Surface Transportation News: Can the Department of Transportation terminate New York’s cordon pricing program?

In this issue:

• Can U.S. DOT terminate New York’s cordon pricing?
• New report reviews U.S. transit and climate change
• Rethinking the energy transition
• How state highway systems measure up
• Central planning a new shipbuilding industry?
• Federal AV policy reinvented
• News Notes
• Quotable Quotes

Can U.S. DOT Terminate New York’s Cordon Pricing Program?

When I first read Transportation Secretary Sean Duffy’s Feb. 19 letter terminating federal permission for New York’s cordon pricing program, I thought it was on solid ground. It argued that under the federal Value Pricing Pilot Program (VPPP), any such projects must provide a non-priced alternative, which is not consistent with cordon pricing. But an April 11 letter to the Department of Transportation (DOT) from three assistant U.S. attorneys at the Southern District of New York provides a strong case against that argument.

The VPPP was created by the Intermodal Surface Transportation Efficiency Act (ISTEA) in 1991, and the discussions and testimony on value pricing make clear that the term was broadly understood. Discussions by members of Congress and witnesses supported “congestion pricing” as covering a range of alternatives, including actual (Singapore) and proposed (Stockholm) cordon pricing, as well as a proposal from Los Angeles to price all lanes of its congested freeways (which I recall from having been a member of a task force on freeway congestion there). The attorneys also cite DOT’s March 1990 National Transportation Strategic Planning Study that included Singapore’s cordon pricing as an idea “that may be of interest to the United States.”

The letter goes on to include excerpts from the VPPP solicitations for proposed projects in 2005, which included “area-wide pricing” and a 2007 VPPP notice that explicitly identifies “cordon pricing” as an eligible project category. And the Federal Highway Administration’s (FHWA) 2009 report to Congress on VPPP stated that “the VPPP portfolio of implemented projects must include pilot implementation of broad congestion pricing involving tolls on all lanes of a highway facility, all roads in a congested area, or all roads of an entire roadway network.” It also cites VPPP approval in 2002 of a cordon pricing project for Fort Myers Beach, Florida, and a project to study cordon/area-wide pricing in Southern California.

As I wrote in the Dec. 2024 issue of this newsletter, I still think the New York cordon pricing system was poorly designed and implemented: its flat-rate (rather than variable) charge is not aimed directly at reducing congestion but at raising enough money to finance $15 billion worth of improvements to the subway and bus system. So I was glad to see the additional section of the Southern District of New York attorneys’ letter, arguing that DOT has a legitimate way to terminate federal permission for the project.

That approach cites changed DOT priorities, via an established Office of Management and Budget (OMB) procedure for terminating cooperative agreements with a state or local government. Such agreements may be terminated if the project “no longer effectuates the program goals or agency priorities.” The attorneys also explain that even though there is no grant funding included in this agreement, it may still be terminated. But just to be sure, it also notes that “FHWA’s grant of authority to the [NYC] MTA… is clearly the transfer of a thing of value.”

As always, when reporting such legal assessments, I remind readers that I have no legal training and only ever took one survey course in business law. But from my decades of transportation policy work (including as a subject-matter expert for FHWA on value pricing), I think the above case for federal termination is sound.

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New Report Reviews U.S. Transit and Climate Change

Reason Foundation has released part two of a three-part study by Steven Polzin of the School of Sustainable Engineering and the Built Environment at Arizona State University. The report provides a wide array of data on energy use and transportation modes, looks into transit’s past and potential future impact on land-use and travel behavior, and offers some sobering thoughts on changes in travel behavior in the coming decades.

A short review cannot do justice to a data-intensive 52-page report, so I will limit these comments to some of the more unexpected findings in the report. First, I was surprised by the data in Table 1 on 2019 energy use by all major modes of U.S. transportation. Using the metric of BTUs per passenger mile, the winner nationwide was rail transit, at a low of 851. That compares with 2,787 for passenger cars, 1,583 for commuter rail, and 4,634 for bus transit. Hence, transit bus was already a relative energy hog even pre-pandemic, and it’s very likely worse with today’s even lower post-pandemic ridership.

