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From page 163... ... 4Government Responsibilities for Freight Infrastructure The study charge asks the committee to analyze the rationale for public investment in freight transportation projects of national significance and to develop criteria for defining national significance. This chapter analyzes government responsibilities in three steps. Read the entire page →
From page 164... ... 154 Funding Options for Freight Transportation Projects transportation. Second, governments impose charges (e.g., tolls) Read the entire page →
From page 165... ... Government Responsibilities for Freight Infrastructure 155 The policy issues raised by such proposals for changes in government responsibilitieswere themotivation for the committee's study charge. The likely consequences of proposals for major alterations to public–private or federal–state roles must be carefully evaluated. Read the entire page →
From page 166... ... Limits on Government Capabilities Whenpresented as general statements, the rules outlined above aremostly noncontroversial. The TRB Freight Capacity committee noted that they appear in federal executive agency policy statements and in legislation (TRB 2003, 120–121) Read the entire page →
From page 167... ... Government Responsibilities for Freight Infrastructure 157 BOX 4-1 ExternalBenefitsof Freight InfrastructureProjects The justification for public subsidy for an infrastructure project depends on an argument that the project is worth more to the public than it is to the users. Otherwise, the project could be funded with user fees and the subsidy would be unnecessary. Read the entire page →
From page 168... ... BOX 4-1 (continued) External Benefits of Freight Infrastructure Projects The TRB Intermodal Freight committee considered the relevance of external costs and benefits of freight transportation as warrants for government involvement in infrastructure development (TRB 1998, 30–32; Eberts 1998) Read the entire page →
From page 169... ... Government Responsibilities for Freight Infrastructure 159 BOX 4-2 Public and Private Benefits Proposed definitions of government responsibilities often characterize project benefits as composed of public and private components and apply this distinction in determining the appropriate division of responsibilities for paying for projects. For example, with regard to projects jointly funded by government and the private sector, it is often said that the government role is justified by the expected public benefits and that shares of project expenditures should be divided between the government and the privatesector parties in proportion to relative public and private benefits (Waterfront Coalition 2005, 19; NSTPRSC 2007, 58) Read the entire page →
From page 170... ... 160 Funding Options for Freight Transportation Projects BOX 4-2 (continued) Public and Private Benefits the initial outlays to pay for these measures. Read the entire page →
From page 171... ... Government Responsibilities for Freight Infrastructure 161 illustrates that the risk of unsatisfactory outcomes is real, a new intervention ought to be justified not only by a qualitative argument about market failure but also by quantitative evidence that the practically attainable benefits of the action will exceed the costs (Box 4-3) Read the entire page →
From page 172... ... 162 Funding Options for Freight Transportation Projects BOX 4-3 (continued) Practical Risks in Expanding Government Involvement in Freight Infrastructure (including income generated by the external grant) Read the entire page →
From page 173... ... Government Responsibilities for Freight Infrastructure 163 cultivation of more widespread understanding of how government interventions, particularly investment decision making and facilities pricing, affect the performance of the transportation system; and (b) institutional arrangements that give system users, through the working of the freight transportation market, more influence over governments' freight facility investment and operating decisions. Read the entire page →
From page 174... ... 164 Funding Options for Freight Transportation Projects programs; and an examination of the relevance of the "national significance" concept in defining the federal role. Scope of Responsibilities The federal government's existing responsibilities relating to freight infrastructure provision are extensive: provision of grants to state and local governments for highway and airport construction; collection of revenue, mainly from user taxes, to fund these grant programs; direct federal provision of the inland waterways, harbor channels, and the air traffic control system; regulation of safety and environmental impacts of transportation; economic regulation that includes oversight of rates and competition in the railroad and ocean shipping industries; border controls; general tax provisions that influence investment decisions of governments and private firms; and research and information services. Read the entire page →
From page 175... ... Government Responsibilities for Freight Infrastructure 165 BOX 4-4 Federal Government Activities Affecting Freight System Performance and Infrastructure Development Funding Aid for Capital Expenditures Federal-aid highway program Airport Improvement Program Freight rail assistance: Railroad Rehabilitation and Improvement Financing program; short line railroad investment tax credit Direct Federal Construction, Maintenance, and Operation Inland waterways system Air traffic control system Harbor channels Marine navigation aids Dedicated User Fees and Taxes Aviation: aviation excise taxes, airport passenger facility charges (federally supervised but locally imposed) Highway user taxes: motor fuels excise, heavy vehicle use tax, truck equipment excises Inland waterways fuel tax Harbor maintenance tax (continued on next page) Read the entire page →
