APPALACHIAN DEVELOPMENT HIGHWAY PROGRAM (ADHP): AN OVERVIEW

APPALACHIAN DEVELOPMENT HIGHWAY PROGRAM (ADHP): AN OVERVIEW

98-973 E
December 7, 1998
CRS Report for Congress
Received through the CRS Web
Appalachian Development Highway
Program(ADHP): An Overview
Robert S. Kirk
Economics Division
Summary
The Appalachian Development Highway Program (ADHP) is a road building
program that is intended to break Appalachia’s regional isolation and encourage
Appalachian economic development. Administered by the Appalachian Regional
Commission (ARC), the ADHP is authorized to develop a network of 3,025 miles of
corridor roads. At the end of 1997, 2,258 miles, comprising 75% of the approved
corridor roads, were open to traffic. During the first 33 years of the ADHP’s existence
over $4.5 billion was appropriated from the Treasury’s general funds for this road
system. The annual appropriation levels fluctuated substantially over this period. The
Transportation Equity Act for the 21st Century (TEA21) authorizes $450 million per year
for the ADHP during FY1999 to FY2003 from the Highway Trust Fund. This provides
stability of funding for the ADHP.1 The federal share of the estimated cost to complete
the ADHP network at the end of FY1997 was $6.2 billion. This report will not be
updated.
Program Origins
In 1964, the President’s Appalachian Regional Commission (PARC) reported that
Appalachia’s geographic isolation from both the prosperous adjacent eastern seaboard
and the mid-west was the “very basis” of its developmental lag. The PARC report argued
that Appalachian development could not proceed until its regional isolation was
overcome by its “penetration by an adequate transportation network.”2 Congress
responded to the report by passing the Appalachian Regional Commission Act of 1965
(ARCA) (P.L.89-4). The Act established the Appalachian Regional Commission (ARC)
as a regional development agency designed to establish a federal, state, and local
partnership. Although the Act’s supporters envisioned an economic development effort
1See U.S. Library of Congress. Congressional Research Service. The Transportation Equity Act
for the 21st Century (TEA-21) and the Federal Budget. CRS Report 98-749 E, by John W.
Fischer.
2President’s Appalachian Regional Commission (PARC). Appalachia: a Report. Washington,
The Commission, 1964. p. xv-xviii.
Congressional Research Service ˜ The Library of Congress

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in a broad sense, building a road network that provided access “to and from the rest of the
nation and within the region itself,” was the ARC’s highest priority. The ARC program
is divided into two program areas, the Appalachian Development Highway Program
(ADHP) and the area development program.
This report discusses the ADHP. After a brief description of the ADHP system, the
report describes the ADHP’s operation, organization, spending history and status. It then
describes changes in its funding mechanism resultant from TEA21 and issues of interest
to Congress related to the ADHP.
Appalachian Development Highway System (ADHS)
The core development argument in the PARC report was that, before development
could take place in Appalachia, major investments had to be made in “basic public
facilities.”3 This infrastructure-focused development theory, coupled with the belief that
the “barrier-effect” of Appalachia’s mountain-chains was a major cause of Appalachian
underdevelopment, led to the proposal that a development highway system be built to
break the isolation of Appalachia’s economically depressed regions. The ARCA
incorporated the PARC’s recommendation and authorized the establishment of the
ADHP. The ADHP system was seen as a network of highways that would work in
conjunction with both the Interstate Highway System and other federal aid highways.
The system of corridor highways and access roads was designed to pass through isolated
parts of Appalachia and link up with the interstate system. The original network design
reflects the PARC report’s suggestion that the routes not be chosen to ease congestion
or upgrade heavily traveled areas but to stimulate traffic through “remote areas that have
a developmental potential.”4
Although the basic corridor network has been adhered to, it has been subject to
controversy; for example, a 1971 General Accounting Office report concluded that the
ARC was allowing the individual states, through their transportation/highway
departments, to direct priority construction to some highway segments “that did not
significantly increase accessibility to and through the region.” The 1971 study asserted
that this had led to a fragmented pattern of construction.5 The ARC took issue with
GAO’s conclusions, noting that it made sense to assign priority to the least adequate
sections and that the Commission could not compel a state to accept a project without its
consent.6 With 75% of the ADHS now open to traffic, many of the gaps mentioned in the
GAO study have been completed. States still commonly propose giving construction
priority to congested or heavily traveled portions of the corridors.
Originally the network was envisioned as having 2,350 miles but over time and as
new states were added to the ARC, the system was increased to 3,025 miles of corridor
3PARC Report, p. 28
4PARC Report, p. 33.
5U.S. General Accounting Office. Highway Program Shows Limited Progress Toward
Increasing Accessibility to and Through Appalachia. May 12, 1971. Report no. B-164497(3).
Washington, GAO, 1971. p. 2-3.
6Ibid. p. 3.