But Polzin also provides a caution about rail transit. If the 10 large “legacy” rail transit systems (which account for 77% of rail transit passenger vehicle miles) are excluded, in all the other metro areas with non-legacy rail transit, personal vehicles are more energy-efficient than transit rail. Unfortunately, most of the data in this report ceases at 2021, and transit ridership has increased somewhat since then. But this section’s 13 tables on various measures of energy use and transit trips still provide a wealth of information.

Later sections get into the energy intensiveness of transit in more detail, introducing the reader to a 2021 report from the Transit Cooperative Research Program (TCRP Report 226), which explains how indirect emissions (from “well-to-pump”) are calculated. Polzin notes that these indirect emissions typically add about 20% to each mode’s total, but this may vary considerably depending on the energy source. Another section goes further, explaining life-cycle energy intensiveness, which includes energy used to operate stations, maintenance yards, etc. This aspect is becoming more complex as electric buses and electric robo-taxis enter the picture.

One of the most interesting sections is the seventh, which addresses the relationship between land-use patterns and travel behavior. The historical concept (pre-auto and later pre-internet) was based on agglomeration benefits from concentrations of economic activity in central business districts (and later in “edge cities”). But today’s communication modes, which have facilitated part-time or full-time work from home, have significantly changed the benefits of this land-use model. Polzin also emphasizes the changes coming about in personal/household travel due to vendors and service providers coming to people’s homes, leading to fewer non-work trips.

Polzin contrasts his own 1999 journal article, “Transportation/Land-Use Relationship: Public Transit’s Impact on Land Use” (ASCE Journal of Urban Planning and Development), with the changes we are likely to see in the decades ahead. These include different types of new development with different relationships with potential public transit, and a slower pace of land use changes in the coming years. He also cites the landmark 2009 Transportation Research Board study, “Driving and the Built Environment: The Effects of Compact Development on Motorized Travel, Energy Use, and CO2 Emissions.” Its analysis of 2050 development scenarios found that, “Under a wide range of conditions, reductions in VMT, energy use, and CO2 emissions resulting from compact, mixed-use development are estimated to be in the range of less than 1 percent to 11 percent.” That was a sobering finding in 2009 and remains so today.

The third and final volume of this three-part study will be reviewed in the June issue of this newsletter.

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Rethinking the Energy Transition

This is a newsletter about transportation policy. But since climate change and energy policy will have significant impacts on transportation, it’s important for those of us in transportation to understand what is going on regarding energy use and goals for “net-zero emissions” by 2050.

The most profound article I’ve read on this subject appears in the March/April 2025 issue of Foreign Affairs. The authors are Daniel Yergin, Peter Orszag, and Atul Arya. Yergin is one of the world’s most respected energy analysts, whose books include The Prize and The Commanding Heights (made into a PBS series). I met Orszag when he was OMB director in the Obama administration. Arya is the chief energy strategist at S&P Global.

The article’s theme is that the energy transition “will be much more difficult, costly, and complicated than was initially expected.” The authors explain that previous energy transitions were “energy additions,” with each new source adding to rather than replacing prior sources. To illustrate the size of the challenge, they note that the International Energy Agency (IEA) in 2021 projected that to meet 2050 targets, greenhouse gas (GHG) emissions would have to decrease from 33.9 gigatons in 2020 to 21.2 gigatons in 2030. But as of 2023, global GHGs had increased to 37.4 gigatons. Why are things going in the opposite direction?

When coal first became an energy source, it did not displace wood for two centuries, they report. And once that finally happened, oil took another century to overtake coal in the 1960s. But again, coal did not go away. As of 2024, global coal consumption was three times what it was in the 1960s, due to the transition from wood in much of the developing world. Not only giant China, India, and Indonesia but nearly all of Africa and many other “global South” governments have every intention of bringing electricity and improved transportation to their rising populations—and they will make use of the lowest-cost energy sources. (The authors note that three billion people in the developing world use less electricity per capita than the average American refrigerator.) Moreover, those relatively poor countries have little realistic prospect of paying the first-world costs of a large-scale transition to renewables. That leaves the developed world with a choice between paying only the trillions it would need to reach its own net-zero transition while the rest of the world does not participate… or paying for the rest of the world’s transition, as well. 

