Building Smarter, Safer Systems
Framing the 2026 Surface Transportation Reauthorization
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Executive Summary
Surface transportation is often taken for granted because it is always present. Roads, transit, rail, and freight corridors facilitate key economic and mobility objectives, but are often underfunded, regulated unevenly, or managed through legacy frameworks designed for a different era. These systems shape how Americans move and businesses grow and must be calibrated for the future.
The 2026 federal Surface Transportation Reauthorization arrives at a moment when infrastructure investment is broadly popular, but serious questions remain over the government’s role in this process. Congress must ultimately grapple with how the federal programs define purpose, measure results, and adapt for a rapidly innovating future. What outcomes will national policy deliver, what tradeoffs will there be, and how can we measure success in practical terms?
Effective policy depends on clear goals, reliable data, and independent evaluation to delineate what is working, and what is merely for show. It also requires specific attention to consequences – both positive and negative – that follow every decision. For long-term changes to be effective and hold, regulatory frameworks must pursue safety and efficiency gains through performance-based outcomes rather than prescribing methods. Highways, rail, aviation, and multimodal freight are central to our economic strength and crucial to further growth. The most persistent challenges are not caused by a lack of will, but a lack of stability, predictability, and alignment between policy objectives and real-world operations.
As Congress approaches a multiyear reauthorization that could alter the nation’s economic future, this paper offers high-level framing for policymakers to consider for modernizing surface transportation policy, including the role of the federal government itself. It is not a proposal for specific legislative language – it is a framework for clarifying federal responsibilities, organizing priorities, and defining performance so results can be evaluated over time. It focuses on how the underlying decision-making architecture shapes outcomes, how incentives are created, and how the process can learn and adjust from new data and evidence as conditions change.
Rather than treating reauthorization as a checklist of initiatives, this paper emphasizes processes that can make future debates more productive. We risk continuing as we’ve always done it if we do not critically evaluate policy and make new plans discerningly. Above all, surface transportation policy should remain coherent, measurable, and resilient in the face of an evolving world.
The Stakes of Reauthorization
When most people consider infrastructure, they instinctively picture roads and bridges. These elements of our society are so foundational that virtually without exception, every person in the country relies on them every day. From industrial supply chains moving commodities to parents taking their kids to school, roads are a necessity. They are also a public good, but what that means has evolved over time and requires a clear answer today.
The 2026 Surface Transportation Reauthorization will greenlight policy and funds for everything from federal highways to regional transit for the next five years. For decades, these reauthorizations have reflected incremental compromises that expand program scope and layer new objectives while deferring real debate. What is the end-goal of an interstate system that has been functionally complete since 1992? The rationale for the outsized federal role in highway and transit funding is no longer self-evident. What responsibilities should remain federal, and which are better left to states and local governments? Where do private firms with experience and expertise in planning, building, and maintaining critical infrastructure fit into the equation? In the absence of clearly articulated national priorities, federal surface transportation policy has expanded in scope without consistent reassessment of purpose.
These institutional questions set the conditions for others. A program originally designed to build a national interstate network now funds thousands of projects with widely varying objectives. Without a clear organization of federal priorities, infrastructure policy can become reactive and fragmented, with short-term considerations outweighing long-term national policy aims. The decisions made in this reauthorization will help determine whether federal surface transportation policy remains focused on justifiable outcomes or continues to fragment.
Parallel to the federal role, further debate stems from regulation. Across surface transportation modes, policymakers have increasingly relied on prescriptive rules to manage compliance and enact new safety measures. Many rigid regulatory frameworks prioritize compliance over innovation, inadvertently diminishing long-term safety rather than improving it.
Taken together, these choices define the stakes of reauthorization. The central issue is not whether surface transportation is important, but how the current system is structured to make decisions. How Congress frames federal responsibilities and evaluates the results will determine if surface transportation moves forward into a new era of resilience and growth, or if federal leaders will leave those questions unsettled and the potential gains unrealized.
Federalism and Authority in Surface Transportation
The balance of authority between the federal government and states and local governments in infrastructure policy has evolved over time, often without a clear articulation of objectives. Federal involvement in the Interstate Highway program was justified by clear national interests of commerce and national defense. In fact, the network is still officially titled the Dwight D. Eisenhower National System of Interstate and Defense Highways. However, over time the scope of federal surface transportation programs has expanded significantly, often overlapping with the responsibilities managed by the states. As a result, the division of roles has become blurred, and many projects rely on federal funds to get off the ground.
