oversight

Highway Program Shows Limited Progress Toward Increasing Accessibility to and Through Appalachia

Published by the Government Accountability Office on 1971-05-12.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

REPORT            TO THE COi’kGRESS




          rogram Shows
             ress Toward
    asing Accessibility
To And T
                                    S-164497(3)



Appalachian   Regional   Comm won




BY THE CQMPTROLLER GENERAL
OF THE UNITED STATES
                                                  1
                 COMPTROLLER      GEN;RAL       OF   THE       UNITED     STATES
                                WASHINGTON       D C       20548




B- 164497(3)




To the    President       of the Senate     and the
Speaker     of the     House   of Representatives

         This   1s our report     entitled    “Highway                     Program    Shows Llm-
lted Progress        Toward   Increasing       Accesslblllty                     To and Through
Appalacha       I1 This program          1s admlmstered                       by the Appalachian
Regional      Commlsslon.

        Our review  was made   pursuant   to the                               Budget   and Accounting
Act,   1921 (31 U S.C  53), and the Accounting                                  and Auditing   Act of
1950   (31 U.S C. 67).

         Copies     of this report       are being     sent to the Director,       Office
of Management          and Budget,       the Federal       Cochalrman       and the
States’    Regional      Representative,        Appalachian        Regional    Commls-
sion,   the Secretary        of Transportation,          and the Admlmstrator,
Federal     Highway       Admlmstratlon




                                             Comptroller                General
                                             of the United              States




                         SOTH   ANHIVERSARY                 1921-       1971
    I
            t
            COMPTROLLERGENERAL'S                                  HIGHWAYPROGRAMSHOWSLIMITED PROGRESS
            REPORTTO THE CONGRESS                                 TOWARDINCREASING ACCESSIBILITY TO AND
                                                                  THROUGHAPPALACHIA
                                                                  Appalachian Regl onal CornmissIon
                                                                  B-164497(3)


                DIGEST
                ------

                WHYTHE REVIEW WASMADE
    I
’   I
                       The Appalachian       RegIonal Development Act of 1965 was enacted to promote
                       the economic development of the Appalachian             region on a coordinated        and
                       concerted reglonal       basls       Studies and congressional      heanngs preceding
                       passage of the act emphasized that an adequate transportation                 system was
                       the first    requlslte     for successful      economic development     of Appalachia.
                       The General Accounting Offlce (GAO) In Its review sought to determlne
                       whether the Appa7achlan development highway system was achieving                  the ob-
                       Jectlve   established      for it--to     increase accesslblllty     to, through,    and
                       within the region.


            FINDINGS AND CONcL;USIOiVS
                       LImited progress has been made toward accompllshlng             the ObJective     of the
                       development highway system, as discussed below.

                       The act authorized     $1 768 billson   7n Federal funds for a 6-year develop-
                       ment effort    and established    the Appalachian  RegionaJ Commlsslon to plan
                       and coordinate    It

                       About $1.165 biJJlon was earmarked for the development              hlghway program
                       Of that amount, about $1 08 billion  was for construction              or improvement
                       of development highways to open up isolated  areas

                       About $80 million    was for bulldIng      access roads to connect industrial
                       sites and recreattonal     areas with     maJor highways.  (See p. 8.)
                       Lack of regzonuZ     przorztzes

                       The Regional Commlsslon established    21 corridors          wlthln which the devel-
                       opment highways would be built.     (See app. I for          map of corridors.)

                       The development highway system as planned by the Regional Commission was
                       designed to connect with the Interstate         Highway System in and surrounding
                       Appalachia   to provide access to isolated       areas.    The Regional Commission,
                       however, did not establish     constructlon     prTorltles   directed  toward
                       achieving  the greatest  contrlbutlons      toward program goals at the earliest

                Tear   Sheet


        I
practicable    time, nor did 7t determIne whether pnoritles           establlshed   by
the States    were dlrected toward that end. (See p, 9.)

Instead,   the     Regional Commission allocated   the Federal funds available        on
the basis of       the estimated cost of the highways authorized       for each State.
                                                                                           I
The States,      In effect,    were allowed to set their own priorities,      regard-      I
less of the      extent to which they might further     regional accesslbality.            I

(See p 9.)                                                                                 I
                                                                                           1       u

About 50 percent of the highways of the development highway system have
been constructed      or planned for constructton    wtth the Federal funds au-
thorjzed.      Some of the highway segments do not slgn7flcantJy      Increase ac-
cesslblllty     to and through the region.      They do, however, ease local
traffic     congestIon and improve local accesstbiltty,

Cognizant committees of the House and the Senate have pointed out that,
although It was recognized that the development highways would ease
traffic  congestTon in some parts of Appalachia,   they were not to be de-
signed and built with that obgectlve    in mind.  Rather, they were to be                  I
designed and built as instruments    of economtc development--to open up lso-
lated regions.     (See p. 9.)
GAO believes   that the Regional Correnission should have given priority    to
proJects that would have provided the greatest accesstblllty      to and
through the region at the earliest    posstble time and that funds should
have been allocated    on the basis of those prlorlties  and of the ability
of each State to proceed.     (See p. 13.)

Unapproprzated      funds

About $345 mtl7lon of the program funds have not been appropriated,          and
as of February 7971 about $78 mt‘lllon had been appropriated       but not ob-
ligated.     Thus an opportunity  still  exists for the Regional Commlsslon to
give priority    to proJects that would contribute     most toward improving   ac-
cesslblllty    to and through the region.      (See p. 30.)

Cost   z&&eases     of the hzghway sys$em
The Regional Commission's current estimated cost of the development high-
way system is about $3.85 billIon,        an increase of $2 65 bllllon    over its
original   estimate.    The current estimate was compt led in a more reliable
manner than was the initial        one, and part of the Increase resulted     from
more realistic     cost estlmattng.

In addlt-ion,  changes in program requirements     subsequent to the start of
the program contributed    to the increase.     The changes Included increases
tn the number of mi7es of four-lane      hlghways to be built and ln the total
number of miles of highway to be constructed         Also new Federal requtre-
ments, including    safety standards and design hearings,     were imposed.                    I       *
(See p 22 >




                                       2
 I
 1
 I
 I
 I
 I              RECOMMElVDATIOiW
                               OR SUGGESTIONS
 I
 I                  The Regional Commlsslon should establish  priorities for further   construc-
 I                  tion and should use remalnlng funds on proJects that ~111 contrlbute     most
 I
 I                  toward program goals.   (See p 30 >
 i
 I
                AGENZ'YACTl-O&SAND UNRESOLTIED
                                             ISSUES
b1
 i                  The RegIonal Comm-rsslon disagreed with GAO's conclusions    that priorities
    I               for hIghway construction   should have been established   on a regional     basis
  I
1 I                 and that funds should have been allocated   to proJects having the highest
  I                 regional  priorities.
  I
  1
  I                 The RegIonal Commlsslon said that It believed     that GAO had somewhat over-
  I
  I                 stated the problem of highway fragmentation    that resulted  from permitting
  I                 the States to set their own pnorltles.      The Regional Commission cited
  I
  I
                    these reasons, among others,  for its program procedures.
  I
  I                    --Some States were not ready to provide        the required     matching   funds
   I
                          when the act was passed.

                       --New layers of organization         and procedures would have been necessary
    I                     to carry out the program on a reglonal          basis, therefore   the Regional
    I
    I
                          Cornmlsslon followed    regular    Federal-aid   highway procedures,   under
    I                     which prlorltles     are established     by the States.
    I
    I
    I                  --Delays In State funding and the need to resolve             local problems would
    I                     have prohlblted completion of all the corridors            in their entirety.
    I
    I
                       --Recommendations   of the Governors must carry heavy weight with the Re-
        I                 gional Commlsslon in matters affecting  their States    (See P* 28 ) 2
        I
        I           GAO believes   that some of the difficulties,     such as delays in State fund-
        I
                    ing and the need to resolve local problems, would exist regardless        of
        I           program procedures      The declslon to follow    the normal Federal-ald  high-
        I
        I
                    way procedures , with priorities     set locally,   however, is not In consonance
        I           with the Congress' recognition      of the need for a regional   program, in
                    GAO's opinion.     (See pp 27 and 28 )
        i

        i
        I
        I
                MATTERSFOR CONSIDERATIONBY THE CONGRESS
        I
        I           The Congress may wish to consider requiring      the Regional Commksslon to
         I
                    adopt a reglonal    approach to the construction    of the development highway
1       /           system, allocating    remalnlng funds to proJects having the highest prior-
        I           ities in increasing     accessibility to and through the region
        I

l       i
                    The Con ress 1s currently  conslderlng  leglslatlon to authorize an addl-
            I       tlonal i 925 million as the Federal share to complete the system.   In
            I
            1
            I   Tear Sheet
            I
            I
            I
            I                                            3
            I
            I
            I
            I
conslderlng   that and slmllar  future legislation,   the Congress may wish
to take note of the manner In which the Regional      Commlsslon admlnlstered
the Appalachian    Development Highway Program.