The authors also point out, as others have, the extreme dependence of large-scale electrification (e.g., of transportation) on costly and scarce rare earth elements such as cobalt, graphite, lithium, and others that most people have never heard of. According to the IEA, demand for such minerals will quadruple by 2040, and even copper supply will need to double by the mid-2030s to meet current net-zero targets for 2050. And they add that “the push for energy transition minerals is in tension with local environmental, political, cultural, and land-use concerns and permitting obstacles.”

Another major challenge for the United States (and other developed countries) is a lack of electricity capacity. Power demand in the USA is expected to double by 2050, based on plans for the electrification of transportation, a huge increase in data centers, and other planned changes. As a result of all the above factors, “the goal of achieving zero-carbon electricity in the United States by 2035 will be more challenging than it appeared during the slack years of the Covid slowdown.”

The authors’ bottom line is the need for trade-offs. For example, instead of insisting on phasing out natural gas, they note that utility-scale electricity from natural gas emits 60% less CO2 than coal, per kilowatt hour of electricity. It has already displaced a lot of coal, which provided 49% of U.S. electricity in 2008 but only 16% today. Needless to say, they are also encouraged by the increasing support for nuclear power, as at least an important transition source (but I would say as an ongoing zero-emission source). They acknowledge that the energy transition “will unfold over a long period and that continuing investment in conventional energy will be a necessary part of the energy transition.” This is wise counsel from exceptionally well-qualified people.

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How State Highway Systems Measure Up
By Baruch Feigenbaum

Reason Foundation recently released our 28th Annual Highway Report. The report measures how states manage their roadway system by evaluating them in 13 different categories. Four of the categories measure spending, four measure pavement quality, one measures urban traffic congestion, and four measure safety (one for structurally deficient bridges and three for fatality rates).

This year, the top five states, providing the best performance for the funds spent, are North Carolina, South Carolina, North Dakota, Virginia, and Tennessee. The bottom five states are Alaska, California, Hawaii, Washington, and Louisiana.

While states can have big increases or decreases in the highway report’s rankings, most states move fewer than five slots from year to year. This year’s exceptions include Idaho, which improved 19 positions; Maine, which improved 11; and New Jersey, which improved 10. On the downside, Massachusetts declined 20 positions, and Arkansas declined by 15.

While the national rankings are important, regional comparisons may be more valuable. While we weigh the measures for costs, departments of transportation (DOTs) cannot control factors such as urbanization, and some regions fare better than others. For example, the Southeast is home to five of the top 10-ranked states. As a result, Louisiana’s 46th place ranking, West Virginia’s 33rd place ranking, and Arkansas’s 28th place ranking really stand out. Each of these states could learn best practices from peer states, including Georgia, North Carolina, South Carolina, and Virginia, through trade organizations such as the Southern Association of State Highway and Transit Officials. 

Meanwhile, on the West Coast, Oregon is the only state not to rank in the bottom 40. While Oregon has a lot of room for improvement, states such as California and Washington could learn from it.

Some state transportation departments believe that they are penalized for high costs. But costs are just one factor, and Utah shows it is possible to have high costs and a top 10 ranking. The state, which ranks 8th overall, ranks 47th in capital disbursements, 34th in maintenance disbursements, 27th in administrative disbursements, and 32nd in overall disbursements. Yet Utah ranks in the top 20 in every other category, including 6th in urban arterial pavement condition and structurally deficient bridges. Utah shows that a top 10 ranking is possible with high spending if the rest of the system is in outstanding condition.

Another misconception is that if states rank high in several categories, they will rank highly overall. But in reality, the states that rank the highest have the fewest poor categorical rankings. For example, Ohio ranks 10th overall but does not rank in the top five in any category. The key to its high overall ranking is that it doesn’t rank in the bottom 10 states in any category either.

State DOTs often ask what common factors lead to high rankings. While each state is different, there are four common factors that high-ranking states share.

