August 18, 2010

Credit Assistance for Surface Transportation Projects

Proposed Rule
Summary

Score: 17 / 60

Additional details
Agency
Department of Transportation
Regulatory Identification Number
2105-AD70
Agency Name
Department of Transportation
Rule Publication Date
01/21/2009
Comment Closing Date
03/23/2009

RULE SUMMARY

Recent changes to the Transportation Infrastructure Finance and Innovation Act (TIFIA) statute require changes in the TIFIA rule. In addition, the DOT has gained substantial administrative experience since the TIFIA rule was last amended in 2000. The DOT proposes to amend the TIFIA rule to implement the recent statutory changes and to incorporate certain other changes to the rule that it considers will improve the efficiency of the program and its usefulness to borrowers. In addition, the DOT seeks comment on policy issues with potentially significant impact on the TIFIA project selection process.

 

METHODOLOGY

There are twelve criteria within our evaluation within three broad categories: Openness, Analysis and Use. For each criterion, the evaluators assign a score ranging from 0 (no useful content) to 5 (comprehensive analysis with potential best practices). Thus, each analysis has the opportunity to earn between 0 and 60 points.

Criterion Score

Openness

1. How easily were the RIA , the proposed rule, and any supplementary materials found online?
RIN 2105-AD70 can be found on regulations.gov using the RIN and a keyword search. The Department of Transportation's website includes links to regulations.gov and the Transportation Equity Act for the 21st Century but is not updated to include a direct link to this particular rule.
3/5
2. How verifiable are the data used in the analysis?
Few data are used; there are no projections of the future costs or benefits of the program, the proposed changes, or alternatives. Data cited are sourced and linked.
3/5
3. How verifiable are the models and assumptions used in the analysis?
Very few models/assumptions are used due to the paucity of analysis. A few authoritative sources are cited on the cost of transportation delay and the economic benefits of transportation investments. On the otehr hand, there are no descriptoins of, or citations to, specific studies that show how the TIFLA program can specifically "reduce congestion, increase mobility, improve safety and enhance the environment and economic growth."
2/5
4. Was the analysis comprehensible to an informed layperson?
The document is relatively readable, but there is very little analysis to read.
3/5

