March 13, 2003




Thank you for the opportunity to submit a statement for the record presenting the views of the National Association of Home Builders (NAHB) on the issue of the Congestion Mitigation and Air Quality Improvement Program (CMAQ) and transportation conformity process and their impact on the home building industry.


NAHB represents more than 205,000 member firms involved in home building, remodeling, multifamily construction, property management, housing finance, building product manufacturing and other aspects of residential and light commercial construction. The members of NAHB recognize the importance and value of a safe, easily accessible and reliable transportation system. Homeowners and potential homebuyers depend upon transportation systems to move from homes, to places of employment, to shopping and to schools. Homeowners also demand communities with clean air. The transportation conformity process creates the nexus between the necessity of a safe and efficient transportation system with the desire for maintaining clean air. Unfortunately, the conformity process can be confusing, bureaucratic and burdensome without necessarily demonstrating unmistakable air quality benefits. The transportation conformity program goals and processes must be reevaluated and reforms need to be made. NAHB’s members believe that the building industry can play a constructive role in addressing this issue.




Transportation Conformity


Transportation conformity is a requirement under the Clean Air Act (CAA) and the Transportation Equity Act for the 21st Century (TEA-21) that mandates states with impaired air quality to conduct air quality assessments prior to federal approval, or the expenditure of federal funds, for construction of any major transportation project that may have an impact on regional air quality (e.g., highway expansion, bridge construction, new freeway construction, or transit project). In short, it is a federal requirement that local transportation plans must “conform” to the state air quality plan.


Transportation conformity applies to counties with impaired air quality (“called “non-attainment” areas) — today there are approximately 276 counties in 32 states that the U.S. Environmental Protection Agency (EPA) has designated as having excessive amounts of ozone (smog), particulate matter (soot), carbon monoxide, and/or nitrogen dioxide. In addition, EPA is in the process of implementing new, more stringent standards for ozone and particulate matter. With the implementation of these new standards, the number of non-attainment areas considered to have impaired air quality and subject to transportation conformity requirements could double by 2007.


A transportation conformity determination is set up as an all-or-nothing proposition. The projects in the local transportation plan are taken in the aggregate. If local planners are unable to show conformity of both a 20-year transportation plan and a 3-year transportation plan (including the funding to back the projects contained in those plans) with a the state air quality plan, the area experiences a “conformity lapse.” The result of a conformity lapse is that all federal transportation funding for the area is frozen until the transportation plans are approved. With federal funding suspended due to a conformity lapse, badly needed transportation projects are delayed or even cancelled, leaving the population of these areas with continued traffic congestion and no better air quality.


Congestion Mitigation and Air Quality Improvement Program (CMAQ)


Enacted as part of the Intermodal Surface Transportation Efficiency Act of 1991 and reauthorized in TEA-21, the CMAQ program sought to highlight the impact highways and transportation facilities have on the environment and quality of life. The CMAQ program provides a flexible funding source to state and local governments for transportation projects and programs that improve air quality and congestion in areas of the country with the most severe air quality problems. Originally, funding was available for only non-attainment areas for ozone and carbon monoxide. However, TEA-21 expanded the program to include former non-attainment areas that are now in Clean Air Act compliance (maintenance areas). Eligible activities for CMAQ funding include transit improvements, traffic flow improvements, cleaner fuels conversion of public vehicles, and bicycle and pedestrian programs that reduce congestion and emissions and improve the quality of life.


Impacts on the Home Building Industry


By all measures, the housing industry, which accounts for fourteen percent of the nation’s Gross Domestic Product, has been a bellwether during the recent difficult economic times. Fortunately, to date, transportation conformity requirements have not hindered the industry’s ability to continue producing safe, affordable housing in most cities. In recent economic data for 2002, builders produced 1.7 million housing units, including 1.36 million single-family units and 345,000 multifamily units. As a result, U.S. homeownership reached its highest level yet — 68.3 percent — in 2002’s final quarter. Over the past year, low interest rates and strong underlying demographic demand has kept housing strong while the rest of the economy has struggled to regain its footing.


The construction of 1,000 single-family homes generates 2,448 jobs in construction and construction-related industries, approximately $79.4 million in wages and more than $42.5 million in federal state and local revenues. The construction of 1,000 multifamily homes generates 1,030 jobs in construction and related industries, approximately $33.5 million in wages, and more than $17.8 million in federal, state and local revenues and fees. NAHB members will construct approximately eighty percent of the almost 1.6 million new housing units projected for 2003.


