In March 2022, the Minnesota legislature directed its auditor to review the Southwest Corridor light-rail project. The transit project was originally approved by the Federal Transit Administration in September 2011, and at the time was estimated to cost $1.25bn to develop.
Like all major transit schemes, the upfront capital costs were considerable, but the project promises enticing economic gains for the city and its surrounding area over the long term. According to the project website, 56,000 people live within a ten-minute walk of the new 23km route and 16 new stations and two new tunnels will connect citizens to 81,000 jobs along the extension and 145,000 jobs in downtown Minneapolis once it is completed.
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Minnesota has a small but efficient existing metro system. The Southwest Corridor is set to significantly expand public transit capacity for the city’s metropolitan area.
Unfortunately for the local population, the project is now running nine years behind schedule, with the auditor estimating that total costs have more than doubled to $2.74bn due to cost overruns. While federal, state and local government are covering some of those additional costs, there remains a funding shortfall of around $535m.
The remarkable thing about the Southwest Corridor project is that it is not that remarkable. Major transit development projects in the US are not uncommon but are often beset by delays, exacerbating an acute need for investment in the sector given the increasing traffic in most cities across the country. The annual cost of congestion in the 15 largest urban areas in the US alone totalled close to $7bn in 2019, according to the Texas A&M Transportation Institute.
Despite the US being the richest country on Earth, its urban transport systems are not world-leading. The American Society of Civil Engineers (ASCE) publishes an annual report card assessment on the state of US transport infrastructure. In 2021, it scored public transit in the US at just D-. There is no doubt that the US could do better.
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By GlobalDataThe ASCE notes that 45% of Americans have no access to transit and most of the existing systems are ageing and dilapidated. It says there is an investment backlog of $176bn, which it expects to grow to $270bn by 2029.
So how has the US ended up with such substandard transit systems and why does it struggle to deliver the investment projects needed to improve them? With the US Congress passing a $1.2trn Infrastructure Bill, will this funding injection solve these problems?
To try and answer these questions, consideration must be given to the historical reasons the US’s transport system developed how it did and the role local politics and planning laws play in infrastructure development in the country today.
The age of rail in the US
Railways played a major role in the early history of the US, being the country’s first national transport system. Rail transported economic migrants west from the mid-19th century as the union expanded, and it also drove the industrialisation of the nation by allowing mass transportation of goods. The economic activity created by rail was how financiers such as JP Morgan built their business empires, which had so much influence on some of the country’s biggest economic booms (and busts).
The impact of the rail network was political as well as economic. The larger rail system in the north of the country helped the Union defeat the Confederacy in the US civil war in the 1860s by allowing war supplies and soldiers to be transported more efficiently. After the war, the expansion of the railway system in the south of the country was a key component of reconstruction.
The legacy of this investment in the national rail system lives on today. The US freight rail network spans 225,000 route kilometres and is operated by seven Class 1 railroads, supporting an $80bn industry that is widely seen as world class.
The first passenger railway in the US, the Baltimore and Ohio Railroad, began operating in 1830, yet while freight rail continues to play an important role in the country, commuter rail travel is much more of a niche activity. Rail passenger numbers in the US today are a fraction of those in other large countries.
Although Italy’s land mass is just 3% the size of the US, and it has less than a fifth of the population, Italy’s rail usage is much higher. In 2018, Italy recorded 55,493 passengers per kilometre compared with just 31,963 in the US.
Shifting to car travel: the US Interstate Highway System
The US Interstate Highway System that Americans use today dates back to 1956, when President Dwight Eisenhower’s administration took existing federal road funding programmes to the next level.
The Federal Aid Highway Act of 1956 for the first time designed an all-freeway system, with nationally unified standards for construction and signage.
Cars had been gaining ground in the country since the beginning of the 20th century, which led to two previous government funding initiatives: the Federal Aid Road Act of 1916 and the Federal Aid Highway Act of 1921, paving the way for the planning of a national road grid.
In 1926, the United States Numbered Highway System was established, creating the first national road numbering system for cross-country travel. The roads were still state-funded and maintained, however, and there was little in the way of national standards for road design.
It was only with Eisenhower’s administration that the all-freeway system that exists today came into being.
The US Interstate Highway System was a milestone in the US transport sector as it created a 77,000km road network that for the first time connected the east and the west coast in a much safer and less time-consuming manner than previous road networks had done.
