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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While the intention behind House Bill 4388 is a worthy attempt to reinforce a parent’s role in keeping kids safe online, the bill suffers from constitutional concerns and privacy risks that must be addressed before it becomes law. As other states have learned, through the passage of nearly identical legislation, the outcome of leaving these constitutional concerns and privacy risks unaddressed is wasted taxpayer dollars in attorneys’ fees without forward progress.  

The fact of the matter is that laws mandating age verification for social media platforms cut through the core of the First Amendment right to access speech and speak anonymously. Age verification laws also create unnecessary privacy risks by requiring online account holders and users to disclose personal information before accessing social media.  

All of this has held true across the states that passed bills that were nearly identical to HB 4388, and for the reasons outlined below, we urge this legislature to oppose this bill.  

HB 4388 is fraught with constitutional concerns 

The exact methods a social media company must use to comply with HB 4388’s age verification mandate is a mystery — the only hint provided by the bill as to the procedures and mechanisms for verifying age is that the attorney general (AG) must recommend more than just the use of a valid government-issued ID. This does not mean a government-issued ID is off the table; it just means it cannot be the only recommendation. While one should never speculate as to the recommendations that could be offered by the Michigan AG, when this bill was passed in Utah, the proposed alternative methods of privacy-invasive age verification included biometric facial scans, bank information requests, social security numbers, and more.

The same ambiguous delegation of authority is relied on for setting rules for confirming a parent is, indeed, the parent of a minor account user. Same for “retaining, protecting, and securely disposing” this information. As the Supreme Court has made clear, it is rare for such a burden on the First Amendment to survive legal scrutiny.

Other states that passed HB 4388 have not been successful in court 

Not even Utah follows this approach, despite being the first state in the country to pass a near-identical bill in 2023. In fact, exactly one month after the first complaint was filed in a lawsuit over Senate Bill 152, alleging that the bill violated the First Amendment, the AG requested that the court reschedule hearings due to the legislature completely rewriting the law and pushing back the effective date. The new law that followed, Utah Senate Bill 194, was enjoined for violating the First Amendment.

Other states that have passed nearly identical laws as HB 4388 have either lost in court, been forced to delay effective dates, or are now awaiting hearings. This includes Arkansas (permanent injunction), Georgia (preliminarily enjoined), Louisiana (pending judgment, effective date delayed), and Tennessee (pending judgment), with Nebraska likely to be added to that list within the year.

Similar, though not identical, bills have found the same to be true. This includes California’s Senate Bill 976, which was blocked by the district court and the Ninth Circuit on appeal. Another similar bill, Mississippi’s House Bill 1126, was also struck down by the courts. The list goes on, including Texas, Ohio, and Maryland.

HB 4388 ignores clear privacy risks inherent in age verification 

As has been fleshed out over time, “commercially available methods” involve handing over sensitive information like a government ID, biometric facial scan data, social security numbers, banking information, and more. This information, and the process used to gather and collect it, has not only led to privacy risks but also painted a target on the backs of companies collecting it, resulting in significant data breaches that could have been prevented had these laws not been in place.

Thank you for the opportunity to submit this written testimony, and we welcome the opportunity to advise the legislature on this subject in the future.  

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House Bill 473 (HB 473) addresses a common issue found in public employee retirement plans. Pension plans depend on regular contributions to fund the benefits that will become available to workers upon retirement. Typically, these contributions are split between the employee and employer according to rates established beforehand or when a public worker is hired. Employees in the Ohio Public Employees Retirement System (OPERS), for example, contribute 10% of their paycheck, while their employer contributes an amount equal to 14% of that member’s pay. These rates are a key part of the decision-making and bargaining that takes place between the employer (in this case, local governments) and a potential hire. 

In an effort to compete for high-value workers, some local employers offer to cover all or part of an employee’s retirement contributions, a practice commonly known as a “pickup.” While the intent of this strategy is honorable—it is in the public’s interest to have experienced and capable government employees—the practice distorts the cost and the purpose of a collaborative retirement plan. 