GAO belleves  that the organization dvectmg   any future regional  devel-
opment program ~111 need to exercise strong leadershlp   to ensure that,
State actions provide the greatest  benefit to the region as a whole.
                              Contents

                                                                      Page

DIGEST                                                                  1

CHAPTER

        1   INTRODUCTION                                                5

        2   LIMITED PROGRESSTOWARDACHIEVING GOALS OF
            APPALACHIAN DEVELOPMENT HIGHWAY SYSTEM                      9
                 Allocating  funds and establishing pri-
                     orities                                          12
                 Program results                                      14

        3   INCREASES IN ESTIMATED COST TO CONSTRUCT
            DEVELOPMENT HIGHWAY SYSTEM                                22
                Unrealistic  cost estimates                           23
                Additional  mileage and increased    con-
                  struction  of four-lane   highways                  24
                Additional  Federal requirements                      24

        4   AGENCY COMMENTS AND OUR EVALUATION                        27

        5   CONCLUSIONS, RECOMMENDATION, AND MATTERS
            FOR CONSIDERATION BY THE CONGRESS                         30
                Conclusions                                           30
                Recommendation                                        30
                Matters   for consideration by the Con-
                  gress                                               30

        6   SCOPE OF REVIEW                                           32

APPENDIX

        I   Map of Appalachian         Development     Highway
              System                                                  35
   II       Letter    dated February   17, 1971, from the
               Appalachian   Regional    Commission to the
               General Accounting     Office                          37

 III        Officials      responsible     for   the administration
               of activities       discussed     in this report       42
    COMPTROLLERGE'NERAL'S                          HIGHWAY PROGRAMSHOWSLIMITED PROGRESS
    REPORTTO TBE CONGRESS                          TOWARDINCREASING ACCESSIBILITY TO AND
                                                   THROUGHAPPALACHIA
                                                   Appalachian Reglonal Commxslon
                                                   B-164497(3)


.   DIGEST
    ------

    WHYTHE REVIEW WASIUDE
        The Appalachian        RegIonal Development Act of 1965 was enacted to promote
        the economic development of the Appalachian              region on a coordinated      and
        concerted regional        basis.     Studies and congressional     hearings preceding
        passage of the act emphasized that an adequate transportation                 system was
        the first     requisite     for successful     economic development of Appalachia.
        The General Accounting Office            (GAO) In its review sought to determlne
        whether the Appalachian          development     highway system was achieving     the ob-
        Jectlve    established      for 3t--to    increase accesslblllty    to, through,     and
        within    the region.


    FINDINGS AND CUilK'LVSIONS
        Limited progress has been made toward accomplishing             the obJective    of the
        development highway system, as discussed below.

        The act authorized     $1 768 billion   in Federal funds for a 6-year develop-
        ment effort    and established    the Appalachian  Regional Commission to plan
        and coordinate    it

        About $1.165 billion  was earmarked for the development             highway program.
        Of that amount, about $1.08 bllllon   was for construction             or improvement
        of development hlghways to open up isolated   areas.

        About $80 mllllon    was for building      access roads to connect industrial
        sites and recreational     areas with     maJor highways.  (See p. 8 )
        Laok of regzona2     przorztzes

        The Regional Commission established    21 corridors         within which the devel-
        opment highways would be built.     (See app. I for         map of corridors,)

        The development    highway system as planned by the Regional Commission was
        designed to connect with the Interstate          Highway System ln and surrounding
        Appalach-ra to provide access to Isolated          areas.    The Regional Commission,
        however, did not establish       construction     priorities   directed  toward
        achieving   the greatest   contrlbutlons      toward program goals at the earliest
practicable    time, nor did 7t determIne whether prlorJties         established   by
the States    were directed toward that end.   (See p. 9.)

Instead,   the    Regional Commission allocated   the Federal funds available        on
the basis of      the estimated cost of the highways authorized      for each State.
The States,      Jn effect,   were allowed to set their own pnorltles,       regard-
less of the      extent to which they might further    regional accesslblllty,            .
(See p. 9.)

About 50 percent of the highways of the development highway system have
been constructed     or planned for construct7on   with the FederaJ funds au-
thorlzed.     Some of the hIghway segments do not significantly     Increase ac-
cess7bJlJty    to and through the region.     They do, however, ease 1ocaJ
traffic   congestion   and improve local accesslblllty,

Cognizant committees of the House and the Senate have pointed out that,
al though Jt was recognized that the deveJopment highways would ease
traffic  congestion    in some parts of Appalachia,  they were not to be de-
signed and built with that obJectlve     in mind    Rather, they were to be
designed and built as instruments     of economic development--to  open up Jso-
lated regions.      (See p. 9.)

GAO believes  that the Regional Cotnnission should have given priority      to
proJects that would have provided   the greatest accessiblJlty    to and
through the region at the earliest   possible   time and that funds should
have been allocated on the basis of those prlorlties     and of the ability
of each State to proceed.    {See p. 13.)

Unapproprzated      funds
About $345 mllllon     of the program funds have not been appropriated,     and
as of February 1971 about $78 miJJion had been appropriated        but not ob-
ligated.     Thus an opportunity   St777 exists for the Regional Commlsslon to
give prlor-nty   to proJects that would contr-rbute    most toward Jmprovlng ac-
cessibility    to and through the region.      (See p. 30,)

Cost mcreases       of the hzghway system
The Regional Commission's current estimated cost of the development high-
way system 1s about $3.85 bllllon,        an increase of $2 65 billion    over its
origina    estimate.    The current estimate was compiled In a more re'llab‘le
manner than was the Jnltlal        onep and part of the Increase resulted     from
more realistic     cost estimating.

In addition,   changes in program requirements     subsequent to the start of
the program contributed    to the Increase      The changes inc7uded increases
Jn the number of mJ7es of four-lane      highways to be built and in the total
number of miles of highway to be constructed         Also new Federal requlre-
ments, Jncludlng    safety standards and design hearings,     were Imposed
(See p 22.)
        RECOJJMENDATIONS
                       OR SUGGESTIONS
           The Reglonal Commlsslon should establtsh  prlorltles for further   construc-
           tlon and should use remaining funds on proJects that ~111 contribute     most
           toward program goals    (See p 30 >


        AGENCYACTIONS AND UNRESOLVEDISSUES
           The Regional Cotrunlsslon disagreed with GAO's conclusions    that prlorltles
           for highway construction   should have been established    on a reglonal     basis
           and that funds should have been allocated   to proJects having the highest
           regional  priorities.

           The Regional Commission said that it believed     that GAO had somewhat over-
           stated the problem of hlghway fragmentation    that resulted  from permitting
           the States to set their own priorities.     The Regional Commlsslon cited
           these reasons, among others, for its program procedures.

             --Some States were not ready to provide            the required     matching   funds
                when the act was passed.
             --New layers of organization        and procedures would have been necessary
                to carry out the program on a regional         baslsP therefore   the Regional
                Commission followed    regular    Federal-aid   highway procedures,   under
                which prlorlties    are establlshed     by the States.

             --Delays in State      funding and the need to resolve            local problems would
                have prohibited     completion of all the corridors            In their entirety.

             --Recommendations   of the Governors must carry heavy weight with the Re-
                gional Commission ?n matters affecting  their States.   (See p, 28.)

           GAO believes    that some of the difflcultles,     such as delays in State fund-
           ing and the need to resolve local problems, would exist regardless         of
           program procedures.      The decision    to follow the normal Federal-aid  high-
           way procedures,     with priorities   set locally,   however, is not in consonance
           with the Congress' recognltlon       of the need for a reglonal   program, in
           GAO's opinion.      (See pp 27 and 28 >


        MATTERSFOR CONSIDERATIONBY TBE CONGRESS
           The Congress may wish to consider requlrlng           the RegIonal Commlss ion to
L          adopt a regional    approach to the construction         of the development highway
           system, allocating    remaining      funds to proJects having the hlghes t prior-
           ltles in increasing     accesstbillty      to and through the region
-   7
           The Con ress 1s currently     considering     leglslatlon       to authorize    an addi-
           tional P925 million  as   the  Federal    share    to   complete   the  system.    In




                                                  3
consldenng    that and sjmllar  future leglslatlon,   the Congress may wish
to take note of the manner In which the Regional      Commission administered
the Appalachian    Development Highway Program.
GAO believes  that the organization directing   any future regional   devel-
Ooment program will need to exercise strong leadershlp      to ensure that
State actions provide the greatest  benefit   to the region   as a whole.




                                 4
                                  CHAPTER 1

                                INTRODUCTION

       The Appalachian    region stretches    diagonally      across the
eastern United States between the populated            eastern seaboard
and the rndustrral     Mrddle West and Includes        the State of
West Vlrgxnra     and parts of the States of Alabama, Georgia,
Kentucky,   Maryland,   Mrss~sslpp~,    New York, North Carolrna,
Ohlo, Pennsylvanra,     South Carolrna,    Tennessee,      and Vlrgrnra.
For numerous reasons this region lags behind the rest of the
Nation In terms of prosperity        and economrc growth.

