing, demonstrations, and technology transfer. An emphasis on these stages of the innovation process is appropriate given the many practical problems state and local agencies face and their need to make ongoing incremental improvements across a range of chal- lenging issues. However, based on the committee’s estimate, the share of funding for these activities is disproportionately large. Inadequate invest- ment in fundamental research risks missed opportunities for insights that might yield future transformative improvements in highway transportation. Universities may be more fertile areas for fundamental research than federal contract research programs, but the funding requirements and structure of the UTC program drives universities to focus on applied research. Congress may want to consider whether changes are needed to UTC program require- ments to ensure adequate UTC investment in fundamental research. Evaluation Congress has also specified evaluation requirements for RD&T. FHWA and ITS JPO have notable evaluation efforts, but even greater benefits are possible from expanded investment in this area. FHWA RD&T has an important initiative to conduct case study evaluations of specific RD&T initiatives, but limited funding has constrained the number and extent of evaluations. The ITS program has an ongoing evaluation activity, including the independent evaluation component of its large-scale connected vehicle (CV) pilot projects. Regarding demonstration programs, as directed by Congress, FHWA is requiring annual reports of progress and documenta- tion of lessons learned from grantees, but is relying on self-reports rather than independent evaluations. This raises questions about whether (a) there are better ways to fund and design demonstration programs around

SUMMARY 5 strategic objectives and reporting and (b) FHWA could rely on independent evaluation of a sample of demonstration projects rather than relying on self-reports from all of them. FHWA and ITS JPO research is spread across many different highway topics, allowing it to contribute positively to the many important aspects of highway transportation. Although the scope of the RD&T program is broad, the emphasis on being comprehensive can lead to resources being spread too thinly. Congress’s direction in the Fixing America’s Surface Trans- portation Act of 2015 stating that funding representing $80 million annually in FHWA and ITS RD&T resources be transferred from existing RD&T for new pilot and demonstration programs has exacerbated this risk. Understanding that deployment of innovation in the highway sector requires serving the states and local governments that own and operate highways, FHWA and ITS JPO RD&T programs are explicitly designed for this purpose. More than 80 percent of FHWA’s RD&T activities identify state departments of transportation as partners. ITS JPO’s large-scale pilot programs and ITS demonstration projects conducted with state and local government partners represent 44 percent of ITS funding, and many of its other programs support state and local government initiatives as well. Addressing Gaps in Research FHWA and ITS JPO RD&T programs, as required by Congress, are ad- dressing a number of critical gaps not covered by other programs: 1. Responsiveness to Congressional Direction. FHWA RD&T is ad- vancing congressional and federal policy direction in areas such as system performance, asset management, acceleration of project delivery, safety planning, and environmental compliance. 2. RD&T Coordination. FHWA provides the pooled-fund contracting mechanism for the dozens of ongoing collaborations in RD&T by states and by states with FHWA. 3. Advancing City-, Regional-, and State-Scale ITS Applications. ITS JPO RD&T on cybersecurity, system integration, standards for interoperability, development of infrastructure-based sensing and communications systems, operational applications, and support for city-, regional-, and state-scale pilot tests is not being addressed in SP&R or UTC RD&T. 4. Data Collection and Sharing. FHWA develops and maintains in- valuable, widely used national datasets (travel, safety, asset condi- tion and performance, system extent, and funding among them). 5. Broad Diffusion of RD&T Information. FHWA funding and tech- nology transfer activities support broad diffusion of information

6 VITAL FEDERAL ROLE IN HIGHWAY INNOVATION about ongoing and published transportation research from all sources to policy makers, practitioners, and researchers alike, and FHWA and ITS JPO websites provide extensive information about their RD&T activities. 6. Support for Innovation from Discovery to Deployment. FHWA and ITS JPO’s stable resources and strategic approach enable them to make long-term commitments, often spanning more than a decade, to identify, develop, test, and demonstrate potentially promising innovations. FHWA and ITS JPO play a critical role in supporting state and local deployment through technology transfer programs that include funding, technical guidance and assistance, training and education, and professional capacity building. Conduct of Nationally Significant R&D FHWA and ITS JPO are conducting nationally significant research, but there are compelling policy and operational issues that could justify even greater levels of RD&T investment by the two programs. As described in Chapter 5, FHWA RD&T is addressing most of the nationally significant topics identified in Critical Issues in Transportation. This report draws from this list, which is presented below in no priority order. Many of these topics overlap and interrelate. Illustrative examples of compelling policy and op- erational concerns that could drive sustained and additional RD&T include Transformational Technologies—by (a) continuing to foster interop- erability and cybersecurity of rapidly evolving connected and automated vehicle (CAV) technologies, (b) monitoring and forecasting how CAVs will affect highway performance and capacity, and (c) by collecting data about shared mobility travel and sponsoring research on the broad implications of this fast-growing trend. Energy and Sustainability1—by collaborating in R&D with other fed- eral agencies and developing policies on how to best foster the recharging infrastructure needed for electric drive and low-greenhouse gas emission fuels for highway transportation. 1 A short definition of sustainability used by FHWA is as follows: “Sustainability aims to satisfy basic social and economic needs, both present and future, by promoting the responsible use of natural resources, while maintaining or improving the environment on which life de- pends” (FHWA. Advancing a Sustainable Highway System: Highlights of FHWA Sustainabil- ity Activities. June 2014, p. 1. https://www.sustainablehighways.dot.gov/documents/FHWA_ Sustainability_Activities_June2014.pdf).

