In this issue:
- Anti-highway lobby escalates its rhetoric
- Feds open the door to electricity on highways
- Hyperloop’s still-unanswered questions
- Should electric vehicles help power the grid?
- FRA sued for veto of automated track inspection
- Why free transit is not green
- News Notes
- Quotable Quotes
Anti-Highway Lobby Escalates Its Rhetoric
On April 26, a collection of anti-highway groups announced the formation of the Freeway Fighters Network. Its announcement said the coalition involves “about 35 local groups and 230 individual members involved in fighting over 60 highway projects across the country.” They aim to shift funding from highway capacity expansion/reconstruction to “multimodal infrastructure, community development, and reconnecting communities that were divided by freeways.” They also seek to “upend a 70-year-old system of car dependency and commuter culture and replace it with a more diverse transportation system.” Among the founding members is the Congress for the New Urbanism, which has touted freeway teardowns for many years.
Supporting these anti-highway efforts is a series of op-eds claiming that all highway capacity expansions are being promoted despite the ‘iron law of freeway congestion,’ which allegedly means that any such highway expansion is a waste of money because the new lanes quickly fill up and are congested so the supposed net gain for building them is zero (but at a huge cost). An especially egregious example of this is a piece by Charles Marohn of Strong Towns, “Ignoring Induced Demand Is Engineering Malpractice.”
It’s an anti-highway piece dressed up as an analysis of a highway widening study in Loudon County, VA. The author tries to make the traffic engineers look like idiots by claiming that they deny the existence of induced demand when data show the phenomenon exists but is nowhere near as broad or sweeping as typically portrayed by anti-highway people. For example, the often-cited academic paper that introduced the idea of an “iron law” of freeway congestion measured only post-widening trip volume on the freeway, neglecting to consider or quantify the extent to which already-existing trips shifted from parallel arterials to the freeway, since the latter now offered faster and more reliable travel times than the arterial. This serious point is dismissed out of hand by Marohn.
My go-to resource on induced demand is transportation researcher Steven Polzin, formerly at the University of South Florida’s Center for Urban Transportation Research and more recently a senior advisor for research and technology at the U.S. Department of Transportation (DOT). Polzin, now a research professor at Arizona State University, circulated a brief commentary on the Marohn article to transportation colleagues, where he made the following points:
- “Yes, there is induced demand, but a whole bunch, and in many cases the vast majority, of the demand is not induced and can necessitate new capacity in some locations.
- “Induced demand isn’t what it used to be. Lessened diversion from other modes, the option of communication substituting for travel, near-saturation in vehicle availability (and the plateauing of VMT per capita), and environmental sensitivities all dampen the propensity for induced travel to a greater extent than when the majority of induced demand measures were developed.
- “Induced demand isn’t necessarily bad or wasted VMT. Being able to get to a better job or access venues that offer better choices and lower costs isn’t bad. Businesses having access to a bigger labor pool and potential customer and supplier bases isn’t bad. Making those supply chains work better isn’t bad. Getting emergency vehicles where they need to go, faster, isn’t bad. Pulling cut-through traffic out of neighborhoods isn’t bad. Using infrastructure to shape development or improve economic competitiveness of given geographies isn’t bad.
- “Finally, the way too broad-brush characterization of planners as road-building zealots indifferent to the public will is as repulsive as the too-often characterization of planners as insensitive racists steering bulldozers through minority neighborhoods.”
Polzin’s longer and more comprehensive discussion of induced demand is available in a recent policy paper from Reason Foundation: “Induced Demand’s Effect on Freeway Expansion”
Feds Open the Door to Electricity on Highways
In a potential breakthrough, the Federal Highway Administration (FHWA) has published guidance material regarding the possible use of rights of way of federal-aid highways for renewable energy, alternative fueling, electrical transmission and distribution, and broadband projects. This might open the door to electric vehicle charging facilities at Interstate highway rest areas, depending on how FHWA’s language is interpreted.
