On behalf of Reason Foundation, I respectfully submit these comments in response to the Office of the Secretary’s (OST) notice of proposed rulemaking (NPRM) on Procedures in Regulating and Enforcing Unfair or Deceptive Practices.

By way of background, I am a senior transportation policy analyst at Reason Foundation and focus on federal transportation policy, including aviation consumer protection regulation. Reason Foundation is a national 501(c)(3) public policy research and education organization with expertise across a range of policy areas, including transportation.

Reason Foundation previously submitted comments to OST recommending the initiation of this rulemaking proceeding. We write in support of the proposed changes to Subparts F and G contained in the NPRM.

Protecting consumers from defective regulations

The statutory authority (49 U.S.C. § 41712) wielded by the U.S. Department of Transportation to police unfair or deceptive practices in the aviation industry long predates the Department itself. The authority was created as Section 411 of the Civil Aeronautics Act of 1938 and modeled on the “unfair or deceptive acts or practices” language included months before in the Federal Trade Commission Act of 1938, which covered most other commercial contexts. In 1958, Congress expanded Section 411 to cover not only air transportation itself but the sale of air transportation by ticket agents.

When Congress passed the Airline Deregulation Act in 1978, it eliminated most economic regulation in the aviation sector and wound down the Civil Aeronautics Board (“CAB”). When the CAB was terminated in 1985, Section 411 consumer protection authority was transferred to the Department of Transportation’s Office of the Secretary (“OST”). In 1994, Congress reorganized the Title 49 Transportation Code, and Section 411 was recodified as Section 41712.

While reorganizing the Transportation Code, Congress was also working to modernize authorities held by the Federal Trade Commission (“FTC”). The FTC Act Amendments of 1994, among other things, codified longstanding internal FTC policy in dealing with claims of unfair or deceptive acts or practices that had in part been synthesized for Congress in the FTC’s December 1980 “Policy Statement on Unfairness.” The FTC’s approach, as affirmed by Congress, requires that specific elements be met to prove unfairness allegations, one of which necessitates careful benefit/cost analysis.

Specifically, the FTC Act amendments added three standards of proof to the FTC’s broad statutory prohibition on unfair business practices (15 U.S.C. § 45(n)). For conduct to qualify as legally unfair, it must be (1) “likely to cause substantial injury to consumers,” (2) not “reasonably avoidable by consumers themselves,” and (3) “not outweighed by countervailing benefits to consumers or to competition.” It is worth noting that these reforms earned bipartisan support. Similar language was also included in the Dodd-Frank Act of 2010, covering the enforcement responsibilities of the Consumer Financial Protection Bureau (12 U.S.C. § 5531(c)).

While bipartisan recognition of the problem of ill-defined “unfairness” exists in virtually every other federal consumer protection context, Congress has so far not moved to reform the Department of Transportation’s similar Section 41712 aviation consumer protection authority. This failure to act has enabled regulators in recent years to engage in a variety of re-regulatory activities, including new restrictions on airfare advertising that prohibit government taxes and fees from being “displayed prominently” (14 C.F.R. § 399.84(a)), outlawing true nonrefundable ticketing (14 C.F.R. § 259.5(b)(4)), which puts upward price pressure on airfares due to the forced risk transfer from consumers to air carriers, and an inflexible tarmac delay rule (14 C.F.R. § 259.4) suspected of increasing flight cancellations—particularly at smaller and more-rural airports.

Each of the aforementioned aviation consumer protection regulations has been criticized as harming consumers, some with stronger evidence than others. But without the FTC-style standards of proof and evidentiary hearing procedures, the scales were tipped in favor of regulators. These are fact-intensive matters that require careful review of the evidence to ensure potential regulatory actions will not perversely harm consumers.

Despite congressional inaction on modernizing Section 41712, the December 2020 final rule did much to bring the Department’s aviation consumer protection authority into alignment with similar federal authorities. This rule added FTC-style standards of proof to Section 41712 enforcement and rulemaking procedures while also codifying internal agency practices for allowing alleged violators to present evidence defending themselves against possible enforcement or rulemaking activity derived from the aviation consumer protection authority.

While this would have improved airline and ticket agents’ defensive positions, it also would have required the Department of Transportation to clearly explain itself along the way and give consumers better insight into how decisions that affect them are made. In this way, the FTC-style standards of proof in unfairness claims are best understood as promoting regulatory quality and consistency in enforcement.

Following the transition between administrations, the Biden administration quickly moved to reverse these reforms. In February 2022, the Department published a rule modifying the hearing procedures for discretionary aviation consumer protection rulemakings in several ways that would reduce regulatory quality. In August 2022, OST published a guidance document further suggesting it will again take an expansive view of how its Section 41712 powers are defined and limited.

These policy changes reopened the door for future discretionary rulemaking guided more by political whims than careful empirical analysis. The recent history of Section 41712 discretionary rulemaking suggests that regulatory analysis has not been sufficiently robust to avoid harm to consumers. As such, we support the proposed restoration of the 2020 hearing procedures, as modified. While outside the scope of this proceeding, we also support the rescission of the August 2022 Guidance Regarding Interpretation of Unfair or Deceptive Practices, as the Department indicated it will pursue in the future.

Conclusion

Thank you for the opportunity to provide comments in response to this NPRM. We urge the Department to act swiftly to implement these needed reforms to protect consumers from defective regulations derived from the aviation consumer protection authority.

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The FAA’s new order that airlines limit flights at 40 major airports is meant to stabilize traffic flow and ensure safe operations, at the cost of tens of thousands of Americans experiencing flight cancellations each day. This unfortunate situation was entirely avoidable and is impossible in most of the rest of the world. That’s because most countries have converted their air navigation service providers into public utilities that operate independently of national government budgets.

What the FAA’s emergency order requires airlines to do

The FAA’s Emergency Order Establishing Operating Limitations on the Use of Navigable Airspace came into force on Nov. 7. Airlines at 40 “High Impact Airports,” which account for the vast majority of air traffic in the United States, are required to reduce their daily scheduled flights between 6 a.m. and 10 p.m. Required flight cuts begin at 4% today, increase to 6% on Nov. 11, then 8% on Nov. 13, and finally peak at 10% on Nov. 14 and beyond. 

Airlines’ initial planned flight cancellations through Nov. 14 were to be filed with the FAA on today, and are to be submitted seven days in advance on a rolling schedule going forward. Even at the initial 4% reduction, this translates to tens of thousands of Americans receiving cancellation notices for their previously booked flights. 

The impact will be even more severe than if airlines could freely select the lowest-volume flights to cancel because the FAA’s order imposes a requirement that carriers must reduce by marketing code, rather than operating certificate. Large mainline carriers have outsourced their short-haul routes to regional airlines, such as American Airlines, which operates its American Eagle-branded subsidiaries, including Envoy Air, PSA Airlines, and Piedmont Airlines, as well as contract carriers Republic Airways and SkyWest Airlines. Each of these airlines flies under a separate operating certificate, but all are marketed as American.

In its order, the FAA recognizes that major airlines would have an incentive to reduce smaller-capacity regional flights operated under separate certificates from the mainline carrier. As such, the FAA requires that flight reductions be calculated by marketing code and that reductions for any single operating certificate shall not exceed 15%. This will undoubtedly ensure more geographic equity in flight cuts, but will also result in more travelers being impacted.

In addition, the order puts airlines on notice that failure to comply can result in fines of up to $75,000 per flight operated over a carrier’s limit.

To further ease airspace congestion, all commercial space launches and reentries are prohibited between 6:00 a.m. and 10:00 p.m.

How to make air traffic control shutdown-proof

This unfortunate situation was completely avoidable. It’s also impossible in most of the rest of the world. This is because most countries have converted their air navigation service providers into public utilities since 1987.

According to Reason Foundation’s 2025 Annual Aviation Infrastructure Report, 98 countries are served by air traffic control utilities, which collect user fees from their aviation customers to fund day-to-day operations and finance improvements. Just 24 countries provide air traffic control through legacy FAA-style civil aeronautics authorities, mostly in developing countries in Africa, Asia, and the Caribbean.

The two main reasons why most of the world has moved on from the World War II-era FAA model are:

1. Regulatory independence: There is an inherent conflict of interest when a regulator provides the service that is tasked with regulating. Since 2001, the International Civil Aviation Organization (ICAO) has urged member states, including the United States, to separate the provision of air navigation services from its regulation. The non-compliant FAA model is increasingly uncommon as countries around the world have moved to adopt consensus regulatory best practices.
2. Financial independence: Air traffic utilities charge cost-based user fees based on ICAO consensus charging principles. This makes them independent from government budgets and allows them to issue revenue bonds to finance major improvements quickly. Free from the strings attached to government funding, air traffic utilities tend to focus on efficiency-enhancing modernization projects. Because utilities are able to finance improvements based on expected future revenue, these projects and their benefits to customers are delivered much more rapidly and cost-effectively.

Reason Foundation’s Robert Poole has been researching and advocating for air traffic control governance reform for more than 40 years. He has long argued in favor of converting the FAA’s Air Traffic Organization into an independent public utility. This approach has enjoyed bipartisan support in the past, although certain special interests have been successful in derailing reform. As he wrote days ago, “Depoliticizing the U.S. ATC system would be the most effective way to insulate it from inevitable future government shutdowns. Building the coalition to get this done should begin now.”

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On behalf of Reason Foundation, we respectfully submit these comments in response to the Office of Science and Technology Policy’s (OSTP’s) request for information on “Regulatory Reform on Artificial Intelligence.”

Reason Foundation is a national 501(c)(3) public policy research and education organization with expertise across a range of policy areas, including technology and communications policy.

There are numerous activities, innovations, and deployments currently inhibited, delayed, or constrained by federal statute, regulation, or policy. For this reason, we recommend a formal audit or review to identify areas of regulatory conflict with innovation—including the effect of state laws where federal regulation is silent. However, we offer the following specific examples in response to Question (i) for OSTP’s review:

1. Legacy NEPA Rules and Expansion Create Major Delays in Energy Production
2. Regulatory Barriers Limit the Expansion of Automated Track Inspection

Legacy NEPA rules and expansion create major delays in energy production

In order to maintain global technological superiority, the United States must focus squarely on reforms that increase energy capacity through streamlined permitting reforms in order to facilitate the development of artificial intelligence (AI) across industries. As of now, multi-year permitting delays are the status quo in any energy project. These delays set back the construction of new power plants, but also lead to the downstream effects of a restricted energy grid. As the United States competes with foreign adversaries for dominance in AI, energy capacity will either be a force multiplier in the country’s success or lead to failure on the global stage.

Congress passed the National Environmental Policy Act (NEPA) in 1969, directing federal agencies to evaluate the environmental impact of their decision-making prior to a major federal action. As part of this directive, agencies were required to produce an Environmental Impact Statement (EIS) when a federal action would significantly alter the environment, which is to include a comprehensive analysis of environmental effects, alternatives to the proposed action, and proposed mitigation measures (42 U.S.C. § 4332).

For federal actions that would impose smaller effects on the environment or where the size of the effect is uncertain, agencies must complete an Environmental Assessment (EA). An EA is a shorter-form document that aims to determine whether a proposed federal action warrants a full EIS or if the effects are small enough to render a Finding of No Significant Impact (FONSI). These mandated reviews were meant to inform both decision-makers and the public of potential significant environmental impacts and potential mitigations, but have evolved into increasingly lengthy and complex processes. Further, despite their extensive documentation, these reviews generate a substantial amount of litigation. As a result, the environmental review process that was designed to increase public transparency increasingly serves to delay and add costs to worthy projects.

For instance, the Nuclear Regulatory Commission (NRC) promulgated licensing rules that incorporate NEPA’s environmental review framework into nuclear power project approvals (10 C.F.R. Part 51). These NRC licensing processes have traditionally entailed lengthy reviews and administrative hurdles, delaying and often derailing reliable energy projects that could support AI infrastructure. Similarly, power grid interconnection regulations governed by the Federal Energy Regulatory Commission (FERC) under 16 U.S.C. § 824a et. seq. impose restrictive control over how new loads such as AI data centers connect to the grid. Lengthy wait times and cost allocation disputes in FERC’s interconnection queues compound delays to reliable, scalable power delivery essential to AI model performance.

The Supreme Court’s decision in Seven County Infrastructure Coalition v. Eagle County curtailed this expansion of agency review. Moreover, recent reforms, such as the expansion of categorical exclusions, recent executive orders on permit streamlining, and the U.S. Court of Appeals for the D.C. Circuit’s Marin Audubon Society ruling, may remove some of the chokepoints.

However, legacy NEPA implementation and statutes built upon decades of overexpansion continue to impose substantial procedural burdens on AI-related infrastructure—particularly energy.

As the need for abundant energy production grows more vital, this regulatory barrier to energy production is particularly relevant in light of small modular nuclear reactors (SMRs), which have emerged as a promising source of clean, abundant energy to power the energy-intensive AI data centers at the heart of U.S. technological superiority.

Regulatory barriers limit the expansion of automated track inspection

Automated track inspection (ATI) technologies have been tested in recent years to improve railway track defect detection and have the potential to improve rail safety while also increasing operational efficiency of the network. Instead of shutting down tracks for human inspectors to walk, or using specialized rail vehicles to inspect track visually, ATI sensors are mounted to trains as they are in service to collect track component data as part of normal rail operations. These robust sensor data are then fed to AI-powered models to better plan maintenance activities.