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roads and 1,400 miles of access roads. By September 30, 1997, 2,258.8 miles comprising
75% of the planned corridor miles were open to traffic. Over 60% (894 miles) of the
authorized miles of access roads had been completed.7 The map in Figure 1,
downloaded from the ARC’s 1997 Annual Report, displays both the completed and to be
completed corridors of the system.8
Figure 1. Appalachian Development Highway System
In 1995 dollars, the cost to complete the system was estimated as $8.5 billion
dollars. The federal share was estimated at $6.8 billion. After adjusting for federal funds
available in FY1997 the required federal share was estimated as $6.2 billion.9 The
portions of the ADHS still to be built traverse some of the most difficult terrain of the
corridors. Average construction costs of the remaining corridor miles are expected to be
7Appalachian Regional Commission. Appalachian Development Highway System Budget
R e q u e s t F Y 1 9 9 9 . W a s h i n g t o n , 1 9 9 8 . p p . 1 - 2 .
[http://arc.gov/infopubs/poldocs/budget99/budadhs.htm]
8Appalachian Regional Commission. 1997 Annual Report.
[http://arc.gov/programs/highway/hwymap.htm]
9Appalachian Regional Commission. Appalachian Development Highway System: Briefin Paper.
Washington, The Commission, 1998. p. 1.

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high, with each $100 million funding approximately nine miles.10 Upon completion,
development highways not already part of the U.S. federal-aid system are to be added to
the system.11
Administration and Organization
The ADHP is administered by the ARC.12 The state membership of the ARC is
made up of the Governors of the 13 participating states. The sole federal member is the
federal Cochairman, who is appointed by the President. The second Cochairman is
elected by the state members from among themselves for a term of not less than one year.
Decisions by the Commission require the affirmative vote of the federal Cochairman and
a majority vote of the state members. By statute, the ARC transmits to the U.S. Secretary
of Transportation its designations of general corridor locations and termini of
development highways, local access roads to be constructed, and priorities for the
construction of segments of the development highways. Before a state member
participates in a vote on any of these designations they must obtain the recommendations
of the appropriate state transportation agency. The U.S. Department of Transportation
(U.S. DOT) is authorized to assist in the construction of the system and the local access
roads in a way similar to its involvement in the federal-aid highways as long as the
involvement is not inconsistent with the ARCA.13 Periodically the ARC provides an
estimate of each states “cost to complete” its share of the system. Funds are apportioned
by the U.S. DOT to the states based on these cost to complete estimates. The state
transportation/highway departments oversee the planning and construction of the
corridors and access roads.
The federal matching share for any construction project is limited to a maximum of
80% of the project cost. In cases where a state has begun construction of a segment
without the aid of federal funds, the U.S. DOT, upon application by the state and with the
approval of the ARC, may authorize payment to the state of the federal share (not to
exceed 80% of the project costs) from funds appropriated and allocated to that state.14
Spending History
1965 to 1998. From the inception of the ARC in FY1965 to FY1997, the
Congress has appropriated over $4.5 billion for the system. The spending history of the
ADHP, shows alternating periods of increased and decreased spending during the first 33
10ARC FY1999 Budget Request, p. 1.
11The roads are then required to be maintained by the states as provided for federal-aid highways
in Title 23 of the U.S. Code.
1240 U.S.C. appendix, sec. 201.
1340 U.S.C. appendix, sec. 201.
14Prior to FY1999 the federal share was 70% for pre-financed construction. The Omnibus
Consolidated and Emergency Supplemental Appropriations Act of 1998 (P.L. 105-277) increased
the federal share to 80%.

