Office of Planning, Environment, & Realty (HEP)
Good afternoon or good morning to those of you to the West. Welcome to the Talking Freight Seminar Series. My name is Jennifer Symoun and I will moderate today's seminar. Today's topic is Projects of National and Regional Significance. Please be advised that today's seminar is being recorded.
Today we'll have two presenters, Tony Furst and Ed Strocko, both of the FHWA Office of Freight Management and Operations.
I'd like to go over a few logistical details prior to starting the seminar. Today's seminar will last 90 minutes, with 60 minutes allocated for the speakers, and the final 30 minutes for audience Question and Answer. If during the presentations you think of a question, you can type it into the smaller text box underneath the chat area on the lower right side of your screen. Please make sure you are typing in the thin text box and not the large white area. Please also make sure you send your question to "Everyone" and indicate which presenter your question is for. Presenters will be unable to answer your questions during their presentations, but I will start off the question and answer session with the questions typed into the chat box. Once we get through all of the questions that have been typed in, the Operator will give you instructions on how to ask a question over the phone. If you think of a question after the seminar, you can send it to the presenters directly, or I encourage you to use the Freight Planning LISTSERV. The LISTSERV is an email list and is a great forum for the distribution of information and a place where you can post questions to find out what other subscribers have learned in the area of Freight Planning. If you have not already joined the LISTSERV, the web address at which you can register is provided on the slide on your screen.
Finally, I would like to remind you that this session is being recorded. A file containing the audio and the visual portion of this seminar will be posted to the Talking Freight Web site within the next week. We encourage you to direct others in your office that may have not been able to attend this seminar to access the recorded seminar.
The PowerPoint presentation used during the seminar is available for download from the file download box in the lower right corner of your screen. The presentation will also be available online within the next week. I will notify all attendees of the availability of the PowerPoints, the recording, and a transcript of this seminar.
We're now going to go ahead and get started. Today's topic, for those of you who just joined us, is Projects of National and Regional Significance. Our presentation will be given by Tony Furst and Ed Strocko both of the FHWA Office of Freight Management and Operations. As a reminder, if you have questions during the presentation please type them into the chat box and they will be answered in the last 30 minutes of the seminar. And with that I'm going to turn it over to Tony Furst.
Good afternoon, and to those that are willing to join us on a Friday afternoon particular thanks. It will not be a 60 minute presentation. We hope to get through this in 30 minutes and open the floor to questions from you. This is the Final Rule on Projects of National and Regional Significance. I'd like to give a tip of the hat to Ed Strocko, who put in the leg work and all of the negotiating with the attorneys and the Office of Secretary and OMB to make it happen. The lion's share of the credit for making this thing go is Ed.
The background of PNRS was in Section 1301 of SAFETEA-LU. It established this program to fund the critical needs that you see listed here. It was $1.78 billion over five years. Projects are rated highly recommended, recommended or not recommended based on the selection criteria that was established in the legislation and eventually for regulation. It requires a report to Congress. Those are available, we put those out every February, although they don't always get out the door in February. They're prepared by February. All funds authorized by SAFETEA-LU were dedicated to 25 projects listed in the bill in section 1301. There was no money available to do any of the types of selection criteria we had talked about or mentioned in the legislation, but this rule making puts in place the regulatory framework to do that in the future should funding be available from Congress.
As I said earlier SAFETEA-LU required the establishment of regulations and a number of people asked while we were bothering to go through rule making when the fully allocated and earmarked in the final legislation. This program has a lot of potential going forward as a lot of the discussions revolve around freight in the next authorization bill. We have in place a very transparent open and above board process as to how to go and solicit, evaluate and rate projects should the money be available from Congress. These do not apply to SAFETEA-LU funding for the 25 designated projects. These have no affect upon any of those 25 projects. We looked for a lot of specific and detailed comments. We had two different notices of rule making on this to get feedback from the industry on what they thought we should be putting in the regulations. Those who have read through the preamble you'll see a lot of the comments we got. Some of them were very good and we incorporated them in to the rule making. There were some beyond the scope of the rule making and couldn't incorporate them. Read the preamble to the regulations. The preamble is key to understanding and interpreting the regulations and walking through the thought process we had within the Department and agency on how we were going to promulgate the final rule.