The reasoning behind a retirement plan in which both employees and employers share the contribution load (by far the most common approach among government pensions) is that it signals to both parties that they are contributing to the same shared goal of a secure retirement. While pickups have no impact on the total amount going toward contributions, they create unnecessary complications with government transparency and cost. Policymakers, administrators, and the public usually evaluate the compensation of public workers based on the hourly wage or salary offered, with pension costs listed and evaluated separately. A pickup arrangement is certainly part of an employee’s total compensation, but it is commonly overlooked since it is part of the larger retirement package offered to all public workers. Analysis comparing compensation between different local government employers usually isn’t sophisticated enough to include the variety of pickup arrangements between each employer and employee. It would better serve the public to make the costs of public service as straightforward as possible without creative compensation strategies. 

As local governments compete for the best public employees, they should do so using clear, transparent, and undistorted compensation. By banning the practice of pickups for Ohio’s public employers, HB 473 would ensure that pension contributions are transparent and in line with the goals of shared responsibility, all while not hurting local governments’ ability to offer attractive compensation packages to remain competitive with today’s workforce.  

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The Technology Policy Project at Reason Foundation has provided pro bono consulting to public officials and stakeholders to help them design and implement technology policy reforms around the regulation of artificial intelligence (AI) and other emerging technologies, digital free speech, data security and privacy, child online safety, and tech industry competition policy. Our team brings practical, market-oriented strategies to help foster innovation, competition, and consumer choice through technology policies that work.  

We submit this written testimony on House Bill 392 as an interested party.   

HB 392 is similar to other state legislation in that it creates a “Right to Compute.” This right to compute is a critical affirmative right for innovators, as it requires a state legislature to carefully weigh the compliance burdens of proposed, potentially heavy-handed legislation and affords innovators a right of redress when such burdens are imposed.   

The bill is an excellent first start, but two areas for improvement currently limit its intended effect. These problems revolve around the bill’s definition of  “compelling governmental interests.” As written, the bill would still allow for a state agency or political subdivision to impose burdens on innovators in two key areas.  

First, the bill makes AI-generated content the basis of a “compelling governmental interest” for further regulation or legislation, but does not specify the actor creating such content. Leaving this definition vague opens the door for laws that would punish an AI company rather than the person using an AI model with nefarious intent—an onerous legislative proposal that would be impossible to comply with. Such a law was proposed in California, and because of its unreasonable burdens on AI companies, Gov. Gavin Newsom vetoed the bill. These types of bills are not one-off bad ideas. Though well-intentioned, they fly in the face of the core intent of HB 392: to unburden innovators from impossible compliance demands so as to allow the U.S. to develop next-generation technologies that compete with the rest of the world.   

Second, aside from the public process of approving new construction on a data center, carving out exceptions for laws and local ordinances that undermine data centers under the veil of “public nuisance” law would ignore the possibility that hostile localities would create ordinances after the fact to hike up energy rates and extract revenue from data centers once they’re built. The U.S. needs more—not less—data center capacity, which is contemplated in Right to Compute legislation passed elsewhere.   

Thank you for the opportunity to submit this written testimony, and we welcome the opportunity to advise the legislature on this subject in the future.  

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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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Thank you for the opportunity to provide Reason Foundation’s view on the impact of social media and AI on children and platform privacy protection. In a time when parents are concerned over their children’s safety, advocates for bills such as the proposed App Store Accountability Act at the federal level and recently enacted versions at the state level (Utah, Texas, and Louisiana) have called for age verification practices at the device level to ensure they do not access harmful content. The state bills do not go into full effect until 2026. 

In practice, these mandates would require users to provide verifiable age information, such as government-issued IDs, and/or biometric data (facial scans, for example), at the point of creating an account that can reliably establish their age. The system would then categorize users into predefined age brackets (children under 13, teenagers 13-17, and adults over 18) to tailor content restrictions and access rights accordingly. For minors, this would mandate linking their accounts to verified parental accounts, with explicit parental consent required before allowing downloads, purchases, or access to certain application features. 

While these checks aim to reduce minors’ exposure to harmful material, this approach both raises privacy concerns and risks eroding online anonymity. Requiring websites to view and store government IDs and biometrics greatly increases the risk of putting people’s privacy at risk if a site is breached, especially sites that are required to verify age but do not have sufficient data security measures. One clear example of this is when the dating app Tea was breached, leading to thousands of users’ information being made public for bad actors to potentially use.  

Furthermore, age verification negatively affects online anonymity substantially, as users must provide evidence of age, which could be linked to their identity, even when platforms claim to employ privacy-preserving technologies. Throughout the United States’ history, anonymous speech has been considered First Amendment-protected, including online speech. However, age verification, which links government IDs and biometrics to specific users, erodes the ability to participate pseudonymously or anonymously online, crucial for whistleblowers, activists, and vulnerable groups engaging with sensitive issues. The persistent digital footprints required by these laws raise risks of profiling, tracking, and surveillance, especially as verification systems integrate with government digital identity schemes. 