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years of the program. Figure 2 displays the spending trends from FY1965 to FY1998
and spending projected through 2003.15
Figure 2: ADHS Appropriations &
Early in the program, from
Contract Authority FY1965 to FY2003
F Y 1 9 6 5 - F Y 1 9 6 9 , h i g h w a y
appropriations averaged $94 million per
year. During the 1970s the average
annual fiscal year appropriation was
$169.9 million, 80% higher than the
1960s average. The decade of the
1980s was a period of reduced
spending. The FY1982 appropriation
was less than half that of FY1981, and
the average annual fiscal year
appropriation during the decade was
$108.6 million, 36% lower than during
the 1970s. The Reagan Administration
was opposed to the continued existence
of the ARC and each year the federal
Co-chairman would recommend a zero
appropriation for the ARC only to have
Congress appropriate funds to sustain
the agency, although at reduced levels. Appropriation levels increased during the first
five fiscal years of the 1990s, from $105 million in FY1990 to $179.8 million in FY1995.
Appropriations again fell to about the $100 million level for FY1996 and FY1997. The
House report for the Energy and Water Appropriations Bill (H.Rept. 104-679) referred
to this as the “continuing downsizing of the agency.” However, in FY1998, the ARC
experienced another reversal of fortune when Congress increased the appropriation for
highways to $402.5 million, more than four times the FY1997 level of $99.7 million.
This turnaround presaged a major change in the long-term funding for Appalachian
highways.
TEA21 and the ADHP. Historically, ADHP funding had come from U.S.
Treasury general funds. Passage of TEA21 changed this by authorizing that $450 million
in contract authority be appropriated from the Highway Trust Fund for each of the fiscal
years FY1999-FY2003. These funds remain available until expended. The Congress can
appropriate additional money from the general fund if it wishes.16 TEA21 guarantees the
availability of at least $2.25 billion of new funds for spending on system roads over the
next 5 years.
15Figures in this section are drawn from the following sources: Appalachian Regional
Commission. 1997 Annual Report. Washington, The Commission, [1997] 60 p.; House of
Representatives Reports 105-313 and 105-271; and Department of Transportation. TEA-21 Fact
Sheet: Appalachian Development Highway System.
Internet address: [http://www.fhwa.dot.gov/tea21/factsheets/appal.htm].
16The Omnibus Consolidated and Emergency Supplemental Appropriations Act of 1998 (P.L.
105-277) included provisions that did this. It included language that appropriated an additional
$132 million: $100 million for Corridor X in Alabama and $32 million for Appalachian
development highways in West Virginia. These FY1999 amounts are not reflected in Figure 2.

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Issues for Congress
Most of the policy issues Congress faces concerning the Appalachian Development
Highway Program are recurring issues that date back to the founding of the Appalachian
Regional Commission.17
Emphasis on Highway Construction as a Requisite for Development.
The founding argument for the ADHP was that Appalachia was a “region apart” and that
development could not proceed until the regional isolation was broken. Advocates of this
view argue that improvements in the poverty and employment rates in areas served by the
completed highway segments vindicate this policy. Critics of this view generally argue
that these improvements reflect trends in the national economy rather than the impact of
the ADHS. Some also argue that these highways can exacerbate depressed local
economies as small towns and businesses are sometimes bypassed by the new roads.
The Federal Role in Regional Economic Development. Supporters of the
ARC and the ADHP argue that, given the size of the region, the number of state and local
jurisdictions involved, and the amount of money needed, federal participation is
necessary. The PARC report also argued that when it came to federal spending, the
Appalachian region had for many years been short-changed. Opponents of federal
involvement question the appropriateness of concentrating a special effort on 13 states
to the relative disadvantage of nonparticipating states in terms of federal highway dollars
available.
Cost to Complete the ADHS. TEA21 authorized, over five years, $2.25 billion
or roughly one third of the estimated federal share cost to complete the system. During
this period there could be proposals to add appropriations additional to the TEA21's
authorized levels to speed the ADHS to completion, or to direct extra funds to particular
corridors (as has already happened for FY1999).
Environmentalist Opposition. Some of the remaining ADHS corridor miles
are to be built in the least developed parts of Appalachia and critics charge that
completing these corridors will “destroy wilderness” in remote areas. Supporters of
completing the entire system generally assert that environmental problems are minimal,
especially given the planned implementation of environmental mitigation measures.
Supporters also often assert that the economic and safety benefits outweigh any possible
environmental costs.
17For overviews of the debate over Appalachian highway building and economic development
see Bradshaw, Michael. Appalachian Regional Commission: Twenty-Five Years of Government
Policy. Lexington, KY, University of Kentucky Press, 1992. 168 p. and also Isserman, Andrew,
and Rephann, Terance. Economic Effects of the Appalachian Regional Commission. APA
Journal, summer 1995: 345-364. For an ARC sponsored study see, Wilber Smith Associates.
Appalachian Development Highways Economic Impact Study. Columbia, SC, Wilber Smith
Associates. [110] p. See also, U.S. Federal Highway Administration. West Virginia Division
of Highways. Appalachian Corridor H: Final Environmental Impact Statement. Charleston,
WV, Division of Highways, 1996, 3 v.; Road to Ruin ‘97: Corridor H Highway.
[http://www.taxpayer.net/tcs/RoadRuin/mid8.htm]; and Corridor H Action Committee: The
Populist Approach to Economic Development. [http://geocities.com/CapitolHill/2929/]