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Remarks by Gregory Nadeau, FHWA Administrator

AASHTO Annual Meeting

Boston, Massachusetts

Tuesday, November 15, 2016

Transition

Last week, the electoral process concluded and the result was the election of Donald Trump as our next president. The day after the election President Obama said following a reference to the success of the Bush transition to his presidency, “Because we are all rooting for his success in uniting and leading the country. The peaceful transition of power is one of the hallmarks of our democracy. And in the next few months, we are going to show that to the world.”

Secretary Foxx has made it clear that he is committed to that ideal, as am I.

USDOT and FHWA have already been hard at work preparing for the transition. One of the best and most important decisions I’ve made as Administrator was recommending Butch Waidleich for FHWA Executive Director to Secretary Foxx’ for his approval.

He has been assigned the responsibility of leading our force of career professionals to support the President and President-Elect, and the President-Elects Transition Team (PETT) in preparing to transition our agency and the Federal Aid Highway Program to a new administration. I know Bud has offered AASHTO’s support to assist the new administration as well.

Given the President-elect’s statements regarding his intention to pursue a $1 trillion infrastructure investment program, it’s critical that we transition an efficient and effective surface transportation project development and delivery system, particularly for federal programs like the FAHP, transit and the new freight initiatives. These are critical conduits to deliver a program of that scale to America’s communities and the American people.

INTRODUCTION

Normally, I’d start by simply saying what a pleasure it is to be here representing Secretary Foxx and everyone at FHWA.

And while it is, indeed, a pleasure to be here and to represent the Secretary, it’s obviously a bittersweet occasion for me as well.

The last eight years have been an amazing time for me personally and professionally.

I’m pleased to say the relationship in our federally assisted, state-administered program has never been stronger – thanks to Bud’s leadership, thanks to each of you and thanks to the commitment of all of the good people at FHWA.

I’d originally intended to use this meeting to give you a progress report on where a number of ongoing initiatives stand that we’ve worked together.

But I’d rather start by focusing on some important accomplishments, rather than just a list of things in progress.

And, more importantly, I’d like to look ahead to discuss how the things we’ve achieved together will prepare our industry as it moves forward.

So here are a few of our “greatest hits” from the last eight years:

ACCOMPLISHMENTS

Safety – We joined with you in pursuing new, innovative approaches to improving safety – our Number One priority. The Highway Safety Improvement Program has been extremely successful, and the new version of the program will have an emphasis on performance management.

Two recently published regulations that have been updated to meet FAST Act requirements will advance the data-driven approach to making safety decisions and improve collaboration among all safety partners.

And USDOT’s partnership with AASHTO and other stakeholders in the Road to Zero initiative will provide everyone with a path toward eliminating traffic deaths.

Recovery Act – As the nation struggled through the worst economic crisis since the Great Depression, we worked with you to distribute more than $27 billion in Recovery Act funding to more than 13,000 road and bridge projects. At the beginning, I was on the receiving end of the program as Deputy Commissioner at MaineDOT.

This unprecedented cooperation during extraordinary times helped us tackle two of the nation’s greatest challenges – rebuilding our infrastructure and putting tens of thousands of people back to work.

As President Obama said at the time, we helped rebuild America’s economy by re-building America!

Two transportation bills – During the life cycle of this Administration, we’ve worked with you to successfully implement two major transportation bills – MAP-21 and the FAST Act.

Each – in its own way – has had a major impact on our industry.

MAP-21 was a transformative policy framework, taking us squarely into the world of performance measurement and putting in place a system for directing our investments and giving the public a clear view of what it’s getting for that investment.

But, it did not address the long term sustainable funding need.

And the FAST Act provided states with five years of funding at a slight increase over previous levels. But it did not address the long term sustainable funding challenge.

As Secretary Foxx and members of congress on both sides of the isle have said, the bill is only a down payment on the transportation infrastructure critical to safety and the economic growth of the nation.

Every Day Counts – I take great personal pride in highlighting our innovation partnership, Every Day Counts.

In the seven years since FHWA and AASHTO launched this partnership, we’ve established a regular cycle for considering and rapidly deploying innovation.

We’ve created with you a mechanism for making sure the innovation pipeline remains full.

And we’ve worked together to create a nationwide STIC network that will ensure the culture of innovation remains a permanent part of the FAHP.

All of this outstanding work was recognized by Congress when it wrote Every Day Counts into law.

