STATEMENT OF EMIL H. FRANKEL
ASSISTANT SECRETARY FOR TRANSPORTATION POLICY
U. S. DEPARTMENT OF TRANSPORTATION
COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS
UNITED STATES SENATE
HEARING ON PROJECT DELIVERY
AND ENVIRONMENTAL STEWARDSHIP
SEPTEMBER 19, 2002
Mr. Chairman and Members of the Committee, thank you for this opportunity to discuss the issues of transportation project delivery and environmental stewardship.
Ensuring that important transportation projects are completed as quickly as possible is one of the top priorities for all of us at the Department of Transportation, as I know it is for members of this Committee. Transportation system users too are becoming more and more frustrated with a process they perceive to be overly laborious and cumbersome. Growing congestion is fueling this frustration. This Department has already made great strides in the area of streamlining the project development process while protecting the environment, and the reauthorization of the Transportation Equity Act for the 21st Century (TEA-21) presents an excellent opportunity to review and refine those efforts.
There are a multitude of factors that impact the timing of project delivery, from the planning process to construction techniques to environmental issues. Issues confronted in one project will often vary substantially from the issues confronted in another seemingly similar project. Many problems are local in nature and thus demand local solutions. The Federal government’s role in creating project delays is frequently minor, although occasionally it is not. Unfortunately, the nature and complexity of the issues mean that blanket solutions have proved very elusive. That is not to say that progress cannot be made. In fact, this Department’s expansive efforts have brought positive change. Progress has always required great efforts, and the area of transportation project delivery is no different.
While this testimony will focus heavily on the environmental aspect of project delivery, it is important to note that advancements have been made in streamlining other aspects transportation project development. A few of those advancements are discussed later in the testimony.
Secretary Mineta noted to this Committee back in January that one of the goals of the Department’s reauthorization proposal will be to increase the efficiency of our infrastructure while retaining environmental protections that enhance our quality of life. Transportation agencies realize today, more than ever, that environmental stewardship is a critical part of how we do business.
Public expectations and demands for transportation solutions today, not ten years from now, are understandable, given the magnitude and pervasiveness of America's transportation problems. Equally understandable is the public's desire for environmentally sensitive ways of doing business. Sometimes these two societal goals work in conflict. Environmental streamlining and stewardship is the term used for a new way of doing business that brings together the timely delivery of transportation projects with the protection and enhancement of the environment. In essence, it is a rejection of the false choice so often presented between adding transportation capacity and protecting our environment.
In its simplest terms, environmental streamlining consists of cooperatively establishing realistic project development time frames among the transportation and environmental agencies, and then working together cooperatively to adhere to those time frames. Because major transportation projects are affected by dozens of Federal, State, and local environmental requirements administered by a multitude of agencies, improved interagency cooperation is critical to the success of environmental streamlining.
The Department has worked extremely hard to solidify relevant interagency partnerships through a series of actions that include pilot efforts, process reinvention, alternative dispute resolution, and a focus on performance evaluation. We can and will do more.
TEA-21 has also been crucial in encouraging meaningful streamlining and stewardship. The objectives of TEA-21’s streamlining section 1309 were to: expedite transportation project delivery; integrate review and permitting processes to identify key decision points and potential conflicts as early as possible; encourage full and early participation by all relevant agencies that must review a highway construction or transit project or issue a permit, license or opinion relating to the project; coordinate time schedules for agencies to act on project decisions; establish dispute resolution procedures to address unresolved project issues; and to improve decision making under the NEPA.
Consistent with the mandate of Section 1309, the Department has taken a series of administrative actions to enhance environmental streamlining. The FY 2002 Department of Transportation Appropriations Conference Report, of November 30, 2001, directed FHWA to report on agency streamlining efforts by January 2, 2002. In January, we submitted a report to Congress that summarized many of the steps the FHWA has taken to enhance environmental streamlining:
From 1999 to 2001, the median time for completing environmental review for projects requiring an Environmental Impact Statement decreased by one year (from five and a half years to four and a half years). This reflects respectable progress for projects that are most complex, challenging and have significant impacts. These constitute less than 3% of all Federally funded surface transportation projects.