First, top-ranked states have an effective quantitative cost-benefit project selection process. With these processes, states create a list of potential projects and compare their costs and benefits. For example, a project that widens a roadway from two lanes to four lanes, costs $50 million and reduces congestion by 500 hours per year, will score higher than the same length project that costs $100 million and reduces congestion by 100 hours per year. While all states have some type of review process, both North Carolina and Virginia, which are perennially in the top five of the rankings, have nationally recognized prioritization tools. California and Washington, which are ranked in the bottom five, were cited by the Federal Highway Administration as using the wrong methods to prioritize projects.

Second, states that make use of innovative delivery, such as design-build and public-private partnerships, also ranked highly. Virginia (4th) and Florida (14th) are two of the heaviest users of public-private partnerships (P3s). Georgia, 6th, is one of the heaviest users of design-builds. Of the bottom five states, none make significant use of innovative delivery. In fact, in the past five years, of those states, only Louisiana has entered into a P3.

Third, states that modernized their DOTs into 21st-century operations fare better. Around the turn of the century, after the Interstate system was completed and DOTs began contracting out more of their maintenance needs, many researchers encouraged DOTs to reorganize and focus more on project management and less on new construction. Over the next 10 years, Florida, Georgia, North Carolina, and Virginia DOTs made these changes. California, Louisiana, Oklahoma, and West Virginia did not make these changes, which is one factor in their low rankings.

Finally, states without strong unions rank better as well. One factor is costs. Many non-unionized states, particularly in the South, have lower costs. But other non-unionized states, such as Utah, have higher costs and are still ranked higher. Productivity may be a bigger factor. Whether it is extra staff required by union contracts or the inability to discipline certain workers, higher union costs don’t generally translate to better roads, while higher non-union costs often do.

The full report is available here.

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Central Planning a New U.S. Shipbuilding Industry?

The United States used to have a commercial shipping industry, but in 1920, Congress tried to help it grow by passing the Jones Act. It requires that all ships carrying any cargo between U.S. ports be constructed in American shipyards, crewed by U.S. sailors, and owned and operated by U.S. companies. As I reported in the March 2025 issue of this newsletter, due to high costs and costly mandates, the “merchant marine” fleet has dwindled, and the United States is left with a handful of inefficient, very expensive shipyards. And that means military ships, such as destroyers, aircraft carriers, and submarines, are also very expensive and often delivered late.

Meanwhile, the world’s commercial and military ships are mostly built in efficient 21st-century shipyards in Asia—China, Japan, and South Korea. Yes, those industries received government subsidies to begin with, and China reportedly still subsidizes ship-building. But the world’s commercial shipping companies buy Asian ships because of their high quality and reasonable prices.

On April 9, President Trump signed an executive order called “Restoring America’s Maritime Dominance.” It basically amounts to super-sizing the Jones Act with a program of massive new subsidies for shipbuilding. Federal agencies must produce a Maritime Action Plan (MAP) by Nov. 8. It calls for extending the Harbor Maintenance Tax (HMT) to U.S.-destined cargo unloaded in Canadian and Mexican ports for shipment to the United States. (Jeff Davis in Eno Transportation Weekly, April 11, points out that this violates the user-fee principle of the HMT because the proceeds are used for dredging of U.S. ports.) It would create a new Maritime Security Trust Fund to direct various revenues (from tariffs, fines, fees, etc.) to be spent on modernizing U.S. shipyards. And it requires the relevant federal agencies to draft legislative proposals (by November) to provide subsidies for shipbuilding. It further requires DOT and DOD to come up with another legislative proposal to ensure an “adequately-sized” U.S.-flagged merchant fleet for use in times of crisis. And there’s even more in the offing. Starting in October, Chinese ships docking at U.S. ports will be charged $50/ton at each stop. And starting in 2028, ships that export LNG must be U.S.-built (which none of them are today—and none could be ready by 2028).