I learned of this development thanks to the release of a report called “NextGen Highways Feasibility Study for the Minnesota Department of Transportation: Buried High-Voltage Direct Current Transmission.” A key participant in the study was the Atlanta-based nonprofit organization The Ray, which has been researching such projects for a number of years. The Ray partnered with NGI Consulting for the project with the Minnesota Department of Transportation (DOT). One of the interesting findings in the study is that Wisconsin is far ahead of other states in allowing the use of existing highway right-of-way (ROW) for electric transmission facilities, so long as the installations don’t interfere with present or future highway functionality. It enacted enabling legislation in 2003, and a relatively new transmission-only utility—American Transmission Company—began its first project there in 2005. Wisconsin DOT and utility regulator Public Service Commission of Wisconsin entered into a cooperative agreement on new transmission lines in Interstate and freeway ROW in 2009. More recently, Maine and New Hampshire have also taken steps in this direction.
The Minnesota study drew on these prior state efforts, plus the new FHWA policy, to suggest that Minnesota begin planning to do likewise. There are several reasons why long-distance highway ROW would be a good location for new high-voltage DC transmission lines, as well as other linear infrastructure such as broadband. Ambitious U.S. plans for greatly increased electricity use (not least for future vehicle propulsion) will require a major expansion of both electricity generation and long-distance transmission. Yet just like other major infrastructure (pipelines, highways, etc.), new electric transmission lines generally face some combination of NIMBY and environmental group opposition. Buried high-voltage DC lines on the right of way that already exists will likely circumvent much of that opposition. Legislators and state transportation departments in other states should be looking into this subject as a possible win-win for transportation and energy.
The Minnesota study also produced a useful guide, called “NextGen Highways: Overview of Federal and State Policy.” It reviews current federal law and regulation of highway ROW. This includes a discussion of an FHWA memo from April 27, 2021, “State DOTs Leveraging Alternative Uses of the Highway Right-of-Way Guidance.” The memo says that state DOTs can leverage highway ROW for “pressing needs relating to climate change, renewable energy generation, electrical transmission and distribution projects, broadband projects, vegetation management, inductive charging in travel lanes, alternative fueling facilities, and other appropriate uses.”
The italicized uses are defined as Clean Energy and Connectivity (CEC) projects. They can be accommodated in the ROW either as a utility under 23 CFR 645 or as an alternative use of ROW under 23 CFR 710. It also explains that CEC projects can be located at rest areas and “are not prohibited as a commercial activity under 23 USC 111” (which is the law that prohibits commercial activity at Interstate rest areas).
But the built-in contradiction in this policy is that alternative fuel facilities cannot charge for electricity or hydrogen provided to vehicles. And that, of course, means that nobody will invest the considerable capital in building and operating electric vehicle charging facilities at rest areas or anywhere else along or within Interstate highway ROW. Yet profit-making electric utilities and broadband companies can use Interstate ROW for transmission lines whose users will pay for the services those new lines provide. If FHWA cannot see a way to get beyond this contradictory policy, it will be up to Congress to change the law, accordingly—the sooner the better.
Hyperloop’s Still-Unanswered Questions
There have been good news and bad news developments for fans of hyperloop—the futuristic idea of providing 600 miles per hour passenger and freight service using magnetically levitated and propelled vehicles traveling in evacuated tubes—an idea that I studied in an MIT student project in 1964 and which Elon Musk revived as a concept about a decade ago.
The bad news came on Feb. 22, when Virgin Hyperloop announced that it would shift its focus from passengers to freight, as a less-risky business plan. The good news arrived on April 25, when Elon Musk announced that his tunnel company, The Boring Company, plans to build a “full-scale” working hyperloop to demonstrate its feasibility. The announcement (with few other details) was made about a week after The Boring Company raised $675 million, for an estimated market value of $5.7 billion.
Alas, neither the technical nor economic feasibility of hyperloop has come anywhere near to being demonstrated, despite all the hype from several start-up companies. I wrote two critiques of hyperloop in this newsletter in 2020, “A Closer Look at Hyperloop Feasibility” in the July 2020 issue and “Hyperloop, Yet Again” in the August 2020 issue. Each reviewed various hyperloop feasibility studies, which did not address unanswered technological questions or provide credible benefit/cost assessments.
Here are some of the technology unknowns.
- 600 miles per hour or higher speed is a potential hyperloop advantage in shifting customers from air and highway travel. Thus far, nobody has built an evacuated tube long enough to demonstrate that such a vehicle could accelerate to reach that speed and then decelerate. It would be many miles long and very costly to build. So we cannot yet take that speed and time advantage seriously.
- Maintaining the vacuum in the tubes has also not been demonstrated in a realistic tube, nor have there been any available numbers on the energy cost of operating the system, both propelling the vehicles and operating the pumps to maintain the vacuum.
