MULTI-STATE INSTITUTIONS FOR IMPLEMENTING IMPROVED FREIGHT MOVEMENT IN THE U.S.

Part I: THE TIME IS RIPE FOR FREIGHT IMPROVEMENTS

What Kinds of Improvements are Needed?

The I-95 Corridor Coalition is one of several multi-state coalitions that are identifying the transportation problems of freight corridors and needed improvements. The I-95 Coalition commissioned Cambridge Systematics, in combination with Parsons Brinkerhoff Quade and Douglas, to prepare the April 2002 Mid-Atlantic Rail Operations Study. That study identified a $6.2 billion package of rail improvements needed to repair deteriorated facilities, eliminate choke points, and reconcile competing freight and passenger needs. ¹

This Mid-Atlantic study is one of many proposals for improving corridor facilities and operations all across the nation. Some propose specific projects, while others propose broader strategies and system-wide improvements. A few of these proposals are cited below to provide a sense of the types of issues, strategies, and improvement projects that multi-state transportation institutions might be called on to consider, support and/or implement.

For example, 22 states are devoting portions of their economic recovery (stimulus) funds to accelerating their investments in high-tech equipment designed to speed traffic, reduce congestion, save fuel, and reduce harmful emissions along heavily traveled multi-state highway corridors. The types of equipment used for these purposes include such items as traffic cameras, express toll collection booths, upgraded traffic signals, ramp meters, vehicle sensors, and portable as well as permanent electronic signs—to make their highways "smart," reduce congestion, speed traffic (including trucks) on its way, and reduce the impacts of construction. ²

Likewise, the Federal Railroad Administration has a long-range plan for "intelligent railroad systems" ³ in multistate corridors that would use emerging sensor, electronic information, and communications technologies to prevent collisions and accidents, prevent hijackings and runaways, increase capacity and asset utilization, increase reliability, improve service to customers, improve energy efficiency and reduce emissions, increase economic viability and profits, and enable railroads to measure and control costs, and recover more rapidly from incidents.

In preparing for congressional renewal of the nation's current surface transportation program (SAFETEA-LU) in the fall of 2009, the U.S. House of Representatives Committee on Transportation and Infrastructure adopted a reauthorization bill that proposed several new freight provisions. The Committee drew heavily on recommendations made by many interest groups with vital interests in improving the capacity, reliability, and operations of national, state, multi-state, and regional freight transportation systems. ⁴ The Committee bill's main freight provisions are:

• National Intermodal Policy and Plans: Reestablish the Office of Intermodalism under a new Under Secretary of Transportation in the Office of the Secretary. The Under Secretary would work with a new Intermodal Council chaired by the Secretary and consisting of the Department's modal Administrators and the heads of the U.S. Coast Guard and the U.S. Army Corps of Engineers. The Under Secretary and Council would be charged with preparing a national transportation strategic plan that would focus on projects of national significance (PNS), determine priorities among these projects, and establish a vision for long-term transportation investment. The new PNS program would explicitly include freight modes—enumerated as highways, railroads, navigable waterways, deepwater ports, and intermodal linkages, access and transfers. PNS projects would have to be consistent with statewide, metropolitan planning organization (MPO), freight, and freight corridor plans.
• Statewide Freight Planning: The House bill would require statewide transportation plans to include or be accompanied by proposed freight and other projects of national and regional significance. Each state would have to have a performance-based freight improvement investment program, a state freight rail plan with annual reporting on progress toward goals for achieving speed and reliability targets for freight movement, and a freight advisory committee. States would also have to propose, for approval by the U.S. DOT Secretary, designation of secondary freight routes (non NHS public roads) for which the state would have to submit 5-year condition and performance reports.
• Regional Freight Institutions: The bill would enhance MPO roles in freight planning and coordination, and would add similar rural planning organizations (RPOs) for rural regions outside the MPO jurisdictions. RPOs might have particular value in helping state DOTs work cooperatively with counties and other local governments on federally designated secondary freight routes that serve the mining, agricultural, timber, and tourism industries.
• Freight Corridor Coalitions: The U.S. DOT Secretary would be given authority to designate up to 10 freight corridor coalitions and to fund their operations up to 80 percent of their costs for preparing corridor improvement plans, identifying projects and funding sources (and responsibilities), and providing cost estimates for proposed projects.
• Financing: Funding for PNS and other freight improvement projects would be authorized to come from (1) any appropriate federal-aid funds (including a new PNS fund created by consolidating three existing DOT programs), (2) national, state, and metropolitan infrastructure banks, (3) reauthorized and extended capital assistance for short-line and regional railroads, and (4) other sources. The House Transportation and Infrastructure Committee bill does not identify specific revenue sources to support these programs because that is the responsibility of another committee.
• Freight Safety: The Highway Safety Improvement Program (including the highway-railroad grade crossing program) and the Motor Carrier Safety Assistance Program would be strengthened.
• Freight Data: To support federally required planning more fully (including freight planning), new and improved data programs would be authorized. These improvements would include commodity flows, hazardous materials transportation, performance measures, 20-year forecasts of national trends, safety information, and estimates of project benefits.

