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62 The purpose of Task 3 was to provide context for the assess- ment of policies and strategies for managing truck transport in U.S. urban areas. In Task 2, we identified a broad array of strategies implemented in Europe and other parts of the world, as well as several best practices that have been imple- mented in the United States. To what extent are these policies and strategies transferable? Are the innovations we have seen in a few U.S. metro areas the result of unique circumstances, or might they be more broadly replicated? This section begins with an overview of the complex gov- ernance arrangements in which freight policy takes place. Next, policy trends are discussed, including shifts in policy emphasis and the devolution of freight policy to lower lev- els of government. The third section discusses the impacts of these trends: what motivates policy decisions and what chal- lenges are faced by the public sector in making effective policy decisions. The last section discusses recent trends and con- siders how these may influence decision-making in freight transport planning and management. 3.1 The Public Sector Role in Urban Freight26 Although the U.S. freight transport industry is privately owned and operated, the public sector plays an important role in ensuring safety, monitoring competition, regulating for environmental protection, imposing taxes and fees, and, in some cases, providing infrastructure and various services. Government at all levels is involved. Federal agencies engage in system planning, collect taxes and fees, and invest in infra- structure, as well as regulate safety, economic competition, and environmental impacts. Special authorities own and operate ports and intermodal facilities. Local governments invest in infrastructure, manage traffic, and regulate the loca- tion and operation of freight facilities. As freight transport has evolved, so has the role of the public sectorâfor exam- ple, from active economic regulator of air, rail, and trucking from the 1930s through the 1970s, to providing minimal oversight of freight markets since the 1980s, but with increas- ing emphasis on environmental and safety externalities. A paper by Robin and Strauss-Wieder (2006) summarizes the roles of public agencies in the freight sector; Table 11 is a modified version of their Figure 2. It includes the major fed- eral agencies, as well as several categories of state, regional, and local agencies that play a significant role. Note that this is not an exhaustive list of agencies that have a role in the freight system. The rows in Table 11 are grouped by level of governmentâ federal, state, and regional/local. The table columns are grouped by function (system planning; infrastructure devel- opment, operation, and maintenance; funding and taxing; and regulation and oversight), and within each group there is a column for each mode (rail, truck, air, and waterborne). The pattern of filled cells indicates the prevalence of public agency roles and makes it obvious that regulation and over- sight are the most common activities of government. The table also indicates that regional and local governments often play an active role in freight. 3.1.1 Federal Agencies The FHWA hasâin addition to its role in facilitating the development, operation, and maintenance of the federal highway systemâsome specific freight-related responsibili- ties through its Office of Freight Operations. These include the following: â¢ Certification of vehicle size and weight standards, â¢ Freight research, â¢ Advanced technology operational tests, S e c t i o n 3 The U.S. Policy Context 26 This section is adapted from Giuliano (2011a), with permission from the Eno Foundation for Transportation, Washington DC.
63 â¢ Funding of freight infrastructure, and â¢ Freight-related professional training and development. The FAA is the safety regulator for the air transport indus- try and the operator of the air traffic control system. FRA is the safety regulator for the railroad industry. FMCSA is the safety regulator for the trucking industry; it develops, main- tains, and enforces safety regulations for drivers, carriers, vehicles, and equipment. It also regulates hazardous materials transport. The EPA has a major impact on the freight system through environmental regulation. The Clean Air Act of 1970 and its amendments set emission standards for heavy-duty diesel truck, locomotive, marine vessel, and aircraft engines. The EPA also sets water quality standards and discharge limits for water bodies that are enforced by the Coast Guard and the U. S. Army Corps of Engineers. The EPA is also charged with oversight of wetlands and of endangered species and habitats that are prone to impact by construction and opera- tion of freight infrastructure projects. Freight activities are also subject to noise standards and environmental review of major projects through the National Environmental Policy Act (NEPA). Standards for hazardous material transport are issued by the Pipeline and Hazardous Materials Safety Admin- istration (PHMSA) and are enforced by each modal agency. 3.1.2 Other Agencies State departments of transportation are also important actors in the freight system. They operate and maintain the state highway system, conduct short- and long-term multi- modal planning, and construct major facilities. The states also have the authority to regulate speed limits. Truck size and weight limits are established by the federal government, but states have some latitude in allowing longer combina- tion vehicles (tractor-trailer combinations with two or more trailers, known as LCVs) and higher weight limits.27 State police and highway patrols enforce state and federal safety standards. States with major freight nodes or high volumes of freight activity (such as California, Illinois, Georgia, New York, and Kansas) tend to have higher levels of engagement in 27 Truck size and weight limits are complicated. The first laws limiting size and weight were enacted in 1956; since then, size and weight limits have changed many times. State limits have been grandfathered at various times to allow previously established state-level standards to remain in force. Agency System Planning Infrastructure Development, Operation, and Maintenance Funding and Taxing Regulation and Oversight R T A W R T A W R T A W R T A W Federal Treasury/Customs Y Y Y Y Y Y FHWA Y Y S Y FAA Y Y Y Y FRA Y U.S Maritime Administration Y Y Y FMCSA Y TSA S S S S Y Y Y Y EPA Y Y Y Y Corps of Engineers Y Y Y Surface Transportation Board Y State State Departments of Transportation S Y S S Y Y State Environmental Protection Agencies Y Y S Regional/Local Port Authorities S Y Y S Y Y Y Y Y Y MPOs Y Y Y Y S S S S Local Government S S S S S S S S S S S Y Y S S R = Rail, T = Truck, A = Air, W = Waterborne; Y = Yes, S = Sometimes, Blank = No Source: Adapted from Robins and Strauss-Wieder (2006), p. 3 Table 11. Public agency roles.