- Airlocks at stations do not appear in any published conceptual study. How they will work, and how much they will cost, are unanswered questions.
- Switches to divert hyperloop vehicles from one tube to another have been shown on maps in some studies, but no designs or cost estimates have been presented.
- Emergency evacuation does not appear to have been considered in the studies I’ve reviewed, but it’s hard to imagine federal safety certification of hyperloop without the inclusion of such facilities. That’s yet another cost.
Then there are questions about economic feasibility.
To finance a toll road, an airport terminal, or a new pipeline, investors need to see and vet an investment-grade traffic and revenue study. Nothing approaching that has been released for any proposed hyperloop line. The 2020 “Hyperloop Feasibility Study” for the proposed Chicago to Pittsburgh system made aggressive assumptions about passengers and freight diverted from air and highway modes due to both time saving and “affordable” fares, which is at odds with a more realistic study from Lux Research estimating that the high cost of hyperloop would seriously limit passenger and freight demand.
The same 2020 study did a benefit/cost assessment that claimed to follow U.S. DOT methodology, but it used a 3% discount rate rather than the 7% required in federal agency work by the Office of Management & Budget. It counted travel time and operating cost savings of $5.9 billion, but did not account for corresponding losses in market share by airlines and trucking companies (or lost revenue to toll roads in the corridor). Yet even with the inflated benefits of $18 to $19 billion, the estimated cost of the infrastructure ($26.9 billion) suggests that costs significantly exceed benefits.
The engineer in me is excited by concepts like hyperloop, and perhaps the technical problems noted above will be solved someday. But it’s also my engineering background that serves as a hype detector for concepts that have many thus-far unsolved problems. Federal and state DOTs should proceed with caution, insisting on independent benefit/cost studies, and if a proposed hyperloop project passes that test, then insisting on independent investment-grade traffic and revenue studies. Taxpayers should not be required to support hype-loops.
Should Electric Vehicles Help Power the Electricity Grid?
When I first heard this idea about a decade ago from an academic economist, I was dumbfounded. People who buy electric vehicles need to buy electricity from the grid, to ensure they can get where they want to go, especially at unpredictable times. Why would they want to deplete the stored electricity in their EV, even if the electric company paid them for the transferred power?
Yet today the idea is being taken seriously by various advocates of sustainability and reduced carbon footprints. Here is just a small sampling of recent news articles on this idea:
- “Battery Pioneer Suggests Letting EVs Power the Grid to Go Green,” Bloomberg News, Dec. 12, 2021
- “GM, PG&E to Test Program for EVs to Boost Power Grid,” The Wall Street Journal, March 9, 2022
- “Give and Take: The [Porsche] Taycan as a Buffer,” Electric Car News, April 11, 2022.
The project under way by General Motors and California utility PG&E is intended to enable EV owners to use the electricity stored in the vehicle to power their homes during outages of utility power (as have been frequent in parts of California recently, especially where wildfires threaten power lines). Another idea to be considered by GM/PG&E is to use stored EV electricity to supplement the electricity grid during peak demand periods—so-called vehicle-to-grid (V2G) power.
In Germany, Porsche and grid operator TransnetBW are testing a slightly different V2G application. In the project, an off-the-shelf electric Taycan EV was connected to the power grid via the Porsche Home Energy Manager (HEM). The test showed that it is possible for stored electricity from the EV to be used to stabilize the grid, by providing balancing power to offset fluctuations.
My concern is not with the technical feasibility of V2G and related concepts. Assuming it works, the real questions are: Who would actually do this, and how much of a difference would it make? Here are three examples where human behavior must be taken into account.
First, consider some kind of emergency situation—a California wildfire nearby, an impending hurricane where one might need to evacuate, etc. Yes, electric power from the grid might be cut off (either from the emergency itself or deliberately, as PG&E does pre-emptively to reduce downed wires starting new fires). In that kind of situation, why would an electric vehicle owner risk draining the vehicle’s full charge, when she has no idea how long the outage will last after the emergency, especially if it turns out she may need to evacuate on short notice? And if she owns a relatively low-range EV, the need to retain its full charge will be even more important.
Second, consider an EV used for everyday commuting. In this case, the owner might be willing to sell overnight a modest amount of its accumulated charge, being sure to retain enough for at least the next day’s commute and various stops along the way. Presuming that selling electricity to the power company is voluntary, it will be essential for the EV owner to be able to limit the amount sold, to preserve her mobility options.