This year, FHWA has set internal goals to continue to decrease the review time for all projects requiring rigorous environmental analysis. This would be accomplished through negotiated project timeframes with each State DOT and FHWA division office and consultation with review agencies. FHWA has put an Environmental Data tracking system in place to track review times on an ongoing basis. FWHA expects to have a solid database within the first year.
Fifty States have adopted initiatives for streamlining that clarify, amend, or re-invent the project development process. At least 24 States have focused their process redesign efforts on integrating planning and National Environment Policy Act (NEPA) activities.
A number of these initiatives have evolved into major process reinventions that FHWA has supported with streamlining funds as well as technical assistance. Not only are environmental concerns integrated into the long range planning process, the processes themselves and the agency reviews and comments are conducted electronically. This cuts review time and makes the web-based process transparent and accessible to the public.
Using TEA-21 authority, 34 States have agreed to provide personnel to State and Federal environmental agencies for the purposes of expediting reviews. The Department is very encouraged by the efforts. FHWA has now finalized guidance for using these arrangements, as well as documented the lessons learned for viewing by all States. The guidance includes a template that other States can easily adapt and modify for their use.
Twenty-nine States have adopted agreements to merge the FHWA NEPA process and the Clean Water Act permitting process administered by the USACOE. This eliminates what can be a duplicative process. FHWA is working with the Corps to modernize merger agreements already in place and update agency policy directives and clarifications that will help foster new NEPA merger agreements.
Forty-one States have created some level of delegated authority for historic resources that allows many projects to be processed quickly. This also frees up Federal and State resources to focus on complex issues. Vermont’s efforts in this area are to be commended, and their approach sets the standard nationwide.
FHWA’s streamlining website, www.fhwa.dot.gov/environment/strmlng/index.htm, has proven to be a key medium for communication on these topics. It includes an inventory of best practices and a catalogue of State efforts and national activities. A new “Success Story” is featured each month, and feedback from our stakeholders has been very positive. Links to other key sites (e.g., AASHTO Center for Environmental Excellence) will make the website more interactive and provide access to very useful resources.
Successful environmental streamlining requires fostering good working relationships across a number of organizational lines. These relationships allow for the development and establishment of reasonable and realistic schedules for advancing major projects. It is important for the Department to facilitate agreement by Federal agencies on time frames for conducting reviews and granting approvals. Working together in partnerships, combining a full range of Federal, State, and local officials and interest groups, will lead to reasonable ways to meet the Nation’s transportation needs, while being good stewards of the environment. A wonderful example has been Senator Smith’s efforts to initiate a successful partnering model in NH that has fostered the examination and exploration of improved and more efficient approaches to mitigation while adhering to deadlines.
Pursuant to a national memorandum of understanding signed among Federal agencies, DOT and other agencies have worked to further progress on a coordinated environmental process to expedite Federal highway and transit projects. The agencies have developed interagency action plans. We are on track for the successful implementation of our 2002 priority items adopted by the Federal Interagency groups. Our activities in this regard include:
In addition, we are implementing actions to streamline the environmental review of airport projects. Secretary Mineta's May 2001 report to Congress on the Environmental Review of Airport Improvement Projects concluded that reducing environmental delays should be addressed in areas of resource, process, product, and interagency coordination. FAA is implementing administrative initiatives outlined in the report. These include establishing expert teams to expedite environmental reviews for critical airport capacity projects, allocating more resources to environmental reviews, maximizing the use of consultant resources, expanding the list of projects with minimal impacts that don't need detailed environmental review, issuing guidance to streamline reviews, better interagency coordination and cooperation, and a guide to best practices.