Reason Foundation urges the committee to instead consider policies that would empower parents—the primary decision-makers for their children’s online access.  

Rather than mandating invasive age verification systems that collect personal sensitive data, it would be better to promote and utilize existing technology and parental control features found at device and platform levels, such as screen time limits, content filters, and family account management. These tools can be flexibly adapted to individual preferences without exposing minors to privacy risks or chilling anonymous speech.  

Similarly, promoting age-appropriate educational programs within schools is critical to equipping youth with the skills and knowledge to navigate online environments safely and ethically. Digital citizenship curricula, such as those offered by Common Sense Education or Google’s Be Internet Awesome, guide students in understanding privacy, communication etiquette, digital footprints, and cyberbullying awareness. Such education fosters informed, responsible technology use from an early age, complementing parental controls rather than replacing them.  

A balanced approach that maximizes family autonomy, minimizes data exposure, and supports education over coercion creates a safer online environment while respecting constitutional freedoms and technical feasibility. 

Although age verification practices are meant to protect minors from harmful content and regulate online engagement, current proposals involve complex technical challenges that risk both children’s and adults’ online privacy and security. Balancing safety, parental empowerment, and constitutional rights would foster a safer and privacy-respecting digital environment for all. 

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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.

To facilitate the process of evaluating the Mississippi Public Employees Retirement System, PERS, funding policies after the launch of a new Tier 5, the Pension Integrity Project at Reason Foundation provides the following funding analysis. Reforms made to establish a new tier of hybrid benefits (Tier 5) will have a positive impact on returning the state’s pension for public workers to full funding. Significant changes to contributions are still needed, however, or the state could face an insolvent pension and a massive burden on future taxpayers. The Pension Integrity Project offers several policies that could help Mississippi gradually adopt full actuarial funding of PERS, including segmenting the plan’s unfunded liabilities and directing future state budget surpluses to pay down the costly debt.  

Assessing the impact of Tier 5 

Consistent with the findings shared with the legislature during the 2025 Regular Session, Reason Foundation’s PERS modeling shows the positive long-term impact of Tier 5 and how it reduces future liability accrual by around $80 billion by 2074 (Figure 1).

Figure 1. MS PERS post-Tier 5 accrued liability projection 

This slowing of liability accrual is one-half of the assets versus liabilities equation upon which PERS is built. Our modeling shows that combining the new benefits with the current statutory funding policy could bring PERS to full funding at least a full decade sooner if market outcomes match plan expectations (Figure 2). If all assumptions prove 100% accurate each year over the next 50 years, and the legislature did nothing more than what it did during the 2025 Regular Session, PERS would reach 80% funded by 2062 and 100% funded in 2065. This has a significant impact on the overall costs for government employers and taxpayers compared to pre-reform. 

Figure 2. MS PERS post-Tier 5 funding projection

Conversely, this same modeling shows that PERS is still 40 years away from eliminating its unfunded liabilities, which is well above industry standards and will generate a significant level of unnecessary debt-related costs and risks for future taxpayers. Also worthy of concern is the fact that a less-than-ideal investment outcome still results in the eventual exhaustion of PERS assets. PERS is still on a very long and precarious path to achieving full funding (Figure 3). 

Figure 3. MS PERS post-Tier 5 funding projection under stress

PERS’ excessively long path to eliminating pension debt and continued vulnerability to investment underperformance, even after the prudent reforms enacted in Tier 5, is due to employer contribution rates being fixed in statute. This approach has advantages in predictable budgeting, but it also guarantees that any negative investment performance will increase unfunded liabilities and incur substantial costs over the long term. This is why most states have adopted a funding policy based on the actuarially determined contribution (or ADEC) rate that sets a final payment date for pension debt and adjusts contribution rates accordingly each year based on the system’s investment experience. 

