Statement of Dean Carlson,
American Association of State Highway and Transportation Officials (AASHTO)

Mr. Chairman and Members of the Committee, my name is Dean Carlson. I am Secretary of the Kansas Department of Transportation, and am here today to testify on behalf of the American Association of State Highway and Transportation Officials (AASHTO). I want to thank you for your leadership in holding this hearing to address the critical problems associated with this very complex and complicated issue called "transportation conformity."

Mr. Chairman, AASHTO supports the national goal of improving air quality, but we believe that we can and should work toward achieving this goal in a practical and effective manner that does not require burdensome, complex and costly regulations which do nothing to reduce emissions. We stand ready to assist you in moving forward to remedy the unwarranted and unnecessary additional burdens placed on the project delivery process resulting from the agreement reached by EPA and DOT to implement the March 2nd EDF decision. To this end, we urge your support of S. 1053, recently introduced by Senator Christopher "Kit" Bond.

S. 1053 would reinstate the transportation conformity process as it existed prior to the Circuit Court's decision. While it does not solve the myriad of problems with this burdensome process, it would permit us to return to the rules that were adopted after lengthy negotiation and debate within the transportation and environmental communities. AASHTO strongly supports enactment of S.1053 because a legislative remedy is needed. The administrative action that has been taken by EPA and DOT has not proven satisfactory.

I want to assure you that all of the State transportation officials across the country fully support the national goal of improving air quality and ensuring a healthy environment in all of our States. We strongly believe that environmental stewardship is very much a part of our fundamental transportation mobility mission, and continually seek new and innovative, multi-modal strategies to more effectively unite the two. However, we are extremely concerned that many of the current procedures for linking transportation and air quality have resulted in increased uncertainty throughout the entire transportation planning and project delivery process and have substantially increased project costs and delays, not to mention our fundamental ability to provide quality transportation systems and services. The existing approach for linking transportation and improved air quality is based on an esoteric, resource intensive and costly set of regulations that have done little, if anything, to reduce air pollutants.

The current transportation conformity regulations were drafted by the U.S. Environmental Protection Agency (U.S. EPA) to implement provisions of the Clean Air Act Amendments of 1990, which more explicitly defined the process for ensuring that transportation plans and programs conform with State air quality implementation plans (SIPs). As the States and Metropolitan Planning Organizations (MPOs) gained practical experience with the regulations, minor, but important, modifications were recommended, resulting in three sets of amendments to the regulations. Most of the regulatory adjustments provided by these amendments were endorsed by both the transportation and environmental communities.

Among the adjustments were several that specifically lessened uncertainty and strengthened the link between air quality strategies and transportation plans and programs:

An explicit set of rules for allowing those projects, which had previously been found to conform and were past the environmental review process, to advance to construction - the so-called "grandfathering" of projects;

The ability to use the emissions budgets in submitted SIPs as the test for conformity rather than continuing to rely on a "Build/No-Build" test that both the transportation and environmental communities agree is flawed; and

The addition of a 12-month "grace period" to enable newly designated areas to prepare technically to undertake conformity demonstrations.

These provisions are examples of the results of an effective partnership between the transportation and environmental communities to begin to move forward in establishing a more rational and practical approach to ensuring transportation plans and programs adhere to state air quality goals. More work is needed, but this was an excellent start. Unfortunately, what has been accomplished was completely undone with the March 2, 1999 decision by the U.S. Court of Appeals for the D.C. Circuit in response to a case brought by the Environmental Defense Fund.

In its decision, EDF v. U.S. EPA, the Court remanded several of the key adjustments made by EPA in its three sets of amendments, eliminating the grandfathering provision, prohibiting the use of submitted budgets as the basis for making conformity determinations and eliminating the grace period for newly designated non-attainment areas to prepare for demonstrating conformity. The court ruled that the current law does not provide the statutory basis for EPA to institute these regulatory modifications, which were designed to bring some flexibility and common sense to the conformity process.