      The Appalachian        Regional     Development     Act of 1965, as
amended (40 U.S.C. app. I), authorized                a special   6-year de-
velopment    effort     designed to assrst the region           In (1) meet-
rng Its special        problems,   (2) promoting       its economrc develop-
ment, and (3) establlshrng            a framework for Joint Federal         and
State efforts       toward provldlng       the basrc facllrtles       essentsal
to growth,    attacking       common problems,      and meeting common needs
on a coordrnated        and concerted      regronal    basis.

       The Regional       Commlsslon, which was established         by the
act to plan and coordinate           various  special  programs that were
authorized,       comprises a Federal cochalrman        appointed    by the
President      and the Governor (or his desrgnee)         of each of the
13 participating        States.    Declsrons   by the Regional      Commls-
slon require       an afflrmatlve     vote by a maJorlty      of the State
members.       Also the Federal cochalrman must approve all proJ-
ects under the program.           Each State,   however, was granted
veto power over acceptance           of programs within     Its boundaries.

         To assist      In the economrc development         of the region,       the
act authorized          Federal    funds for highway and nonhlghway          pro-
grams.        The nonhrghway programs involve           demonstratron      health
facrlltles,        land utrlrzatron       and conservation,      prrvate    non-
profit      timber development         and marketing,    mane restoration,
housrng,       vocational      educatron,   sewage treatment,       and water
resource       studies.

        The maJor part of       the highway program rnvolves      the con-
struction    of a system      of development    highways.     The House
and Senate Committees         on Public Works, In reporting       on the
bill    to assist in the      development    of the Appalachian     regron
                                         5
(H. Rept. 51 and S. Rept. 13, 89th Cong., 1st sess.),     empha-
srzed the importance   of the development  highway system to
the economic development    of the region.  The Senate report
states,  in part

                    "Transportation        and Access

              "The isolation   of Appalachia     and the neglect
     which 1s the major cause of its economic 111s are
     directly     attributable   to the lack of adequate ac-
     cess to, from, and within         the region.      In testr-
     mony before this committee,          rt has been apparent
     that a comprehensrve       developmental      highway system
     is the most important       aspect of the program for Ap-
     palachia.

           "In   the report     of the President's    Appalachian
     Regional    Commission,     the point   is made.

            'The remoteness   and lsolatlon    of this region
           lying directly    adjacent    to the greatest  con-
           centrations    of people and wealth in the coun-
           try y is the very basis of the Appalachian        lag.'

           "The report  of the President's       Conxnissron gave
    the highway problem       'a double priority    of emphasis,'
    concluding    its section    on highways with the state-
    ment that:

            'Its  (Appalachia)       penetration      by an adequate
           transportation       network is the first           requisite
           of its full     partlclpatron         in industrial       Amer-
           ica.'

             "The commrttee is charged with the primary
    legislative       responsibility        in the Senate for hrgh-
    way development          In the United States.        During the
    hearings     *** and in previous          hearings   on general
    highway legislatron,             the committee has received
    conclusive      evidence       from many studies     which have
    demonstrated        the impact of highways on economic
    development.          For that reason the reported         bill
    authorized      the Appalachian         Development   Highway Sys-
    tem to be built          in conjunction      with the interstate

                                      6
     and prrmary and secondary systems.                 The Federal
     Government would contrrbute             $840 mrllron     from the
     general    fund for the constructron            of the new devel-
     opment highway system which would be designed to
     provide    access to the presently           almost rnaccesslble
     subregrons     of Appalachia.         These highways,       while
     they would ease the traffic             congestron     rn some
     parts of Appalachra,           will not be constructed        with
     that particular       oblectrve      rn mind.      Rather they
     wrll be burlt     as instruments         of economic develop-
     ment to generate       traffic      where none presently
     exrsts.      They will    do so by opening up areas to
     development     which, because of therr present remote-
     ness and lsolatlon        have not been developed.

             "Appalachia        1s a land of promise.               Its natural
     resources       foretell      both its rndustrlal            and recre-
     ational      future.       Untrl   its natural        resources     can
     be moved swiftly           to their processing           sites and then
     to their markets they will               remain an unrealized
     potential.         Tourism, upon whrch a substantral                  part
     of Appalachia's          future    prosperity       will     rest,  can-
     not be explorted           untrl   travel-time        both into and
     within     the region        1s Improved.        The Appalachian         de-
     velopment       highway system will           provide      the means to
     insure that this rndustrlal                 and recreational        po-
     tential      1s realized.

             !'The funds for this program will        be provided
     from the general       fund.   There will     be no reliance
     upon the highway trust       fund and thus no threat         1s
     offered      to that fund's  fiscal  integrity.

             "The States rn Appalachia           have put a drspro-
     portionate      amount of their       primary     ard highway
     funds into their        Appalachian      areas.      *** the Pres-
     ident's     Appalachian      Regional    Commsssaon documents
     that point.       The participating         States will     provide
     $360 mlllron       of their    own scarce funds to build
     the 2,350-mile        development     system."       (Underscorrng
     supplred.)

       The House report   on the same brll   included   almost rden-
tlcal   language in drscusslng   the importance     and purpose of the
development     hrghway system.
                                  7
       The development     highways that have been authorized        un-
der the act are major roads desrgned to open up isolated
areas havrng development        potentral     and to link such areas
with the Interstate      Highway System and other Federal-aid
highways in the reg1on.l          The Federal    share of the cost of
constructing     the development     highways is lrmited     to 70 per-
cent of the cost of a two-lane           highway and 50 percent   of the
cost of a four-lane      highway.

       The Regional  Commission in 1970 estimated   the total cost
of the development    highway system 1s to be about $3.85 brl-
Iron,    an increase of about $2.65 bslllon  over its inltlal
estimate    rn 1963 of $1.2 bllllon.

       The Federal    share of the highway program,        as authorized
by the act, as amended, 1s $1.165 bllllon.             Of thus
$1.165 bllllon,      about $1.08 billion     was for the development
highway system, about $80 million          was for the construction
of access roads to connect industrial          sites or recreational
areas with the major highways in the region,            and the remaln-
ing $5 million      was for adminlstratlve     expenses associated
with the construction      of the development      highways and access
roads.     Through fiscal   year 1971, about $820 mlllron         has been
appropriated     for the highway program.

        As of February   1971, about $657 million,    or about 61 per-
cent, of the Federal      funds authorized    for the development
highway system had been obligated         and about 33 percent    of the
system had been constructed       or was under constructron.       An
additional    20 percent    of the system, estimated   to cost about
$423 mllllon,    has been planned for construction.


1The National        System of Interstate          and Defense Highways is a
 42,500-mile       system of highways linking             the major metropoll-
 tan areas of the country.              Other Federal-aid         highways In-
 clude (1) the Federal-aid             primary     system, consisting        of im-
 portant    city-to-city,       interstate,        and intrastate       highways
 serving    essentially      through      traffic,     (2) the Federal-aid
 secondary      system, consisting          of routes     serving    local   traffic,
 and (3) extensions        of these two systems into urban areas.




                                          8
                                    CHAPTER 2

           LIMITED     PROGRESS TOWARDACHIEVING               GOALS OF

              APPALACHIAN DEVELOPMENT HIGHWAY SYSTEM

        About 50 percent          of the hrghways of the development
highway system have been constructed                  or are planned for con-
struction      with the Federal          funds authorized.         It appears
that in many cases the highways constructed                     or planned for
construction        will    improve access to certain           areas within
the region       and will      provide     benefits   by easing local         traffic
congestion.         Limited     progress      has been made, however,           to-
ward the program objective               of lncreaslng     accessibility          to
and through       the Appalachian          region.    The cognizant        commlt-
tees of both the House and the Senate pointed                      out, at. the
time the program was recommended for approval,                       that,    although
it was recognized           that the development        highways would ease
the traffic       congestion        in some parts of Appalachia,            they
were not to be deslgned               and constructed     with that particular
objective      in mind.        Rather,     they were to be designed           and
built     as instruments        of economic development--opening                up for
development,        areas which, because of their             remoteness        and
isolation,       had not been developed.

