FY 2006 Performance Budget Justification

Congress expressly created the Appalachian Development Highway System (ADHS) to provide economic growth opportunities for the residents of the region – the same benefits afforded the rest of the nation through the construction of the Interstate Highway System, which largely bypassed the region due to its rugged terrain.  Reauthorization of the program, currently referred to as SAFETEA, is pending. It is anticipated that the ADHS funding will continue at the present level.

The Appalachian Regional Development Act of 1965 authorized the Commission to construct the Appalachian Development Highway System (ADHS), a 3,025-mile road system, with assistance from the Secretary of Transportation as a highway system that supplemented the Interstate System and other federal-aid highways programs.  P.L. 108-199 added 65 miles to the system in 2004, for a new system total of 3,090 miles. Congress authorized this initiative because it recognized that regional economic growth would not be possible until the region's isolation had been overcome.

Because of the high cost of building roads through Appalachia's mountainous terrain, adequate roads had not been built in much of the region.  When the interstate system was built, large areas of Appalachia were simply bypassed, compounding the problems of the region's already troubled economy.  The ADHS was designed to link Appalachia with the US interstate system. New jobs have been created as businesses have located along the system. Substantial time savings have occurred as isolation is reduced, and crash and injury rates have dropped as much as 60 percent as two-lane roads are replaced by modern and safe four-lane thoroughfares.

In 1998 ARC completed a study to objectively measure, in retrospect, the extent that completed portions of the ADHS had contributed to the region's economy. The study found the ADHS has been instrumental in creating thousands of new jobs and generating economic benefits that will exceed highway construction cost and maintenance cost by more than a billion dollars.  The ADHS corridors generate economic development benefits in the region by improving the competitive position of existing and new industries through lower transportation costs and higher productivity.  In addition, the new corridors will increase access to health care, education, and cultural amenities that improve the quality of life in the region they serve and will indirectly boost labor productivity.

Moreover, the corridors increase roadside business and significantly boost the opportunities for tourism development in the region through improved access. The ADHS corridors improve travel efficiency by reducing travel time, lowering vehicle-operating costs, and reducing the number of accidents.  These efficiencies are the result of:

• An increase in the number of lanes and lane and shoulder widths,
• Improved grades and road conditions with fewer curves,
• Restricted access and egress and more freeway miles,
• Overall, higher operating speeds, and
• An increased emphasis on highway safety improvements.

The study determined that over the life of the ADHS, each dollar invested is expected to result in $1.32 in economic benefits and $1.10 in travel efficiency benefits. 

More than 80 percent (2,480.1 miles) of the total 3,090 miles of the ADHS authorized by Congress for construction are open to traffic, and another 147 miles are under construction. The remaining 462.9 miles are in the location or final design stages. The Commission continues its strong commitment to complete the ADHS, the centerpiece of ARC's strategic plan for the region. Table 4 and Figure 3 on page 16 show progress on the system through the end of FY 2004.

The Transportation Equity Act for the 21st Century (TEA-21) authorized funding for ADHS from the Federal Highway Trust Fund at a level of $450 million in fiscal year (FY) 1999 through 2003. The Surface Transportation Extension Acts of 2004 (STEA04) authorized $512.5 million for ADHS in FY 2004. In recent years, Congress also allocated additional funds through annual DOT appropriation acts for ADHS ranging from $125 million to $200 million annually. These brought to an average rate of $601 million a year federal funds between FY 2000 and FY 2004 toward completion of the ADHS. It has provided a steady, dependable and substantial source of funding toward the completion of the Appalachian Development Highway System.

The ARC 2002 cost-to-complete study estimated the federal share of the eligible work to complete the ADHS at $6.2 billion in year 2000 dollars. The Commission currently estimates the remaining federal funds needed from Congress to complete the ADHS total approximately $3.2 billion. This is a significant reduction from the remaining need at the time of the 1997 estimate, which was $6.2 billion. The 2002 cost-to-complete study does not include the cost of the additional 65 miles added to the system in 2004.

Section 201(a) of the ARDA authorized the construction of up to 1400 miles of local access roads (LAR) to complement the ADHS by providing new or improved access to local areas.  A state may spend a portion of their ADHS funds or Area Development funds each year on access to industrial and commercial sites to create/retain jobs as well as provide access to recreational areas, educational facilities, health care facilities, residential areas, and timber access areas.

The ADHS program is a major factor in the Commission's success in reducing the region's isolation and providing mobility and access to its residents.

FY 2006 Initiative

During FY 2006, make progress toward completing the ADHS by completing 25 additional miles of the ADHS:

• The economic impetus to complete the system has never been more compelling.  A modern system of highways is an essential first step toward fostering economic growth and enabling Appalachia to become a significant contributor to the national economy.
• Completion of the ADHS will permit the nation to realize the system-wide efficiencies of linking with the interstate highway system and the nation's intermodal transportation networks.  Appalachia's strategic location between the eastern seaboard and the Midwest enhances the national value of the ADHS as a transportation asset to channel increasing domestic and international freight traffic between metropolitan centers and trade gateways.  Forecasts of national freight demand over the next ten to twenty years by the U.S. Department of Transportation underscore the potential of the ADHS to help relieve congestion along major transportation routes and help develop new and more efficient freight flows to trade gateways.

Strategies for 2006 include the following:

• Manage ADHS/local access road program;
• Prepare annual ADHS status report;
• Coordinate with the Federal Highway Administration, state highway departments, and federal and state environmental agencies;
• Establish ADHS terminal points and alignments;
• Obligate all available ADHS funds;
• Work with Congress and the states to secure full funding for completing the Appalachian Development Highway System;
• Facilitate closer working relationship between economic development and transportation organizations; and
• Develop appropriate tools (GIS, etc.) to assist states, FHWA, and ARC in developing ADHS cost-to-complete estimates and status reports.