NATIONAL TRAROPORTATION POLICIES THROUE:: SHE YEAR 2000 National Transportation Policy Study Commission Final Report June 1979 oak Ary UNIVERSITY OF ILLINOIS URBANA, ILLINOIS This book is treated as a RESERVE book = See the POSTED RULES It MUST be returned to the desk If loaned OV&RNIGHT - it must be returned by 9:00 a.m. on the day after it was loaned if the library is open AUTOMATIC FINES will be assessed for violations ; POLICIES ~ THROUGH THE YEAR 2000 “National Transportation Policy Study Commission Final Report June 1979 Chairman Bud Shuster United States Congressman - Pennsylvania Library of Congress Catalog Card Number 79-600020 For sale by the Superintendent of Documents, U.S. Government Printing Office, Washington, D.C. 20402 NATIONAL TRANSPORTATION POLICY STUDY COMMISSION 2000 M Street, NW., Suite 3000 Washington, D.C. 20036 202-254-7453 Hon. Bud Shuster, M.C. ees June 25, 1979 The President Honorable Walter Mondale Honorable Thomas P. O'Neill, Jr. The White House President of the Senate Speaker of the House of Washington, D.C. Washington, D.C. Representatives Washington, D.C. Gentlemen: I am pleased to submit the final report of the National Transportation Policy Study Commission prior to July 1, 1979, as authorized by Public Law 94-280, as amended. Congress charged the Commission to study the transportation "needs, resources, requirements, and policies of the U.S." through the year 2000. This was a broad mandate and required investigation of all aspects of the transportation system. The report analyzes passenger and freight transportation needs for both domestic and international markets. Based on these analyses, it makes far-reaching policy recommendations. The Commission believes that implementation of these policies will foster a healthy, responsive transportation system to serve the needs of the American people into the 21st century. In submitting this report, I, as Chairman, would be remiss not to praise the efforts of my fellow Commissioners. Although they carry other heavy responsibilities, they responded to the additional duty of serving on the Commission with a commitment of time and energy that made this report possible. It is significant that the final report was unanimously adopted by a vote of 18 to 0, although, obviously, not every Commissioner agrees with every recommendation. I respectfully submit this report and commend it to your consideration. Bad Shunde BUD SHUSTER, M.C. CHATRMAN eee ‘HOE, | Se00T 210) notgriniene | Cod TeARS NR: a. ZO" 2 eee R 28 pM ik “4h ‘1 > sg - ; as 7 ce / a y i tae ¥ vs Rey au vo = an oe , ; ae nate . iF 7 —s BE colle ww? wri eee ainie of Peetarinte Vv ? ae ie n¥ ib o Cc Wa hheaey ' Site aS a shale < t) 4 i ; ° ¥ . Paco taty ipl fre ae: cM en ries i | r Ts DOs ier tay: Can 7 al ‘. 2 * ) Mi ve ty i} at a) - # 19 | ue } , CM 3 6 berctrs A ee fe Sire or " ee ‘ Ls ve ares ee AR Sie as Hie sie as wef | “ee sai Herbjpcditindeny toth oaak ee aim nt Lot by Caneel : ey rad be , I, Ss PGs een hts % ‘Bon ; a y Ps ean a vb! “we ve ee ‘58 5% o! sO Seer arcane 2s) >i te kal Chad tlds byt MEE 0) st ee \ Pie (2 a Iie ’ 5 Gat) Br ha. boris ; ( i } i a : ; * " , ee at ig pease S Seb to aft - - . | ae | ay he ; xe 7 ' ee 5 ky rr ’ : “ “ a. 1) a. S ” 7 5 tl , . i Rite Pa ae na en oe sthsly rie f . het +) 720 Bs STAM i, A vig . a i . yg) aks ote MS, vit Tas, ag, ORS f 6X) o esc - oe: ebel , ut? On ajo =useor' a : So a ; ; I ‘ : vi Xi. 4 why wg ot rank: brainy | . (Oo yee ae as My sb A Vaid? , Yo, he : agi py Rang x Ane | F : { " Lo ‘ | | ne one Ya wr ik =, » £9 ih he : ’ erie, sf f i Latent eat NTPSC Commissioners Chairman Bud Shuster United States Congressman Pennsylvania Glenn M. Anderson Russell B. Long United States Congressman United States Senator California Louisiana Benjamin F. Biaggini James C. McConnon Chairman and Chief Executive Officer Attorney and Member of the Board, Southern Pacific Company Southeastern Pennsylvania Gilbert E. Carmichael Transportation Authority President James L. Oberstar Carmichael Development Company United States Congressman William F. Cellini Minnesota Executive Vice-President Illinois Asphalt Pavement Association and Former Secretary, Illinois Department of Transportation John H. Chafee United States Senator United States Senator South Dakota Rhode Island Gene Snyder James J. Florio United States Congressman James D. Pitcock, Jr. President, Williams Brothers Larry Pressler United States Congressman Kentucky New Jersey John G. Tower Mike Gravel United States Senator United States Senator Texas Alaska William H. Tucker Richard L. Herman Attorney and Former President and Chairman of the Board, Chairman, Interstate Herman Brothers, Inc. Commerce Commission James J. Howard _ Harrison A. Williams, Jr. United States Congressman United States Senator New Jersey New Jersey Former Commissioners Brock Adams James B. Pearson Former United States Congressman Former United States Senator Washington Kansas James Buckley Former United States Senator Fred B. Rooney New York Former United States Congressman Alvin L. Feldman Renney iia President, Frontier Airlines Robert T. Stafford Vance Hartke United States Senator Former United States Senator Vermont Indiana Dale Milford James Wright Former United States Congressman United States Congressman Texas Texas Digitized by the Internet Archive in 2022 with funding from University of Illinois Urbana-Champaign Alternates httos://archive.org/details/nationaltranspor0Onati NTPSC. Staff John E. Wild John W. Fuller Elizabeth M. Singley Directors Edward J. Bentz, Jr. Samuel C. Colwell Edward R. Hamberger J. Kent Jarrell Daniel P. Solon Richard K. Taube Arthur L. Webster Il Impact Analysis Kate T. Beach Todd M. Berko Stephen Ceurvorst Gretchen Coar Elaine M. Conley Jeffrey S. Gutman William K. Hooper, Jr. Executive Director Deputy Executive Director Administrative Assistant Director, Impact Analysis Director, Transportation Systems and Special Studies General Counsel and Director, Public Participation Executive Counsel and Director, Administration Director, Public Participation (1977) Director, Policy Development Director, Policy Integration Lawrence R. Kahn A. Barry Melnkovic David B. Nemschoff Harry Schleifer Susan Schwamkrug Lawrence Slater Barrett M. Williams Transportation Systems and Special Studies Jane F. Daly DuWayne A. Koch Bruce A. Lederer Joseph H. McCann Michael E. McCulloch Helen E. Ramatowski Annemarie H. Reimer Benjamin J. Ritchey General Counsel/Public Participation Leslie Berkowitz Gerri G. Carrington John W. Crutcher James C. Edgar Kenneth House Edwin J. Kirschner Donna L’Heureux Joseph A. LaSala, Jr. Mitchell A. Luxenberg Elizabeth A. McCormick Ronald M. Shapiro James T. Williamson vii vill Administration Research and Information Services: Nancy Aiken Janice W. Bain Eileen M. Bartscher Sharlyne J. Braude Dennis S. Carroll Ann K. Christy Administrative Support: Lorraine L. Archer Lorretta A. Barnett Judith W. Blaschke Douglas B. Butler Mary Beth Cerjan Rodney T. Davis Valerie W. Floyd Janeen M. Granakis Vikki M. Green Rebecca E. Hamill Rose A. Hayden Meri-jo Helmink Peggy L. Helmink Jacqueline R. James Policy Development James O. Butler Tulinda Deegan Douglas A. Durante Patrick S. Healy Patricia A. Klaas Policy Integration Edward M. Miller Staff on Loan from Other Agencies: Barbara S. Davies M. Karen Gamble Margaret C. McGrath Mark Mulligan Rexford B. Sherman Audrey B. Wharton John C. Katz Jean C. Kuebbeler Jean Lee Sydney A. Lee Phyllis Lutsky Cary S. Melnyk Anthony D. Newell Charles A. Ossola Nancy L. Perlmutter Cecelia E. Roots Nancy L. Rose Debra B. Smith Linda Sokolowski Richard P. Kowalewski Douglas J. McKelvey Leonard Merewitz Rolf R. Schmitt Paige L. Wenrich Alan E. Pisarski Meri A. Bond, Environmental Protection Agency Brent D. Boyd, Department of Defense James Sawyer, Resources for the Future (on a grant from the National Science Foundation) Norbert Y. Zucker, Department of Transportation, Federal Railroad Administration Contents Listiomr igurcsem ee tee ee fe ess Lee Pewee ies cp Oe eee, LSC OL tapiese tor eee Pee mse Ge RS hee LA ee SS oor 0 SION RICE oe Ors piel Pret aCen meee a nee tee eee i Pe eee een ee, ee eee ee eee ee eS Transportation Activity and Institutions ............................. 4 Transportation Functions, Institutions, and ActivityintheU.S.........................-. TNE UNCHONSIOMtranSPOntaciOn we tebeeeet ko calc: chs Mote P oat, WoMGN ee EUROPE) PsP cE an Meme merna hy meee Meee cal to's Tneroveraliscoperor transportation inthe U.S: ;CCONOMY a.4.). sy eh ae mena ohne een Gee hh eee eee gc ee INGTUT ALC SOULCE LSC Sem ae Menem Marae, castles att Loe eM aeRO el ea eee ee R Ca ROMS eT La epetete 6 Ors eid, 6 lala ag MEA SOL COCOMBLNSLITU LION Sar pateemc sire sah eect oUt at a tai etn Meee ton eo ec ea Ree ORT ote eh OE ean ee Ae oe ee Pee CTOLIVATESSCOLO Meme ee Oia Ne Nhs hs Bee ie Fa es EN oe ea ae ee oe SLE Boe Bache a kke hed vbeishe eet eadee ns keer A CSOUDIIC SCECTOL. sien ge pease on [ey ak os) ot ae io ES eee Ve ee et Oe ee ee ase orn te bas Pee na . [Institutions anc activityernntie local transportation: Mmarket!:; .o) a 4.0 2) as cee ckcursuel cts) © Su lat ey: ou Glee a) sa clueculeeuegs os ite LAS ULUTONS “ULC vCOELAL. (Ol Gi Wal on cr. 4cm 6 REE Lh cect OM te Coo eM WLM eRe Te Cok oS eee Raw emtiiegiod <4 Slick ae choke des POSSCTIGCIAITAVGI = LIL OIE AITO TUT AIORRY «oc neh ea teed oy ered ed Coe he can ce OF OR oT ERS ol ER Pee HD ee Beech on heh seek ci oom e reign tatransportation—Ubale and SUlal a mapce cna tet otek. haRonetohebcns cheeks Meee eee ee ee eee Ce Sie institutions andractivityainitine intercity: transportation market 2 ..625.) echt otc an etel ot ctet ch Aree cht tet tc Re ace POSTICUTIONS INE RCOCL AIOE sa. ge enc) J is oe eae kee Asldas 26 ba battens Acide de Yo Wot de 4c Ae ee EE Ae eek ates PASSGIGCIAFAVEGI—- (CCL CI LY a Bo dva ny oc + gales ating eee hes he ees ao gis a GA ae Ao EAC he Stl ciad gek se ROMO: SOEk a he EVE ION TALLOMSDOTL—TINCGICLCV sone do ges ae AS as Bae. vd, Go: ave us As ds) eae ts WET HE cles HE Foe a EE TIONED pe ah alts INstitutions ana activity un thenternational markets. i... <9... kclcme lhe telat Pe Benen Me eee et. taf he. tates eats nc clos sue LTSCITUTIONS ee eee. ee a, as ee eg he ah Mo nee Moet os tlre ee ee etm sr ete liste ie PASSENGEIAS AVE! —INEFNatlONal ste pee «otc ee At et ee TE At, ote alhas SMe ee et Ome tea et oe ae a ok a ve ETEIGNT CraniSOOTCINtel NaAtlONale cancer 0 ogc ccte ca) al clee hciaz hola hate Aectie Altes twats chloe GEREN ARRAS SORES eck SUT OLY Seem EMEC SMC er dove oa cad aks Fe & vines Cine oR CeS hn a Syed ORG CRT RCA CR TN OL CASAC Wie how cae MER cae eE Oe Ue 2 Federal Transportation Policies and Programs. .............. 2... cece eee eee eee ee eee Aine Lil arm een ra we ee ik ee Br ne ee en et CR ee Ore wo Cue RES Welu 5 iw. ioe ltel Gay edge pike ch heh Jarelee ResearchaporOach meer neta: Beant Eee a Ls prota), 4h cao va Shon pete ee vases ike meme, sus) ec) sw Ps leant ue. oto te loti Spe, oun asd8, ahs Institutionalisources of USatransportation policies;and Programs we eyem. cat ot aks cred ce sete at ole ital et oo) ele ee ele COMGIESSION al (COITITILICES 0 tev: 3) cla ol ck saute ey ete to® stl) GMoae. ols Re ee Me hone Me AEE Heo Cobia ceo ire pa! oA pie te web Rederatiagencies (legislative. executive, and (NGEDENGeNT) © ai syauess io se neas shee gods Syskeurhe s.scc = sues ses 66 oe IO: ACN CIALY ame Ee Ge. ook RA ed ee Pe eFC SCG, ce eeI PE A or aaaer Munaaigte e+ We . WREST an. FaeraletransoOnidtronzDOlicies: And PFOOLaIniS wveucmee iaehiet aotictasmcs mires oratciaier Gi clis ciel cio yemjeusen @uecce 4s el sae. covey AMINE PRE) wc META ETA OATS Oe Oe SE Bene Be. ios oo HO Bea Nae Gene, Ea COU Cone ee Pee Eee em teepen i oer LOILET DATING K CLA TERE oot dhl Uae rs Sek cle ate RE TNE, cel etches Neuer ys ctis shes Fete Bed 3, bet nisuas, sh co,) doa, \iwe le eae ape po st TL DGLELIPA LIN ALK C UMMM ae Atte ares ses ee a aes was a volyal sh) ot hei tiaak teh atch beieh esl Se Rckss. o @ oey oe Ae eae —_ =e att att ott od oD OONUHNO2=2OCHOHnH HT EBK BWWwW WD a NN = © N N “8 State and Local Transportation Policies and Programs. ................. 0 cee eee eect eeee {Introductions gus) co nucle. Smiter aeleacauit wh als) Sis 'o © ca te Seis Wha at Gt eu ke RIS) ac) Cee ee a et ee Background of intergovernmental relations . 2... 0 ee ee re ee ee ee ee et et et we ee ee ee Phases in intergovernmental relations. . . .. 25 21122 ee ecw es eee eee rere sens Whe VL cake ec eels goiter tat tie Institutional; frameworks co coc. cs Gem ene ees 0c whol 4) a) se pana tetas IR ee es ees cts et es el ae Statasinstitutions lc ak eae en ee lk a be ew a es ecient tt TR DRC RanTe Sele Ma oI RER Sen leat a ota] Polite cate oe eevee One nene Local INStiEUTIONS cco co cha oc Serie bao oe Cad o Soe a Pas hace (sen hs dae aout oi aa nik Roe edt ee ok aol ea Maat Me Nene eM Multistate regional organizations . 24 6 6a 60 6, a doe whe as ema ehelgr (eten see (6 Gane ahr) >) oem ee) En State and local transportation programs . «6. 60s be + we ein ot eerie hs) ele te Ue egecire rele cell ele! Felice) «ete 7 ee Planning’ 2 voices «oa cn 5) od bce Wee 5 0 ont ectodhe.cap op pun ei eo eee nee ei ren on na Finance and operations. 6... << 64 Sie te oy hm, owl ie meee aliee oiiel oot Ret ees ieek ae olga etre vi ented ne et Reégtlation.., 6.6 sis 6 4m Wace hte & Bb eue le op » ple 2 ene els. @ Oueme ee aney ere deine ellen esha. tee State and local transportation, policies). 29 -0<, ¢ cs) ous ce ele at own ome 20g Sy ne miata rete SNR ov oMe tN ott eed TOC os oie atest a ie ea State government (ole. 603) Fgh a ote ots pee oe my ee oes 0) eye mieelin te omen tiem ee Me ras oe os eer We ete SD) Pte bain eats RAS Teh Co nate ine te pe Crh uel pind Sm: ee 97 PLATGUIOCWAVATLGIISDOS LATION me. ni =. etal ie) ute hetta ie, mo ONL elses Oe eee. Gis (Cale) Opt gikb oe el oe ilies ele ae ss 98 A eer ASI NCA Cid ME Te eB Re aici eee ytie. cook an ws cet TES hie oh oe Sow ah Sate eine aie ees Sia ka tagil is a. 99 RAAT NERA SDOLIid COTM eae Beets eB Sf. 5k Ae Gos SiBhVe ME Rie ed sl, ee a oe eaeteMiac eas 2ita Gade falas atusi ye 2's! <6 100 PIDEMMOMLOULIOLLELION a SUEY 1 DIDO MeS me Bets. <1). 5 )-/der dieses aad cate oe x day eel oe cal lad tte bo agai 6) 0d. te 102 PROVEN Ten DEnelitsilOut transport tecniOlogy INNOVAU/ON oe arena see el tee ye) en sts chia) oe eich ce ree a eee ce ate ses) = oe = 102 EADIE TOTS. 6 un cece 6 a. BAGG ch Ome Pair aa are che ten race ere ee 1 Rene. OCP A th ar arr eer 104 MNNAGE OL COMMENCATION SLECUNOLOGV ON transport GEmMmMand. . meant aii) oe etn eta eeuianie) teres = eae 105 Pata ATISACL ONS ea meiie B ene mew aoa Pikes le ae sy Glen oe eect ah as ae ED ence ee MERE re Geis seit antag ta wae Sao)! 4 105 VECesaiG VIGGO COMMUN ICAU ONS ® atk oL caste) orc) tite chs MAE eae oP aie So) See GL 7) mates Sle P ees Whsiots s\*’ & 106 Puture. or communications TECHNOLOGY A. 6 Fe ee On oe rete er eee kM) ee Se Lt Ss et peeks ng te 106 CORGHISTON Sip ana e Mde seit, els) Ge a Ga ous) erage ogee ee SAE les ok leprae tated va aylen Shey aol, ARO MMEAIONS ca: 106 SSCITTVLIGT Weise einer ere, frames wc? ARMS at oh 1G ay sige# uy. 6: ‘», ies; tetas) nduaelenrans Gb GA a rkh a's. Mpc ah UROL. Wen MRIS 107 7 Transportation and Externalities 600. ce cece cccecceeeeevectveene. 113 UCCOCUCTION Maman ten ae aceers sees, feccd vier dnc, “Ae, Gs os) on Gallas os lle a npeeeiay SL ain co'eg'Gi Ae ca loy Rew Le aes MET ARB ON c nh. 113 A DDOaCh Ter tee ai ee A a a ke po Sr ae et Rett Silat Aree Sete cate SURE ee Se oy a te And PTE ORG CLOl eee ae ne een EEO Tc fo fc Ac, cay, coer fr Seen See, ete RN fe RR PON oe ok y Sent LT eee y im, alta tat aut s “Ny ke: Prograins administered, DY PEGeralragencieS @ + a= worse Adv tt ea a el ah tc dees ot aed Gate ates so as 114 States OCAMILOGIAINS wate foe onc Ahh Sch cere etch ae ohh oh hel ee a et Ee Ae ee eae Tote eG eee iy ate 116 IDCTCOCLEOULATIONOLNNIODIIGISOLUICOS WA Hts Met Se eee ee ee ee eee eee We eee ec) Meee 5 tegen 118 PaO ROL ise MEM CAs PFE Sas tht eae Or ee Ae ced Gee ot eee de dee Std a Soe Ree ele ees 118 SEAT ESESC st ACL OTIC SC MeN, Se AL cs rss. a) Gir cs ata CLT Cae DoW oasas Sue AMT One > Cac ied hie Logs Jo Bae BLE CRE cn 118 EAZALOOUSHINGLE Tals thaniSDORLALION ser wis 3! ue aes al panharce ceo. bet cua ma iMen on eh seme ee baralhaw s fre, Hameo aiatsmnetd tn Ss as Seine 120 VV ATE OOS TION Oame tmCn ManID EN fom te fornia taste a teed as alt Al ved Calais cpipceen ct cyl aoe Sire) SURE oe ES Ee A, RC PERM o's 3. oa 120 iran spoOcraviOMmana thee lo: DLOCCOUTE.. 4.< tc an ecchld ons mia oe mon Pec eee edness 4a Wa Gler el Aaeas © Giuxte SOEMEEES © 121 PANSOOLTSLIOlUSaLe CV ai ea te SUA raise ve A hier GA Tauyy UN OK co ae oe LGN eS iay ENE GUAR Oh ote oh how etapa ct BPA Ue MN a os 122 Qa iCAtORI AN OW TLIOSS. OL: ODELatOlrs ox-o A op oe eek A oe th chi hE ENON eGR AP NS aD oe ee OUT PE ss 124 Physical. condition.of rights-of-way and vehicles «i+ 5... +. 2 ae es ee ee eee. - 124 SOULCES ANG INELIOGS OMeCNLOCEMECNLE © cw chy he sk Rh LH oe PE ean od CEA ces See ete} oP eT OM ose &. 2 124 MazardOusi Material Ss Qanguing.a0G ACCIOGNtS.4,..cu. adsl dams Me ke vetoes arate a cele asc ke heme cas kc he ue oss ne Le ot 125 BULNIMANV EAC CONC USIONMPEEn Ete. me. 24155; 1-ass) MMi eee rookene hs measure eh a te aetie tebe chet oa techeaea eee Leas a 125 8 BeReperBClommno ENBTOY! 4. cot | uke tat, Bre eis een Le, likes aw aes ‘clbirtonts paar ahh > a: i> 131 Init KOCUCEION cit ws ee ese k 1k Sk, Bow Gu, cia Ke MA RSM oa Seg txt lich Aaa WeMRO ORL TET hes, h, ARMIES citeeaes CMOS or Eh Nationalenerdviconsumptionrmand DLOguCtION 2. ea Ata boat. free ee eee ne se ees ee a es wk eee se. ie 131 ERELOVACONSUIND LOM eek. S Roth ite tet a Sted ace abu s feeds tare eae Gees Shee ty ese Fee ol ea pha le 131 ENEIVEDLOOUCTIONE, FA tae. ce thats Ao teds bodeita WOR aID eect et ee oR eee Cota a SUS ee fe ea lees te eo Mit ia at al 132 Nery pices senna while het dec a) xisnay wa hs eat, Bate! Ge ae I nls BOR Pa ey ee ee ee 133 Natlonalpercaleuimiconsu mp uGinand PLOOUCTION er mesci tes. cee ons ca Pee ena Re ome me ds Metteds esate isi cus a0 op 3 ce ouemes ene aa 135 PETOIELETINCOIISUITID UOTE Meee See She ee ERT et MENT OPEN kasd aah cabacias olad chase yelp I ge ges iv ge fad Une WBepwigm: vo lin) ave 135 TANT T i ly Na RULE TOT EL coy. 6 PS ROME Gin TO ae ID Ria HR ch Seve SO ae OE en PNA gy 136 PRS WR, pe Be oie 5 ee ee a ee ee ri ne Oe er en Ne ee 136 FatrspOCLaTOllAancreneray, CONSLIIMP TION sa. ff sem eat ake on es tot att drole at tah tue ecsuiviuel wat a sal ao at gaan CA meatal ot a 137 MLENSDORIAUION SISHAle OL ational CNEIgy CONSUITIPTION once bet rote nck chute «ch elie? et ofc. ol) wl-p) 0 oh epie pome a) shel wines wt ops 137 RrAansSDOLLaUONIS COMSUINDLION Ob DELOIGUIT DEOGUCTS gh. Siti 00 we oh seat sh oki atiptuchcal io) Wiis! ovate! ofa" n=!) of a) We wet Bem ot 138 Tita nsHOrtAUO NOMIC |S nme erent ont, Oe ween Per ae ns teh) cements ale nuaiaaliy, SNise ecb atie ve Yew oc Gwe wreteun oa 140 AITOCIDated Changes I) anergy COMIMOO/ tes And LHI TANSPOLd > ee eis we ot wl wale FMW af 20S) wYiehel are #2 le eh awe a) aie 140 INCELLAIILEC SM ORCI ULLaliSD Ol Lae ee ie cree os sete es SW ad hee. abe eae ales) Seas alla) sh weno a apes es. We veya! Zo lahey =) bili 149 xi 9 Forecasts of Future Transportation Activity ai aivkas. oac OSA ahody > Peo ie hl b40P ao peak obec ese cake Sn otrateamte) latest iuaipaliey: mand oll agar 1 53 INtrOGUETION 2a cae) aeet eke hobs core, 5 pee all sahle Grid ceeg st omen sme Ie ene YE pukel, Sk cae ee Meme eiadta teres cease men tae ore 153 Activity forecasts. by market. is, oy c< ie ti eos ee fee 8 clan e tim eileen in ellie? Bowtie teins) yee ea aaa el 153 National overvieW..«.; caveos bg eke m C6 ides 6. oslo telinratel ol eka baapite blog Ncaew Men GCMs Geib renee mse) a0) aie mete 153 Urban passenger Movement. 0205 6 a ais Fk eo. he te coe rele on mene Bo pene) Oe pel eae ie eae ae eae eee 153 Urbari goods mioverment 2 605 oo. ona oe Foye loti cg a ae Poe ON ts Te ol eng, eS age oe a a ea 156 intercity passenger movernent. — 2. 20000 6 ss wn we Seas Wie pes eee cele oe te ei ne 158 Intercity freight.movement 2. 628 oe ee en oa tin eee won Ae nt mee Rad ole, eee nd tee ar ese eee aes ee alee 159 Rural passenger MOVEMENT. 2.2 nee ee cae cm dw tekoue cal eMinthoie) coins etl Lemon egiomee Filia Rete okie) Taleo noire! (ocao rian once 161 Rural goods movements ee ee Seo la Sas ate ge Mata ne os Re Ne ee a 163 lntermarket considerations .\ 6 5 vcs heck es oe bok tuatle tae as ano hain te ei eae emeits Wee eile) ee tenet. ere ete 164 International'aviation. 320.3 Se De re 0s Sle ate eras eee eee eae OR eT teen eee ce, Meena te ag ee 165 international maritine 2 «ve woes Oe ea i Soe 8 ta ele Nee eo eee io ee Oe EM eect, ete ees Rothe te fe etal a 166 10 Capital Requirements for the Transportation Forecasts ---------- me Shon oncig yy EL Fier 171 Poneqereltloa(os ath by ays an ee aera re MPR S Gf od. Tan God Gute ub ri 6.6 a Ge SOO, ty Sugeteg Gu own te ae PAL Publicthighwayiinvestmenés, §.3-4llive he cuset tselde bie) cnet cae or lor leurensel am opeeieg tapers (on ot tC iy ea A ain ce neat es ta 171 Capital. and’otherexpenditure needs.5 oo cod eco serene eed a eR ee gra aaa ae ro aie ee ete cee ee 171 Highway revendesx sc: iiss oss oe cei Bo) oe ta a) ele, cw) Diy RR Re ete es Bonne Ree ee ne eek ee ee 171 Private highway) resource needs is 3 4.0. 6, t5) dosed So Bice dE eon lelel oabeachee Pot eeeiclogte ete acetone oii het kt ent mien ams 174 Personal vehicles as. 3.5.) sets ss PA em ada ds ween Aves cs- wh ml an a Col ay Oh od oR ts Bee ure ely eae iat ais oo: ate 174 Rd td a ele Oe en oo een eer acs Tsao Gals tho ey Gop lpusceb Am ain so 6 ys FN As i725 ATL Sl ol) eee ee re Pre eer Re, a ee. mee 1 SS Cae Oa Mek eer eS Oe 178 etl lectern re SS oy yb cao cc Oo te om A eos 179 Capital requirements 55 fe a. \0 5 6 ee eee, 2 le, 8, Gye acto salviodle, Mol euey a. sp elyeiay a Reith oi s/s tanec Me eae ies os A erate 179 Fedeéral financial aides) 8 Bo, 6 eo Bisel ie. Relies iby Spe ey ln. oie) bohtedte EMER ie eo ae oh We Soils ee ae 181 Fail PaSSONGES:SCTVICG aN ik dil ean be en thw a) ka uti Ym to Shell gos fo ouuells Mist is Meth alate a) ays OS) Poca te eee em 182 Railroad employmentice cate ois Seo Se eels ay ohueiga 0 nee i eee © RD eal en ete on aia na bate eat oirs i oMeg etc fail ia ees 182 Pipelines in). a dake) 4. See 6 ce 98 ce wow wens 8 ey ele etl he lo apie cee nO a alo 183 Off PIDGIINGS 2. ask en dna eBid Boas a: aye et oh oh as Gal ay a, 1n Genial Sato oe noe een eons Rie es eco 2 ae ose 183 Natural gaS Pipelines: a. oie) ax oe, vu. a eh ony Biel om Mm eK, eal atte’ rao Gaba eRuGtS oN LeU gst TOA cil a teh omen (cMESSnICe oR AE a) tet on a oe 184 AViationh 3. a 6. eee che MWe tere we ecm ear lies » an are le oot le 1 dhol: fl tot a Lena IL aan Onn te mM ree tee cn ae nce re crate 185 PV fe) hee eee oh he eh en ee res re SC SEA Ge Geo MAM oi cs A oe ee a oS 185 The Airport.and Airway. Trust Fund... 2.0. & 6 «oie 4, , 11. ey.0, oe) «12, eR eT ee eee re cae 187 Projected trustifund revenues‘and FAA expenditures. .: .. . seesaw ee ae ee eee ee 188 AICWAYV Six sy ooo oa ce bey ty oy'o, oc ay B. oy ey 6 aire, th.sn, "o ocs'6u veSidgl oy by 21 -oih/Eul oie yule.t ) calen tal ec aan eR ae te eevee re 189 AIP CALICO Srche.ge.cdicons, 6.4 e costed ano o(h 8 1dr 68-08 04 0 Speke falls delle 9) sete AoE Tea eee ae 190 LabOrs ode evel iadeitce. sate) 6a le b.Jote 68d. 6 se 8S elheicai ie Wee. © 18, clad puree yp el cutee rela oe ave nn ec ee 192 General AVialiOMn: Wen eis coc" 0 wipe oh 6 lays eS Ie Ge a ate a fo Ne ek BO aL eRe ee ek ee eae 192 Domestic.:marine:transportations, ye. sao e sc Bic 5) ance Tere crlayiag, 2 Ue ihock cect a meee apnPo er ce mene ee 192 Current policy'and the: Federal roles 222), esd eke tetate ie en ote feed ee Le ea ee eee en eee 192 Projected Inland Waterway Trust Fund revenues...........2.6++¢++e+e+ee4ee08s ‘ive sok win a Ce NSEC Ie eevss cs 192 Federal expenditures:on water. transportation ;..... .o.«+-2 6+, «2 «. ae eee 193 Domestic channels; harbors, ports, and facilities’. 5 j.e «sot on cul aac cao ee ee 194 Domestic: marine equipment.capital.requirements ~ sa) .os) a.2 » 6 = oe we eee Ce eee 195 EQUIPMENT. FINANCING 38. eee re lies le ol ee, He Ae sayhar undo bal ge OU) eZ PO ee a ae 196 international*marinetransportationea ys See ca ory ate etc este ve eois oa ks ay ce ca ee 196 UO SMaritime: CapablitVEcR ic, eh fea) oi ge os ek og ol axse ee ae tode 6 enid ls patton Ee a ee 196 Projected 'US:imerchant fleet:.0 5. sth iaiehis xsd os erseh Seek sv! Sie ela dente CUR Te a en 197 Projected: capital: requirements. 3.00 Sh aisoe shey tk dona Bale Gos: eli, Se, 5 EE ee ee ee 198 Ports) harborszand facilities forinternational trades... 2a 2+ 6 ete ee eee 199 Employ men tere oes ie ates cd We le tad vo tate edia Sac bel tedetak ois olrsehe taal: eee eee ee ee ee ae 199 Local’ publicitransiti te Atel Se ah te eee be eles, Meee let ee ee ee Oe ec ee a ee 199 Rural publicttransit (cease sca cst Some yes oe pial Sel w ecco ee, a, ye tea po ey wa eye cer css ic et eae een 201 The transportation equipment industries. .... Pr vee ier re coe oe Se Che tna OR eee 202 xii 11 The Relative Price of ibransportation to the Year.2000 . #novebnygungoel! y04 YA) 12 eg, 207 BINCrOOUCTI CN emma eereeet cer ere ter sikh Rea oh ee Ge RRA a ok Ge ah eet os Seti te ae te ee Be Ut ee oy on Ce 207 PGE TON LranSpOrtatiom ACCOUNTS att SiGe sack a 2 eee ee eee Oe a ee ee ee ee eee Te he ahah 207 SUIMTIOM UY MN DUG saan et Breet) B Wi S08 co 3 ko a KS ee ee eee a ee on eee it ee thes one we 208 CRIES aIITCCLMB UO] I lsirenen Cian cat Ca ek oat sockin, Seay Aare ocala aod He cae ae Oh CL AL hte nk oy «SN eae 208 FITIETCIVDUrAlISOLtatlOsl OTN opsas ior eb ov) a oh yah A Oe ok OVAL TY CEL hl ee or oe ne et ev once 213 PP OCIATIANSDOLEA COSI ane el ae Moka Blct Any ok! axl oy Lilet: ox ak ou atch OP aN ER Cook Aaa ee A A, eh A te. winless 218 IVGSCEMANCOUS ILCIIS Trane ey 3) yh ch sired iraliey. fia) ay ac & Sh piel sulal ep Gla bush qs ey ai ao la) aan Ce LOI A ede es 219 LOOMIONEITINDCNE QCCOUNCS dias ah eae mo oh wd ee AS Be Aiea A hea Bd fo IN Le 219 Cesmniernational: government aCCOUNtS rc: wank Ane UVa MLNS tak A ee Fe ee wears 220 Momesicitransportation government accounts, Sv +4. a ek ce A ee ak a chat ae IS co a 222 NiatehingicatiOs mee sce cece Wecreuive suck co) x ai’nt eg once quae ab-uc Bere eeiau cy hts teruh dak ce ce RTE. ETO WR eee, 2 229 implications Omunit:cOStcnanges at as1& co .kaus Lem oe ou klacain pues i csash ae catches , eatscus Wit eC RNEROES. 6 crate 230 OUTNSGCOStS meee eet foe ct ae se cys, 5) ete acy oy cc Oe Cte Arcee Al a a knee tke SRS eee ee YN 231 | Issues and Policy Resolution. oo 68. i nc ener ees eee. 235 ¥ 2 Emerging Transportation Issues INTLOOUC TON nmr me eee Mh Beene Mohn cre utsmhledams. fy -ciienscced ccs e ce (hs todews Oaatus kepada taMetre eUisvie aatah ea (outaiatins “op.8 237 FEC LT SSU CS erin et It kU fe NS ne A Ta ee a Mn ae cae APSR ema ae ay AP Tare lco.can Yo Chai sat wy Ow ee 237 (FOVETHINEN TE DOICVAIMECHANISITIS: acts ar ais wis Gedo Av calle paul cole th eeaihu Letter aie data cae ha eu ama se cits We Gltad a] ink Seals Petes Hen ertensice 237 EVIL GVAGNOMLANSDOLlaliOl seme santo achis We Gace as et ts Ce rn et ste te ee one eee ee 238 Chiapas WCTIELT hs 44 We ye ee RCS Oe LEED, Eo Ae Te NOP OR Oe ee oo ne 239 GOVEFNTICI TE INANCE Uae aie MR eel LEA re ok ole crested age sp otiese Parodl atsts aleSy fede peg ebuewareeac, causes «) apwecons wale 240 ELIQUUAVESV STCNIITIGNAGECINICI eat ae Boa thse at Leki een See oo ee a ssa et ae De ee, chs kc aa ee a ee 241 (OTETNALIONaltranSDOLLAt ON eee tte sce sin yonk oa ate A eae ee ea et a eee de eek Cet Rene Gage = sks oes 241 PUBIC TFANSPOLTATION a. ou nin 5 0.0%, viet oro bc Hs A OR, CET ee, eT, SSeS PGs 242 MiLANSPDOLELECHN OLOOGV ere Golo ieiet, oy ops hohe ioe oa alot wen ellie, 528) wh cp esate, oud ge Peme re Re ene, Pte HORE het ede. atts ais 243 (Ntergovenninental SElatiONS Jy. cies: ot jor seiali ay 0m oh (oh sores Sakon). af <0 woah mcs oR eet PAL UPS catta e acbs Maine Gees oS 244 Economicidevelapment.and,land.US6 0~ :sotigete eaaaes) at kee ares SE hae eaves en eeieeael ap eolceebeney o.2 244 SUM Mayra. CONCLUSIONS ramiat air ated = cub atreyac a5r aln curtebsecegs ce et ot (erat ae xe om oem ae cred coats Pen a. sei SERED ay eiees cyto oN CEI Ao cat ae 244 BRSCGIIGy RecOnimehdationg ee ee ee ee ete cates 4 s- 247 TP robeate rely a hiiblie dice fy An ee ei ee a a eee eee es |) ) 247 MalomOolicVatiCmesma tm castl t a,c eek tg reme foo Co ewe aoe are et air ny BA Cie oct oo, A ne. 22 247 mE Vat Onailranspontation PONCY: SUOUIC DC UNILOlI) see chest cee ee eee nel cee rie iesian's Co) one erin eee 2 248 B. There should be an overall reduction in Federal involvement... ... 