64 freight-related planning and investment. States may develop statewide freight plans, collaborate with neighboring states to facilitate commerce flows, or directly invest in freight infrastructure. Far more numerous and diverse are the many local and regional public institutions. As with state departments of transportation, MPOs in regions with heavy freight flows are more likely to include freight in the formal planning and forecasting processes. Ports and airports in the United States are typically owned and operated by public authorities, which are special-purpose governmental units authorized by the state. Port and airport authorities are managed by governing boards that include representatives of industry, local juris- dictions, and other levels of government. Local governments have authority to regulate truck traffic on streets and roads, regulate the location of freight facilities (distribution centers and warehouses) and the hours of operation, and determine parking zones and standards. Local governments can have significant influence on freight activity. They can invest directly in new freight facilities, in roads to provide better access, or in favorable zoning practices to attract industry investment. On the other hand, through their management of the environmental review process and control of land use decisions, they can discourage industry investment. The ability of local governments and interest groups to influence ports, airports, and other intermodal activity is a major theme of the next subsection. Waterborne commerce is particularly complicated due to its international component. International shipping is gov- erned primarily by the International Maritime Organization (IMO), an agency of the United Nations established in 1948. The IMO is a voluntary organization; member states agree to abide by IMO guidelines on safety, pollution, and docu- mentation. Ocean-going vessels are governed by the rules of the country in which they are registered. They are entitled to the protection of the âflag countryâ while at sea, and they are subject to all safety, commercial, and operating regulations of that country. The ocean shipping industry consists almost exclusively of nonâU.S. flagged vessels. However, water ship- ping within the United States (including coastwise shipping) is governed by the Jones Act (Merchant Marine Act of 1920), which limits transport of goods or passengers within the United States to ships built in the United States, operated by U.S. owners, and operating under the U.S. flag. International waterborne commerce is monitored by the Federal Maritime Commission (FMC). It is charged with administering the regulatory provisions of shipping laws that apply to U.S. foreign commerce. As with other parts of the freight industry, shipping has undergone substantial deregu- lation. The FMCâs main purpose is to maintain âjust and rea- sonable practicesâ in U.S. foreign trade by administering the provisions of the Shipping Act of 1984 and the Ocean Shipping Reform Act of 1998 (i.e., to maintain an adequate competitive environment). Other functions include monitoring foreign government activities as they affect U.S. shipping and enforc- ing regulatory requirements on ocean common carriers. This brief overview illustrates the enormous complexity of freight-related governance. Of particular interest to this study are (1) the fragmentation of regulatory authority across different levels of government, (2) differences in governance structures across modes, (3) the absence of any federal entity that has full jurisdiction across modes, and (4) the potential of local governments to participate in all four of the major public agency functions. 3.2 Policy Trends There are three policy trends in the United States that are especially relevant to urban freight: (1) a growing disparity in federal surface transportation funding supply and demand, (2) the lack of a national freight policy or program, and (3) devolution of authority in surface transport to lower levels of government. 3.2.1 Federal Surface Transportation Funding The problems of federal surface transportation funding are well known. Two different national commissions have docu- mented the growing gap between revenues and system needs and have recommended a long list of strategies to address the shortfall (National Surface Transportation Policy and Rev- enue Commission, 2008; National Surface Transportation Infrastructure Finance Commission, 2009) Given popula- tion and employment growth, it is expected that transport demand will increase. At the same time, greatly increased fuel efficiency will further erode the revenue-generating capacity of the fuel tax. As this report is written, there is no political consensus on how to address the federal funding shortfall. The federal funding shortfall is relevant to urban freight for two reasons. First, as discussed in Section 1, the major freight bottlenecks are located in large metropolitan areas, particularly those that serve as gateways or intermodal nodes for the nationâs commerce. These bottleneck problems are perceived as ânational,â in that they are related to interstate commerce and economic productivity, and they are seen as being a federal responsibility. In an environment of funding scarcity, freight bottleneck problems are just one of many problems competing for funds. Freight is a relative newcomer to the surface transportation program, and, even as recently as the 2005 Safe, Accountable, Flexible, Efficient Transporta- tion Equity Act: A Legacy for Users (SAFETEA-LU), only a little over $5 billion was allocated for freight-related capital
65 28 SAFETEA-LU included other provisions to expand funding for freight, including expansion of the TIFIA program, establishment of Private Activity Bonds (PABs) for private freight investments, and an increase in the Railroad Rehabilitation and Improvement Financing (RRIF) program. Until the bank credit freeze in 2009, none of these programs had been widely used. Assessing the extent to which credit programs may address urban freight bottleneck problems is beyond the scope of this report. programs, a tiny fraction of the $244 billion bill.28 It is unlikely that freight project funding will grow in the current environ- ment. Without a long-established program, freight funding could disappear as core programs take up all the available revenues. The absence of federal funding options is relevant to urban freight also because this creates an incentive for states and local governments to develop their own options for dealing with freight problems. Because of this, there is great variation in the types of solutions being proposed and in the fund- ing mechanisms used to pay for them. There is also variation in the effectiveness of metropolitan areas in solving freight problems. For example, the Alameda Corridor was built on time and within budget, making it a national success story, while the CREATE project in Chicago has encountered many difficulties. From the perspective of a national freight system, reliance on local governments to solve bottleneck problems means that the efficiency of the national system is critically dependent on the actions of local and state governments. It bears noting that several TRB policy studies have addressed freight infrastructure needs, and a major topic is the extent to which federal funding is merited and the conditions under which it is justified (TRB, 2009, 1998, 2003, 2004, 2006). Various forms of pricing (e.g., road pricing and container fees) can both increase system efficiency and generate needed revenues. While many proposals for freight-related tolls and fees have been made, few have been implemented to date. 3.2.2 National Policy The 1991 ISTEA included provisions for freight planning, and the increased funding flexibility made freight projects eligible in various aid programs, but the first allocation of funds exclusively to freight came with the 1998 Transporta- tion Equity Act for the 21st Century (TEA-21), which included $1.1 billion for border crossings and trade corridors. Both programs were established as discretionary grant programs, but ended up as fully earmarked programs. SAFETEA-LU expanded both the border crossing and national corridor programs and added a new program for Projects of National and Regional Significance (PNRS). PNRS was widely viewed as a program for funding major freight projects. The border crossing program was restructured as a formula distribution, while the national corridor program and PNRS ended up as earmark programs. As noted above, several credit programs relevant to freight and intermodal infrastructure were also expanded in SAFETEA-LU. Taken together, these programs do not make what could be interpreted as a national policy for freight. There is no state- ment of federal responsibility or overall national system goals (beyond the general discussion of goals in the U.S. DOT Stra- tegic Plan). The prevalence of earmarking in the SAFETEA- LU freight-related programs suggests a funding allocation process based on political power rather than transportation system priorities (Giuliano, 2010). There are therefore not only no guidelines for state and local governments seeking to solve their freight problems, but instead a strong incentive to use earmarks to promote local agendas. Thus while the absence of federal leadership has allowed for rich and varied experimentation in addressing urban freight problems, it has also precluded the consideration of national priorities or a consistent national public policy. The recent passage of MAP-21 may signal a change in fed- eral policy, as it calls for the development of a national freight infrastructure policy, but no funds are attached. The PNRS is continued, but with funding at $500 million, it will provide limited federal leverage to implement a national policy. 3.2.3 Devolution Over the past few decades major shifts in the role of gov- ernment have taken place. Experts identify a different model of public service provision: one that is collaborative rather than authoritative, horizontal rather than hierarchical, and jointly provided by public and private entities. These shifts in the role of government also imply a different public decision- making processâone that is highly localized and fragmented, based on single-issue alliances, and incremental in nature (Kettl, 2002, p. xi). Governance scholars identify three trends that have led to this structural change: devolution, fragmen- tation, and privatization. Devolution typically refers to the shift of responsibilities from higher to lower levels of government. Devolution has a long history in transportation; the original legislation for the surface transportation program established a decentralized model, with the federal government providing policy guid- ance and core funding and the states doing the implementa- tion (construction, maintenance, and system management). As noted above, constraints on federal funding are providing an additional incentive for devolving responsibilities to state and local governments. Fragmentation refers to both the prolif- eration of governmental units and the dispersion of authority over public funds among them. Fragmentation in government is demonstrated by the growth in the number of local govern- ment units, particularly special-purpose governments over the past few decades (U.S. Census Bureau, 2002). Fragmentation
66 is visible in the transport sector with the increase in special authorities and single-purpose agencies, such as toll authori- ties or county-level transportation commissions. Trends in privatization take many formsâderegulation of industry, increased participation of the private sector in service provision, and a devolution of ownership of and authority over traditionally public services to the private sec- tor. Efforts to reduce the role of government in the transport sector began in the 1980s with deregulation of railroads, air transport, and trucking in the United States. Privatization efforts in the transport sector include proposals for private highways and the use of private capital in public infrastruc- ture. These trends have had a significant impact on public decision-making. Fragmentation disperses power and author- ity over many governmental units, complicating the decision process. There are some special challenges for transportation (Giuliano, 2007). These include the following: â¢ Network aspects of transport systems may not be managed effectively, because local decision-makers do not have an incentive to preserve network benefits if local costs are per- ceived to outweigh them. â¢ Inefficient decisions are more likely because those with veto power must be accommodated, and achieving agree- ment among multiple jurisdictions and decision-makers is a more time-consuming and complex process. â¢ Social costs and benefits tend to be perceived in the context of geography, so the smaller the decision units, the smaller the scale at which social costs and benefits are considered. â¢ A highly localized and fragmented decision process raises the standard for impact mitigation because only local ben- efits are considered. Transportation infrastructure tends to have narrowly focused costs and broad benefits, hence highly localized decision-making is particularly challenging. â¢ Fragmentation divides and obscures responsibility and authority. 3.3 Impacts on Solving Urban Freight Problems How do these policy trends affect efforts to solve urban freight problems? Following is a general discussion, followed by a discussion focused on local decision-making. 3.3.1 Impacts of Policy Trends on Decision-Making First, local decision-makers have no motivation for solving national system bottleneck problems, except as they affect the local community, and they also have little authority to do so. Railroads and trucking are protected by interstate commerce laws; local governments thus have limited ability to influence these industries. A common problem is at-grade rail crossings. The local community suffers delays at train crossings, but has no authority to restrict rail traffic or require the railroad to correct the problem. A frequently proposed solution is for the public sector to pay for a new below- or above-grade crossing. Local decision-makers argue that funds should come from higher levels of governmentâfederal or stateâbecause the problem is being generated by interstate commerce and the benefits of an efficient freight system are national. In a con- strained funding environment, such mitigation projects are difficult to accomplish. An illustrative example is the Ala- meda Corridor East (ACE) in Southern California. In contrast to the original Alameda Corridor, ACE is primarily a set of grade-crossing projects. The project is stalled due to limited public funding. Second, freight transportation problems are typically very visible: ports, rail yards and intermodal facilities are very large and significant elements of the urban landscape. Trucks are perceived as a major cause of congestion and accidents. Solutions to freight problems often involve major infrastruc- ture investments (truck lanes on freeways, consolidation and reconfiguration of rail facilities). Thus, transportation decision-making tends to be very visible and highly politi- cized (Altshuler, Womach, and Pucher, 1979; Dunn, 1998; Altshuler and Luberoff, 2003). Devolution changes the nature of the politics by increasing the number of participants in the decision-making process and empowering local governments and communities (Giuliano, 2011b). The combination of mul- tiple stakeholders, large and costly projects, and significant local impacts results in a highly contentious decision-making process. Often there is insufficient consensus; a process of law- suits and revised plans may go on for years or even decades. If consensus is reached, it may require substantial payoffs to various interest groups, adding to project costs and some- times reducing the effectiveness of the project. An extreme example is the I-710 expansion project in Los Angeles, which has been in the planning process for well over a decade. The current set of alternatives includes tolled âclean truckâ lanes, which are envisioned to be available only to zero-emission, heavy-duty trucks. Third, fragmentation affects the ability of government to address major problems. One of the most telling examples of fragmentation is that of air quality regulation. Freight-related emissions come from a variety of sources: trains, trucks, ocean vessels, off-road vehicles and equipment, and harbor craft, with trucks of all sizes as major contributors (see Sec- tion 1). All levels of government have some role in air quality regulation. Using Los Angeles as an example, authority over emissions is shared among the EPA, CARB, and South Coast AQMD as follows: â¢ On-road light-, medium-, and heavy-duty trucks: CARB, with approved waiver from the EPA.
67 â¢ Off-road vehicles and harbor craft: CARB and South Coast AQMD jointly, with fuel standards that exceed EPA stan- dards with EPA approval. â¢ Railroad locomotives: EPA. â¢ Ocean-going vessels: Subject to national standards by flag of origin. The international container fleet is primar- ily foreign flagged and hence is under the International Convention for the Prevention of Pollution from Ships (MARPOL), created by the IMO. In the United States, the authority for enforcing MARPOL standards is vested in the EPA, so the EPA has authority over local emissions and fuel standards for ships. An area of uncertainty is author- ity in coastal waters and the extent to which national and state governments have authority to regulate foreign car- riers within their waters. The South Coast AQMD, which has authority over sta- tionary sources and mobile sources not covered by the EPA or CARB, has responsibility for the regionâs air quality plan and its compliance with the Clean Air Act. However, a significant portion of air pollution comes from sources over which the South Coast AQMD does not have formal control. This lack of authority, together with growing public pressure to solve air pollution problems, has resulted in a number of actions: (1) The South Coast AQMD attempted to preempt state and federal authorities with its own regulations; (2) state legisla- tion was used to regulate or threaten to regulate the ports and port operations; and (3) ultimately the Los Angeles and Long Beach ports established their own mitigation plan, the CAAP. 3.3.2 The Local Environment Governance within U.S. metropolitan areas is highly frag- mented. Cities, counties, special districts, and authorities all play a role. Cities have jurisdiction over land use and the local road system and thus can greatly influence where freight activ- ities take place, what facilities and policies guide local pick-up and delivery, where trucks may travel, and the degree to which local policies are enforced. Counties have jurisdiction over the county road system and, in the case of âself helpâ counties, also raise funds for capital investments and thus influence the regional transport system. Special-purpose governments operate public transport systems, bridges, toll roads, and other facilities; build major facilities; regulate air and water quality; and conduct regional transportation planning. Large metro- politan areas have large numbers of local government entities. Multiple local governments generate a complex regula- tory environment for shippers and their clients. Design and capacity requirements for loading bays, parking limits, or truck route designations may differ from one city to another, creating challenges for trucking companies and others whose operations span multiple jurisdictions. Also, local freight is embedded within the dynamics of the larger supply chain. Delivery restrictions, for example, affect the routing and scheduling of an entire shipment system. Local regulatory actions have impacts throughout the supply chain, so the net impacts of efforts to reduce traffic congestion or emissions locally could be increased congestion or emissions elsewhere. Multiple local governments also create the possibility of competition between cities to attract activities perceived to be beneficial (e.g., white-collar jobs) and resist activities that impose costs (e.g., distribution centers). More affluent cities have more resources to resist unwanted activities, shifting them to less affluent locations and often generating significant social justice problems. Activities that generate negative externalities also influence surrounding land values; as land values decline, these areas are more likely to be populated by low-income and minority people, reinforcing the social justice problem. As noted above, fragmentation makes metropolitan-level decision-making difficult. With few exceptions, there is no regional governing body with authority to make land use decisions (hence the repeated calls for regional governance by urban planners and others). Thus the locations of activities that generate freight supply and demand (shopping centers and warehousing districts) are influenced by individual cities based on unique and highly localized considerations. Such location decisions may impose costs on neighbors in the form of truck VMT and emissions. The situation is somewhat dif- ferent in the case of major transportation infrastructure due to the key role of MPOs in creating regional transportation plans. MPO boards are made up of local elected officials and hence ultimately depend on some level of regional consensus. Fragmentation is additionally challenging in the case of freight policy because freight famously âhas no borders.â The global dynamics that drive freight flows are largely beyond the control of any one government. The lack of authority over these flows, combined with the external costs they impose, create especially serious problems for local governments, whose citizens are incurring the external costs. Finally, fragmentation requires collaboration and con- sensus building among jurisdictions in order for action to be taken. Examples include mitigating impacts of freight through traffic, truck, or rail emissions reductions, as well as consolidated delivery efforts. The review of best practices in Section 2 shows that innovative efforts are typically the result of collaborations across stakeholder groups and utilize mechanisms outside the traditional regulatory process. The next section elaborates on this point. 3.4 New Directions Faced with multiple and diverse local government partners and limited jurisdictional authority, metropolitan areas have turned to collaboration, consensus building, and engagement with industry to solve urban freight problems. Why has indus- try in so many cases complied and accelerated fleet turnover,
