Federal-Aid Highways: Federal Requirements for Highways May Influence Funding Decisions and Create Challenges, but Benefits and Costs Are Not Tracked Page: 2 of 62
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Accountability. Integrity. Reliability
Highlights of GAO-09-36, a report to
Why GAO Did This Study
As highway congestion continues
to be a problem in many areas,
states are looking to construct or
expand highway projects. When a
state department of transportation
(DOT) receives federal funding for
highway projects from the Federal
Highway Administration (FHWA),
the projects must comply with the
National Environmental Policy Act
(NEPA), the Davis-Bacon
prevailing wage requirement, the
Disadvantaged Business Enterprise
(DBE) program, and the Buy
America program. While
complying with these requirements,
states must use limited
transportation dollars efficiently.
As requested, GAO addressed (1)
the types of benefits and costs
associated with these requirements
for federal-aid highway projects;
(2) the influence of these federal
requirements on states' decisions
to use nonfederal or federal funds
for highway projects; and (3) the
challenges associated with the
federal requirements and strategies
used or proposed to address the
challenges. To complete this
work, GAO reviewed 30 studies,
surveyed DOTs in all states and the
District of Columbia, and
interviewed transportation officials
and other stakeholders.
The Department of Transportation
should re-evaluate the Buy America
threshold and the DBE personal
net worth ceiling, and modify them,
if necessary. The Department of
Transportation provided technical
comments on the report, but took
no position on the
To view the full product, including the scope
and methodology, click on GAO-09-36.
For more information, contact David J. Wise
at (202) 512-2834 or email@example.com.
Federal Requirements for Highways May Influence
Funding Decisions and Create Challenges, but
Benefits and Costs Are Not Tracked
What GAO Found
Several of the studies GAO reviewed describe the benefits of environmental
requirements for highway projects, such as better protection for wetlands, but
none attempted to quantify these benefits. Some studies quantified certain
types of environmental costs, such as costs for administering NEPA. In
general, however, quantitative information on environmental benefits and
costs is limited because states do not generally track such information.
Several studies attempted to quantify the benefits and costs of the Davis-
Bacon prevailing wage requirement; however, these studies did not focus on
transportation projects specifically. Furthermore, while the studies reviewed
did not identify the benefits of the DBE program, transportation officials
identified some benefits of the program, such as providing greater
opportunities for DBE firms. One study we reviewed identified the benefits of
the Buy America program, including protecting against unfair competition
from foreign firms. The studies reviewed also identified, and in some cases
quantified, the costs of the DBE and Buy America programs, including
administrative costs and the use of higher priced iron and steel in projects.
Of the 51 state DOTs GAO surveyed, 39 reported that, in the past 10 years,
federal requirements had influenced their decision to use nonfederal funds for
highway projects that were eligible for federal aid. Thirty-three of these state
DOTs reported that NEPA factored into their decision to use nonfederal
funds, while the other three requirements GAO reviewed were a factor only in
a few states. State officials said that they use nonfederal funds for certain
projects to avoid project delays or costs associated with the federal
requirements or because of other factors, such as requirements imposed by a
state legislature. A state's funding decision may depend on whether the state
has requirements similar to these federal requirements. The decision may also
take into consideration the availability of nonfederal and federal funds. For
example, officials from one state said that they have limited nonfederal funds
available, and as a result, like other states GAO interviewed, rely on the
federal funds to finance their highway projects.
According to transportation officials and contractors, administrative tasks
associated with the federal requirements pose challenges. For example,
analyzing impacts and demonstrating compliance with NEPA requires
extensive paperwork and documentation. State officials also said that
coordinating with multiple government agencies on environmental reviews is
challenging, in part because these agencies may have competing interests.
Furthermore, according to state DOTs, some provisions of the federal
requirements may be outdated. For example, the $2,500 regulatory cost
threshold for compliance with the Buy America program for purchasing
domestic steel and $750,000 regulatory personal net worth ceiling of the DBE
program have not been updated since 1983 and 1999, respectively. All of these
challenges may cause delays and increase project costs. Some government
agencies have implemented strategies to address these challenges and these
strategies have had varied success in decreasing project costs and delays.
United States Government Accountability Office
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United States. Government Accountability Office. Federal-Aid Highways: Federal Requirements for Highways May Influence Funding Decisions and Create Challenges, but Benefits and Costs Are Not Tracked, report, December 12, 2008; Washington D.C.. (digital.library.unt.edu/ark:/67531/metadc303007/m1/2/: accessed January 17, 2019), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.