Other states have deployed various mechanisms to overcome public pension underfunding, including layering amortization schedules and applying regular supplemental payments. Any plan facing unfunded liabilities will see significant long-term improvements and taxpayer savings from earlier additional funding. For example, Reason’s modeling indicates that an additional $110 million contributed annually over the next four years to PERS would reduce the time required to eliminate the state’s pension debt by about five years. (Figure 4)  

Any additional revenue dedicated to PERS by the legislature will reduce long-term costs, but this alone, without addressing the inflexible nature of the state’s statutory contribution policy, will not be enough to address the system’s vulnerability to market factors. This concept can be illustrated by comparing PERS post-Tier 5, both with and without an additional $110 million appropriated annually over the next four years (Figure 4). Both Mississippi House Bill 1 as is, and with nearly half a billion extra over four years, react the same when either investment assumptions prove accurate each year or when the system experiences recessions similar to those experienced over the last 20 years.  

Figure 4. MS PERS post-Tier 5 + $110 million over 4 years funding projects under stress

Looking at the same supplemental appropriation through the lens of required employer contribution rates, employers may experience some contribution relief if investment expectations prove accurate, but any investment underperformance eliminates those extra appropriations, and PERS would still face significant insolvency risk (Figure 5). The employer rate being fixed under HB1 results in the system moving into pay-as-you-go (pay-go) status, where benefits are no longer paid out of the PERS trust but out of general revenue funds. 

Figure 5. MS PERS post-Tier 5 + $110 million over 4 years contribution projects under stress

Unless legislators aim to appropriate hundreds of millions annually over the next 30 years to supplement the current fixed employer contribution rate, our modeling finds minimal fiscal gain will be achieved through supplemental contributions, both due to the sheer scale of the plan’s liabilities and PERS’ lack of responsiveness to market downturns.  

Post-Tier 5 recommendations 

The enactment of PERS Tier 5 during the 2025 regular session addressed the long-term viability of the retirement benefit. By providing a new Tier 5 benefit for new hires, lawmakers created a more balanced and risk-managed plan going forward, benefiting employees and taxpayers. While this was a necessary and positive step towards long-term sustainability, further actions are needed to address outstanding funding requirements.  

What is ADEC, and why is it the Gold Standard? 

The actuarially determined employer contribution rate, or “ADEC” rate, is the contribution rate required by employers in a given year to fully fund all accrued benefits within a predetermined timeframe.  

The majority of states fund their public pension benefits each year based on ADEC calculations using a 30-year timeframe, although that timeframe is beginning to shrink closer to the Society of Actuaries (SOA) recommended 20 years. Most states also fix the employee contribution rate in statute, resulting in the employer contribution rate  

(more tax dollars) being the only contribution rate that fluctuates in response to investment performance. Contribution rate responsiveness to market performance is key to a sustainable funding policy. The ADEC rate is the responsive mechanism by which public pension debt becomes fully funded over time. 

Currently, the Mississippi PERS employer contribution rate is fixed in statute and scheduled to increase to 19.9% by 2028. Employees will continue to contribute 9% of their salaries. As of November 2024, the ADEC rate for Tiers 1-4 benefits was calculated at 25.92% of payroll using a 30-year timeframe, according to plan actuaries. Upon review, we found the underlying assumptions used to calculate that rate generally align with industry standards. Slower government payroll growth or a lower investment return assumption are examples of assumptions that would increase the ADEC rate. 

Ways to get to ADEC over time  

Based on employer feedback and the scale of the current $26 billion PERS unfunded liability, we suggest members of the House Special Committee on PERS Funding focus on providing ways to bridge the gap between the statutory rates set in HB1 and the ADEC rate calculated annually by PERS actuaries. 

Any effort to achieve the ADEC rate of funding each year will not only better secure PERS, but it will also save taxpayers tremendous amounts of money by avoiding decades of expensive interest on the pension debt. To that end, the following three recommendations can be used as a guide to phasing in an ADEC policy. 

#1. Segment the debt 

Thanks to the legislature’s launch of the new Tier 5 benefit, members can now leverage the layered amortization approach deployed by systems and legislatures throughout the country to segment the PERS unfunded liability in three categories: Initial Legacy Debt, New Legacy Debt, and Tier 5 Debt.  

Each segment of debt comes with its own unique risks and timelines that allow legislators to incorporate different service methods. This layered approach commits the state to maintaining proper funding on any new debts without applying immediate inordinate costs associated with the current $26 billion debt.   

Initial legacy debt: All pension debt associated with tiers 1-4 as of a certain date. 

New legacy debt: All pension debt associated with tiers 1-4 after that certain date. 

Tier 5 debt: All pension debt associated with the defined benefit portion of tier 5. 