Through pilot programs established by railroads, which obtained waivers from the Federal Railroad Administration (FRA), ATI was demonstrated to more reliably detect defects than traditional inspections—and improve maintenance forecasting and planning over time. Pilot program data submitted to FRA show that defects per 100 miles of inspected track declined from 3.08 before the use of ATI to 0.24 during the ATI pilots, or a 92.2% reduction. Reportable track-caused train derailments on main track per year during that same period declined from eleven to three, or a 72.7% reduction. None of those three derailments was attributable to ATI-targeted defects, with two occurring while manual visual inspections were still taking place twice weekly and one while pilot testing was inactive.

These results are in line with successful ATI performance expectations, with a shift in maintenance practices from being guided by a “find and fix” approach to a “predict and prevent” approach. Better and earlier detection of geometry defects allows track maintenance to be performed in a more preventative manner. Further, the higher-quality data collected by ATI over time allows for AI-powered improvements to maintenance forecasting and strategy. As such, as ATI use is expanded and repeated over time, defect detection rates—and defect-related hazards—should decline.

Realizing the benefits of ATI requires changes to manual inspection practices. ATI cannot inspect turnouts (i.e., the point where trains switch from one track to another), turnout components (e.g., “frogs”), and other special trackwork. By focusing ATI on track geometry defects, human inspectors can be redeployed to infrastructure where they are best positioned to inspect. If legacy visual inspection requirements are not modernized, railroads will have less incentive to invest in ATI and improve their inspection practices.

Analysis of the ATI pilot program data found that visual inspectors identified far more non-geometry defects than track geometry defects. Prior to ATI testing on the pilot corridors, visual inspectors identified 10,645 non-geometry defects and 422 geometry defects. In 2021, during the ATI pilots, visual inspectors identified 14,831 non-geometry defects (a 39.3% increase) and 238 geometry defects (a 43.6% decrease). Of the non-geometry defects identified by visual inspectors, 60-80% were in turnouts and special trackwork that ATI cannot inspect.

Another important benefit of ATI is reducing visual inspectors’ exposure to on-track hazards. Substituting ATI for routine geometry defect inspection, coupled with a corresponding reduction in visual inspections, will remove inspectors from harm’s way. Data from the ATI pilot program indicate that inspector track occupancy duration declined by approximately one-quarter after visual inspections were reduced to once per week as part of the ATI pilots, suggesting substantial inspector workforce safety risk reductions are likely to occur if ATI is widely deployed.

The Association of American Railroads recently petitioned for an industry-wide waiver to enable significantly expanded ATI deployments. The necessity of a waiver is indicative of the inflexibility of legacy rail safety regulations, which mandate rigid manual visual inspection frequencies (49 C.F.R. § 213.233). Importantly, these long-standing inspection frequency rules are based on questionable assumptions about accumulated tonnage loads and lack the scientific rigor that ought to guide safety policy. FRA has yet to act on the pending ATI waiver petition, thereby preventing rail carriers, rail workers, shippers, and consumers from realizing the safety and efficiency benefits of ATI.

Conclusion

We greatly appreciate OSTP’s attention to regulatory barriers to the development and deployment of AI technologies. Realizing the full benefits of these various technologies and applications will require a sustained, concerted effort on the part of policymakers.

Thank you for the opportunity to provide these comments to OSTP. We look forward to further participation and stand by to assist as requested.

Download the full public comment:

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The proposal envisions channeling these dollars into various labor market interventions, such as union apprenticeship programs and a safety net for displaced workers, and infrastructure upgrades, especially for energy and water systems. This suggests Democrats may be shifting their rhetoric on AI, although the scant details so far make it hard to know how much difference this will make in terms of actual policy. Sen. Kelly’s proposal also comes at a time when Democrats control neither Congress nor the White House, so their priorities could shift whenever they regain congressional majorities and the presidency.

Setting aside these uncertainties, there appears to be support for Kelly’s approach. President Barack Obama tweeted on X that “We need more ideas like the ones @SenMarkKelly has outlined on how we can shape the future being created by artificial intelligence.”

Several other major Democratic Party figures and labor leaders have also declared support.

Sen. Kelly’s AI for America proposal can be contrasted with President Joe Biden’s 2023 Executive Order (EO) 14110, which envisioned a strong role for government intervention in the development of AI technologies. EO 14110 emphasized safety and “responsible innovation” as AI policy cornerstones. President Donald Trump rescinded EO 14110, then issued EO 14179, which is aimed at “removing barriers to American leadership in artificial intelligence.” In contrast to the safety-focused Biden era AI policy statement, Kelly’s AI roadmap stresses “strengthening the foundation of our success” in achieving “an early and commanding lead in AI thanks to our culture of innovation, world-class infrastructure, and unmatched ability to train and attract top talent.” Safety and equity considerations are present in Kelly’s proposal but receive much less attention.

Democrats have faced a series of high-profile setbacks when attempting to impose other strong regulations on how artificial intelligence is developed and used. In Colorado, Democratic Gov. Jared Polis convened a special session in August 2025 to amend Senate Bill 24-205, the Colorado Artificial Intelligence Act. That law would impose significant obligations on developers and users of “high-risk artificial intelligence systems” in sectors like healthcare. Lawmakers ultimately voted instead to delay implementation until June 30, 2026, rather than reopen the framework for amendment as Polis had sought. And in California, a federal judge blocked Assembly Bill 2839, which sought to restrict election-related deepfakes, as unconstitutionally overbroad, writing, “Most of AB 2839 acts as a hammer instead of a scalpel, serving as a blunt tool that hinders humorous expression.”

These defeats may be inspiring a new Democratic strategy that avoids direct restrictions on AI models and instead focuses on taxing industry to fund workforce and infrastructure programs. Kelly’s AI for America lays out a framework for managing the economic and social impacts of artificial intelligence without directly restricting innovation. The proposed AI Horizon Fund is the plan’s central feature. Kelly frames this fund as a way to ensure that the large technology companies benefiting most from AI’s growth also bear responsibility for addressing the broader costs that their expansion places on society. The fund is presented as a mechanism to channel private gains into public priorities.

Kelly describes these taxes as “common sense” because the firms generating “enormous profits” from AI should be required to offset the costs imposed on workers, communities, and public infrastructure. Of course, AI companies already do pay taxes just like any other business, so in practice, this funding mechanism transforms the proposal into a form of targeted redistribution, singling out private earnings from a particular type of technological innovation to be redirected into public spending priorities.

One of the key areas identified for this reinvestment is education and workforce development. The roadmap calls for expanding union apprenticeship programs and channeling resources into community colleges so that workers can gain the skills needed in an AI-driven economy. It also supports the creation of an “AI economic adjustment program” to supplement the incomes of displaced workers. AI for America also encourages increased labor union involvement in the design and deployment of AI to benefit workers, which raises questions about how much pivoting Democrats actually plan to do on their previous calls for AI model regulation.  Each of these interventions are cast as a way to ensure that technological change creates upward mobility for a broad base of workers, rather than widening inequality.

The second area of focus is infrastructure, where the plan highlights the strain that data center growth will place on water and electric systems. By directing AI company contributions into these public utilities, Kelly argues that firms can “offset these impacts” and “strengthen the systems and infrastructure on which they depend.” In practice, this would mean redistributing private sector gains into federally directed local or regional projects in energy, water, and other essential services.

This approach not only reinforces the idea that AI profits should be harnessed for broad social benefits rather than remaining in the hands of the companies that generate them, but it also raises practical questions about utility regulation and the roles of various levels of government.

Both public and private electric utilities typically rely on user revenue from their “ratepayers” to finance infrastructure improvements, which is subject to regulation by state and local utility regulators. AI companies are among those ratepayers, so if regulated rates are insufficient to generate revenue to finance improvements or if costs are poorly allocated, policymakers should direct their attention to state and local utility regulation.

Where federal involvement in utility infrastructure finance exists, it is principally in the form of loans and loan guarantees, such as the Environmental Protection Agency’s Clean Water State Revolving Fund and the Department of Energy’s Title 17 Energy Financing Program. These subsidized credit assistance programs play a relatively small role in U.S. utility networks and—importantly—require that a substantial amount of project risk be retained by utilities and their ratepayers.

Kelly’s proposal recommends new “financing mechanisms” to supplement the traditional utility ratepayer model, but it says nothing about how existing regulation is denying utilities the ability to, in the words of his roadmap, “raise capital quickly and recover their investments fairly without disproportionately impacting the communities that host new AI infrastructure.”

As energy economist Lynne Kiesling noted in a Reason Foundation commentary:

By temporarily scaling down operations or shifting workloads to off-peak periods, data centers can help balance supply and demand, stabilize prices, and reduce the need for expensive and emissions-heavy peaking power plants.

However, the regulatory and market institutions have to enable such markets and price signals to reduce frictions that maintain the timing mismatch between demand growth and increasing supply. They do not. While some demand response integration exists in wholesale power markets, it’s limited and heavily constrained.

Thus, the problem is not a relatively simple one of limited access to capital, which Kelly’s proposal aims to address in an equitable manner. Instead, the heavily regulated market design in utilities limits the ability of providers to match supply with customer demand efficiently. The upshot is that, absent market-oriented reforms, federal financing assistance will merely perpetuate and likely worsen the underlying problems that constrain utilities’ responses to the growth of data centers, and result in project risk being increasingly shifted to taxpayers.

There are limited instances in the United States where governments have asked specific technology firms to help offset the societal impacts of their operations beyond ordinary taxation.

One instructive precedent is the Universal Service Fund, which requires U.S. telecommunications providers to contribute to a pool that subsidizes broadband and telephone service in rural and underserved areas. These programs suggest that targeted levies or partnerships aimed at offsetting industry impacts are not without precedent, even if they remain relatively rare in the technology sector.

Ideally, a light regulatory touch would be the ideal path. But Democrats tend to heavily involve the government at some level in many proposals. Ultimately, whether this shift from regulation to redistribution benefits or harms innovation will depend on the scale of the required contributions, as well as how those revenues are directed. Heavy-handed regulation that restricts the design or deployment of AI models could stifle startups and slow the development of foundational technologies that underpin the broader ecosystem.

Yet if the new approach functions as an industry-specific tax that grows too large and funds programs of dubious value, it could limit the ability of U.S. companies to reinvest profits in research, infrastructure, and global competitiveness that would deliver real value to consumers. The balance between these two risks will determine whether policies like Sen. Kelly’s proposal strengthen the AI sector or instead constrain its long-term growth.

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This is simply no way to run airport security screening and underscores the need for reforming the TSA. Reason Foundation has long supported reforms to TSA’s governance model to improve the provision of airport security screening in the United States. To insulate airport security screening from congressional bickering and government shutdown risk, as well as improve its efficiency and effectiveness, we propose the following three reforms: separate the provision of airport security screening from its regulation; allow airports to contract directly with private security providers; and convert the 9/11 Security Fee into a dedicated local user fee.

To that end, we have developed draft legislation, which we are calling the TSA Reform Act, to detail and help implement these reforms. This proposed legislation is contained in Appendix A of this memorandum.

Separate the provision of airport security screening from its regulation

Following the enactment of the Aviation and Transportation Security Act (ATSA) of 2001, U.S. airport security screening was centralized under TSA. Importantly, the law tasked TSA with both providing screening services and regulating those services. This dual mandate combines the regulator with the regulated entity and represents an inherent conflict of interest. 

As with airlines, railroads, and automobiles, arm’s-length regulation by a government regulator and regulated entities is necessary to reduce the risks of regulatory capture. In the case of European Union member states, airport screening is the legal responsibility of airport operators. These airports either provide screening services themselves or contract with private providers.

Annex 17 to the Convention on International Civil Aviation (commonly known as the Chicago Convention) contains the International Civil Aviation Organization’s standards and recommended practices for aviation security. Paragraph 3.5.1(a) states that parties—including the United States, which is a founding signatory and the treaty’s depositary—should ensure the “independence of those conducting oversight from those applying measures implemented under the national civil aviation security programme.”

As a combined regulator and provider, TSA’s current institutional design fails to align with international consensus standards.

To address TSA’s core self-regulator design flaw and to align U.S. screening with global best practices, TSA should be reformed to focus strictly on the regulation of security services. Section 110(b) of ATSA replaced an earlier requirement that airport security screening be conducted “by an employee or agent of an air carrier, intrastate air carrier, or foreign air carrier” with a mandate that screening “shall be carried out by a Federal Government employee” (presently codified at 49 U.S.C. § 44901(a)).

We propose that this be amended to require instead that airport security screening be conducted by “an employee or agent of an airport” who would be certified and regulated by TSA.

Allow airports to contract directly with security providers

The major exception to TSA’s general security screening monopoly under ATSA Section 110(b) is the Screening Partnership Program, which allows airports to apply to seek the services of private screening companies (49 U.S.C. § 44920). TSA’s website lists 20 airports that are currently enrolled in the Screening Partnership Program, mostly small airports, but also includes Kansas City International, Orlando Sanford International, and San Francisco International.

Growth in the number of airports opting for private screening has stalled. Observers have identified a complicated, time-consuming, opaque, and biased process as the principal cause for the lack of interest in airport security contracting. A normal government contracting process typically involves a government agency issuing a request for proposals from qualified firms and then initiating a competitive bidding process. In the case of airport security, this would perhaps involve a sponsor airport beginning procurement from a list of security companies certified by the security regulator and then selecting the firm that best fits the airport’s particular needs.

This is not how the Screening Partnership Program is designed. Instead, under current law, an airport seeking to opt in to private screening must submit a detailed request to TSA. If TSA decides to grant the airport entry into the Screening Partnership Program, it will then determine which security company it believes best fits the needs of the airport applicant. As part of this selection process, the airport has only a minor advisory role. The security company is then assigned to the airport, and the private screening company is contracted to TSA; rather than a contract between the company and the airport it would serve.