2.2 se eee ee ew et et te ee ee 248 iGaveconomic analysision intended. Federal actions snOuld be:used =, © as cue eee ete el etes ies cesses 2 esl ne 248 D. When the transportation system is used to pursue non-transportation goals, do so in a cost-effective GET ITALR ices co ss. Gen ME Ec IRE EE Hig ooo Ak OOO) Ant ane CEASE PGE Oe OTe Re An a eee 249 E. Federal involvement in (including financial assistance for) transportation safety and research is PCI CO ee ae en ere A eA NT am” SOUS eee Re eet ete e eee GY Sk cs lcip ibs ros we gals 249 F. Users and those who benefit from Federal actions should pay .. 1... ee ee ee te ee 249 PONCVALCCOMIGNCLOLI ONS Meee a cintan aca oats centre Terie sia CMa a hn Sone OTOt eter ied a eh Me mak alk oh ouviaa oie a aie salma botnet ie 249 FLCQUIAT/ OMe tt Re Ror 1s een Wis, aif) eds ce on Oh et abet ee anne he cicey opheMak a BEA CoG ahs os, 0 frien edad. * jan ouaan le Ee 88 249 (ONIELSIIDIGDGIODELAL ON Sree Ree See cee water oe k Oke conten sh ete. ie cteies hear h ed cas Asian, wlas hem Caseks hk tie eked Ley ra- (© 251 PIIGNCE MOLICIIO LAT OULAXGLION Ara de rea aera Yo coet eken eke Ue ie Peek Paeg tee al ohh ele ele setae te a es eas as hee oes Wk Sie) 4) Be 258 PIANHiNG ANOABLOLIMNAUOD werk. Welks ace me te Ne Vene he to Bo ois a Yoo Ne Me Wo reMte Me oil, Nate Pla ovate to ¥e) Rs) ken. halice ote Me PSO oh 3 261 GOVELDIMIEI OLGA Za Ol me tT aie ee er ret ec, oe ats ze one n ) ML Meso cit hot stie, o ok eo ciae arches og uauriea cage) ss > 265 GONGIUS! ON ean atee Carrer oe meer bis ose if ae iniain css Sichcotre hat = Valea) ep Lena abetislGh at's WaekoRy te > Uma heath aviv mat. was 265 xiii 14 impacts of the Poli¢y Recommendations . . isase%.. a) aol eeegeeelt Meal ete ee ote. 269 Hhigelo(Ulond(s)) i ar rn ern ere a ie A eS MA re ee as aw 269 Measuring and forecasting impacts of policy alternatives .. 1... eee ee ee eee eee eee eee ees 269 Structure for reporting the impact analysis results’... . si. =) Sie ee ate ee a ee 270 Regulation 0.5 d's oun cn «eS ee Som Bre Wes Se Seley my Slew VQyleN tein e a cnier oy Sa oe eo ee rea eee 271 ECONOMIC. FEQUIATION sci. 0 oa: a. mH ey 0) 0, emp wu aE Wh Eh my HL SEM eee deo 5 eee aies ope Ae et Re eee 271 Other regulation: oo ooo. 5) ew a opty a elce, #) at Sy my te me hcg eed aad rl eee er on eee a 288 Ownership.and-operationsic..¢ a.6.¢ ie ae ee (Fw ca He wives ate a OP ne tea pa Oa IE On PA LenS en ree tetoeiarcene 297 Status.Quo POliCies'. 2. 2. 8 a ee we we Sow 0 ge os in Ca eas tet onion a ee er (aa, Cee ae ene Pn ee 297 AMTRAK |: gouueley 2k Re IE MD cm ime 369 Review of the'stldy sities o's... 3 acs) Sas 0! sce) By iogagae Blip cateowee eames gneln ug UL cute atl © a ee I ar sega i fae dR 369 Transportagion' activity ANG Institutions... <2 oksue =). @ eh ouc. f+ ae eee Ce ee ee ee 369 Forecasts'to' the’ VYeari 2000 Vi cteica bis a ce Ripe: re UD ot aah ad, oy Eee ee 370 issues and policy resolucion? MO tA Le DU ee: Shc kb Pg igen Spal ems, Ale ee re 372 Research'methods.and special studies *% 2.) 1 vara si ti ons fava, dais de.2est es a eee 373 LUSIONS) << cc shee Malgd pl ferce cota Je aralce come jee miLmedjBiceine She cte yous ba, 75 on ola) lay ge aay Le rrr ee Conclusions 374 NTPSC response to the congressional mandate'otPub. L. 94-280) 5. 4.) 2 ee ee ee 374 Concluding COMMENTS % i. %.64 fe%5 ne Bene p's een an cee te ole oo ee ee eee 376 Xiv ae eae ene a Bes aan TC EMI TIYRSTICHT ION et ge of tine ere ae te che. Stroke eee ra occas ay, Cd Re aMeceow pT wd Se. ba ls 379 CT Ee TS foe SUPT OS OE) CM oy a el Oe ty oa or a ee ae ee rr a i ee 397 eh en EC LMT MN UICN IGS icy bask Gan AG RC inc vein os wR eae aeaw ee awece ia WM ikl k le edi oe be OA 429 Use Wes. 2 giecs abi OPAL & booselle SOA wien LOR Eek ibd tho en ilar earn tr hd ere os Ae a lee 429 SOLITUUEMD AN V Meee CR MN ec NC TTS Bean cS ie) toy Pa ntade, hata Re ans, wi pas Pera et eas snaee Wt Wiale Hla phe gs & bis eas 429 EET og SS Aa ie Pa re eae ara eat eee eee eae ee eee er re a er ee a 429 CLR SEES yy och lee wid gc Cr oe a ORCL CRE deer Tenors tye cre age age) SS Pcur als, oa Sie dr ae ere 430 ROMCICS MRE Seem M te EIT TTT ea CON: Tae See? oe oy nate ttre oar eee eee eet G. Rota hy erat See ate ia eras ee eae pas 432 ee ee RE aera et gg ees AS ee wien ie ee as Se oe Ap LOE Re RRR Oe ee ee doe 432 UDA S eee LRM aga) scan ci kkatee es a aki ce eee SSM agate sat elena sree sets Foe & ere On aa Slala pe alae 432 [SSUGS nem ene Memeeey Oe ieee. ts See ee cn Mala Peals seers el Ain s lpvienie Is aerate pele a erene te Meets, oes 9 eam 433 EEL META ae Se TEA SST SES EE te RR on te i ati oa or a eee Sn ac Si hs er 433 Appendix || — Comparative Social, Economic and Transportation Forecasts.............000e eee eee 435 SODA eCUNUMME OLOICCIONS te Tin men Pan sc cer heii) atic (oie tack ttewe oe Uneee ttc hs PTET cehial eercile Cee cArN 2, Sherine! vay a 435 Ia an SDOlatiON OLOICGTIONS Sok w ie ese ewok oot ee Mi ae va eee WA il) MER A a Ee Wisk Gidd fo le naa) 435 Sots 2 eek 8 2 SS ty OE © Oo eer ere: ee eae St iar earls eee Seem 435 Appendix I! — Alternative Energy Sources and Coal Movement Projections................0-0000005 445 BLOCUCTIONIOMAILALTIALIVELCHE LOGS sm Sires aie ie dl) ai al eae ee a, EMD |, be Oe ees Uses Sy GK. a ae « 445 BOL auSAO Lacerda UVeUUeISHDV ELAN SDOrtAtOMs, = druicclcocs veer eu tents) Pentseeatin ecach. Ses RE Peale ay cbten wee iano eek vio cs a as 445 ENELOUMOVEMCNIUSH MPens Tae cee co. fk Ss us Pe SO eae te sek le ede enge Sooo pe a eee Gia lah enia 28.8 449 A poenn bel e- GovernmentAccoun ts: Computations. () orecast annual,auto fatalitiesiniurbanized areas71975jto\ 2000 ncmewsme oes ie is eto. ee) este Ved Es A Meee! 158 25. Projections of truck-miles in urban goods movement by scenario, 1975 to 2000... 2... 2 ee ee ee eee 158 2orerorecastmoverents of intercity treight, by scenario, 1975 to. 2000 2 3 2s 2 ee oe ee ape ee es ewes pp ere euee 160 Zia Orecast intercityrreignecon-rniles spy scenario, 1975'to ZO00 % Wee eS Freee A, NOSE ve Sa al is ni ete teste ae op Ae Os ces 161 28. Forecast energy consumption by intercity freight transportation, by scenario, 1975 to 2000..................... 161 ZomtOrecast rural passenge; travel: by scenario, 19751to 2000. sew Feces, eatere ta tee tea ells See enie fe Pats, 6 fete cede te We Ss foe gn sve aa 163 30; Forecast of truck-miles in rural goods movement; by scenario, 1975 to 2000/22 5 2... 2 es te ee ee ws 164 31. Forecasts of highway revenues, 1975 to 2000, medium-growth scenario... 2 6 ee ee es 174 32. Capital investment as a percent of total public expenditure for highways, 1962 to 1975 and estimate to SSO ee ee ee eee ee eee en td MBN ve Mabe: a) clvel cally a Mogbewtans te rahe Ue “aka Uello ReMlar ee Gh Etats « aCe ts ccmetel 175 33. Comparison of forecast revenues and alternative levels of highway disbursements. ............ 04000 ee eee ee eens 314 34. Congested urban interstate mileage in 1990 (percent of traffic exceeding design volume) ...........-00 000+ e see 315 35. Congested rural interstate mileage in 1990 (percent of traffic exceeding design volume)... ........2.2 020202 e eee 316 APPENDIX FIGURE Larose Depaitiment.otl ransportation-organization Chart ™ et ie.) e Gos tere s. ba ace oo eee teen Met an TEM ee ok wy eb cee 397 2. U.S. population living in urban areas as a percentage of total resident population in the combined SOUTHFAanG West Census regions G00 tONZOUS Mri. Senet Sea ence ee meer ca, ee, PMO EES cn boca “sae ba ceatia tele 398 3. U.S. population living in urban areas as a percentage of total resident population in the combined NOLiNeas anc nontiirCcentralfeglOnse 1OOU0 tOP200O may sree) fares te ee me ie ay Siete ead ETT LN c/o gy ole) cede & nln) ohepatne 398 4. U.S. population in combined south and west census regions as a percentage of total resident popula- TON BIO OOLOr2 OOO emer cele Gh Ne Pee Sk SU Sa te MEY Gere hy locos i MENGE ep elt ol 0 Mere en's Owe ca beara abe 398 EAT LEVAI EIU VEITIIIGS een oie Meee ny ec NEM LP SRST Lomwe My, relat hed bco dtc hu u's Wake Mey) Caltel Sin! talwy Ma albwlic lo (es wie sate owl colbert Soe 398 6. City group comparison of 1975 and year 2000, percent of arterial mileage which is freeway ............-..-.2+2000- 399 Wa OLanralerian CADACILY [11 LOS eee APO. NC a ewer ake ow oe vel Fed sin bce Heh Socw oe Macte va Mace telts te crauee Secs fome a ata (ale A Sha wAD Oe 400 8. City group comparison of 1975 and year 2000, medium-growth scenario forecasts, peak period high- WOVESDGECS Ol LIT DalnalkolialS meme ee eme A reenter ey cP eel. Sued: ctetalceeaMe lara bate ke cel Sacer Be ahs sovlansleBerse Seta wee chi dle h wleanle 400 9. Projections of operation costs of trucks in urban goods movement, by scenario, 1975 to 2000................2.... 401 Fie SCOSSUNGTIONAIRTOGUCE COMDAlISONS Men meine eI immer Settee ame: reed cts WANMONE ts. cHathels lec mau wolcmpe se diene wets aogier 437 ieee CUGranGOVErnment spending as a percentage OnmGNPees ce arleme cacters Cite cis suas ccstas totetone ole ws ce teGnboeiecuies ss ca Where 438 xvii 1-3. 11-4. 11-5, 11-6. H-7. 11-8. 11-9. 11-10. 11-11. 11-12. 11-13. 1-1. I1-2. H1-3. 111-4. 11-5. I1I-6. Il-7. 11-8. 111-9. 1-10. H-11,. H-12. H-13. 1-14. 1-15. HHl-16. H-17. xviii State’and local!government spending as a percentage of GNP ia. c ce anna emen seiecieen cisco tenreren te ie cetc tio 4) sue alice. Ueno tateicepantmentOlclansportavionUnctions, 09/9... co)... me wee eae eet on cd atk ee Ren meal Sucul msmsp amolas SeeouUnmaveOmtransooLtauomexpencditures by;state, FY 75-775 .0c0, 2) aes cies) ure cucien oh luteO Roane n caeuleien au Sumer cea nie 9. Urban mass transportation administration capital grants by fiscal years and program, 1965 through NESLOETASH . GMs Bo coo 6 8 bw ere DOOR Ene eOnERE Cc oke Re Or See ek ne nee ee Rene ete ten OMEN Ties Gescenanioscomponents.ana.trendse .We... cas... cs i<) aye rie. Cue wie eau epee tetany: Pe oR bid cette og cea ey Bese Ae SagrossinationalOroguctrassumPptiOns, DYrSCeMafiO: nc: cus MeGMeh stasis cueibodleusae wars) sis eee ey Ealcocias Get ery tee tual euch mee eth 226 96. Variation in airport and airway trust fund revenues and FAA operating and maintenance costs for all Orr Teseeey o Pte te) UR, TTL 1), PS lee an ben Freel Si. BO lek! anid abies avid Ved tersits pa deinedie-renida, CITE 228 97. Forecast per capita growth in disposable income, by scenario, comparisons of 1985 and 2000 with 1975.............. 228 98. Intercity rail passenger service subsidies, medium-growth scenario, 1980 to 2000 (millions of 1975 $). ... 2... 2002 e ee 228 99. Forecast urban mass transportation government accounts, medium-growth scenario, 1975 and 2000 Ebi aS) SLE yee Amarin highest aie tek oe LID CRSA REE oe ee” eR Te tee ee Pe aT ee ORS ee ee ee Oe 230 TOOMs Navel tine expPenaltures: 1970 ania OO svcd. concia pealicreneh Jism: eter. ¢ RTE Caen Vit One WO ROE eT eSeACs (Gey elle Pets 231 ROje Aitermative novons Ol, NidnhWaViNlGeGs’. - ... . :... 0. 4 ©» ehbamonnn git auetmelicasr: birds SRMRer. sopeiaasir sek dyowyogers .est! = 242 ODE EV OUUACIONN F ONGIOS! cet ert cerrinatie adie: ci oc Gi cco x) an a) ecuaita ig acl iis op hn keh es eNom aaeele ROE owt hd ie bases Teese See 2 252 ROS OVUTEL Shi band, OPerallOns POMCIOSs ors) te vac sl ws ds cer sue epee a ea) nae aati w Vedat Eon heiwone earn innigiress ara lais « 258 104. Finance, Pricing and Taxation Policies. ET ee gee CS SUR Shar en ne nee 262 ROS Mane NoanGr nrOnnaiOn POUGIES tere ee ves cisael is wicsiin 6) fleas! wh scorch Rete ol oo: ol SMa Puede, on sl one Skemuke eodirrabttage ai ae « 266 LOUGSEGOVERMINENe CGAMIZAIONM s tues a ars ar sus sss ew (no ce, o « sbgeae Rae, Sh eae mesa oueswses hd Pei eh sh ag east aaeeepeis eae) ADVE 268 LO7ZzrASDeCts Of National TransvOrration GOadl Sa: avatiec. musais cree cess cup ouch’ alle Rolie ean ices Ue oetaecta ised: Sih ert dewahe « 270 LOSsSumiiianveOtastiniates OlcOstsiOL TEGUIatION is 4, co gear mc susie caer aod oases evieietenaes ne, oS SER Gti date 272 109. Growth in the demand for transportation fuels, 1947 to 1975 versus 1975 to 2000 ................000 00 eee eee 291 110. Forecast real fuel price increases in comparison with 1975 fuel costs as a percent of revenues, by mode, 19sSrenarz000 Ameditim-qrowta.scenaniO.w oo anesnve -aecas tes ee ate «AR con PTE creebbads Lhesiiiae cet t arte L1G anes. 293 111. Economic impacts of EPA’s existing and proposed surface transportation noise regulations, by mode or DIOGUCE Rg ie ter 5c oc: +) a GR SeEM SEO IRE

Ct deere! reer ei, ae eee, Po ec, Fee 2 321 124. Estimated diversion of waterborne traffic under segment-specific user charges sufficient to recover 100 PercenLamorier. costs umn wiekete bce ee lone) ss ae oe Re ee, SNE, Wen OH ee eegs, eae Ts Cc toa 5 322 125. Transportation subsidies as a percent of expenditures by users, 1974to 1976. ........ 2.00 eee eee eee ee ete eee 323 i264 Rail oroperty gaxation; by) selected states... oo c-c.s02 SAVeRt teed Arties EEN, SE Pee Pc a Ts Be toe 3 Tae. 324 i272 e8timates of private person-hoursito comply withiregulationst. :.vil .2An Me ao .Aciets eee Sees eles & Meets He ee 327 1287 NUPSC policyzimplementationactions ?...sisarteat at eases, Se. 2 eee eA te Sesihwsed site Acme hernia weil eee S.. 347 129. Schedule for implementation of existing and NTPSC-proposed policy recommendations. ............0005 505s eeee Jos SOs IN TESG chapters, appendixes and, supporting special reportst. ey.rn fh. £0 92°94 its Sed eI ee eee tree net, ee ree ett) sn net > a ee ee City group. comparisons of 1975 and year 2000, percent of arterial mileage which is freeway .............-+6-222++20- Average daily urban transit seat-miles (millions). 5.5. Bk ie ee nd eee cn er amr nerret nS enmnerere Peery cae City group comparison of 1975 and year 2000, medium-growth scenario forecasts, peak period high- way speed on. urban-arterials gui..9% ieeeite esis oo ae. Pe ee see eee ere tne eae roy, rT ee er Forecasts for three scenarios over time: private urban personal passenger vehicle fleet (millions). ..............+.2.2+-- Projections of truck-miles in urban goods movement, by scenario, 1975 to 2000 (hundred millions). ..............04- Projections of operation costs of trucks in urban goods movement, by scenario, 1975 to 2000 (billions OFID). A ose wenn Lion «la. a seatetalaels, Sci By RR aoe 50 ry ana a ee oS ee ree Forecast movements of intercity goods, by scenario, 1975 to 2000 (billions of tons). .......... 0000 ee eee eee eee Forecast movements of intercity goods by mode, 1975 to 2000 (billions of ton-miles)............2.-.200000 ee eeee Eorecastishares of, intercity freight ton-miles by mode,1975 to: 20002). aucune cicnenetcl cic inicmcinetnel circ cinetnenCn Siete tn: ent armen Forecast local rural passenger travel, 1975 to 2000 (billions of vehicle-miles) ..........0 0000 eee eee eee eee ee ee Forecast of truck-miles in rural goods movement; 19751to 2000: (billioms)) >< .12. seen sueeecretnamnetiich sich cileireictnents menrsunen ist en ercnran ae Forecast international aviation passenger-miles, by market, by scenario, 1975 to 2000 (billions). ................2-- Forecasts of international cargo tons handled at U.S. airports, by market, by scenario, 1975 to 2000 and.annual percent change J... -s.0. =: PRee eerie 0 et Se ae ee All cargo\aircraft operations/at_U.S) airports; by: market, 1975 to; 2000 te yee. eee ert teen ere ncn enn et re Alternative 1976 to 1990 highway capital needs by state (millions of 1975$)..............2.. 0000 ee eee ee ee ee Exciseitaxesiaccruingito the highway: trust fund:by taxirate irl O79 asec ete ene nen ern ee Estimates of. tor-nire truckingemployment 1975 torzOOO0)(initmOU Sams) sauce vee en cient aan te Estimates of intercity bus employment in Class |, I! and III carriers (in thousands) ..............000 00 ee eeeeee Estimates of railroad employment,.1975 to 2000 (ini thousands)i).)cas).) «sss ssc ae cieunee eee cen nea ene ee FAA labor requirements for air traffic control facilities, 1980 to 2000 (in thousands) ................-.+.-0+000 eee Forecast of number of airline employees in total U.S. and domestic U.S. operations, 1975 to 2000 (thousands ofijobs) #55 3. Aci eee alent eine ea de oie or ey ieee OM Ry eee eee ee re ee ne en a Forecast inland waterway trust fund revenues, 1985 and 2000, by scenario (millions of 1975$)............-...+.200% U.S Coast:Guard ‘expenditures 21950:tos1975 0m eee oz ae cee erste etc cre sakes eee cee Cn ean cee na ae ee 53. 54. 55. 56. Dis 58. 59. 60. 61. 62. 1-1. 1-2. 1-1. H-2. HH-3. 111-4. 1V-1. IV-2. IV-3. IV-4. IV-5. 1V-6. IV-7. IV-8. IV-9. 1V-10 V-l TOME Cea Ore Oni tlOs aint r ic eT eet a etek ce een Le eared tps oni ga hl ee he ee og Jul a Projections of domestic and international marine transport shipboard employment, 1975 to 2000.................. US intemmationavcerinitionsacinmeanscr.. ceeiet. ttn |. AE SOs eRe hale «Le AP MENS . Le eT Ee ae: «uae gele oe ee intercityitransportation: Gerinitionsrcar Scse-ceeaerene: heel twee. Jt yest. (ieee eee Clie) eho She ecb hidcr rahi ewes sickens so ee es Operating cost of inland towing transport, by cost item, twelve months ending June 30,1978 .............022+0005 Highway cost responsibility based on 1975 disbursement patterns and 1975 user-charge percentages, GU rT COMIN EOATIAN CMU OMS. OF 1 15).5) oii tc Sout cen a ty ete RET soa a tat oer an CEN deena ts ee te soe fo ks ek ae, a Eederaltaxscneauies tome aiternatives.1970,.19Go.and 20000 et aetna cr fee ee Rreecn re rmnn ryan pets sc scum ies Constant dollar 1975 and current dollar fuel taxes (constant federal user-charge percent) alternative (Sper gallons medium-growthscenatio; 1975 torzO00)) a eae ci Reena oh). Ae eR AIO SeeNMt ate ap ees cu =) Payments and expenditures occasioned by road types and vehicle class (1956 to 1975), (‘‘Pay-As-You-Go”), (Di ONSIOTCUTCENE GS) ieee deen tere ee cree Cate ed. Ma omameiy, eee sea wae Sec Saree ois opis! EO Mr ee ER fe ie ce dale ey: transportationsissuess21 O.7G2 5 cstabe) cea). ao ee Mee ica ans: GAOL als. Sia. ese eREUP EH. 2 ficPiemomame Lutes). s 06 6 ois. Examplesiofimodalgoals earyren tee -rt cee a cokes iy. Ret (ee EMR ans io! ek RMON Racer oihs ET ANG! 6fese 07% wie es EXAmplesiOnmimOc ad tODlECTIVES mtn cara wamtib. Vaulted ie ot, ee e-Laws Mica ve see iicmremireReueae si edoh os Isc ese 6 8 6 Sources of liquid fuels, medium-growth scenario (quadrillion Btu per year) ........ 0... ce ee et et ee ee te ee Liquid fuel energy: production to consumption, medium-growth scenario, 1975 (quadrillion Btus per year). ........... Liquid fuel energy: production to consumption, medium-growth scenario, 1985 (quadrillion Btus per year). ........... Liquid fuel energy: production to consumption, medium-growth scenario, 2000 (quadrillion Btus per year)............ Line items in government accounts, detailed air data, 1975 receipts (thousands of $)..........2. 0.00 eee eee eens Line items in government accounts, detailed air data, 1975 expenditures (thousands of $)..........-..2200008000. Line items in government accounts, detailed highway data, 1975 receipts (thousands of $) ............2.02220000e Line items in government accounts, detailed highway data, 1975 expenditures (thousands of $) ..............2-2208. Line items in government accounts, detailed pipeline data, 1975 (thousands of $)..........-.0+00 +e ee ee eee eee Line items in government accounts, detailed rail data, 1975 receipts (thousands of $) .......... 0c eee eee ee ee es Line items in government accounts, detailed rail data, 1975 expenditures (thousands of $) ...........2.225-e eee eee Line items in government accounts, detailed water data, 1975 receipts (thousands of $)...........0220200 +e ee eee Line items in government accounts, detailed water data, 1975 expenditures (thousands of $)...........-2..02-000+ . Line items in government accounts, detailed urban mass transportation data, 1975 (thousands of $).........+.++-e808: pr SSUES ASSIGNECEOMIarKEUTEAINS er. = neuer ins eu. hen SO eCRN LLIN. CORBA w few Fy Lone te Naate RN MRO R RCE Se, SMC Leh. Gs MliBM teks 6 se larne te Xxili bale bi 4 . ; : so. ‘ek att 4 7 7 6. OSA, Fhe He "7% ve Et 0 vin : ‘ . Pe, io? rte Se ats Shie ner 1 ane He ware e : ’ as : , bey b 7 vi MU ee f j * 7. | A a “tee ; “i nf 4s he al Rien Lit tas i. 4 : ; = live if ¢ i won wv hed rT. mueee.t at A: Tt ek ’> 2 7 > gets 0 Oe gd Ger wc ate Merino ate : ez. > => => =" : : . © TGR vy , m= ®% “ (éthe coirsr «ae aie Ore ibe “90 ; Mer th ty , “~ i is p \ i ah r2’. ah : 7B eal) . ve ea -" ; i 4. ‘ t i, ; . ’ OP ay is ae we ti ai, y @ og re eh i chs rel wie‘ awe! et abe equine ry) iv ae i a isu Sy helek GaN ee eee se me 7 here i ill EE ee AE eet ise Wihanteg fr P é 4 ab Nenana ay -" gy of it ma Fs dhe = ! ah ar ‘tr je Ny ak ‘a cau ; “ rd , ' ‘ , abn Pet rien atranves A = ap re i. bg ae ae a " al ees CaP Reale trl. Recah te ‘neta * ( . My HT hs. ©) | 1 ae r . a , dh are a \ \ uv = ve . vr bares + pie we - ag 4 a= 1S ao@ @ q ig i) mi ra LD.@O@s Zz, | 7 7 i ‘ 7 Tal eh hia : 6. ‘ee > dy ° | ere 6 ’ of Pia © + mM wu i s gerd =. . UE tr iit 7 “ ote Bs 404, iuay ong? 2h *eAe on wee my ay, eh alec I el a mY al ener ree am * fea «jin alk ig a id oy ie "hal m yf aah ai ae f aa mae dj 5 ty 9 ‘ : Py ait nl wl rai .) o:) om : = 7 mm i¢ 5 Preface The objective of the National Transportation Policy Study Commission (NTPSC) has been to formulate the broad outlines and primary themes of improved transportation policy for the United States. The Commission’s recommendations are based on analyses and forecasts of the nation’s needs and resources, taking into account the role of transportation in supporting national goals and shaping the lives and futures of American citizens. The Commission’s charter was mandated by Public Law 94-280, Section 154, of the 94th Congress (May 5, 1976),* which required: ‘“... a full and complete investigation and study of the transportation needs and of the resources, require- ments, and policies of the United States to meet such expected needs.’’ Further, the NTPSC was to “... take into consideration all reports on National Transportation Policy which have been submitted to the Congress... .’’ It should evaluate the relative merits of all modes of transportation in meeting our transportation needs. . .”’ and “... recommend those policies which are most likely to insure that adequate transportation systems are in place which will meet the needs for safe and efficient movement of goods and people.’’ The NTPSC’s final report was to include its findings and recommendations with respect to— 1. the Nation’s transportation needs, both national and regional, through the year 2000; 2. the ability of our current transportation systems to meet the projected needs; 3. the proper mix of highway, rail, waterway, pipeline, and air transportation systems to meet anticipated needs; . the energy requirements and availability of energy to meet anticipated needs; . the existing policies and programs of the Federal government which affect the development of our national transportation systems; and 6. the new policies required to develop balanced national transportation systems which meet projected needs. me To accomplish this set of tasks, the NTPSC’s final report has been organized to begin with a chapter that presents base-line information on transportation activities and institutions as of the most current date. Then, in order to evaluate or recommend changes, it was believed essential first to understand present conditions of transportation in conjunction with the activities of governments. Accordingly, the second chapter provides material on present transport policies and programs of the Federal government (indicating their effect on the development of the national transportation systems), followed by a third chapter with similar information for state and local governments. Chapter 4 looks beyond the U.S. to compare and contrast transport policies of other developed countries with the U.S. situation. In The NTPSC’s charter also calls for findings and recommendations related to transportation needs through the year 2000. Therefore, it was necessary to project transport and other circumstances to that point in time; this task is described, first, in Chapter 5, which presents the three scenarios used by the NTPSC to bound future economic and social anticipations. Chapter 6 describes the technological changes specific to transportation and communications which are expected to affect transport markets to the year 2000. Chapter 7 deals with externalities, such as pollution and safety, that both proceed from transport forecasts and are likely to influence those forecasts. The NTPSC’s charter further calls for special attention to energy requirements and availability. In Chapter 8, energy demand and supply projections are presented, based on analysis of the likely production and consumption of energy in the U.S., calculation of transport’s share of consumption, and review of how transportation will distribute energy commodities to the year 2000. That chapter displays extensive *The Federal-Aid Highway Act of 1976, 23 U.S.C. 101 (1977), 90 Stat. 448. XXV xxvi material on coal consumption and movement because coal is believed to be a primary energy source for the U.S. to the year 2000. The results of the NTPSC’s forecasts of passenger and freight activity from the base year of 1975 to the end-point of 2000 are given in Chapter 9. As with much of the Commission’s work, these data are presented by transport market, rather than by transport mode. The markets adopted concern rural, urban, intercity and internation- al movements, further divided as to passenger or freight transport. Because the NTPSC’s charter indicates special concern about transportation ‘“‘needs,’’ Chapter 10 cites the projected capital requirements of the transportation demand forecasts. Although the capital estimates are based on the NTPSC’s activity forecasts, additional material from a variety of sources about capital requirements was brought into the calculus. If new policies are not implemented, the activity forecasts of Chapter 9 and the capital forecasts of Chapter 10 indicate the nation’s transportation ‘‘needs.”’ Chapter 11 places in perspective the various estimates to 2000 by indicating how the price of transportation and the use of resources in the transport sector are expected to differ compared with the base year 1975. For the 1975 to 2000 period, total U.S. transport expenditures are expected to equal from $11.5 to $14.3 trillion 1975 dollars, depending upon which national growth estimates are adopted. The chapter shows how constant-dollar government subsidy of transportation is also anticipated to rise, from $17.5 billion in 1975 to perhaps $70.8 billion in 2000, although national expenditures for transportation in the year 2000 are expected to comprise a smaller share of the gross national product (or of per capita disposable income) than was the case in 1975. However, levels of service are forecast to fall, with time spent in travel rising dramatically. It should be noted that, to the maximum possible extent, all the NTPSC’s forecasts were based on ‘‘status quo’’ policy assumptions.