There’s a name for all this: it’s called central planning or “industrial policy.” This kind of policy has a very poor track record in the United States. It would likely expand federal spending by billions of dollars a year, provide new jobs in shipyards, and produce ships that are not competitive with those produced in China, Japan, and South Korea

There are alternatives to this potential boondoggle. One of the merits of international trade is taking advantage of lower-cost producers in other countries. As The Economist reported (Feb. 27):

“America’s allies in East Asia could help counter the Chinese build-up. South Korea and Japan are home to the world’s second- and third-largest shipbuilding industries, accounting respectively for 28% and 15% of global production. Shipyards there have cutting-edge technology.  The firms that run them built industrial clusters with robust supply chains. . . . ‘Shipyards in South Korea and Japan are 21st-century enterprises,’ Mike Walz, America’s national security adviser, said in September . . . . ‘You go to some of ours—it looks like it hasn’t changed since the 1930s.’ Officials around the region are keen to work with America. Doing so is good business for their industries, and [their] potential investment in American shipyards could also be good politics.”

The Economist also suggested several forms of collaboration. One would be having Japanese and South Korean shipbuilders help revive their ailing U.S. counterparts. The article pointed out that one major South Korean company last year bought Philly Shipyard in Pennsylvania and reported that other Asian shipbuilders are considering doing likewise. Another would be tapping Asian shipyards for maintenance, repair, and overhaul (MRO). That could free up U.S. shipyards to build more naval vessels.

It also suggested that collaboration on MRO might even lead to further collaboration, asking “Why not have South Korea build ships for the American navy? In private, some senior American military officials salivate over the prospects.” Lest that seem far-fetched, Utah’s Republican Sens. Mike Lee and John Curtis in February introduced a bill that would enable the U.S. Navy to contract with shipyards of close U.S. allies to build military ships. 

Finally, Rodolphe Saade, the CEO of CMA CGM, the world’s third-largest ocean shipping company, has pledged to invest $20 billion in U.S. shipyards and cargo ships. He plans to add 20 US-flagged ships to the CMA-CGM fleet. The company holds leases on terminals in Los Angeles/Long Beach and New York/New Jersey. While in D.C., he met with President Trump, but said the new fees on Chinese ships would be ill-advised.

In short, there are many alternatives to spending taxpayers’ money on a central plan to jump-start U.S. shipbuilding. Far more effective would be to work with world-class Asian shipbuilders and encourage them to invest in modernizing whatever U.S. shipyards appear to be salvageable. And maybe even build us a few Navy ships.

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Federal AV Policy Reoriented Around Growth and Innovation
By Marc Scribner

There is growing optimism around automated vehicle (AV) technology in the United States. AV developers made several important announcements in recent weeks. This industry momentum coincided with the release of a new AV Framework by the U.S. Department of Transportation, which is designed to “unleash American ingenuity, maintain key safety standards, and prevent a harmful patchwork of state laws and regulations,” according to U.S. DOT. This led to two immediate policy changes, and more ambitious proposals are expected in the future.

As last month’s issue of this newsletter previewed, AV trucking startup Aurora Innovation announced it began regular driverless commercial operations on I-45 between Dallas and Houston during the final week of April in partnership with Uber Freight. That same week, robotaxi pioneer Waymo revealed it had partnered with Toyota to explore, among other things, incorporating its automated driving system (ADS) into vehicles manufactured by Toyota that are designed to be personally owned by consumers.

The changes in policy announced on April 24 by Secretary of Transportation Sean Duffy are meant to support these types of advances in deployment. The new federal AV Framework is guided by three principles: prioritize the safety of ongoing AV operations on public roads, unleash innovation by removing unnecessary regulatory barriers, and enable commercial deployment of AVs to enhance safety and mobility for the American public.

The debut of U.S. DOT’s new AV Framework included two specific changes in federal policy at the National Highway Traffic Safety Administration (NHTSA). First, NHTSA amended the 2021 Standing General Order (SGO) that requires incident reporting for vehicles equipped with ADS as well as certain advanced driver assistance systems (ADAS). The SGO was initially issued in June 2021. It was amended twice during the Biden administration, first in Aug. 2021 and again in April 2023. The latter version remains in effect.

The previous iterations of the SGO led to duplicative and overbroad reporting, which caused junk data, with no plausible bearing on safety performance, to proliferate. For instance, incidents in which electric scooters lightly impacted AVs and then continued on their way as if nothing had happened were included. So was an incident in which a fight broke out between two (presumably intoxicated) individuals in the driveway of a Las Vegas hotel, who proceeded to stumble into a Zoox robotaxi moving at 2 mph before fleeing the scene.