In response to the court's action, EPA chose not to appeal, preferring instead to proceed with compliance in a manner that would mitigate the negative impacts on transportation, and from their perspective, would diminish the procedural uncertainties during the appeals process. Therefore, both the U.S. Department of Transportation (DOT) and EPA have published guidance intended to comply with the ruling and to administratively lessen the impacts on the transportation planning and project delivery process. We respectfully believe that the guidance does not, in fact, achieve this goal. Indeed, the most recent guidance of June 18, 1999 from the U.S. Federal Highway Administration (FHWA) is even more restrictive and burdensome than earlier guidance issued subsequent to the court's decision. Nor does the recent administrative action ensure that additional court challenges will not continue to disrupt transportation programs.

Indeed, the court itself recognized the burdensome nature of its ruling, stating, "if this legislative scheme is too onerous, it is up to Congress to provide relief." Such relief is urgently needed, and the legislation recently introduced by Senator Bond would statutorily reinstate the earlier "mutually agreed to" modifications. This would merely require a minor, technical amendment to the Clean Air Act to clarify implementation. We strongly support Senator Bond's bill, S.1053 and respectfully urge this Committee to approve this measure as soon as possible.

In short, what we now have is an agreement between EPA and DOT that is intended to mitigate the impacts of the court's ruling, but now allows highway project development to be disrupted right up until the day construction actually begins. These are not new projects, but rather ones that are the product of a rigorous and lengthy regional transportation planning process and that have already passed previous conformity tests. In fact, DOT has informed the States that in the event of a conformity lapse, they will immediately stop payment for ongoing design work and right-of-way acquisition.

Let me provide some examples of the impacts that the elimination of the grandfathering provision has already had in several states where conformity has lapsed for a variety of reasons.

In my own State of Kansas, we have determined that in order to maintain air quality, ten years from now the Kansas City metropolitan area will need to begin using reformulated gasoline. This ten-year horizon will give us the time to put in place the necessary distribution infrastructure to ensure smooth transition and effective implementation of this air emission reduction strategy. However, EPA is insisting that in order to include this long-term strategy in our SIP, we must have enforceable mechanisms in place to begin using reformulated gasoline within one year, despite the fact that it is not needed for some ten years. Therefore, Kansas City's transportation conformity demonstration has lapsed, and our transportation program has come to a halt. Both highway and new transit capacity projects have been stopped.

Other areas face similar problems. Late last year, the North Carolina Department of Transportation (NCDOT) foresaw that the Raleigh/Durham/Chapel Hill/Carrboro non-attainment area might experience a conformity lapse. At the time NCDOT was working with the MPOs in the region to update their regional transportation model, and it had become apparent that the time required to satisfactorily complete the update effort would result in a short-term conformity lapse. NCDOT determined that the risk of project delays that might result from a temporary conformity lapse would be minimal because project planning and design would be far enough along - under the grandfather rules existing prior to March 2nd of this year -- that project delivery would not be interrupted. In weighing the risks of a short-term conformity lapse, NCDOT had not anticipated a change in the rules, which the March 2nd EDF decision represents.

In just this one area, the DC Circuit Court's March 2nd EDF decision, eliminating the grandfathering provision, has affected $72 million worth of projects.

One of the projects on which work has come to a halt involves access to a new solid waste facility in a small community outside of Raleigh, North Carolina. The environmental permit for the waste facility is tied to construction of a new road, without which trucks would have had to travel through residential neighborhoods to access the facility. Now, construction of the solid waste facility and the new highway facility are out of sync, complicating the development of a much-needed environmental facility. While NCDOT and its MPOs in the Raleigh metropolitan area were proceeding responsibly with their regional transportation modeling update effort, they unfortunately were ambushed by a change in the conformity regulations that have cost them significantly in terms of dollars, delays, environmental construction, and economic development.