* That is, the estimates to the year 2000 assume the continuation of current 1979 policies (except where new policies are already established by law to be phased in at a later date). Such a ‘‘status quo”’ forecast was necessary for comparative policy analysis reasons—to be able to contrast the result of imposing new policies by the year 2000 with the situation if present policies were to continue. On the basis of the NTPSC’s forecasts, major issues were identified, as described in Chapter 12. In response to the NTPSC’s legislative mandate, it was found that the nation will be unable to meet forecast ‘‘needs’’ to the year 2000, using current transportation systems, without declines in levels of transport service and increases in the resources devoted to transportation purposes. The issue is whether the U.S. desires to choose worsened service or the large expenditures necessary to continue present service levels. As to energy requirements and availability, the NTPSC found no lack of energy for transportation purposes, providing that the nation is prepared to pay the costs engendered. These costs involve not only money for the development of alternative energy technologies, and the transport of energy commodities, but environmental and safety costs of an uncertain magnitude. The issues surrounding the development of energy supplies and technologies are perhaps the most immediate concerns uncovered by the NTPSC’s investigations. The “‘proper mix of . . . systems to meet anticipated needs,”’ involves an issue that, as cited in the NTPSC’s legislation, forces the consideration of questions central to the development of new policies. Towards what mix of systems is present policy directing the U.S.? What are the consequences of that future mix? Is there a certifiable ‘‘best mix’’ of systems which policies might endeavor to achieve? What policies might achieve that ‘‘best mix?’’ How effective and efficient are such policies? Are there conflicts between measures that seek to achieve a ‘‘best’’ modal distribution and other values regarding freedom of choice and action? *The primary exception involved petroleum regulation, where the NTPSC made forecasts based on deregulation of energy prices. Past U.S. transport policies have never confronted such questions directly. It is the finding of the NTPSC that an appropriate mix of systems is best achieved through promoting an environment of free choice, by consumers and suppliers of service, where prices fully reflect the monetary and non-monetary costs of that choice. Thus, certain basic themes supported by the NTPSC’s investigation of transportation issues emerged. These include the importance of pricing mechanisms in competitive markets to determine transportation services required by the U.S. economy and the importance of neither distorting transport markets nor destroying the role of private enterprise when transportation is made a tool for achieving national objectives. On the basis of forecasts, and the identification of emerging issues, the NTPSC Commissioners recommended ‘‘... new policies required to develop balanced national transportation systems... .’’ Six major policy themes were adopted, as presented in Chapter 13. . National transportation policy should be uniform; . There should be an overall reduction in Federal involvement; . Economic analysis of intended Federal actions should be used; . When the transportation system is used to pursue social goals, do so in a cost- effective manner; . Federal involvement in (including financial assistance for) transportation safety and research is required; and . Users and those who benefit from Federal actions should pay. oO on 2WN = Based on these themes, NTPSC policies (as contrasted with status quo policies) were recommended in the functional areas of transportation: regulation; ownership and operation; finance, pricing and taxation; planning and information; and govern- ment organization. These new policies are designed to improve what is today a reasonably effective U.S. transportation system to meet the challenges with which it must cope through the year 2000. The policies encourage Federal action, in concert with the private sector and other levels of government, that are more consistent, flexible and cost-effective. The impacts of the NTPSC’s recommendations are discussed in Chapter 14, followed by Chapter 15 which suggests details of how the policies could be implemented. The concluding chapter summarizes the study and indicates specifical- ly how the NTPSC’s report responds to the mandates of P. L. 94—280. The sixteen-chapter final report of the NTPSC, in conjunction with its published special reports, represents several departures from past national transportation policy investigations. The NTPSC’s report is not only multi-modal, it is multi-market and deals with important influences external to transportation such as energy and communications. The NTPSC believes that national policy involves more than the actions of the national government and implies knowledge of the activities and contributions of other government levels and other institutions involved in transporta- tion matters; special attention was therefore paid to state and local government roles. The NTPSC believes that much can be gained from reviewing the policies of other countries and gave attention to such investigations. Above all, the NTPSC’s research was forward-looking, to discover the effect of today’s policies in a changing world, so as to make sound and lasting policy revisions. For that reason, forecasts were made of energy conditions, transport activity and capital requirements. Finally, the NTPSC went to great lengths to analyze the impacts of its recommendations and to suggest how new policies might best be brought into action. It is appropriate to conclude that the outlook of the NTPSC is unique among transport policy reports in its breadth and detail of analysis. Improved transportation policy for the United States is definitely in order. The report of the NTPSC recommends to the Congress and to the President the shape and extent of that policy. It is the hope of those who have produced this study that the recommendations will be carefully reviewed and acted upon to achieve an equitable and efficient use of transportation resources. XXvii ea a piper ¥ anny’ Ne ae ; en wares aiid | Wye Ratt gate By ge wld! sac , 1 deagevebaiye mar mre tut vm ‘sige yf 08 rr He Py r ; iL A ae ta hava ap moi senate ute Cai can ght ea ayy "i A a Sischactiae Sasol ae Sedo Shy GA call: Pre COMER RC ry we 1 INR? Mey texte ¥ ue y hel siete ee el ae Ki % 1 atl Mey orm: Met b) gi heey a seldah a ey Mana Aepiteay le » 4 a Na + via 0 jes ‘elites ean vt Anup) oe aby. ube. ? Fe tet | at Bsc a aed oot Brenan ee verne poste eae Nor ter aig es te aig noe A a in a 7 we iy igrk A PLT MND lta salerds at ae ect anyon and bd Rr Ve ee he ee We yFRI we a thi ‘ it likin. tell ucclashbadanreahtbicineh doi he . ee ht" thay ref i — Pagh iptey:- ra eedrieves an . at pleat. rt hasan a > eet ibe eee AIRS ic. iM ¥ ipo ae bey: eer: i ere if hal ae: Seraont ah sped ag et ae A, Sit ia? ip ; ope aie mal 00 1 ety > epi tte nc Aaah rota : Willen, ‘yy dag sib : ae ne me eat se teh Wise Looe ' if | Pa vt, las wie by ak on a ‘a es EAP YA (othsy vb", Spaske : ae gd ¥ ie wren) ~ » ee ; iT. a uae 4 ps 4 ik oe Py i ® on on ; a ya ai) am eet aN rokt aalt | Wy Noe ; nmin heads i. we re apl e e n .T v the a ’ Pap cary ves cE ; abo’ dirvsaleel Ae ss NATIONAL TRANSPORTATION POLICIES THROUGH THE YEAR 2000 . . * Transportation Activity and Institutions n ; A, 7 ee Pe a) iol ¢ 7 a a 4 pe Saul if ee) Transportation Functions, Institutions, and Activity in the U.S. THE FUNCTIONS OF TRANSPORTATION Transportation supports fundamental economic and social activities. It involves the movement of goods and persons to bridge gaps in time and space. Transport is pervasive, influencing business struc- ture and location and allowing alternative consumer choices—alternative selections of living sites and offices, factories, schools, shopping centers, and places for recreation and entertainment. Improve- ments in transportation permit more participation in community activities, better communication with oth- ers located anywhere in the world, and more stimula- tion and enlightenment resulting from travel. Improvements in transportation can facilitate eco- nomic growth through promoting economies of scale, increased efficiency, further specialization, and better use of expertise. Improved transportation can lower the costs of production and can increase competition among producers by expanding the area to which a given plant may distribute its products economically. Such competition may lead to lower prices and a wider choice of products for consumers. The cost and quality of transport services also influence the effectiveness of government activities, such as mail delivery, emergency services, waste disposal, and national defense. Further, changes in transport services, along with utility service exten- sions, preferential taxation and zoning, can affect patterns of land use. The positive functions of transportation should be weighed against its costs. To produce its services, transportation applies resources that otherwise would have alternative uses. Moreover, indirect costs result from supplying transport services. Transporta- tion accidents can injure, maim, or kill. Transporta- tion facilities or operations may spoil natural views, annoy with noise, pollute air and water, uproot or divide neighborhoods, encourage undesirable land use, and consume large amounts of nonrenewable resources. In addition, legal actions involving trans- portation may clog the courts. Substantial progress has been made in recent times to decrease such social costs. One purpose of this report is to recommend policy guidelines that enhance informed choices in the transportation field, considering both benefits and costs. THE OVERALL SCOPE OF TRANSPORTATION IN THE U.S. ECONOMY Annual expenditures for transportation in the U.S. have amounted to approximately 22 percent of the annual gross national product (GNP), equaling $416 billion in 1977. These expenditures are about evenly divided between freight and passenger transport.' The recent trend has been for passenger travel to increase in relation to the GNP while freight move- ment per dollar of GNP declines. The U.S. economy is less and less oriented to heavy goods; extractive industries and heavy manufacturing have become less dominant while the service sector of the econo- my has gained in importance. In fact, the total tons moved by transportation has remained a relatively stable figure since 1972.2 The average shipping distances of some commodities (Such as fruits and vegetables, oil and coal) have risen, so the number of ton-miles of movement produced by transportation modes has grown slightly.* Passenger transportation expenditures—about 94 percent for user-operated forms (mainly automobiles) and 6 percent for pur- chased services (mainly air travel and urban tran- sit—have kept pace with other personal consump- tion expenditures in recent years at about 13.5 percent of total dollars spent. Passenger transporta- tion expenditures have risen in number of dollars expended, however, from $58 billion in 1965 to over $172 billion in 1977.4 (These figures do not include personal consumption expenditures for foreign travel in 1977 of about $10 billion or purchases of largely recreational goods such as bicycles, personal air- craft, and private boats, which exceeded $11 billion.)® NATURAL RESOURCE USE Transportation is a major consumer of resources. Among the important inputs to transportation are 4 e TRANSPORTATION ACTIVITY AND INSTITUTIONS rubber, petroleum, steel, aluminum, and lead. Petro- leum is the most significant of these in terms of public concern. Transport is approximately 97 percent dependent on petroleum for its operation and 53 percent of all petroleum consumed in the U.S. is used by transportation. More than 30 percent of that petroleum consumption is by automobiles.® PERSONAL MOBILITY AND THE AUTO Personal transportation by automobile is inextricably linked to contemporary American culture. Such mea- sures as speeds and travel distances for personal trips have increased over the years, while simulta- neously urban and suburban forms and structures have changed in accord with changes in mobility. Shopping patterns have shifted from short, frequent trips to longer, less-frequent ones, tied to the growth of large, centralized shopping centers. Increases in social and recreational travel, particularly eating out in auto-oriented fast-food restaurants, is one attri- bute of new life styles. Work trip length has grown and changed in direction and choice of travel mode. TRANSPORTATION INSTITUTIONS Transportation functions are performed by a variety of institutions, organizations, agencies, and individu- als. These institutions, which can be separated broadly into private and public sector categories, influence how the transportation functions are per- formed. This first chapter initially highlights the institutions and organizations involved, noting their various roles; later sections of the chapter add to this discussion descriptions of the transportation facili- ties and services available to the nation, summarizing the levels of activity occurring in individual transport markets and onth various transport modes. THE PRIVATE SECTOR Consumers U.S. citizens on the average spend over an hour per day traveling. More than 80 percent of U.S. citizens of eligible driving age possess driver’s licenses, and air travellers totaled 280 million in 1978, with both figures on the increase.’ In spite of this personal involvement, a large portion of the population does not belong to a transportation consumer organiza- tion. However, the membership of organizations like the American Automobile Association and the Air- craft Owners and Pilots Association is substantial. These organizations sell services, such as insurance, and represent the interests of their members in the political arena. Firms A compilation of the firms that produce and sell goods connected with transportation would be a major undertaking, so as not to omit any of the thousands of firms of differing sizes and types (e.g., mining, refining, manufacturing, construction, whole- sale and retail sales, maintenance, services, opera- tors, insurance, financing) directly or indirectly con- cerned with transportation. Private enterprise in its many forms predominates in the U.S. transportation scene, contrasting with the situation in many other countries. As to the purpose and provision of trans- port services, about two-thirds of the nation’s total annual expenditures for transportation are made by individuals and small firms owning and operating vehicles.2 These expenditures are made for the purchase of vehicles and parts, fuel, insurance, parking, maintenance and the like. The firms that directly serve these markets are generally relatively small and usually make retail purchases from larger wholesale or manufacturing firms. Certain of the manufacturers, such as General Motors, are among the world’s largest firms. In some cases, these large manufacturers may distribute their products directly to private and government markets. As to the other third of U.S. transport expenditures, purchased ser- vices are provided by operators of all sizes in a variety of modal transport fields—such as transit, motor carriage, railroads, airlines, pipelines, water- ways, and ocean shipping. Those who produce and sell transportation tend to be well organized along trade lines. A large portion of the nation’s transportation operators belong to national or regional trade organizations (such as the American Trucking Associations, Inc.). Other organi- zations of firms exist too: for example, the Motor Vehicle Manufacturers Association, the Railway Sup- ply Institute, and the Aerospace Industries Associa- tion of America; all include manufacturers of trans- port vehicles. Those involved in constructing trans- portation ‘facilities also generally belong to nation- wide trade organizations. Those who produce and sell transportation are so thoroughly organized that they have established an organization of transport organizations, the Transportation Association of America. Shippers are consumers of transportation, and sometimes producers of transportation as well. Many of them own and sometimes operate much of the transport equipment they use; others rely instead on carriers. Perhaps the largest and most influential shipper organization is the National Industrial Traffic League. TRANSPORTATION FUNCTIONS, INSTITUTIONS, AND ACTIVITY IN THE U.S. @ 5 Labor It is estimated that transportation directly employs about one of every nine persons in the nation’s labor force,® including gas station and garage personnel and sellers of transportation equipment and related services. More than 93 percent of workers directly employed in transportation work in the private sec- tor.'° About half of all transportation employees work for filling stations, garages, and small firms." A large portion of the labor force of the commer- cial transportation industry (excluding gas station personnel and private owners and operators) be- longs to unions. Labor union membership statistics vary widely depending on the sources and definitions used. Appendix Table 1 summarizes membership based on selections from a number of sources. Smaller transportation unions can wield power far in excess of their membership because other unions may honor their picket lines. Early in their history most transportation unions represented workers in only one mode of transporta- tion. More recently, some have broadened their scope to represent workers in two or more modes or workers engaged in occupations other than trans- portation. In the rail and airline industries, labor union activity at the national level tends to predominate over local or regional activity. The Railway Labor Act, with its emphasis on a corporate system approach to orga- nizing and bargaining, may have facilitated this development. Government policy seems to have favored national concentration of bargaining in the rail industry. Court decisions have been rendered against some unions seeking local bargaining rights, thereby forcing those unions to bargain nationally.12 Most transportation unions are craft unions (those that represent workers with a common skill, rather than workers with a common employer). In the railroad and airline industries, the governing law (The Railroad Labor Act) apparently encourages craft unions: union elections can only be held among a single ‘‘craft and class.’’'* The National Labor Rela- tions Act governs Federal labor activities in most other modes. That act is not “‘craft’’ oriented, but transportation tradition has resulted in craft unions for most modes. However, a trend exists toward broadening the membership of many unions so that more unions are an amalgam of both the craft and the industry type. THE PUBLIC SECTOR Governments have substantial influence over trans- portation, although they employ a small percentage of the nation’s transport employees. Of the 766,000 government employees in transportation, the Federal government employs 75,000 in the U.S. Department of Transportation (DOT), and another 91,000 in the Postal Service. State and local governments employ 587,000."4 State and local governments fund the major portions of public transportation expenditures. His- torically, Federal involvement in transportation fo- cused on international and interstate transportation, but in the past two decades, it has become increas- ingly involved in local transportation as well. Government involvement in transportation encom- passes the construction and maintenance of high- ways, waterways, and airways; the ownership and operation of urban mass transportation services, intercity rail passenger service, plus air and marine navigation and traffic control facilities; the provision of flight information and air and marine search and rescue services; subsidy or other support for almost all forms of transportation; the formation and en- forcement of rules of operation for public facilities and services; the establishment of economic, envi- ronmental, and safety-related regulations; research and development; and the negotiation of agreements with other nations. INSTITUTIONS AND ACTIVITY IN THE LOCAL TRANSPORTATION MARKET INSTITUTIONS—THE FEDERAL ROLE The Federal government, though it does not general- ly own, develop, or operate local transportation, has a substantial influence upon it. The Federal govern- ment contributes to the financing of the nation’s local highways and urban mass transportation (details are covered in Chapter 11). It funds much of the planning related to develop- ment of public highways, airports, and urban mass transportation. As discussed in following chapters, the Federal government often conditions eligibility for the receipt of certain types of Federal program funds on the establishment of particular state or local agencies. In addition, Federal environmental and energy regulations may motivate local governments to promote modes which pollute less or are more energy efficient. Although the functions of Federal agencies are national in character, thus directly affecting most local transportation activity, the de- tailed discussion of Federal agency activities where the Federal role is predominant is presented in the intercity section of this chapter. State Governments State governments play a key role in transportation, providing many transportation facilities and services. 6 e TRANSPORTATION ACTIVITY AND INSTITUTIONS Further, because the powers of local governments derive from states, the transportation roles of local governments are influenced by state governments. In order to be eligible for Federal highway funds a state must have a highway department or agency. All 50 states have established such departments and most have established Departments of Transporta- tion. The nature and composition of state organiza- tions vary, but all such agencies have responsibility for developing and maintaining some of the highways within their state. In addition, some of the depart- ments have multi-modal planning and promotion responsibilities. In the past decade some states have become involved in funding airports, public transpor- tation, and rail operations. State highway and transportation officials have organized national associations including: the Ameri- can Association of State Highway and Transporta- tion Officials (AASHTO), and its affiliates; the Nation- al Association of State Aviation Officials and the National Conference of State Railway Officials; and the National Association of State Secretaries of Transportation. The National Governor’s Associa- tion, the Council of State Governments, the National Conference of State Legislatures, and the National Association of Regulatory Utility Commissioners ad- dress transportation issues as part of their broader responsibilities. Local Governments In general, states are divided into counties or parishes, of which there are more than 3,100 in the United States.'* In addition, thousands of communi- ties are incorporated. The Bureau of the Census has terms to describe different types of areas. They include: places; municipalities and townships; urban- rural areas; standard metropolitan statistical and consolidated areas; and urbanized areas."® The division of responsibility between state, coun- ty or parish, and incorporated communities varies over a wide spectrum. Additional complexity exists in states where the Federal government owns or exer- cises jurisdiction over major land areas (such as national parks, monuments, forests, and Indian reser- vations). In general, local governments regulate the use of public facilities within their jurisdiction (for example, highway speeds and parking laws), al- though they are sometimes subject to state or Federal guidelines. Some localities construct, main- tain and service public transportation facilities; some sponsor, own, or operate public passenger transpor- tation services. Some have taxing powers; others depend largely on funds provided by other levels of government. In the 1960s and early 1970s, beginning with the Federal Urban Mass Transportation program, the Federal government began to allocate funds directly to local governments.'” This has been a source of concern to some states. A number of national associations have developed to serve the needs of local government officials. Organizations such as the U.S. Conference of Ma- yors, the Urban League, the National League of Cities and the National Association of Counties have broad interests including transportation. Multi-Jurisdiction Agencies The Federal government has fostered the establish- ment of multi-state regional organizations for the purpose of development planning. Transportation is one of the concerns of such organizations. The three major types of multi-state regional organizations are the Title V Commissions, the Appalachian Regional Commission, and the river basin commissions (plus such other multi-state river basin institutions as Federal-state compact commissions and interagency committees). The eight Title V Commissions organized under The Public Works and Economic Development Act of 1965'8 represent about 60 percent of the land area of the U.S., along with a third of the nation’s population.'? Their focus is on industry, human re- sources, energy and energy conservation, natural resources, transportation, and tourism and recre- ation. The problem of coordinating separate urban transportation systems in an urbanized area that extends beyond the boundaries of a single state has resulted in the formation of special-purpose inter- state planning agencies. Through legislation enacted by each of the states in which the urban areas are located, these agencies have been assigned plan- ning responsibilities for the entire multi-state urban- ized area. PASSENGER TRAVEL—URBAN AND RURAL Local passenger travel uses both public and private vehicles. Transport using highways and highway vehicles is the largest component of this travel in the U.S. In fact, automobile purchase and operation costs constitute the largest element of the average household transportation budget.2° Over 114 million automobiles are registered in the U.S., approximately one car for every two persons or 1.8 vehicles per household.2* When the approximately 30 million trucks, 5 million motorcycles, and half million buses in the nation are added, there are over 150 million motor vehicles in the nation, mostly privately owned.” In 1975, for the first time, the number of vehicles in the U.S. exceeded the number of persons licensed to drive.2° With the continuation of present trends, 90 percent of the eligible population could be licensed to drive by 1980. TRANSPORTATION FUNCTIONS, INSTITUTIONS, AND ACTIVITY IN THE U.S. @ 7 The Highway System Highway mileage has not grown dramatically over the years. In 1921 the center-line mileage of roads and streets in America was 3,160,000.*4 By 1975 the total had increased by only 21 percent to 3,838,000 miles.*5 (In the same period the population doubled and auto ownership increased 10 times.)?