We propose that the basic statutory framework of the Screening Partnership Program be amended to allow airports to contract directly with security screening providers or to self-provide screening services. The screening companies should be certified by TSA to be eligible for selection by individual airports, and airports should be able to choose the screening companies that best fit their needs and terminate contracts with those that fail to provide adequate service. Airports that choose to self-provide screening services should be subject to the same TSA certification and oversight as private screening companies.

Convert the 9/11 security fee into a dedicated local user fee

The principal barrier to direct airport contracting with security screening providers is payment responsibility. Under the Screening Partnership Program, rates are determined by TSA, which then pays the contracted providers and assigns them to willing airports. An unfunded mandate on airports to provide certain security services without compensation would surely be opposed by the airport industry.

To address these legitimate concerns, we recommend that Congress reform the existing security service fee, commonly referred to as the 9/11 Security Fee, which is assessed on airline tickets. Currently, airlines are required to impose security fees of $5.60 per one-way trip and a maximum of $11.20 for round-trip tickets (49 U.S.C. § 44940(c)(1)). Airlines then remit the fee revenue to TSA. However, since the enactment of the Bipartisan Budget Act of 2013, Congress has diverted one-third of 9/11 Security Fee revenue for deficit-reduction purposes (49 U.S.C. § 44940(i)).

To fund airports’ security screening operations, Congress should convert the 9/11 Security Fee into a dedicated local airport user fee akin to the passenger facility charge (PFC). Congress authorizes enplaning airports to impose PFCs of up to $4.50 per flight segment, with a maximum of two PFCs per one-way trip ($9) and four PFCs per round trip ($18) (49 U.S.C. § 40117(b)(1)). Airlines collect the fees on passenger tickets and remit the revenue directly to the airports at which the passengers enplaned. The Federal Aviation Administration regulates the use of airport PFC revenue by project eligibility criteria (14 C.F.R. Part 158). Despite these restrictions, PFC revenue now accounts for a large share of commercial service airport capital investment, particularly on terminal projects.

A PFC-style 9/11 Security Fee would restore the 9/11 Security Fee to its original purpose of advancing aviation security. Like the Federal Aviation Administration’s oversight of the passenger facility charge, TSA should regulate the use of these funds to ensure they are spent on security-related projects and operations. Revenue from a reformed 9/11 Security Fee would be sufficient to cover security screening services at most airports, although Congress should require, as part of these reforms, that TSA conduct a detailed financial analysis. Low-volume airports that might be unable to raise sufficient revenue to provide effective security screening should be supported by a separate account established by Congress and funded through annual appropriations, along with TSA administrative costs and other activities lawmakers deem appropriate.

Conclusion

These reforms to the Transportation Security Administration would significantly improve airport security governance and effectiveness in the United States. They are long overdue and are justified on their own terms. But the latest government shutdown, with the looming threat of commercial air travel chaos, underscores the need for these reforms. Airport security screening is simply too important to be left to the whims of Congress. 

Reason Foundation’s proposed TSA Reform Act is available here.

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The Spring 2025 edition marks the first Unified Agenda publication of the second Trump administration. Like past presidents, President Donald Trump immediately issued a customary “regulatory freeze” of all federal rulemaking activities to allow new agency leadership to evaluate the regulations being developed by their predecessors.

The Trump administration has also been aggressive in its issuance of executive orders, and two in particular are relevant to the federal regulatory enterprise: EO 14192 (2025), “Unleashing Prosperity Through Deregulation,” and EO 14219 (2025), “Ensuring Lawful Governance and Implementing the President’s ‘Department of Government Efficiency’ Deregulatory Initiative.”

EO 14192 orders regulatory agencies to identify 10 existing regulations for repeal whenever they consider promulgating a new regulation. This 10-out, one-in regulatory budget also contains a directive that, to the extent permitted by law, any new incremental costs of a new regulation be offset by the elimination of existing costs associated with at least 10 prior regulations.

Having been tasked with implementing ambitious regulatory budgeting, EO 14219 provides agencies with specific deregulatory targets. It directs agencies to identify regulations that are unconstitutional or pose “serious constitutional difficulties,” based on unlawful delegations of statutory power, go beyond the “best reading” of the statute, implicate significant matters not clearly authorized by Congress, impose significant costs on private parties not outweighed by public benefits, harm the national interest, or impose undue burdens on small businesses and entrepreneurs. Following agency review, identification, and categorization of the offending rules, agencies are to consult with OIRA to develop a “Unified Regulatory Agenda” to rescind or modify these regulations.

In its Spring 2025 Unified Agenda preamble, the U.S. Department of Transportation states that it has “taken actions to ensure that all Departmental policies align with the Administration’s policies.”

With respect to regulatory policy, it highlights, “Ensuring Reliance upon Sound Economic Analysis in Department of Transportation Policies, Programs, and Activities,” Department Order 2100.6B, “Policies and Procedures for Rulemakings,” and a memo from the Department’s Office of General Counsel on “Review and Clearance of Guidance Documents.”

Each of these policies is deregulatory in character, and together they suggest that the Department of Transportation is taking seriously its orders from the president.

I previously examined the transportation rulemakings contained in Fall 2024, Spring 2024, Fall 2023, Spring 2023, Fall 2022, Spring 2022, Fall 2021, Spring 2021, and Spring 2020 editions of the Unified Agenda for Reason Foundation. From a historical perspective, Figure 1 below shows that the current volume of regulatory activity at the U.S. Department of Transportation is unprecedented, exceeding the previous record number of newly published rulemaking projects set in Spring 1996 by nearly 50%.

The Spring 2025 Unified Agenda lists 291 active rulemaking projects at the U.S. Department of Transportation. Of those 291, 133 are new rulemaking projects first published in the Spring 2025 edition. These new rulemaking projects are listed in Table 1 at the bottom of this article.

The Unified Agenda contains rules determined to be “significant regulatory actions,” or “economically significant” rules, which had been defined by EO 12866 (1993) as regulations that would have an annual impact on the economy of $100 million or more, or otherwise “adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities.” Rules deemed economically significant are subject to greater scrutiny, most notably a requirement that agencies conduct a benefit-cost analysis of the proposed regulation.

With the changes brought by EO 14094 (2023), the annual cost threshold for a rule to be considered a “significant regulatory action” doubled to $200 million, and that threshold will be adjusted every three years for “changes in gross domestic product.” This adjustment was made in Section 3(f)(1) of the 2023 EO. A discussion of the rationale and implications of this change can be found in my review of the Fall 2023 edition of the Unified Agenda.

One important implication is that EO 14094 made historical comparisons of the stock and flow of “economically significant rules” more challenging. Fortunately, as part of the Congressional Review Act, Congress itself requires a separate “major” rule designation that retains the traditional $100 million threshold (5 U.S.C. § 804(2)(A)), allowing for continued like-for-like historical accounting.

Figure 1 preserves the traditional cost threshold by counting “major” rules instead of “economically significant” rules. While Trump revoked EO 14094 (2023) as part of EO 14148 (2025) and thereby restored the traditional $100 million cost threshold for “economically significant” rules, we have continued to count “major” rules to ensure continuity. There are currently 12 “major” rules under development at the Department of Transportation. Of the 133 new rulemaking projects that first appeared in the Spring 2025 edition of the Unified Agenda, only one has been designated a “major” rule. However, 34 have a “major” status listed as “undetermined,” meaning they could be later designated as “major” rules as they move through the rulemaking process and economic costs are estimated.

Transportation deregulation in the second Trump term

Given that Trump signed an executive order titled “Unleashing Prosperity Through Deregulation,” it should perhaps not be surprising that the U.S. Department of Transportation has categorized many of its newly announced rulemaking actions as “deregulatory.” That order, EO 14192, established a regulatory budget, which necessitates the categorization of rules as “regulatory” or “deregulatory.”  OIRA issued a memo in March 2025 providing guidance on this process. According to the Spring 2025 Unified Agenda, of the Department of Transportation’s 133 newly announced rulemaking projects, 119 are categorized as “deregulatory,” with the remainder being categorized as “fully or partially exempt,” “not subject to, not significant,” or “other.”

Some of DOT’s deregulatory actions involve rescinding existing rules, such as the forthcoming proposed rule from the Federal Aviation Administration that would eliminate the regulatory prohibition on overland supersonic flight (2120-AM15). Others would amend existing regulations to enable new technologies, such as the National Highway Traffic Safety Administration’s planned modernization of Federal Motor Vehicle Safety Standards 102 (2127-AM72), 103 and 104 (2127-AM71), and 108 (2127-AM70) to accommodate automated driving systems. And still others focus more on what could be called regulatory hygiene by removing obsolete requirements and unnecessary language that naturally accumulates over time, such as a recently issued proposed rule to eliminate a reference to a program that was terminated in 1998.

What this shows is that DOT is likely to pursue an aggressive deregulatory agenda, broadly construed. This makes sense given the presidential requirement of 10 deregulatory actions for every regulatory action. Agencies will have a strong incentive to find deregulatory actions, however inconsequential in terms of economic impact, to demonstrate compliance with the executive order.

Yet, the other component of this new regulatory budgeting—that the costs of a new regulation be offset by the costs associated with at least 10 other regulations that would be eliminated—is likely to focus DOT on bigger-ticket items. Thus, the size of the cost savings identified in benefit-cost analyses included in the regulatory impact assessments that accompany “significant” rules will determine the internal political success of this deregulatory effort. But the quality of those benefit-cost analyses will determine this deregulatory effort’s economic success, which is ultimately what matters, and that will need to be a key focus of those seeking to realize actual reforms.

Table 1: U.S. Department of Transportation Rulemaking Projects First Published in the Spring 2025 Unified Agenda

Source: Office of Information and Regulatory Affairs, Unified Agenda of Regulatory and Deregulatory Actions, Spring 2025

Note: RIN = Regulation Identifier Number, a unique alphanumeric code assigned by the Regulatory Information Service Center to each rulemaking project listed in the Unified Agenda. An explanation of Stage of Rulemaking terms can be found on pages 10 and 11 of the Introduction to the Unified Agenda from the Regulatory Information Service Center.

The post First look at the Trump administration’s transportation regulatory agenda appeared first on Reason Foundation.

On behalf of Reason Foundation, we respectfully submit these comments in response to the Office of the Secretary’s (“OST”) request for information on advancing a surface transportation proposal that focuses on America’s most fundamental infrastructure needs.

Reason Foundation is a national 501(c)(3) public policy research and education organization with expertise across a range of policy areas, including transportation. Since 1978, Reason Foundation has led the development and implementation of innovative solutions to complex transportation problems—emphasizing the roles of markets and choice in delivering durable transportation improvements. Our approach is aligned with the Department of Transportation’s four major policy themes that it aims to advance in a forthcoming surface transportation reauthorization proposal: enhancing safety, accelerating project delivery, increasing opportunity, and strengthening partnerships.

Our policy proposals are divided into topic areas. Each proposal contains either legislative reform principles or recommended legislative text.

Jump to policy proposal topic areas:

• A fiscally responsible surface transportation reauthorization bill
• Give states a new option for converting from per-gallon taxes to per-mile charges
• Expanding private activity bonds for major transportation projects
• Reforming the TIFIA loan program
• Discretionary grant programs need to be reformed
• Prioritizing maintenance in federal transit programs
• Improving public transit efficiency
• Clearing a bureaucratic roadblock to safer driverless trucking
• Advancing performance-based rail safety regulation

A fiscally responsible surface transportation reauthorization bill

The U.S. government’s fiscal situation is going from bad to worse. Rising concerns about the federal government’s fiscal solvency are likely to have a negative impact on transportation programs that depend on general fund support.

Congress faces the need to reauthorize federal surface transportation programs in 2026, and a top priority should be increasing the long-term resilience of these programs by insulating them from the federal government’s worsening fiscal problems. If Congress wanted to put transportation investment on a sound, longer-term basis—meaning no more unfunded programs based on irresponsible federal borrowing—what kind of measures could they consider?

One idea that already has some congressional supporters is to abolish discretionary grant programs in favor of going forward only with formula funding. These discretionary grants are essentially executive branch earmarks. Just as congressional earmarks should be banned, so should executive branch earmarks. Short of abolition, more modest reforms of federal discretionary grant programs are discussed later in this memo.

A second key change would be to make the federal Highway Trust Fund self-supporting, as it was until 2008. That means formula funding would be limited to the revenue from federal user taxes. The Congressional Budget Office in January estimated that this change would require increased revenue of $40 billion per year or reduced spending of the same annual amount. Highway users should be paying for the highways they use, rather than having the true cost disguised by federal borrowing.

Those are relatively modest changes, but state DOTs and legislatures will undoubtedly be concerned because they have gotten used to the funding levels provided by recent surface transportation reauthorizations based on that irresponsible federal borrowing. This is why Congress should also give states opportunities for greater transportation investment.

One option would be to expand financing mechanisms for large-scale public-private partnerships (P3s). For greenfield projects (e.g., replacing major bridges), removing the cap on qualified private activity bonds and expanding TIFIA loans would have minimal effects on the federal budget but could foster increased state and local use of P3s. Recommended reforms to both of these federal financing programs are discussed in greater detail later in this memo.

Another program change could be to liberalize the never-used Interstate System Reconstruction and Rehabilitation Pilot Program (ISRRPP) by opening it up to all 50 states and allowing them to use toll financing to rebuild any or all of their Interstates needing reconstruction. Gradually shifting Interstates from federal funding to toll financing would enable the gradually shrinking federal and state fuel tax revenues to be reserved for non-Interstates.

As is explained later in this memo, liberalizing ISRRPP could lead to the first large-scale shift from fuel taxes to road usage charges (RUCs). The Interstates and other limited-access highways handle about one-third of all U.S. vehicle-miles of travel, so converting them to per-mile toll charges could be the first large-scale transition away from fuel tax dependence. Per-mile tolls cost far less to collect than any projected large-scale RUC system now being considered. With the future of the planned national RUC pilot project mired in uncertainty, the Interstate tolling alternative could be a feasible replacement, as individual states opt into it.