When federal funding is broadly distributed across many project types and priorities, state and local planning processes may be shaped by eligibility criteria rather than measurable outcomes. This dynamic can influence investment decisions toward projects that more closely align with federal criteria than with locally identified priorities. At the same time, federal requirements for these projects can reduce flexibility. This does not imply that federal involvement is inherently bad, but it does raise a question for reauthorization: what problems are national in character, and what problems are better addressed by more local authorities?
Refining the position of the federal government in surface transportation does not require a retreat from national priorities. A framework where federal policy focuses on setting clear and broad goals like safety, reliability, and infrastructure resilience, while stepping back to let the state and local governments work to achieve those goals is within reach. When paired with performance-based accountability, defining success in measurable terms becomes achievable.
The underlying reality of infrastructure investment also reinforces the need for policy decisions grounded in real-world data. Despite the magnitude of federal funding on highways, states and local governments still account for around 75 percent of road spending. A system that aligns federal oversight with outcomes can strengthen accountability while respecting state and local governments as the primary managers of the nation’s infrastructure. The goal with reauthorization should be not to add complexity, but to add real value.
Highway Trust Fund Insolvency
Perhaps the central example of a runaway surface transportation program is the Highway Trust Fund (HTF). Established in 1956 to finance the Interstate Highway System, the HTF is the primary distributor of federal funds for infrastructure projects, constituting about one quarter of highway and road spending. Taxes on gasoline and diesel are the main sources of funds for the HTF, but it also receives some sales and excise taxes on heavy vehicles. The fund is divided into the Highway Account and the Mass Transit Account. This presents both revenue problems and spending problems. Due to contradicting policy priorities built up over time, not enough funding comes in, while part of what comes in from roads goes out to transit rather than paying for continued road maintenance.
Today, the program scope has broadened significantly, and the revenue base has eroded over time. Fuel taxes remain the backbone of the HTF budget, but have been unchanged since 1993, failing to keep up with fuel economy gains and inflation. This is a salient example of the broader structural tension: Congress has advanced fuel-efficiency standards through Corporate Average Fuel Economy (CAFE) requirements, which reduce fuel consumption and, over time, diminish the revenue base of a trust fund that depends on fuel-use taxes. The result is a funding mechanism that must be supplemented by the general fund periodically, totaling over $275 billion since 2008. Without these injections, the HTF would have been exhausted years ago, and is again approaching a critical funding shortfall in the next few years, currently projected around 2028.
Reauthorization, therefore, is an opportune time to examine the HTF, its function in practice, and what the future of it will be. The foundational question is whether Congress should work to close the self-funding gap, keep the status quo, or overhaul the HTF entirely.
One potential approach is to address the funding gap directly. Historically, the gas tax functioned as a user-based mechanism, allowing those who relied on the highway system to fund its maintenance and expansion, but the tax has not kept up with inflation. Solutions that are commonly discussed, ranging from raising fuel taxes to adopting a mileage-based user fee, each raise real tradeoffs over cost, privacy, administrative complexity, and political feasibility. Other approaches move further away from the user-pays model toward broad fiscal support.
The revenue debate also closely intersects with a program design debate. If federal dollars are spread across dozens of programs with overlapping purposes and uncertain performance, additional revenue does not guarantee improved outcomes. The Government Accountability Office has raised concerns about HTF’s fragmented program structure and a disconnect between spending and measurable results for many programs. The projected insolvency reflects not only a financing gap but also underlying governance and program design challenges. Uncertainty about revenues and policy ultimately encourages short-term fixes without addressing the big questions.
The Highway Trust Fund currently lacks a stable revenue model, clearly articulated federal objectives, and a performance framework that allows Congress and the public to evaluate results. Reauthorization provides an opportunity to examine the purpose, structure, and expectations of the Trust Fund through discussion, independent analysis, and data-driven evaluation. The projected 2028 insolvency underscores the urgency of that examination.
Regulatory Systems
The questions that need to be answered during reauthorization are not only about who pays and how much, but also how authority is exercised and how success is measured. Freight rail is a useful case study because the safety mission is clear, the industry is in a state of change, and the regulatory framework has not kept up.