© The major highway development has been improvement of the road system by paving, widening, and restructuring. A very small proportion of the mileage, generally representing the most developed highways, carries the vast preponderance of the traffic flow. The major functional categories used to classify roads are as follows:2” 1. Principal Arterials. The network of high-volume facilities normally carrying long-distance travel. The Interstate System and other freeways and expressways are included in this category; 2. Minor Arterials. The network of routes providing access to the principal arterials, and supporting intercity flow to the principal system; 3. Collectors. An intermediate system of roads gen- erally serving more localized travel; and 4. Local Streets. The lowest level in the functional classification, giving access to residences, farms and businesses. Congress has established a Federal-aid highway system, primarily consisting of Principal and Minor Arterials, defined as follows:28 1. Federal-Aid Primary System. A system of con- nected main highways designated by each state subject to the approval of the U.S. Secretary of Transportation; 2. Federal-Aid Secondary System. A system select- ed by state highway departments and other appropriate local road officials that may include farm-to-market roads, rural mail routes, public school bus routes, local rural roads, access roads to airports, county roads and township roads, all subject to the approval of the U.S. Secretary of Transportation; ; 3. Federal-Aid Urban System. A system established in each urbanized area of a state, located to serve major centers of activity, subject to approval of the U.S. Secretary of Transportation; and 4. The Interstate System. A system established by Congress connecting principal metropolitan ar- eas, cities, and industrial centers, to serve the national defense and to connect at suitable border points with Canada and Mexico. Local Highway Congestion Over the period from 1970 to 1975, total travel expressed as daily vehicle-miles of travel (VMT) increased faster than highway capacity.” Generally in the U.S., highway congestion worsened. Both rural and urban peak-hour speeds declined, meaning time spent in travel increased.°° The actual congestion conditions as reported to the Federal Highway Administration by states for 1975 are illustrated in Figure 1 for urban areas. Maps in Figure 1 show that 40 percent of urban interstate and 41 percent of all arterial travel occurred at levels indicating some congestion. On a similar basis, 19 percent of travel on urban collectors occurred in congested condi- tions during peak hours. Transit Transit systems operate both by road and rail, serving approximately 5 percent of all local travel.* However, much of this travel is at peak rush hours in Our major urban areas when people commute to and from work. Recent intensive investment in transit, particularly in large urban areas, has served primarily to arrest rather than reverse the long-term decline in transit’s share of travel. If such public spending continues, some believe the long-term decline may be reversed.* Transit services declined precipitously after World War Il. From 1945 to 1975, transit ridership fell from 19 billion to under 6 billion passengers per year, yet fares rose so rapidly that transit revenues actually increased by 45 percent.** However, operating costs more than tripled in the same period.*4 What had been a profitable activity in the decade of the 1940s, incurred increasing deficits. It was against this bleak picture of declining service and patronage that local, state and Federal agencies attempted to revitalize transit. The first target often was to hold the line on transit fare increases in an effort to stem continuing rider- ship losses. Fares were stabilized by these efforts. On a current dollar basis there have been only slight fare increases from 1973 to the present.%6 On a constant dollar basis fares have actually declined in the same period despite substantial cost increases and inflation.*’ As a result, much of the cost burden has shifted from the farebox to the public treasury. In 1967 fares covered 96 percent of operating costs; this declined to 77 percent in 1972 and 53 percent in 19774 In conjunction with attempts to hold down fares, new programs have been tried to improve the quality and attractiveness of transit service as well as its availability. The effects of these programs are just becoming evident. The number of transit vehicles available for service has slowly increased since 1974, with the retirement of old vehicles and the expansion of fleets.°° Deliveries of new vehicles jumped from the 3,500 per year range in the early 1970s to 5,500 per year since 1974, with most replacing outdated equipment.*° Miles of service 8 e TRANSPORTATION ACTIVITY AND INSTITUTIONS FIGURE 1. Percent of congested? urban travel. Interstate Hawaii basa} Less than 10% 10% to 24.9% 25% to 49.9% Be 50% to 74.9% Eas More than 74.9% NR Not Reported Other Principal Arterials Alaska Hawaii SOURCE: U.S. Congress, House, Committee on Public Works and Transportation, The Status of the Nation’s Highways: Conditions and Performance, Report of the Secretary of Transportation, 95th Cong., 1st sess., Washington, D.C.: Government Printing Office, 1977, pp. 115-116. aPeak hour volume-to-capacity ratio greater than 0.8. TRANSPORTATION FUNCTIONS, INSTITUTIONS, AND ACTIVITY IN THE U.S. @ 9 Minor Arterials Alaska Hawaii ee Less than 10% 10% to 24.9% 25% to 49.9% 50% to 74.9% eee More than 74.9% NR Not Reported Collectors 10 @ TRANSPORTATION ACTIVITY AND INSTITUTIONS showed a similar reversal in trend in 1974 and have continued climbing.4’ As a result, both the vehicle fleet and miles of service have returned to the levels of 1960.42 Ridership has responded slowly to these improve- ments, increasing only sporadically since a large jump during the 1974 energy shortage.** As a result of greater urban dispersal in many cities, average journey lengths by transit have increased 50 to 100 percent since the early sixties,“4 meaning that transit users today travel farther at less cost per mile to the rider. There have also been identifiable changes in public attitudes towards transit use. The Roper Organization has discovered as part of its continuing surveys a 20 percent increase since 1973 in the portion of the U.S. population that indicates transit is available to them for travel to work.45 These surveys have also observed that, although the proportion of the population preferring to use transit for work has actually declined since 1973, it is still more than three times actual transit ridership.*6 Transit service is highly variable from city to city. City size, age, and spatial form have all affected levels of transit service and utilization. Extensive transit service exists predominantly in cities that developed prior to the auto’s ascendancy, and those cities still carry the great share of transit patrons today. Approximately 75 percent of all transit activity occurs in cities of over 2,000,000 people.*’ Almost all of the ridership decline from 1961 to 1976 occurred in cities under 500,000 in population.** In that same period, transit in the group of cities over 500,000 held steady or increased slightly in patronage.*? School Buses Although rarely treated as one of its major elements, school buses are a component of the transportation system. Over 22 million students were transported to school at public expense in the 1975-1976 school year.*%° A fleet of approximately 300,000 vehicles provided this service at an estimated cost of slightly over $2.3 billion, or about $100 per pupil per year.*' These vehicles are estimated to have traveled over 2.5 billion miles per year.5* An important attribute has been the exemplary safety record of school buses, with fewer than 100 pupil fatalities registered in each year from 1974 to 1977.5 FREIGHT TRANSPORT—URBAN AND RURAL Goods movement in local areas is of two distinct types. The first consists of shipments that are part of a larger intercity movement. This transport activity is covered primarily under the intercity freight section of this chapter. The second type of local freight movement involves the pickup and delivery of goods within a local area. Most local movements occur in trucks. Of the total truck fleet of over 28 million, approximately 8 million are in use for service or commodity transportation rather than for personai transport.“ Although 47 percent of national truck vehicle- miles are traveled on urban streets,*> the urban sector claims a much smaller percentage of total ton- miles by truck®* due to the smaller size of the typical truck in use in urban areas and the large proportion of the urban truck fleet used as service vehicles that do not transport goods. However, the fleet of goods- carrying urban trucks earns a larger-than-proportion- ate share of industry revenue. The Transportation Association of America (TAA) estimates that $54 billion of the total $110 billion paid to the trucking industry in 1976 went to local trucking.°’ This would place the earnings in local trucking at 50 percent of all trucking revenues and 37 percent of all U.S. freight revenues. Estimates place the level of expen- ditures for local trucking in rural areas at approxi- mately $11 billion or 20 percent of the total $54 billion paid for trucking in 1976.5 Despite the large share of freight revenue in- volved, local trucking has been the object of little government interest or involvement. As a conse- quence, local goods movement appears both the least regulated and the least studied of transporta- tion activities. The portion of local freight related to intercity transport has two components. The first is the local leg of an intercity journey. One measure of the scale of the activity is provided by the 1973 Truck Survey published by the Federal Highway Administration. That survey established that truck trips representing 58 percent of all truck ton-miles had their destination in a Standard Metropolitan Statistical Area (SMSA) and 35 percent of all truck ton-miles was destined to the central city of a SMSA.°° An additional 32 percent was destined to small cities between 2,500 and 50,000 population and 9 percent to rural areas.© The second component of local goods movement related to intercity travel is the pickup and delivery of goods in the local area for consolidation into intercity shipments by other vehicles. It has been estimated that more than half of the 3.4 million tons picked up and delivered by trucks in SMSAs was for this purpose.® The element of urban goods movement involving purely local movements accounted for the remainder of the tons moved. Of these movements, approxi- mately two-thirds went from warehouse to retailers and factories and the remaining were deliveries from retail sites directly to consumers.® Of the 23 billion TRANSPORTATION FUNCTIONS, INSTITUTIONS, AND ACTIVITY IN THE U.S. @ 11 pickup and delivery stops, approximately 80 percent were by service vehicles, particularly refuse collec- tion and mail.® Local movements exhibit very different patterns depending on the commodities involved. Such pat- terns are determined by the frequency of stops made, the size of the shipments and the distances from home base to delivery. Delivery trucks with generally only one stop in a delivery area, such as trucks bringing material to a construction site, have all their miles attributed to the trip from base to zone (called stem driving). On the other hand, mail delivery vehicles have only 20 percent of their miles in stem driving and 80 percent in travel within the delivery area, called zone driving.” Variations in the patterns of truck movement can have consequences for the cost of goods, fuel consumption, pollution and the contribution of trucks to street congestion. For instance, changes in stem- driving distances can appreciably affect congestion patterns. These trips typically occur in peak hours and use major arterials, while zone trips tend to be midday trips occurring on local streets. Reduction in stem mileage driven, as a result of the relocation of firms responding to new population patterns, can reduce congestion and delivery costs. More efficient delivery routes within zones, and increases in total shipment sizes, can have considerable effect on miles driven, fuel Consumed, and total transport costs. Zone driving, involving perhaps 30 or 40 short pickup and delivery trips per truck per day, can cause much of the friction between cars and trucks in downtown areas during working hours. High transport costs push producers and retailers toward fewer and larger shipments. Such pressures have contributed to the decline of home deliveries and small grocery and retail stores. The economies of large shipments to fewer sites have contributed to the growth of supermarkets and shopping centers. An effect has been to place the goods movement burden on the individual consumer, who is forced to travel greater distances to larger, more centralized facilities. Historically, shopping trips accounted for 7 to 8 percent of vehicle-miles of travel or over 100 billion vehicle-miles per year.® Shopping trips tend to be longest in rural unincorporated areas, and short- est in small cities, increasing in length with city size.© Simple logistics applied to urban truck patterns reveals large-scale truck movement and freight cost reductions result from consolidation of shipments on delivery vehicles, better organized routing and scheduling and similar operation devices. Shifting truck delivery to off-hours or separate streets and better coordination with loading and unloading facili- ties have also been examined as ways of reducing congestion and costs.®” On the other hand, there are benefits to the present system, such as name recog- nition and advertising on privately owned vehicles and greater control and flexibility in dedicated vehi- cles. INSTITUTIONS AND ACTIVITY IN THE INTERCITY TRANSPORTATION MARKET INSTITUTIONS—THE FEDERAL ROLE Domestic interstate transportation falls into two general classes, depending on whether or not it is regulated by interstate transportation regulatory commissions. Regulated transportation accounts for about 20 percent of the nation’s annual transporta- tion expenditures (34 percent of nationwide freight expenditures, and 9 percent of nationwide passenger expenditures).® The Federal government develops or owns and operates most of the nation’s airways and water- ways, and some roads on Federal lands. It also owns and operates the Alaskan Railroad and two Washing- ton, D.C., airports. State and local governments own and operate the highways and most major commer- cial airports. Pipelines and railroads own their rights- of-way. The Federal government has increasingly become involved in rail matters. The National Railroad Pas- senger Corporation (Amtrak) is directly subsidized by Congress and provides about 90 percent of the nation’s intercity rail passenger service.® The Conso- lidated Railroad Corporation (Conrail) operates most of the rail freight service in the Northeast region of the nation. The Federal government organized this private corporation and financially supports it.’ Federal laws recently passed have made available increased financial aid to private railroads (loans, loan guarantees, and stock purchases as well as grants to state governments faced with line abandon- ments).” The trucking industry covers a broad distribution of firms—tranging from individual independent own- er-operators to unregulated carriers of agricultural commodities to large common carriers regulated by the Interstate Commerce Commission (ICC). As shown in Appendix Table 2, the ICC classifies regulated motor carriers according to the nature of service they provide. These classifications are bro- ken down in considerable detail based on the commodities transported and the type of carriage provided. The railroads and motor carriers have each estab- lished groups of regional freight traffic bureaus to facilitate this process. The intercity bus industry has also established passenger bureaus for the same 12 e TRANSPORTATION ACTIVITY AND INSTITUTIONS purpose. The ICC must approve the proposed rates before they become effective. The intercity bus industry provides the most nearly ubiquitous service of all passenger common carrier modes, covering about 15,000 communities of which only 1,000 are served by other intercity common carriers.”2 Although the ICC regulates between 600 and 700 bus companies, two companies, Greyhound and Continental Trailways, have a large share of the intercity market, accounting for about 65 percent of the intercity bus passenger-miles.’”* Most other bus companies serve very limited regions of the nation. U.S. aviation falls into three broad categories: general aviation, air carriers, and military aviation. The Civil Aeronautics Board (CAB) has held econom- ic regulatory jurisdiction over air carriers (although economic regulation is now scheduled to be phased out of existence by 1985), including domestic and international ‘‘trunk’’ airlines, local service airlines, and supplemental air carriers. The trunks generally serve major intercity markets, and the local service airlines have served regional or short-haul markets. The supplementals are non-scheduled air carriers. Commuter carriers, which must use smaller aircraft than the trunks and local service carriers, provide scheduled service in short-haul markets and have not been regulated by the CAB. In addition, air carriers operating solely within the boundaries of one state are outside CAB regulation (although occasionally they are regulated by states). The water transportation industry comprises three types of carriers: inland shallow-draft carriers, the Great Lakes and intracoastal shipping companies, and deep-draft ocean carriers which engage in international trade. A physical characteristic which differentiates these classes of water transportation is draft. Inland barges and towboats are normally restricted to shipping drafts of nine feet or less. About 1,850 commercial companies operate on the U.S. inland waterways, but about 10 percent of these are subject to ICC regulation.” The rest tend to haul exempt bulk commodities by barge. Great Lakes ships operate at drafts of no more than 25 1/2 feet, while ocean ships generally operate at draft of no less than 35 feet. All shipping which occurs between U.S. ports must move in ‘‘U.S.-flag’” (i.e., U.S. built, owned, and operated) ships.”© This includes oceanborne trade between the mainland and the noncontiguous areas of Alaska, Hawaii, and Puerto Rico. There are many U.S.-owned ships registered under foreign flags of convenience. Under Section 902 of the Merchant Marine Act of 1936 these ships are subject to requisition for U.S. maritime support.’® At the begin- ning of 1975 the ocean shipping industry was comprised of approximately 103 owners, 25 opera- tors and 40 shipping agents.’ Few international marine carriers are subject to ICC regulation. In 1976, only five carriers were so designated. Their combined operating revenues — were $1,583,281.78 The Federal Maritime Commission (FMC) is the principal government agency that deals with commercial conduct of the international mari- time community, being responsible for implementing Federal statutes that regulate both U.S. and foreign ships engaged in carrying import and export trade. FMC has the task of assuring the fairness of ocean freight rates and of competitive practices of carriers in the U.S. ocean trade. The freight forwarding industry is also active in interstate and international freight movements. Ship- pers hire freight forwarders to organize and broker shipments, select carriers, and keep track of move- ments; certain forwarders act as shippers them- | selves. Some freight forwarders also provide or arrange pickup and delivery, packaging, warehous- ing, consolidation, financing, and insurance. Inter- state freight forwarders are regulated by the ICC; international freight forwarders are regulated by the FMC; air freight forwarders are regulated by the CAB. Currently, the interstate pipeline industry trans- ports primarily oil, oil products and gas. Ownership of oil and oil-product pipelines falls into three catego- ries: single ownership; joint venture; and individual- interest pipelines. There is one coal slurry pipeline operated in the U.S. Most single-owner pipelines are owned by subsidi- aries of oil companies. Oil companies tend to be both the owners and users of joint-venture pipelines. In general, joint-venture companies have been created by several parties interested in providing service to a specific region. Usually, these parties assume owner- ship shares in the venture in proportion to the throughput commitment each is willing to make. Individual-interest pipelines differ from joint-venture pipelines in that each of the several parties involved owns an exact share of the pipeline capacity. Each owner assumes responsibility for rates, regulations, throughput commitments and the like within his share. The recently completed Trans-Alaska Pipeline System has this type of ownership. The institutional structure of natural gas pipelines differs from that of oil and oil product pipelines in that natural gas pipeline firms generally serve as facilita- tors or wholesalers in the natural gas industry. They purchase gas from producers and sell it to local utilities which distribute it to consumers. Because they own what they transport, they are not consid- ered common carriers. They do not charge a custom- er a rate for transporting gas from one place to another. Although gas pipeline companies purchase most of their gas from oil companies, nearly all major gas TRANSPORTATION FUNCTIONS, INSTITUTIONS, AND ACTIVITY IN THE U.S. e 13 pipeline companies are financially involved with corporations which engage in exploration and drilling for natural gas. Gas producing companies are in- creasingly becoming subsidaries of the pipeline companies. PASSENGER TRAVEL—INTERCITY Intercity passenger transportation carriers have shown mixed trends in recent years. There have been service gains in the air and highway modes.” But there also has been declining service in the national rail and bus systems.® The situation today can be characterized as one of better service than in the past, but with fewer places where services (or significant choice of services) actually exist. Total intercity passenger-miles of travel grew by 97 percent from 1960 to 1978, mostly on the nation’s highways.*' Significantly, the highway share of inter- city passenger-miles has actually declined, from 90 percent in 1960 to 85 percent in 1978.®* At the same time, the relative shares of rail and bus travel also declined, from 2.5 percent to about 0.3 percent for rail, and from 2.5 to less than 2 percent for intercity bus.® Air has been the great gainer, increasing five times in passenger-miles, and tripling its share of travel in the intercity market from 4 percent to over 12 percent. Because of the expansion of air travel, the public-carrier share of intercity travel has grown, even as rail and bus declined. The Passenger System The highway system’s significant component for intercity movement is the National System of Inter- state and Defense Highways (the Interstate System). With more than 39,412 miles of the total 42,500 mile system open to traffic in 1978, the Interstate System has become a leading conduit for intercity travel. The Interstate portion of the principal arterial network carries 20 percent of the U.S. vehicle-miles of travel in rural areas, using less than 1 percent of the rural road mileage.® All principal arterials (including the Interstate System) accounted for only 2.5 percent of rural miles of highways and yet carried 40 percent of travel in rural areas, including some local rural travel and the preponderance of intercity travel.®’ BUS The Interstate System also serves many of the approximately 1,000 bus companies that provide intercity service with a total fleet of 20,000 buses.® These buses run over a billion miles per year carrying approximately 330 million passengers.®? Bus service operates in 15,000 U.S. communities with over 50,000 scheduled and flag stops. It is estimated that virtually all communities over 5,000 in population have intercity bugs service, as do 96 percent of communities between 2,500 and 5,000 in population.*’ For more than 14,000 of these places, bus is the only intercity public carrier service avail- able.% In many, however, service levels have been declining, sometimes to as few as one bus per day. Charters and package express service have each grown from approximately 8 percent to 16 percent of bus revenues since 1960.% Charter bus rates are lower per mile than regular bus fares,% and offer groups of travelers direct, long-distance service. / RAIL The decline of railroad passenger travel, on the other hand, has been slowed only by the infusion of public funds. In 1920, some 20,000 daily trains operated over a 226,000 mile network. By 1970, when Amtrak assumed responsibility for most passenger rail oper- ations, there were fewer than 300 daily departures, with yearly losses estimated at $252 million.’ Amtrak has attempted to reverse this decline by restoring and revitalizing service. As of 1977, the Amtrak system, with 24,000 route-miles, served 532 places with 350 locomotives and approximately 2,000 rail cars.% Amtrak transports approximately 20,000,000 passengers annually.% AIR In 1960 air travel was 40 percent of the public carrier sector;'© by 1978, air carriage doubled its share to more than 84 percent of public-carrier passenger- miles.1°' Because of longer average trip lengths, the air carriers’ share of miles traveled exceeded their share of total passengers carried. Air travelers totaled 240 million in 1977, and reached approxi- mately 280 million in 1978.'° Approximately 58,000 city pairs were served by over 13,000 flights per day ini 97718 The number of aircraft in certificated intercity service, approximately 2,200 in 1977, is not dramati- cally larger than the number of aircraft in service in 1960 and is actually smaller than the fleet in service in 1970.'% The dramatic difference comes in the size and speed of the aircraft in use. The number of points served by trunk and local-service carriers has actually declined as those firms have withdrawn their operations from smaller communities, although com- muter air carriers, using smaller aircraft, have often become replacements. In 1972, the last time an extensive inventory of the airport system was made, 93 percent of the U.S. population was within 30 minutes driving time of an airport and 86 percent was within 60 minutes of an airport with scheduled service. 1° The general aviation fleet has also grown rapidly. Over 185,000 private aircraft used for business and recreation operate in the U.S.'°%° They constitute the 14 e TRANSPORTATION ACTIVITY AND INSTITUTIONS major portion of aircraft operations at most airports. In the 427 airports with Federal Aviation Administra- tion traffic control towers, the distribution of the 67,000,000 aircraft operations conducted in 1977 was as follows:'°” Air Carrier 15% Air Taxis 5% General Aviation 76% Military 4%. Activity and Levels of Use By any method of counting and definition, the total amount of intercity travel is enormous. The TAA, which reports a consistently defined series of esti- mates on an annual basis, shows total intercity passenger-miles of travel to be over 1,440 billion miles in 1977 or roughly 7,000 miles per capita per year.'° That would constitute about 2 1/2 hours of intercity travel for every person in the country each week, on top of the amount of time normally spent in local daily travel. Public carriers provide 14 percent of that travel, moving approximately 640 million passengers per year.'