NHTSA’s April 2025 amended SGO, which takes effect on June 16, makes several changes aimed at improving data quality and consistency in reporting, including:

• The new SGO eliminates the requirement that all reporting entities submit incident reports even if another reporting entity has already submitted a report on the incident, “unless [the additional reporting entities] have notice of materially different information.”
• The current SGO requires an incident involving a vulnerable road user to be reported even when that person is not struck in a crash involving a covered vehicle (i.e., they are “alleged to have caused or contributed to the crash by influencing any part of the driving task for any vehicle involved in the crash”). The new SGO will require reporting of incidents involving vulnerable road users only if that person “is struck by any vehicle involved in the crash.”
• The new SGO will only require reporting of an incident within five days if the crash involves a fatality, injured person transported to a hospital, strike of a vulnerable road user, airbag deployment, or vehicle tow-away. In contrast, the current SGO requires incident reporting even when those criteria are not met, in addition to separate reporting when those factors are involved.
• The current SGO requires monthly reporting of all crashes that do not meet incident-reporting thresholds. The reports must be filed even if the covered entity has no crashes to report. The new SGO requires monthly reporting of incidents only if they involve property damage expected to exceed $1,000 or, if damage is expected to cost less than $1,000, the covered vehicle was the only vehicle involved and/or it struck another vehicle or object. Monthly reports are only required if the covered entity has any incidents to report.

In addition to the revised SGO, NHTSA also announced in an open letter to AV developers that it was expanding an existing exemption program that from 2016 to 2024 had exempted 347 ADS-equipped vehicles for research purposes, but only if those vehicles had been manufactured abroad. The expanded exemption program for non-commercial research vehicles will now allow domestic manufacturers to seek the same exemptions as their foreign counterparts.

Secretary Duffy’s statement that he seeks to “slash red tape and move us closer to a single national standard that spurs innovation and prioritizes safety” correctly identifies the key policy impediments faced by AV developers. The growing patchwork of AV regulation at the state level is needlessly raising compliance costs and barriers to entry, while the failure to modernize federal auto safety regulations to incorporate AVs is needlessly limiting the growth potential of this technology. While we don’t yet know exactly how Secretary Duffy will pursue this innovation-focused AV policy agenda, the revised posture at U.S. DOT is a welcome change.

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News Notes

Indiana Legislature Sends Interstate Tolling Bill to Governor
House Bill 1461 was approved by the state Senate and sent to the governor to be signed. It would allow all the state’s Interstate highways to be tolled, per a detailed HNTB study for Indiana DOT, released in Nov. 2018. Federal approval would be required for each such conversion, via either the never-used ISRRPP program (allowing only one toll conversion per state) or via the “bridge” provision of federal law, which permits tolling to replace non-tolled bridges on Interstate highways. Indiana DOT’s rationale for the HNTB study was the need to rebuild Indiana’s aging Interstates using toll financing.

Tennessee Shortlists Four Teams for First Choice Lanes Project
Infralogic reported (April 28) that TDOT has selected four teams as best-qualified to design-build-finance-operate-maintain the planned new express toll lanes on I-24 in the Nashville metro area. The teams are as follows: Cintra/Transurban, Plenary/Shikun and Binui/Sacyr, ACS/Meridiam/Acciona, and ASTM North America/FCC. The winner will sign a 50-year P3 concession agreement, with toll revenue as the primary funding source. Commercial close is expected in July 2026 and financial close by April 2027.

US DOT Rescinds $63.9 Million Grant for Texas High-Speed Rail
Last month, DOT Secretary Sean Duffy announced an agreement between the Federal Railroad Administration and Amtrak to terminate a previously announced grant for the proposed high-speed rail line between Dallas/Ft. Worth and Houston. In his announcement, Duffy stated that “FRA and Amtrak are in agreement that underwriting this project is a waste of taxpayer funds and a distraction from Amtrak’s core mission.” For some background on this troubled project, see Jeff Luse’s article, “In 12 Years, This $40 Billion High-Speed Rail Line in Texas Has Not Laid a Single Foot of Track.