68 adjusted delivery practices, or employed new technology such as particulate traps, without formal regulation? 3.4.1 Voluntary Regulation29 Urban freight problems are at their core externality prob- lems. Moving freight generates noise, air pollution, and congestion costs that are imposed on the surrounding com- munity (and the global population in the case of GHGs) and for which those who incur the costs are not compensated. Typically externalities require government intervention to implement some form of regulatory strategy. However, when jurisdictional authority does not exist, or scientific evidence is insufficient to justify formal regulation, or the problem is considered too urgent to await the establishment of formal regulation, or when political opposition to regulation is par- ticularly strong, governments may choose various forms of voluntary regulation (Linder, 2010). Voluntary regulation can take a variety of forms, but in all forms the targeted industry participates by choice. A public voluntary program is initiated by government. The public agency sets goals and provides technical assistance and/or positive publicity to firms seeking to meet the goals. The European âgreen certificationâ programs are examples. Another form is a bilateral agreement, in which the public agency offers some benefit (technical assistance, relief from certain regulatory requirements, or an operating permit) in exchange for the firm meeting specific pollution reduction goals (Lyon and Maxwell, 2001; Alberini and Segerson, 2002). The voluntary speed reduction (VSR) program at the Ports of Los Angeles and Long Beach and the Dutch PIEK deliv- ery program provide examples. Negotiated agreements are similar to bilateral agreements, but they are achieved through collaboration with the targeted industry. The New York City off-hours delivery demonstration program is one of the most visible examples of negotiated voluntary regulations. Finally, there is self-regulationâan individual firm or industry com- mits to a course of action, such as Wal-Martâs commitment to âgreeningâ its supply chain, or FedExâs experimental use of electric delivery vehicles in urban areas. There are several possible explanations as to why indus- tries or firms would engage in voluntary regulation or self- regulation. The first is social legitimacy. Firms must operate within âinstitutionalized norms of acceptabilityâ or accord- ing to social norms and expectations (Bansal and Roth, 2000, p. 202). If a firm does not fulfill social expectations, it risks losing customers, business, and profits. Thus, as social norms change, so does firm behavior. With growing public attention to sustainability, it is not surprising that consumer-oriented firms are âgoing green.â The second and related explanation is social pressure placed on firms by clients, stockholders, or citizen groups. Pressure can be applied through lawsuits or local activism, imposing high costs on firms and affecting their reputations (Linder, 2010). A third explanation is the threat of regulation. Companies may choose to go beyond what is legally required by govern- ment regulation in order to preempt stricter regulation (Lyon and Maxwell, 2001; May, 2005) or to gain competitive advan- tage (Desimone and Popoff, 1997; Schot and Fisher, 1993). Preemptive moves can be taken for several reasons: to avoid stricter regulations, to weaken pending regulation, or to dis- advantage competitors (Lyon and Maxwell, 2001). Operating beyond compliance can also be a strategy to obtain recog- nition from government and communities, an improved working relationship with regulators, access to technical assistance and resources, and lower regulatory transaction costs (Fiorino, 2006). Voluntary behavior may also help to set future standards, providing a form of first mover advantage. The fourth explanation is the business case or eco- efficiencies. More efficient operations can lead to cost savings (as in the case of reduced packaging) as well as environmental benefits (less waste). Eco-efficiencies may lead to development of new markets and customers (reduced packaging attracts environmentally conscious consumers) and contribute to social legitimacy (Clifford and Dixon, 2006). Eco-efficiencies are debated in the literature: eco-efficiencies may require large up-front investments that are not fully offset, and, in a competitive industry, it is unlikely that opportunities for efficiencies would not be exploited (King and Lenox, 2001). Whatever the motivation, it is apparent that voluntary regulation is an important tool in managing urban freight problems. The policy and governance environment make negotiation and offering of incentives often the most feasible and effective means for achieving mitigation objectives.29 This section is adapted from Giuliano and Linder (2012).