In 2001, forty-one of the largest fifty housing markets in the United States were either non-attainment or maintenance areas subject to transportation conformity requirements. As these population centers grow, the demand for affordable housing must be coupled with the need for a safe, efficient and modern transportation system. Driven by consumer demand, land developers and builders plan their projects according to local growth plans. Local transportation plans and projects must be designed to complement and support the local growth plan. Since many consumers factor transportation into their decisions about home location, delayed or cancelled transportation projects change the demands of the homebuyer after development projects are planned or even completed. If a metropolitan area is unable to appropriately wade through the red-tape of the federal conformity requirements so that it can keep transportation project funding flowing, previously approved transportation projects are halted, the congestion continues, and homebuyers are left idling in traffic.


In 1999, a NAHB survey showed that 83% of the survey’s respondents favored a detached single-family home in a suburban setting with a longer commute to work and farther distances to public transportation and shopping. Overwhelmingly, the survey showed that the greatest concern to respondents was traffic congestion. Respondents chose road widening (44%), new road construction (27%) and greater availability to public transportation (33%) as solutions to traffic problems. Though a substantial number of respondents advocated the use of public transportation, 92% owned automobiles and 85% said that they use them for commuting.


The survey highlights the trade-off Americans are willing to make: tolerance of traffic congestion in return for the home of their choice, in the setting of their choice. Further, while Americans support public transportation, they rely on the automobile as their primary means of transportation and support transportation improvements to ease traffic congestion. It is clear that transportation, whether by automobile or by transit, is a vital component of the decision-making process for homebuyers. This point is not lost on home builders. Home builders depend on a safe, efficient, modern transportation system (to complement land use choices and patterns) because it is an important selling point for the homebuyers they serve.


NAHB Activity


NAHB began working on transportation conformity in 1999 when environmental advocates in Atlanta, Georgia decided to mount legal challenges to transportation plans in federal court. Throughout the country, environmental groups have petitioned federal courts to have transportation plans frozen and then voided by the court because they are “flawed” in some way. If a transportation plan is stricken, essentially there is no plan and, therefore, no conformity. Without conformity, federal funding would be frozen until a “better” plan is approved.


In response, NAHB formed a coalition with other construction interests to intervene on a national level in transportation conformity lawsuits. NAHB has participated in transportation-related litigation in Sacramento, Atlanta, Baltimore, and Salt Lake City. NAHB is of the opinion that Congress did not intend for environmental groups to have standing to challenge transportation planning decisions under the Federal Aid Highways Act and that the courts should not resort to picking and choosing specific transportation projects for a region. Congress envisioned a dynamic process where transportation documents are continuously reviewed and updated on a regular basis in an effort to account for new data, technology improvements, and shifts in transportation growth. The conformity process is not static, and by necessity, is dependent on estimates and predictions based on ever-changing data and projections regarding future transportation trends. However, while this litigation continues, it is imperative for parties with an economic interest or those parties who are reasonably affected by an ultimate decision have the opportunity to intervene in those lawsuits. Efforts to keep transportation planning flowing without court-selection of specific transportation projects have been very successful.


NAHB has also recognized that a conformity lapse can result from a poorly coordinated administrative process as much as any court decision. For example, Houston was days away from lapse in the summer of 2001, and San Francisco did experience conformity lapse twice in 2002. Both of these areas became bogged down in underlying challenges to state air quality planning (such as modeling issues) that overlapped with upcoming deadlines for approval of transportation plans. It was not that the transportation plan itself was flawed, but that the air quality plan approval process was not synchronized with the transportation plan approval process. The transportation planning process itself can be unnecessarily burdensome on local planners, and changes should be made to the requirements to facilitate better air quality and transportation planning.


Concerns about Current Transportation Conformity Requirements


In reconsidering transportation conformity while reauthorizing TEA-21, NAHB urges Congress to carefully weigh the air quality benefits gained by implementing the complicated transportation conformity requirements against the economic impacts of the current transportation conformity system. NAHB supports air quality planning aimed at reaching the goals of the CAA and understands the need for future motor vehicle emissions to be factored into transportation planning. As the reauthorization effort progresses, Congress first should carefully consider whether the transportation conformity program is fundamentally addressing the goals of Congress.


