NATIONAL ROUND TABLE:
INSTITUTIONS FOR IMPROVING FREIGHT MOVEMENT IN MULTI-STATE CORRIDORS

ASSESSING THE EIGHT INSTITUTIONAL OPTIONS

When asked to assess the relative potentials of the eight types of institutions to improve the performance of multi-state corridors, the group had a hard time. The general consensus arrived at was that "it depends." Choosing institutional options was considered to be very situational and potentially problematic. Several members of the group appeared to believe that the U.S. may already have too many transportation institutions. These institutions often get locked-in to how and why they were set-up in the past, and then are difficult to modify in order to stay relevant and helpful now and in the future. They themselves may, in fact, become barriers to meeting future multimodal needs. It was suggested that this may be a particular problem with Interstate Compacts because of the need to go back to multiple state legislatures to change them when circumstances change.

The only general consensus favoring a particular institutional option was that the federal government (Option 8)—more particularly the Office of the Secretary of DOT—should be re-structured to provide greater leadership with regard to intermodal coordination, the selection and official designation of multi-state transportation corridors, and system-wide intermodal (network) planning. This federal leadership role should be imbedded in a collaborative framework with the states and other stakeholders. By this means, projects and corridors of national interest could be provided for by the federal government consistent with how this role was exercised at key junctures in the past. Federal financial incentives and initiatives were also welcomed, and federally "induced collaboration" was seen as legitimate and needed.

The group also recognized that no one will let significant amounts of federal money go unclaimed for the want of an institution capable of claiming and using it. Thus, institutions inevitably will be created as necessary to follow the money. The general feeling seemed to be that if the federal government provides the money, the appropriate stakeholders will provide the needed institutions—similar to the way in which MPOs developed during the 1960s and 1970s.

A couple voices favored using options #3 (special districts or authorities) and #4 (voluntary coalitions) as the most feasible ones. AASHTO's freight policy for this year's surface transportation reauthorization discussions—summarized in the draft paper being reviewed by the Roundtable—calls on Congress to provide for better definition of freight corridors and funding of multi-state intermodal organizations to serve them. Some Roundtable participants noted that options #3 and #4 tend to separate planning and system-wide decision-making from program and project implementation, but the question of how to improve the institutional capabilities of existing transportation corridor coalitions was raised. Funding the existing coalitions, which is already occurring to some extent, would be consistent with the concept of federally induced collaboration. This topic was not pursued, however, because time was short and the intension in this meeting was not to focus on any specific multi-state structure but to focus on the overall array of options.

All the other options were felt to be too situational to earn a general endorsement from the group. However, some participants were curious to learn more about the potential roles of foundations and non-profit corporations, and the possibilities of creating hybrid organizations.

The group did seem to recognize that there are situations when new institutions are required. These situations might arise if (for example):

• A big long-term infrastructure job or a significant new continuing operations assignment is clearly identified and agreed too (such as the Appalachian Highway System or a major project or system, or a corridor of national interest)
• No existing institution can handle the job
• Solid long-term financing is tied to the task
• Implementation capabilities are required that cannot be segmented into individual projects to be implemented by existing organizations

Some in the group pointed out that state boundaries are historical artifacts of the 18th and 19th centuries, and that consequently states are not always the most effective institutions to deal with the movement of commerce in the 21st century.

The prevailing view appeared to be that any new multi-state transportation institutions that might be created should be nimble, adaptive, or temporary—so they can go away or change their missions as the tasks they were created to achieve are completed or changed.

A wide variety of individual comments were offered during this discussion. They are grouped and captured below under the following two headings: (1) focus on the capabilities needed rather than on the institutional models, and (2) be open to building and modifying hybrid institutions tailored to unique situations as they develop over time.

Focus on the Capabilities Needed

The split between planning and financing was singled out as a very significant factor that impedes the implementation of system-wide transportation improvements. For example, MPOs (and other coalition-type organizations) do a great deal of planning but have relatively little to say about the availability of funding. Recent requirements for "fiscally constrained" planning by MPOs were meant to address the problem of "wish list" plans that had no relationship to available funding. Although this requirement has narrowed the gap between best-case solutions and affordable improvements, it has done little to ensure adequate and reliable funding and prioritization for essential projects.

State DOT planning and financing have a much closer relationship to each other. But multi-state transportation corridor planning has little recognized status. This reality led one participant to wonder: Who can bless such planning and bring the parties together for funding and implementation. Another asked: Who decides or who is empowered to decide what is important in these corridors? Are there coherent plans for these areas? Can we find carrots and sticks to get coherent plans and coherent decisions made? Can we identify catalysts for creating effective public institutions at the multi-state level? Can U.S. DOT rebuild an Intermodal Office in the office of the Secretary to pull together all the rail, highway, and maritime elements required to improve the operation of freight corridors? Could there be some federal intermodal funding to help bridge gaps between the existing programs? One participant suggested having a "desk officer" in U.S. DOT for each multi-state corridor—someone to expedite high priority projects. Others suggested:

• The need for corridor plans to be performance-based
• The need for data-driven investment priorities rather than legislatively-driven priorities

A participant with long and deep experience in the natural resources field remarked how much more the transportation decisions seem to be driven by funding arrangements, and how much less they seem to be driven by scientific analysis. Others asked: How should private sector planning and decision-making—by railroads, truckers, and others—fit into public planning and decision-making at the multi-state level? Another participant suggested: We may need to start with funding structures focused on multi-state corridors, and with greater federal leadership in using these funds. And we may need strong political leadership to go beyond parochial interests.