Some key points and then I'm going to turn it over to Ed for the particulars. The comments we got in the two notices of proposed rule making showed strong support for the program. Both the concept and the idea, people liked the transparency of the process and selection criteria for everyone to see straight up and above board. What we did is we took the most liberal and broad interpretation of eligibility as we could, given the constraints that we have that all the projects have to be title 23 eligible. We did take as broad reaching perspective of that as we could. A number of people wanted the highway trust fund dollars only spent on highways. But in keeping with what we believe is the intent of the projects of regional significance we made sure all the eligibility including title 23 was with the broadest interpretation as we could. I'll now turn it over to the person who did most of the leg work for this thing, Ed.
I'm going to go through some of the specifics on the eligibility and the criteria that are in the regulations now. Let's start out with the applicant. The law says that the grants for PNRS need to go to States. We had a number of comments requesting flexibility to include MPOs, transportation properties, and the private sector and we very much strongly encourage partnership and coordination, but because the law says states, we had to stick with states as the applicant. We encourage people to coordinate and include the private sector as well as some the local folks in making the projects. The other possible applicant is multiple states. We were able to stretch this to include multiple states, the only caveat there is we need a lead state because of the way federal code is written right now. As an example, Corridors of the Future, in that program where we're looking at corridor-wide efforts, and looking at freight which doesn't know any political boundaries and goes to where the markets and people are. We're hoping to see corridor and corridor coalition efforts when and if there's a solicitation for PNRS.
On the project cost eligibility threshold, we had a variety of comments ranging from reducing the threshold to raising it. Again, the legislative requirement was $500 million or 75% of the apportionment. About 32 states have an apportionment of less than $500 million. That would kick in there. Again, we allow the multiple state projects here. When we have a multistate project we would use the largest state's eligibility. When we have a project that's currently underway and it may not meet that threshold, we'd want to look at what the relationship and linkage with the project, how do they relate, is it logical to include those costs that have already been incurred to overcome that threshold? On the project availability, we had taken the broadest interpretation as possible to include everything that's title 23 eligible. We usually look at grant eligibility, but in this case we look at grant and loan eligibility. That would include highways in there or surface transportation improvements. When you look at the 1301 versus the 1302 sections of SAFETEA-LU, 1302 being the national corridor infrastructure improvement program, 1301 says transportation projects, 1302 says highway corridor. We looked for comments and expanded what a project could be. It's not just a single project but a compilation of projects put together in a program. The key here is that they are related somehow in a logical manner. They are closely aligned in time so that we're not funding one thing now and another thing 20 years down the road. It's a package interrelated. This goes back to the corridor piece. We don't want to solve one problem and five miles down the highway have a bottleneck. We need to address the entire corridor whether it's in a state or multistate. We need to ask: How do you get a package of funding together? How do you put performance measures together? How do you prioritize along a corridor to achieve national goal?
On eligible costs, the law says pretty much everything from NEPA to construction, comments on both sides of the fence here. Some folks only wanted construction, while some felt needed to get some funding up front. We left it as specified in the law and we also did add bond financing that was requested as allowed by law. That could be included in there. We felt that we couldn't just fund construction because of the amount of time it takes to get there in the amount of funding for these mega projects, so the funding can include PE. The way to go about that is to use advanced construction. The big thing is make sure you have FHWA authorization before incurring any costs. In the case of this program, you could use advanced construction, get the approval, do some of the NEPA work or PE and convert that to PNRS funds or if it wasn't selected you could convert it to another eligible federal aid category so you'll have federal reimbursement there.
On the evaluation, the law said that we should provide a grant when the PE is complete. As we are dealing with mega projects this could be a while. So we were able to give flexibility in doing a preliminary evaluation after development of concept plan. We would put it in the appendix of the annual report. Once PE was complete we would do a final evaluation and put it in the report and give a final rating and ranking. We hope this gives people insight as to how their project would rate and then give them the ability to change course, make changes as they complete PE. If a project is not selected, it stays there until the next solicitation and then an applicant can submit a letter saying we want to go with our application or revise it and here's a new application. We also want to give the flexibility to states to withdraw. We'll let them know before we put anything in the report as to their rating and if they choose to withdraw we'll say withdraw and not give them a high, medium or low ranking there.