Analysis

5. How well does the analysis identify the desired outcomes and demonstrate that the regulation will achieve them?
2/5
Does the analysis clearly identify ultimate outcomes that affect citizens’ quality of life?
New investment in transportation and the economic productivity gains result from efficient transportation investments. It also identifies spillover benefits, "such as reduced pollution, increased safety, improved international competitiveness, and enhanced accessibility."
4/5
Does the analysis identify how these outcomes are to be measured?
The proposal hints at some potential measures. The RIA cites a September 2003 study which estimated that average annual returns on highway investment of approximately 14 percent between 1990 and 2000. The DOT's continued research on highway capital investment for the 2000–2005 shows positive returns but lower than the 1990–2000 time period. Further, the RIA includes figures describing traffic congestion patterns. DOT currently assigns scores to projects based on their perceived ability to generate various benefits. This information is used for project selection, not to measure the benefits the projects actually produce. No discussion of direct measurement of outcomes.
2/5
Does the analysis provide a coherent and testable theory showing how the regulation will produce the desired outcomes?
The proposal would expand eligibility to smaller projects, broaden categories of eligible projects, and make a number of changes intended to simplify and clarify the program. So presumably it would produce more of the stated benefits by making more projects eligible, but the proposal does not explicitly say this.
2/5
Does the analysis present credible empirical support for the theory?
No empirical demonstration of how the program has produced outcomes in the past or will produce them in the future.
0/5
Does the analysis adequately assess uncertainty about the outcomes?
No relevant discussion.
0/5
6. How well does the analysis identify and demonstrate the existence of a market failure or other systemic problem the regulation is supposed to solve?
1/5
Does the analysis identify a market failure or other systemic problem?
The RIA does not specifically mention that a market failure or other systemic problem exists in the provision of credit assistance to surface transportation assistance. The analysis would need to start by explaining how the Transportation Equity Act for the 21st Century (TEA-21), which established TIFLA, solves a systemic problem. The proposed rule says TIFLA could fill "market gaps," thereby leveraging additional capital from private markets. No specific explanation for why federal intervention would help develop the nation's economy and attract new investment capital better than private efforts is given.
1/5
Does the analysis outline a coherent and testable theory that explains why the problem (associated with the outcome above) is systemic rather than anecdotal?
The RIA states that the TIFLA program was established to provide fractional credit assistance to major transportation infastructure projects that have the potential of generating substantial economic benefits both regionally and nationally. The problem is merely asserted, and even then only by implication—since the program seeks to make some projests happen that would not otherwise happen, it must be solving a systemic problem.
1/5
Does the analysis present credible empirical support for the theory?
The proposal cites some research suggesting that transportation delays are costly, but does not really relate these facts to the need for this particular program or the proposed changes.
0/5
Does the analysis adequately assess uncertainty about the existence or size of the problem?
No relevant discussion.
0/5
7. How well does the analysis assess the effectiveness of alternative approaches?
1/5
Does the analysis enumerate other alternatives to address the problem?
Neither the proposal nor the analysis consider alternatives to the major pieces of the proposal. The proposal solicits comment on two alternative ways of incorporating benefit-cost analysis into project selection decisions.
2/5
Is the range of alternatives considered narrow (e.g., some exemptions to a regulation) or broad (e.g., performance-based regulation vs. command and control, market mechanisms, nonbinding guidance, information disclosure, addressing any government failures that caused the original problem)?
Virtually no alternatives are considered; the two DOT seeks comment on are small variations.
2/5
Does the analysis evaluate how alternative approaches would affect the amount of the outcome achieved?
There are no calculation of outcomes at all.
0/5
Does the analysis adequately address the baseline? That is, what the state of the world is likely to be in the absence of federal intervention not just now but in the future?
There is no description of what the state of private sector capital investment would be like without the help of TIFLA itself or the proposed changes to TIFLA is given.
0/5
8. How well does the analysis assess costs and benefits?
1/5
Does the analysis identify and quantify incremental costs of all alternatives considered?
The Paperwork Reduction Act section states that DOT has never received 10 or more applications for Federal Credit Assistance per year. The analysis notes that this program has provided $4.8 billion in credit assistance at a subsidy cost to the government of $346 million. Total amounts of congressional authorizations are mentioned, but there is no breakdown into costs already incurred vs. costs that will be incurred in the future. There is no calculation of projected future costs, or how costs will change as a result of the rule changes.
1/5
Does the analysis identify all expenditures likely to arise as a result of the regulation?
See above.
0/5
Does the analysis identify how the regulation would likely affect the prices of goods and services?
The proposal mentions that DOT currently charges the Treasury interest rate on all loans, and inquires whether DOT should adopt risk-based pricing. The analysis mentions that "transportation improvements lead to increased productivity and economic growth through improving access to goods and services for businesses and indivduals" but gives no explicit explanation of how federal efforts via TIFLA will improve the flow of goods or what effect that will have on their prices.
2/5
Does the analysis examine costs that stem from changes in human behavior as consumers and producers respond to the regulation?
No relevant discussion.
0/5
If costs are uncertain, does the analysis present a range of estimates and/or perform a sensitivity analysis?
No relevant discussion.
0/5
Does the analysis identify the alternative that maximizes net benefits?
Neither benefits nor costs are calculated.
0/5
Does the analysis identify the cost-effectiveness of each alternative considered?
Neither benefits nor costs are calculated.
0/5
Does the analysis identify all parties who would bear costs and assess the incidence of costs?
The analysis notes that the "proposed regulation would affect only those entities that elect to apply for TIFIA assistance and are selected to receive a Federal credit instrument. It would not impose any direct costs on non-participants." Loan subsidy costs are clearly borne by federal taxpayers. The proposal notes that the federal government only provides partial funding so that the private sector has to put up the rest of the money. A few statistics are cited, but there is really no systematic analysis of cost incidence.
2/5
Does the analysis identify all parties who would receive benefits and assess the incidence of benefits?
"The analysis mentions spillover benefits, which may yield financial and nonfinancial benefits, sucha s reduced pollution, incresed safety, improved international cmpetitiveness and enhanced accessibility. No discussion of the incidence of these benefits is given. "
1/5

Use

9. Does the proposed rule or the RIA present evidence that the agency used the analysis?
There is no analysis to use.
0/5
10. Did the agency maximize net benefits or explain why it chose another alternative?
Net benefits are not calculated, and there is really no analysis to use.
0/5
11. Does the proposed rule establish measures and goals that can be used to track the regulation's results in the future?
No goals/measures are specified, and there is no analysis that could be used to establish goals and measures.
0/5
12. Did the agency indicate what data it will use to assess the regulation's performance in the future and establish provisions for doing so?
The analysis notes that DOT must submit biannually a report to Congress on the financial performance of the projects this program funds. One of the main proposed changes to the TIFLA project selection process is the use of benefit- cost analysis in selecting projects for TIFLA Assistance. If implemented, benefit-cost analysis could "maximize the rate of return on Federal runds invested in transportation projects," as stated in the proposed rule. Other changes could very well be used to asses the regulation's future performance but the analysis gives no discussion of how that might happen.
1/5
 
Total 17 / 60