°° The changing distribution of passenger-miles of travel among the common carrier modes in the postwar period is shown in Figure 2 and Appendix Table 3. Passengers travel for a variety of reasons. Visiting friends and relatives has been predominant, explain- ing almost 40 percent of all intercity travel, but in recent years other purposes have increased in proportion (see Appendix Table 4). Changing demographic trends in the U.S. likely will continue to modify the amount and kind of travel in the intercity market. Among notable trends are the following:"'° 1. Expansion of industries and occupations with high travel potential, such as service industries and white collar occupations, will increase busi- ness travel faster than the general level of eco- nomic growth; 2. Increased affluence and more leisure time will stimulate pleasure travel and tourism; 3. Changing age distributions mean more persons in high-travel-potential age groups; 4. Having fewer dependents allows more time and disposable income for travel; and 5. The rising relative affluence of other countries will increase tourism to the United States, creating new demands on the intercity system. Quality and Cost of Service As the previous descriptions indicate, the U.S. today has extensive capacity for intercity passenger travel. Table 1 summarizes national service levels. The system’s great strength is ubiquity of service. Few areas of the U.S., and even a smaller proportion of the population, are beyond a reasonable access time to the two major intercity travel modes: auto on the Interstate and the. scheduled air carrier. The bus system is similarly pervasive, providing access to even very small communities. But trends in coverage indicate that service is becoming less pervasive, with reduced public carrier service to small communities. Statistics each year show fewer communities served, as carriers try to shift service toward more lucrative high-density markets." The advent of an active and healthy commuter airline service system has helped to sustain service in small communities where trunk or local-service air carriers have withdrawn. Commuter carriers have often been able to increase service points and expand schedule frequencies as a benefit of using smaller aircraft. Overall, however, many of the communities identified as receiving bus or air service are receiving minimum service, i.e., one departure per day, or even less. Amtrak has been a major example of a Federal attempt to maintain service in areas not able to justify it economically. Federal Amtrak subsidy has grown rapidly without any sign of tapering off, recently ex- ceeding $500 million per year in providing service to 20,000,000 riders.''? Local air carriers have likewise been subsidized in the range of $70 to $80 million annually to sustain service to small communities.''? Subsidy programs for bus have been enacted by the 1978 Surface Transportation Assistance Act, ''* but not yet appropriated. Some states have programs under which subsidies of certain kinds are made available for state support (such as loans for new equipment and support for operating costs related to new services). Expenditures to date under these pro- grams have been relatively small.''® Present intercity service offers limited speed and cost options. In short-range markets, there are no substantial high-speed options—air being relatively slow due to excessive access times, and the auto and bus being fixed at a maximum upper speed limit Present intercity service offers limited speed and cost options. In short-range markets, there are no substantial high-speed options—air being relatively slow due to excessive access times, and the auto and bus being fixed at a maximum upper speed limit of 55 miles per hour. This market is often indicated as having potential for high-speed rail service; however, substantial capital investment is required. Where auto, bus, and air speeds are often impaired by road and airway congestion, rail services may gain market share when rail speeds and service levels begin to compare favorably with the other modes. Similarly, there could be need for a mode interme- diate in speed between the auto or bus and air TRANSPORTATION FUNCTIONS, INSTITUTIONS, AND ACTIVITY IN THE U.S. @ 15 Intercity passenger-miles by common carrier, 1940 to 1978 (in billions). FIGURE 2. 180 160 140 120 100 Miles (billions) 80 60 40 1940 1945 1950 1955 1960 1965 1970 1975 1978 Year SOURCE: Transportation Association of America, Transportation Facts and Trends, Washington, D.C.: 1978, p. 18. aLess estimated suburban passengers not on commuter tickets. transport for longer-distance travel at a moderate price. In some respects, this gap is being filled by a diversity of price-service choices in the air mode, including off-peak discount fares and charters. With the exception of peak holiday periods, the non-urban intercity system does not suffer now from serious congestion problems. Highway congestion is typically a problem only around major urban areas where conflicts between local and intercity traffic occur. If current growth in traffic continues, however, intercity congestion could become widespread. The relative share of Interstate facilities and arterials operating at congested levels is shown in Figure 3. Air corridors and airports have gained capacity as a result of larger aircraft and increased load factors, so that air congestion has not been a major 16 © TRANSPORTATION ACTIVITY AND INSTITUTIONS TABLE 1. Intercity public-carrier passenger service, 1976 Number Average Average Number Route of Fare Average Passenger of Length Points Per Mile Speed Trip Mode Vehicles (Miles) Served (Cents) (mph) Length intercity, Bus eins iiilece Wace leenivenees oes 20,000 276,000 15,000 °5.14 50 110 Intercity Ralls Mes pete increta 2,000 27,000 432 £556. ier 46 200 Alri Carriercice cord ic seveien ess eeinac suas 2,400 322,000 645 8.16 400 700 alnterstate Commerce Commission, The Intercity Bus Industry, Washington, D.C.: Government Printing Office, May 1978, pp. 21-26. bAssociation of American Railroads, Operating and Traffic Statistics, 1976, Washington, D.C.: June 1977, p. 5. cU.S. Department of Transportation, Transportation Systems Center, National Transportation Statistics, Cambridge, Mass.: September 1978, pp. 14-16. FIGURE 3. Peak-hour operating speeds, by functional highway system, 1970 and 1975 (percent of miles). Ee 1970 1975 Interstate Other Principal Arterials Collectors Urban 45 30 14 13 Not Collected is ; <35 35-44 45-54 >54 <= 35 35-44 45-54 >54 m.p.h. m.p.h. 85 Rural 13 1 1 30 35-44 45-54 >54 <35 3544 45-54 >54 m.p.h. m.p.h. m.p.h. SOURCE: U.S. Congress, House, Committee on Public Works and Transportation, The Status of the Nation’s Highways: Conditions and Performance, Report of the Secretary of Transportation, 95th Cong., 1st sess., Washington, D.C.: Government Printing Office, 1977, p. 96. concern."'® As air travel demand grows, hub volumes such as through-ticketing and baggage handling, may be alleviated by fewer connecting operations that would be characteristic of a true intermodal and direct routings between medium and small hubs. system are examples of the difficulty. Generally only the automobile provides unified service from origin to Intermodal Connections destination. There are few intercity bus and rail connections at airports, few good transit services to A remaining weakness in intercity service is poor airports, and little connection between bus and rail. connection between modes of transportation. The Auto access to bus and rail is also weak, often due to lack of information and other supporting services, the high-density downtown sites of bus and rail TRANSPORTATION FUNCTIONS, INSTITUTIONS, AND ACTIVITY IN THE U.S. @ 17 terminals, which make parking difficult and expen- sive. Some development of suburban terminals is making rail and bus services more accessible to automobiles.'’” Airports, on the other hand, have become increasingly accessible to automobiles over the past ten years.''® Large facilities for long-term parking are more generally available at airports. Automobile rental systems offer extensive, auto- mated means for intermodal transfers at destination airports. Safety Overall, the U.S. intercity system is one of the world’s safest, and in terms of accident rates per mile of travel it is continually improving its record. The fatality rate per mile has declined 40 percent in the last decade,''® yet total accidental deaths remain high due to growth in use of the system rather than to its safety characteristics. U.S. accident and death rates per mile of intercity travel average 3.6 per 100 million miles and are much lower than comparable rates in other countries.'*° The intercity public-carrier modes have accident and death rates far lower than the auto mode.'! FREIGHT TRANSPORT—INTERCITY The Intercity Freight System The physical size and capacity of the U.S. freight system is prodigious. It provided over 2.3 trillion ton- miles of freight service in 1977'* and encompasses the vehicles, terminals, rights-of-way, and other facilities engaged in freight movement. TABLE 2. Private and for-hire trucks by type, 1975 Private? Number Percent Single Unit Trucks PIN UECL NS TOR baie Sac A Roepe 22,432,496 94.9 PoAXIES ern es i ees. | oetat aes 596,524 2.5 Total Pare SIMU sinks ia ccc SS 23,029,020 97.4 Combinations PAT PAM Se coren aL chan atecasasbucivevens 102,078 0.4 (tals ga Ra OS I ain i asa ele 198,609 0.8 BPON MOTE AXIOS cores co sscds.cncesceceecesss 318,301 1.4 Total Combinations .................cccceee 618,988 2.6 CRN oe 92 te a a A 23,648,008 100.0 VEHICLES Highway vehicles constitute the largest component of the freight-vehicle fleet. There were approximately 28 million trucks in the U.S. in 1977, more than twice as many as in 1965.'25 About 1.2 million were owned by Federal, state, and local governments.'** Approxi- mately 40 percent of the non-government fleet is used by individuals as personal vehicles; the remain- ing 15 million vehicles include a variety of types and sizes as tabulated in Table 2.'2° Although large tractor-trailer combinations constituted less than 5 percent of the total, they are responsible for the majority of ton-miles of service provided by both for- hire trucking and private industry.'76 The rail-car fleet consists of approximately 1,700,000 rail cars and 27,700 locomotive and booster units.'*” Approximately 200 of these units are electrically powered.'® The others (except for 11 remaining steam engines still in service)'*9 are die- sels. The car fleet, with a variety of types as shown in Table 3, is owned by the railroads, car companies, and shippers. A decline in the number of cars in service has been offset by a steady increase in average capacity to over 75 tons per car.'%° The commercially navigable waterways of the U.S. exceed 25,000 miles in length.'*' The water fleet is predominantly located on the Mississippi River sys- tem and the Gulf Intracoastal waterway and consists of approximately 4,000 towboats and tugs, plus almost 27,000 non-self-propelled vessels.'s* Tow- boats average over 100 feet in length and some of the newer towboats extend 200 feet.'*> The number of towboats in the fleet has remained nearly constant over the last 5 years.’ For-Hire Total Number Percent Number Percent 378,845 39.4 22,811,341 92.7 43,276 4.6 639,800 2.6 422,121 44.0 23,451,141 95.3 70,181 had 172,259 0.7 145,899 Toe 344,508 1.4 321,499 33.5 639,800 2.6 537,579 56.0 1,156,567 4.7 959,700 100.0 24,607,708 100.0 SOURCE: American Trucking Associations, Inc., American Trucking Trends, 1975. aAbout 3 million of the private trucks are farm trucks. 18 © TRANSPORTATION ACTIVITY AND INSTITUTIONS TABLE 3. Rail car Inventory, January 1, 1979 Car Companies Class 1 Other and Car Type Total Railroads Railroads Shippers Box cars: ait | 1 RGBeer ay Deg e eas AS TaN: ie dive Te seen lie apa ie SUES. bah Ge BM Bek ee 262,986 217,307 32,335 13,344 Ee CHUTE 5 cae cece sas can re tees zees faces navanatcec ek ne tee acces raeenics ¢ Soi ame 172,685 166,719 5,733 233 Covered HODDOre se. aiei cael iu ee hk es habs anspebesas pes poe on tenpea dar areaeghiae 246,087 161,903 3,409 80,775 PRE CANS ssc catewnicaoi coven aiereeesosnauialncn’ dav vuntaynscadusussnneenehsainsni me siteraias 146,402 97,752 3,799 44,851 Refrigerator cars 87,601 68,059 3,648 15,894 GOMAONE OANS oo ciace eck se ccheccresd giascoun sanctus idence weanenaanest avs deegn es qoderateoieners 175,777 158,680 5,240 11,857 PIOPDONL CAPS Se cselis acd soak sadee ns Ses cad oeahleenatonaneeries se leucuuiiaus, Grupeuncnier 354,086 327,047 11,296 15,743 TATU CLS cic Sos ss cso nlszsos nde pues evitee she austen haere ucuetiotteas Por ea can eae 174,170 2,542 ey 171,591 Other, Freight: Cars 255 gecssesceesedicios Sissy stds mnecreoteselpabuvelicpee contest docee hemes 32,980 26,491 3,384 3,105 Tar] bet eet alt Beech 1 Pte ana Re ARE 0 ee pe 8 See BN 1,652,774 1,226,500 68,881 357,393 SOURCE: American Association of Railroads, Car Service Division. RIGHTS-OF-WAY Although nearly all of the 3,800,000 miles of road in the U.S. are available for truck use, some 700,000 statute miles of the total system are most heavily traveled.'%© In 1975 the rail system consisted of somewhat less than 200,000 miles of line, operating between 4,000 rail yards.'%° The miles of line and track in the rail system have been in continuous decline for much of this century.'*” Over 1,400 TOFC (trailer-on-flat-car) terminals exist for direct truck-rail interchange." A main component of the air freight system consists of 55 airports receiving all-cargo or wide- body lower-hold service.'*? Over 9,000 communities are served by air freight pickup and delivery service.'4° Activity and Levels of Use Figure 4 compares the intercity freight modes by tons carried, ton-miles produced, and revenues received. Modal shares have changed significantly over the years. The rail share of ton-miles declined as other sectors, particularly pipeline and truck, gained. Air freight, although insignificant in terms of tons and ton-miles, has a significant share of revenues, provid- ing relatively high-priced service for high-value goods. Among the crucial commodity characteristics which determine modal choice are value, density, size, and perishability. Important trip characteristics are load size, trip distance, frequency of trips, and scheduling requirements. The modal elements to be matched with these are services, schedules, travel time, and costs. The interplay of shipment and service characteristics produces a pattern of modal shares for each commodity that varies geographical- ly and with time. Different segments of the freight industry are associated with different commodities. Consequent- ly, a mode’s growth and success can be linked with changing patterns in the growth of the commodities it moves. Appendix Table 5 identifies the ten more important commodities for each mode. In this period of concern for energy, the impor- tance of energy-producing commodities in overall intercity freight activity should be highlighted. By reference to Appendix Table 5, it can be seen that the movement of energy commodities represents a major, sometimes dominant, activity for each mode, except possibly trucking. If oil and gas pipelines are included (representing almost one quarter of intercity freight ton-miles and carrying energy commodities only),'*’ plus international freight tonnages (more than 50 percent of which involve the movement of energy commodities),'4* the full importance to the freight sector of moving energy can be appreciated. Energy Consumption The transportation industry itself consumes consider- able quantities of energy, particularly petroleum. For this reason any reduction in the transportation of energy would produce a compound savings. Such savings might result from a decrease in tonnage requiring shipment, an increase in the use of renew- able resources, or a decrease in the distance tonnage is shipped. Most trends, however, point in the opposite direction. In particular, the average shipping distances of petroleum and coal have increased.'43 TRANSPORTATION FUNCTIONS, INSTITUTIONS, AND ACTIVITY IN THE U.S. @ 19 FIGURE 4. Distribution of freight by mode, 1977. Tons Carried* *Air Less Than .1% Great Lakes 2.0% Oil Pipeline 18.2% Rivers and Rail Classes | and 11 26.5% Canals 10.0% Domestic Deep Sea 9 Domestic Sea 4.5% 8.5% Revenues Ton Miles Rivers and Canals 11.1% Truck Non-ICC 38.2% Shae Sea 1.6% Rivers and Canals 2.0% Great Lakes .5% Oil Pipeline 2.8% SOURCE: Transportation Association of America, Transportation Facts and Trends, Washington, D.C.: 1979, pp. 4, 8, 10. INSTITUTIONS AND ACTIVITY IN THE INTERNATIONAL MARKET INSTITUTIONS A number of international bodies influence transpor- tation. Also, the marine and air transportation indus- tries have set up international organizations jointly to control prices and other economic factors in specific routes or markets. Ocean freight rates are established and published by steamship conferences. Conferences are organi- zations of shipping companies which were formed to control freight rates, standardize shipping practices, and provide regularly-scheduled service between designated ports. There are approximately 120 route or market-specific conferences in the ocean trade of the U.S.'44 An investigation of shipping companies begun by Congress in 1912 led to the passage of the Shipping Act of 1916 which established the present pattern of regulation.'*° It exempted certain anti- competitive agreements of steamship conferences from the antitrust laws when such agreements were filed with and approved by a designated government agency. This authority is now vested by Congress in the FMC. A number of cooperative, international transport organizations facilitate resolution of multi-national 20 e TRANSPORTATION ACTIVITY AND INSTITUTIONS issues. For example, the Inter-Governmental Mari- time Consultative Organization (IMCO) has ad- dressed the problem of cargo container standards and tanker safety. United States international air carriers generally receive landing rights in foreign countries as a result of bilateral international agreements which grant reciprocal rights in the U.S. to the other nations’ air carriers. A group of contracting nations formed the International Civil Aviation Organization (ICAQ) as part of the United Nations. ICAO develops and sets navigation, communication and air traffic control standards for its members and fosters international air navigation planning. U.S. international air carriers have usually be- longed to the International Air Transport Association (IATA). IATA is a voluntary organization open to any scheduled air carrier whose home country is a member of ICAO, and it establishes international rates and fares, subject to unanimous resolutions of the member carriers and veto by the involved countries. In recent years some air carriers have decided not to use IATA’s service. PASSENGER TRAVEL—INTERNATIONAL Balance of Payments International passenger travel, both by Americans traveling outside the U.S. and by foreign visitors to the U.S., is an activity with significant ramifications outside of the usual transportation concerns. Chief among these is the effect on the national balance of payments position. The approximately 20 million foreign visitors each year represent only about 4 percent of intercity travelers in the U.S.'4* They are a valuable source of foreign exchange, ranking fourth in dollar earnings among U.S. export industries.'4’ In 1978, receipts from visitors were approximately $8.5 billion, of which $7.3 billion was spent on goods and services in the U.S. and the remainder, $1.2 billion, was paid to U.S. carriers.‘4* This $8.5 billion amounted to somewhat more than 4 percent of U.S. export earnings, remaining roughly constant from 1968 to 1978 as both receipts from tourism and total exports grew at an annual average rate of 16 percent over the period, although foreign visitor receipts have grown faster than general exports in recent years.'49 The U.S. transportation system provides foreign visitors few unique services. Compared with other countries, multilingual, information, and money- changing services in the U.S. are limited. As the number of visitors grows, ancillary services will be in greater demand. Travel abroad by U.S. citizens has not risen as dramatically as travel to the U.S. by foreign visitors. Travel abroad doubled from 1960 to 1970, but since 1971 has been stable at somewhat more than 22 million travelers yearly.1%° U.S. citizens spent $9.4 billion for travel abroad in 1976, including $7.7 billion on goods and services and $2.5 billion to foreign carriers, equaling less than 5 percent of U.S. imports and leaving a net travel deficit in U.S. international payments of $2.6 billion in 1976.'*' U.S. citizen expenditures abroad rose about 9 percent in 1977 and 7 percent in 1978, reaching $11.1 billion in that year. The net travel deficit rose to $3.1 billion in 1977 but dropped to the $2.6 billion level of 1976 in 1978. Sixty percent of the travel deficit is due to foreign air carriers earning more from American passengers than U.S. carriers earn from foreign passengers.'* This represents an imbalance that is increasing in scale. Despite general improvement in the overall U.S. travel deficit, the imbalance caused by pay- ments to foreign flag carriers has not been reduced. Sources of Visitors Most foreign visitors to the U.S. come from Canada and Mexico. Appendix Table 6 shows total arrivals in the U.S. from Canada, Mexico, and all overseas countries in numbers of visitors to the U.S. The modal distribution of arrivals evidences the domi- nance of air travel for overseas visitors, and of the auto for Canadian and Mexican arrivals. Ports of Entry Major points of entry of overseas visitors to the U.S. for overland arrivals are more numerous than those open to arrivals by air and water. The top ten ports of entry for land arrivals in 1977 accounted for only 38 percent of all land arrivals.'5° On the other hand, 80 percent of sea arrivals landed at the leading ten seaports.’ Air, the dominant mode of arrival, is also the most concentrated. Not only do the top ten airports account for 91 percent of arrivals, but the top five account for 77 percent; New York alone had 34 percent of all air arrivals.‘%° Recent decisions to add more ports of entry and exit for foreign travel’ should help disperse this concentration and also provide more direct air service both for U.S. and foreign travelers. Charter and Reduced Fare Services International air service data show a growth in charter flights compared to scheduled service and an increasing proportion of passengers traveling on reduced fares. Carriers have cut prices and added seats. In 1977 in the major international market, the North Atlantic, the average number of seats per aircraft reached 274 compared to 140 in 1967.17 It TRANSPORTATION FUNCTIONS, INSTITUTIONS, AND ACTIVITY IN THE U.S. @ 21 may be too early to assess the overall economic impact on U.S. and foreign carriers, but first results indicate the new environment in international air travel will benefit both carriers and passengers. In 1977, charter services carried 17 percent of international air travelers to and from the U.S.15® Of the 2.5 million who flew on charter aircraft, approxi- mately 1.7 million flew on U.S. charters and the remainder came on charters of foreign-flag carriers.'5° Most charter travelers were U.S. citizens. The distribution of travelers by flag of carrier and citizenship is shown in Appendix Table 7. On scheduled flights, which account for 83 per- cent of international air travel to and from the U.S., U.S. citizens use U.S.-flag carriers less than foreign nationals use their own flag carriers; 52 percent of the more than 12 million travelers on scheduled flights were U.S. citizens.’ They used U.S.-flag aircraft 55 percent of the time, while foreign nationals used foreign-flag carriers 60 percent of the time.'® Consequently, U.S.-flag carriers served 48 percent of the travel.'®* A summary of market shares for sched- uled travel is shown in Appendix Table 8. FREIGHT TRANSPORT—INTERNATIONAL Summary of Imports and Exports Both the tons and value of goods moving in interna- tional trade have grown dramatically since World War Il. Tonnages of exports more than doubled in the 17-year period from 1960 to 1977, and import tonnages tripled.‘ On a value basis, air-freight movement is quite significant, representing 17 per- cent of the value of exports shipped and 9 percent of the value of imports.’ Of the $120 billion of exports in 1977, electrical and non-electrical machinery and agricultural com- modities were major export items.'® Large exports of transportation equipment were also important, in- cluding $3.6 billion in new autos, $2.0 billion in trucks and buses, and over $6.5 billion in parts, accessories and used vehicles.'® Civilian aircraft exports of almost $6 billion made a significant contribution to the export balance.'® Imports, amounting to $147 billion in value in 1977, have as major categories: petroleum and products (in excess of $42 billion); and machinery (over $13 billion). Imports of transport equipment approxi- mated $19 billion, including over $10.6 billion in new autos and over $5 billion in parts.'© Inland Distribution of Goods in Foreign Trade Little information is available on the inland origins and destinations of exports and imports. The most recent survey data, for 1976, traced the inland legs of international goods flows. According to the survey the trucking mode predominated in terms of both value and weight shipped for exports and even more substantially for imports.'7° International Air Cargo Air freight has been a more significant component of international than of domestic air operations. In 1977, scheduled air carriers obtained air freight revenues equal to 15 percent of revenues from passenger operations in international air markets, compared to only 7 percent in domestic markets." With growth at annual rates in excess of 13 percent per year in the early seventies, international air freight revenues exceeded $400 million in 1977 for scheduled carriers, with an additional $200 million obtained by international air cargo carriers.'”? Statis- tics for 1977 indicate air imports of 1.3 billion pounds and $12.5 billion in value.’ Exports were 1.8 billion pounds with a value of $20 billion.'’* These figures indicate the high-value nature of international air cargo, approximately $9 per pound for imports and $11 for exports.17° In 1974, U.S. carriers obtained 40 percent of the import market by value, and 34 percent by weight and 15 percent by value of the export market.'76 Appendix Table 9 provides detailed market data for that year for all carriers and U.S. Carriers. Air cargo flows are highly concentrated, for the most part paralleling international air passenger traffic. New York accounts for approximately 50 percent of all cargo activity by weight or value for imports and exports.'””? Other major ports in descend- ing order of cargo value handled are Los Angeles, Chicago, San Francisco, and Miami.'’8 These four ports, with New York, account for more than 80 percent of import and export air cargo activity." International Waterborne Cargo Most foreign trade tonnage moves by water. In 1977 international waterborne commerce reached 915 million tons.1®° Of these, 635 million tons were imports and 280 million tons were exports.'®' On a tonnage basis, the major commodities moving in foreign waterborne commerce in 1975 are shown in Table 4. The petroleum and iron categories were primarily imports; the coal, grains, and logs were primarily exports; the other categories were relatively bal- anced. According to 1976 data of the U.S. Bureau of Census, the shares of this commerce obtained by U.S.-flag carriers were 4.7 percent of imports and 6.0 percent of exports, or 5.2 percent overall.'® The privately owned portion of the U.S.-flag fleet ranked tenth in the world in size in 1977 with 2.4 percent of the 23,902 ships over 1,000 gross tons in 22 e TRANSPORTATION ACTIVITY AND INSTITUTIONS size.'®3 The scale of the U.S. fleet in the major ship categories is shown in Table 5. In 1966 the U.S. ranked fifth on a tonnage basis.'* The size of the merchant fleet declined until 1970, but has climbed slowly since. '® The world rankings of national fleets indicate the considerable use of flags of convenience in countries such as Liberia, and the continuing growth of the Soviet fleet, particularly in small merchant ships. The Soviet merchant fleet, ranked twentieth 20 years ago, is second today in number of ships and eighth in deadweight tonnage.'® / Ports There are approximately 170 major commercial ports in the U.S.187 Since the Second World War, the share of foreign compared to domestic traffic handled by these ports has increased significantly. In 1947, coastal port domestic traffic was almost three times TABLE 4. Major commodities In waterborne foreign trade, 1975 Tons Commodities (Percent) Petroleum. 