On the rating highly recommended, recommended, not recommended and withdrawn. We're not going to rank within categories. Just within those categories. Selection is done by the Secretary of US DOT. The vehicle for making grants is the Full Funding Grant Agreement. We had a couple comments on can you provide a loan guarantee or tax credits instead of a grant? The vehicle of this is a Full Funding Grant Agreement. This does not mean that the complete package is a Full Funding Grant Agreement. You could have TIFIA in there. We will be more happy to coordinate that as a package with the TIFIA office, with SEP15 or streamlining. There's comments that these projects should automatically be included in these other programs. We looked into that but because the requirements are different and each of these projects is likely to be unique, doing that wouldn't be in the best interest. Not everybody is going to need to go in to a streamlining program because they've already completed their NEPA process. They might not need a TIFIA loan. They might not be doing anything that requires a SEP15.
On the selection criteria, we tried to stick closely to what was in SAFETEA-LU. No surprises. We relied on the comments. We went out twice to get as many comments as possible. It's very important that it be transparent, understandable and predictable. It's designed as a framework and basis for which decisions will be made. We didn't want to get into the weeds in the regulations with a lot of specifics that may or may not be applicable but we wanted to set out a clear framework that everybody understood and that everybody was on an equal playing field. We didn't want to specify any specific model that needed to be used, we wanted people to use industry standards when they are doing their evaluations. We'll put the onuses on us to check those. The data we should be looking for is publicly available data or public data. We need to be able to see what went in to those. We don't want any black boxes and not understand what's going on. We're not going to specify a data source either.
As mentioned before, the program is set up to do solicitations, most likely on an annual basis. I don't know what the timing will be, although funding is committed until 2009. I don't know what will happen in the next authorization or if there will be a continuing resolution and if that would free up any funds. In the past that hasn't been the case. It went to apportioned programs. Who knows what the future holds. The important thing on the solicitation is it provides the focus. It tells people where we want to go, what's important, what the points and weighting would be for that particular year and what procedures would be. That's where we'll find all the details.
Some of the specific selection criteria I'll go through now. The first one is economic benefits. The program is about increasing throughput, reducing congestion. When looking at the economic benefits, that's the direction we're leaning towards. We understand that creation of jobs on a construction project and creation of economic development are important as well. Our main thrust here is solving the current congestion problem. Impacts to GDP, the important of freight and passenger travel served. You can see some of the different elements on the bottom of the page there. The demographics and economic areas served. There were a lot of comments on cost benefits analysis. As was noted on the previous page we're not going to specify the specific cost model to use or if it's going to be a formal CBA or something else. There are a couple of parameters we put out there. We want to see build and no build scenarios, understand the private cost and benefits. We suggest you consider using some of our freight CBA tools we developed, not only for this but for projects in general. That looks at the secondary benefits from a highway project to the freight community, the shippers, some things that are not captured in a cost benefits analysis. We have the FTAT or the Freight Technology Assessment Tool that evaluates technology and it's performance.
Moving onto some of the other selection criteria on the congestion. We're looking at how effective the mitigation is that's proposed. Travel time reliability. How we're going to reduce congestion. What the impacts are there.
On safety. Pretty straightforward and well known ones, we look at safety, crashes, injuries, fatalities. The consistency with the state's strategic highway plan.
We took a a different direction with regard to national transportation system enhancements. When we got the comments in, we saw a wide range of comments from crossing the border, international border crossings, crossing natural boundaries, canyons, rivers, security. The list grows longer and longer. In each state and area the context is going be specific to what was of national significance. So we left this flexible for the states to define but the underlying message here that needs to involve improve throughput no matter what it is.