By segmenting the various tranches of debt, appropriators can tackle the more expensive long-term debt more consistently while using smaller segments of new debt to slowly transition the system to a modern ADEC funding mechanism.  

Example Segmented ADEC Policy: 

• Initial legacy debt: Amortize on a 50-year, level percent of payroll basis  

• New legacy debt: Amortize on a 50-year, level percent of payroll basis 

• Tier 5 debt: Amortize on a 25-year, level dollar, layered basis  

Applying the example above to a post-Tier 5 launch PERS, we see that the current statutory rate aligns closely with the calculated ADEC rate (Figure 6). The elongated amortization schedule applied to the initial legacy debt provides some consistency for employers managing year-to-year budgets. At the same time, the proposed example tackles new unfunded liabilities quickly enough to avoid expensive compounding interest. 

Figure 6. MS PERS post-HB1 + example ADEC contribution projects

If the same example were then subjected to economic stress, lawmakers would continue to see a need for additional appropriations, albeit on a much smaller scale. 

Figure 7. MS PERS post-HB1 + example ADEC contribution projects under stress

From a funding perspective, two recessions over the next 50 years will place a significant burden on employer contributions. Segmenting the debt does not prevent the funded ratio from falling, as evident in Figure 8, but it does prevent insolvency while maintaining an employer rate below 27% over the next 50 years, as previously shown in Figure 7. 

Figure 8. MS PERS post-HB1 + example ADEC funding projects under stress

In the end, elongating the amortization schedule and capping the employer contribution will always limit the designed effects of an ADEC policy. The lack of revenue from investment returns can only be made up by additional employer contributions or investment gains that not only meet but exceed assumptions.    

#2. Supplement the employer rate with additional appropriations.  

Separate funding sources, like interest generated by special trust funds, have been used to various degrees by legislatures to pay off debt earlier and reduce expensive interest payments. The scope and nature of these supplemental funding sources are typically unique and a result of political and fiscal conditions in the state. From a purely financial perspective, when a public pension is underfunded, any additional funding would be a net positive to the fund. However, not all supplemental funding will have the same effects on an employer’s risk profile or budget. Supplemental funding is most effective when paired with a plan to eventually meet actuarially determined rates; otherwise, the risk remains that the additional amount will not be enough to fulfill pension promises.  

Applying an additional $110 million over the next four years to the statutory rate of 19.9% of payroll as scheduled, the modeling shows only a subtle difference compared to the status quo and Example Segmented ADEC scenarios as shown in Figure 9.   

Figure 9. MS PERS post-HB1 + example ADEC + $110 million/4 years contribution projects

Figure 10. MS PERS post-HB1 + example ADEC + $110 million/4 years projects under stress

The effects of a segmented ADEC policy are most evident when market stress is applied. Figure 10 shows that the only policy that funds all benefits with a long-term employer rate below 30% is the two where the segmented ADEC policy was applied.  

The segmented ADEC policy also ensures there is always an established date when any new unfunded liabilities accrue. Figure 11 shows the effects market stress has on the PERS-funded ratios under the various conditions and policies covered previously.  

Figure 11. MS PERS post-HB1 + example ADEC + $110 million/4 years funding projects under stress

Despite two recessions over the next 50 years, the PERS funding ratio radically decreases without legislative action, but never goes insolvent due to the systematic ADEC funding rates.  

#3. Earmark 25% of future surplus funds to be deposited into the Pension Special Trust Fund to help address pension investment return volatility  

Some states (Louisiana and Connecticut, for example) have set in law that a certain percentage of surplus funds must be allocated toward the reduction of unfunded pension obligations. Others have directed volatile and non-recurring revenue to special funds designed to help pay down pension debt. Earmarking future surplus funds to pay off pension debt is a clear policy that perpetually sets the honoring of pension obligations as one of the state’s highest priorities, while requiring no up-front costs on already cash-strapped government employers. This practice can be capped by only covering any difference between the actuarially determined employer contribution rate and the PERS employer rate set in statute, but lawmakers should know that any amount contributed above ADEC will save taxpayers in the long run and accelerate the pension’s path to full funding.  

Mississippi lawmakers took an important first step in establishing a new, reduced-risk hybrid tier of benefits for new hires in 2025. Now, they need to address the ominous funding shortfall of PERS, or the plan will continue to be at risk of insolvency, and the state’s taxpayers will continue to bear the burden of massive debt-related costs. While this will require a significant commitment of state funds, there are ways to gradually adopt the proper funding policy and secure an affordable retirement benefit for Mississippi public workers into the future. 