When the first President Bush set a national “no-net loss” wetlands policy to stop a decades-long history of cumulative losses, FHWA set a target of 1.5 acres replaced for every acre adversely affected by highway projects. Our recent performance figures show that we are exceeding that target by a substantial margin, providing over two acres of replacement wetland for every acre taken. To our knowledge, no other public or private entity is setting goals as ambitious as ours or is tracking their wetlands performance as we are.
To date, we have invested over $11 billion dollars to improve air quality in areas that do not, or did not, meet Federal air quality standards under the Congestion Mitigation and Air Quality Improvement Program, or CMAQ. These funds have furthered air quality improvement in a number of very important ways. They have helped to accelerate use of cleaner technologies by retrofitting, or replacing, heavily polluting trucks and buses. They have helped to further Intelligent Transportation Systems on the road and for transit, making our transportation system work better, smarter and cleaner. And they have helped to put in place alternatives to driving alone. No single source of funding has made a greater investment in clean air than CMAQ.
Looking at the human environment, more money has been spent on historic preservation from transportation funds than any other source. Historic preservation often leads to private investment far beyond the transportation investment. For example, the city of Meridian, Mississippi strategically used the $7 million rehabilitation of the Meridian, Mississippi Union Station for reuse as a multi-modal transportation center to leverage over $10 million in private investment in the depot district.
As we look ahead, we see a number of possible environmental stewardship opportunities to pursue in collaboration with transportation and environmental colleagues. We are providing funds and staff assistance to the new American Association of State Highway Transportation Officials (AASHTO) Center for Environmental Excellence. Working in partnership with the Federal Highway Administration (FHWA) and with involvement from other Federal agencies, the Center will promote the use of environmental management systems by transportation agencies, as a systematic way of institutionalizing environmental stewardship.
We have provided Texas with funds to support their streamlining efforts to develop a Geographic Information Systems (GIS) based mapping and environmental management system that is helping State and Federal agencies to devise the best protection, conservation and mitigation strategies for the entire 1,000-mile section of the I-69 North American Free Trade Agreement corridor project within Texas. The Environmental Protection Agency (EPA) and the United States Army Corps of Engineers (USACOE) are consolidating their reviews and comments so that Texas will have just one set of comments from each agency. This action is greatly facilitated by the coordination, training and development of those management efforts we are funding.
We have asked FHWA division offices to help establish at least 30 exemplary ecosystem initiatives around the country during the next five years. When we say “exemplary,” we are looking for initiatives that raise the bar, that push the boundaries. Such initiatives will result in project delivery efficiencies through mitigation and conservation measures that are defined for regions or corridors and for which credits are applied to types of projects, or within specific transportation corridors.
Endangered species habitat conservation plans fall in this category and so do large-scale studies of migration patterns by large mammals and ways to minimize conflicts between the migration of people on the highways and the migration of animals near and across highways. FHWA is working with Alaska to advance habitat connectivity and GIS database mapping efforts that will significantly address human and wildlife mortality along critical habitat corridors for major freight, transportation and railroad corridors and effectively plan for future transportation improvements.
FHWA and Federal Lands Highway offices are working with States to develop integrated approaches to transportation and environmental planning and project development at the system level and supporting “context sensitive solutions” at the project level. Many States have embraced or are advancing these approaches. We will continue to facilitate the success of such endeavors.
Context-sensitive solutions are an effort to get all of the players to work together in an integrated fashion to ensure that transportation decisions are fully respectful of the community and the natural environment. In Montana, on US 93, the State Department of Transportation, Indian tribes, and local communities were able to come together with a context sensitive approach. Currently 26 States have some type of context sensitive design activities underway.
Project Construction Innovations
As I discussed above, aside from environmental issues, other problems can delay the completion of a project. Construction of a typical highway project generally takes from one to more than five years depending on the complexity, size and controversy of the project. Unforeseen and often uncontrollable circumstances impede construction efficiency. There are, however, some fairly recent and significant advancements that have been made in the ways projects are constructed.