NAHB would like to work with Congress to address the major problems with the transportation conformity program. Through several meetings and conversations with industry stakeholders and transportation and environmental officials, NAHB has identified several areas of concern:


    The inconsistency of statutory timelines between transportation and air quality plans results in the delay of transportation projects and subjects MPOs to excessive and burdensome planning requirements. Under TEA-21, conformity is required at least every three years, the regional transportation plan must be revised every three years and the transportation improvement program (although a three year plan) must be revised every two years. Congress should enact statutory reforms to merge transportation and clean air requirements into a single timeline that avoids overlapping efforts and additional conformity requirements.


    Excessive statutory triggers result in non-attainment areas continually performing countless transportation conformity demonstrations that often overlap and are considered obsolete before they are complete. Under the existing transportation conformity program, non-attainment areas must demonstrate conformity each time EPA proposes or approves a State Implementation Plan (SIP), each time EPA modifies a control measure that impacts the motor vehicle emissions budget (MVEB), and each time a transportation control measure is added, modified or deleted. Conformity determinations are also required each time a MPO adds or modifies a project in its transportation plan. Congress should ensure that conformity determinations are only required once every three years and on a cycle that has timelines consistent with transportation planning. Further, Congress should consider establishing a level of change in the MVEB below which MPOs can make changes to the transportation program without triggering a conformity determination.


    Transportation planners are confused by current EPA and U.S. Department of Transportation (DOT) guidance about what procedures should be followed and which data should be used in planning. Under the current transportation conformity system, the introduction of “new” air or transportation data triggers the need for a new air quality plan and, in turn, a new conformity determination. Unfortunately, it is difficult to find a balance between introducing new air and transportation data into the system while still maximizing the time available to state and local transportation planners to make conformity determinations prior to statutory deadlines. Congress should ensure that a region is not liable for new data that becomes available during the course of developing a conformity determination. By doing so, an area will be able to meet conformity timelines and avoid penalizing the area for ongoing data collection and analysis.


    The federal agencies have not concluded properly or consistently what kind of transportation projects can move forward during a transportation conformity lapse. As EPA and DOT address a court decision from 1999 that interprets the statute, once a project is approved by a local government and well on its way to becoming a reality, conformity lapse can leave a partially completed project unfinished. Unfinished or idled transportation projects serve only to perpetuate traffic congestion and dirty air, the very consequences these projects presumably are intended to alleviate.


    The way that EPA implements its new 8-hour ozone and fine particulate matter standards will have significant impact on the transportation conformity process. As stated previously, the number of non-attainment areas may double, limiting state and federal resources. Further, the newly designated non-attainment areas will have little experience with the implementation of an already complicated conformity process.


Concerns about the Congestion Mitigation and Air Quality (CMAO) Program


Unfortunately, over its history, the CMAQ program, which is extremely popular with state and local officials, has funded some questionable projects that fail to improve air quality. As a result, in 1998 Congress requested a National Academy of Sciences (NAS) study of the program’s effectiveness in improving air quality. The study recommended reauthorization of the CMAQ program with caveats, such as that state and local air quality agencies should be more involved in the CMAQ project decision-making process and that CMAQ funding should be expanded to areas with pollutants other than ozone and carbon monoxide.


During the reauthorization of TEA-21, NAHB urges Congress to weigh the air quality benefits gained by the current administration of the CMAQ program. First, Congress should fully examine whether the CMAQ program is realizing the goals of Congress. Through several meetings and conversations with industry stakeholders and transportation and environmental officials, NAHB has identified the following areas of concern:


    CMAQ-funded projects must not only reduce congestion but also be scientifically proven to provide air quality benefits. By allowing projects with questionable results to continue to be funded, the CMAQ program is not fulfilling its intended goals of cleaning the air and reducing congestion. Further, the program is not making efficient use of taxpayers’ dollars and deriving no air quality benefits for the citizens who live in non-attainment areas, the very citizens the program is designed to help.


    Congress should preserve the original intent of the CMAQ program by ensuring that funding is used exclusively in non-attainment and maintenance areas. Opening up the CMAQ program to non-designated areas would serve only to dilute the already limited funding levels and take away projects from the areas that need the funding the most desperately.


    Only a fully funded CMAQ program that accounts for the increase in non-attainment areas will ensure the popular program’s viability. As stated previously, due to EPA’s implementation of the new 8-hour ozone and fine particulate matter standards, the number of non-attainment areas may double, stretching limited CMAQ funding.



Thank you for allowing NAHB the opportunity to share its views on the CMAQ and transportation conformity programs. NAHB applauds the efforts of the Senate Environment and Public Works Committee to tackle these difficult issues. We look forward to working with members of the committee on these issue and other issues of concern to the home building industry during the reauthorization of TEA-21.