6: .-PrOGucts'sticec «-teccetesas sen edie cacs exes tes 44.7 Coal ‘Sas Cone oes doh kas eee Bea 10.5 iron, Ore, Iron. and Steel sic. ic eee ks 9.8 Sand: iGravele&: Stone: 22 wisisete cp casiceseesuec kee une 1.8 COPANNIS seer a ev ony enk eseiiee ae earn serie ee aerate ats 10.6 Vogs? and EUMbDen ic asa aie. sectonst acentece ace ctetee eee 3.2 Chemicals ces ea eee este bap bocselasstuepaneaamese 5.0 Alk:Other (Commodities: 6556.. e 14.4 Rife) f-| hte Sei. LF LN Fie yee ane Sa IE FTO da eh 100.0 SOURCE: U.S. Corps of Engineers, Waterborne Commerce of the U.S., Vicksburg, Mississippi: 1975, p. 3. TABLE 5. U.S. waterborne fleet, 1975. Number of Ship Type U.S. Ships ET GILON nc ashaspipinenritns te ckegiismncangesebusatna ceaic oats 299 CNT. COENIO ov onat engi crentiee Gosuveatrecsancnphtreses 113 COGMTSINOTEN IS ai A eternskcaieatesgar thee 105 Parti Gonta sec ese ee pe ae. 45 Roli-on/ROl-off.. ssc aids danvenesnt 13 Barge, CArri@rs..ascercisdasvaeninancestbdidcwsancee 23 BUG. CRITICS oor cae A heat nee ack teucen? 18 WANKONS I cote este csccess cores aregveveke teste ecpabss ett 269 Passenger Snipe: eu aie ceri 6 the tonnage of foreign traffic.’ By 1975, foreign traffic had become almost 80 percent of the volume of the domestic traffic.'®° The Maritime Administration estimates that within U.S. ports there are now 2,400 marine terminal facilities capable of handling foreign commerce.'? These facilities are owned by a mixture of private and local public agencies providing a range of services to the shipping industry. They make a net contribution in foreign exchange to the U.S. balance of payments through receipts from foreign vessel expenditures’ and serve as the vehicle for collection of almost $6.3 billion in customs income.'9% Trends in ship construction and operation, such as container ships, barge ships, and very large tankers, have created demands on ports for highly special- ized facilities, designed to handle unitized cargoes rapidly with minimum delay. The result has been increased capital requirements and reduced operat- ing times and costs. Assistance to public ports has come from state and local governments. No Federal programs finance the development of port facilities; however, the Maritime Administration does provide design and planning assistance, and both the Corps of Engi- neers and Coast Guard provide services in channel development and sea-lane operation. SUMMARY Transportation supports the nation’s social and economic activities, and in turn, transportation stimu- lates these activities. Many private and public institu- tions or groups are involved with transportation. The private sector, which has the primary operating role, is segmented and complex. An array of government institutions is directly involved in transportation. Federal programs have U.S. Dead- U.S. Rank DWT of weight Tons in World First Ranked (thousands) Tonnage First Ranked (thousand) 4,931 7 Liberia 10,967 11,518 — USSR 9,840 1,734 1 U.S.A. 1,734 665 2 USSR 706 205 1 U.S.A. 205 809 1 U.S.A. 809 529 —_ Liberia 40,464 10,714 8 Liberia 101,232 50 oe USSR 250 SOURCE: U.S. Department of Commerce, Merchant Fleets of the World; Washington, D.C.: Government Printing Office, 1976, pp. 34-43. TRANSPORTATION FUNCTIONS, INSTITUTIONS, AND ACTIVITY IN THE U.S. @ 23 influenced the nature of state and local institutions and numerous Federal bodies have evolved to administer regulatory and promotional programs initiated by the Congress. State and local govern- ments develop, plan, own, operate, maintain, or regulate various facets of transportation. The pattern varies from one state or jurisdiction to another, determined by local conditions. Lines of authority, responsibility and accountability between various levels of government have become blurred and overlaps exist. The current division of responsibility as it affects transportation will be discussed in more detail in later chapters. Chapter 1 has highlighted the institutions involved in transportation, pointing out the interactions of governments with private-sector providers and users of transport services. Trends in transport activity have been described, by market and by function of passenger or freight movement. The dominant role of the auto has been documented, although in intercity passenger transport, air carriage has come to pro- vide more than one in ten passenger-miles traveled. Intercity freight transport, at a relatively stable tonnage level for the decade of the 1970s, has come to be dominated by motor carriage in terms of revenues received, yet the railroads still produce the most ton-miles of service of any mode. The interna- tional market has been shown to be growing in terms of both passengers and freight as part of total U.S. transportation activity. The next chapter describes the present extensive policies and programs of the Federal government that affect both passenger and freight movements in all the transportation markets of the U.S. Chapter 3 presents similar information for state and local governments. NOTES AND REFERENCES 1. Transportation Association of America (TAA), Transporta- tion Facts and Trends, Washington, D.C.: 1977, pp. 4—5. (Hereafter cited as TAA, Facts and Trends.) 22 dbids p.10. 3. U.S. Bureau of the Census, 1972 Census of Transportation, Washington, D.C.: 1973; 1977 Census of Transportation, Washington, D.C.: 1979; U.S. Federal Railroad Administra- tion, 1971-1977 Carload Waybill Statistics, Washington, D.C.: annual, 1972-1978. 4. U.S. Department of Commerce, Bureau of Economic Analy- sis (BEA), Survey of Current Business, Washington, D.C.: July 1978, Table 2.6. Ibid. Ibid., pp. 6, 32. U.S. Federal Highway Administration, Highway Statistics 1976, Washington, D.C.: Government Printing Office, 1977, p. 25; U.S. Bureau of the Census, ‘‘Population Estimates and Projections,’’ Current Population Reports, Series P—25, No. 451, Washington, D.C.: Feb. 1975, p. 8. 8. Preponderantly automobile and general aviation expendi- tures, plus some expenditures for the taxi, domestic water, and local trucking modes. See TAA, Facts and Trends, pp. NO 4-5. 9. Ibid., p. 23 10. Ibid. 11. Ibid. 12. D.C. Associates, Inc., A Report to the National Transporta- tion Policy Study Commission on Identification of Labor Constituencies, Washington, D.C.: 1977, p. 9. goo sIbid.ap; 12: 14. TAA, Facts and Trends, p. 23. Also, many other govern- ment employees may devote some time to transportation, as explained in Chapter 2. 15. U.S. Bureau of the Census, 1970 Census Users Guide Part |, Washington, D.C.: Government Printing Office, 1970, p. 75. When the word county is used in this report, it is defined to include parishes, as found in Louisiana, and other similar substate entities. 16. Ibid. 17. Urban Mass Transportation Act of 1964, 49 U.S.C. Section 1601 et seg. (1974), Pub. L. 88-365, 78 Stat. 302. 18. Pub. L. 89-136, as amended. 19. U.S. Department of Commerce, “The Regional Commission Program,’’ mimeographed information sheet, Washington, D.C.: 1977. Also, Robert M. Rawner, ‘‘Multistate Regional Development: Some Economic and Legislative Perspec- tives,’”’ paper presented at the Special Conference on Economic Development, San Juan, Puerto Rico, 23 April 1976. 20. Motor Vehicle Manufacturers Association (MVMA), MVMA Motor Vehicle Facts and Figures ‘78, Detroit, Michigan: 1978, p. 24. 21. = Ibid. 22. Ibid. 23. Ibid., Table M—201. 24. Ibid., Table M—200. 25. Ibid. 26. Ibid., Table M—201. 27. U.S. Congress, House, Committee on Public Works and Transportation, The Status of the Nation’s Highways: Conditions and Performance, Report of The Secretary of Transportation, Committee Print 95-29, 95th Cong., 1st sess., Washington, D.C.: Government Printing Office, 1977, p. 53. (Hereafter cited as Status of the Nation’s Highways.) 28. 23U.S.C. Section 103 (1974). 29. Committee on Public Works and Transportation, Status of the Nation’s Highways, pp. 90—93. 30. Ibid., pp. 94-97. 31. U.S. Bureau of the Census, Journey to Work Statistics, National Housing Survey, Washington, D.C.: 1977, p. 657. 32. Passenger Transport, 13 April 1979, p. 4. The American Public Transit Association’s continuing statistics series indicates 19 months of ridership growth. 33. U.S. Department of Transportation, Office of the Assistant Secretary for Policy, Plans and International Affairs, Public Transport Fare Policy, prepared by Peat, Marwick, Mitchell and Co., Report No. DOT—TPS—10—77-20, p. 1.5; (ex- pressed in current dollars). 34. Ibid. 35. Ibid., pp. |.3—.9. 36. American Public Transit Association (APTA), Transit Fact Book, ‘77—‘78 Edition, Washington, D.C.: 1978, pp. 32-33. 24 e TRANSPORTATION ACTIVITY AND INSTITUTIONS Also, James E. Sale, ‘Operating Costs and Performance of American Public Transit Systems,’’ Journal of the American Planning Association (January 1978), pp. 7-35. Ibid. Ibid. APTA, Transit Fact Book, p. 35. Ibid., p. 36. Ibid., p. 30. Ibid., pp. 30, 35. Ibid., p. 27. Sale, ‘Operating Costs,”’ p. 23. The Roper Organization, Roper Reports, Report No. 77—10, New York: 1977. Ibid., p. 192. APTA, Transit Fact Book, p. 24, and U.S. Department of Transportation, 1974 National Transportation Report: Cur- rent Performance and Future Prospects, Washington, D.C.: 1974. APTA, Transit Fact Book, p. 24. In the large cities there were some declines in heavy rail ridership, but not in surface transit. Ibid., p. 27. MVMA, Motor Vehicle Facts and Figures, p. 46. Ibid. Estimate by U.S. Federal Highway Administration, Highway Statistics Div., 1978; also, MVMA, Motor Vehicle Facts and Figures, p. 60. U.S. Department of Transportation, Office of the Secretary, Safety Information Report, Washington, D.C.: 1978, p. 14. MVMA, Motor Vehicle Facts and Figures, pp. 38, 44. Ibid., p. 60. U.S. Department of Transportation, Office of the Secretary, National Transportation: Trends and Choices, (to the Year 2000), Washington, D.C.: 1977, p. 343. (Hereafter cited as DOT, Trends and Choices.) TAA, Facts and Trends, p. 4. A. T. Kearney, Inc., Urban Goods Movement Demonstration Project Design Phase IV, prepared for U.S. Urban Mass Transportation Administration, Chicago, Illinois: 1976. U.S. Federal Highway Administration, National Truck Com- modity Flow Study, Washington, D.C.: 1976, Table 55. Ibid. Kearney, Urban Goods Movement, p. |V—1. Ibid., exhibit I, p. 1. Ibid., p. IV—2. Ibid., exhibit I, p. 2. U.S. Federal Highway Administration, Purposes of Automo- bile Trips and Travel, Report No. 10 of National Personal Transportation Study, Washington, D.C.: 1974, p. 63. Ibid., Report 7, p. 17. Kearney, Urban Goods Movement, pp. IV—1 to VI-3. TAA, Facts and Trends, pp. 4, 5, 6, and 9. National Transportation Policy Study Commission (NTPSC), Amtrak: An Experiment in Rail Service, by Dr. Frank P. Mulvey, Report No. NTPSC/SR-—78/02, Washington, D.C.: September, 1978. Ibid. Regional Rail Reorganization Act of 1973, 45 U.S.C. Sections 721, 762-763 (1977); Railroad Revitalization and Regulatory Reform Act of 1976, 45 U.S.C. Sections 822, 825-837 (1977). DOT, Trends and Choices, p. 151. Ibid. American Waterways Operators, Inc., Big Load Afloat, Washington, D.C.: 1973, p. 3. DOT, Trends and Choices, p. 272. Merchant Marine Act of 1936, as amended, 46 U.S.C. Section 865a (1975). Irwin M. Heine, The U.S. Merchant Marine: A National Asset, Washington, D.C.: National Maritime Council, 1976, pp. 20, 142-151. 78. 79. U.S. Interstate Commerce Commission, [CC Annual Report: 1977, Washington, D.C.: 1977, p. 147. Oak Ridge National Laboratory, The Transportation Energy Conservation Data Book, Edition 3, Report No. ORNL— 5493, Oak Ridge, Tennessee: February, 1979. The Data Book indicates that highway mileage grew continually while the railroad network shrank between 1950 and 1976 (Table 1.7). Similarly, the number of vehicles providing service on the highway network have increased at least since 1965 (Tables 1.9 and 1.10) while the fleet of railroad freight and passenger cars declined between 1950 and 1977 (Tables 1.93 and 1.94). All forms of air travel have increased (Tables 12.84, 1.87, and 1.89). Commercial bus travel declined between 1960 and 1975 (Table 1.58). Ibid. TAA, Facts and Trends, p. 18. Ibid. Ibid. (Rail commutation deleted). Ibid. U.S. Federal Highway Administration, Quarterly Report, Washington, D.C.: December 1978. Committee on Public Works and Transportation, Status of the Nation’s Highways, p. 59. Ibid. American Bus Association (ABA), America’s Number 1 Passenger Transportation Service, Washington, D.C.: 1978, Appendix Table 1. Ibid. U.S. Interstate Commerce Commission, The Intercity Bus Industry, Washington, D.C.: May, 1978, p 27. Ibid. Ibid. ABA, America’s Number 1 Passenger Transportation Ser- vice, Table 4. Ibid., p. 46. Ibid., p. 53. Ibid., p. 99. Ibid. Ibid., also U.S. Interstate Commerce Commission, Operat- ing and Traffic Statistics, Washington, D.C.: Annual. The Amtrak system is likely to be reduced in extent. See Report of Secretary Brock Adams, U.S. Department of Transporta- tion, Final Report to Congress on the Amtrak Route System, Washington, D.C.: January 1979, pp. 4-4, 5—3. Association of American Railroads (AAR), Yearbook of Railroad Facts — 1978 Edition, Washington, D.C.: 1978, p. 30. (Hereafter cited as AAR, Yearbook of Railroad Facts.) TAA, Facts and Trends, p. 18. Ibid. Aviation Week and Space Technology, 26 March 1977, p. 38. Air Transport Association of America (ATAA), The U.S. Airline Industry from 1977 to 2000, statement to the National Transportation Policy Study Commission, Wash- ington, D.C.: June 1977, p. 2. Air Transport Association of America, Air Transport 1978, Washington, D.C.: 1978, p. 32. (Hereafter cited as ATAA, Air Transport 1978.) DOT, 1974 National Transportation Report, p. 395. ATAA, Air Transport 1978, p. 32. Ibid. TAA, Facts and Trends, p. 18. Ibid., p. 19. (Excludes rail commutation.) See Chapters 4 and 5. DOT, Trends and Choices, p. 230. ICC, Intercity Bus Industry, p. 99. Ibid., p. 98. Pub. L. 95-599. ICC, Intercity Bus Industry, p. 101. Except in some of the largest hubs which are often close to saturation in peak periods. Of course, local ground trans- TRANSPORTATION FUNCTIONS, INSTITUTIONS, AND ACTIVITY IN THE U.S. @ 25 portation can be greatly congested at airports, especially at peak periods. U.S. Department of Transportation, Increasing the Attrac- tiveness of Land Based Common Carrier Service in the U.S., Washington, D.C.: October 1975, pp. 67—74. DOT, Trends and Choices, p. 228. TAA, Facts and Trends, p. 17. MVMA, Motor Vehicle Facts and Figures, pp. 56, 59; also, TAA, Facts and Trends, p. 17. TAA, Facts and Trends, p. 17. TAA, Facts and Trends, p. 8. MVMA, Motor Vehicle Facts and Figures, p. 35. Ibid., p. 45. U.S. Bureau of the Census, 1972 Census of Transportation Truck Inventory & Use Survey, Washington, D.C.: 1972, p. 2 and MVMA, Motor Vehicle Facts and Figures, p. 45. U.S. Federal Highway Administration, Nationwide Truck Commodity Flow Study, Washington, D.C.: 1976, p. 19. AAR, Yearbook of Railroad Facts, pp. 48, 50. Ibid., p. 48. Ibid. Ibid., p. 51. DOT, Trends and Choices, p. 254. American Waterways Operators, Inc., 1976 Inland Water- borne Commerce, Washington, D.C.: 1978, p. 2. U.S. Corps of Engineers, Waterborne Commerce of the U.S., Vicksburg, Mississippi: 1977, p. 259. American Waterways Operators, Inc., 1976 Inland Water- borne Commerce, p. 3. Committee on Public Works and Transportation, The Status of the Nation’s Highways, pp. 59, 68. AAR, Yearbook of Railroad Facts, p. 46. Ibid. U.S. Department of Transportation, Transportation Systems Center, “U.S. Cargo Transportation Systems Cost and Service Characteristics,’’ Rept. No. 55—-212—41-13, Cam- bridge, Massachusetts: April 1976. Ibid. Ibid. TAA, Facts and Trends, p. 8. DOT, Trends and Choices, p. 375. See Chapter 8. Harbridge House, The U.S. Merchant Marine and the International Conference System, prepared for U.S. Mari- time Administration, Cambridge, Massachusetts: August 1978, p. I-1. Shipping Act of 1916, as amended, 46 U.S.C. Section 801 et seq. (1977). Department of Commerce, U.S. Travel Service (USTS), Highlights of International Tourism 78, Washington, D.C.: 1978. Ibid. Ibid. Ibid. U.S. Department of Commerce, U.S. Travel Service, Sum- mary and Analysis of International Travel to/from the U.S. 1978, Washington, D.C.: 1978, Table 11. Ibid. Ibid. U.S. Department of Commerce, U.S. Travel Service, For- eign Visitor Arrivals by Selected Ports, Calendar Year 1977, Washington, D.C.: Government Printing Office, 1978, Table 41. Excludes Canada and Mexico. Ibid. Ibid. Since mid-1978, the following additional airports have become international gateways (i.e., now have direct international service by CAB definition): Cleveland 186. 187. 188. 189. 190. 191. 192. Pittsburgh Atlanta Tampa New Orleans Houston Dallas/Ft. Worth St. Louis Kansas City Denver Minneapolis/St. Paul U.S. Customs Service, Office of Passenger Processing, telephone interview, 27 April 1979. International Air Transport Association, World Transport Statistics 1977, Geneva, Switzerland: 1977, p. 68. Kearney, Urban Goods Movement, Table 1a. Ibid. Ibid. Ibid. Ibid. U.S. Bureau of the Census, Highlights of U.S. Export & Import Trade, Report No. FT 990, Washington, D.C.: annual. Ibid. BEA, Survey of Current Business, Tables 1 and 3. Ibid. Ibid. Ibid. Ibid. U.S. Bureau of the Census, Domestic & International Transportation of U.S. Foreign Trade, Washington, D.C.: 1976. ATAA, Air Transport 1978, pp. 17-21. Ibid. U.S. Bureau of the Census, Highlights of U.S. Export & Import Trade, p. 138. Ibid. Ibid. U.S. Bureau of the Census, U.S. Airborne Exports and General Imports, Annual 1977, Washington, D.C.: May 1978, Tables 1 and 2. Ibid. Ibid. Ibid. Corps of Engineers, Waterborne Commerce of the U.S., p. 5 Ibid. U.S. Bureau of the Census, U.S. Waterborne Exports and General Imports, Washington, D.C.: April 1978. U.S. Maritime Administration (MarAd), MarAd’ .77, Annual Report, Washington, D.C.: 1978, p. 29. Ibid. U.S. Bureau of the Census, Statistical Abstract of the United States, 1978, Washington, D.C.: Government Print- ing Office, 1978, Table 1162. MarAd, MarAd ‘77, p. 158, 29; and U.S. Maritime Adminis- tration, Expansion of Soviet Merchant Marine into the U.S. Maritime Trades, Washington, D.C.: August 1977. U.S. Maritime Administration, What U.S. Ports Mean to the Economy, Washington, D.C.: September 1978, p. 4. Corps of Engineers, Waterborne Commerce of the U.S., p. 5: Ibid. U.S. Federal Maritime Commission, Public Port Financing in the U.S., Washington, D.C.: June 1974, p. 3. Ibid.,p. 6. American Association of Port Authorities, ‘‘Port Perfor- mance Indicators,’ A.A.P.A. 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Cag vant 5 ’ 4 i i a ’ : i et eg - 7 ad ' 3 Ms © | te Oe ‘ ke a Pah 7) Sit} ts i of F A : , ‘tiry iy) 4.4 e ¢ bet. here A Vos aie? STi “3 sa40 ir \ ‘ } 7 ] out: a ae Wis Pe es ee ae Le eo RA sil Jaqre eek N\/) erli 3.0 paaproaga. Gas av ; sy RIE “Seaeiat ' ee PSS" >) eee aye rer med” Penta "4.4 anak Lay pape, ery Speirs "| OGAWA: 2 leiqure AAR Vieni sGAm :. | . ; 7 " ah A bet = 5 : Det. neeane iat aie, t On Fe * d ids ‘ ( ee R Federal Transportation Policies and Programs INTRODUCTION This chapter describes the transportation policies and programs of the Federal government. As no full compilation of Federal policies and programs exist- ed, one research task of the NTPSC was to inventory transportation policies and programs as enunciated by the Congress, Federal agencies (legislative, exec- utive, and independent), and the judiciary.’ All major transportation policies and programs have been identified, including those that affect the supply of transportation services and those which have a di- rect or indirect effect on the demand for transporta- tion. A primary purpose of this chapter, in addition to enumerating Federal transportation policies and pro- grams, is to point out potential problems, or issues, that may arise from gaps and conflicts in these poli- cies and programs. ‘‘Gap”’ is defined as ‘‘a void or inconsistency” in Federal actions; a ‘‘conflict’’ poses “competing directions’ for the Federal transport role. (These and other definitions are explained fur- ther in Appendix |, Policy Definitions.) In short, these are symptoms that may require policy remedies. RESEARCH APPROACH In gathering policies and programs, as reported fully in NTPSC Special Report No. 6, A Compendium of Federal Transportation Policies and Programs, it be- came evident that compiling programs is much easier than discovering policies. This is because program Summaries are more readily available than policy statements. The Catalogue of Domestic Federal As- sistance (by the Office of Management and Bud- get—OMB), reports to Congress by Federal agen- cies, and studies by the General Accounting Office (GAO), are good sources of program information. Policies, on the other hand, are much more elu- sive. People define policies in different ways, and the NTPSC found that many government employees are not concerned with policy, at least not in the sense of specifically stating which policies have been adopted to guide their decisions. The NTPSC defines policy as a guide for choice—a method for choosing be- tween competing ways to pursue goals. This defini- tion was used when researchers attempted to glean from the written and spoken words of Federal offi- cials and employees an inventory of the guidelines (the status quo policies) they use in making decisions in transportation. These policies, along with more easily identified programs, provide a base from which changes can be proposed to improve transportation in the U.S. It should be noted that each policy (guide for choice) is not always associated with one or more programs that seek to implement the policy. The world of Federal transport policy is not organized in such a neat fashion. The proliferation of policies and programs is especially troublesome when seeking to measure the exact levels of Federal expenditures on transportation and transportation-related programs. A 1975 GAO staff report stated that Federal spending for transportation in 1974 totaled about $11.3 billion.2 The combined transportation account in the Federal Budget for Fiscal Year 1979 shows that actual outlays for transportation in 1977 were slightly under $15 billion, and anticipated FY 1979 outlays are predicted to be less than $18 billion.* Neither the budget nor the GAO calculations in- clude the litany of social service programs (as imple- mented by Action, Community Services Administra- tion and HEW). These programs supply transporta- tion for their clients, or provide funds with which clients may purchase transportation services in the marketplace, and serve to raise considerably the to- tal Federal expenditure for transportation. The GAO report relied upon a survey of 32 Federal agencies and 12 major congressional committees. The NTPSC has identified 64 Federal agencies and 30 congres- sional committees as having jurisdictions which af- fect the supply of and demand for transportation ser- vices. INSTITUTIONAL SOURCES OF U.S. TRANSPORTATION POLICIES AND PROGRAMS Policies are determined and programs shaped at var- ious levels of the Federal government by numerous actions. Both formal and informal channels are part 27 28 @ TRANSPORTATION ACTIVITY AND INSTITUTIONS of policy and program formulation. Too, elucidation of policies and administration of programs may differ from published details, often due to the force of an individual personality, such as that of a congressio- nal committee chairperson. Thus, the institutional de- tails discussed below may vary in individual cases. CONGRESSIONAL COMMITTEES A description of the jurisdiction of congressional committees provides a convenient means for dis- cussing the role of the Congress in transportation decisionmaking. It is primarily through its committees that Congress expresses policy, establishes pro- grams, and sets funding authorization and appropria- tion levels for transportation. Statutory language is the most formal means by which Congress partici- pates in decisionmaking at the Federal level. Less formally, Congress provides guidance on policies and programs to the executive branch, the regulatory agencies, and the judiciary through committee re- ports and hearing records. Such congressional guid- ance may, at times, serve as de facto legislation. In addition, individual members of Congress may dis- play interest in transportation policy through corre- spondence and personal contact with agency heads and program managers. Congress’ committee structure has made coordi- nation of policy through legislation difficult. Pro- grams are often legislated according to mode, rather than by function, reflecting the jurisdiction of the then-existing congressional committee structure. An example is provided by the Surface Transportation Assistance Act of 1978, which adopted new policies for the highway and transit modes. This legislation was considered by the Public Works and Transporta- tion Committee and the Ways and Means Committee in the House of Representatives. In the Senate, the bill was considered by the Commerce, Science and Transportation Committee, the Environment and Public Works Committee, the Banking, Housing and Urban Affairs Committee and the Finance Commit- tee. In reconciling differences between the House and Senate versions of this legislation, there were five sets of Senate conferees appointed to meet with a single group of House conferees. Virtually every congressional committee in some way influences either transport demand or supply. Appendix A of NTPSC Special Report No. 6 de- scribes briefly the legislative and oversight responsi- bilities of those 30 congressional committees that are involved directly in transportation decisionmaking. FEDERAL AGENCIES (LEGISLATIVE, EXECUTIVE, AND INDEPENDENT) Federal agencies are responsible for carrying out policies and programs mandated by Congress, but at times themselves make policy and alter program de- tails. Because each agency must function within lim- its established by Congress, while at the same time satisfying constituents and employees, gaps or con- flicts in Federal transportation policies and programs arise. Sometimes Congress requires an agency to meet a goal, without providing the means to do so. In such cases, the ways in which an agency chooses to allocate its budget and personnel may shape policy. In other cases, agencies may implicitly thwart the will of Congress, as certain segments of the bureaucracy may be insulated from congressional oversight and be longer-lived than particular concerned members of Congress (who may fail to be reelected). Appendix B of NTPSC Special Report No. 6 sum- marizes the transport-related responsibilities of 64 Federal agencies identified as having some involve- ment in transportation policy development and pro- gram implementation. Legislative agencies (e.g., Congressional Budget Office—CBO), executive agencies (e.g., Department of Transportation— DOT), and independent agencies (e.g., Interstate Commerce Commission—ICC) are all included in Ap- pendix B, which also provides an example of a policy or program that demonstrates the agency’s relation- ship to transportation. Department of Transportation The U.S. Department of Transportation is the largest of the Federal transport agencies and administers a major portion (amounting to over $10 billion annually) of the Federal government’s transportation expendi- tures. Established April 1, 1967, DOT is headed by an Office of the Secretary; five Assistant Secretaries have functional responsibilities that cut across all modes of transportation. Each of eight ‘‘operating administrations,’’ except for the Research and Spe- cial Programs Administration, administers programs associated with a single mode or aspect of transpor- tation. The current organization of DOT is shown in Appendix Figure 1. (However, DOT has proposed to combine the Urban Mass Transportation and the Federal Highway Administrations—UMTA and FHWA— into a unified administration.) The U.S. Coast Guard, the