Freight movement, of course, involves many multimodal movements. Railroads, trucking companies, highways, delivery companies, airports and water ports—as well as inland and inter-coastal waterways and intermodal transfer terminals—all play important roles in providing efficient portal-to-portal, just-in-time pick-ups and deliveries. A new National Freight System and its institutional framework would need to support all these roles.

Crisis Often Produces New Institutions

The nation is now in a multi-dimensional crisis that calls for new institutional capabilities. The economic meltdown, global warming and climate change, the energy crisis, dependence on foreign oil, environmental challenges of many kinds, and massive accumulated infrastructure deficits are coming together to form a "perfect storm" of public policy challenges to the transportation community.

At other such crisis points in the nation's history, the U.S. created new institutions to meet new needs. For example:

• When water supplies to New York and other major East Coast cities faltered in the face of rising demand, increasing pollution, and intensifying interstate competition for using the limited water resources in this heavily urbanized Megalopolis, Congress and the States got together to form a federal-interstate commission to ensure the productivity and reliability of the Delaware River Basin.
• When the private sector was discontinuing railroad passenger service, Amtrak was formed as a federally sponsored private corporation to continue providing this vital public service.
• When most of the Northeastern freight railroads were going bankrupt in the early 1970s, the United States Railway Association was formed as a mixed federal-private corporation to find a solution, and a new government-sponsored Conrail corporation was formed to continue the vital services being abandoned by the private sector. Conrail subsequently became profitable, was split and sold to two other healthy private railroad companies, and the government got out of the freight rail business after approximately two decades of deep involvement in the northeastern United States.
• When the Great Depression struck, the Tennessee Valley Authority was formed as a federal government corporation by the Administration and Congress to develop a major river and turn one of the nation's poorest regions into a powerful new economic engine that: (1) provided electrical power to the resident people and businesses, (2) improved river navigation, (3) reduced flooding, (4) provided fertilizer to the nutrient-spent farms in the region, and (5) created one of the nation's major munitions centers and suppliers of aluminum for airplanes during World War II. TVA also created one of the nation's richest outdoor recreation resources.
• When navigation and flood control problems on the Mississippi River became acutely important to the nation in 1879, Congress created the Mississippi River Commission, and then later revised this institution's role and related federal programs several times to meet changing needs through a combination of direct federal action, interstate cooperation, and actions by state and local governments and others.
• When dramatic electric power outages struck the Northeast, and then California and the Pacific Northwest in the latter part of the 20th Century, the reliability of the nation's electric transmission grid became a serious national issue. These periodic large-scale blackouts and brownouts demonstrated an urgent need for an improved national network. Electric power generation involves a large number of public and private operators that are connected by private long-distance transmission companies. Initially, the individual power generating companies developed MOUs with neighboring companies to help them meet uneven demands on a spot basis. This ad hoc system "just grew" into a series of relatively weak local connections that proved unequal to the nation's growing needs. The federal government responded with a National Transmission Grid Study ⁵ and new regulations designed to ensure the grid's reliability. To administer compliance with these new regulations, the Federal Energy Regulatory Commission certified the privately chartered, nonprofit North American Electric Reliability Corporation as the responsible organization. ⁶

Many institution-building lessons can be learned from these and other examples. And the current confluence of public policy crises offers a ready opportunity to examine them—with some assurance that they will be useful in future national policy discussions.