       The act authorized         a 6-year highway program and allo-
cated about $805 millron            for the development          highway system.
The highway system as planned by the Regional                      Commission
was designed primarily          to connect with the Interstate                  High-
way System in and surrounding               Appalachra      to provide      access
to the almost inaccessible              regions    of Appalachia.         The Re-
glonal    Commission believed           that Federal     financial       particlpa-
tlon would be limited         to the amount authorized              and recognized
early    XI the program that available              Federal    funds would not
be sufficient      to complete        the entire     highway system.            The
Regional    Commrssion, however,             did not take appropriate             action
to establish     priorities       to ensure that the objectives                 of the
development    highway system would be accomplished                    to the ex-
tent possible     within    the available         funds

      The Regional   Commission allocated     funds to provide     each
State with a proportionate     share of the Federal     funds avail-
able on the basis of the estimated       cost to construct     the
total  miles of hrghways authorized      in each State.     Each

                                            9
State was permrtted,     In effect,    to establish              Its own con-
struction  prlorltles   regardless     of the extent               to which such
prlorltles  might further     regional   accesslblllty

       As a result      of these circumstances,           completion      of those
portions      of highways as currently         designated       by the lndlvld-
ual States and approved by the Reglonal                 Commrsslon will        re-
sult In the construction          throughout       Appalachia     of segments
of highways,       some of which do not slgnlflcanfly               increase     the
accesslblllty       to and through the regron.             Although      some In-
creased moblllty       ~111 result      from the construction           of these
highway segments, some of the communities                  served by these
segments will       remain relatively       isolated     unless the completed
segments are connected         to the Interstate         System.

         We believe        that a need exists        for the Reglonal         Commlsslon
 to assume a leadership              role by establlshlng         highway con-
 structron      prlorltles        directed     toward accomplishing         the ob-
jective      of the development            highway system.        Of the funds au-
thorized      for the program,            about $345 mllllon        of funds have
not been appropriated,               and as of February         1971 about
 $78 mllllon       had been appropriated            but not obligated            There-
fore,     with respect         to these funds,       an opportunity       still    ex-
ists for the Regional              Commission to place prlorltles               on
completing       those projects          which would contribute          most toward
the accomplishment             of the program goal--improving             accessi-
bility     to, through,          and within      the region--at      the earliest
practicable        time.

        The Appalachian      Regional    Development  Act of 1965 autho-
rized the constructron         or reconstruction     of 2,350 miles of
highways.      Subsequent     amendments to the act increased      the
number of miles of highway which could be constructed              or lm-
proved to 2,700         The size of the highway system itself,
however,    could be greater        than the 2,700 miles of highway
authorized     If the Regional        Commission were to decide that
existing    highways not In need of improvement          should be part
of the system.       Existing     highways which became part of the
system were, in most cases, p art of the primary             and second-
ary systems of the Appalachian            States.

     The Reglonal    Commlsslon          was directed       by the    act,   as
amended, to establish*


                                          10
      1. The general       corridor   locatlon--routes             the highways
         would follow       through   the region.

      2. The designation        of local      access     roads     to be con-
         structed.

      3. The priorities for construction of the local    access
         roads and the maJor segments of the development
         highways.

         The Reglonal    Commission has approved a development
hlghway system 2,954 miles in length         and located     along 21\
corridors      in 10 of the 13 Appalachian    States.     About 2,530
miles of highways In this system are considered            inadequate,
requiring      either  new construction   or improvement,      and are
eligible     for financing    under the act.

       The Regional    Commission did         not contemplate     highway
construction    or improvements     in       South Carolina,     Alabama, or
Mississippi    because these States           either  were reasonably     well
served by the Interstate       System        or were included     as part of
the Appalachian     region  after   the       development    highway system
had been established.

        The locations     of the corridors   were selected and ap-
proved by the Regional         Commission as part of the development
highway system on the basis that they would benefit          overall
regional    development     by accompllshlng   one or more of the
following     objectives.

      1. Link major economic centers              in Appalachia            to the   In-
         terstate  Highway System.

      2. Provide    access between          key markets        surrounding      the
         Appalachian     region.

      3. Provide     access to large areas of Appalachia     having
         significant      potential for recreational  development.

      4. Provide    greater    access to major           job     centers     in and
         around    Appalachia.




                                       11
 ALLOCATING FUNDS AND ESTABLISHING                  PRIORITIES

         The Reglonal       Commrsslon allocated               Federal      funds to the
 States on the basis of its cost estimate                         for the miles of
highways requiring            construction         In each State.             The Regional
Commission allocated            the Federal funds on this basis because
of its conviction           that Federal         financial        participation         in
the construction          of the development             highway system would be
 limited    to the $805 million            originally          authorized        by the
act and because of its desire to ensure that each State
would receive       a share of the funds.                  Each of the States in
the region established             its own prioritres              and was permitted
to use Federal        funds to construct              the highest         priority
project     within    its boundaries.              The Regional          Commission did
not establish       construction         priorities          directed      toward
achieving      the greatest        contributions           toward program goals--
improving      accesslbillty         to, through,          and within        the reglon--
at the earliest         practicable        time, nor did it determine
whether the priorities             established          by the States were dl-
rected toward that end.

        As early as July 1965--shortly               after    passage of the
 act--the    Regional     Commission was aware that the Federal
 funds authorized        were considerably         less than those needed
 to complete the entire          system.      It therefore          initiated        ac-
 tion to establish        a system of priorities            for the construc-
tion of the development            highway system.          The States were re-
quested to identify         the adequate and inadequate                   sections      of
existing     highways within         the established        corridors.            On the
basis of information          furnished      by the States,           the Regional
Commlsslon established           a tentative       priority      listing        for
each State.        The highest      priority     was assigned to those
projects     which had been approved for construction                         by the
Regional     Commission as of July 1, 1966, wlthout                       first     de-
termining      whether these projects           should have had the high-
est prlorltles        in terms of increasing            the accessibility             to
and through      the region.

        The tentative   priority   listing    showed which of the re-
maining projects      could be constructed      with the Federal  funds
allocated     to the States.     Construction    of the remaining
mrles of inadequate       highway was to be deferred.



                                            12
       In August 1966 the Regional         Commission requested    each
State to review the tentative         priorities,     recommend appro-
priate   revisions,     and furnish   supporting    information  for its
recommendations      by mid-September      1966.   The Regional  Commls-
sion, in turn,      was to review the States'       recommended revl-
slons and revise      the tentative    priorities.

         Our detailed        review of the programs in Kentucky and
West Virginia          showed that highway officials                of those States
had objected         to the Regional           Commlsslonfis     tentative      priori-
ties because they did not correspond                     with the States'          prl-
orities.       Each State submitted              to the Regional         Commission a
recommended list           of proJects         which placed the highest            prl-
orlty     on projects        that had been approved for construction                       by
the Regional         Cormnlsslon as of July 1, 1966.                  The lists      sub-
mitted     by Kentucky and West-Virginia                 also included        other
projects     in the highest           priority      category     that differed          from
the tentative         priority      listing      that had been established                by
the Regional         Commission.          The Regional       Commission accepted
Kentucky's       and West Virginia's             recommendations         generally        as
they were submitted             and, in effect,         permitted      the States to )
establish      their     own priorities.

        We believe        that the Regional         Commission should have
established       priorities        for the completion          of projects       which
would have provided             the greatest      acceseiblllty       to and
through     the region at the earliest               possible     time and should
have allocated         funds on the basis of the priorities                   estab-
lished    and the ability           of each of the States to proceed.
One approach the Regional               Cormnlssion might have taken would
be to concentrate            on constructing        highways connecting           with
the Interstate         System within         and surrounding        Appalachia.
If this approach had been taken,                  there would have been
greater     assurance        that the highways which were to be con-
structed      with available          Federal   funds would have improved
the accessibility            to the region      from the economically             de-
veloped areas surrounding               it.    Had priorities        been estab-
lished    on this basis,           some of the problems discussed               in
the following        sections       of the report       could have been
avoided.




                                            13
PROGRAMRESULTS
       If completed, the highway system approved by the Re-
gional Commission ~~11 provide increased accessibility      to
the region.      However, only 1,345 of the approximate 2,530
miles of highway needing improvement are planned for con-
struction   or improvement within the presently authorized
Federal funds. Although the 1,345 miles of highway repre-
sent completion of over 50 percent of the system, the seg-
ments planned for completion will be scattered throughout
the participating     States.
      Hlghways on 20 of the 21 corridors required improve-
ments. None of the highways on the 20 corridors are planned
for completion in their entirety,   and in many Instances the
segments of the highways that have been constructed or are
planned for,construction  will not be connected to the Inter-
state System. If completed, rather lengthy segments of the
corridors which are not planned for construction    would en-
hance the accessibility  to and through the region sought un-
der the program.
     The following  examples are illustrative   of the manner
in which the highway system was constructed.

     1. East-west corridors-- The system included two corri-
        dors to provide access to the region from the popu-
        lous Baltimore, Maryland, and Washington, D.C.,
        metropolitan   areas. As can be seen on the follow-
        ing map, neither of these corridors    is planned for
        construction   in its entirety and the major part of
        the southern corridor has been deferred.




                              14
15
                                                                                                 --




Although      West Vlrglnia    and Maryland        constructed       a
srgnificant       part of the northern        corridor     and
thereby     increased     the accesslblllty        of the area
traversed      by the corridor     to an Interstate          highway
in Appalachia,        Maryland   deferred     construction        of
sections      of this corridor     which would complete the
link from the Baltimore         and Washlngton metropolitan
areas.      Unless these sectlons          are completed,       the
primary     purpose of the corridor--to            provrde     a maJor
highway in that part of Appalachia               to increase       ac-
cessibility       from the Baltimore        and Washington
areas-- will      not be accomplished.