An underlying reality too often forgotten is that states own virtually all of this country’s highways. The federal Highway Trust Fund was created in 1956 for the sole purpose of building the Interstate highways. It was never intended to be an ongoing federal-aid program for highways and transit. It gradually morphed into that after most of the Interstates were built.

A fiscally responsible 2026 surface transportation bill could also convey a message to state legislatures and their DOTs: The federal government can no longer afford ever-expanding borrowing to support projects that states and metropolitan areas could finance themselves as infrastructure owner-operators. If there really is a federal fiscal collapse within the next 10 years, states and metro areas need to start planning now for how they will cope when the “free” federal money runs out.

Unlike the federal government, states must balance their budgets each year. Relying more on their own financing capabilities to issue both revenue bonds and general obligation bonds—and with increased use of long-term P3s where feasible—states should be able to phase in state responsibility for their highways.

As for mass transit, California has long provided a model via its self-help counties. Every county that includes one or more large metro areas has long embraced dedicated transit sales taxes, usually approved by voters for several decades at a time. This approach localizes the funding, instead of requiring rural residents to help pay for urban transit systems that they will never use.

The coming end of free federal money for highways and transit is in sight, though few have begun to realize this. The 2026 reauthorization should be crafted with this impending change in mind.

Recommended reform principles:

• Eliminate, or at least minimize, discretionary grant programs supported by the general fund.
• Align Highway Trust Fund outlays with expected user-tax receipts.
• Increase flexibility for states to finance their own infrastructure improvements.

Give states a new option for converting from per-gallon taxes to per-mile charges

Most state DOTs understand the need to shift from per-gallon fuel taxes to per-mile charges dedicated to highway funding. But progress toward this goal has been very slow. Seventeen states have carried out pilot projects, but none have enacted a permanent program that applies to all vehicles. And Congress’s plan for a national pilot program is three years behind schedule and will not have any results useful for the 2026 reauthorization.

Very real problems have held back progress, despite some lessons learned from state pilot projects. First, there are still serious concerns about privacy—about being “tracked” on every trip one makes. Motorists and taxpayers are also concerned that a new per-mile charge would be in addition to their current federal and state fuel taxes—“double taxation.” And many experts on potential technology for per-mile user fees for all types of roads have concerns about collection costs that may be 10 to 20 times more than the cost of collecting fuel taxes.

One alternative that could help start this needed transition is the following. Instead of starting with one kind of vehicle (such as electric cars), states could start with a type of roadway. The Interstate highways (some of which are already tolled) would be relatively easy to convert to per-mile charges.

Consider the privacy concern about all journeys being “tracked” and reported to the government. Interstates (and other “limited-access” highways) have only a small number of entry and exit points. A trip on an Interstate would be charged from the on-ramp to the off-ramp, revealing no details about where the trip originated or terminated. Motorists on today’s turnpikes express no concerns about the electronic tolling that charges them from entry to exit.

The concern about double taxation is very real, and this has been a long-standing concern of the trucking industry in particular, when they must pay tolls and fuel taxes on the same tolled highway. The solution would be for a state that opted for per-mile charging to provide fuel-tax refunds for the miles traversed on its converted Interstates.

As for technology, today’s electronic tolling with pre-paid accounts has a cost of collection as low as 5% of the revenue for cars (and less than that for trucks). That compares with 2% to 3% cost of collection for fuel taxes. But 5% is much less than the 10-20% estimated for large-scale systems by per-mile-charging experts today.

Starting the transition to per-mile charges with the Interstates and other limited-access highways would offer several additional benefits. Were all states to make this transition, about one-third of all vehicle miles of travel would be shifted from fuel taxes to per-mile charges. And by providing refunds of fuel taxes for the miles driven on converted highways, states would demonstrate that there would be no double taxation involved.

To implement this change, Congress could modify an existing federal statute that has never been used: the Interstate System Reconstruction and Rehabilitation Pilot Program (ISRRPP). This program allows only three states to convert one Interstate highway to tolling. Such a conversion is currently politically unviable because singling out only one Interstate to have tolls would lead to protests from users of that one corridor (as happened when North Carolina proposed using ISRRPP for I-95). Instead, ISRRPP would be opened to all 50 states and all of each state’s Interstates.

To prevent “double taxation,” the legislation would require participating states to provide fuel tax rebates to motorists and truckers for all miles traveled on the converted highways. Calculating those rebates would be a simple function of the per-mile charging software. Similar rebates are being provided today on two U.S. toll roads: the Massachusetts Turnpike and the New York Thruway.

To participate in this new program, a state transportation department would apply to the Federal Highway Administration. The two parties would negotiate and sign an agreement to comply with the terms of the legislation.

View Reason Foundation’s recommended legislative text here.

Expanding private activity bonds for major transportation projects

Surface transportation Private Activity Bonds (PABs) are tax-exempt bonds first authorized by Congress in 2005 as part of the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU). Their purpose is to create a level financial playing field for highway and transit projects developed under long-term public-private partnership (P3) agreements. Traditional state and local government-financed transportation projects routinely use tax-exempt municipal bonds, which have lower interest rates than the taxable bonds historically available for privately financed projects. Thus, tax-exempt PABs enable the financing costs for P3 projects to be nearly the same as for traditional government-financed projects.

Prior to the advent of PABs, transportation P3 projects were few and far between. The early projects relied on bank debt at typical bank loan interest rates. Only three such projects were financed between 1995 and 2007. Between 2005 (when PABs were authorized) and 2023, there were 14 highway P3 projects financed by revenue and 12 highway and transit P3 projects financed based on availability payments. PAB-supported P3 projects have been implemented in 13 states, from California to Virginia.

The original PABs legislation included a cap of $15 billion worth of such bonds. By 2020, as more states began implementing P3 surface transportation projects, the cap was on the verge of being reached. In the Infrastructure Investment and Jobs Act (IIJA) of 2021, Congress increased the cap to $30 billion. Since then, the demand for P3 projects has increased dramatically. There are at least $31 billion of P3 project construction costs expected to reach the financing stage over the next several years. Yet, as of June 1, 2025, DOT’s Build America Bureau estimated that the remaining PABs’ capacity was only $500 million.

Congress could increase the surface transportation PAB cap again in the forthcoming reauthorization, but the better option would be to eliminate the cap altogether. When the original legislation was enacted in 2005, PABs were seen as an experiment, and it took 16 years before the original $15 billion cap was reached. But in only four years, the additional $15 billion is already close to being allocated. Surface transportation PABs are no longer an experiment and should now be mainstreamed as a proven tool for financing transportation P3s.

Removing the cap on PABs was first suggested by the bipartisan Special Panel on Public-Private Partnerships convened by the House Transportation and Infrastructure Committee in 2014. That panel also suggested that transportation PABs be extended to projects at airports and seaports. These proposals were endorsed as part of the Trump administration’s first-term infrastructure plan, “Legislative Outline for Rebuilding Infrastructure in America,” released in February 2018.

It is important to understand that transportation PABs are non-recourse bonds. They are obligations of the P3 entity: neither federal not state taxpayers are at risk if the bonds run into trouble. Equity investors and bond-buyers alike understand this point, and they have no basis for expecting a federal or state bailout in the event of revenue shortfalls.

Both the U.S. Treasury and Congress’s Joint Committee on Taxation (JCT) often express concern about expanding the scope for tax-exempt bonds. Their concern is that projects that get financed via PABs would likely otherwise be financed via taxable bonds, so the Treasury would be losing revenue from such taxable bonds. But evidence suggests this assumption is incorrect. The very slow progress of transportation P3 projects between 1995 and 2007 suggests that the private sector rejected the alternative of using taxable bonds. The few large surface transportation projects that took place during those 12 years were evidently financed by state and local governments using traditional tax-exempt municipal bonds—which are not subject to any volume cap.

Contrary to the assumptions of the Treasury and JCT, eliminating the PABs volume cap and expanding eligibility could increase federal tax revenue. The $62.5 billion invested in transportation P3 projects through 2023 via infrastructure developers and infrastructure investment funds is expected to lead to profits for these entities, resulting in their paying federal corporate income taxes. These projects are designed, built, financed, operated, and maintained by companies from this new industry, with project terms ranging from 35 to 70 years. There is every expectation that this new industry will be an ongoing source of federal corporate income tax revenue.

View Reason Foundation’s recommended legislative text here.

Reforming the TIFIA loan program

The Transportation Infrastructure Finance and Innovation Act (TIFIA) was created by Congress in the 1998 TEA-21 reauthorization. The purpose was to deal with capital market gaps for promising surface transportation (highway and transit) projects. Applicants could apply for construction-related loans for new projects, limited to 33% of the project budget. To qualify, projects had to receive two investment-grade ratings. As of 2022, TIFIA loans had helped to finance 98 projects in 22 states.

These limitations were key to the project’s success and the program’s very low loss rate. An external review conducted for the U.S. Department of Transportation, TIFIA at 25, found that through 2022, the average initial ratings of financed projects were BBB+, and the average of the portfolio in 2022 had increased to A-.

Legislative changes since MAP-21 in 2012 have gradually reduced the safeguards that have ensured the soundness of the TIFIA loan portfolio. First, the maximum loan amount was increased to 49% of project costs. More recently, new project categories were added: transit-oriented development (TOD), INFRA grant projects, state infrastructure banks, and a Rural Project Initiative that offers interest rates at one-half the Treasury rate. These new projects can all receive TIFIA loans at up to 49% of their proposed budgets.

In addition, the term of TIFIA loans can now be as long as 75 years (compared with 35 originally), and only one investment-grade rating is required. The scope of projects has recently been expanded even further to include projects at airports, seaports, and natural habitats affected by infrastructure. As of early 2025, the Build America Bureau has not approved any loans for state infrastructure banks or the Rural program, and only one for a TOD project.

Nevertheless, these changes could pose a risk to the credit quality of what has been a very successful program. As the program begins to resemble traditional competitive grant programs (which award, rather than loan, funds), sponsors of all kinds of projects may urge further expansions of TIFIA’s scope. In response, those concerned about increasing federal spending may seek to abolish TIFIA, along with earmarks and competitive grant programs.

The alternative to this would be to enact reforms that return TIFIA to its original purpose: to provide gap funding for projects that support surface transportation improvements only. Among the policy changes that would strengthen TIFIA’s credit quality are the following:

• Limit loans to the original 33% of a project’s construction budget;
• Limit TIFIA loan terms to the original 35 years;
• Restore the requirement of two investment-grade ratings; and
• Eliminate the recent additions of TOD, INFRA, state infrastructure banks, Rural, and natural habitats. 

Some recent applicants for TOD and passenger rail projects have applied for both TIFIA and Railroad Rehabilitation and Improvement Financing (RRIF) loans, with the most recent expression of interest coming from Amtrak, seeking a combined $19 billion for its proposed Texas high-speed rail project. RRIF has historically been underused. With that separate program available for passenger rail projects, there is no good rationale for TIFIA to be investing in passenger rail projects. Further, while airport and seaport projects would likely not impair the credit quality of the TIFIA portfolio, both facility types can already issue both general obligation and revenue bonds, and generally do so more rapidly than obtaining a TIFIA loan.

In several recent years, Congress has reduced the TIFIA budget, apparently based on a perception of limited demand. Yet the projected demand for revenue-risk highway and bridge P3 projects over the next three to five years was estimated in the December 2024 issue of Public Works Financing as $31 billion. Since projects of this kind average TIFIA loans for 17% of project cost, this category alone would account for more than $5 billion in new TIFIA loans.

View Reason Foundation’s recommended legislative text here.

Discretionary grant programs need to be reformed

Historically, most federal transportation funding has been awarded through formula funding. Congressional authorizers crafted multi-year transportation bills that awarded funding based on criteria including population, highway lane miles, and bridges.

The biggest problems with discretionary grants emerged under the Infrastructure Investment and Jobs Act (IIJA). But the problems started during the Obama administration, whose grants were focused on local projects with a limited nexus to transportation. A Reason Foundation analysis evaluated the Transportation Investment Generating Economic Recovery (TIGER) I, TIGER II Capital, TIGER II Planning, and TIGER III grant programs at the U.S. Department of Transportation (USDOT). The analysis found:

• The metrics that USDOT used to evaluate the applications lacked quantitative components.
• Certain funding applications contained incorrect information that USDOT used in press releases to justify the funding of those applications.
• USDOT provided limited information to the public explaining the process.
• Grant funding was not determined by rigorous application of USDOT’s own evaluation criteria: USDOT funded almost as many “Recommended” projects (25) as “Highly Recommended” projects (26). Meanwhile, only 23% of the 110 projects ranked “Highly Recommended” were funded. The TIGER Review Team offered no official written explanation for its selections. The Review Team offered notes in draft form and a memo, but these limited explanations only raised more questions because, in many cases, the projects selected were not deemed better than the projects that were not.
• A disproportionately large number of projects were funded in Democratic congressional districts. In TIGER I, TIGER II Capital, TIGER II Planning, and TIGER III, congressional districts represented by Democrats were awarded a higher percentage of grants than their overall proportional representation. In TIGER III, districts represented by Democrats received 69% of the funding despite Democrats holding only 47% of the total congressional seats.
• Many of the “transportation” projects awarded funding to environmental or economic development causes with, at best, a tenuous connection to moving people and goods.
• Many of the projects were purely local in nature with no plausible national nexus, such as recreational trails or local transit lines. 