Finally, selling electricity to help stabilize the grid would require currently unknown amounts of V2G sales per day. Again, assuming such sales are voluntary, a key question for the grid operator is how much “balancing power” would it need, and how many customers would be willing to sell what amount of electricity each day for that purpose. Those numbers are unknown, as far as I can tell.
In all three of these examples, a critically important factor is the behavioral feasibility of this idea. Sure, electric utilities can offer various rates they are willing to pay for V2G electricity, but the success or failure of these new uses for EVs’ electricity will depend at least as much on how consumers choose to behave as on the technical feasibility of V2G. And that is currently unknown.
FRA Sued for Veto of Automated Track Inspection
By Marc Scribner
On April 14, BNSF Railway sued the Federal Railroad Administration (FRA) for arbitrarily denying BNSF’s petition to expand its successful automated track inspection (ATI) program. In recent years, several major railroads have deployed ATI in various degrees on their networks with the support of FRA. The agency itself uses ATI as part of verifying railroad compliance with track safety standards. These early experiences with automated track inspection, in which ATI augments manual visual inspections by track inspectors long required by FRA rules, have yielded very positive safety results. Unfortunately, FRA’s recent actions to deny approval of automated track inspection by rail carriers call into question the Biden administration’s commitment to rail safety.
In November 2018, FRA approved BNSF’s test program to evaluate automated track geometry cars that could replace some visual track inspections as well as augment the remaining visual inspections through data-driven selections of track segments in need of closer monitoring. BNSF found during its ATI pilot program that its automated geometry cars not only identified many defects that went undetected by visual inspections but also allowed for the redeployment of manual track inspectors to segments with greater known needs. As a result, its track inspectors on the pilot territory were “recording nearly three times the number of geometry defects per 100 miles than were identified by track inspectors systemwide.”
BNSF also found safety benefits arising from reduced track occupancy by inspectors, which reduces their exposure to hazards in the field. Its pilot program saw 20% reductions in both the number of requests to occupy track and the number of hours the track was occupied for inspections. In addition, BNSF believes increasing automation will lead to reductions in rail equipment accidents that may arise from track defects and human factors. These findings were unambiguously positive and accepted by FRA.
In July 2020, BNSF petitioned FRA for a system-wide waiver to build on this success. In January 2021, FRA authorized BNSF to supplement visual track inspections with automated geometry inspection over two territories of track—the Powder River Division, centered around Wyoming’s coal country, the site of BNSF’s earlier pilot program; and the Southern Transcon route from Los Angeles to Chicago—rather than system-wide as the railroad had requested. BNSF’s request for a seven-year waiver was also denied, with the board limiting this waiver to the standard five years.
In June 2021, BNSF again petitioned FRA to expand the geographic scope of its waiver to include the Northern Transcon route from Seattle to Chicago and an additional 395 miles of track to the existing Power River Division ATI territory, subject to the same conditions and limitations imposed by the January 2021 waiver. While it waited, BNSF sent multiple letters to FRA asking for a decision.
Finally, in March 2022, FRA responded by denying BNSF’s petition. FRA’s rationale for its decision is peculiar for a safety regulator. The agency did not deny the safety benefits of ATI that it has documented and praised in the past. Rather, it stated it had collected enough data from BNSF for its ongoing ATI evaluation, arguing that allowing BNSF to expand its successful use of ATI would amount to “short-circuiting this evaluation process.”
This doesn’t pass the laugh test. Allowing BNSF to expand its ATI program would have no impact on FRA’s ATI evaluation. The agency itself says it already possesses data necessary to carry out this task, and granting BNSF’s modest expansion request could not impact a historical dataset and certainly not “short-circuit” a program evaluation that makes use of those data. Nothing in law justifies FRA’s choice to deny a waiver for the safety-enhancing activities of one railroad as it evaluates potential industry-wide regulatory changes. Interestingly, the only known ATI data quality problem is with FRA’s own internal ATI program, which was the subject of an audit report by the Department of Transportation’s Inspector General that was publicly released shortly after BNSF filed suit. It found, among other things, that over half of FRA’s ATI-related inspection reports reviewed by the Inspector General contained inaccurate data.