Although     sections    of highways provrdlng       increased
local mobility       were being constructed      throughout
Appalachia,       as can be seen by the following         map, a
lengthy     section   of highway which would have in-
creased accesslblllty         to and from the Crnclnnati
and Dayton, Ohio, and Indranapolis,           Indiana,      indus-
trial    areas was deferred.




          DEFERRED   SECTIONS       OF DEVELOPMENT            CONSTRUCTION     ASSISTED   OR TO BE ASSISTED
                                                          I   WITH APPALACHIAN      HIGHWAY   FUNDS
          HIGH WAY SYSTEM

          ADEQUATE     SECTIONSOF      DEVELOPMENT
illumll   HIGHWAY    SYSTEM



                                                     16
                2. Increasing     local mobility--In      establishing     the sys-
                   tem, the Regional        Commlsslon determined      that there
                   was a need to connect Altoona,          Pennsylvania,      to the
                   Interstate    Highway System which would provide
                   greater    access between Altoona       and such industrial
                   centers    as Pittsburgh     and Philadelphia,      Pennsylva-
                   nia (via Interstate        Route 76) and New York City
                   (via Interstate      Route 80).

                        As can be seen by the following      map, highways have
                        been constructed     or are planned for construction
                        in and around Altoona      that will  increase     local mo-
                        bility.    For the most part,    however,    the sections
                        of development    highways which would provide          access
                        between Altoona    and the non-Appalachia       regions    have
                        been deferred.




m    DEFERRED
     HIGHWAY
                    SECTIONSOF
                 SYSTEM
                                       DEYELOFMENT   CONSTRUCTION
                                                     WITH   APPALACHIAN
                                                                           ASSISTED
                                                                                 HIGHWAY
                                                                                         OR   TO BE
                                                                                               FUNDS
                                                                                                       ASSISTED



    ADEQUATE       SECTIONS      DF   DEVELOPMENT
m   HIGHWAY     SYSTEM




                                                                          17
Another example of constructing          hlghways to provide
increased    local moblllty    1s a corridor     which was
designed to open up areas of Tennessee and Kentucky
and to link these areas with the Interstate            System.
Several   sectlons   of the hlghway on this corridor,
ranging   from about 3 to 14 miles In length,          have
been constructed     or are planned for construction
where communltles     exist,   and these sectlons      have
increased    or will  increase   moblllty     for those con-
cerned with the communltles.

However, some sections     of the highway,        ranging   from
about 5 to 47 miles In length,        between communltles
have been deferred.     The fragmented       highway which
results  can be seen by the following          map. The com-
munltles  served by the completed        sections     of the
highway will   remain relatively      isolated     unless the
sections  of the highway between them and linking
them with the area outside       Appalachia     are completed,




                          18
                                                       I
 COOKEVILLE                                            \




                                                       -

DEFERRED      SECTIONS   OF DEVELOPMENT   HIGHWAY    SYSTEM

CONSTRUCTION     ASSISTED   OR TO BE
ASSISTED   WITH APPALACHIAN     HIGHWAY   FUNDS


ADEQUATE      SECTIONS   OF DEVELOPMENT   HIGHWAY   SYSTEM




                           19
     3.   State-lrne      crossings--The       States'     Influence       on the
          establrshment       of prlorltles       IS illustrated         further
          by the circumstances           that exist on the development
          highways at the State-line            crossings.         Of the 21
          corridors     included      as part of the development              sys-
          tem, 14 crossed State lines at 21 different                      loca-
          tions.     Of these 21 State-line            crossings      (1) con-
          struction     of one crossing        had been completed            on
          both sides of the State lrne,              (2) construction           of
          one was In process on both sides of the State line,
          and (3) construction           of 13 had been deferred             on
          both sides of the State line because the mlleage to
          be constructed       had a low prlorlty.             The remaining
          SIX State-line        crossings     were In either        the prellm-
          lnary engineering         phase or the rzght-of-way              acqulsl-
          tlon phase.        Examples of State-line            crossings      are
          shown on page 21.

       We belleve that the examples on pages 14 to 21 demon-
strate   the need for the Regional   Commlsslon to carry out the
pqogram on a regional    prlorlty  basis,  Appendix 1 contains
a map showing the system as designed and those parts of the
system that have been deferred.




                                        20
   ILLUSTRATION OF STATE-LINE CROSSINGS




TENNESSEE

                                                  PENNSYLVANIA




                             LEGEND

                         prj         State    boundary      line


                         ~ffffffff   Construction      to be
                                     asslsted     with Appalachxan
                                     highway funds

                         -           Deferred    sectlons   of
                                     development     hlghway system

                         1-i         Adequate sectlons   of
                                     development  highway system
                         rI;40\      Interstate     Route     40




                    21
                                      CHAPTER 3

              INCREASES IN ESTIMATED COST TO CONSTRUCT

                        DEVELOPMENT HIGHWAY SYSTEM

       In 1970 the Regional         Commission estimated        that the
 cost of constructing       the development       highway system would
 be about $3.85 billion,          an increase    of about $2.65 billion
 over the initial      estimate     of $1.2 billion      developed      in
 1963.    The Federal     share of the development         highway system
 is currently     estimated     to be about $1.97 billion,          an in-
 crease of about $1.16 billion            over the initial      Federal
 share of $805 million        when the act was passed.

        The higher        1970 cost estimate        resulted,        in part,    from
 the development          of more realistic       estimates        after    the de-
 velopment      highway program was initiated.                  In addition,       sev-
 eral changes in program requirements                  resulted        in increases
 in the estimated          costs.   These changes related                to (1) an
 increase     in the number of miles of highways to be con-
 structed,      (2) an increase       in the number of miles of four-
 lane highways to be constructed,               and (3) new Federal re-
 quirements       related    to safety,     relocation        allowances,       and
 public    design hearings.

         We recognize      that many of the program changes may be
  necessary     and may be beneficial          to those who use or who are
  affected     by the highways.        These program changes were not
  known at the inltiatlon          of the program and consequently
  could not have been provided            for in estimating          the initial
  system costs.        The part of the increase           attributable        to the
  development     of more realistic         cost estimates        could have
  been avoided,      however,    if more reliable         cost estimates         had
  been developed       at the initiation         of the program.         Reliable
  cost estimates       are necessary      to enable the Congress to make
  sound decisions       concerning     the merits of a program and the
  Federal    funds to be authorized          to carry it out.           Because of
  the unrealistic       cost estimates       and the changes In program
, requirements,      the currently       authorized     funds are sufficient
  to complete only about 50 percent               of the planned develop-
  ment highway system.


                                            22
       A further   explanation       of the manner in which the cost
estimates     were compiled and the effects       of the changes in
program requirements        follows.

UNREALISTIC       COST ESTIMATES

      Kentucky and West Virginia     did not develop the initial
cost estimates  for the construction       of the development   high-
way system in the usual manner of applying        the latest   avail-
able cost data to the estimated      quantities   of materials    and
labor to be used based on detailed       plans.

        For example, West Virginia           compiled    its inrtial       cost
estimates     by applying     to the total      development        highway mile-
age to be constructed         in the State,       an estimated        per mile
cost for two highways which were to be part of the develop-
ment highway system.          The cost estimates         for these two high-
ways had been developed         earlier--one        several    years before.
The State then adjusted         the cost estimate           to recognize      some
cost increases      up to about 1963.          The resulting        cost esti-
mate was further       adjusted    to take rnto consideration              the
terrain    over which the other Appalachian              corridors       in the
State were to be constructed.              No provision       was made for
possible    increases     in cost during the construction               period.

       West Virginia    highway officials     recognized     that the
procedures     used had resulted    in an unreliable      estimate   and
cautioned    the Regional    Commission against      undue reliance    on
the data.      The data was used by the Regional         Commission,
however,   to compile its initial        cost estimates.

        Although     we did not make a detailed              analysis      of the
subsequent       cost estimates       developed      by the States and used
by the Regional        Commission,       those estimates           had been com-
piled     in a more reliable         manner--using        the most recent cost
data available        and the quantities          of materials          and labor to
be used and taking          into consideration          the location        of the
highways.        No provision      was made for increases               in costs
during the constructron            period,      however,     in compiling        the
subsequent       cost estimates.         West Virginia         officials      informed
us that it was not customary               to include       a provision       for in-
flation      in compiling      hlghway cost estimates.                The absence of
such a provision,         especially       during a period          of rising      con-
struction      costs such as that experienced                from 1965 to 1970

                                          23
when construction       costs increased about 7 percent                    a year,
makes it likely      that the most recent cost estimate                     may be
substantially     lower than the actual cost.

       In 1970 the Regional   Commission estimated        that reflne-
ments in cost estimates     accounted       for about $100 million     of
the increased    Federal share.     Inflation,     on the other hand,
accounted   for about $500 million       of the increased     Federal
share.