General Lucius Clay, who was appointed by Eisenhower to head the committee in charge of planning for the interstate highway system plan, explained the need for the new system as follows: “It was evident we needed better highways. We needed them for safety, to accommodate more automobiles. We needed them for defence purposes, if that should ever be necessary. And we needed them for the economy. Not just as a public works measure, but for future growth.”
After talking Eisenhower out of building it as a toll system – which in Clay’s view would not work in more sparsely populated areas away from the coasts – the general’s committee proposed a ten-year, $100bn programme that would build 70,000km of divided highways linking all US cities with a population of greater than 50,000.
The initial cost of the projects was then estimated at $25bn over 12 years. It ended up costing $114bn and took 35 years, being completed in 1992.
Today, the system connects around 90% of all US cities with a population of at least 50,000 and carries approximately one-fifth of the country’s motor traffic.
Nearly nine-tenths of all households own at least one automobile or truck in the US. At the end of the 20th century, these added up to more than 100 million privately owned vehicles.
The construction of the Interstate Highway System not only made travelling by car faster, safer and easier for Americans, it also led to the rise of the container trucking industry.
Up until then, railroads had dominated both passenger and freight traffic in the country, but with an increasing number of people using their private cars to travel on the highway and with trucking increasing competition for freight, the role of railroads in transportation started to decrease.
By 1970, many rail companies had given up passenger services as Congress created the National Railroad Passenger Corporation, known as Amtrak, to take over passenger routes. Amtrak currently operates a 33,800km system serving more than 500 stations across the country.
Over the years, railroads have turned increasingly towards freight traffic. Today, they account for roughly 40% of US long-distance freight volume – more than any other mode of transportation.
Will the US ever have a high-speed rail system?
Despite the US having a vast rail network that penetrates all major cities in the country, it is used almost entirely for freight. When Americans move between cities and states, they tend to do so by car or by air, as the modern alternative of high-speed rail never took hold in the US.
Japan became the first country in the world to build a high-speed rail line in 1964 and it now has nine routes serving 22 major cities. France was the first European country to build a high-speed rail route and today routes spread inter-country across western Europe.
Plans for high-speed rail in the US date back to the High-Speed Ground Transportation Act of 1965. Despite being one of the world's first countries to get high-speed trains – the Metroliner service in 1969 – this mode of transport failed to spread in the US.
The country has only one railway that could be described as high-speed today. The Acela Express, connecting New York and Washington DC, reaches 240km per hour (km/h) on parts of its route but the average speed of its trains is just 106km/h. In comparison, China is the world leader in high-speed rail. Its high-speed network, which it began building in the early 1990s and which is expected to reach more than 38,000km by 2025, carries trains travelling of up to 350km/h.
In 2020, a map of an imagined high-speed network in the US went viral on social media, as young Americans expressed their support for more cross-country passenger train routes. Yet this high-speed train dream looks unlikely to be realised, even though in 2020 the California High-Speed Rail Authority started working on the California High-Speed Rail project. Construction is under way on sections traversing the Central Valley, which are scheduled to open in 2029 and phase one is planned for completion in 2033.
Other routes have been proposed around the country, but Kent Rowey, a partner at Allen & Overy who specialises in infrastructure investment, doubts any additional high-speed railways will now be built in the US due to the emergence of electric vehicles and synthetic fuels.
“Is it really a good spend of taxpayer money to build high-speed rail when there are viable alternatives?" Rowey asks. "With the increasing move towards vehicle electrification, a lot of the environmental issues that people are concerned about are becoming less acute.”
City congestion and lack of metros
With the expansion of the national highway network after the Second World War, urban areas in the US were increasingly built to support road rather than rail travel. City centres were places to get in and out of, rather than move in and around. This led to housing sprawl out to ever-expanding suburbs.
There are more than 20,000km of metro systems operating globally, according to the Institute for Transportation & Development Policy. More than one-quarter of these routes have commenced operations since 2017, 80% of which were built in Chinese cities, seeing China overtake the US for overall rapid transit capacity.
According to the International Energy Agency, rail is the least emissions-intensive mode of passenger transport and China’s vast investment in light rail means its cities now have far lower per-capita transport emissions than cities in the developed world.
Urban areas around the world are trying to move car traffic out of their centres through the proliferation of electric micro-mobility devices and cycle lanes, low maximum speed limits for cars, pedestrianisation and congestion charging. More and better public transport options are also vital as part of these plans to improve quality of life and reduce emissions in cities.