In its letter denying BNSF’s petition, FRA notes that the only opposition it received came from the Brotherhood of Maintenance of Way Employees Division (BMWED) of the Teamsters Union. In its denial, FRA quotes BMWED’s opposing comment to BNSF’s petition that the union “‘does not feel’ that any of the test programs or waivers issued related to railroads’ Automatic Track Geometry Measurement Systems programs provide a ‘level of safety equal to the minimum safety requirements’ of FRA’s Track Safety Standards.”
Under Biden-appointed FRA Administrator Amit Bose, are the feelings of a self-interested railroad union being elevated over railroad safety? One would hope not, but it’s possible to see how one would get that impression. It is no wonder BNSF filed its petition for review with the U.S. Court of Appeals for the Fifth Circuit, seeking to overturn FRA’s decision “on the grounds that FRA’s action is arbitrary, capricious, an abuse of discretion, and otherwise contrary to law, all in violation of the Administrative Procedure Act.”
BNSF may not be the only railroad with grounds to challenge FRA’s conduct around ATI. Norfolk Southern Railway also had its waiver petition denied by FRA in March using nearly identical language, including citing the BMWED union’s “feel[ings]” in support of its decision. As with BNSF, the only opposition to Norfolk Southern’s ATI waiver petition came from BMWED. Something fishy is going on at FRA. In addition to review by the courts, Congress and the Department of Transportation Inspector General should probe these recent automated track inspection decisions.
Why Free Transit Is Not Green
By Baruch Feigenbaum
During the last five years, a growing number of cities from Kansas City, MO, to Olympia, WA, have started offering free (no-fare) transit service. Many transit advocates have claimed that fare-free transit will reduce greenhouse gases. In the last few months, the Massachusetts Budget and Policy Center, Rapid Transition Alliance, and the Climate Mobilization Project have each argued that free public transit would result in a major reduction in greenhouse gas (GHG) emissions.
But just because something sounds logical doesn’t mean it is true. David Zipper, visiting fellow at the Harvard Kennedy School’s Taubman Center for State and Local Government, conducted detailed research for a recent Bloomberg article, and found that free transit actually increases emissions. How did Zipper reach his conclusion?
First, let’s examine what transit advocates claimed. In the Massachusetts Budget and Policy Center article, analyst Phineas Baxandal notes that in 2017 transportation (of all types) accounts for 42% of greenhouse emissions in the state. He notes also that bus riders are sensitive to costs and details an MIT experiment with low-income individuals who ride the Massachusetts Bay Transportation Authority (MBTA) transit system. Half of the riders’ fares were reduced by 50%; the other served as a control group and paid full fare. The riders with reduced fares took 30% more transit trips. He notes that customers can board a bus faster if they don’t have to pay fares. He speculates that eliminating fares would encourage people not to own vehicles so they would choose to live closer to where they work, reducing GHGs. Further, fare-free transit can encourage compact land-use patterns, which would reduce GHGs, he suggests.
The Rapid Transit Alliance is ready to battle with automobiles, saying, “Free mobility, it seems, is the perfect antidote to rising car militancy in our cities and towns around the world – especially as countries reopen and rebuild after the pandemic.” The piece notes in the city of Tallinn, Estonia’s transit usage increased 14% after free service began.
The Climate Mobilization Project findings argue that eliminating fares on buses must be part of a goal to cut 60% of carbon emissions and write, “Data collected in 2019 and 2020 demonstrated a 50% increase in ridership after introducing the fare-free model.”
What free transit advocates show is that reducing the price of transit increases transit ridership. That’s Economics 101. We see the same effect with the cost of fuel. When the price of fuel increases, the number of miles that are driven decreases.
But, as Zipper notes in Bloomberg, to reduce carbon emissions, free transit policies must induce transit-choice riders to drive less. Zipper writes:
Providing enhanced mobility for those of limited means is societally valuable — but it doesn’t reduce emissions. To accomplish that, fare-free transit must win over a significant number of people who would otherwise have driven. And that’s a trickier proposition. Car owners tend to be wealthier than the general public, and their access to a private vehicle makes them less willing to tolerate bus transfers, wait times, or slow journeys. Especially in a region lacking frequent and fast bus service (UTA buses arrive every 15 minutes on many routes), removing a $2.50 fare seems unlikely to convince many drivers to leave their keys at home.