On project development, as stated in the law, it needs to be based on results of preliminary engineering and there also needs to go through statewide planning process. So a number of comments came in questioning that. We think that if you can get through the statewide planning process complete PE and put a funding package there's probably political and institutional support for the project.
On technology, important to consider using the FTAT. Although this is an infrastructure program we want to make sure we're maximizing the operations and operations within the project. We don't have the funding nor the right of way to continue to accommodate everybody from 8 to 5. We need to know how we can use the existing infrastructure more efficiently and we want to see that in applications.
The environment covers a broad range of air quality to water quality to land use.
On the funding piece, we need to have stable, reliable commitments from the non-federal side. We wanted to see this leveraging the federal funding, although it's an 80/20 program. We see this more of a gap financing where you put a package together of public and private funding, use the apportioned funds that you already have. This can fill in the gap to take you over the top.
As far as public and private costs, there is an NCFRP project out there right now. Project number five is looking at a framework and tools that might be a benefit down the road as we look at the tools necessary to figure out the costs. All the projects we are having go through financial and management plan as we usually do for mega projects. This is 23USC106.
I think with that, we'll end it and open it up for questions.
There are two questions typed in. One asks about a link to the rule.
It's under FHWA Office of Freight Management and Operations website and it's under the freight infrastructure page there.
Another person has asked about where they can find the cost benefit tools that you mentioned.
The FTAT tool is on the Freight web site under operations and technology section and the highway logistics reorganizational benefits tool is under the economic studies. There is a logistics reorganizational benefits tool is excel spread sheet you can download.
We'll send out a follow up email with these links.
Looking at the PNRS Timeline, when will project funds begin to be distributed?
T. Furst/E. Strocko:
Well for the 25 projects currently in SAFETEA-LU, those project funds are already being distributed to the vast majority of the projects. There is no additional funding yet for any new solicitations. That will be entirely dependent upon what Congress wants to do on the next authorization bill. We have a framework that is ready to go, no funding behind it yet. We hope in the next bill this program will continue and funding put to it by Congress and we can exercise this regulatory framework to evaluate and suggest projects for funding.
Could this be used with other federal programs as well?
T. Furst/E. Strocko:
Yes. It can be. It can be used with other Federal Highway funds. Federal Highway apportioned funds can't be used as a non-federal match, although if you did get private activity funds you could use that as the non-federal match. You can mix and match funds in here. Again, we see this more as the gap funding piece that you would apply other federal funding first and then this would come in to complete the project.
We made that determination in the rules that federal loan programs do not qualify as a federal match. They can be considered non-federal funds because you have to pay the loans back.
The program is set up as many of our programs are 80/20 with 20% non-federal match there.
What are the 25 projects or is there a place where these projects can be found?
T. Furst/E. Strocko:
The projects can be found on our website on freight infrastructure. It's also listed in section 1301 under SAFETEA-LU under section M.
At this point only 50 States, DC, PR are eligible for funds, however, the major BRAC shift to Guam puts transport infrastructure improvements into realm of national significance. What options are open under PNRS for GU in the future
T. Furst/E. Strocko:
That's one we'll go ahead and research. We'll research that and get back to you.
What is the status of the FY '09 funding distribution?
T. Furst/E. Strocko:
We're waiting for a budget and we'll probably be sending out the funding allocations for the 25 projects after the first of the calendar year.
Can you explain how the FFGA applies within the PNRS program as opposed to the New Starts Program? Within New Starts my understanding is that the FFGA guarantees funding for the entire project through a series of appropriations. PNRS does not seem to work this way.
T. Furst/E. Strocko:
The concept is the same. The language in SAFETEA-LU appears to be drawn from the original New Starts language and the Full Funding Grant Agreement would be for fully funding a project. If we are going to be funding something that's outside of an authorization, we cannot make an obligation so we would be writing a letter of future intent but we cannot commit to things down the road. It would be similar in how it would function. The concept is, let's not just piecemeal project, let's fully fund the project. The projects in the program right now that have received funding, although very large earmarks, the projects are billion dollar projects and that doesn't really help move a project along. If there are a couple of bridge projects there and the bridge is a billion dollars you can't build 30 feet of the bridge. All or nothing. You need to be able to complete the project.
