What does an expanded National Highway System mean for urban arterials?

ODOT has an interactive map of the changes

MAP-21, the most recent federal transportation re-authorization bill, included a somewhat odd provision to expand the National Highway System (NHS). Roadways on the NHS are eligible for federal-aid highway matching funds, and it seems odd to expand their number in a time of uncertain revenues. As of October 1, 2012, though, all principal arterials that connect to the existing NHS became part of the system. Many of these streets in urban areas have little resemblance to any sort of highway (Portlanders, think NW Broadway or the E Burnside/Couch couplet), and have been redesigned to serve the needs of bike, pedestrian, and transit users as well as drivers. A major concern is whether and how federal design guidelines might hinder development of people-friendly streets.

While the federal funding potential is interesting, Jonathan Maus (BikePortland.org) spotted the potential for design clashes:

The implications for Portland (and other cities) could be significant, because it would mean several of our local streets — including ones that are crucial for bicycling — would suddenly be required to conform with design standards laid out by the Federal Highway Administration, instead of the more flexible local and state standards used today.

Less than 3 weeks before the new policy took effect, Maus reported that then head of Portland's Bureau of Transportation (PBOT), Tom Miller, was unaware of the change. The state transportation department (ODOT) was said to be "scrambling" to understand the new provision. States were apparently given less than one month to apply for classification changes that would prevent specific stretches of road from being added to the NHS.

In a fact sheet released shortly after the changeover, ODOT stated that the new NHS status means any new projects will have to conform to the federally sanctioned AASHTO Green Book governing federal-aid highways instead of more urban, multimodal-oriented alternatives. The FHWA, for their part, only make it clear that the law as written does require adherence to federal design standards for any "new and reconstruction projects on the NHS." The requirement seems to apply even if a project does not receive federal funding; however, ODOT's fact sheet notes that they will have final say on the majority of design exceptions for the newly added routes. Only on projects requiring "full federal oversight" would design exceptions automatically go to the feds for review. However, ODOT apparently cannot contradict its own Highway Design Manual to grant exceptions. If PBOT wanted to maintain or build new lanes to its preferred 10-foot width on an NHS roadway, for example, the agency would have to go directly to the FHWA for an exception.

Overall, urban arterials on the NHS require more state involvement in local project planning, and in some cases more federal involvement as well. Even if a state DOT goes out of its way to accommodate cities' preferred designs, the policy change still adds the cost of a design exception review. And, what happens to cities that want progressive designs for their NHS arterials but lack such willing state partners?

Additional links: ODOT's NHS Expansion Page, additional BikePortland post