What did researchers find in the link between free transit and automobile usage? Zipper compiles evidence from across the globe. Remember The Rapid Transit Alliance’s claim that free transit in Estonia was reducing greenhouse gas emissions? Estonia’s National Auditor analyzed mode changes and found free transit failed to reduce car trips. Mohamad Mezghani, secretary general of the International Association of Public Transport, wrote a policy brief on free transit in Europe and found that in Dunkirk, France, and Frydek-Mistek, Czech Republic, most of the new public transit riders used to walk.
Did free transit reduce driving in Latin America? Chilean researchers gave free, two-week transit passes to residents. The residents did use transit 12% more, but they did not drive any less, Zipper reports.
Have U.S. cities fared any differently? A 2012 study by the National Academy of Sciences found fare-free transit experiments in Denver and Austin failed to reduce driving.
In fact, as Zipper highlights, many respected transit advocates have a negative view of free transit. David Bragdon who leads Transit Center notes that the way to improve transit is not to remove the fares but to make transit more abundant and frequent. “If you take bad American transit that costs $1.50 and make that bad service free, that won’t move the needle enough to make a climate impact,” Bragdon tells Zipper.
What does all of this mean from a public policy perspective?
Many anti-highway groups believe that if they can combine transit, cycling, walking, labor, environmental, and low-income interest groups together and throw a solution that pleases everybody at a wall, it will stick and the groups will then be in a stronger position to battle highway interests. But there are several problems with this approach, including that these groups’ members may have very different interests.
By partnering with environmental interest groups, for example, mass transit agencies may be neglecting their most-important customers—transit-dependent riders. Free transit increases ridership, but so does more frequent service, redesigning bus route networks, and providing cleaner vehicles.
The best way to improve transit service for transit-dependent individuals is not by making it free for everybody, but by providing vouchers to the lowest income individuals who can use it for any mobility option. If transit riders are empowered to take the voucher to any mobility provider, they are more likely to receive quality service. If transit agencies really want to serve their communities, they will make service quality a higher priority.
Georgia DOT Plans a “Pipeline” of P3 Projects
To continue building out what will be a network of variably priced express lanes in the Atlanta metro area, Georgia DOT is under way on the first of three multi-billion-dollar public-private partnership projects. For the first time, it plans to procure all three as revenue-risk design build finance operate maintain (DBFOM) concessions. The request for qualifications for the first of these—SR 400 express toll lanes—went out March 31, with qualifications due June 23. This first project is expected to cost $2.0 to $2.4 billion, and GDOT expects to offer a 50-year concession to the winning team. The other two projects will be I-285 Express East and I-285 Express West. Public Works Financing expects that this pipeline of express lanes megaprojects will ensure strong industry interest. It’s the first such multi-project P3 pipeline in the country.
Political Battle Over New Mississippi River Bridge at Baton Rouge
Louisiana Gov. John Bel Edwards started the debate earlier this year by proposing that the state set aside $500 million of what is expected to be $3 billion in unanticipated revenue as a down payment on the planned $2.5 billion new bridge across the Mississippi in or near Baton Rouge. But last month some legislators proposed dividing that $500 million among an array of projects. Louisiana DOT Director Shawn Wilson favors a long-term P3 procurement, with tolls as a revenue stream, but understands that in a state with very little tolling, having the state put in some equity (e.g., 20%) would contribute to a financing package leading to toll rates that are not sky-high (which would risk dooming the project).
California Aiming for 35% of Car Sales by 2026 as Electric Vehicles
The California Air Resources Board has proposed that all new vehicles sold in the state by 2035 be either hybrids or fully electric, with an interim target of 35% in 2026, just four years from now. Currently, 16 other states follow California’s lead on vehicle emissions and zero-emission regulations, but it’s not clear that many or all of them would go along with what many consider an unrealistic schedule.
Ownership Change for Canada’s Confederation Bridge
Canada’s first major DBFOM P3 was used to finance, build, and operate the eight-mile Confederation Bridge, which links New Brunswick and Prince Edward Island, across often-icy waters. It cost C$1.3 billion and opened in 1997. The main equity providers in the P3 consortium were Canadian pension fund OMERS and French infrastructure firm Vinci. Last month OMERS agreed to sell 100% of its interest in the P3 company to Vinci Highways. Thanks to this transaction, Vinci will now own 85% of the concession, which runs until 2032.