Federal Aviation Ad- ministration (FAA), FHWA, the Federal Railroad Ad- ministration (FRA), the National Highway Traffic Safety Administration, and UMTA each has a region- al staff. Several also have sub-regional field offices and facilities. DOT has aligned the regional bound- aries of its Administrations with the ten Federal Re- gions and colocated offices whenever practical. In some cases the functions of Administrations made the same boundaries and locations impractical; for example, most Coast Guard activity is along the coasts, while rail activity is largely inland. Regulatory Agencies The Interstate Commerce Commission (ICC), the Civil Aeronautics Board (CAB), and the Federal Maritime Commission (FMC) have responsibility for regulating land, air, and maritime modes, respectively. The ICC regulates, in varying degrees by mode of transport, surface carrier operations; it conducts investigations and awards damages where applicable, and adminis- ters railroad bankruptcy. Although recent legislation is phasing out economic regulation of air carriers, the CAB currently regulates air carrier operations; it de- termines and grants subsidies. The FMC regulates services, practices, and agreements of common car- riers in international trade. In addition, the Federal Energy Regulatory Commission (FERC), the Depart- ment of Justice’s anti-trust division, and the Federal Communication Commission (FCC) regulate aspects of transportation and communications. THE JUDICIARY Just as Congress and the Federal agencies interact to determine transport policies and programs, so too does the judicial system. The courts may be called upon to interpret statutes or reconcile conflicts. Per- sons interested in altering existing policy may find the means to do so more readily through the courts than they might through other channels. At times, other branches or levels of government may defer to the judicial system, perhaps to avoid making unpopular decisions. In some cases, Federal agencies (such as the reg- ulatory commissions) make policy or administer pro- grams using quasi-judicial processes. In these cases, requirements for due process may conflict with de- sires for speedy resolution of the issues. Conventional wisdom holds that the role of the courts in the area of policy is to interpret the meaning of policy as enunciated in statutes, regulations, exec- utive orders and treaties. But Americans also look to the courts for resolution of difficult social problems. At any given time, transportation policies are being adjudicated at different levels of the judicial system or are being remanded to agencies for alteration. Some recent decisions indicate the growing impor- tance of the courts concerning transport policy in the U.S. In 1978 the U.S. Supreme Court, in a five to three decision in Federal Maritime Commission v. Pacific Maritime Association,’ held that a collective bargain- ing agreement between a maritime employers’ asso- ciation and a maritime labor group must, under the Federal Shipping Act, be submitted for approval to the Federal Maritime Commission (FMC) if the agree- ment has anti-competitive impacts. (Previously, it had been thought that the Shipping Act did not give the FMC jurisdiction over unions or union agreements.) FEDERAL TRANSPORTATION POLICIES AND PROGRAMS @ 29 This decision could create problems in the maritime industry if an ‘‘eleventh-hour’”’ labor-management agreement is required to be submitted to the FMC, as unions are likely to stop working under their ‘‘no con- tract, no work”’ tradition. In Atchinson, Topeka and Santa Fe Railway Com- pany, et al. v. Howard H. Calloway, et al.,° a U.S. District Court held that Locks and Dam 26 on the Mississippi River could be replaced only by specific authorization from Congress. Previously, the U.S. Army Corps of Engineers had routinely rebuilt water resource projects which had become structurally de- ficient or functionally obsolete. This decision will probably result in the Corps’ not proceeding with any rebuilding project without first obtaining specific con- gressional authorization. U.S. Supreme Court rulings have also recently al- tered state tax policies affecting transportation prod- ucts and services. In 1977, the Court ruled that Mis- sissippi could levy a gross receipts tax on a Michigan corporation moving motor vehicles by truck from rail- heads in Mississippi to dealers within the state.’ This policy greatly enlarges the potential for states to have an impact, adverse or positive, on interstate commerce. In 1976, the Court upheld a state property tax on imported tires. Previous interpretations of the Con- stitution had banned all such state levies. The Court now holds that these taxes are permissible if they do not interfere with foreign policy, reduce Federal reve- nue, or Cause conflict among the states. As a result of this new policy, states have more power to ‘‘con- trol’ their imports. This example shows that the transport sector is affected by decisions that relate to interstate commerce in general. It also illustrates the dependence of the transport sector on judicial rulings that serve to alter, directly or indirectly, trans- portation demand or supply (as in this case, in which tires are an input to the production of transport ser- vices). Finally, in October 1978, by refusing to review an Appeals Court ruling on Federal Motor Vehicle Safe- ty Standard 121 (covering requirements for maximum braking distances and the use of computerized anti- lock devices on trucks and buses), the Supreme Court accepted the appellate ruling, which denied enforceability of the standard in its existing form, largely because the standard was neither reasonable nor practical at the time it was put into effect.° FEDERAL TRANSPORTATION POLICIES AND PROGRAMS THE INTERCITY MARKET This section addresses Federal transport policies af- fecting the intercity transportation of passengers and 30 ® TRANSPORTATION ACTIVITY AND INSTITUTIONS freight and the programs developed to implement these policies.'° The intercity market incorporates transportation between U.S. urban places of at least 2,500 popula- tion, as well as interstate transportation generally. In particular cases, relatively high-density movements between Standard Metropolitan Statistical Areas dis- tinguish intercity policies and programs from those of the rural market characterized by lower-density movements between smaller places. In other words, the definitions of markets are meant to be very broad and need not be mutually exclusive. Many Federal transportation policies and pro- grams directly affect both intercity and rural markets. Such policies and programs generally are discussed in the intercity market section. For example, the ba- sic aspects of ICC regulation of motor carriers are discussed in the intercity section, while the ICC’s ag- ricultural co-op exemption is given primary consider- ation in the rural section. Whether a particular policy or program should be considered within one market or another depends on the context of the problem. (Chapters 1 and 9 both provide data on relative mag- nitudes of transport demand and supply among mar- kets.) Regulation The Federal government regulates many aspects of transportation activity. On the one hand, entry and exit, routes and other certificate restrictions, rates, and quality of service are often regulated by the in- dependent regulatory commissions and other agen- cies. This is known as ‘‘economic”’ regulation. On the other hand, many other aspects of transportation are regulated, including energy use, environmental im- pact, and safety. This regulation is labeled here sim- ply as “‘other.”’ Common themes discussed below attributed to both types of regulation include the lack of uniform criteria (policies) to guide the determination of regu- lations, and the static, unchanging nature of the reg- ulations. Certainly regulatory policies differ among transport modes and markets. The lack of sunset re- view or some other dynamic mechanism is apparent. Another theme is the frequent disparity between stat- ed regulations and regulations as they are actually enforced. The lack of uniform, vigorous enforcement of regulations often contributes to abuses that may be blamed on the regulations themselves. ECONOMIC REGULATION: ENTRY The Federal government is extensively involved in regulating the entry of transportation carriers into the intercity market. The CAB still awards certificates to air carriers for passenger service between city-pairs for the ‘‘public convenience and necessity” if the carrier is determined to be ‘‘fit, willing, and able.’’" Congress acted in 1978 to shift the burden of proof to those claiming that an air carrier’s application is inconsistent with public convenience and necessity. The ICC is more restrictive in its control of the entry of many new carriers, as well as in granting entry into new markets by certain existing carriers, providing certificates of ‘‘public convenience and necessity”’ to common carriers and permits to contract carriers found ‘‘fit, willing, and able’ to provide the service. All rail carriers and domestic freight forwarders are regulated by the ICC in this regard, as are some parts of the for-hire motor and inland water carrier industry.'? Natural gas pipelines are similarly regulat- ed by the FERC of the Department of Energy (DOE), while oil pipelines are not so regulated.'% Whether regulatory control over market entry should exist is but one policy issue. If it is determined that regulation is appropriate, the question arises whether particular modes, areas, commodities, or groups should be exempt from such control, and what tests should be used for exemption. For exam- ple, in legislation enacted in late 1977, existing U.S. certificated all-cargo air carriers (and passenger air carriers with all-cargo service) were allowed to pro- vide air cargo service to all U.S. cities at all times. New carriers (those not certificated in November 1977) were not permitted the same freedom until No- vember 1978. All carriers now may enter the market freely, subject only to a finding that such carriers are “fit, willing, and able’ to serve. Congress also acted in October 1978, to ease, in a gradual manner, entry into air passenger markets.'* The lack of detailed en- try control in the air cargo industry and the more restricted but rapidly easing entry controls into air passenger markets raise questions as to whether dif- ferences between the movement of goods and the movement of people by air in the intercity market are so great that the one function should remain more regulated than the other, even though the differences are less pronounced as a result of legislation enact- ed in the 95th Congress. Within the regulated intercity modes, there exist numerous exemptions, some of which have been a continuing source of controversy. Agricultural coop- eratives and the motor-carrier transport of agricultur- al commodities are exempt from most ICC regulation.'* ICC regulations provide very detailed definitions of exactly which cooperatives and com- modities are exempt. Too, transportation incidental to air movement is not regulated by the ICC.'* Water Carriers are exempt so long as they carry commodi- ties in bulk—and most movements are bulk.'” Railroads must seek ICC authorization to con- struct and operate new lines and to acquire and op- erate existing lines.‘* However, no permission is needed for jointly-owned-or-used spur tracks. As a result of this exception, major rail construction is pro- ceeding without ICC approval in the western U.S. to serve coal movements, as railroads arrange with shippers to build lengthy lines for eventual purchase by the railroads. Such avoidance of ICC regulation is supported by court rulings.'9 Regulation generally covers “‘for-hire’’ carriers— common and contract carriers.*° It does not cover private carriers that transport their own goods;?! however, railroads are not allowed to carry their own produce.” The ICC, until November 1978, limited to eight the number of shippers a contract carrier could serve,?> but has removed such restrictions. In addi- tion, contract carriers by water are exempt from reg- ulation. ECONOMIC REGULATION: CERTIFICATE RESTRICTION The ICC also limits carrier entry by attaching restric- tions to certificates granted to motor carriers.*4 Such restrictions include commodity, intermediate-point, route, highway, territory, and one-way haul restric- tions. With regard to intermediate-point restrictions, the ICC in 1974 adopted rules (since expired) allow- ing carriers to stop using gateways if the most direct highway distance was not more than 20 percent shorter than the gateway distance between two points.2° Thus, to save fuel, the ICC permitted easing its gateway restriction, but only if the reduced dis- tance (and consequent fuel savings) was not so great as to risk bestowing a competitive advantage. The Department of Justice (DOJ) met the ICC head-on concerning this policy, with the DOJ urging expansion of this rule by circuity reductions of 16 percent per year for 5 years until circuity would be eliminated altogether.?° ECONOMIC REGULATION: EXIT The Federal government regulates the exit of air, rail and natural gas pipeline carriers in the intercity mar- ket. Motor carriers, water carriers and oil pipelines are not similarly constrained. Certificated air passenger carriers (consisting ba- sically of trunk and local-service carriers) must ob- tain CAB approval to withdraw from a route. The domestic trunk carriers, however, have found it easy in many cases to leave an estabiished route, because the CAB has readily allowed the trunks to turn over their lower-density routes to local-service carriers which are eligible for Federal subsidies. Similarly, lo- cal-service carriers have successfully negotiated the transfer of their service in some areas to commuter airlines that use smaller aircraft, although many com- munities prefer service by trunk or local-service car- riers. In 1978, Congress altered its local-service sub- sidy (which is now due to expire in 1986) and estab- lished a new, 10-year subsidy program for smaller cities that might otherwise lose essential scheduled FEDERAL TRANSPORTATION POLICIES AND PROGRAMS ¢ 31 air service. The new subsidy may favor the United States Postal Service, which has been actively seek- ing to maintain air service to as many communities as possible in order to meet postal needs.?’ A rail carrier wishing to abandon a line must first receive ICC approval.?8 ICC authority in this regard applies to passenger as well as freight service. How- ever, in 1975 the Congress adopted legislation which exempts the National Railroad Passenger Corpora- tion (Amtrak) from ICC oversight of service discontin- vance) Natural gas pipeline carriers must obtain aban- donment approval from the FERC. Approval is grant- ed if the natural gas company successfully meets the burden of showing that the public interest will not be affected and that the gas will be diverted to a higher- priority use.°° It should also be noted that while motor and water carriers can abandon unprofitable routes, without ICC approval, by ceasing to serve them, they may be indirectly deterred by that Commission’s power to revoke operating rights on all routes, including the profitable ones. The effectiveness of such a deter- rent is a matter of debate. ECONOMIC REGULATION: RATES The regulation of rates and fares is generally justified on the grounds of insuring the existence of rates and fares which are just and reasonable, compensatory, and neither unduly discriminatory nor preferential. Throughout the remainder of this subsection, ‘‘rate regulation”’ will be used in a generic sense to encom- pass freight rates and passenger fares. The ICC has authority to reject proposed rate changes and to set maximum, minimum and specific rates for regulated motor, rail and water carriers, and domestic freight forwarders. Changes in rates are filed with the ICC in the form of tariffs at least 30 days before they are scheduled to go into effect. The ICC then may determine on its own initiative or on the basis of a complaint (usually through its Suspension Board) whether the rate should be filed, rejected, or suspended based upon whether it is reasonable and lawful. The Suspension Board may allow a protested rate to take effect, may investigate a protested rate, or may suspend and investigate such a rate. A carrier may appeal an adverse Board decision to a Commis- sion Division (but such appeals are seldom effective). Rate regulation policy is certainly not without gaps and conflicts. While the ICC seeks just, reasonable, and non-discriminatory rates for motor common car- riers, it seeks just and reasonable minimum rates for motor contract carriers.*' Government shippers are conspicuously singled out under Section 22 and simi- lar sections of the Interstate Commerce Act as being free to negotiate rates with ICC-regulated carriers without being subject to provisions of the Act, and 32 @ TRANSPORTATION ACTIVITY AND INSTITUTIONS even to determine discount rates after shipment.* The only requirement is that the rates be filed. Critics of this special policy allege that the government can indirectly use its powers to coerce lower rates from carriers. The Department of Defense is the most fre- quent user and strongest supporter of Section 22 rates. Many rate proposals filed by |CC-regulated carri- ers are developed through broad-based groups of modal carriers known as rate bureaus.* The practice of allowing such group ratemaking has been criti- cized as conflicting with the national policy of prohib- iting collusive activities in restraint of trade.** On the other hand, some contend that rate bureau opera- tions are necessary for the orderly provision of joint and through rates.** In an options paper submitted to OMB, the DOJ proposed eliminating rate bureau an- titrust immunity and ending ICC approval of maximum rates.*¢ If rate bureaus are allowed to continue, Jus- tice proposes that rates of the large intercity bus carriers (Greyhound and Continental Trailways) be considered separately from the smaller carriers.” Other gaps and conflicts in rate regulation policy have.special application to the rail mode. For exam- ple,/Amtrak is exempt from ICC regulation of rates even though other rail carriers, including the remain- ing private rail-passenger carriers, are subject to such regulation.* Rail carriers are required to assess incentive per diem charges (charges railroads make against other railroads for use of rail cars on a daily basis) on top of flat per diem rates as an incentive for the quick return and acquisition of boxcars. Only cer- tain general-purpose cars are singled out for this special treatment, even though serious shortages of gondola cars have been alleged in recent years.*9 The railroads are also allowed to negotiate unit-train rates for the transport of coal to utilities.4° Critics argue that such rates are discriminatory or arranged to prevent more efficient modes from winning cus- tomers. The railroads insist that only the cost savings from guaranteed, long-term contracts are reflected in these rates. The ICC recently opened up contract ratemaking to railroads, but with restrictions on pub- lication of contract terms.4' Another dispute in the regulation of rail rates re- lates to the ICC practice of preventing many rail rate reductions, even when such reductions would retain rates above variable cost. Section 202(f) of the Rail- road Revitalization and Regulatory Reform Act (4R Act) provides that nothing in that Act is to be con- strued as modifying other laws that give the ICC au- thority to prevent ‘‘unfair, destructive, or predatory prices.’’42 The Senate and House reports on the 4R Act, however, define ‘‘predatory”’ to be prices below variable costs.*? By so defining ‘‘predatory,”’ it ap- pears that Congress intended to limit the ICC’s dis- cretion in disapproving rate reductions. Air freight rates for all-cargo carriers and all-cargo operations of CAB-certificated carriers are now virtu- ally free of rate regulation. The CAB acted to elimi- nate its requirements that carriers publish these tar- iffs in advance. Many shippers have objected to the CAB change.“ The CAB does, however, regulate passenger air fares.45 On a quarterly basis, the carriers submit cost figures which the Board uses to determine the carri- ers’ indirect costs, revenues, and profits. A compari- son of these figures with the Board’s determination of the industry’s revenue requirements makes it ap- parent whether a carrier might be permitted a fare increase. After a comparison has been made the car- rier may file a new tariff. While protests can be filed at this stage, the fact that a need for change has been determined on the basis of CAB-required pro- cedures leaves little room for argument. Only in 1978 did Congress act to give air passenger carriers limit- ed, automatic rate flexibility. Air passenger rate regu- lation by the CAB is scheduled to end as of January 1A GSSite Subsidized air carriers have enjoyed maximum freedom to experiment with rate changes within a range of 100 to 130 percent of the applicable trunk- coach formula.4’ In contrast to this policy of rate flexi- bility with a cost constraint for subsidized air carriers (presumably for the purpose of subsidy reduction), subsidized transit operators in the urban market are encouraged to keep fares as low as possible through operating subsidies that vary directly with operating losses. The FERC regulates oil and natural gas pipeline rates by valuing pipeline property and then permitting the pipeline company to charge rates which yield a reasonable percentage of the value as an annual re- turn. However, in evaluating natural gas pipeline property, FERC employs a base of original cost less depreciation, while in evaluating oil pipeline property, FERC employs a factor which measures the cost of reproducing assets at current prices.4* The DOJ maintains that this reproduction cost method of valu- ing oil pipelines builds inflation into rates and boosts transportation costs. OTHER REGULATION Another type of regulatory policy, in addition to eco- nomic regulation, is the establishment of constraints (e.g., no highway projects can be approved for states that allow speeds in excess of 55 m.p.h.) and standards (e.g., highway construction standards de- veloped by the American Association of State High- way and Transportation Officials (AASHTO) and pro- mulgated by the Federal Highway Administration) to help achieve other goals such as safety. At times, conflicts may develop between Federal agencies over these standards and constraints, or two agen- cies may issue differing regulations concerning the same matter. Enforcement of safety regulations is often cited as an area of Federal involvement that needs improvement. The National Park Service of the Department of Interior establishes design and construction stan- dards for national parkways on Federal land, while the FHWA administers congressional design stan- dards for the Interstate Highway System and ap- proves standards adopted by AASHTO for other Federal-aid highways. Parkway and highway stan- dards may differ even though some parkways carry as much or more intercity automobile traffic as some Interstate segments (although parkways often ex- clude heavy trucks). FHWA’s Bureau of Motor Carrier Safety (BMCS) sets standards for such matters as the qualifications of truck and bus drivers, and maximum hours of driv- er service.‘ The DOE, however, has encouraged the BMCS, at least in times of moderate fuel shortage, to suspend the regulations which limit the number of hours which a truck driver may operate a vehicle during a 24-hour period.S° This DOE position may conflict with safety goals. Finance, Pricing and Taxation This section lists some inconsistencies in providing Federal assistance to intercity transportation. The uneven treatment of competing transport modes that results from these inconsistencies shows the need for development of overall national transport poli- cies. Federal assistance to intercity transportation con- sists of financial aid to state and local governments, as well as to private carriers. However, there is vari- ance in the Federal shares for different intercity transportation programs (e.g., 100 percent Federal payment for pavement-marking projects versus 75 percent sharing for Federal-aid primary highway con- struction projects), and in levels of Federal involve- ment in different modes (e.g., virtual Federal owner- ship of intercity rail passenger transportation since 1970 as compared to no direct Federal assistance to intercity bus transportation until aid was authorized in;1978). Amtrak subsidies are provided to cover operating deficits and capital improvements in order to main- tain some intercity rail passenger service.°' State and local agencies may also request Amtrak to provide new service with the state or local entity paying 50 percent of the subsidy requirement.** _/ Subsidies go to local-service air carriers to sup- port ‘‘necessary”’ intercity air passenger service to small communities.5> In 1978, Congress acted to phase out this subsidy by 1986 but enacted a new 10-year subsidy program for essential air service. FEDERAL TRANSPORTATION POLICIES AND PROGRAMS e 33 Also in 1978, Congress authorized a new program of aid to intercity buses. In the case of highways, a trust fund is used to account for collections of user fees imposed on fuel, lubricants, vehicles, parts and other vehicle-related items. These fees do not vary directly with the costs imposed on particular segments of highways. In addi- tion, numerous exemptions are given, the most re- cent (in 1978) to intercity buses.°° The country’s highways are financed by all levels of government. Federal trust fund receipts are used to support scores of categorical highway-aid pro- grams, undertaken and partly financed by state and local agencies. A similar trust fund is used to account for grants for airport construction, with revenues pro- vided by such Federal user fees as passenger ticket and freight way-bill taxes. Tolls are generally forbid- den on federally funded highways. Exceptions in- clude structures such as bridges, in which case tolls must be eliminated once the facility has been amor- tized.5° Because tolls cannot be continued, they can- not be used to cover maintenance costs or to affect congestion. At the same time, tolls are applied on the federally funded Saint Lawrence Seaway*’ and on the Panama Canal. Federal funds are provided for rail/highway grade separation or protection.s® At issue is whether the level of funding is sufficient to meet projected needs, and the extent to which highway user fees should be applied to fund such categorical programs involving other modes. Federal funds are used to construct, operate and maintain the country’s inland waterway navigation system.°° The general public paid for these naviga- tion projects (i.e., the cost was not even partially recouped by user fees) until Congress passed, in Oc- tober 1978, a program of collecting fuel taxes from waterway users.© The new waterway fees are de- signed to cover a portion of operating costs of the inland waterways, but will mot provide revenue suffi- cient to cover capital costs (e.g., for improvements at the Alton, Illinois Locks and Dam No. 26).®' Ownership and Operations The DOJ cites competition as a fundamental eco- nomic policy which it seeks to implement.