Maryland Will Protect Another Major Bridge from Ship Collisions
The Maryland Transportation Authority (MDTA) has finished a safety study of the Chesapeake Bay Bridge, resulting in plans for $160 million worth of enhancements to limit the damage from ships colliding with its piers. This is the kind of study the agency never performed for the now-demolished Francis Scott Key Bridge, per the findings of the NTSB report on that bridge’s collapse. The twin spans of the Bay Bridge date from the 1950s and 1970s, respectively, and do not comply with current safety standards. The upgrades will include beefier fenders and the addition of “dolphins” to protect the piers.

US DOT Rescinds Two Biden DOT Guidance Documents
One guidance document urged state DOTs to prioritize grant projects dealing with climate change and vehicle electrification, in programs where Congress did not call for such priorities. The second Biden memo wanted DOTs to focus on existing infrastructure rather than adding new capacity, and to focus their formula funding on environmental impacts and equity. Both new DOT memos nullify the Biden DOT guidance. In a follow-up notice of funding opportunity for grants, DOT announced that it will not give priority to road diets, lane reductions, and sidewalk expansions, which were priorities of the previous administration. These memos illustrate that earmarks are not only a legislative phenomenon. Congress should reject administrative earmarks, as well.

I-77 Express Toll Lanes Get Bond Rating Upgrade
Fitch Ratings last month announced that the revenue bonds for the I-77 North express toll lanes (ETL) project near Charlotte, NC, have been upgraded from BBB to BBB+. The upgrade is due to the strong demand fundamentals in this corridor, and it bodes well for the now-planned I-77 South ETLs, which will extend the current ETLs southward to the South Carolina border.

Federal Private Activity Bonds Nearly All Allocated
The U.S. DOT’s Build America Bureau announced at the end of April that $27.6 billion in tax-exempt revenue bonds for surface transportation projects had been issued or allocated by that date. The federal cap on private activity bonds (PABs) was increased by Congress in 2021 from $15 billion to $30 billion. A large pipeline of P3 projects will be seeking PABs financing in the next five years. Hence, it will be incumbent on Congress to either increase or (preferably) eliminate the cap. When PABs were first authorized by Congress in 2005, they were considered experimental, and it took more than 15 years for the initial $15 billion to be allocated. The large and growing demand suggests that PABs are now widely accepted. Just as there is no cap on tax-exempt municipal bonds, there is no reason for a cap on PABs.  

Virginia Beltway Express Toll Lanes Project Faces Upcoming Decisions
Virginia DOT’s several alternatives to fill in the missing link in its I-495 express toll lanes will be reviewed by the Commonwealth Transportation Board this month. The gap extends from I-95 on the west to the Woodrow Wilson Bridge on the east. In addition, whether the ETLs will traverse the bridge and transition onto a Maryland expressway is still being discussed with Maryland officials. VDOT will hold public meetings in June to seek input on its draft Environmental Assessment (EA) document, prior to seeking FHWA approval in early 2026.

Troubles in View for California High-Speed Rail Project
The California Legislative Analyst’s Office told legislators at a March hearing that the High-Speed Rail Authority is still short $7 billion to complete the 171-mile starter segment between Bakersfield and Merced, and it reminded the legislators that the Authority has still not come up with a plan to fund the rest of that initial segment. In April, U.S. DOT Secretary Duffy said the Federal Railroad Administration will “soon” complete its review of the $4 billion in federal grants the CHSRA received during the Biden administration. He suggested that if “what many people have reported on [this project] is true, we’re gonna pull the funding for this boondoggle endeavor.”
 
New Toll Roads Proposed in Fast-Growing Urban Areas
In three suburban areas in fast-growing Florida, North Carolina, and Texas, local demand for less-congested travel has led to serious proposals for new tolled corridors. In the exurbs of Orlando, the Central Florida Expressway Authority is considering a tolled connector between Orlando’s tolled beltway, SR 417, and the Orlando Sanford airport; Seminole County officials are supporting the idea. In Cedar Park, Texas, a northwestern suburb of Austin, the City Council has asked the Central Texas Regional Mobility Authority to assess the feasibility of an eight-lane tollway along the route of Ronald Reagan Blvd. And in Raleigh, NC, the Capital Area MPO and NCDOT are studying the potential conversion of Capital Blvd. (U.S. 1) to either a toll road or an expressway with express toll lanes.