Performance-Based Safety and Promoting Innovation in Freight Rail
Freight rail has long operated under a dynamic where high-profile incidents prompt policymakers to enact safety mandates and new prescriptive regulations. A central concern within the existing framework is that rulemaking may at times respond to political pressures rather than systematically evaluated safety data. There is a widening gap in the industry between rulemaking and technology. The result has been a politicized and lethargic regulatory environment, where cooperation between industry and government has eroded, and operators have turned to litigation to force changes. As Congress approaches the 2026 Surface Transportation Reauthorization, the key policy challenge is how federal policy can best reinforce safety improvements without constraining innovation.
Friction often arises because of a disconnect between perceived and actual safety. High-profile derailments have prompted proposals for new safety measures, including new regulations on crew sizes, inspections, and train length. While these measures are advanced on safety grounds and presented as straightforward solutions, they fail to fully grapple with the tradeoffs and consequences, which Aii has examined in greater depth elsewhere. Many of the mandate-style policy preferences simply are not supported by data or introduce ripple effects. Sound policy is built on a holistic review and robust data and is not swayed by recent incidents or political or rhetorical winds. For instance, despite claims of untenable safety conditions, train derailments and incidents of many kinds have decreased significantly in the past two decades.
Additionally, the tools for change have stagnated themselves. The Federal Railroad Administration’s (FRA) waiver process, formerly one of the primary ways for railroad operators to test new technology and push for regulatory change, has become politicized. Despite documented safety improvements, several innovative technology waivers were denied by the FRA and later overturned by the courts.
For reauthorization, impacts to freight rail offer a lesson in institutional design. A regulatory system that cannot incorporate new evidence and new tools will struggle to keep pace with technological change, even when goals of safety are shared unanimously throughout the industry. A system that measures safety through adherence to prescribed regulations can weaken incentives to pursue better methods. When the objective is safety improvement, policymakers and regulators must look to data, not politics or preference.
NEPA Review and Project Delivery
The National Environmental Policy Act (NEPA) of 1969 remains the cornerstone of federal environmental review for major infrastructure projects, including for surface transportation. NEPA requires federal agencies to assess the environmental impacts through Environmental Assessments and Environmental Impact Statements, with public engagement and interagency coordination built into the process. While NEPA is intended to ensure environmental protection and informed decision-making, the process often extends project timelines significantly. The program has faced increased scrutiny in recent years due to delays that can extend projects, increase costs, and complicate long-term planning.
The Infrastructure Investment and Jobs Act (IIJA) in 2021 required the U.S. Department of Transportation (DOT) to report on NEPA roadblocks to infrastructure projects, leading to the 2024 report Surface Transportation NEPA Process Improvements Report to Congress. The report outlines the strategies that can be used for streamlining environmental reviews for surface transportation projects. These strategies include expanding liaison staff to enhance coordination between agencies to speed up reviews, modernizing programmatic agreements to allow “blanket” approvals of routine projects, encouraging digital platforms for better engagement, consolidating rules and guidance, and encouraging robust up-front planning efforts. Additionally, the Inflation Reduction Act (IRA) provided $100 million in funding to speed up the process.
Despite these initiatives, stakeholders still report that NEPA remains a bottleneck for permitting timelines, especially in large projects requiring full Environmental Impact Statements. The delays from these reviews come at a time when general construction timelines are being extended and the cost of materials is rising. Many of the problems with NEPA reviews are less about the environmental review itself and more about inefficient bureaucracy, poor coordination, and staff shortages that have a significant impact. Recent reforms to NEPA, including the 2023 bipartisan Fiscal Responsibility Act, have had a limited effect so far.
Congress has several tools at its disposal within the surface transportation process to address these challenges. Statutory reform can clarify the scope and timing expectations for NEPA review to reduce ambiguity that can lead to litigation and long reviews. Following the advice of the 2024 improvements report, Congress can also build on existing statutes to promote programmatic environmental reviews to streamline individual projects. This would concentrate resources and significantly increase efficiency for coordinating government agencies already under strain. Additionally, authorizing expanded front-end planning and unifying application processes could improve administrative efficiency within the NEPA framework. A bipartisan package that emphasizes categorical exclusions, modernization of digital systems, and targeted litigation reforms may help improve infrastructure development timelines.