In the IIJA, discretionary grant funding ballooned to $200 billion, which was spread over dozens of different programs, accounting for approximately one-fifth of total transportation funding. Similar to many of the grants awarded during the Obama administration, the project documentation of IIJA grant programs has been severely deficient. Details on why certain projects were awarded funding over other projects have not been provided. Local projects and those unrelated to transportation continue to receive funding. In the face of questionable and politicized grant awards, the Florida Department of Transportation took the unusual step of launching an advocacy campaign criticizing USDOT’s discretionary grant programs: “Build Infrastructure, Not Political Agendas.”

But an even bigger problem has emerged. Despite a nearly 10% increase in USDOT staff, the Biden administration was unable to process the grants in a timely manner. For instance, as of January 31, 2025, the National Infrastructure Investments grant program (currently known as BUILD; previously RAISE and TIGER) had only obligated 20.4% and outlaid just 2.4% of funds available under its $10 billion in IIJA budget authority. USDOT claimed that the grants were slowed due to “accountability” factors. But an analysis of the program showed that much of the internal USDOT documentation was missing, which belies accountability justifications. Regardless, discretionary grants fail to serve a purpose if USDOT does not disburse the funds.

In summary, USDOT discretionary grant programs lack focus, have become overtly political, and cannot be executed in a timely manner. It’s time for Congress to reduce, consolidate, and refocus DOT discretionary grants. In doing so, Congress should codify in statute quantitative scoring weights that guide the selection of projects based on their performance to the following criteria: reducing congestion, improving mobility, improving safety, and facilitating interstate commerce.

Recommended reform principles:

• Reduce the number of discretionary grant programs to a maximum of one per mode of transportation.
• Focus on the core national transportation priorities of reducing congestion, improving mobility, improving safety, and facilitating interstate commerce.
• Establish quantitative project scoring criteria in statute to ensure the reformed discretionary grant programs consistently meet national transportation priorities.
• Fund transportation projects only. Federal transportation funding should not be used for environmental or community development projects. The federal government has other programs to fund those projects if they are justified.
• Increase the quality and the quantity of documentation explaining the decision-making process. Review Team meetings should include officially recorded notes of all projects, indicating the reasons for approval or rejection of each project. All notes should be posted online to the USDOT website.

Prioritizing maintenance in federal transit programs

In recent decades, approximately 20% of the funding in each surface transportation reauthorization bill has been allocated to mass transit. The federal government typically allows transit capital projects (such as those funded by the New Starts, Small Starts, and Core Capacity programs) and transit maintenance projects (State of Good Repair program) to be funded with 80% federal money and 20% local money.

Many of the mass transit systems across the country are in poor shape, in part because they direct money to costly new capital projects rather than needed maintenance. When Congress writes and passes the next surface transportation reauthorization bill, it should encourage maintenance projects by lowering the maximum federal share for capital projects.

State highway systems are generally in good condition. Reason Foundation’s most recent Annual Highway Report found that of the nine categories focused on performance, the states made significant progress in six of them. In contrast, many rail transit systems are increasingly in poor condition. Major mass transit agencies are using federal funding for new capital projects that should not be priorities due to the significant backlogs in maintenance and other system needs. 

For example, the Washington Metropolitan Area Transit Authority built the Silver Line in largely low-density suburban Virginia and is studying a new $40 billion line connecting National Harbor with Rosslyn. Meanwhile, its existing rail network has been plagued by collisions, derailments, and increased crime in recent years. Similarly, New York’s Metropolitan Transportation Authority (MTA) has had a series of service breakdowns and faces major public safety problems. Many other major transit systems are encountering similar problems.

Unfortunately, many transit agencies prioritize capital projects over ongoing maintenance needs. Part of this problem is structural. Most of the mass transit agency boards across the United States are composed of political appointees, who often favor big new projects that enable ribbon-cuttings and photo opportunities. As a result, there is often a built-in bias towards building new rail projects over improving existing transit services. This dynamic helps explain why there have been more than 20 new light-rail lines added over the last 20 years, despite many of the rail projects failing to increase transit ridership.

Additionally, new rail expansions can sometimes mean cuts in bus service. When the Dallas Area Rapid Transit (DART) Authority and Houston Metro added new light-rail services, for example, they cut existing bus service. This resulted in fewer riders using public transit after adding rail service at great cost.

With reduced transit ridership due to the COVID-19 pandemic, this is not the time to add costly new capacity. As of January 2025, ridership on U.S. rail transit systems is at 78% of 2019 levels. Prior to the pandemic, many systems had seen ridership declines over the preceding decade. Rail transit ridership is increasingly unlikely to recover to 2019 levels within the next decade, if ever. Remote work remains several multiples above transit’s share of commuting and is likely to persist at high levels. Long-term trends in ride-hailing services and the future availability of automated vehicles are also likely to reduce transit ridership.

Given these circumstances, Congress should prioritize maintenance over capital expansion projects by capping funding for New Starts, Small Starts, and Core Capacity grants at a 50% maximum federal share. The maximum federal share for the State of Good Repair grants should remain at 80%.

View Reason Foundation’s recommended legislative text here.

Improving public transit efficiency

Following the onset of the COVID-19 pandemic, public transit systems throughout the United States experienced an unprecedented ridership collapse as people stayed home and avoided crowded public spaces. While most disease mitigation measures have since been abandoned, the impact of the pandemic continues to be felt in various ways, including persistent changes in travel behavior. One consequence has been a muted transit ridership recovery, which stands at approximately three-quarters of the pre-pandemic ridership level in the United States. Depressed transit ridership has been met with unprecedented public subsidies, especially from the federal government. These two trends resulted in a steep decline in transit productivity.

This decline has alarmed policymakers. However, while conditions have substantially worsened in recent years, public transit productivity has trended downward since the end of World War II, largely due to increasing household incomes, growing private automobile ownership, and the dispersal of households and then workplaces into the suburbs. Between 1960 and 2019, the inflation-adjusted operating costs more than quintupled while ridership remained flat.

Following the onset of the COVID-19 pandemic, public transit ridership collapsed. As of 2024, nationwide ridership had only recovered to approximately 78.4% of 2019 levels. More recent estimates from May 2025 show transit ridership at 80.6% of 2019 levels. Much of this ridership decline can be explained by changes in work travel. Many transit systems were designed to facilitate journeys to and from work in central business districts, and working from home remains two to five times its pre-pandemic share of “commuting”—and four to eight times the share of mass transit commuting—depending on how it is measured.

Depressed ridership led Congress to authorize unprecedented federal subsidies for transit agencies. Supplemental COVID-19 appropriations during FYs 2020 and 2021 provided $69.5 billion in emergency support for transit agencies, equivalent to nearly five years of pre-pandemic federal transit funding. The Infrastructure Investment and Jobs Act, enacted in FY 2022, increased federal transit funding by 67% over the levels previously authorized by the Fixing America’s Surface Transportation (FAST) Act of 2015 in nominal dollars.

This large increase in federal funding allowed transit agencies to continue to provide service close to pre-pandemic levels, with transit service provided between 2019 and 2023 falling by only 10.3% (in vehicle revenue miles) despite ridership declines of 29.3%. These dynamics had predictable effects on transit labor productivity, with productivity declines almost entirely driven by decreased ridership.

As historical experience with transit subsidies has shown, advancing transit efficiency is not a simple question of additional funding. Making better use of existing resources must be prioritized to avoid counterproductive subsidy policies that merely deepen and prolong the transit’s productivity crisis. Two strategies to advance transit productivity show particular promise:

• Competitive contracting: Under public-private partnerships, transit agencies can contract out transit service provision to private firms. The agency would serve as the coordinating and oversight entity, developing performance requirements and ensuring private partners adhere to those requirements embedded in their contracts. A 2017 study estimated that contracting out bus service in the United States could reduce operating costs by 30%.
• Transit vehicle automation: Urban rail transit is increasingly automated outside the United States. A 2023 study comparing rail lines in the United States and fully automated lines abroad estimated automation could potentially reduce U.S. operating costs by 46%. In addition to rail transit automation, numerous companies are developing automated road vehicles. One rubber-tire automated transit company that is developing two projects in California claims it can reduce operating costs by approximately 80% compared to average costs faced by conventional transit systems.

Unfortunately, both competitive contracting and automation face substantial deployment barriers in the United States. Section 13(c) of the Urban Mass Transportation Act of 1964 established transit worker labor protections. This provision was included to ensure collective bargaining agreements continued to be honored during the period when transit systems and their workforces were transitioning from heavily unionized private ownership to—at the time—sparsely unionized government ownership.

Section 13(c) requires transit agencies that receive federal funding to certify employee “protective arrangements” with the Department of Labor. As a consequence, transit agencies are greatly constrained in enacting any operational change involving employees. Section 13(c) generally requires transit agencies to either incur substantial upfront costs to buy out affected employees or delay the realization of labor-saving benefits. Transit agencies largely dependent on annual government appropriations face a strong financial disincentive to adopt practices and technologies that would improve service and reduce growing operating subsidies.

Transit employee labor protections included as part of the Urban Mass Transportation Act of 1964 were designed to address the particular circumstances of the time, when just 2% of state and local government employees were authorized to collectively bargain. But this transition period has passed, and all affected employees have long since retired. Further, most states have authorized public-employee collective bargaining since the 1960s, with 63% of state and local employees being authorized to collectively bargain as of 2010.

Section 13(c) exists alongside federal, state, and local labor laws that apply to public-sector workers. Importantly, federal transit labor protections supplement rather than substitute for other general labor protections. As a result, Section 13(c) provides transit workers—and only transit workers—with special protections beyond those enjoyed by other government employees.

This has two important implications for policymakers. First, eliminating Section 13(c) special transit worker labor protections would merely level the playing field between transit workers and other government employees. All other federal, state, and local labor policies that apply to government employees would continue to apply. Second, repealing Section 13(c) would not automatically usher in transit public-private partnerships or automation. Rather, it would remove an impediment to transit agencies seeking to negotiate more flexible labor contracts in the future.

Reason Foundation’s recommended legislative text:

(a) Section 5333 of Title 49, United States Code, is amended by striking subsection (b).

Clearing a bureaucratic roadblock to safer driverless trucking

Autonomous commercial motor vehicles have great potential to improve roadway safety and logistics efficiency in the United States. Developers have been successfully validating their technology on U.S. public roads for years and are now prepared to enter commercial service. However, outdated federal regulations will pose challenges. One in particular—the requirement that operators of commercial motor vehicles stopped on or on the side of highways place warning triangles or flares around their disabled vehicles—presents a unique barrier that Congress can quickly address.

The Department of Transportation has long required operators of commercial motor vehicles that are disabled in highway traffic lanes or shoulders to immediately exit their vehicles to place reflective warning triangles or flares in order to alert other motorists of the potential hazard. The requirement for the placement of roadway warning devices makes intuitive sense, despite the limited empirical safety evidence supporting it.

The warning device rule poses a unique challenge for driverless operations of automated commercial vehicles because it implicitly assumes an operator will be seated in the vehicle and able to immediately exit the cab to place warning devices. This rule was never intended to apply to driverless commercial motor vehicles, which had not yet been conceived when the warning device placement requirement was promulgated in 1972.

In January 2023, automated vehicle developers Aurora and Waymo petitioned the Federal Motor Carrier Safety Administration (FMCSA) for an exemption from the warning devices requirement. To ensure the broader safety intent was preserved, the petitioners proposed that driverless, autonomous commercial vehicles would, in lieu of the warning device placement requirement, be equipped with cab-mounted warning beacons.

The warning-beacon system Aurora and Waymo proposed would consist of at least one rearward-facing light mounted on each side of the cab and at least one forward-facing light mounted on the front of the cab. The warning beacons would be installed at some point between the upper edge of the sideview mirrors and top of the cab for both forward- and rearward-facing lights. The companies provided two studies showing that cab-mounted warning beacons would achieve a level of safety at least equivalent to the warning-device requirement.

In December 2024, the FMCSA denied the exemption petition, citing a lack of data on the safety equivalence of cab-mounted warning beacons. This justification was especially odd because the agency concedes it has never conducted any research on the effectiveness of its warning-device requirement in enhancing safety. The suggestion from FMCSA seems to be that there is no official safety baseline by which to compare alternatives to warning devices, which thereby renders the agency unable to consider alternatives—even those that offer superior safety. If true, this greatly undermines the supposed safety basis for the existence of this longstanding rule.

Setting aside the arbitrariness of FMCSA’s warning-device rule, Congress can easily resolve this bureaucratic roadblock to safer driverless operations by requiring the agency to promulgate amendments to its regulations to explicitly exempt commercial motor vehicles from the warning-device requirement if those vehicles are equipped with cab-mounted warning beacons.

View Reason Foundation’s recommended legislative text here.

Advancing performance-based rail safety regulation

New technologies are increasingly reshaping transportation systems. Various types of automation technologies can significantly improve transportation safety and efficiency. With respect to freight rail, the ability to adopt new technologies in the face of increasingly automated trucking is also a competitive imperative.

One problem is that freight rail safety regulations promulgated by the Federal Railroad Administration (FRA) are often overly prescriptive, which limits alternative means of compliance as technology and practices evolve. Related to this problem is that these regulatory requirements often reference outdated technical standards. Figure 1 below compares the standard edition years of nearly 750 specifications, recommended practices, and standards contained in the AAR Manual of Standards and Recommended Practices with the edition years of the standards incorporated by reference in FRA regulations. While this is not quite a like-for-like comparison, it shows a roughly 10-year lag between the latest railroad industry standards and those referenced in railroad safety regulations.

Most FRA regulations incorporating nongovernmental technical standards do not contain update trigger mechanisms (such as the one for FRA brake standards at 49 C.F.R. § 232.307), so any updates will require conventional rulemaking proceedings. This gives agencies more discretion over any potential regulatory changes and increases the length of time to complete a change. Given this cumbersome and uncertain process to address outdated standards already referenced in regulation, the persistent conformity gap between standards and regulations should not be surprising.