In Kentucky, two rural counties north of Paducah were designated as non-attainment for ozone after the enactment of the 1990 Clean Air Act Amendments. In April 1995, with no further violations, the area was redesignated as a maintenance area. As required by the conformity regulations, Paducah then had 18 months to demonstrate conformity with the emissions budgets established in the State Implementation Plan (SIP). Unfortunately, the mobile source emissions budgets established in the early 1990s for the region were based on inaccurate travel projections which do not coincide with the actual growth, albeit small, that has occurred and is now projected to occur in the future. Therefore, the area is unable to demonstrate conformity with the current emissions budget and the previous conformity demonstration for this maintenance area has lapsed. There is nothing the area can do until a new emissions budget is negotiated, submitted and approved by EPA, which is a lengthy process that will take more than a year to complete.

In the meantime, construction on critical highway projects has come to a halt. For example, design work on a replacement bridge with new capacity over the Tennessee River has been stopped. The existing bridge has a sufficiency rating of 5.3 on a scale of 100, which means that it is in extremely poor structural condition and is weight-restricted. Work has also ceased on the relocation and replacement of a bridge across the Kentucky Lake Dam, which has been requested by the Army Corps of Engineers to coincide with replacement and modernization of the locks on Kentucky Lake.

These examples illustrate how some metropolitan areas are already experiencing problems due to the March 2nd EDF decision. However, over time these problems will spread through the country to all non-attainment and maintenance areas, the numbers of which will substantially increase under the new standards for ozone and particulate matter. Moreover, because newly designated non-attainment areas will have no grace period in which to technically prepare for performing conformity analyses, we anticipate that many never before designated non-attainment areas will immediately face a conformity lapse. Quite simply, the new guidance from FHWA and EPA creates such a complicated, erratic and unpredictable process that most areas will find it impossible to keep conformity lapses from occurring at some point.

I have also attached to my testimony a hypothetical illustration of the many points at which a conformity lapse can occur, and the impact on the project delivery process resulting from EPA and DOT's agreement in response to the EDF decision.

While enactment of Senator Bond's legislation will reinstate the status quo as it existed prior to March 2nd, I would be remiss if I did not inform this Committee of another fundamental flaw in the transportation conformity process. Under the existing regulations there is a mismatch between the shorter-term horizon for attainment or maintenance of air quality standards in SIP and the 20-year time horizon required for the long-range transportation plan. The practical result is that there is no mechanism for examining trade-offs among mobile, areawide and stationary sources for the out-years. Moreover, when this happens, the transportation agencies essentially take on the long-term air quality planning responsibility, but without the authority to unilaterally implement the types of programs (e.g., enhanced Inspection and Maintenance or reformulated gasoline) needed to substantially reduce mobile source emissions.

One remedy would be to allow the operative SIP emissions budget to suffice for the purposes of demonstrating conformity of the long-range transportation plan. Transportation conformity would need to be demonstrated only for those years for which a SIP emissions budget exists. We urge you to assess the fundamental flaws resulting from inadequate linking of the transportation and air quality planning time horizons. We are prepared to offer assistance in searching for ways to modify the transportation conformity procedures that will ensure better linkages with air quality planning while simultaneously ensuring continued transportation mobility and access.

Mr. Chairman, AASHTO's member States share the national goal of improving air quality, and believe that we should work cooperatively with the federal government and environmental community to find and implement practical and effective procedures and strategies to help us meet our mutual goal. The D.C Circuit Court's decision has placed the States in an impossible situation that leaves projects facing an uncertain future right up until the point at which the shovel goes in the soil. EPA and DOT attempted to mitigate the effects of the decision, but unfortunately, each successive release of guidance became ever more restrictive. Legislative action is now required, we applaud Senator Bond's efforts on this issue and urge your support of S. 1053.


A Hypothetical Illustration of the Impacts of the Current Guidance on the Project Development Process

One of the most onerous provisions of the post-court ruling guidance that contributes to creating a wildly unpredictable planning and project delivery process involves grandfathered or "previously conformed" projects. Conformity regulations in existence before the March 2nd EDF decision established a reasonable point at which highway or transit projects could proceed regardless of conformity demonstration difficulties, including lapses. However, the latest guidance, intended to mitigate the impacts of the court's ruling, now allows highway project development to be disrupted right up until the day construction actually begins. These are not new projects, but rather ones that are the product of a rigorous and lengthy regional transportation planning process and that have already passed previous conformity tests. In fact, the U.S. FHWA has informed the States that in the event of a conformity lapse, they will immediately stop payment for ongoing design work and right-of-way acquisition.

