STATEMENT
OF EMIL H. FRANKEL
ASSISTANT
SECRETARY FOR TRANSPORTATION POLICY
U.
S. DEPARTMENT OF TRANSPORTATION
BEFORE
THE
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.
Environmental Streamlining
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
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. |
Environmental Stewardship
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.
Design/Build
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.
Cost-Plus-Time
Bidding
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
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.
Conclusion
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.