Macquarie Seeks to Diversify U.S. Infrastructure Holdings
Financial investors such as Macquarie tend to be medium-term investors, and last month brought news of two potential sales by this major investor. First, Macquarie Asset Management announced it is looking to sell its 90% equity interest in the replacement Goethals Bridge linking New Jersey with Staten Island. That new bridge opened in 2018, moving from the risky construction phase to the less-risky operations phase. Several weeks later, Macquarie Capital announced plans to sell a portion of its equity in Accelerate Maryland Partners, the P3 team that won the bidding for a predevelopment agreement for Maryland’s new American Legion Bridge and I-495/I-270 express toll lanes project. The fraction it is seeking to sell was not disclosed, but a Bloomberg story estimated that it might total $1.25 billion.
Philippines’ Longest Bridge Opens
On April 27, the new 5.5-mile Cebu-Cordova Expressway bridge opened to traffic. The $627 million project was procured as a long-term P3 led by a special-purpose vehicle managed by Metro Pacific Tollways Development Corp. The company made a point of noting at the opening festivities that it was “funded entirely with private money, with no public funds.” The bridge is a key link in the expressway, another 3 to 5 miles of which are still to be built.
Jacksonville Express Lanes Open, but Only Part-Time
The second set of express toll lanes (ETLs) in Jacksonville, Florida opened to traffic in early April. The new variably priced lanes are on the East Beltway. Florida DOT announced that variable prices will be charged only during peak periods, 6 to 10 AM and 3 to 7 PM Monday through Friday. This contrasts with the operating policy of ETLs financed by toll revenues, whether managed by P3 companies or government agencies. Those ETLs generally charge prices 24/7, and the data show that some customers value driving in those lanes even when the general-purpose lanes are not congested. With all-electronic toll collection, there is no significant increase in operating cost from 24/7 operation. Those ETL operators wonder why others would leave money on the table by not charging for use all the time.
Jamaica Planning Tourism Highway Expansion
The International Finance Corporation has signed a contract with the government of Jamaica to develop a plan for a P3 procurement to widen about 37 miles of two-lane highway to four lanes. The three segments to be expanded are on the North Coast Corridor where major tourist resorts are located in Montego Bay and Ocho Rios. Jamaica has a toll road across the mountains between Montego Bay and the capital, Kingston, on the south coast. It is not clear whether tolling will be part of the North Coast improvements.
Panama Canal to Increase Toll Rates to Fund Improvements
The Panama Canal Authority is facing a water supply crisis and has planned $2 billion worth of water supply projects, with assistance from the U.S. Army Corps of Engineers. To help pay for these needed improvements, it is planning refinements to its tolls. For example, it plans to simplify its complex toll rate structure from 430 different tolls to fewer than 60. For the first time, a ship hauling empty containers back to Asia will now be charged tolls, having historically been exempt for some reason. We can only hope the Army Corps will bring some of this knowledge back to the USA, suggesting how toll revenue could jump-start the huge backlog of lock and dam modernization projects on the inland waterway system.
Will Including Light Rail Once Again Kill the Oregon/Washington I-5 Bridge Replacement?
Staffers working to define the long-needed replacement I-5 bridge between Portland, OR and Vancouver, WA are finalizing recommendations to go before various officials this month—including a light rail line. While federal regulations appear to require a transit option on the bridge, Portland’s demand that this be an extension of its MAX light rail system added over a billion dollars to the proposed cost of a previous attempt to finalize a bridge plan, ultimately killing it. Portland has bus rapid transit lines which could operate on uncongested express toll lanes on the new bridge; that approach would not require a dedicated lane each way and the addition of more expensive structure.
California Port Congestion Could Get Much Worse Next Year
About a decade ago the California Air Resources Board implemented a ban on the use of all trucks powered by 2006 and older emissions-spec engines, as of Jan. 1, 2023. Now CARB plans to go further, extending the ban to 2007-2009 engines used by many drayage trucks that serve the ports. An analysis of vehicle records by RigDig Business Intelligence estimated that nearly 76,000 trucks of 2007-2009 vintage are in operation in the state. Those trucks will be blocked from having their registrations renewed in January, after which they will be illegal to operate on California roads. Needless to say, many trucking industry people are strongly opposed to this policy.