A research paper from the OECD published in December 2020 argued that "a shift from car use to more space-efficient means of transport is a long-term solution to congestion and contributes to properly functioning cities".
US cities, even those with the more efficient urban transit systems, have much lower rapid transit (bus, rail and light-rail) capacity than other rich-world cities, however, and have not kept pace with Chinese cities for expanding their systems.
Urban areas in the US built around car use that have historically underinvested in metro and other rapid transit systems have tended to experience major traffic issues. Congestion rose sharply in the US over the decades leading up to the Covid-19 pandemic.
The national average rose from 20 hours of congestion every year per auto commuter in 1982 to 54 hours by 2019, according to the Urban Mobility Index produced by the Texas A&M Transportation Institute.
“The whole relationship between land use and transportation is pretty directly connected and, in the US, we seem to have taken a very localised approach to regulating land use,” says Tim Lomax, a research fellow at the institute.
Zoning laws restrict the type and volume of housing that can be built in and around downtown areas in most US cities. As city populations have expanded, the total proportion of residents living outside inner cities has increased, leading to more traffic jams but also greater demand for road capacity.
“It is hard to coordinate land use in a way that creates a market for public transportation,” Lomax says, adding that "a combination of sprawl, choice, growth boundaries and schools preferences” have contributed to urban sprawl and decreased demand for downtown urban transit.
“There is a persistent perception that suburban school districts are better than the inner-city school districts," says Lomax. "It is not just that people want a house with a big backyard and a park down the street, they also want their kids to go to a better school.”
He adds that most major cities have seen an increase in housing development in and around downtown areas over recent decades, yet most people would still not consider living in those areas.
To try and tackle these issues, Lomax says federal government should pass on the process for approving funding for rail transit programmes to local authorities, with funding decisions more closely linked to zoning, housing, commercial land use and school districting policies.
He adds that such an investment decision should be based on whether "you can show me that your policies match the attributes that evidence shows will make public transit work, then we will consider your application more favourably".
There are examples of US cities that have found good solutions to congestion, however. Industry observers point to both Denver and Salt Lake City as examples of municipalities that have enhanced their urban transit systems.
In the late 1990s, Salt Lake City's Envision Utah developed a multimodal transport system around the Wasatch flyer that consisted of a long-distance rail connection with a 160km distance range. "I was a participant in the consultations for this," says public-private partnership (PPP) consultant David Baxter. "It was and still is a very successful project in solving most of the traffic congestion around the area."
Denver's light-rail system and the Silver Line metro extension from Washington, DC to Dulles International Airport are other good examples of successful urban transit schemes.
Political obstacles to delivering US transit projects
US politics is different from other developed countries in both Europe and Asia in that it is a federated union of many states spread across what is, essentially, a continent.
The dichotomy between the federal government and state administrations is a well-known factor, for instance, in the slow progress of the PPP financing mechanism, which in other regions is the main driver of transport infrastructure development.
“A major challenge of developing transport in the US is the dynamic between the decentralised federal government and the states,” says Baxter.
“This often means that wealthy states can afford to develop advanced transport projects while others cannot. The Interstate Highway System, for instance, is funded by the federal government but then when federal funds reach the states, local transport priorities tend to prevail. The issue, in this instance, is a state-focused approach rather than one that aims at integrated and coordinated cross-state boundary collaboration.”
Baxter also points out that state politicians respond to their own constituencies, which makes it hard for them to pass a bill that helps another state and even less one that makes even partial compromises to do so.
The political debate in the US – as in most parts of the Western world – has become a highly divided one in recent years and a divided political arena does not make it easy to pass legislation that is for the common good.
“We do not have the kind of consensus that we had in the 1950s or 1960s, when the Interstate system was developed," says US transport expert and consultant Michael Sena. "We are in a situation at present where politicians – and people – are not able to talk across the political aisle in order to get things done.
“In a way,” he adds, “we can say that the US transport sector’s main weakness is also its biggest strength. We live in a democratic country where people, for instance, have their say as to whether they want a road built next to their house.”
The rise of the 'not in my backyard' phenomenon from the 1960s onwards is cited by many industry observers as one of the reasons that makes developing new transport infrastructure, especially roads, so difficult in the US.
Politics can prevent transport development not just through opposition but also due to bureaucracy. Rowey of Allen & Overy says that the three main obstacles to major transport projects in his experience are funding, right-of-way issues and inter-municipality agreements.