Will this program increase private sector funding?
T. Furst/E. Strocko:
It is our hope that it would. To the extent that localities and state DOTs can bring funding packages to make major transportation investments, it is our expectation and hope that they can put together funding programs. Ed has already described we see PNRS the last link in the change to make the project whole.
That is one of the things that is evaluated and public/private partnerships come in a variety of flavors.
Would railroad projects be eligible as a way to alleviate hwy. congestion if partnering with a state?
T. Furst/E. Strocko:
Title 23 eligibility is the criteria that we have to go to. If you are in a non-attainment area, my understanding is can be used for these types of projects. So under PNRS those projects would be eligible. You're going to have to meet some of the requirements that are contained within the programs that identify the eligibility that's broad reaching.
Same with TIFIA railroad projects are permitted if it's a highway and a public benefit can be demonstrated.
In Section 505.9(a)(4)(i) paragraph 2, the rule defines 'region' as "based on (1) Origin and destination patterns of traffic using the facility. But facility-level O-D information isn't typically available. Is there an expectation that any future application would develop O-D info at the project level?
T. Furst/E. Strocko:
Barbara I can always count on you to get down to the details and look at the specificity of this thing. We have been working with a number of states to aquire local and state data so you can get down to the project level activity. It is not at this project level capability. We have had a number of projects underway with four different states on the east coast and southern region to put together local data collection that would allow you to do that. We have an effort under way to put together a state commodity flow survey. The hope is that as we move forward in the future we would be able to put together a number of methodologies for exactly this type of level decision making.
Will this approach favor larger projects over smaller projects?
T. Furst/E. Strocko:
In the corridor approach, there could be a number of types of projects that could free up corridor improvement. The concept is you look at the entire corridor and you see where it is the pinch points are. A very small project could have huge benefits in unlocking the movement of freight through that door too. I'm not going to say it's large or small specific. Whatever you can do to improve throughput to include operational improvements and work with the private sector to think about business operations, it could work.
Does Title 23 eligibility extend to operations improvements? For example, would a multistate operational package be eligible?
T. Furst/E. Strocko:
We don't have anything typed in at the moment. We'll go ahead and open the phone lines and see if there's any questions over the phone.
Thank you. We will now begin the question and answer session. If you would like to ask a question press star one. To withdrawal press star two. One moment.
At this time we have no questions.
Okay. Another one did come typed in. If a State is partnering with municipal and/or private entities, can PNRS funding be passed through to these entities for project implementation?
T. Furst/E. Strocko:
Yes as other federal aid programs work, states can make sub grants to other organizations, institutions, as long as they follow federal regulations.
Are there any special provisions to make it easier for isolated states, such as Hawaii and Alaska, to meet the requirements?
T. Furst/E. Strocko:
No, everybody is on an even footing. All states can apply. The trick is, you have to identify national or regional significance. I think national significance would be a bit of a challenge but regional I think could be demonstrated.
Well you have both my contact information and Ed's contact information. If you have any questions as you read through the preamble or the regulations, please don't hesitate to contact us. Again, the take aways from this is that we now have in place a regulatory framework that is transparent, straightforward on how to solicit, evaluate and selecting projects of national significance. The selection criteria are in the regulations. In the solicitations we would put out the weighing criteria for the selection criteria and what the intent was in each regulation. So again, when we start soliciting the July solicitation we will also include an awful lot of information in conjunction with the regulations.
We do have one more question. Do you think this rule will be the basis of future criteria used by the new administration?
T. Furst/E. Strocko:
Well I think we hope it will be the criteria for the next program, if it gets funded by Congress. I think a lot of the criteria that we look at in corridors of the future is reflected in a lot of what you see in these final rules. We will see what the next bill will present. We'll put it that way.
Okay. I think that's all we have for today. Tony and Ed's contact information is up there if you want to contact them. I do want to remind everyone that we have another seminar on November 19th on freight and land use. Please register for that one if you haven't done so already. Thank you everybody for attending and the recording will be available soon. I'll send out an email once it becomes available. Enjoy the rest of your day!