EDITIONAL  MILEAGE AND INCREASED CONSTRUCTION
OF FOUR-LANE HIGHWAYS

       At the initiation        of the program, about 2,100 miles of
highway on the system were considered              inadequate   and in
need of improvement.           Since that time, about 400 miles of
highways needing improvement            have been added to the system.
According      to the Regional       Commission's    estimates,  the addi-
tional    mileage    increased     the Federal    share of constructing
the system by about $300 mullion.

      In addition,     the States decided that more of the high-
ways should be four-lane         highways,     rather   than two-lane
highways as originally        planned.     Although     the Federal   share
of a four-lane     highway is 50 percent,           compared with 70 per-
cent for a two-lane       highway,     the decision     that there should
be more four-lane      highways increased         the Federal   share by
about $85 million.

ADDITIONAL      FEDERAL REQUIREMENTS

        Several new Federal          requirements         for construction          of
highways that were adopted after                  the initial        cost estimates
were developed         have resulted       in significant          increases      in
the cost estimates.             In addition,        the Federal       requirements
have resulted        in delays which, in a period                 of rising    con-
struction      costs,     further    contribute        to the increases         in the
cost to complete the system.                 Although       no firm cost data
can be associated          with such delays,           hlghway construction
costs have increased            about 7 percent          a year since 1965.            We
found no evidence           that the new Federal            requirements      had in-
fluenced     the establishment          of priorities          for the construc-
tion of the development            highways.


                                           24
    Safety   standards

             The Federal    Highway Admlnistratlon,             Department   of
    Transportation,        adopted the safety         standards      of the Ameri-
    can Association        of State Highway Offlcrals             In 1967.    These
    standards,      such as a 30-foot          clear zone--an       area on each
    side of a roadway that must be clear of such obstructions
    as rocks and trees --and full-shoulder                width on all bridges,
    became part of the design criteria                for all Federal-aid         hlgh-
    ways In the effort         to make highways safer.              The Regional
    Commission estimated          that these safety         standards     had in-
    creased the estimated           cost to complete the development              hlgh-
    way system by about $150 mllllon.                 Also a Kentucky highway
    offlclal     estimated     that these standards          had delayed the com-
    pletion     of several     projects      in Kentucky      from 9 to 12 months
    and thereby       had further      increased     costs.

    Relocation     assrstance

            The Federal-aid      Highway Act of 1968 (23 U.S.C. 501)
    provided    relocation      assistance       to persons,    businesses,
    farmers,    and nonprofit       organlzatlons       drsplaced     as a result
    of Federal-aid       highway programs so that they would not suf-
    fer disproportionate         lnjurles      as a result     of programs de-
    signed for the benefit          of the public       as a whole.       The pro-
    visions    of this act relating         to relocation       assistance     were
    repealed    and replaced       by the Uniform Relocation           Assistance
    and Land Acquisitron         Policies     Act of 1970 (84 Stat. 1894).
    Under the provisions         of these two acts, displaced             persons
    were to be given compensation              as well as assurance that
    safe, decent,       and sanitary      dwellings     were available.         The
    Regional    Commission estimated           that these requirements         had
    increased     the Federal      share by about $25 millron.

           Our review revealed    several     cases where the construc-
    tion of segments of the development           highway system had been
    delayed because the States of Kentucky             and West Virginia
    could not provide     safe, decent,     and sanitary      housing    for
    displaced    persons.    For example,     in Kentucky     one project
    was delayed about 2-l/2      months until       the proper facilities
-
    could be provided.       In West Vlrginla       one project     was de-
    layed over 1 year for the same reason.



                                           25
Design hearings
      The design hearing is a new requirement established    in
January 1969 by the Federal Highway Administration    to pro-
vide the persons along a proposed highway route with an op-
portunity   to voice any objections to the precise location
and major design features of a proposed highway.     Our re-
view showed that this requxrement could cause as much as a
4-month delay even if no problems resulted from the hearing.
If problems are encountered and a restudy of the alignment
of a project is necessary, the delay could be significantly
longer.
      Our review of 15 projects in Kentucky and West Vir-
ginia showed that the requirement for design hearings had
delayed the projects from about 3 to 16 months.




                              26
                                     CHARTER 4

                 AGENCY COMMENTS AND OUR EVALUATION

      The Reglonal     Commlssron, in commentrng on our draft            re-
port by letter     dated February      17, 1971 (see app II),        ex-
pressed Its belief      that we had somewhat overstated           the prob-
lem of highway fragmentation         that had resulted     because the
States were permitted       to establish    their  own prlorrtles

        The Regional      Commission stated     It had established      a
regional    adequacy-rating       system whereby the highest       prlorlty
for construction        funds was asslgned to the least adequate
 sections   or to entirely       new alignments     within each State.
The purpose of the rating           system was to ensure that,      within
the llmlted      Federal    funds available,      as much of the develop-
ment hlghway system as possible            could be constructed     to the
highest    overall    regional    adequacy,

        We believe          that,    because the development            highway system
was authorized           to provide          greater   accessrblllty       to, through,
and within        the region,          the Regronal       Commission should have
establrshed         prlorltles         designed      to meet this end.         Cur re-
view showed that the manner in which prlorrtles                            had been
assigned by the States,                  In many cases, had not slgnlflcantly
Increased      the accesslbllrty                 to and through      the region.     Con-
sequently       It is apparent             that permlttlng        each State to es-
tablish     prlorltles           for improvements         wlthln     the State does
not necessarlfy             contribute         to the program goal

        In presenting     our findings      to the Regional    Commission,
we observed that one approach the Regional              Commission might
have taken in allocatrng          funds to the States was to rank the
various    highway corridors        In terms of antlclpated      economic
development       along the route of the corridors          and to fund
proJects     withIn    the corridors     having the highest     prlorrtles.

        The Regional    Commission apparently     interpreted     this ob-
servation    as a suggestion     that lndrvldual     corridors    be com-
pleted    In their   order of prlorrty        The Regional     Commlsslon
provided    us with a number of reasons why this approach would
not be practicable.



                                            27
         Some of the reasons        given        by the Regional   Commission
were :

         1. Some States were not ready to provide   the required
            matching funds when the act was passed.

         2    New layers    of organization      and procedures  would have
              been necessary    to carry out the program on a regional
              basis;  therefore     the Reglonal    Commlsslon followed
              regular   Federal   highway procedures      under which prl-
              orltles   are established     within   the States by the
              States themselves.

         3. Delays in State funding  and the need to resolve   lo-
            cal problems would have prohlblted   completion  of all
            the corridors  in their entirety.

         4. The recommendations     of the Governors must carry
            heavy weight with the Regional      Commission In matters
            affecting  their   States.

         Itwas not our intention            to suggest that the program be
 carried   out by completing          corridors      in their      order of prl-
 orlty.    We intended        to point out to the Reglonal               Commission
 that a regional        program should be carried              out on the basis
of regional     priorities.         Certain     problems noted by the Re-
gional    Commission,       such as delays in obtaining               State match-
 ing funds and the need to resolve               local problems,          would ex-
 ist regardless      of the manner In which the program was car-
ried out.      Other matters,        however--such        as the decision        to
carry out the program in accordance with the normal Federal-
aid highway program procedures,               which results         in construc-
tion on the basis of local prlorltles--in                      our opinion     do not
adequately     meet with the Congress'             recognltlon        of the need
for establrshing         a reglonal     program.             i

       In authorlzlng     this program the Congress recognized
that,    in the past, attempts     at solutions   to the problems of
Appalachia      had been made on four levels:       by rndlvlduals,      by
local    groups,   by communltles,    and by each of the States,        with
the Federal      Government involved    at each level.      In each case
it was demonstrated       to the Congress that success was llmlted
by the fact that the problems were truly          regional     In scope
but that the solutions        were proposed on a piecemeal       basis.

                                            28
Therefore    the Congress supported        the regional      program which
the States had asked for and had promrsed to support,                   in the
expectatron     that the Reglonal      Commlsslon would establish
program prlorrtles      glvlng   conslderatlon      to pertinent      factors
of economic development,       lncludlng      a determination       of the
relatlonshlp      of a proJect   request     and overall     regional     de-
velopment.

        The Regional     Commlsslon did not disagree            with our ob-
servatlons     concerning       cost estimates       but stated that changes
In cost estimates        over those developed           In 1963 could be
attributed     prlmarlly      to two factors.         (1) neither    time nor
flnanclal     support had permitted            the preparation     of deflnl-
trve cost estrmates         In 1963 and (2) the orlglnal            1963 cost
estimates     developed    by the States had been scaled down at
the request     of the Federal       Government because of a deter-
mlnatlon    that all the required            funds could not be authorized
at that trme.




                                      29
                                CHAPTER 5

                  CONCLUSIONS, RECOMMENDATION, AND

             MATTERS FOR CONSIDERATION BY THE CONGRESS

CONCLUSIONS
                                                                                .
         The Regional   Commission did not establish       construction
priorities     directed   toward achieving    the greatest      contrlbu-
tions toward the program goal--improving          accesslbillty         to,
through,     and within   the region-- at the earliest      practicable
time, nor did it determine        whether the priorities        established
by the States were directed         toward that end.