The post Mississippi Public Employees Retirement System post-Tier 5 funding stress test and recommendations  appeared first on Reason Foundation.

Oklahoma has been a model of success in offering and administering a DC plan to public workers. In 2014, Pathfinder became the primary retirement plan for all new OPERS members. Alongside the 2011 reforms, Pathfinder played a crucial role in stabilizing and maintaining OPERS funding. 

Ten years after Oklahoma’s landmark reform, the Pension Integrity Project has evaluated ways to strengthen Oklahoma’s DC options. Pathfinder’s contribution rates meet industry standards. However, lawmakers should aim to improve the adoption rates of the optional higher contribution. 

Regarding Pathfinder vesting, employer contributions vest gradually over a five-year period (20% annually). Best practice policies call for all contributions to be vested within three years. A majority (64%) of new hires leave OPERS before their fifth year, potentially leaving them without adequate retirement savings. 

Key recommendations for Pathfinder’s modernization

Clarifying Objectives: Codifying retirement security and guaranteed lifetime income goals into law to guide the OPERS Board. 

Investment Focus: Modernizing investment options by setting a default that adjusts allocation over a career to accumulate sufficient assets for retirement income, and requiring individualized investment advice and planning. 

Lifetime Benefit Guarantee: Offering in-plan annuity options that provide guaranteed lifetime benefits, with a default distribution form securing lifetime income and survivor benefits. 

Pathfinder is a leading government-sponsored DC plan, but further modernization is needed. This includes reduced vesting requirements, investment defaults that align with retirement security goals, in-plan lifetime annuity options as the default distribution method, and a clear legal statement of “lifetime retirement income” as the plan’s ultimate objective. 

The Pension Integrity Project’s recommendations, presented to Oklahoma lawmakers, can be viewed here.

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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 a free and safe society, law enforcement is essential for maintaining the rule of law and protecting people and property from harm by others. At the same time, law enforcement officers have a tremendous responsibility to uphold the constitutional rights of the citizens with whom they interact. Even a few “bad apples” can undermine public trust in law enforcement––especially when governments fail to hold these officers accountable for misconduct. Michigan must embrace transparency and accountability in law enforcement to demonstrate a commitment to upholding the rule of law and maintaining the public’s confidence in the justice system. 

The legislation presented in the bipartisan Police Practices Standardization, Transparency, and Trust (S.T.A.T.) package would limit the use of no-knock warrants, require de-escalation and crisis response training, and provide other safeguards to protect the public and law enforcement officers. 

Use of force standards, de-escalation and crisis response training, and duty to intervene requirements will ensure that armed officers of the state respect the constitutional rights of Michiganders and provide law enforcement with critical tools to maintain their own safety. Law enforcement officers must be trained to de-escalate tense interactions, but, when necessary, employ “objectively reasonable” physical force. When excessive force is employed, the rule of law requires fellow officers to intervene.  

Restricting the use of no-knock warrants will likewise improve the safety of law enforcement and the public. Search warrants are an essential and uncontroversial law enforcement tool. However, no-knock warrants allow law enforcement to forcibly enter a residence without first announcing their presence or identifying themselves. This practice creates a dangerous situation for everyone involved. A recent report from the American Legislative Exchange Council noted that: 

Between 2010 and 2016, 81 civilians and 13 law enforcement officers were killed in forced-entry searches. Officers represented 10% of fatalities while executing standard “knock-and-announce” search warrants and 20% of fatalities associated with no-knock warrants. 

Increasing transparency also confers mutual benefits to law enforcement and the public. Body-worn cameras shed necessary light on rare instances of police abuse, but they also frequently exonerate officers who are falsely accused of misconduct. The S.T.A.T. package includes reasonable requirements and penalties to protect against tampering with body-worn cameras or resulting video evidence. Additionally, the package includes improvements to the Michigan Commission on Law Enforcement Standards (MCOLES) Act and establishes new standards for separation records. These provisions will empower police chiefs and sheriffs to avoid hiring officers with poor records.  

Finally, the package’s provisions related to false testimony and anonymity of complaints will help ensure truth in accountability and protect the privacy of individuals who file complaints alleging misconduct by law enforcement. A key principle that undergirds the rule of law is that nobody is above the law, including those who are tasked with enforcing the law.  

