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Transportation Equity Act for the Twenty-first Century

Last Updated: 2006

The Transportation Equity Act for the Twenty-first Century (TEA-21) was signed into law by President Bill Clinton in 1998. The bill authorized federal highway, highway safety, public transit, and other surface transportation programs from 1998 to 2003 (the bill was later extended to 2005). With an authorization of $217 billion, TEA-21 was the most expensive public works legislation ever passed by Congress. Besides providing a substantial increase in federal funding, the law guaranteed that federal tax revenues could not be diverted from surface transportation projects.

TEA-21 replaced the Intermodal Surface Transportation Efficiency Act (ISTEA), known as “iced tea” for its acronym, which became law in 1991. After it became law, ISTEA was believed to have the potential to radically alter the structure of the nation’s transportation infrastructure. Despite the expectations that states would use the increased discretion given to them to innovate transportation policy, however, the unprecedented flexibility that ISTEA gave the states went largely unused as few states took advantage of the flexibility allowed them by the act to transfer transportation funds from roads to alternative means of transit. Thus, when ISTEA was replaced by TEA-21 in 1998, it was widely believed that the act did not live up to its potential. Yet, despite the perceived failures of ISTEA, rather than reversing direction, TEA-21 builds upon and reinforces many of its predecessor’s policies. One important difference between ISTEA and TEA-21 was the amount of money allocated: the original six-year reauthorization increased spending by almost 40 percent over ISTEA levels.

Like ISTEA, TEA-21 continued to leave much of the decision making over the nation’s transportation policy to state and local officials. When reauthorization of ISTEA was being considered in 1997, Republicans who controlled Congress were anxious to support devolution of policy functions to states and localities. Total devolution of transportation, however, though supported by some Republican members of Congress, did not gain support because states and localities did not want to be placed in the position of having to raise their own taxes in order to support transportation funding.

ISTEA and TEA-21 marked an important change in American transportation policy by recognizing and responding to the transportation problems that metropolitan areas faced. TEA-21 followed ISTEA’s precedent and established a voice for metropolitan areas by devolving greater responsibility for planning and implementation to metropolitan planning organizations (MPOs). By enhancing the responsibilities and powers of MPOs, TEA-21 encouraged urban areas to tailor transportation plans to their own needs.

At the same time, TEA-21 promoted greater cooperation and coordination between state and local governments. TEA-21 authorized federal transportation funding to MPOs as “metropolitan-wide” institutions charged with “metropolitan-wide” transportation planning. TEA-21 was intended to encourage local governments within a metropolis to coordinate their efforts in the MPO process. The law has numerous financial incentives and disincentives to encourage local and state cooperation in planning transportation in metropolitan areas, and TEA-21 reserves a significant share of surface-transportation block grants to MPOs in areas with populations over 200,000.

TEA-21 was designed to give states and regions greater flexibility in the spending of federal highway and transit funds. The law allowed states and MPOs to employ a portion of highway funds for transit purposes. This “flexing” authority has handed states and MPOs a greater opportunity to tailor transportation spending to regional needs and market realities.

Factors besides transportation were also incorporated into TEA-21. The law required transportation planning to move beyond mobility concerns and to take into account economic, social, and environmental outcomes. TEA-21 required that broad and inclusive public participation in the transportation planning process be facilitated, and mandated that this engagement be “early and continuing.” Furthermore, the law maintained the Bureau of Transportation Statistics that was created by ISTEA in an effort to enhance both planning and the public’s access to information.

TEA-21, like ISTEA, was designed to promote a more balanced transportation system. TEA-21 continued the transformation of the nation’s 1950’s-era highway-building program into a more flexible transportation program. Priorities were supposed to include improved planning, environmental protection, and spending flexibility for greater transportation choice. Public transportation and alternative means of transportation such as bicycles were given consideration in the legislation. Besides considering alternative modes of transportation, construction of transportation systems was to give consideration to environmental, cultural, economic, and social conditions. One component of TEA-21 is a program called Transportation Enhancements that invests in facilities for walking and bicycling, historical preservation, scenic beautification, land acquisition, and environmental mitigation. Other environmental initiatives in TEA-21 included funding for a congestion mitigation and air quality improvement program; tax-free, employer-paid transit benefits to promote transit ridership; establishing a pilot program to help state and local governments plan environmentally friendly development; and provisions to make bicycling and walking safer and more viable ways of travel.

By historical standards, TEA-21 was an ambitious attempt to improve the nation’s transportation infrastructure. TEA-21, along with ISTEA, recast transportation governance, spending patterns, and behavior. With these laws, for the first time the principle that Americans metropolitan areas required an integrated, balanced, and regionally designed transportation system was embedded into law. Yet most states failed to utilize the funding and discretion afforded to them to meaningfully address the worsening transportation problems affecting the nation’s metropolitan areas.

SEE ALSO: Intermodal Surface Transportation Efficiency ActInterstate and Defense Highways ActMetropolitan Planning OrganizationsTransportation Policy


Robert J. Dilger, American Transportation Policy (Westport, CT: Praeger, 2003); Joseph R. Marbach and J. Wesley Leckrone, “Intergovernmental Lobbying for the Passage of TEA-21,” Publius 32 (2002): 45–64; David Nice, Policy Innovation in State Government (Ames: Iowa State University Press, 1994); and Jeffrey Pressman and Aaron Wildavsky, Implementation, 3rd ed. (Berkeley: University of California Press, 1983).