February 17, 2017

Freight by its nature crosses state and national borders, it is enormously important to the U.S. economy, and has wide-ranging implications for jobs. Investing in a freight system that is reliable and efficient is an inherent federal responsibility that gets to the core Constitutional imperative for the federal government to take the lead on interstate and foreign commerce. A federal discretionary grant program, if designed correctly, can target limited funds to freight projects that relieve bottlenecks and improve reliability for freight movements across the country. Given the new Administration’s talk about making major investments in the nation’s infrastructure, it is all the more important to use such programs as effectively as possible.

On February 15, Eno released a white paper that outlines how to best shape future federal discretionary grant programs. The paper uses the FASTLANE grant program, created in 2015 as part of the FAST Act, as a case study and suggests how Congress and the Administration can improve upon federal discretionary grants when creating new discretionary grant programs or upgrading the existing one. While this paper was specifically focused on the freight aspects of the program, its recommendations are widely universal. Below are five key lessons for future federal competitive grant programs.

Size matters.

Eno recommended that Congress increase the size of the FASTLANE program to at least $2 billion annually. Its current size of $800 million is a good start, but if a federal grant program is truly going to have real impact on a national scope, there needs to be more funding available than what the FAST Act provides. In previous reports, Eno recommended specific ways for Congress to secure this money in the short and long term.

Eligibility should reflect the program’s goals.

The FASTLANE program, through the law’s guidelines, restricts eligibility mostly to highway projects. This leaves out a huge swath of the freight network, and at the same time includes projects that are not freight specific. In the paper, we discuss why the eligibility should be broadened to include any freight project (not just highways). At the same time, we encourage that the program be limited to freight projects only. Having federal grant programs focused around a goal (such as efficient freight movement, safety, metropolitan accessibility, or environmental sustainability) supports projects that achieve the stated objective, while also not restricting it to a certain mode or geographical area.

Transparency matters as well.

Government grants for infrastructure investment are often multi-year programs, and the process will not be perfect on its first iteration. Despite the listing of different “outcomes” in the evaluation criteria section, U.S. DOT gave little insight as to how its staff ultimately used them to rank the projects and make final selections within FASTLANE. Opening up the selection process to scrutiny will help strengthen the program in the long run, and applicants will have significantly more direction in how they shape their submittal. This also brings accountability to the applicants: for their part, grantees should openly show how their project meets certain criteria, and provide U.S. DOT with enough detail to test their results. This would allow DOT officials and others in the transportation community to review applications and validate their results, and refine future rounds of the program.

Emphasize non-federal funding.

One of the biggest advantages of competitive federal grants is they can reward applicants that bring new money to the table. Leveraging state, local, and private dollars to complete the project, and thus reducing the federal share to the lowest amount possible, can make limited federal dollar go to more projects. With all of its grant programs, including FASTLANE, U.S. DOT should emphasize leveraging non-federal funds, both public and private, by increasing the weight of this metric so that projects that use fewer federal dollars score better.

Understand, but limit, the political nature of distributing funds.

It is important for a discretionary grant program to keep project awards targeted to the most valuable projects, regardless of location or political distribution. However, the long-term sustainability of a federal grant program depends on support from Congress. If the program were to continue to award a large portion of the funds to just a few regions, then the program would quickly see its political support among legislators from other regions collapse. Sometimes this means selecting some projects that do not score as high as other projects, as there is a political obligation to ensure that the funding does not leave too many places out. Consistent with the recommendation for transparency, U.S. DOT needs to objectively analyze the geographical distribution aspect of the program and openly report how they achieved a geographical distribution element.

The FASTLANE grant program represents a positive step toward making robust federal freight investments. Eno recommended enhancing this program, or creating a similar program that is targeted to freight infrastructure, that can make a real difference in improving the safety, reliability, and effectiveness of the U.S. freight network. Now is an opportunity for Congress, the Administration, and the freight industry to take this next step together.

Ed. Note: Listen to Paul Lewis and Jeff Davis present the report in this 30 minute webinar from February 14, 2017: