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22 Table 3-7. Examples of infrastructure investment policies that may affect the freight system. Federal State Local/Regional Level of highway funding Level of highway funding Local roadway funding Support for large, targeted projects Project selection Project selection Highway design standards Design and build highway Design and build roadways Some aid for railroad infrastructure projects Modal split of funding Level of inland waterway investment Modal split of funding (for repair/construction of locks and dams) Modal split of funding some cases. The policy decisions in this category concern modities influence freight flows. Closely related is economic which mechanisms to use and how much money is required regulation, carried out exclusively at the Federal level. The from each. Recently the policy decision-making process has principal example is Surface Transportation Board (STB) expanded to include means for drawing in private funds-- regulation of railroads, primarily for grain and coal. (Con- the Transportation Infrastructure Finance and Innovation gress preempted state economic regulation of trucking in Act (TIFIA) program and outright privatization of highways 1994.) The Jones Act is, in effect, another form of trade pol- are two examples. The Federal government can also impose icy, requiring that coastwise maritime freight be carried in user charges to finance waterway infrastructure and avia- U.S.-flagged vessels. tion systems. These policies can affect the aggregate level of freight trans- The level and type of fuel taxes, tolls, and other user charges port, shipper mode choice, carrier routing decisions, and the affect freight carriage in numerous ways. These charges directly use of individual freight corridors and terminals, as well as ef- affect carrier operating costs and therefore influence the price ficiency of freight system components. For example, trade of freight transport and the decisions of shippers. Tolls or agreements that lower tariffs can stimulate freight movement other user charges on individual freight facilities can affect between some nations, sometimes at the expense of others. By routing choices and, in some cases, time-of-day decisions. lowering the cost of international trade, trade policy can also Table 3-8 lists examples of infrastructure finance policies that stimulate total trade and encourage U.S. companies to rely may affect the freight system. more on foreign suppliers. Economic regulation, or the removal of it, can affect the freight system profoundly. A prime example is the deregu- Trade Policy lation of trucking. The Motor Carrier Act of 1980 led to ex- and Economic Regulation plosive growth in the truckload sector and the emergence of The Federal government establishes U.S. trade policy (e.g., the competitive, low-cost truckload carriers we know today. the North American Free Trade Agreement [NAFTA] and Much of current U.S. logistical patterns--especially the wide other trade agreements), which affect the flow of goods both use of just-in-time delivery, using fast and reliable trucking to over land borders and through seaports and airports. Fed- hold down inventory costs--are built on the innovations in eral (and California) policy also affects the extent to which trucking that followed deregulation. Table 3-9 lists examples foreign trucking firms and drivers operate on U.S. highways. of trade policies and economic regulations that may affect the Federal subsidies for agricultural products and other com- freight system. Table 3-8. Examples of infrastructure finance policies that may affect the freight system. Federal State Local/Regional Fuel taxes (on-road) Fuel taxes (on-road) Tolls Fuel taxes (inland towing) Other taxes Local taxes Approval for tolls and other Tolls and other user charges Privatization of roads user charges Other finance programs (e.g., infrastructure Port fees (e.g., TEU fee, Other finance programs (e.g., banks) gate peak pricing) TIFIA) Privatization of roads Airport peak pricing policy Port fees (e.g., TEU fee, gate peak pricing)
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23 Table 3-9. Examples of trade policies and economic regulation that may affect the freight system. Federal State Local/Regional NAFTA, other trade agreements None None Jones Act Agricultural subsidies Customs regulations STB rules on railroad rates