Taken together, this bipartisan package provides necessary improvements to policing that will promote the transparency, accountability, and trust necessary to foster an environment of safety and order in Michigan communities.  

The post Michigan’s bipartisan legislative package provides necessary improvements to policing appeared first on Reason Foundation.

Public-private partnerships have been used across the country to advance major infrastructure projects where traditional funding is limited. These agreements allow public agencies to transfer significant risks—such as construction delays, cost overruns, and lifecycle maintenance—to private partners, who are contractually obligated to meet performance standards over decades.

Louisiana House Bill 687 would authorize the Port of New Orleans to enter a public-private partnership (P3) to establish, design, construct, and finance the St. Bernard Transportation Corridor. This project is intended to support the Louisiana International Terminal, offer a reliable local and emergency route, and connect key freight and evacuation pathways.

A widely cited example is the Port of Miami Tunnel, completed under an availability payment (AP) design-build-finance-operate-maintain P3. The Port of Miami Tunnel P3’s goal was to reduce downtown traffic congestion by giving freight a dedicated route to the port. The project opened on time and on budget, transferred significant construction and financing risk, and has since delivered measurable mobility and freight efficiency gains, reducing truck travel times by nearly an hour and removing 80% of 18-wheelers from Miami’s downtown.

These results are made possible by contracts that align design, operation, construction, and long-term maintenance incentives. P3s also allow states and agencies to accelerate project delivery using milestone or availability payments, spreading costs over time while beginning construction much sooner than pay-as-you-go models allow.

For Louisiana, freight efficiency is a pressing concern. The state moves over $580 billion in goods annually, and the value of freight shipped to and from Louisiana is expected to grow by 78% overall and 112% for goods shipped by truck over the next two decades. Roadway improvements that reduce traffic congestion and increase access to port infrastructure can directly impact shipping costs, job growth, and regional competitiveness.

HB 687 includes important safeguards: all agreements affecting state roads must be approved by the Department of Transportation and Development, and contracts must include bonding, oversight, and long-term maintenance responsibilities. These provisions mirror best practices in successful P3 legislation across the country.

While many delivery models can work, public-private partnerships offer a pathway for delivering major infrastructure on time, with less public-sector risk, and with the potential for long-term savings.

Video of this testimony and hearing is available here.

The post Louisiana House Bill 687 could improve shipping and boost regional economy appeared first on Reason Foundation.

Assembly Bill 569 undermines a meaningful reform established by the General Assembly in the Public Employees’ Pension Reform Act (PEPRA), designed to limit unexpected and unnecessary taxpayer costs and eliminate over $200 billion in pension debt. It would remove restrictions on government employers, allowing them to increase pension promises through supplemental defined benefit plans, even though the state’s pension promises are still underfunded. AB569 would allow local governments to sidestep the currently agreed-upon contributions for what is already considered an adequate pension benefit. Opening the possibility for more pension promises would ratchet up the risk and costs imposed on California’s strained taxpayer base.

All these changes thwart the prudent and necessary reforms lawmakers adopted and built coalitions around in 2013. Passing PEPRA required sacrifice from government employees and employers alike, but the result of this landmark piece of legislation was that California’s pensions would remain secure and eventually be fully funded.

CalPERS estimates that PEPRA has saved the state more than $5 billion since its inception. Another $25 billion in savings is estimated over the next 10 years, but only if members reject bills like AB569 and uphold the shared PEPRA commitments.

AB569 essentially repeals one of the most essential parts of PEPRA and would add more unfunded mandates to the state’s already underfunded pensions. Offering government employers the option to provide and pay for supplemental pension benefits may seem innocuous at first glance; however, cost estimates for pension benefits have frequently proven to understate their ultimate long-term costs, forcing future policymakers and taxpayers to deal with burdensome unfunded liabilities of past promises. Ill-advised pension enhancements with underestimated costs were a major contributor to the explosion in the state’s pension debts in the early 2000s, and this bill would again open the possibility for runaway debt.

Support of AB569 is also based on questionable logic and is unlikely to achieve the proponents’ stated goal of improving the recruitment and retention of public workers. According to California’s 2023 Total Compensation Survey, the turnover rate for police and patrol officers was 7.5%, nearly identical to the state’s overall public employee turnover rate of 7.4%—and far below the 2023 national average of 18.5% for non-education state and local government workers, as reported by the Bureau of Labor Statistics. There is no empirical basis to support the claim that California’s workforce is in crisis or lacking retirement security under its current retirement systems.