One simple example of the problem of overly prescriptive rail safety regulations is related to automated track inspection (ATI). The benefits of ATI include more reliable defect detection, more robust maintenance data analysis and planning, redeployment of visual inspectors to higher-need areas and for infrastructure that cannot be inspected by ATI equipment, reduced human exposure to safety hazards in the field, and reduced delays to trains in revenue service.

While it has long acknowledged the benefits of ATI, FRA in 2021 reversed course by denying multiple ATI waiver requests, BNSF Railway challenged FRA’s decision to deny it an expanded ATI waiver in federal court, which ruled in March 2023 that regulators violated the Administrative Procedure Act’s prohibition on “arbitrary and capricious” acts and ordered FRA to reconsider its decision. In June 2023, FRA again denied BNSF’s ATI petition. BNSF challenged this second denial in the same federal court, which in June 2024 again ruled against FRA and ordered the agency to grant BNSF’s ATI waiver petition.

A more complex example of the problem relates to the automation of revenue-service rail vehicles that do not resemble conventional freight trains. In August 2023, two short-line railroads owned by Genesee & Wyoming (G&W)—the Georgia Central Railway and Heart of Georgia Railroad—submitted a petition to test new rail technology developed by Parallel Systems. The proposed pilot would take place on 160 miles of track between Pooler near the Port of Savannah to a large inland distribution hub in Cordele in central Georgia.

Parallel was founded in 2020 by two former SpaceX engineers and has developed battery-electric, self-propelled railcars designed to transport standard 40-foot shipping containers weighing up to 65,000 pounds at up to 25 miles per hour. Parallel’s railcars can be operated individually or in platoon formation. When operated in a platoon, Parallel’s railcars won’t be mechanically coupled; instead, they are equipped with bumpers and will touch one another but remain individually powered and controlled. This allows them to reduce stopping distance by 90% compared to conventional freight trains. Perhaps most significantly to the broader economy, the technology is designed to serve local container markets traditionally dominated by trucks—breaking the so-called “500-mile rule” after which rail is competitive with trucks.

In January 2025, FRA granted the G&W/Parallel test petition. Testing was scheduled to begin in April. But to conduct this test under FRA approval, G&W needed to receive a waiver granting relief from 33 FRA regulations, including:

• Part 218 Operating Practices
• Part 229 Locomotive Safety Standards
• Part 231 Railroad Safety Appliance Standards
• Part 232 Brake System Safety Standards for Freight
• Part 236 Signal and Train Control Systems
• Parts 240 and 242 Engineer and Conductor Qualifications

If this test is successful, waivers would still be required to operate Parallel’s rail vehicles. The next step for FRA would be to begin the lengthy process of updating the implicated regulations so that they can accommodate this new technology. While most of these requirements can by changed by FRA through rulemaking, the automatic coupler requirement is statutory (49 U.S.C. § 20302(a)(1)(A)). This means that for Parallel-style self-propelled railcars to be entered into mainstream commercial service, Congress will need to modernize its legacy coupler statute.

These are just two examples of the problems of overly prescriptive, outdated rules. New technologies will inevitably be invented and will run into the same policy barriers. To ensure that freight rail can remain a competitive mode of cargo transportation in the future, Congress should examine structural regulatory reforms to identify and modernize rail safety regulations in a performance-based manner.

Recommended reform principles:

Congress should consider the approach proposed by the RAILS Act (S.1451) in the 115th Congress. That bill included future-oriented provisions that could be adopted, such as:

• Requiring FRA to consider performance-based alternatives whenever proposing or adopting a rule;
• Streamlining the waiver petition process for innovative approaches to safety;
• Integrating the improved safety innovative waiver process with regulatory modernization; and
• Requiring FRA to conduct periodic comprehensive reviews of its rules, orders, and guidance documents to assess their effectiveness, consistency, and whether they reflect the current best technologies and practices.

In addition, Congress should modernize its legacy automatic coupler statute at 49 U.S.C. § 20302(a)(1)(A) to ensure that novel rail vehicles that do not rely on couplers are not subject to these requirements.

The post Recommendations for the surface transportation reauthorization bill appeared first on Reason Foundation.

Many states have passed or are considering multiple AI bills that are technically complex and politically charged, singling out this technology for extra regulation on issues like discrimination, child safety, and housing. This avalanche of legislation is especially troubling because existing laws in all these areas apply equally to AI, and the current need to single out the technology is highly dubious.  

In making the case for a federal moratorium, many observers correctly point to the danger of a “regulatory patchwork” in which up to 50 states may make widely varying rules and stifle important and useful innovations. There is no natural reason for data to stop at state borders, meaning virtually all economic activity involving AI is interstate commerce. The framers of the U.S. Constitution recognized interstate commerce as essential for both economic prosperity and political unity, placing its control in federal hands. In addition to reducing inefficiencies arising from inconsistent state laws, federal powers over interstate commerce using AI prevent large states such as California from gaining the de facto power to regulate the new technology across the entire country. 

AI is a foundational technology with an impact many expect to be on par with the internet or personal computers. Like those technologies, AI is already spawning an abundance of applications for a wide range of uses. This makes the development of AI extremely important, but also highly uncertain. There is no single finish line in the “AI race.” While building the technology and its countless applications will require massive efforts, they cannot be coordinated toward a single goal. This fundamental uncertainty is the source of AI’s great potential. AI breakthroughs will be made not only in university laboratories, but by firms, workers, and entrepreneurs in our market economy. This process of innovation will ultimately lead us toward finish lines we can’t yet even imagine. 

Nothing about AI places the technology or its applications outside the reach of any existing laws or government agencies with respect to any policy. Just as we remain early in the process of finding out what AI can do, we have much to learn before concluding that AI requires different laws or approaches to regulation. But proponents of restrictive AI legislation today are guilty of exactly this mistake.  

State bills seeking to govern the design and performance of AI systems are not typically written with today’s chatbots in mind. They are concerned about what future AI technology might do, or what our future energy and data center needs might be. Supporters of such efforts do not appreciate that transformative technologies and the societies they transform change together. Those who worry about AI replacing workers, for example, usually miss that such technological changes happen over time rather than all at once. Workers, therefore, can and do adjust to new technology. 

As the path of AI’s development becomes clear over the coming years and decades, speculative and restrictive laws will do more harm than if they were simply outdated rules that missed the mark. Government regulation influences the course taken by technology. When that course is based on flawed assumptions, we fail to realize the benefits of technology fully and often don’t know what those benefits might have been. 

Compounding these difficulties and potential for misunderstanding is the expansion in the list of technologies commonly called “AI.” Once associated with science fiction and futurism, the term “AI” gained widespread use in the last few years, after generative AI chatbots powered by large language models were introduced. However, people now frequently apply the term to many algorithmic tools widely used for years or even decades. 

There is no current need to single out AI, over and above other technologies or means of expression, for regulation or enforcement beyond existing laws. Nonetheless, the political temptation of singling out real or imagined use of AI is too great for many to resist. Users of AI technology in housing and labor markets are singled out for more oversight and compliance under anti-discrimination law. Large AI developers are singled out for more transparency rules, seemingly at the discretion of state officials. Images of political figures created using AI are singled out and banned in the lead-up to elections. AI-powered human resources software suites face extra scrutiny. 

The correct approach toward AI at all levels of government is to enforce existing laws and regulations. Indeed, Congress’ AI moratorium proposal from earlier this year explicitly exempted from federal preemption “generally applicable” state and local laws and regulations. Comprehensive legislation targeting AI may prove desirable in the future, but that day has not arrived. While some might consider such a level-headed approach from the federal government unlikely, expecting similar restraint in 50 statehouses at once is all but impossible. Absent a moratorium, state legislators would nevertheless be well advised to exercise and advocate such restraint. 

State lawmakers can also pass legislation that affirms the applicability of current laws to AI and establishes basic individual freedoms with respect to computing. Bills such as Right to Compute, passed in Montana and introduced in an increasing number of states, provide an important blueprint for those who see the importance of restraint to make that case and partially mitigate the efforts of overactive colleagues. 

A torrent of bills singling out AI in misguided attempts to solve what amount to guesses of future problems would threaten the open climate of innovation and entrepreneurship that has greatly benefited the United States in recent decades. But uncertainty, misunderstanding, political incentives, and media hype conspire in the current moment to produce this outcome in statehouses across the country. A federal moratorium on bills singling out AI would help ensure the U.S. remains fertile ground for the AI revolution. 

The post A moratorium on state laws targeting AI would safeguard innovation and interstate commerce  appeared first on Reason Foundation.

On behalf of Reason Foundation, I respectfully submit these comments in response to the request for stakeholder feedback on the European Union (EU) Space Act from the NOAA Office of Space Commerce and the Department of State Office of Space Affairs.

Reason Foundation is a national 501(c)(3) public policy research and education organization with expertise across a range of policy areas. Reason Foundation has published research on the economics of space, space traffic management, orbital debris policy, and lunar space transportation.

Upon our review, we find several aspects of the EU Space Act concerning and worthy of attention by the U.S. government. Our comments develop the following points:

1. Differing registration regimes disadvantage non-EU space operators;
2. The U.S. Government should not consent to on-site inspections by EU personnel of non-EU space-operator facilities; and
3. Satellite constellation size is a poor proxy for collision risk and debris hazards, and the EU Space Act’s compliance thresholds uniquely disadvantage U.S. firms.

1. Differing registration regimes disadvantage non-EU space operators

The EU Space Act provides that registrations of EU-based space operators are to be obtained through the designated competent authorities of individual member states (Articles 6, 7, and 9). Member states also have the power to determine the means by which technical assessments are carried out (Article 8). While these member state authorities must adopt common standards prescribed by the Act, they have significant flexibility in their implementation of these requirements.

In contrast, registrations of third-country space operators are obtained through the EU Agency for the Space Programme (EUSPA) (Article 17). This includes a special assessment process through EUSPA’s Compliance Board (Article 43, points 1.c and 2.c), which requires a consensus vote of approval—or a decision made by qualified majority voting if consensus cannot be reached (Article 45, paragraph 4).

As a result, the licensing process for third-country space operators is significantly more onerous than that for EU-based space operators. To avoid undue bias against international commerce and competition, we believe a dual-track, origin-based registration regime should be opposed.

2. The U.S. government should not consent to on-site inspections by EU personnel of non-EU space-operator facilities

The EU Space Act provides expansive investigative and enforcement powers, including authorizing EU personnel to conduct inspections of the facilities of third-country space operators located outside the EU (Article 48, paragraph 4). For third-country inspection authorizations to be granted, an international agreement specified in Article 106, paragraph 1 must be concluded. Following the conclusion of the international agreement, before inspection of the facilities of a third-country space operator can take place, the third-country space operator must consent (Article 52, paragraph 1, point a), and the relevant third-country government authority has been notified by the EU and does not object (Article 52, paragraph 1, point b).

U.S. space operators are by far the most advanced in the world, and trade-secret theft represents a significant risk from extraterritorial inspections. This risk is underscored by the EU Space Act’s general bias in favor of EU-based space operators. Further, many U.S. space providers develop and make use of dual-use civilian/military technologies. This raises significant national security concerns as well as potential conflicts with special compliance obligations on dual-use technologies and entails heightened liability risks. The U.S. government should make clear to the EU that it will not permit EU personnel to inspect the facilities of U.S. space operators or their partners.

3. Satellite constellation size is a poor proxy for collision risk and debris hazards, and the EU Space Act’s compliance thresholds uniquely disadvantage U.S. firms

The EU Space Act would create regulatory distinctions based on the size of satellite constellations managed in orbit by space operators. For instance, Article 5, paragraph 4 defines a “mega-constellation” as a satellite constellation consisting of at least 100 operational spacecraft but not more than 999. A constellation with 1,000 or more operational spacecraft is defined at Article 5, paragraph 5 as a “giga-constellation.”

The Act would impose special and prescriptive requirements on mega- and giga-constellations (Article 73, paragraphs 1 through 3). This purportedly is justified because of the heightened risk posed by large constellations. While it is true that debris and spacecraft collision risk is in part a function of the volume of spacecraft in orbit, hazards arise from specific spacecraft and the accumulation of material in orbit over time.

Constellation size—i.e., some number of operational spacecraft “working together for a common mission, subject to a predefined orbital deployment plan” (Article 5, paragraph 3)—is a poor proxy for these risks. This is in part because of the nature of the risks described above, but also because space operators with the largest constellations operate the most advanced technology and lead the development of global best practices.

In addition, the creation of a “giga-constellation” category subject to the highest compliance burden would at present and for the near future apply to only two firms worldwide, both of which are leading U.S. space operators. This raises understandable suspicions that the satellite constellation regulatory thresholds proposed in the EU Space Act are designed to uniquely disadvantage U.S. firms.

Conclusion

Thank you for the opportunity to provide feedback on the proposed EU Space Act. We are optimistic about the long-term prospects of space commerce but remain concerned that several elements of the EU Space Act would unduly harm international competition, stray into extraterritorial enforcement, fail to adopt a risk-based approach, and uniquely disadvantage U.S. firms.

We urge the U.S. government to challenge these provisions in the interests of continued development and growth of this sector of the economy.

Download the full letter here:

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On behalf of Reason Foundation, I respectfully submit these comments in response to the Federal Railroad Administration’s (“FRA”) notice of petition for waiver of compliance (“waiver petition”) on certain regulations concerning track inspections from the Association of American Railroads (“AAR”).