        The Reglonal     Commission adopted a passive role in the
administration        of the highway program and was concerned
primarily      with approving     the actions    taken by the States.
As a result,       those sections    of the highway system that have
been approved for construction           within    the currently     autho-
rized Federal funds will          be scattered     throughout     the partl-
cipatlng     States and some sections         do not significantly       In-
crease accessibility        to and through the region

     Of the funds authorized     for the program, about $345 mil-
lion have not been appropriated      and as of February    1971 about
$78 million  had been appropriated     but not yet obligated.

RECOMMENDATION

      We are recommending that the Regional       Commission estab-
lish priorities   for the further    construction    of the system
on the basis of the potential     for improving    the overall
accesslbillty   of the region and use the remaining        Federal
funds under the program-- about $423 million--on        the basis of
the priorities   established.

MATTERS FOR CONSIDERATION BY THE CONGRESS

      Because of the limited           progress    made toward accomplish-
ing the primary      obJective     of the development        highway system--
to provide   greater     accessibility        to and through the region--
the Congress may wish to consider              requiring   the Regional
Commission to adopt a regional             approach to the construction

                                     30
of the hrghway system.                The Congress may wish also to re-
qulre that the Regronal               Commlsslon establish     reglonal   prl-
orltles      and allocate         funds to those proJects      having the
highest      regional     prlorltles      as they relate    to lncreasrng      the
accesslblllty         to, through,       and within   the region.

        The Congress 1s currently         considering       leglslatlon         which
would authorize,        among other things,         $925 mllllon        addltlonal
as the Federal       share to complete the system.               In conslderlng
this leglslatlon        and future   leglslatlon         of a similar       nature,
the Congress may wish also to consider                 the manner In which
the Regional      Commlsslon administered           the Appalachran         develop-
ment hrghway program.          We believe      that the admlnlstratlve
organlzatlon      which heads any future          regional     development
program ~111 need to exercise           strong and effective             leader-
ship in conslderlng        and approving       actions     by the lndlvldual
States,      to ensure that such actlons          are directed        toward pro-
vrdlng     the greatest    benefit   to the region as a whole.




                                         31
                             CHAPTER6

                          SCOPE OF REVIEW

       Our review was conducted at the Appalachran         Regronal
Commission headquarters       in Washington,  D.C., and at the high-
way departments      of the States of Kentucky and West Vlrglnia.
These States were selected       because they received     a signifl-
cant part of the funds for the development         highways.      We
undertook    our revPew to compare the progress made under the
development     highway program wrth the obJective      established
for it in the act,

       We reviewed  pertinent    leglslatlon   and policies   and pro-
cedures of the Reglonal       Commission.    We also held discussions
with appropriate    officials    and reviewed   records of the Re-
gional   Commrssron and the States pertalnlng         to the Appala-
chian development    highway program.




                                 32
APPENDIXES




  33
  APPALACHIAN
          DEVELOP#ENT
                  HI6HWAY
                        SYSTEM-
                             I APF
MICHIGAN




                0 H I




                                                       RGINIA




           C,                                      - __ __
                                                   CAROLINA        -   -   - - - --




                                             HIGHWAY      SYSTEM
                            ’=   IITEISTATE1161WAY SYSTEI
                             =   DEVEUP~EWT  116llWY SYSTEM
                            --   ADEQMTE  SECTMMIF IEVELOPf4ElT   lllElUAY SYSTEM d
                            L-   SECTIllSOFMYELOPUEIIT lJl6llWAYSYSTEM  TOBEDEFEERB
                             I                          \                   /
                        C

                   \ BEST
                                                                                APPENDIX II    '

                       THE   APPALACHIAN          REGIONAL         COMMISSION
                                   1666 CONNECTICUT           AVENUE
                                    WASHINGTON,         D C     20235

                                  February             17,     1971


Mr. Henry Eschweqe
Associate      Director
Clvll   Divlslon
United    States     General
   Accountlnq       Offlce
Washlnqton,       D.C.     20548

Dear Mr.      Eschweqe-

      This 1s in response       to your                      request     for comments on
the draft  report   to the Congress                          prepared     by the General
Accountlnq   Office   concernlnq    the                      Appalachian     Development
Highway System.
       The report    suggests      that,    because authorized         Federal
funds were lnsufflclent          to complete       construction       of the
System,   the Appalachian        Regional      Commlsslon      should have
ranked by prlorlty       for construction         each of the Appalachian
development     highway    corridors       and allocated       the llmlted
funds available      by corridor         In order of prlorlty,         rather
than allocating      funds to the partlclpatlng               States.
        Such an alternatlve,   among others,   was considered  by
the Commxslon      and was reJected  because It was found to be
lmpractlcable    for reasons cited   later   in this response.
        In order to establish              constructlon         prlorltles        within
each State,        the Commlsslon          devised      a regional         adequacy
rating    system.          The purpose of this           rating      system was to
assure that,         within      the limited      Federal       funds avaxlable,
as much of the development                highway       system as possible             could
be constructed           to the highest        overall       regional        adequacy.
Highest     prlorlty        for construction          funds,      therefore,        1s
assigned     to the least           adequate     sections       or entirely        new
alignments       wlthln       each State.        Such a procedure,             it was
determined,        would be most likely             to result        ultimately        In
a xeqlonal       highway       network     and would mlnlmlze              the problems
of a fragmented            system should       lnsufflclent          funds be made
available      to construct          the entire       System.
       The Commlsslon     speclflcally      reJected   assignment     of
construction   prlorltles       by corridor     for several    reasons.


                                                  37
APPENDIX      II

Mr. Henry Eschwege
Page 2
February  17, 1971

          1. Not all States were ready to provide                     required
matching       funds lmmedlately.           For example,        not until        November
1968 did West Vlrglnla             get approval      by the voters           for $350
mllllon      In bonds to match Appalachian              funds.        Virginia      was
ready to commit 90 percent               of Its total       allocation         lmmedl-
ately.       To have held up States            with funds on hand because
higher     prlorlty     corridors      might have been located               in other
States     did not appear to be a realistic                 approach       toward con-
structing        the overall      System.      In addition,        local     issues
involved       in hlghway     construction        on a given corridor             can
often     delay construction          for considerable          lengths      of time.
It did not appear practicable                to delay construction               on other
corridors        while  these local       Issues    were being resolved.
        2. One of the oblectlves       of the Appalachian      Development
Program has been to improve the operations           of exlstlng      Federal
and State programs    without    creating    new layers   of organlza-
tlon   and procedure.
          In order to mlnlmlze         the need for new procedural                com-
plications,         the Commission,      insofar       as possible,      followed
regular      Federal    highway procedures.             Under the natlonal
highway program,         construction       prlorltles       are establlshed        within
States      by the States      themselves           The Commission      has followed
the same procedure,          except    that construction            must be on those
segments determlned          to be most deflclent            under the adequacy
rating      system.
       3. There are many ob]ectlves          for the development                   hlgh-
way system,   some local    (such as lmprovlng        commutation                to new
lobs and services),     some regional       (such as facllltatlng                   the
flow of natlonal    commerce through       Appalachia    in order                to
enhance regional    development    potential).
         For these reasons,           the ultimate        impact    of a completed
Development       Highway System ~111 be greater                 than the impact of
any of Its parts.           So long as the System remains                 uncompleted,
the establishment          of prlorltles          by corridor      must necessarily
emphasize      reglonal     benefit      criteria     over local       benefit     cri-
teria    or vice versa.         If prlorltles         had been established             by
corridor     based on benefits           to one part of the Region,              local
area benefits        would have been restricted                to only a few parts
of Appalachia.          This would have llmlted              the effectiveness          of
Appalachian       investments       in the rest of the Region whose design
and function        1s predicated        on the highways.           As a result,
these investments         would have yielded            a lesser     return    for the
public    dollars     Invested.
                                           38
                                                                            APPENDIX II