Sovereign Wealth Fund to Invest $2.7 Billion in Indonesia Toll Roads
On April 14, the Indonesia Investment Authority signed agreements to invest a total of $2.7 billion in the Trans Sumatra Toll Road and the Trans Java Toll Road. Sovereign wealth funds such as INA in recent years have begun investing in major infrastructure projects that generate user fee revenue. They join with public pension funds and major insurance companies in finding such projects compatible with their need to generate steady or growing revenues over long periods of time.
Gas Tax Holidays May Not Save Consumers Very Much
A detailed analysis of the impact on gasoline purchasers of changes in gas tax rates found very little difference, whether gas taxes went up or down. The study was carried out by the American Road & Transportation Builders Association (ARTBA) and the Transportation Investment Advocacy Center (TIAC). On average, only 18% of an increase or decrease in the state gas tax rate was passed through to consumers in the two weeks after such a change took place. The study reviewed 177 changes in state gas tax rates in 34 states between 2013 and 2021.
I-27 Designated in Texas
The recent $1.5 trillion federal appropriations law included an official designation of a new Interstate corridor, I-27, from the Texas/Mexico border to the border with New Mexico. TxDOT’s plan is to upgrade existing highways, such as US 83, US 87, and US 277 for most of the north-south route. The 963-mile corridor has an estimated cost of $23.5 billion, as of 2020. It would begin at Laredo, TX and cross the northern border at Raton, NM.
TollPlus Acquired by Vinci Highways
Vinci Highways, a subsidiary of French infrastructure firm Vinci Concessions, has acquired the 70% of TollPlus it did not already own, reported ITS International last month. TollPlus is a toll back-office systems specialist. Together, the firms have been developing free-flow tolling operations.
New Federal Data Reveal Condition of U.S. Highways and Transit
At increasingly lengthy intervals, U.S. DOT produces a comprehensive assessment of the conditions and performance of U.S. highways and transit infrastructure. It’s several hundred pages of detail, and I doubt if anyone in Congress actually reads it (though I always do). To the rescue comes The Road Information Program (TRIP) which has released an excellent short report drawn from the 2021 federal C&P Report and other sources. “Funding America’s Transportation System” provides a wealth of information in less than a dozen pages, plus a data-rich appendix.
“[E]ven before the rise of remote work, notes MIT’s Alan Berger, suburban GHG emissions for individuals were found to be similar to GHG amounts for those living in the inner city, challenging a widely held assumption that living in the urban center is better for sustainability. Changes in technology, such as innovative materials and sophisticated systems for controlling energy and water use, could make these new communities even more environmentally sustainable.”
—Joel Kotkin, “Exurbia Rising,” American Affairs, Feb. 20, 2022
“When the IIJA was being debated in Congress, the fact that it was providing a massive, one-time infusion of capital funding to build down Amtrak’s long-term capital backlog ($22 billion over five years) was well-known. And the $36 billion for new intercity passenger rail capacity grants (many of which will be in partnership with Amtrak) and the $5 billion for “megaprojects” (which might also be used for Amtrak-related capital) were also major selling points for the IIJA. But the fact that the IIJA was de-emphasizing the minimization of federal operating subsidies as an Amtrak goal was not widely advertised (despite being clearly present . . . ). And if Senators knew that Amtrak was going to use the new language to justify abandoning any hope of future subsidy reduction and instead return to the perpetual ward-of-the-state, federally subsidized operating losses of $1 billion per year, they didn’t mention it during debate prior to passage of the bill. And it should be noted that the IIJA did not actually provide any money to pay for the perpetual operating losses that it implicitly authorized Amtrak to incur—all of the IIJA funding, by law, can only go to capital projects.”
—Jeff Davis, “Amtrak Concedes Perpetual $1 Billion/Year Operating Losses,” Eno Transportation Weekly, April 21, 2022
“Today the Biden Administration doubled down on discouraging states from building new roads they may need, despite this policy being in direct conflict with what Congress intended in the recent infrastructure law. Instead of heeding Republicans’ calls for the Federal Highway Administration to rescind its December guidance, which they know is causing confusion among states, today’s announcement echoes the Administration’s earlier guidance and blatant misapplication of the IIJA. The FHWA, Department of Transportation, and Biden Administration need to stop prioritizing their woke agenda over implementation of the infrastructure law as it was written.”
—Rep. Sam Graves (R-MO) and Rep. Rodney Davis (R-IL), “Graves and Davis Statement on the Biden Administration’s Latest Policy Discouraging States from Using their Infrastructure Funds to Build Roads,” April 21, 2022