Some participants showed interest in business corporations and foundations for their special capabilities in implementing projects for which funding is available. Public special districts and authorities also possess this capability as well as the added capability to make public policy. These organizations were noted for their ability to focus funding and action on a limited geographic area where the project boundaries and benefits coincide, so funding responsibilities can be clear.

One federally chartered foundation had unique authority to accept and leverage funding from multiple federal agencies, congressional appropriations, and private foundations to find solutions to natural resources problems that none of the individual project-originating organizations would have been capable of achieving by themselves.

Considering Hybrid Institutions

Looking across these planning, financing, and implementation issues, it seemed clear to many participants that hybrid institutions tailored to meeting the needs of unique situations might make the most sense in many situations. They cited several cases to illustrate the point:

• When it was decided to build a heavy-rail rapid transit system in the Washington, DC metropolitan area, it was clear that no existing organization had the capabilities and legitimacy to do the job. However, it was equally clear that the preferred organization for this multi-state job would be an interstate compact organization, and that it would take several years to develop the necessary political agreements to set it up. Rather than wait, the Administration and Congress set up a temporary federal agency in the 1960s to design the system and begin construction. When the interstate compact organization, the Washington Metropolitan Area Transit Authority, was ready, it took over the ongoing construction and took on permanent responsibility for operating and maintaining the system (including an area-wide public bus system that consolidated and replaced several private bus companies). Because most of the funding for construction came from transfers of 90:10 federal Interstate Highway trust funds, continued financing for operation and maintenance was not built into the Compact adequately at the beginning. That omission is now being rectified as the aging system is facing heavy financial demands related to refurbishing its facilities and equipment and expanding service some thirty years after the original portions of the system opened.

• Another major multi-state transportation project in the Washington Metropolitan Area—replacement of the very heavily used Woodrow Wilson Bridge over the Potomac River—followed a different path. The bridge is located in DC, Maryland, and Virginia, and is a key link in the Maine-to-Florida I-95 corridor. The bridge's daily usage was far over capacity and the structure was in imminent danger of collapse. The project to replace it was begun cooperatively by the three state DOTs and the multi-state MPO. Although good progress was made on the technical planning issues, funding and implementation decisions bogged down. Ultimately, FHWA headquarters, several local members of Congress, and the Congress itself had to be involved to break the impasse. Then, the process reverted to the normal state DOT and MPO process for construction and operation.

• The Appalachian Regional Commission was established in 1965 by a specific Act of Congress. It is a joint federal-state institution governed by the governors of 13 states and a federal co-chair, and is housed within the U.S. Department of Commerce. Although its primary purpose is economic development of a very large underdeveloped mountainous region of the nation, its largest program is the Appalachian Development Highway System—which is now nearly complete.

• The contrast between the institutional histories of Amtrak and Conrail is also instructive. Amtrak is a federally-owned corporation that took over passenger train responsibilities from the private railroad companies that were experiencing severe financial losses from their passenger train operations. It is a permanent operating company devoted to delivering service and upgrading the system's facilities and equipment. The Conrail case, on the other hand, involved a much more complex series of institutions over a period of about 30 years. It began with bankruptcies of the private railroads in the Northeast U.S. To meet this emergency, which could have shut down freight service as well as passenger service, Congress established a quasi-public corporation—the United States Railway Association—to devise a solution to the problem in very short order. The solution settled on was to establish Conrail as a government-owned corporation to receive the assets of all the bankrupt railroads, rework them into a single viable freight railroad, and nurse it back to profitability. Following deregulation of the freight railroad industry, Conrail created an efficient and commercially valuable new railroad that was privatized in the largest IPO in US history. The US government recovered its investment in Conrail from that IPO. After several more years, Conrail was split and sold to two private railroads at a significant profit to its shareholders.

• As the Territory of Alaska was developing, it needed a railroad. However, it did not have the means to build one and business was not sufficient to support a private railroad. So the U.S. Army Corps of Engineers was commissioned to build the railroad. Operation and maintenance was turned over to the Department of the Interior and then to the Department of Transportation, which, after 28 years, sold it to the State of Alaska. Alaska established a state-owned corporation to run it.

These cases illustrated how different situations generate different institutional solutions, and how those solutions changed over time. They also demonstrated that how the purpose of the institution is defined makes a lot of difference to the form of the institution tapped to meet the need, and showed that the ability to be nimble and responsive to the situation is a significant factor in determining the institution's success.

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