It was a crowning achievement and a source of pride for all of us.

STILL UNDERWAY

So we’ve accomplished a lot together – and that list is just the tip of the iceberg.

There’s also a lot of important work still underway.

For example, we’re working to respond to the comments we received this summer in order to develop the National Multi-modal Freight Network.

The Department also continues to work on a National Freight Strategic Plan -- striving to respond to what we’re hearing from states and other stakeholders across the country.

We also encourage you to get involved in the process of nominating alternative fuel corridors.

About a week ago, we announced 55 routes in 35 states and the District of Columbia that will serve as the basis for a national network of electric vehicle, hydrogen, propane and natural gas fueling corridors.

We’re going to continue the designation process on a rolling basis, so it’s very important the state DOTs are involved in the process of developing additional nominations.

Finally, I want to salute you for the tremendous progress you’ve made in completing your ADA transition plans.

31 states now have plans that meet regulatory requirements.

And we’re making progress toward having 100 percent of the plans in place by 2018.

This wouldn’t be happening without the commitment and dedication of the states and your understanding of how important it is that our public rights-of-way are accessible to all Americans.

The transition plans play a critical role in that effort – and FHWA is eager to work with you to reach the 100 percent mark!

SHARPENING THE AXE

Now, as an industry, it’s time to build on the impressive work we’ve done – and continue to do – to prepare our system for the future.

You’re well aware of our Beyond Traffic report and what it projects for our nation – how we’re going to be home to 70 million more people and need to move 45 percent more freight by 2045.

So our challenge is really quite simple: To build on what we’ve accomplished so we’re ready to meet the demands that projected tsunami of people and goods will present.

Failure is not an option.

That type of demand will choke our system, stifle our economy and diminish our quality of life unless we have the infrastructure to support it.

But if we plan and invest wisely, at a much higher level, it can have the opposite effect – boosting our economy and helping our society thrive to the benefit of our children and grandchildren.

I’m confident we’ll make the right choice.

Frankly, I believe we’ve done a lot of the hard work already – following the advice of no less a figure than Abraham Lincoln.

I know many of you have heard me tell this story, but it’s worth repeating and – I believe – very appropriate.

Lincoln said if he had six hours to chop down a tree, he’d spend the first four hours sharpening the axe.

In his homespun way, Lincoln was reminding us that preparation lays the foundation for success.

As a transportation community, we’ve sharpened the axe in many ways – like the ones I mentioned a moment ago: advances in safety, the ability to measure performance and the way we’ve institutionalized the commitment to innovation.

Freight planning and the preparation of our infrastructure to accommodate alternative fuel vehicles will continue that process.

FUNDING/USER FEE

Now it’s time to use that sharpened axe to advance the policies and deploy the resources our system truly needs – not just the resources we can find at the expiration of the next reauthorization clock.

Let’s focus for a minute on the question of resources and how we can broaden the user fee discussion beyond just increasing the gas tax, which clearly has not been embraced at the federal level over the last 23 years.

All you have to do is look at our TIGER and FASTLANE grant programs to see the tremendous unmet need for transportation investment in this country.

As the people on the frontlines, you know the situation all too well.

Grant applicants routinely ask for ten or twenty times more money than we have available.

We’re currently accepting applications for the second round of FASTLANE grants – and we expect similar demand.

There’s no doubt we face what Secretary Foxx calls a “massive” funding gap.

How massive is it?

Many of us have weighed in with projections about the size of the gap, and there’s a certain degree of consensus about where things stand.

Our yearly Conditions and Performance Report projects that the United States needs to invest $1.7 trillion over the next ten years to maintain, improve and expand our system.

You, as well as ASCE, put the figure at $2 trillion, the difference being some calculations include railroads.

Whichever set of numbers you accept, the word “massive” certainly still applies.

ASCE’s framing of this issue is particularly compelling. In their report entitled, “Failure to Act”, they present their numbers in the context of an “investment gap”.

  • Cost to the economy – $3.9 trillion
  • Investment need over ten years – $2 trillion
  • Amount funded under current policies – 46% or $1.1 trillion unfunded.

Given the size of the investment gap, the Secretary has been advocating for what he calls an all-encompassing approach to filling it.

He says we don’t have the luxury of being “single-minded” in our search for funds, but instead need to consider what he calls “all-of-the-above” solutions – including more involvement by the private sector.

As he puts it, no one builds a road or bridge BY themselves or FOR themselves.