Trump Executive Order Targets Certain State Climate Laws
In an E.O. titled “Protecting American Energy from State Overreach,” the order goes after state laws that seek to penalize energy companies for damage from emissions-induced climate change. For example, recent laws in Maryland, New York, and Vermont propose to tax fossil fuel companies retroactively for emissions that were legal in previous years. California and a number of other state governments are planning similar measures. Researcher Steve Goreham points out that the U.S. Constitution forbids ex post facto laws that seek to punish actions that were legal when they occurred. He notes that 22 states filed a lawsuit in February against New York’s retroactive legislation.

Texas County Needs to Replace Aging Toll Bridge
County commissioners in Galveston County, TX voted unanimously to eliminate San Luis Pass bridge tolls. But the 1966 bridge is in poor condition and needs to be replaced. So instead of self-financing it by keeping and increasing the toll rates (which only covered staffing costs for obsolete toll collectors), the Commission plans to seek federal funds to build the replacement. That way, all U.S. taxpayers (or their grandchildren) will pay for the new bridge, rather than those who use and benefit from it. This kind of moral hazard is created by “free federal money.”

New Zealand Plans Its Fourth Toll Highway
The new Tauriko West highway will almost certainly be tolled, reported the Bay of Plenty Times on April 24. The estimated cost is NZ$2.8-3.2 billion. Transport Minister Chris Bishop told the news service, “The reality is that roads have to be paid for.” New Zealand already has three toll roads, all on the more populous North Island, like this one.

New Report on California High-Speed Rail
With its very long history, controversial bond issue, and very large cost overruns and construction delays, it is hard for even transportation professionals (let alone journalists reporting for the general public) to keep track of this now nearly 30-year-old project. So, for those wanting to keep track, I can recommend a concise new report by transportation analyst Wendell Cox, commissioned by a national organization called Unleash Prosperity. I’m saving this report as a comprehensive reference document.

Correction to Previous Issue
In last month’s article, “Assessing U.S. Transportation’s Impact on Greenhouse Gas Emissions,” there was an error in the second paragraph. In listing global CO2 emissions by geographical area, based on Figure 2 in Prof. Polzin’s paper, I read the caption for Europe as 28.9%. That was incorrect. The caption on the pie chart read EU 28-9, which I reported as 28.9%. But the wording referred to the “EU-28” whose emissions were 9%. This error has been corrected in the online version of this newsletter.

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Quotable Quotes

“The Bipartisan Infrastructure Law [IIJA] did little to increase the root causes of the United States’ long-standing infrastructure unaffordability problem—excessive environmental reviews, labyrinthine permitting processes, and laws requiring that workers are paid prevailing wages—and, in some respect, worsened the crisis by adding new requirements. The permitting reform that was supposed to pass in parallel with the climate bill never became law. . . . Spending such a huge amount all at once without any steps to increase construction capacity led to even higher cost increases for building materials than was reflected in the overall inflation rate.”
—Jason Furman [former chair of the Council of Economic Advisers in the Obama administration], “The Post-Neo-liberalism Delusion—and the Tragedy of Bidenomics,” Foreign Affairs, March/April 2025

“Construction costs today are so inflated compared to pre-pandemic trends that it is unclear how the industry will recover, and the trend looks much worse for the large infrastructure projects targeted by some of the most important IIJA grant programs. Construction cost inflation will undoubtedly overshadow the IIJA’s legacy and could arguably consume the IIJA itself. By some metrics, U.S. infrastructure investment has even declined in real terms, despite the nominal spending boost from IIJA.”
—Michael Bennon, “Lessons from the IIJA: Inflation and Federal Infrastructure Legislation,” Public Works Financing, Feb. 2025

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The post Surface Transportation News: Can the Department of Transportation terminate New York’s cordon pricing program? appeared first on Reason Foundation.

Source: https://reason.org/transportation-news/can-the-department-of-transportation-terminate-new-yorks-cordon-pricing-program/