I offer here a figurative illustration of a typical highway project progressing to construction in a metropolitan area to demonstrate difficulties with operating under the latest guidance and the many points at which the project development process can be interrupted.

In my example, a State department of transportation is developing a project that adds lanes for twelve miles to a suburban arterial in an ozone non-attainment area. Due to its length and complexity, the project will need to be constructed in two phases. Our project will add one lane in each direction, add a bi-directional turn lane, resurface the existing two lanes, improve the interchange at the interstate from a partial to a full interchange, channelize six intersections, and interconnect twelve signals in the corridor.

The total cost of the project is $65-70 million. From the beginning of the feasibility study through the letting of construction contracts, our project faces more than a dozen potential federal approvals. The critical decision points and project development steps follow:

The feasibility study for our project is done, and Phase I engineering is nearing completion. The metropolitan area is experiencing difficulty demonstrating conformity of its new regional transportation plan and the current conformity demonstration has lapsed. Therefore, our project, which has previously passed all required conformity analyses, is now in jeopardy.

Under the old rules, FHWA would have been able to approve the project because it came from a previously conforming long range transportation plan (Plan) and Transportation Improvement Program (TIP). Under the agreed settlement and new guidance, they now cannot approve a record of decision on this project because it is not in a currently conforming Plan.

After six months, the MPO adjusts the mix of projects and strategies included in the Plan to enable a demonstration of conformity. FHWA then approves the record of decision, allowing the project to move beyond Phase I engineering.

Unfortunately, while the MPO was able to demonstrate conformity of the Plan, the MPO cannot now demonstrate conformity of the TIP, which must be reanalyzed within six months of a new Plan conformity demonstration. Even though the Department's project development staff is ready to begin Phase II engineering, the U.S. FHWA cannot authorize the expenditure of federal funds because of the lack of a conforming TIP. Under the rules existing prior to March 2nd, engineering could have been authorized because this project was contained in a previously conforming TIP.

Then within six months, the MPO is finally able to demonstrate conformity of the TIP. The FHWA allows Phase II engineering to begin and right-of-way acquisition to occur.

In the meantime, the state environmental agency submits a control strategy SIP that includes emission reductions for an enhanced vehicle inspection program. While the State legislature approves the program, the legislation contains a provision sunsetting the program after three years. Because the State environmental agency has included emissions attributed to this program beyond the three years, the U.S. EPA disapproves the SIP, resulting in a conformity freeze until a new SIP is approved. The TIP has reached the end of its two-year life, and even though the MPO can demonstrate conformity on the new TIP, conformity is frozen until the State environmental agency can submit an approvable SIP. Therefore, the necessary permits from the U.S. Fish and Wildlife Service, the Army Corps of Engineers and U.S. DOT cannot be obtained.

When the State environmental agency submits an approvable SIP and the necessary permits are issued, authorization for construction of the first phase of project construction is requested. After construction begins, U.S. EPA requires the State environmental agency to submit control strategies that address nitrogen oxide (NOx) emissions. Because national NOx controls are delayed, the State is unable to submit a SIP with the appropriate regulations in place.

Unfortunately, the U.S. EPA issues a failure to submit finding just as the MPO is concluding work on the update of the Plan, which is required every three years. Because the SIP call has been missed, the federal agencies are unable to approve the conformity determination for the Plan. Although Phase I of construction is nearing completion, and the transportation department is ready to request approval for the second phase of construction, U.S. FHWA cannot authorize the next phase. The project misses a construction season, which undermines the reason for phasing, causing another year of delays and congestion for the motoring public.

While convoluted, this hypothetical illustration is entirely possible under the current situation. This demonstrates the significant delays facing highway projects due to conformity regulations, despite the fact that the project would reduce emissions and improve safety. This illustration also demonstrates that failure to reduce air emissions is not the source of delay and added costs, but rather bureaucratic implementation of conformity regulations where the adherence to process is the goal, not improving air quality.