DOT Secretary Mary Peters Pushes Big Shift for Roads, Transit

Reduced federal role would defer to state, local and private-sector investment

02/06/2008

By Tom Ichniowski and Aileen Cho

It’s a chilly late January morning and U.S. Transportation Secretary Mary E. Peters is in Montgomery, Ala., speaking bluntly about the need to revamp the nation’s highway program. At a press conference in a state transportation department maintenance shop, Peters praises Gov. Bob Riley (R), who’s standing nearby, for seeking to get the private sector more involved in road projects. Then she blasts the way the program operates now, declaring, “I have…zero confidence zero that if we send more money to Washington we’ll get any better results back.” .

Surface transportation programs stand at a critical juncture. Roads, bridges and transit lines are aging and construction costs rising. But the Highway Trust Fund, the prime federal-aid source for such infrastructure, is projected to show a $3.2-billion shortfall in its highway account in the fiscal year that starts Oct. 1 and cannot cover spending increases public works advocates want. As programs speed toward this crossroads, big questions loom: Which way should the programs turn? Who should pay for the trip?

The debate is Topic A in transportation circles and Peters, DOT’s chief since September 2006, is in the thick of it. Things are heating up. Congress may well repair the projected trust fund “hole,” but the patch would be temporary. A longer-range solution might be needed as early as fall 2009, when a major new transportation bill is due to replace the current statute, 2005’s SAFETEA-LU the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users.

The Bush administration’s term will end well before that new bill will be drafted, but Peters clearly doesn’t intend to just run out the clock. In fact, as her Alabama remarks show, she has become an increasingly vocal critic of the current federal role in funding and overseeing highway and transit infrastructure.

That became clear Jan. 15, when the National Surface Transportation Policy and Revenue Study Commission issued a study that was nearly two years in the making. Nine of the 12 commissioners issued a majority report, saying current annual spending is only 40% of the $225 billion to $340 billion they said is needed. To close the gap, they called for a 25¢-to-40¢-per-gallon hike in the federal fuels tax, plus more tolls, private-sector help, new transit and passenger-rail fees and increased funds from states.

But Peters, who chaired the commission, and two other panel members objected vociferously to the majority views. The gas-tax hike, which would represent up to a tripling of the current 18.4¢-per-gallon levy, was a big reason for Peters’ dissent. But her criticism is more fundamental, as she made clear in interviews with ENR on her recent trip to Alabama.

“I think that we should only do at the federal level what is truly in the national interest,” Peters says. “And everything else, we should offload down to the state and local level.” Along with that shift, she favors more public-private partnerships, tolling and traffic-pricing mechanisms to ease congestion.

Peters doesn’t think the federal government should get out of highways and transit altogether, but contends its role should be sharply reduced. In her view, federal responsibilities should include maintaining Interstate highways and other arterials, projects of national and regional significance, regulating highway safety and doing research in areas that benefit the national interest.

Role Reduction

“I think the federal government should collect and keep only that portion of the gas taxes that we’re collecting that meets those federal interest requirements, and the rest of it we should either give back to the states or never collect from the states to begin with so that it doesn't become federalized income,” she says.

Similarly, she says public transit is important and needs continued support. Peters believes a federal transit agency could have a role in setting security and safety standards, but she thinks states should decide which projects should go forward and have the flexibility to devote to transit whatever portion of their surface transportation funding they feel is appropriate.

Responding to emergencies also would be a federal job, based on Peters’ actions after last year’s Minneapolis bridge collapse. She flew to the scene the day after the accident, made two more trips in the next eight days, one of them with President Bush, and delivered $55 million in initial relief funds. She supported the $195 million Congress approved for the replacement bridge, but opposed adding funds for deficient bridges elsewhere. Congress disagreed, approving $1 billion.

Peters, 59, has long been well-known in transportation circles. She led DOT’s Federal Highway Administration from 2001 to 2005. Before that, the Arizona native spent 16 years at her home state’s DOT. She started as a secretary, and rose to be director for three years. “When I left, she was a slam dunk to replace me,” says Larry Bonine, ADOT director from 1993-1998. Before becoming DOT Secretary, she was a senior vice president with Omaha-based HDR.