The upfront capital costs of large transport infrastructure projects are huge, and fares taken by users of the completed rail route or metro system are only ever likely to cover operating costs. To repay private investors for their capital investment typically requires a large amount of government funds, usually through some form of subsidy.
Rowey argues that large infrastructure projects are often stymied by the bureaucracy involved in gaining federal funding.
“For transit that subsidy historically comes from the Federal Transit Authority", he says. "You have to apply for it, it is a competitive grant, it is subject to annual appropriations, which means you have to wait for it… People end up waiting a long time to get confirmation of the grant money; meanwhile, costs increase because of construction material and labour cost inflation, and all these things conspire to kill deals.”
Rowey cites the Fixing America’s Surface Transportation (FAST) Act, introduced by President Barack Obama, under which he says it can often take longer than 18 months to be awarded federal funding.
Even once funding has been secured, other political obstacles remain. “You may need to condemn privately owned property through an eminent domain procedure, which is time-consuming and controversial," says Rowey. "Taking people’s land away from them is not a vote-getter."
If there are multiple authorities involved in a major project, this will further slow down progress, as each might have different zoning laws or transit development concerns. “On the Denver RTD deal, it took years to get all of the various municipalities in the Denver metropolitan area together to agree on those agreements," says Rowey.
The outlook for transport in the US
The $1.2trn infrastructure bill passed by the US Senate in 2021 offers hope that improvements can be made to urban transit in the country. Yet of the total funding, just $66bn was allocated for rail infrastructure and $39bn for public transit over eight years. In literature released by the White House at the time the legislation passed, the only form of transit mentioned was bus routes. Roads and bridges take the lion's share of transport funding.
Of what funding there is for public transit, its effectiveness may be determined by how it is dispersed. Under existing programmes such as FAST, funding decisions are made on a case-by-case basis, slowing disbursements. If instead the federal government issued block grants to states, this could speed the process and allow for new projects to be part of integrated economic initiatives at a local level.
While administrative hurdles could be reduced, is car culture so embedded in the US that efforts to increase urban transit use are likely to face public or political opposition?
“I don’t think there are insurmountable cultural problems in the US around public transportation," says Rowey. "If you look at cities where it has been implemented, its usually very well utilised and there is a lot of support around it."
“People are generally rational”, adds Lomax. “I don’t think people are in love with their cars, so much as people are in love with the freedom the car provides.
“When you have these corridors with very high-quality public transit systems that connect to dense job centres, you see very high uptake in public transit use. There just aren’t enough. There are an awful lot of spread-out centres that are difficult to get to on public trains for white-collar workers.”
The $1.2trn infrastructure bill has a strong focus on clean energy and energy transition investment, which applied to the transport sector means a strong emphasis on the roll-out of electric vehicles (EVs), EV networks and sustainable transit. Industry experts agree that clean energy and energy transition will play a pivotal role in the future of the US transport sector.
“EVs will reinforce the role of cars in US transportation by greatly reducing cars’ carbon footprint," says Robert Poole, co-founder of libertarian think tank the Reason Foundation. "And vehicle automation – while far from capable yet of operating flawlessly in 'messy' and unpredictable domains – is well suited to uncomplicated high-speed roads such as the interstates. My guess is that this will make driving more competitive with passenger rail for medium-distance trips, and may well reduce the amount of short-haul airline travel.”
A transition to a clean transport system will face familiar funding issues, however. “Sustainable infrastructure in a post-Covid, climate change-dominated landscape is the way forward, but that will have to come from the private sector," says Baxter. "The public sector does not have the vision for it and the new technology that is needed to roll out EV networks will have to come from the private sector."
A further complication is the difficulties in predicting future demand for public transit in a post-Covid world, argues US transport expert and consultant Alan Pisarski. The Urban Mobility Index shows that while congestion rose steadily from 1982 to 2019 in US cities, in terms of delayed hours per commuter, congestion nationwide in 2020 fell back to a level not seen since 1989 due to the pandemic.
“We do not know what future demand is going to look like, as Covid has created a working-from-home or at least a hybrid environment," says Pisarski. "This has drastically changed people’s perception of transport to the point that, for instance, building a toll facility at this stage is very risky. We would be much better off taking care of what we already have rather than building something new."
So despite more federal government funding, a new golden age of transit looks unlikely in the US. Instead, expect more delays to investment decisions and projects, something the citizens of Minneapolis are already very familiar with.
This piece was originally published on our sister site, Investment Monitor.