While large infrastructure projects will always face upfront administrative hurdles in the need identification, planning, and approval stage, innovative delivery models should also be considered as a way to improve the pace and stewardship of projects. Whether constrained by NEPA requirements or simply accomplishing local development, policy should allow and encourage the best projects to be proposed, built, maintained, and operated by the best party at hand. In many cases, that will be a private entity.
Leveraging Private Sector Delivery
Surface transportation projects must be judged not only on how much is spent, but how projects are delivered. If policymakers aim to strengthen reliability in the 2026 surface transportation reauthorization, reviewing delivery models warrants scrutiny. Public-private partnerships and private-sector delivery approaches can, in some situations, create more efficient and responsible assets than traditional public financing. They can integrate design, construction, financing, and maintenance in ways that improve lifecycle accountability and shift risk away from the public.
Private delivery is not inherently better than traditional public methods, but when properly structured, it can improve outcomes and reduce costs. In transportation, federal resources increasingly emphasize evaluation of when a P3 is appropriate. A more effective federal role would focus on performance expectations and outcomes above all else. Where P3s rely on revenue-backed structures or availability payments, the federal role can support while also reinforcing financing discipline. These are often underutilized models because of policy preferences for centralized government program structures, traditional bid processes, or simply continuing the way things have always been done.
It may counterintuitively require the federal government to take the lead by relinquishing its authority or preference for government projects so that select initiatives can be undertaken by another entity. A federal transportation program willing and able to formalize a mechanism for loosening the government’s power in certain areas would signal opportunity for enormous reform and even improve safety outcomes. Too often, it is a tight grip and doubling down (primarily through increased expenditures) that characterize government safety regimes.
Federal Role in Highway Safety
Highway safety is always one of the largest issues when considering surface transportation policy. Even as the United States invests in roads and bridges, the nation experiences a high level of roadway deaths and serious injuries. Early data indicates that traffic deaths are slightly down in 2025 compared to 2024, but fatalities on the road are still in the tens of thousands. Additionally, pedestrian deaths have risen significantly in the past two decades. Over 50 percent of pedestrian deaths come from SUVs, pickups, and other vehicles heavier than passenger cars.
The IIJA – the reauthorization act – moved federal policy towards new initiatives that sought a shift in strategy. In 2022, the DOT announced its own National Roadway Safety Strategy, as part of the follow up to the IIJA. The “Safe System Approach” recognizes that people make mistakes, but also believes that any deaths or serious injuries are unacceptable. The strategy also emphasizes that responsibility is shared by all stakeholders, and that safety should be proactive.
One of the most prominent new highway safety funding initiatives to come out of the bill was the Safe Streets and Roads for All (SS4A) competitive grant program, for funding local efforts to prevent roadway deaths. Longstanding formula programs like the Highway Safety Improvement Program (HSIP) continue to emphasize data-driven approaches and attention for vulnerable road users.
For reauthorization, the core question is what the federal government can do in highway safety that states and local governments cannot do on their own. Most roads are owned and operated locally, so the federal role is most defensible when it adds value through clear national safety goals, has an independent evaluation of what works, and a funding structure that rewards measurable results. In this sense, highway safety is a test of federal policy organization, performance, and effectiveness.
In 2025, the Federal Motor Carrier Safety Administration (FMCSA) had a budget of $965 million, while the National Highway Traffic Safety Administration (NHTSA) received $1.6 billion. Meanwhile traffic fatalities per vehicle mile traveled have decreased in recent years but remain higher than a decade ago. These figures, by themselves, do not show the full picture, but they underscore a key governance question: what metrics should define success?
Resilient Surface Transportation Infrastructure
Today, resilience is often used as a buzzword when it comes to infrastructure investment, but its importance is clear. As American infrastructure faces new threats from extreme weather events, flooding, wildfires, cyberattacks, sabotage, and organized crime, the need for more resilient infrastructure is undeniable. Surface transportation systems are no different. By increasing the resilience of infrastructure against natural and external threats, the U.S. can protect its assets effectively and improve long-term reliability and efficiency.
Resilient infrastructure is a bipartisan issue and has been recognized by DOT and state governments alike. The IIJA introduced the Federal Highway Administration-run PROTECT grant program to provide funds to surface transportation projects that enhance resilience. Elsewhere, federal transportation agencies have framed resilience as a matter of asset protection and reliability, ultimately reducing costs in the long-term from costly repairs and replacements.