We build things together because they’re important to everyone.

And so the funding solutions need to involve everyone as well – including private investors -- who benefit, like the rest of us, from a safe, sound infrastructure that encourages mobility and supports the economy and the creation of jobs.

In the FAST Act, Congress set up the National Surface Transportation and Innovative Finance Bureau, known as the Bureau for short.

The Bureau is the proverbial one-stop-shop for people looking for advice and assistance in project funding.

But just as importantly, it sends a signal that America is open for business and that we’re looking for the private sector to help invest in our infrastructure.

We also need to re-visit a proposal we included in the GROW AMERICA Act that this Administration sent to Congress several years ago.

In GROW AMERICA, we proposed supplementing the gas tax with a tax on the foreign earnings of US companies – otherwise known as repatriation.

Congressional leaders from both parties said variations on this basic conception were worth considering.

In today’s polarized environment, that’s a glimmer of hope. But make no mistake about it, in my judgement a broader application of the tax code will have to be applied to maintain adequate levels of resources in the Trust Fund of the future. This remains our greatest challenge.

But I don’t want to make it sound like we value private involvement only for its revenue and investment potential.

The private sector also has a role to play as a valuable source of information and a partner in the planning process.

We got a lot of interesting and important input from the manufacturing, shipping and logistics communities during my series of freight economy roundtables.

I want to thank Bud and all the CEOs who joined us at one or more of these sessions.

They were very informative dialogues among all freight stakeholders.

In every city we visited, we heard about the challenges people face – the chokepoints and bottlenecks that drain so much time and money out of our economy.

One issue that emerged from the roundtables was the shortage of truck parking, which the industry itself ranks as one of its top concerns.

I want to urge you to consider using some of your new formula funding to help address capacity shortages in your state in partnership with the trucking industry.

This is an important part of our commitment to safety – not only for the nation’s truckers, but for the people who share the road with them.

The other thing I want to mention from the roundtables is the issue of planning.

State freight plans are going to be critical in aligning future state and federal transportation investment with the true freight needs of your state and region.

I encourage you to work with our Division Offices to make sure your freight plan will meet federal requirements, so you can continue to use the new freight formula funding after December 4 of next year.

DEFINITION OF LONG-TERM

Along with revenue, the other big national issue that needs to be addressed is timing.

We all want long-term funding certainty, and you surely need to know when you start a project that the money will be there to get it over the finish line.

Even with the progress we’ve made to shorten project delivery through process and technology innovations, it still takes years to get a project from the idea stage through completion.

So it may be time to re-define what we mean by “long-term” funding.

MAP-21 was a two-year bill, but its impact was felt more on the policy side as I mentioned earlier.

The FAST Act is a five-year bill and has been hailed as the first long-term transportation bill in a decade.

But, with our system facing such tremendous needs, will five years continue to meet the definition of “long term”?

Is it time to re-define what that really means, especially when we already have a good sense of what we’ll be facing 30 years from now?

Just for comparison, I was in the Netherlands earlier this year to meet with my Dutch counterpart, Jan Hendrik Dronkers.

He already knows the level of basic investment he’ll have available through 2028!!

That may be asking too much in our political system.

And the size of the Dutch system is a fraction of ours.

But I do think we need to start thinking beyond five years and adjusting our timeframe to something that better reflects the project delivery process, but that also makes sense politically.

We should periodically review our policies every few years and a five year cycle is a reasonable interval.

But it is quite possible to establish a tax policy that can create certainty and predictability for deposits into infrastructure trust funds from a broad array of economic activity. We need 10 to 15 years of certainty for planning and strategic investment purposes.

CONCLUSION

These are a couple of issues – resources, timing – we need to tackle as an industry in the years ahead.

But as I said at the beginning, as we go about that work, we’ve already worked together to sharpen the axe in several key areas:

  • Innovative, data-driven approaches to addressing our Number One priority – safety;

  • A performance-based structure for targeting investment.

  • The FAST Act moving us toward a longer time frame and making a down payment on funding.

  • And Every Day Counts like approaches to continually earn the confidence of policymakers and the public through our commitment to getting the greatest value for every dollar invested.

Now it’s time to take that preparation into the future and build a system based on sufficient funding and a longer horizon.

I thank you for the work we’ve done together.

And while my time as FHWA Administrator is winding down – I look forward to what the future holds for all of us – and for our children and grandchildren.

Thank you very much!

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