The most significant of these advancements is the design/build construction technique. TEA-21 expanded and clarified the circumstances under which design/build projects may be advanced. At least 30 States have adopted the technique. Under the design/build concept, the contracting agency identifies the end result parameters and establishes the design criteria minimums. The prospective bidders then develop proposals that optimize their construction capabilities. Allowing the project design to be tailored to a contractor's advantage provides flexibility to compensate for cost increases in one area through efficiencies in another. This concept allows the contractor to optimize his work force, equipment and scheduling.
However, along with the increased flexibility, the contractor must also assume greater responsibility and risk. Because both design and construction are performed under the same contract, delays related to design error claims are eliminated, and the potential for other types of claims are greatly reduced. Recently, design/build projects have been authorized to include right-of-way (ROW) acquisition in addition to design and construction, creating a “turnkey” project for the State. Prior to this authorization, necessary ROW for design/build projects was typically provided by the State or local transportation agency. To include ROW acquisition services as part of the design/build approach, it must be allowed by State procedures for procurement of such services. From a State highway agency’s perspective, the potential time savings can be substantial.
With generous cooperation from the States of South Carolina and Virginia, and the Transportation Corridor Agency, Orange County, California, the FHWA’s Office of Real Estate Services reviewed several design/build projects. We interviewed officials from the State and FHWA Division offices, along with key individuals from the prime contractor's team, to determine “best practices” and the extent of any problems associated with these projects. As a result, the Department is now working with State and local transportation officials on the most effective means and times to implement a design/build approach.
Another innovative construction approach is called cost-plus-time bidding, also referred to as the A+B method. This is a procedure that selects the low bidder based on a monetary combination of the contract bid items (A) and the time (B) needed to complete the critical portion of the project. This procedure is intended to provide a contractual incentive for the contractor to minimize delivery time for high priority and congested roadways by offering incentives for early completion and assessing disincentives for late completion.
Lane rental is the practice of charging the contractor a fee for occupying lanes or shoulders during construction. Charges are based on hourly or daily rates and can vary with time of day, amount of traffic, and other measures of user costs. Similar to cost-plus-time bidding, lane rental provides strong contractual incentives for early completion.
Major Project Oversight
One cannot have a complete conversation about transportation project delivery without talking about the Department’s oversight role. Although TEA-21 directed extensive delegation of approval authorities to the States for most Federal-aid projects, FHWA’s oversight role on larger projects was enhanced. Section 1305(b) requires that projects with an estimated total cost of $1 billion or more submit an annual Finance Plan, based on detailed estimates of the cost to complete the project and on reasonable assumptions of future cost increases.
Projects subject to this requirement have been labeled “major” or “mega” projects. However, FHWA includes in the major project category those projects designated “major” projects by senior management due to their complexity or a high level of interest by the public, Congress, or the Administration. Finance plans may be required for such projects even though their estimated total cost is less than $1 billion.
Over the past 10 years, the number of projects greater than $1 billion has grown and, at present, we have identified 14 active major projects across the country, including six that are at the stage of requiring an initial Finance Plan.
FHWA now has the benefit of “lessons learned” from some of the early major projects--construction of the Boston Central Artery/Tunnel (CA/T) project, reconstruction of I-15 in Salt Lake City, and the management of the Alameda Corridor--and we are putting these lessons to work. We have seen that the primary cost drivers of major projects, from the Plans, Specifications, and Estimates stage to completion of construction, are: (1) inflation, since many of these projects take years to complete; (2) phasing of the projects to use available funds; and (3) regional and national economic trends, since these projects are such large economic investments and typically stretch the available technology and industry abilities. We know that the most common factor leading to cost increases and delays for all major projects, especially in 2001-2002, has been the annual adjustment of project schedules to fit actual revenues available. Currently, as a result of the national economic situation and revenue shortfalls, States are readjusting their statewide programs, in some cases stalling major projects.