From page 176... ... 166 Funding Options for Freight Transportation Projects BOX 4-4 (continued) Federal Government Activities Affecting Freight System Performance and Infrastructure Development Security and Border Controls Transportation security operations Customs functions Border immigration controls Agricultural inspections Regulation Transportation safety Federal-aid highway program standards (highway design, construction, operation, and planning) Read the entire page →
From page 177... ... Government Responsibilities for Freight Infrastructure 167 Similarly, proposals for expanding federal responsibility that the committee reviewed (described in Chapter 5) call for more active federal engagement in planning and guiding the development of the freight system through direct federal investment, through federal action to redirect state and local investment priorities in favor of projects serving freight, and through subsidies for private-sector investment. Read the entire page →
From page 178... ... 168 Funding Options for Freight Transportation Projects develop proposals and seek federal government participation. In these projects, the federal government would be a provider of backup credit and an absorber of risk, not a source of grants (TRB 1998, 101) Read the entire page →
From page 179... ... Government Responsibilities for Freight Infrastructure 169 awarded as part of USDOT's National Strategy to Reduce Congestion illustrate this function) Read the entire page →
From page 180... ... 170 Funding Options for Freight Transportation Projects Specific actions to strengthen federal supporting activities will be proposed in Chapter 6. Identifying Projects Requiring Federal Involvement The study charge asks the committee to identify criteria that can be used to select projects requiring public support. Read the entire page →
From page 181... ... Government Responsibilities for Freight Infrastructure 171 teria, as specified in legislation and USDOT implementing rules, are as follows: • TIFIA: Projects may be a public highway or transit facility or a privatesector rail or intermodal terminal facility that has state or local government endorsement (that is, the application for federal assistance must be from a government agency) ; eligibility is restricted to projects that are large and economically important; the majority of project funding must be from facility revenue or other secure nonfederal sources; and selection is to favor projects that would be accelerated by federal assistance and projects in which federal participation would attract private-sector investment in the facility. Read the entire page →
From page 182... ... 172 Funding Options for Freight Transportation Projects The Secretary of Transportation has discretion to select the projects authorized to issue bonds within the act's cap on the total volume of bonds (SAFETEA-LU, Section 11143) .USDOTrequires that applicants be prepared to issue the bonds promptly (FHWA n.d.) Read the entire page →
From page 183... ... Government Responsibilities for Freight Infrastructure 173 BOX 4-5 European Union TEN-T Program The European Union's TEN-T program is an example of a process of identifying transportation projects of (in this case) continentwide significance (European Commission 2005; NEA et al. Read the entire page →
From page 184... ... 174 Funding Options for Freight Transportation Projects BOX 4-5 (continued) European Union TEN-T Program projects crossing natural barriers, solving congestion problems or corresponding to missing links. Read the entire page →
From page 185... ... Government Responsibilities for Freight Infrastructure 175 cance" used in U.S. policy discussions. Read the entire page →
From page 186... ... 176 Funding Options for Freight Transportation Projects because these parties lack the necessary resources or do not see the project as sufficiently beneficial to their local constituents (European Commission 2007, 56–57, 81–83) Read the entire page →
From page 187... ... Government Responsibilities for Freight Infrastructure 177 3. Insufficient local capability: State and local governments are incapable or unsuited for carrying out the project unaided (or at least there is a risk that theywould not be able to carry out the project successfully) Read the entire page →
From page 188... ... 178 Funding Options for Freight Transportation Projects • The federal agency must have the ability to verify sponsors' project evaluations. Project sponsors normally would be required to prepare evaluations (following federal standards) Read the entire page →
From page 189... ... Government Responsibilities for Freight Infrastructure 179 private sector. These should not be common because nearly all projects that pass the economic viability test ought to be conducted by the privatesector owners of these systems. Read the entire page →
From page 190... ... 180 Funding Options for Freight Transportation Projects how to screen out projects that probably would be successfully completed without federal aid. The Freight Capacity committee's criteria above give three circumstances in which state and local governments may be unable or unsuited to carry out a project alone:where a project fulfills essential federal responsibilities, where a conflict exists between local and national interests, and where the scale of a project is beyond local resources. Read the entire page →
From page 191... ... Government Responsibilities for Freight Infrastructure 181 project. Projects requiring multistate cooperation appear to be a category inwhich federal facilitation could be valuable; however, as noted above, no established federal mechanism exists for fostering multistate cooperation in transportation projects. Read the entire page →
From page 192... ... 182 Funding Options for Freight Transportation Projects analysis of whether the federal assistance was necessary for the assisted projects to proceed. It concludes that "severalmore yearsmust pass before the Department can assess the program's actual long-term costs and benefits" (USDOT 2006, 8) Read the entire page →
From page 193... ... Government Responsibilities for Freight Infrastructure 183 on federal participation. These features relate to project size, institutional complexity, the likely availability and cost of financing in the private credit market, and special federal responsibilities. Read the entire page →
From page 194... ... 184 Funding Options for Freight Transportation Projects become necessary as traffic increases in coming decades. The conception of these projects is that they are large (in comparison with typical transportation infrastructure project costs of past decades) Read the entire page →
From page 195... ... Government Responsibilities for Freight Infrastructure 185 BOX 4-6 Projects of National Significance: Past Uses and Definitions The TRB Intermodal Freight committee cited uses of the term "project of national significance" in the 1990s to designate a category of freight project that merited federal assistance. The 1994 report of theNationalCommissionon IntermodalTransportation recommended that "Congress should provide special funding annually to support some number of intermodal projects that are truly of national or regional significance" and that "such projects should be eligible for supplemental funds from the Federal government due to their national significance." USDOT's 1996 National Freight Transportation Policy Statement declared that "Federal participation may be appropriate when infrastructure investment projects have a national or regional significance" (TRB 1998, 54–61) Read the entire page →
From page 196... ... 186 Funding Options for Freight Transportation Projects BOX 4-6 (continued) Projects of National Significance: Past Uses and Definitions program (71FR41748, July 24, 2006) Read the entire page →
From page 197... ... Government Responsibilities for Freight Infrastructure 187 The case study projects in Chapter 3 and the other major projects cited in this report illustrate that large projects are being carried out today by governments and the private sector with the institutional structures and finance arrangements that are now available. The megaproject model exemplified by the Alameda Corridor and CREATE does not correspond to themost typical pattern of development of infrastructure systems. Read the entire page →
From page 198... ... 188 Funding Options for Freight Transportation Projects transportation projects merit extraordinary federal support or involvement. Indeed, any substantial freight transportation infrastructure project that is expected to yield benefits is significant to the national economy. Read the entire page →
From page 199... ... Government Responsibilities for Freight Infrastructure 189 waterway transportation is receiving a subsidy because the fees and special taxes that operators pay are less than the cost to governments of providing facilities to them, then the railroads will not build some capacity that would be economically beneficial (i.e., the cost savings to shippers and to government transportation agencies would exceed the cost of building and operating it) because competition from the subsidized alternative modes prevents the railroads from charging rates that would make the investment attractive. Read the entire page →
From page 200... ... 190 Funding Options for Freight Transportation Projects railroads after 1980, the federal government, through the Surface Transportation Board, retains oversight of rail rates to prevent railroads from exercising monopoly pricing power in markets where competition is weak. Railroad mergers are also subject to review. Read the entire page →
From page 201... ... Government Responsibilities for Freight Infrastructure 191 ments are granted subsidies, then the risk to a railroad of undertaking an unsubsidized improvement has increased, since it may be undercut by a competitor who develops a service with help from a subsidy. Indeed, after the federal grant to construct the Heartland Corridor rail project (described in Chapter 3) Read the entire page →
From page 202... ... 192 Funding Options for Freight Transportation Projects the costs are too great. One way to manage local freight traffic impacts is by pricing; congestion pricing on highways is a well-known example. Read the entire page →
From page 203... ... Government Responsibilities for Freight Infrastructure 193 Truck Program at the Ports of Los Angeles and Long Beach (described in Chapter 3) is a capital project paid for in part by fees on shippers for the purpose of community impact mitigation. Read the entire page →
From page 204... ... 194 Funding Options for Freight Transportation Projects In summary, the burden of paying for freight-related infrastructure improvements should be assigned in a way that promotes economically efficient development and operation of the transportation system. The surest way to meet this objective would be to fund improvements with revenue from charges paid by users of the facilities constructed, although practical constraints will prevent this solution in some cases. Read the entire page →
From page 205... ... Government Responsibilities for Freight Infrastructure 195 traffic or that would replace market-driven investment decision making with government decisions would be vulnerable to these risks. Governments have an essential role in overcoming institutional and political obstacles toneeded infrastructure development and in controlling environmental costs of development. Read the entire page →
From page 206... ... 196 Funding Options for Freight Transportation Projects Cambridge Systematics (in association with Battelle Memorial Institute) Read the entire page →
From page 207... ... Government Responsibilities for Freight Infrastructure 197 Oates, W Read the entire page →

From page 163...

... 4Government Responsibilities for Freight Infrastructure The study charge asks the committee to analyze the rationale for public investment in freight transportation projects of national significance and to develop criteria for defining national significance. This chapter analyzes government responsibilities in three steps.