By way of background, I am a senior transportation policy analyst at Reason Foundation and focus on federal transportation policy. Reason Foundation is a national 501(c)(3) public policy research and education organization with expertise across a range of policy areas, including transportation. I have testified before Congress on automated track inspection (“ATI”), and have previously submitted comments to the U.S. Department of Transportation encouraging increased regulatory flexibility on track inspection standards to facilitate expanded use of ATI.

Our comment letter develops the following points:

1. Expanding the use of ATI in track inspections will increase early defect detection and reduce defects over time;
2. ATI can complement and better prioritize manual visual inspections; and
3. Expanding the use of ATI will enhance the safety of the inspector workforce.

1. Expanding the use of ATI in track inspections will increase early defect detection and reduce defects over time

In recent years, various railroads have tested a form of ATI, track geometry measurement systems (“TGMS”). These pilots proved very successful in validating the performance of ATI technology in track defect detection and reduction. MxV Rail, the research and testing subsidiary of the AAR, analyzed ATI pilot program data from six Class I railroads. These pilots were operated under FRA waivers to allow manual visual inspections to be reduced during ATI testing.

On the pilot corridors, defects per 100 miles of inspected track declined from 3.08 before the use of ATI to 0.24 during the ATI pilots, or 92.2%. Reportable track-caused main track derailments per year during that same period declined from 11 to three, or 72.7%. None of those three derailments was attributable to ATI-targeted defects, with two occurring while manual visual inspections were still taking place twice weekly and one while pilot testing was inactive.

These results are in line with successful ATI performance expectations, with a shift in maintenance practices from being guided by a “find and fix” approach to a “predict and prevent” approach. Better and earlier detection of geometry defects allows track maintenance to be performed in a more preventative manner. Further, the higher quality data collected by ATI over time allows for improvements to maintenance forecasting and strategy. As such, as ATI use is expanded and repeated over time, defect detection rates—and defect-related hazards—should decline.

2. ATI can complement and better prioritize manual visual inspections

The ATI pilot data analyzed by MxV Rail found that visual inspectors identified far more non-geometry defects than track geometry defects. Prior to ATI testing on the pilot corridors, visual inspectors identified 10,645 non-geometry defects and 422 geometry defects. In 2021, during the ATI pilots, visual inspectors identified 14,831 non-geometry defects (a 39.3% increase) and 238 geometry defects (a 43.6% decrease). Of the non-geometry defects identified by visual inspectors, 60-80% were in turnouts and special trackwork that ATI cannot inspect.

These data show how integrating ATI into track inspection practices can complement visual inspections. Track geometry defects are better detected by ATI than manual visual inspection but turnouts, turnout components (e.g., frogs), and other special trackwork cannot be inspected by ATI. Reducing required visual inspections over track that can instead be better inspected by ATI allows for the reallocation of visual inspectors so they can be more focused on the non-geometry defects that they are best positioned to identify.

3. Expanding the use of ATI will enhance the safety of the inspector workforce

An important benefit of ATI is reducing visual inspectors’ exposure to on-track hazards. Substituting ATI for routine geometry defect inspection coupled with a corresponding reduction in visual inspections will remove inspectors from harm’s way. The ATI pilot data analyzed by MxV Rail found that inspector track occupancy duration declined by approximately one-quarter after visual inspections were reduced to once per week as part of the ATI pilots.

Conclusion

Thank you for the opportunity to provide comments. As technology advances, so should human-centered operations. Track inspectors in the future are likely to be more focused on verifying the results of ATI, which will also help guide their inspection activities. But realizing the full benefits of ATI will require regulatory modernization.

Given the above evidence on the value of ATI in enhancing rail safety and efficiency, we urge FRA to grant the AAR’s TGMS waiver petition to allow for the realization of ATI benefits by rail carriers, rail workers, shippers, and the public.

Full Public Comment: Expanding automated track inspection can improve rail safety

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In the second half of the 20th century, the world’s airports and air traffic control systems were essentially all departments of governments. Two events in 1987 launched an ongoing wave of organizational and government reforms: the privatization of the British Airports Authority (BAA) and the corporatization of the New Zealand government’s air traffic control functions as Airways New Zealand.

BAA was privatized as a single entity comprising the three major London airports plus several other airports in the United Kingdom. Later, government policy decisions led to selling Gatwick, Stansted, and two Scottish airports to new private owners.

The improved performance of the privatized airports inspired a global wave of airport privatization and long-term public-private partnerships (P3s) that has resulted in over 100 large and medium-sized airports being either sold to investors or long-term leased as revenue-based P3s—in Europe, Asia, Latin America, and elsewhere.

The outlier has been the United States, which has only three P3-leased airports (San Juan International, Tweed New Haven, and Avon Park Executive in Florida) and a small number of P3 arrangements for airport terminals and other individual facilities.

The corporatization of Airways New Zealand in 1987 also led to a global trend under which more than 60 countries subsequently separated their air traffic control systems from the government’s transport ministry and set them up as self-supporting corporations, regulated for safety at arm’s length from the government.

Within the first decade of this trend, the leading air traffic control providers organized a trade association called the Civil Air Navigation Services Organization (CANSO).

Today, CANSO has 93 full members (providers of ATC services) and 91 associate members (mostly supplier companies). CANSO is the ATC counterpart of the global organizations for airlines (IATA) and airports (ACI).

This brief reviews developments in the United States and worldwide regarding private-sector participation in airports and air traffic control.

While the United States remains an outlier when it comes to airport and air traffic control organization and governance, interest in airport privatization via long-term P3 leases continues.

Read the full Report here:

The post Annual Aviation Infrastructure Report 2025 appeared first on Reason Foundation.

Remote air traffic control towers, sometimes referred to as virtual towers or digital towers, are being deployed in increasing numbers around the world. Rather than building a tall concrete structure with a control cab on top to house the controllers for visual views of aircraft movements, a steel tower (or several towers) is mounted with an array of video cameras and communications equipment. Those cameras and sensors feed information securely to controllers in a ground-level building housing the control room, often in a location remote from the airfield. Instead of the traditional out-the-window view, controllers have panoramic video displays of the airfield and its environs, including identifying individual aircraft with tags displayed on-screen. This allows them to continuously monitor traffic without turning their head or standing, which is critical for safe and efficient air traffic management.

Remote towers provide the ability to serve low-activity airports from locations where controllers live or desire to live, rather than requiring staff relocations. Management of multiple remote towers can be conducted from a single facility known as a remote tower center.

Regardless of how these technologies are deployed, traffic procedures are unchanged from those used in traditional tower operations. While controllers working in a remote tower center can be certified to handle traffic at multiple airports, they only control traffic at one airport at a time. This allows for control of a particular airport to be easily transferred to a second controller as the need arises. As a result, remote tower technology has the potential to maximize utilization of the limited national pool of certified controllers.

The United States is not alone in facing difficulties in attracting and retaining staff to operate control towers, especially those located far from population centers. But many air navigation service providers have begun adopting remote towers, and they have found that the digital working environments supporting multiple airports are attractive to younger prospective recruits. And by increasing controller situational awareness, this technology also reduces workload and stress, helping to retain these highly trained and specialized employees.

Significant cost savings can also be realized. Construction costs for remote towers are a fraction of those for conventional brick-and-mortar towers. When several low-activity airports are controlled from a single remote tower center, air navigation service providers can realize significant staff and operating cost savings. Importantly, this does not reduce the demand for controllers nationwide, but it does mean that existing and new controllers can be employed more productively.

New airspace entrants, such as electric vertical takeoff-and-landing (eVTOL) aircraft operating advanced air mobility (AAM) services, already plan to make use of remote/digital tower technology for vertiport infrastructure. The AAM service model is expected to leverage smaller airports, so implementing remote towers at those airports can support development of technology and procedures for more robust utilization of this proven technology.

The challenge in the United States is that the Federal Aviation Administration (FAA) in recent years has been unenthusiastic and inconsistent about remote/digital tower technology. Congress has attempted to spur the agency to act, although progress to date has been minimal.

This brief makes the case for embracing remote/digital towers in the United States.

Part 2 discusses FAA’s original research into remote tower technology.

Part 3 surveys the global success of remote/digital towers.

Part 4 discusses remote tower development in the United States.

And Part 5, shown below, concludes with recommendations for policymakers.

Conclusion and recommendations

Remote tower technology has been proven and can provide air traffic control services to several small airports from a single facility. A controller would monitor and direct traffic at only one airport at a time, but would be certified for several aerodromes. This would make more productive use of available controllers, allow redundant staffing during low-traffic periods, and allow for consolidated facilities to be located in areas desirable to current controllers and new hires. Compared to new or replacement conventional air traffic control towers, there are significant capital and operating cost advantages.

A secondary but important benefit is that the successful implementation of remote tower centers would be an important step in providing additional digital technology and services for air traffic facilities throughout the National Airspace System, NAS. Digitalization is key to continuing improvements in system efficiency and communication with NAS users.

Internationally, air navigation service providers are developing additional uses for this technology, including at very large airports.

FAA is sensitive to ongoing criticism about the technological advances and deployments made by other air navigation service providers and often emphasizes the higher complexity of the U.S. NAS. While it is true that the United States has some of the most congested and complex activity near major metropolitan areas, dozens of small U.S. airports have relatively simple, low-volume operations that can benefit from this technology.

Many advancements that the FAA needs to make are complex and must be done carefully and step by step. Deploying remote/digital tower technology, initially at small U.S. airports, is a logical starting place. The technology is proven, and successful procedures have been published and deployed for nearly a decade.

As with the prior FAA tests using virtual tower equipment, once anyone (especially controllers, but even laypeople) sees an installation, they realize that this technology can provide significant support to air traffic controllers and to the National Airspace System writ large.

FAA senior management should have a technology plan for remote/digital towers and remote tower centers that envisions the logical next steps in a rollout in the NAS. To facilitate a holistic view of the possibilities, FAA staff should conduct site visits to remote tower centers in Norway and Sweden. FAA staff should also review the simulations of the planned digital tower deployments at Singapore and Al Maktoum airports.

To advance near-term deployment in the United States, the FAA should consider:

• Developing a new remote tower center to manage multiple small airports;
• Testing and certification of multiple technology vendors;
• Conducting field pilots, including system design approval, at sponsor airports as contemplated in the FAA Reauthorization Act of 2024; and
• Reviewing European Union standards for (partial) applicability in the United States.

FAA is on a path to support the development of remote towers, and these efforts should be finalized and standards issued as soon as practicable. Congress should continue its encouragement and oversight to ensure FAA remains on this path to success. Ongoing attention on air traffic control modernization from the Office of the Secretary at the U.S. Department of Transportation should be sustained, with a particular focus on the near-term benefits that could be realized from proven remote tower technology.

Read the full report here:

The post Advancing remote air traffic control tower deployment in the United States appeared first on Reason Foundation.

Senate Bill 46 is deficient in several key respects, which I discuss below.

The first state to outlaw driverless trucks?

Senate Bill 46 would prohibit the operation on public roads of heavy-duty tractor-trailers equipped with automated driving systems unless a human driver is physically present within the vehicle (Section 2). Autonomous tractor-trailers are currently operated in commercial service in Texas, with plans to expand the service territory east to the Phoenix metropolitan area later this year.

If enacted, Delaware would become the first and only state in the country to enshrine in statute a blanket, preemptive ban on driverless trucks. In contrast, three dozen states have explicitly authorized the testing and/or deployment of autonomous trucks if certain safety requirements are met.

Based on failed California legislation

Senate Bill 46 is based on legislation first introduced in California in 2023 (Assembly Bill 316). In both 2023 and 2024 (Assembly Bill 2286), California Governor Gavin Newsom vetoed proposed bans on driverless trucks as being unnecessary and harmful to the state’s reputation as a global leader in technology innovation.

The California Department of Motor Vehicles, which regulates autonomous vehicle safety in the state, announced proposed regulations in April 2025 that would allow the testing and deployment of autonomous vehicles with gross weight ratings in excess of 10,000 pounds. This was the result of a highly deliberative process that took place over two years. The proposed regulations describe testing requirements, roadway operating limitations, carriage prohibitions, data reporting requirements, first-responder interaction protocols, and enforcement powers.

Autonomous vehicles are already making roads safer

The major advantage of automated driving systems is that they do not behave like typical human drivers. Automated driving systems cannot drive drunk, drugged, drowsy, or distracted, and are programmed to follow the rules of the road. According to the National Highway Traffic Safety Administration, human error/misbehavior is a critical factor in more than 90% of motor vehicle crashes.

According to research by leading reinsurance company SwissRe and autonomous vehicle developer Waymo, Waymo’s automated driving system is already far safer than a typical human driver. Their 2024 study analyzed 25.3 million fully autonomous miles driven by Waymo alongside 500,000 insurance claims and over 200 billion miles of driving exposure. Waymo/Swiss Re found that, when compared to human drivers, Waymo’s automated driving system produced an 88% reduction in property damage claims and a 92% reduction in bodily injury claims.

It is worth highlighting that Delaware’s roads are the most dangerous in the region. According to Reason Foundation’s 28^th Annual Highway Report, Delaware ranks #38 nationally in its fatality rate for minor arterials, collectors, and local roadways and #36 nationally in its urban highway fatality rate.

No new authorities are needed to prohibit unsafe driverless trucks

Regulators at the Delaware Department of Transportation already have the authority to refuse, rescind, cancel, or suspend the registration of any motor vehicle that is “unsafe or unfit to be operated” (21 Del. C. §§ 2161, 2162). In addition, the Secretary of Safety and Homeland Security and any Delaware law enforcement officer authorized to make arrests for violating the motor vehicle code may place any commercial motor vehicle out of service for violations of state or federal laws and regulations (21 Del. C. § 4710).

The post Delaware Senate Bill 46 would not improve road safety by banning driverless trucks appeared first on Reason Foundation.