While cost overruns and schedule delays on major projects occasionally occur, we have seen notable successes as well. The Alameda Corridor project in Los Angeles, California, was a huge success in being completed on schedule and within budget. Also, the I-15 reconstruction project in Salt Lake City, Utah, was completed ahead of schedule, well before the opening of the 2002 Winter Olympic Games. Although the CA/T has been the subject of many controversies, it has resulted in important engineering and technological advances. Engineering innovations included new solutions for tunnel ventilation systems that have also been used to reduce the costs on the Cumberland Gap Tunnel project. When complete, the CA/T will link air, sea, rail, bus, and subway facilities, to facilitate local and regional economic growth, while providing environmental benefits, reducing traffic congestion, and improving traffic safety.
Our approach to improving management of major projects has been to continue to strengthen our oversight of all programs, while issuing certain specific requirements for major projects within the framework of existing laws and taking into account that each major project is unique in its complexity, sponsoring agencies, and contracting plans. This approach is consistent with the overall delivery of the FHWA program as a Federally-assisted, State-administered program.
FHWA Stewardship and Oversight Policy.
Implementation of the restated FHWA Stewardship and Oversight Policy (issued June 2001) underpins all of our major project oversight actions. A key element in implementing the policy is to emphasize that all Federally-funded projects are subject to Federal oversight, even where State agencies have title 23 project approval authorities. FHWA has also committed to conducting risk assessments with States to identify strengths, areas needing improvement, and then prioritizing oversight activities accordingly. FHWA will trust, but verify. We must have confidence in the quality of a State’s products and processes, or we must work with the State to achieve appropriate improvement.
The Plan for Oversight and Management of Major Transportation Projects (issued October 5, 2001), provides that improved management of major projects will rely on the sound implementation of the restated FHWA Stewardship and Oversight Policy, FHWA technical assistance and technology deployment, dissemination of best practices information, industry and agency partnership activities, and specific initiatives for major projects in response to recommendations of the DOT Task Force on the Oversight of Large Infrastructure Projects (Report issued December 2000). The Division offices have lead responsibility for the delivery of FHWA programs and are assisted in oversight of major projects by the Major Project Team within FHWA Headquarters. The Divisions are building on a foundation already in place that consists of existing FHWA/State Stewardship agreements, the documented State project development and financial procedures, and the FHWA Financial Plan Guidance (issued May 2000). In addition, once a project is identified as a “major project” based on Division Office information, the Major Project Team begins tracking the project and increases FHWA Headquarters involvement following the environmental clearance of the selected alternative. Each major project will be reviewed at this stage for unique features, or unique relationships between the project sponsors, that require additional documentation to clarify responsibilities and ensure that sound planning and management is implemented.
In response to the TEA-21 major project finance plan requirement, FHWA issued Financial Plan Guidance and, since then, the Division Offices and Headquarters have applied this guidance in the review of finance plans on seven projects. Key major project finance plan requirements include: project cost estimates must be prepared in “year of expenditure” dollars; agency accountability must be increased for the proposed financing in the plan; and significant changes to the project scope in the annual finance plan must be accurately disclosed. FHWA requires annual updates to the plans and obtains independent verification of the financial data provided by the States in these plans.
The upcoming reauthorization of the Federal-aid highway program gives us an opportunity to refine the appropriate Federal role in overseeing infrastructure projects, particularly the high-cost projects. As the Secretary has directed, we will focus on the management and performance of the system as a whole, while ensuring appropriate oversight for both project management and program performance.
We will look for ways to encourage well-managed State programs, without adding additional layers of Federal requirements. Our oversight procedures must harmonize with our efforts to streamline project approvals and expedite project delivery.
The bottom line is: improve oversight and accountability for the expenditure of public funds, without negatively impacting the ability of States and local governments to deliver their programs. Together with Congress, we will define what our role should be and how we carry out our responsibilities.
Mr. Chairman and members of the Committee, thank you again for the opportunity to testify before you today. I look forward to responding to any questions you may have.