SUMMARY 7 Serving a Growing and Shifting Population—by addressing how to ensure that megaregions responsible for a growing share of national pros- perity are well connected internally and with the rest of the nation and the world; developing funding strategies for highways supporting Interstate passenger and freight travel in rural areas with declining populations; and improving the ability to estimate future Interstate highway travel at the network level, including accounting for the ability of passengers and freight to shift the time and routes of trips and to shift to other modes. Resilience2—by collaborating with other federal agencies conducting R&D addressing infrastructure vulnerability to natural and man-made d isasters and by developing risk-management tools; incorporating the results from climate research into standards for resilient design; and devel- oping policies and funding strategies regarding the rebuilding of more resilient infrastructure after it is damaged or destroyed. Safety—by continuing to focus on the potentially transformative safety benefits of technology through ITS RD&T on systems integration; interop- erability; sensing and communications to connect vehicles, infrastructure, and vulnerable road users; and continually updated guidance on the public role in development and deployment as private-sector CAV technologies evolve and find market acceptance. Equity—by conducting R&D to (a) improve transportation access of disadvantaged populations and (b) conduct an updated study to assess whether all classes of vehicles are being charged their fair share of highway costs. Governance—through (a) more expansive and in-depth policy research on the appropriate federal policy and funding role in Interstate highway transportation and (b) research sorting out the trade-offs, responsibilities, and funding roles of the multiple levels of governments involved in highway transportation at the local level. Asset Management and System Performance—by filling critical knowl- edge gaps about the structural condition of aged Interstate highway 2 FHWA defines resilience as follows: “Resilience or resiliency is the ability to anticipate, prepare for, and adapt to changing conditions and withstand, respond to, and recover rapidly from disruptions” (FHWA. FHWA Order 5520: Transportation System Preparedness and Resilience to Climate Change and Extreme Weather Events. December 15, 2014. https://www. fhwa.dot.gov/legsregs/directives/orders/5520.cfm#par6).

8 VITAL FEDERAL ROLE IN HIGHWAY INNOVATION pavement foundations and the extent, condition, and performance of In- terstate interchanges. Funding and Finance—by supporting and managing a large-scale na- tional pilot program to test (a) technologies and systems to allow for direct road user charges and (b) public and political acceptance of these alternatives. Goods Movement—by conducting research and model development to understand the national policy trade-offs of shifting freight to other modes when considering expansion of Interstate highways. (FHWA RD&T is expanding its work in freight in response to congressional direction, but appears to lack the resources needed to make more substantive progress in this important and complex area.) Research and Innovation—(a) to foster and support a culture of inno- vation by states, metropolitan planning organizations, and local highway agencies and (b) by conducting RD&T on ways to expand opportunities for private-sector innovation to occur in highway transportation. INVESTMENT IN FUTURE INNOVATION The U.S. economy and citizenry depend on highways. In an environment in which transformative changes are occurring in technology, mobility services, climate and weather conditions, and the country’s demographic landscape, innovations identified, in part through fundamental research, are desperately needed to harness technology to move highway traffic more quickly, safely, and with fewer adverse environmental impacts. Break- throughs are needed in materials, construction, long-term asset condition and performance, and means to raise revenues to fund the maintenance and renewal of the highway network. The nation is fortunate to have effective highway RD&T programs at the federal level that are addressing these is- sues and more. With sustained and adequate funding and modest improve- ments in RD&T programs such as those suggested above, the programs will continue to serve and advance the national interest and international competitiveness well into the future.