Mr. Henry Eschwege
Page 3
February  17, 1971

       In any event,     even If the Commlsslon           had asslgned      prl-
orlty  to such vital     arteries        In the System as Corridor        "D-E"
and Corridor   "B", the corridors           themselves    would still     not
be completed.     Corridor      "D-E" would not be flnlshed           mainly
because It was not until         November 1968 that West Vlrglnla's
bond issue was approved.            It was necessary       also for Ohlo to
secure some of Its matching            funds through     a 1967 referendum.
Thus, the two key States          on Corridor      "D-E" would have been
unable to have completed          the corridor      by this    year and would
consequently  have held up other States               In other parts    of the
Region on other    corridors.
           Corridor      "B" would not be flnlshed                because of numerous
local      issues.       For instance,        the construction            of Corridor       "B"
1s an integral           part of a model cnty renewal                  plan in Plkevllle,
Kentucky,        lnvolvlng      relocation       of the Big Sandy River and a a
railroad.          The railroad,        the river,        and the highway are to
be located         In one cut to be made through                  a mountain      adlolnlng
Plkevllle.           Federal    urban renewal          funds for the prolect             were
not approved          until   early      1971, and Congress was unable to
authorize        the river      relocation       until     late     1970.    This 1s Just
one example of how local                problems       can hold up construction
schedules        for speclflc        segments of each corridor.                 Instances
of this       kind illustrate         the lmpractlcablllty               of establishing
prlorltles         by corridor.          The complexltles          of the sltuatlon
prevented        that from being a realistic                 alternative.
          The report      does not provide         any basis       for the Commlsslon             &
to conclude        that the regional         benefits     of completing        a few
of the corridors          first   would have been greater              than the com-
bined reglonal          and local    benefits      being realized         under the
Commission's         procedure.      The principal        priority       of the Com-
mission     continues        to be completion        of the entire        System in
order that both the regional               and local      benefits       can be fully  -
realized.         Unless this     1s accomplished,          the investment        of
public     dollars      in the System will         not yield       its full    return,
nor will      many of the other Investments               being made under the
Appalachian         Regional    Development      Act.
     4.  Under Sections        222 and 303 of the Act, the Governor
of a State must recommend to this               Commlsslon      specific
prolects   for action      within    the State.         The Commission       may
not compel any State         to accept      a prolect       or program wlthout
its consent.       Sometimes      the Regional       Commlsslon      may differ
with a Governor       concerning     specific      prlorltles.        The Com-
mlsslon   provides     a forum wlthln        which such disagreements
may be openly      discussed      and some accommodation           reached.

                                               39
 APPENDIX     II

 Mr. Henry Eschwege
 Page 4
 February  17, 1971

 However,     the Governor  of the State has the mayor responsl-
 blllty    under the Act for establlshlng      prlorltles, and his
 determlnatlons     must carry heavy weight     with the Commlsslon
 as a whole In matters      affecting   his State.
         The report      crltlclzes    the Commlsslon  for not having
 developed   firmer      cost estimates    at the time the Act was
 passed.
       Changes in cost          estimates  over      those developed        In
 1963 can be attributed,           in the maln,      to two factors:
         First,     because neither      time nor flnanclal        support
permitted       preparation    of definitive       cost estimates     at that
time,    costs had to be estimated           in most States      on the basis
of past experience;         and second,      the original      1963 cost
estimates       developed   by the States       were scaled down at the
request     of the Federal      Government      itself    because of a
determlnatlon         that all the required         funds could not be
authorized       at that time.
         Nevertheless,         refinements     In cost estimates     and revised
crlterla     concerning        the number of lanes permitted         In the
System, account          for only 10 percent         of the total   presently
estimated     Federal       cost,    a percentage     far below that experl-
enced on other         federally-asslsted         highway programs.
         The remainder       of the cost increases        are attributable
to factors      beyond the Conun1sslon's         control,    prlmarlly     a rate
of inflation       In construction       costs of approximately         seven
percent     per year,    increased      costs to meet new Federal          highway
safety     standards,and      increased     costs to meet new Federal
relocation      requirements.
          The Commlsslon        concurs with the report        in calling
attention      to problems       associated      with State boundary       cross-
ings.      So long as the States            concentrated    on prolects      located
in their     interior     areas,     the need for Commlsslon         mediation
was minimal.          As addltlonal       funds are made avallable,         the
Commission      will    be compelled        to play a still    stronger     role
In planning       and adludlcatlon.           It has taken a hand In several
boundary     crossing     issues     which now exist.
         In summary, the Commlsslon      believes    the report            somewhat
overstates    the problem    of fragmentation     which results              from
the procedure    of allowing    States   to set construction               prlorltles.

                                          40
                                                                      APPENDIX    II


    Mr. Henry Eschwege
    Page 5
    Pebruary  17, 1971


    Since much of the Appalachian                Development    Highway System 1s
L   replaclng      exlstrng      routes,      the completed    segments are all
    linked    via older       highways      into a reglonal     system.    Improve-
    ments of these routes            by prlorlty      assigned    In order of
c   adequacy will         assure that an lncreaslngly           efflclent   regional
    highway     system 1s built          over the coming years.
             The regional      development     highway  system 1s the key-
    stone to the success of all the efforts              of this Commlsslon.
    It should be a national           priority    to see that the System 1s
    completed    In order that we may secure the greatest              return
    for the public      dollars      already   invested  in Appalachian
    regional    development.
                                          Slncerely     yours,



                                           ohn B. Waters,    Jr
                                                  CochaIrman




                                                      Regional   Representative




                                             41
APPENDIX 11X

       OFFICIALS RESPONSIBLEFOR THE ADMINISTRATION OF
               ACTIVITIES DISCUSSEDIN THIS REPORT
                                        Tenure     of office
                                        From                   To

FEDERALCOCHAIRMAN,APPALACHIAN
  REGIONALCOMMISSION:
    Donald W. Whitehead              Mar.   1971      Present
     John B. Waters, Jr.             Mar.   1969      Mar.    1971
 .   Joseph W. Fleming               Mar.   1967      Feb.    1969
     John L. Sweeney                 Apr.   1965      Mar.    1967




                                                       Us   GAOWaSh.   DC

                               42
when construction       costs Increased about 7 percent                   a year,
makes it likely      that the most recent cost estimate                    may be
substantially     lower than the actual   cost.

       In 1970 the Regional   Commission estimated         that refine-
ments in cost estimates     accounted       for about $100 million      of
the Increased    Federal share.     Inflation,      on the other hand,
accounted   for about $500 million        of the increased     Federal
share.

EDITIONAL  MILEAGE AND INCREASED CONSTRUCTION
OF FOUR-LANE HIGHWAYS

       At the inltiatron        of the program,      about 2,100 miles of
highway on the system were considered              inadequate   and in
need of improvement.           Since that time, about 400 miles of
highways needing improvement            have been added to the system.
According      to the Regional       Commission's    estimates,  the addi-
tional    mileage    increased     the Federal    share of constructing
the system by about $300 million.

      In addition,     the States decided that more of the high-
ways should be four-lane         highways,     rather   than two-lane
highways as orlginally        planned.     Although     the Federal   share
of a four-lane     highway is 50 percent,           compared with 70 per-
cent for a two-lane       highway,     the decision     that there should
be more four-lane      highways increased         the Federal   share by
about $85 million.

ADDITIONAL      FEDERAL REQUIREMENTS

        Several new Federal          requirements         for construction        of
highways that were adopted after the initial                        cost estimates
were developed         have resulted        in slgniflcant        increases     in
 the cost estimates.            In addition,        the Federal      requirements
have resulted        In delays which, in a period                of rising    con-
structlon      costs,     further    contribute        to the increases       in the
cost to complete          the system.         Although     no firm cost data
can be associated           with such delays,          highway constructron
costs have increased            about 7 percent          a year since 1965.          We
found no evidence           that the new Federal           requirements      had in-
fluenced     the establishment         of priorities          for the construc-
tion of the development            highways.
           A further   explanation       of the manner in which the cost
    estimates     were compiled and the effects       of the changes in
    program requirements        follows.

    UNREALISTIC       COST ESTIMATES

          Kentucky and West Virginia     did not develop the initial
c   cost estimates  for the construction      of the development   high-
    way system in the usual manner of applying       the latest   avail-
    able cost data to the estimated      quantities  of materials    and
    labor to be used based on detailed      plans.

            For example, West Virginia           compiled    its initial       cost
    estimates     by applying     to the total      development       highway mile-
    age to be constructed         in the State,       an estimated       per mile
    cost for two highways which were to be part of the develop-
    ment highway system.          The cost estimates         for these two hlgh-
    ways had been developed         earlier--one        several    years before.
    The State then adjusted         the cost estimate          to recognize       some
    cost increases      up to about 1963.          The resulting        cost esti-
    mate was further       adjusted    to take into consideration              the
    terrain    over which the other Appalachian              corridors      in the
    State were to be constructed.              No provision       was made for
    possible    increases     in cost during the construction               period,

           West Virginia    highway officials     recognized     that the
    procedures     used had resulted    in an unreliable      estimate   and
    cautioned    the Regional    Commission against      undue reliance    on
    the data.      The data was used by the Regional         Commission,
    however,   to compile its initial        cost estimates.

            Although     we did not make a detailed             analysis       of the
    subsequent       cost estimates       developed     by the States and used
    by the Regional        Commission,       those estimates          had been com-
    piled     in a more reliable         manner--using       the most recent cost
    data available        and the quantities         of materials          and labor to
.   be used and taking          into consideration         the location         of the
    highways.        No provzsion      was made for Increases              in costs
    during the construction            period,     however,     in compiling         the
    subsequent       cost estimates.         West Virginia        officials       informed
    us that it was not customary               to include      a provision        for in-
    flation      in compiling      highway cost estimates.               The absence of
    such a provision,         especially       during a period          of rising      con-
    struction      costs such as that experienced               from 1965 to 1970