Embedding infrastructure resilience early in the policy process helps protect public investments for the long term and strengthens confidence in the surface transportation system. Infrastructure resilience underscores the importance of considering the impacts of every decision. Stronger designs can mean higher upfront costs, but ignoring risk can lead to safety impacts that are far more costly and disruptive later. Such decision-making is crucial for policymakers when considering surface transportation reauthorization.
Commercial Trucking and Federal Governance
Commercial trucking does not rely on the Surface Transportation Reauthorization bill like other transportation industries do for funding and operations, but as the primary method of moving freight nationwide, it gets significant attention. By weight, 65 percent of freight moves by commercial truck in the United States. While trucking has long succeeded due to its flexibility and convenience, the industry has been in a recession since 2022. Historically, lawmakers have used reauthorization to examine the state of the commercial trucking industry, consider reforms, and enact policy changes.
The recent volatility in the trucking industry illustrates the challenge of separating structural factors from economic ones. Currently, one of the most persistent challenges facing the trucking industry is labor. Many in the industry have decried a severe driver shortage, possibly exceeding 80,000 drivers. Industry experts have pointed out that turnover has surpassed 90 percent in recent years, with the industry even adapting to the turmoil. Several academic papers argue that the shortage perception is actually driven primarily by this high turnover.
The IIJA and other programs sought to face these challenges, but to mixed success. Congressional initiatives aimed at these issues, but have also hit roadblocks. Several recent proposals to tighten driver qualification standards, including citizenship and language requirements, would also impact the industry, where approximately five percent of CDL holders are non-domiciled immigrants.
Labor is not the only issue facing the trucking industry. A Federal Highway Administration survey and study found that widespread parking availability shortages were reported, pushing drivers to unsafe stopping locations, leading to increased accidents and crashes, as well as time wasted for drivers looking for a parking spot. Federal and state agencies have responded with guidance, funding, and better measurement, but ultimately the strongest solution is more parking spots or an effective freight relay program that minimizes the need for parking of individual drivers and reduces pressure from hours of service rules Congress also controls. Also crucial is the use of new technology to improve efficiency and decrease the time to identify safe parking.
Additionally, driver detention and freight dwell time represent significant inefficiencies in the trucking supply chain that have measurable operational, economic, and safety consequences. A comprehensive study from the American Transportation Research Institute (ATRI) estimated $15.7 billion in additional carrier costs in 2023 due to wasted driver time and schedule disruptions. Drivers reported being detained in almost 40 percent of all stops. These delays can easily cascade, further eroding margins for the entire industry and being incorporated as higher costs to consumers.
For reauthorization, these problems represent not an agenda to push through, but a lens to view the commercial trucking industry as a whole. Many of the economic constraints the trucking industry faces are distributed across operational realities that federal policy can only influence. Spending and program activity are not the same as results, especially when outcomes depend on system conditions outside any single actor’s control. Targeted reforms need transparent and independent evaluation of data to align with policy with measurable outcomes for safety and efficiency.
Conclusion
Reauthorization provides an opportunity to clarify the objectives of federal surface transportation programs and establish how success will be measured. The most important choices are those made early on in the process, at the foundation. Inherited policy structures and processes are not necessarily productive rubrics for the future. Every step of the way, policymakers should be asking what is the federal role, how will this benefit the nation, and how can it be measured?
Congress must also distinguish between preferences and the nation’s critical needs and ground those decisions in robust data.
A productive debate requires decisions grounded in credible data and a full understanding of tradeoffs and downstream effects. Regulations and programs are tools aimed with a goal in mind. The trick is making them effective tools that reduce risk, improve safety, and strengthen long-term performance in ways that can be measured.
If the next reauthorization bill is structured around measurable goals, transparency, and a willingness to adapt from results, it can strengthen public trust and improve the performance of the entire system. Congress must avoid a reauthorization embodied by a collection of initiatives without clear standards for success, or else the program will continue to drift. The 2026 reauthorization presents a consequential opportunity to clarify federal purpose, strengthen accountability, and improve long-term system performance.
Authors
Benjamin Dierker, JD, MPA
Executive Director, Alliance for Innovation and Infrastructure
Owen Rogers
Public Policy Associate, Alliance for Innovation and Infrastructure
For more information or inquiries on this report, please contact the Aii Media Coordinator at info@aii.org