Peters wasn’t always in transportation. When she and her husband, Terry, lived in Indiana, from 1967 to 1984, her jobs including working as a meatcutter on the “killing floor” at a slaughter house. As a union steward, she was involved in negotiations with the company after it filed for Chapter 11 bankruptcy protection. Peters says that contract negotiating experience appealed to ADOT.

Throughout her career, outsiders and colleagues have found her affable and energetic. “What’s not to like?” says Stephen E. Sandherr, the Associated General Contractors’ president and CEO. “I think deep in her core, she is an advocate for the [highway] program.” Norman Mineta, Peters’ predecessor as DOT Secretary, likes what she’s done on congestion and safety.

An industry source gives Peters high marks as DOT Secretary but adds, “There’s a lot of concern in the industry with the hard-line position she is taking in opposition to a gas-tax increase....I think people are really disappointed because they viewed her as ‘one of us.’”

House Transportation and Infrastructure Committee Chairman James L. Oberstar (D-Minn.), praises her work at FHWA and Arizona DOT, but then backs off. “Her rebirth as Secretary of Transportation has been disappointing because of her mission to cement in place this administration’s view of the future of transportation as one founded upon public-private partnerships, congestion pricing [and] tolling mechanisms,” he says.

Peter Ruane, American Road and Transportation Builders Association CEO, likes her use of the bully pulpit but says ARTBA has “fundamental disagreements” with Peters’ views. “We believe a strong federal role is essential in any future programs or policy,” he says.

Peters has her supporters. Alabama’s Riley says, “At some point we’re going to have to fundamentally rethink how we build highways in this country.”

Paul Yarossi, president of design firm HNTB, Kansas City, says Peters’ decision to dissent from the commission report is “admirable, wherever you fall in the debate.” But he says transportation programs need a combination of many different funding sources. “A gas tax needs to be part of the solution,” he says.

She objects to critics who say she parrots White House views. Tom Warne, former Arizona DOT deputy director and ex-Utah DOT head, says her federalist approach is long-held. “I know for a fact that she always felt that smaller government is better,” he says. “That goes back to her roots in Arizona.”

Peters recalls that as ADOT director, “I felt that the federal government was too intrusive....And I felt there were too many requirements put on the expenditure of federal money.” She cites a federal judge’s 1999 ruling directing the Corps of Engineers to study how its permits affect the pygmy owl’s habitat. Peters put 53 projects worth $978 million on hold around the state, the Arizona Republic reported at the time. She says it was “absurd” that the rulings affected projects so widely, because the owl doesn’t live at elevations higher than 3,000 ft.

Tougher Tone

But she acknowledges her tone has gotten tougher. “Having worked at Federal Highway and now as Secretary, I see the machinations that go on with expending this money and the level of earmarking and of special-interest programs and how far removed that is from the priorities of state and local governments,” she says.

In her spare time, Peters has returned to motorcycling, something she had done in the early years of her marriage. She manages to get on the road every other week or so when she can break away from the job. Peters broke her collarbone in a 2005 motorcycle accident in Arizona, but wearing a helmet prevented further injury, as she relates it in a public service commercial on DOT’s web page to promote motorcycle safety.

While debate over the future of the surface transportation programs simmers, Peters faces some immediate problems on the infrastructure front. To shore up the Highway Trust Fund, the administration’s fiscal 2009 budget proposal, released Feb. 4, recommends shifting money from the fund’s healthier transit account to its highway account. The Senate Finance Committee last year approved a plan to add $5 billion to the trust fund, most of it via a general Treasury reimbursement for the fund’s disaster relief expenditures.

In addition, a multi-year aviation reauthorization bill is mired in the Senate, and a current stopgap bill runs out March 1. FAA has been unable to approve new airport construction grants because Congress failed to approve the needed contract authority. Without some remedy, “We may miss a whole construction season,” Peters says.

What’s next? Peters would like to finish the term as DOT secretary, and then return to Arizona. A source says Peters wants to be the state’s governor, but she is noncommittal. “I can consider where I go in the future once I get back home next year,” she says.