Mandatory age verification undermines privacy and security

• The bill would require platforms to collect sensitive personal data, like government-issued IDs or biometric scans, before users can access apps.
• This creates honeypots for hackers and significantly increases the risk of identity theft and surveillance.
• California’s Age-Appropriate Design Code Act (CAADCA) introduced similar requirements. A federal judge blocked it, finding CAADCA “induces companies to collect additional personal information,” increasing rather than reducing risk.
• Apple, Google, and potentially others would be forced to collect and store biometric templates or ID scans for every user, rolling back years of privacy gains.

It threatens free speech and limits access to information

• App stores aren’t just for entertainment—they’re how people access civic tools, education, and independent journalism. Forcing ID checks to reach that content raises clear First Amendment concerns.
• Courts have repeatedly struck down similar mandates. In Reno v. ACLU and Ashcroft v. ACLU, the Supreme Court made clear that age-gating access to legal speech is unconstitutional.
• The bill attempts to bypass those rulings by targeting app stores instead of social media platforms. But as the Court ruled in Rutan v. Republican Party of Illinois, what the government can’t do directly, it also can’t do indirectly.
• As Packingham v. North Carolina affirmed, “cyberspace” is now the most important forum for speech, and app stores are its front doors. Regulating that access point threatens core free speech rights.

The government can’t replace real parental involvement, but it creates a false sense of safety

• Most online age-verification regimes assume parents want rigid digital barriers—but research shows that many underage users access social media with parental knowledge or help.
• Legal mandates create a false sense of security, shifting responsibility from families to tech firms that cannot realistically enforce behavior within homes.
• Industry-led models like ESRB and MPAA ratings work because they empower—not override—parental discretion, offering guidance without coercion.
• A mandated age gate won’t stop kids from using VPNs, browsers, or sideloaded apps—it will just make parents think the problem is solved.
• That false sense of safety undermines genuine efforts to educate kids, build digital literacy, and strengthen family-level boundaries.

Industry-led tools already help parents protect their kids online

• For example, Apple’s parental control tools include Screen Time, Ask to Buy, content filters, communication limits, and age-based app restrictions.
• Child accounts come with default safety settings and allow parents to block downloads, limit content, and customize age settings.
• Current practices include: No personalized ads for users under 13, no cross-app tracking, and no forced identity collection.
• The Declared Age Range API lets developers serve age-appropriate content without collecting birthdates or IDs—a privacy-enhancing alternative to state-mandated verification.
• App stores already keep platforms safe from scams and malware precisely because they don’t require sensitive personal data. Mandating age verification would undermine that balance and introduce new security risks.

It punishes small developers by adding compliance costs they can’t afford

• Developers could be held liable if minors access their apps without proper age checks, exposing them to legal risk and forcing them to contract with costly third-party age-verification vendors.
• For small app developers operating on thin margins, even minor compliance friction (like age-gating pop-ups or verification screens) can be fatal. Adding age-verification and ID checks will lead to significant user drop-off. A Google study found just a one-second delay increases bounce rates by 32%, and three seconds by 53%.

Bottom line: The App Store Accountability Act would make age restrictions online more invasive than in any other area of daily life—requiring ID checks not just for social media, but for everyday apps that families already manage responsibly. Instead of building a surveillance regime around app downloads, lawmakers should support market-driven tools that empower parents and preserve user privacy.

Full backgrounder: The App Store Accountability Act would undermine privacy and parental choice

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On behalf of Reason Foundation, I respectfully submit these comments in response to the Office of the Secretary’s request for information on Ensuring Lawful Regulation; Reducing Regulation and Controlling Regulatory Costs.

By way of background, I am a senior transportation policy analyst at Reason Foundation and focus on federal transportation policy, including regulation. Reason Foundation is a national 501(c)(3) public policy research and education organization with expertise across a range of policy areas, including transportation.

Our comment letter focuses on the following regulatory topics, on which Reason Foundation has significant expertise:

1. Federal Railroad Administration: Train Crew Size;
2. Federal Railroad Administration: Inspection Regulations; and
3. Office of the Secretary: Aviation Consumer Protection.

Full Comments: Comments to the U.S. Department of Transportation on deregulatory priorities

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The only state to outlaw driverless trucks?

• SB 395 would prohibit the operation of an automated vehicle weighing more than 26,000 lbs or one capable of carrying more than eight passengers on public roads unless a human operator is seated within the vehicle.
• This would deter the introduction of safer automated trucks by preventing the realization of their business benefits.
• If enacted, Nevada would become the only state in the country to enshrine in statute a blanket, preemptive ban on driverless trucks and buses.

Embraces an approach rejected in California for being anti-business

• SB 395 reflects the legislative approach first proposed in California in 2023 (AB 316), which aims to ban driverless trucks.
• In 2023 and 2024 (AB 2286), California Gov. Gavin Newsom vetoed the proposed ban on driverless trucks as being unnecessary and harmful to the state’s reputation for innovation.
• In 2011, Nevada became the first state to explicitly authorize automated vehicles (AB 511). SB 395 would move Nevada from first to last.

Driverless vehicles are already making roads safer

• Automated driving systems cannot drive while drunk, drugged, drowsy, or distracted, and are programmed to follow road rules. According to the National Highway Traffic Safety Administration, human error is a critical factor in more than 90% of vehicle crashes.
• According to the latest research by leading reinsurance company Swiss Re and automated vehicle technology developer Waymo, Waymo’s automated driving system is already significantly safer than a typical human driver, with an 88% reduction in property damage claims and a 92% reduction in bodily injury claims.
• According to Reason Foundation’s 28th Annual Highway Report, Nevada’s local road safety declined more than any other state year-over-year, with its rank falling from #7 to #37.

No new authorities are needed to prohibit unsafe driverless vehicles

Nevada law already prohibits operating driverless vehicles that fail to follow road rules or do not perform fail-safe procedures safely. Falsely certifying compliance with any of these provisions is a gross misdemeanor (NV Rev Stat § 482A.220).

Full Backgrounder: Nevada Senate Bill 395 Could Hinder Autonomous Vehicle Progress

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#1 – Dual rulemaking authorities are counterproductive

Dual rulemaking authorities split between the Department of Transportation (Section 5), and the Department of Justice (Section 6) risk undue delays in the testing and deployment of autonomous vehicles in Montana. California’s bifurcated and complex regulatory approach led to years of unnecessary delay for fully driverless operations.

#2 – Dangerous road conditions lack definitions and standards

Section 5 does not provide a clear explanation of the meaning of “demonstrated to be capable of operating safely during dangerous road conditions.” This vagueness leads to the question of how to demonstrate to the Department of Transportation, given the lack of consensus on technical standards.

#3 – Safe first responder interactions are unaddressed

While Section 6 authorizes rulemaking by the Department of Justice, which includes the Highway Patrol, it is silent on specifics. One omitted element relates to first responder interactions with disabled autonomous vehicles in roadways, a policy states are increasingly adopting. Consensus standardization of both interaction protocols and personnel training is crucial to ensure responder interactions are safe.

#4 – Misalignment with consensus technical standards

The definitions of “automated driving system” in Section 3 deviate substantially from the global consensus technical standard for driving automation definitions widely adopted by the U.S. federal government and most states. Only driving automation at Levels 3-5 constitutes “automated driving systems,” while Senate Bill 67 incorrectly includes all forms of sustained driving automation at Levels 1-5.

#5 – Lack of risk-based regulatory scrutiny

Section 4 groups Level 3 automated driving systems—which pose unique and heightened risks—with Level 1 driving automation systems, such as adaptive cruise control, that have been used in consumer vehicles for more than 25 years, reflecting the lack of a risk-based approach.

Bottom line: Senate Bill 67 (as passed by the Senate) does not align with best practices and contains several problematic provisions that should be addressed by amendment to ensure automated driving systems are safely and efficiently deployed on Montana’s public highways.

Full Backgrounder: Senate Bill 67 Amendments Needed to Improve Montana’s Autonomous Vehicles Regulatory Framework

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Montana needs a workable regulatory framework for vehicles equipped with automated driving systems. However, Senate Bill 67 is deficient in several key respects. 

Dual rulemaking authorities 

Sections 5 and 6 create dual rulemaking authorities for the Department of Transportation and the Department of Justice. This is somewhat reminiscent of California’s approach to autonomous vehicle regulation, in which the state gradually adopted its current bifurcated regulatory framework beginning in 2012. While there was an internal logic to California’s policy choices, those decisions delayed the operation of driverless vehicles equipped with automated driving systems on California public roadways by several years. This result was unforeseen by both the legislative sponsors and many supporters in the industry at the time.  

In addition, California regulators have still not incorporated heavy-duty autonomous vehicles (AV) into the state’s regulatory framework after many years of work. In contrast to California’s complex, restrictive approach, more than 20 states have adopted AV regulatory frameworks based on successful models developed in Arizona, Florida, and Texas that efficiently authorize the safe operation of driverless vehicles. 

Dangerous road conditions 

In Section 5, it is unclear what is meant by “demonstrated to be capable of operating safely during dangerous road conditions.” Importantly, this raises the question of how an autonomous commercial vehicle would be authorized to operate in such conditions. Currently, no consensus technical standards or standardized test procedures exist within any standards body or government anywhere in the world on this topic. 

Current autonomous vehicle industry practice with respect to operating in dangerous road conditions is simply not to operate. In technical terms, severe weather is outside the automated driving systems’ operational design domains. With respect to roadway-specific hazards, sensors such as lidar, radar, and cameras provide superior object detection when compared to human eyes. Response times by onboard computers are also much more rapid than human decision-making and actuation. The enhanced safety offered by automated driving systems has already been demonstrated, such as in research conducted by developer Waymo in partnership with global reinsurance giant Swiss Re. Their 2024 study analyzed 25.3 million fully autonomous miles driven by Waymo alongside 500,000 insurance claims and over 200 billion miles of driving exposure. Waymo/Swiss Re found that, when compared to human drivers, Waymo’s automated driving system produced an 88% reduction in property damage claims and a 92% reduction in bodily injury claims.  

First responder interactions 

While Section 6 authorizes rulemaking by the Department of Justice, which includes both motor vehicle registration and highway patrol, it is silent on the specifics. One expected element that is omitted relates to first responder interactions with autonomous vehicles on roadways. Standard language on autonomous vehicle law enforcement interaction plans has already been adopted in numerous state codes. This language was developed in partnership with law enforcement agencies in Arizona, California, and elsewhere. Consensus standardization of both interaction protocols and personnel training is critically important to ensure that first responder interactions with disabled autonomous vehicles on roadways are safe. 

Conformity with consensus technical standards 

Section 3’s definitions of “automated driving systems” deviate substantially from SAE International’s Recommended Practice J3016. J3016 is the global consensus standard on the definitions of driving automation levels. It has been widely adopted by governments, industry, and technical bodies around the world, including the U.S. federal government and most states.  

For instance, Section 3 refers to technology that performs at Levels 1-5 automation collectively as “automating driving systems.” This is incorrect. In J3016, Levels 1-5 are collectively known as “driving automation systems.” Only a subset of driving automation systems at Level 3-5 are considered “automated driving systems.”  

Section 3 makes a critical distinction between Levels 1-3 and 4-5, while the J3016 consensus definitions distinguish between driver assistance features at Level 1 and “partial automation” at Level 2, where neither is capable of performing the entire dynamic driving task. According to J3016, Level 3 is an automated driving system capable of performing the entire dynamic driving task.  

The crucial difference between Level 3 and Level 4-5 automated driving systems is that at Level 3, if the automated driving system experiences a failure, a fallback-ready user (i.e., a driver seated in the driver seat of the vehicle) must be prepared to take manual control of the vehicle after a request to intervene in order to either assume responsibility of the dynamic driving task or achieve a “minimal risk condition” (i.e., exiting traffic, pulling to a stop on the side of the road, and engaging flashing hazard lamps). In contrast, per J3016, Level 4-5 systems must be capable of automatically achieving a minimal risk condition without the direction of a fallback-ready user. 

Risk-based regulatory scrutiny 

Building on the definitions contained in Section 3, Section 4 improperly groups Level 3 automated driving systems with Level 1-2 driver assistance and partially automated driving automation systems. In contrast, J3016 groups Level 3 with Levels 4 and 5 due to their distinct performance capabilities.  

Recall that Level 3 systems are autonomous systems capable of performing the entire dynamic driving task within their operational design domains, with the distinction between Level 3 and higher levels of automation being the mechanism (human or automatic) by which to achieve a minimal risk condition. It is important to understand that Level 1 systems are increasingly standard in late-model vehicles available for purchase by consumers today. For example, Level 1 systems include adaptive cruise control, a driver assistance feature first introduced more than 25 years ago (Mercedes Distronic in 1999).  

It is widely known in the engineering community that Level 3 systems pose unique and heightened risks compared to all other levels of driving automation by requiring a fallback-ready user to either assume responsibility for the dynamic driving task or achieve a minimal risk condition. Simulator and naturalistic driving studies have found that it can take up to 40 seconds for a fallback-ready user to regain situational awareness and stabilize steering. This duration is far too long to avoid imminent roadway hazards in many situations.  

Due to serious public safety concerns about the readiness of fallback-ready operators, most driving automation developers have been deterred from introducing Level 3 automated driving systems to public roadways. The sole example is Mercedes’ Drive Pilot that will only operate within a very narrow operational design domain consisting of preapproved freeway lanes with no active work zones, congested traffic conditions with speeds less than 40 mph, during daylight hours with clear weather, and with an in-cabin camera that must detect an operator seated in the driver seat. Yet Section 4 would subject Level 3 systems to less scrutiny than the much safer Level 4 systems in successful commercial operation today throughout the United States, which reflects the absence of a risk-based approach in this proposed regulatory framework. 

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