Needed Capabilities of Multi-State Transportation Corridor Institutions

When examining these examples of multistate institutions, three distinct functions or capabilities stand out: (1) strategic design and authorization of outcome-oriented goals and objectives to be achieved for the region as a whole, (2) system management capabilities to ensure that specified outcomes are achieved, and (3) effective management of the projects and operations needed to produce the program outputs in each part of the region that, when aggregated across the whole multi-state region, are needed to meet region-wide goals and objectives. When the region spills across national boundaries, international treaties are needed as well, and must be taken into account. However, the international dimension is considered only tangentially in this paper.

The strategic design and authorization function of multi-state institutions generally requires congressional involvement, in addition to the involvement of state and other policy makers, because it represents multistate policy and the allocation of national resources in addition to resources from other sources. These public policy matters are inherently governmental responsibilities; they cannot be delegated to non-governmental institutions or to governmental decision-making by individual states or local governments that may not be bound to achieving specified overall outcomes designed to benefit the whole multi-state region. Obviously, the state and local governments and others must be involved in building a consensus to support the region-wide design if it is to be implemented successfully, but the final design must be decided collaboratively at the national and regional levels to ensure it will work effectively and efficiently as a system that reaches across multiple states.

Once the system is designed and funded, managing it to achieve the expected systemwide outcome goals can be delegated to others as long as they are committed to operating within the overall framework established for the multi-state region. Much of this work is technical, or discretionary within the bounds of adjusting most effectively and efficiently to local or sub-regional conditions while ensuring that the specified results are being achieved. These goals might include, for example, system capacity, levels of service, and levels of air and water quality that meet regulatory requirements. Accountability to governmental institutions for outcome-oriented results is essential at this level, but much of the work may be done by a variety of qualified partners, including many in the private sector. Measuring and reporting progress, and facilitating or enabling progress are central parts of this job.

The project and operational management function is essentially technical. It involves the nuts and bolts of "getting the job done" on time, within budget, and consistent with design specifications. Essentially, this task is to implement planned, committed projects and service programs. Technical qualifications are paramount. Much of the work may be done under contracts or grant agreements; other work may be done under the authority of and with funding supplied by the individual public and private organizations performing the work. Contract management, public accountability for project outputs, and required audits are essential to provide the accountability needed up-line within the authorized organizational structure and directly to customers.

Thus, a wide variety of implementing organizations ultimately may be involved in the overall network of  governments, companies, and individuals that need to work together to achieve agreed upon goals.  This will make “network management” another important capability the multi-state institution will need to master if it is to be successful. ⁷ The diverse organizations performing these three functions need to be tied together by some reliable means in order to perform consistently and achieve the expected results.

The purpose of this paper is to survey organizational structures that have been used for planning, financing, and implementing large-scale public infrastructure improvements that extend across state lines, and to describe institutional options for strengthening them.

The next section of this paper provides the requested survey of options to help practitioners and policy-makers think through solutions to their institutional needs. It is not limited to transportation institutions alone, or to public agencies alone.

Then, after examining factors for evaluating the suitability of institutional options for strengthening multi-state groups, this paper concludes with a hypothetical scenario of what a network of "most appropriate" organizations might look like. A corridor coalition may be most effective and best accepted as one player among many. It typically performs an essential area-wide strategy development and coordination role not being performed by any other organization, and it often encourages and facilitates other organizations to perform the roles for which they are best suited. Often it is these other organizations—both public and private—that construct and operate facilities, deliver services, administer related regulations, and arrange financing.

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