It is up to lawmakers to protect and defend the 2013 PEPRA reform to its intended end—with CalPERS fully funded within the next 15 to 20 years and secured going into the future. Reversing crucial reforms at this time would come at a significant cost and thrust the state back into perpetually growing pension debt that governments faced over a decade ago.

The post California Assembly Bill 569 would undermine important pension reforms appeared first on Reason Foundation.

Thank you for the opportunity to submit comments on the House Bill 449 of 2025 (HB449). My name is Richard Sill, and I serve as a policy analyst at Reason Foundation, a national 501(c)(3) public policy research and education organization with expertise across a range of policy areas, including housing, public finance, and technology.  

HB449 would amend Section 21.165 of the Texas Penal Code to include “deep fake images” in what constitutes the production or distribution of sexually explicit content. Currently, the Penal Code only refers to “deep fakes videos.”  

HB449 takes a careful regulatory approach, particularly in that it does not expand the definition of what constitutes an offense: a non-consensual deepfake depicting a “person with the person’s intimate parts exposed or engaged in sexual conduct.” By keeping the same language as existing law, HB 449 remains focused on targeting only truly harmful, non-consensual acts. 

We commend Rep. González and the authors of HB 449 for their thoughtful approach in addressing the growing problem of non-consensual sexually explicit deepfake images and videos. The bill sends a clear message that exploiting someone’s likeness is unacceptable and will be met with serious consequences. Overall, HB 449 is a narrowly tailored and well-crafted addition to existing law meant to combat a specific and pressing issue. It deserves praise for striking a balance between protecting privacy and dignity without overreaching into other forms of expression.  

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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.

Our comments argue that government interference in online speech is a bigger concern than technology platform censorship alone, as illustrated by censoring policies during the COVID-19 pandemic and the Hunter Biden laptop controversy, and this has important implications for how Section 230 of the Telecommunications Act of 1996 is enforced.

Full comment: Comments to the Federal Trade Commisssion on digital censorship

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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.

Assembly Bill 1383 reverses course on several prudent reforms established by the General Assembly in the Public Employees’ Pension Reform Act (PEPRA), designed to limit exploding taxpayer costs and eliminate the state’s over $200 billion pension debt. It would expand the definition of pensionable compensation for all PEPRA members, remove critical cost-sharing requirements, and again subject what are currently agreed-upon contributions to collective bargaining. Additionally, it would create a new, higher-cost benefit for public safety employees and reduce retirement age requirements back to where they were before the 2014 PEPRA reform.  

All these changes thwart the prudent and necessary reforms lawmakers adopted and built coalitions around in 2013. Passing PEPRA required sacrifice from government employees and employers alike, but the result of this landmark piece of legislation was that California’s pensions would remain secure and eventually be fully funded.  

CalPERS estimates that PEPRA saved the state more than $5 billion since its inception. Another $25 billion in savings is estimated over the next 10 years, but only if members reject AB1383 and guard the shared PEPRA commitments. 

AB1383 essentially repeals the most important parts of PEPRA and would add more unfunded mandates to the state’s already underfunded pensions. According to CalPERS, AB1383 would immediately increase the annual cost to public employers (and therefore taxpayers) by $343 million and cost nearly $9 billion over the next 20 years. The ultimate cost to taxpayers could extend well beyond $9 billion if market results resemble those of the last 20 years, or CalPERS continues its prudent lowering of its expected rate of return on investments. 

Support of AB1383 is based on questionable logic and is unlikely to achieve the proponents’ stated goal of improving the recruitment and retention of public workers. According to California’s 2023 Total Compensation Survey, the turnover rate for police and patrol officers was 7.5%, nearly identical to the state’s overall public employee turnover rate of 7.4%—and far below the 2023 national average of 18.5% for non-education state and local government workers, as reported by the Bureau of Labor Statistics. There is no empirical basis to support the claim that California’s public safety workforce is in crisis or undercompensated under its current retirement structure. 

It is up to lawmakers to protect and defend the 2013 PEPRA reform to its intended end—with CalPERS fully funded within the next 15 to 20 years and secured going into the future. Reversing several crucial reforms at this time would come at a significant cost, have the counterproductive effect of making it more costly and difficult to recruit new hires, and thrust the state back into perpetually growing pension debt that governments faced over a decade ago.  

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