® As noted in previous sections, the Justice Department has often criticized transportation regulatory agencies. Implicit in the concept of competition is the belief that a government should not provide services in the marketplace except where the private sector is unwilling or unable to provide such services. How- ever, some intercity transport policies and programs are to the contrary. For example, the Department of Defense (DOD) owns a small fleet of rail cars (Defense Freight Railway Interchange Fleet) used to 34 e TRANSPORTATION ACTIVITY AND INSTITUTIONS support unique shipping requirements. These cars may be provided free of charge to other government agencies, and to commercial firms at a fee, when not required for DOD use. Similarly, the U.S. Army Corps of Engineers owns a fleet of dredges to maintain and construct autho- rized channel widths and depths, and it owns and operates locks and dams on U.S. waterways. Al- though private firms are used when their costs do not exceed by 25 percent the Corps’ costs, the Corps’ dredges perform 40 percent of this dredging, placing this government-provided service in direct competi- tion with privately-owned dredges.™ While the Federal government has found it neces- sary to own and operate (at a loss) the Alaskan rail- road,® the FRA Administrator has stated that ade- quate rail service—not the survival of every rail- road—is FRA’s overall goal for the U.S. rail system.® Finally, the FAA provides systems of air traffic con- trol, navigation aids, and flight information.®’ Planning and Information In recent years, the Federal government has encour- aged intercity transportation planning, usually on a modal basis. For example, as a condition of eligibility for rail assistance, states are now required to provide state rail plans, and the FRA has published a detailed State Rail Planning manual. The FAA develops a National Airport System Plan, which is a compilation of development needs of U.S. civil airports. The FAA also provides grants to public agencies to assist in planning a nationwide system of airports.”° In general, DOT does not engage in long-range transportation planning, but many of its administra- tions require planning as a condition for receipt of Federal aid. Government Organization While there are often good reasons for involving sev- eral agencies in decisionmaking and review pro- cesses, the actions of one agency often contradict actions of another. Even where contradictions do not exist, the mere involvement of several agencies can slow decisionmaking and review. | For example, numerous agencies are involved with ‘Amtrak affairs, including the DOT, which annually submits recommendations to the Congress; ICC, which investigates and mediates disputes between Amtrak and the rail carriers, and may impose settle- ments based on its findings; GAO, which periodically audits Amtrak; and the President, who appoints a majority of the Board of Directors.” Railroads have attempted to negotiate special” rates to transport hazardous materials, including ra- dioactive wastes, which require special handling. An ICC administrative law judge ruled that this was a safety matter and should be brought before DOT and the Nuclear Regulatory Commission (NRC), not the ICC. At the same time, DOE (formerly as the Energy Research and Development Administration) argued that such rates would hamper attainment of U.S. en- ergy goals.”2 In its efforts to promote competition in intercity transportation, the DOJ has challenged the ICC by recommending free motor carrier entry, an end to — rate bureau antitrust immunity, and an end to ICC’s control of mergers and approval of maximum rates.” The Federal role in the intercity transport market, though not necessarily the level of Federal funding, is greater than in the other markets subsequently to be discussed. This seems to be an appropriate and nat- ural outgrowth of the responsibility of the Federal government in a union of 50 sovereign states to“... regulate Commerce with foreign nations (and) among the several States... .’’”4 Federal involvement in intercity transport has his- torically used the tool of economic regulation. In the past 20 years, though, the Federal role increased considerably as Federal funds (from user charges and general revenues) began to flow to state and local governments, and to private carriers. These Federal funds are leveraged (that is, they often re- quire recipients to share in the funding), which serves to expand Federal influence beyond the magnitude of its own financial involvement. In the last few years, with the advent of Amtrak and Conrail, Federal in- volvement has taken an even bolder step. In summary, NTPSC found 17 congressional com- mittees and 52 Federal agencies involved in policy development and program implementation in the in- tercity market. NTPSC identified 338 policies and 346 programs with relevance to intercity transporta- tion. THE URBAN MARKET This section discusses Federal transportation poli- cies affecting the urban movement of passengers and freight and the programs developed to imple- ment these policies.’”© The urban market is characterized by great de- mand for personal mobility, as well as for the move- ment of goods, and by relatively short trip lengths for both people and goods. For this report, the urban market is defined as encompassing movements with- in places of at least 2,500 population and includes daily commutation from surrounding areas. Many Federal programs define an urban market as having at least 50,000 residents. By this more restric- tive definition, the urban market contains approxi- mately 60 percent of the U.S. population. An addi- tional 15 percent is covered by Federal programs for which the 2,500 population threshold is applied. Transportation problems are often different in large cities, as contrasted with smaller communities, so that, depending on the issue, one definition or the other may be more appropriate. Regulation ECONOMIC REGULATION Federal economic regulatory activity in the urban market is unusual in its limited scope. Local transit regulation is left to the discretion of state and local governments. Even when a metropolitan area strad- dies a state line, the ICC exempts freight carriers from its economic control for movements within a commercial zone.’6 The Federal government does, however, regulate the economic activities (both operations and capital investment) of some urban transit providers through conditions attached to the receipt of Federal finan- Cial assistance. Federal aid for the purchase of buses is conditioned on prior agreement that the buses will not be employed in charter operations ‘‘. . . outside of the urban area (or areas) within which . . . regular- ly scheduled mass transportation service’ is provid- ed.’’ Federal policy also does not require local transit operators to set fares so as to cover operating costs, because (within limits) Federal operating assistance varies directly with local deficits.” Such operators must also charge fares at least one-half lower than their standard fares for elderly and handicapped per- sons during off-peak hours.79 OTHER REGULATION Non-economic regulation by the Federal government is considerably more pervasive than economic regu- lation in the urban transport market. Most of these regulations are essentially strings attached to Feder- al assistance programs. For example, the DOT Sec- retary has ruled that as a means of insuring equity and providing adequate service, new mass transit vehicles purchased with Federal assistance at some future date must be accessible to the handicapped and the elderly.® As this requirement is attached to the receipt of Federal funds, a transit operator might avoid the regulation by refusing to accept the aid. Such accessibility requirements conflict with at- tempts to minimize Federal subsidy to urban transit systems. This is because many areas are already providing specialized, demand-responsive transpor- tation to meet the needs of the elderly and handi- capped. Special systems, or even taxi service open to all users, often can be operated for less than the cost involved in providing full accessibility to regular, fixed-route urban transit.2’ The conflict is more pro- nounced when it is considered that many areas may be required to continue to provide the specialized FEDERAL TRANSPORTATION POLICIES AND PROGRAMS e 35 services, in addition to an accessible fixed-route transit system, to meet the needs of the elderly and handicapped. Section 504 of the Rehabilitation Act of 1973 re- quires that: No otherwise qualified individual in the United States .. . shall, solely by reason of his handi- cap, be excluded from the participation in, be denied the benefits of, or be subject to discrim- ination under any program or activity receiving Federal financial assistance. ®? UMTA estimates that the cost for transit of complying with Section 504 will be $1.7 billion,“ in 1977 dollars, and the urban transit industry claims compliance costs will be as much as $6.5 billion.™ Another example of regulation achieved by attach- ing conditions to the receipt of Federal funds is Sec- tion 13(c) of the Urban Mass Transportation Act of 1964. Section 13(c) protects employees of urban transportation projects that receive Federal funds by insuring ‘‘... against a worsening of their positions with respect to their employment... .’’ Employees are guaranteed maintenance of collective bargaining rights and other privileges, job protection or priority reinstatement if laid off, and paid training. There are numerous other Federal regulations which affect transportation in the urban market. These regulations include automobile emission stan- dards,** the 55 m.p.h. speed limit,®” brake standards,®* and fuel economy standards.®? All such regulations can affect the quantity and quality of transportation services available in the urban market. The Environmental Protection Agency (EPA) is au- thorized to set noise emission standards for products distributed in commerce. At present, only motor car- riers weighing more than 10,000 pounds are so regu- lated.% No Federal noise standards are set for small- er trucks and automobiles. EPA has proposed noise regulations for motorcycles, however.’ The conflict between these regulations and the goal of low trans- portation prices is demonstrated by EPA’s own esti- mates which suggest that compliance with these reg- ulations will drive up motorcycle costs by 10 percent. At issue is whether such costs are outweighed by the value to society of a quieter environment. The regulation of safety in urban rail transit falls somewhere between the jurisdiction of UMTA and the FRA. A recent U.S. Court of Appeals ruling gives UMTA sole jurisdiction of safety in mass transit.9* The ruling overturned a lower court holding that FRA had jurisdiction over safety aspects of the Chicago Tran- sit Authority's (CTA) rapid transit operation.% The jur- isdictional dispute is not yet fully resolved, as the court ruled CTA rail operations to be outside that which Congress intended in the Railway Safety Act of 1970. Questions remain whether the court would 36 © TRANSPORTATION ACTIVITY AND INSTITUTIONS rule similarly for the Lindenwold (Philadelphia area) or other northeastern commuter lines which more closely resemble intercity rail service. The Consumer Product Safety Commission regu- lates bicycle safety by establishing standards for bi- cycle design and attachments.™ On the freight side of the urban market, a few policies have been focused on the movement of haz- ardous materials through densely populated urban areas. Federal policy does not yet address such urban freight safety issues as designing routes by rail, highway, and water to minimize exposure of peo- ple and property; assuring the development of local plans to respond with the necessary resources when a disaster occurs; or maintaining a general Federal readiness to provide disaster assistance. Finance, Pricing, and Taxation In recent years, major Federal financial assistance has been provided in the urban market. For example, the Federal-Aid Urban System (FAUS) is funded by a categorical highway program tailored specifically to meet urban needs.% The dollar allocation to each state for the FAUS program is based on the state’s share of total U.S. population residing in urban areas. With approval of state authorities, FAUS funds can be used either for transit capital projects or for urban highways. (Despite the apparent flexibility of this pro- gram, few FAUS funds have been used for transit.)9’ At issue is the extent to which highway user fees paid by truck operators and motorists should be used for public transit or for urban highway systems that largely serve auto commuter traffic. Another FHWA program which directly affects ur- ban transportation is the bikeways program, allowing states to construct separate or preferential bicycle paths or lanes, shelters, and parking facilities to serve persons using bicycles.% States also may elect to use their Federal-aid highway funds for vanpool projects. Federal funds can be applied for vehicle acquisition, start-up costs, and guarantees against financial losses. Users are required to pay a fee that covers vehicle depreciation and operating expenses. FHWA regulations require that vanpool projects not have an adverse impact on mass transit. This is, how- ever, a difficult assurance to give and some diversion is likely to occur, placing the vanpool program in conflict with Federal funding of transit. Congress created two additional categorical programs for bikeways and vanpools in 1978 in the same act in which it expanded urban transit aids.‘ Urban transit capital projects may be substituted for a previously approved portion of the Interstate Highway System in an urban area.’ State and local Officials, acting together, must request the transfer. The DOT Secretary must assure that the segment to be deleted is not essential, and the Governor of the state must assure that a toll facility will not be substi- tuted. If a transfer is approved, the Federal share is 85 percent, although the Federal share for the Inter- state projéct would have been 90 percent. The Fed- eral share for transit capital assistance is 80 percent. This difference in matching ratios results in some conflicts at the local level by making highway con- struction financially more attractive, even though transit may better fit local needs. When a transfer is approved, or transit assistance is awarded, general funds are used for the Federal share, whereas funds for the Federal share of expenses for the Interstate Highway System come from the Highway Trust Fund. UMTA funds planning, equipment and facility pur- chases, and operating deficits for a variety of public modes including subways, streetcars, commuter rail- roads, buses and paratransit. Discretionary grants are made to public bodies to help transit systems acquire capital facilities and equipment; the Federal share is 80 percent.'© UMTA required grant recipients to choose the lowest bidder for capital grants projects, regardless of the nationality of the company producing the equipment. However, Congress modified this policy in October 1978 by applying a ‘‘Buy America” re- quirement to projects with total cost in excess of $500,000, unless a waiver is granted by the Secre- tary of Transportation.'° UMTA distributes formula grants directly to cities of 200,000 population and above, and to governors for cities between 50,000 and 200,000 population.‘ Funds may be used for operating assistance (with a Federal share of 50 percent) or capital assistance (with a Federal share of 80 percent). Eligibility for UMTA formula grants for operating assistance was contingent upon maintaining non-Federal, non-fare revenue (such as state and local subsidies and ad- vertising revenues) at a level at least as great as the average of the past two years,'® although this main- tenance-of-effort policy is being phased out as a re- sult of congressional action in 1978. A new program of transit aid to small urban (and rural) areas was begun by Congress in 1978, so that for the first time cities of less than 50,000 population are eligible for transit operating funds, as well as capital funds.'% Federal funds are also provided to subsidize oper- ating losses of commuter rail service. Originally this program was for commuter services in the Northeast. In 1977, anew program was created to provide more extensive subsidy payments to commuter rail ser- vices. The Federal share for both programs is 80 percent.1°7 A variety of additional Federal policies and pro- grams affect the urban market. For example, DOD and the General Services Administration assist in the construction and maintenance of access roads to military and civilian facilities.‘°° Also, a substantial transportation network is operated throughout the District of Columbia and its suburbs by the Washing- ton Metropolitan Area Transportation Authority (WMATA). Although WMATA is not a Federal agen- cy, it has received substantial Federal aid in a form that is quite different from that of other transit author- ities (e.g., Congress continues to appropriate sepa- rate funds to cover 25 percent of WMATA’s interest expense on bonded indebtedness).'° The largest amount of non-DOT financial assis- tance to suppliers of urban transport is provided by the Treasury Department and the Department of Health, Education and Welfare (HEW). Substantial block grants go to state and local governments to be used within relatively broad categories, including transportation-related expenses in the urban market.''° Direct financial assistance for city govern- ments administered by the Treasury (e.g., counter- cyclical assistance and general revenue sharing) may be used, with few strings attached, for transport purposes.''? Even when Federal revenue sharing money is not spent directly on transportation, its availability may permit local governments to spend more of their own funds for transportation. The policies and programs of the Department of Housing and Urban Development (HUD) provide ad- ditional examples of non-transportation actions by the Federal government which heavily impact upon the urban market. HUD programs include grants, loans, and loan guarantees to local agencies and individuals for the construction or improvement of homes, businesses, and public facilities.'‘1* Some an- alysts believe these policies and programs have con- tributed to urban sprawl and central city blight to a greater extent than the construction of freeways and other transport facilities.‘‘s Whatever forces shape cities, the resulting urban form molds both travel de- mands and the characteristics of transportation sys- tems which can serve those demands.'"* The Federal tax code has also impacted the type and distribution of activity and related transportation needs in urban areas. It has been suggested that deductions for interest payments on mortgages and for local property tax payments may have encour- aged home ownership compared with higher-density (usually rental) habitation in urban areas.''> Rapid de- preciation of buildings for tax purposes may have influenced urban form. The deduction permitted on Federal income taxes for state and local fuel taxes has been ended by Congress beginning with the 1979 tax year.'6 In the more recent past, the Federal government, through HUD (by aiding housing renewal projects in urban areas)''’” and through the Economic Develop- ment Administration of the Department of Commerce (by financial assistance for businesses in central cit- FEDERAL TRANSPORTATION POLICIES AND PROGRAMS ¢ 37 ies),"'8 has encouraged a return to central cities. These particular non-transportation policies, togeth- er with implementation of President Carter’s urban policies,''? could, through increased densities, make urban transit more viable. Transit, by encouraging development at major terminals or subway stops, can promote density. On the other hand, local govern- ment may be reluctant to permit dense development, and transit extension to suburban areas can promote sprawl. President Carter’s urban policy, calling for urban impact statements for proposed Federal ac- tions affecting cities, and UMTA’s investment analy- sis requirements,'*° encourage local governments to consider the costs and benefits of various develop- ment patterns induced by the use of Federal funds. The Federal government further affects urban land uses—and related transportation needs—by funding non-transportation infrastructure related to water supply, flood control, sewage treatment projects, hy- dro-electric projects, and the like. The Federal gov- ernment also affects urban transport by locating Fed- eral facilities in urban areas. The location of Federal offices and defense installations can substantially af- fect commutation patterns. Social-recreational trips are also affected by urban parks and historic sites supported or administered by the Department of the Interior.'2" Ownership and Operations The Federal government has generally refrained from becoming the provider and operator of transit ser- vices in the urban market. Some transportation ser- vices (primarily through programs funded by HEW and the Community Services Administration—CSA) are provided with direct Federal aid. CSA, previously the Office of Economic Opportunity, has funded transportation services in urban and rural areas to accomplish its program objectives.'?? These systems may be small, underutilized, run by inexperienced persons, and in competition with existing transit ser- vices, especially those of private taxicab firms. CSA is seeking to demonstrate ways that more coordina- tion can be achieved.'2° Most Federal aid for capital and operating assis- tance can be provided only to publicly-owned transit operations.'*4 As a result of these requirements, and for other reasons, the public has taken over transit operation in many urban areas since the Federal pro- gram of transit grants began in 1964. Planning and Information The Federal-Aid Highway Act of 1962 specified that a ‘‘38C’”’ (continuing, comprehensive, and coopera- tive) planning process be carried out by the states and urban areas with populations greater than 38 e TRANSPORTATION ACTIVITY AND INSTITUTIONS 50,000.12 The Federal-Aid Highway Act of 1973 re- quired states to appoint metropolitan planning orga- nizations (MPOs) to oversee the “‘3C’’ process and to coordinate planning funds from different Federal agencies.'26 Transportation Improvement Plans (TIPs) are now developed by MPOs to augment the “3C” process. A TIP may contain a long-range sec- tion and a 3- to 5-year short-term segment with an annual element. Measures to improve transportation using low-cost methods such as signalization and left-turn lanes are also encouraged. These are to be listed in the Transportation System Management (TSM) component of the TIP’s annual element.'2” Research of interest to urban transport operators is performed by the modal administrations of the DOT plus its Research and Special Programs Admin- istration. Both FHWA and UMTA have developed an- alytical models, computer software and other tools to assist urban transportation planners and operators. These agencies also sponsor seminars and training programs for potential users of these tools for plan- ning, management and operations. The DOD, Trans- portation Research Board (which is partially spon- sored by the Federal government), congressional of- fices and committees, and occasional Federal study commissions, also facilitate urban transport re- search. Specifically, a variety of agencies monitor the variables which are important to the demand for transportation. Key programs include HUD’s annual housing survey, the Census Bureau’s decennial cen- suses of housing and population and quinquennial census of transportation,'*® and various forecasting programs under other branches of the Department of Commerce. Data, methods, and results are usually made available by the sponsoring agency, the Gov- ernment Printing Office, or the National Technical Information Service. '29 It seems that innovations involving high technolo- gy (such as computerized traffic control systems, ful- ly automated transit vehicles, and computerized property control, scheduling, and management sys- tems) plus new propulsion concepts have, in the past, received the most serious attention for UMTA demonstration projects.'%° Some observers suggest that innovations requiring relatively small investments (such as package delivery by taxis, use of rental car fleets as paratransit, and preferential treatment of buses) could have high payoffs in the short term and might be given higher priority under demonstration programs to achieve more cost-effective results. However, it seems that local sponsors have been re- luctant to seek federally funded demonstrations that might impinge on auto use. Government Organization The Federal government recognizes the need for coordination among the numerous public policies and programs in urban areas. Such coordination has sometimes been difficult to achieve because of dis- jointed political jurisdictions within an urban area. In addition, lack of coordination at the Federal lev- el has resulted in redundancy. This is illustrated in the urban market by a recent critique of HEW and other programs issued by the GAO."*' Scores of HEW programs supply or fund transportation for clients to travel to service centers. As a result, a variety of small transportation services may continue to oper- ate well below capacity within one urban area. Federal involvement in urban transport has grown dramatically during the past two decades. The con- tinuing implementation of stricter non-economic reg- ulations (e.g., noise and air emission standards, fuel economy standards, and safety standards) will serve to increase the demand for Federal financing of ur- ban transportation. These regulations will also serve to make the expenditure of additional funds in the urban market easier to justify. In summary, 13 congressional committees and 46 Federal agencies have been identified by NTPSC as having jurisdiction which affects the urban transpor- tation market. NTPSC found 162 policies and 357 programs with relevance to the urban market. THE RURAL MARKET This section discusses Federal transport policies and programs affecting the movement of passengers and freight in the rural market. The rural market is defined as transportation within and between places of less than 2,500 population. This includes many U.S. parks and forests, Indian reservations, and farms. Move- ments from rural points, to or from urban markets, are generally labeled rural, although, depending on the particular context, such movement might be con- sidered urban (commuting to work) or intercity (dense freight movement). Regulation ECONOMIC REGULATION The ICC regulates the entry, exit, and rates of motor, rail and water carriers (although much rural traffic by motor or water carriage is agricultural, and exempt, moving in bulk, or hauled by private carrier). Agricul- tural cooperatives are, however, singled out for spe- cial treatment and are exempt from ICC regulation of motor carrier entry and rates under certain condi- tions.'5? Alleged abuse of this exemption recently led the ICC to ban one-way trip leasing by co-ops to non-members for non-farm business, in an effort to curtail ‘‘sham’’ co-ops that lease their vehicles and thereby effectively compete with common carriers. This ICC policy is being challenged in Federal Court by some of the co-ops.'%% The ICC prohibits independent truck operators (not holding their own operating rights) from carrying regulated commodities unless they have a trip-lease agreement with a certificated carrier.‘ The terms of such agreements may discourage the non-certificat- ed trucker from trip-leasing and, therefore, the inde- pendent trucker’s exempt haul in one direction may be accompanied by an empty return haul because it is unlikely that agricultural commodities would be available for both directions of a trip.'*> This results in conflict with national energy conservation goals. The ICC, with DOJ support, also prohibits independent truckers from publishing rates.'%¢ This ICC policy con- flicts with the Department of Agriculture’s position that independents should publish rates so that farm- ers and shippers can make use of the lowest-cost transportation available. The Justice Department has threatened prosecution of agricultural truckers that publish ‘“‘suggested”’ rate sheets for hauling ICC-ex- empt commodities. '*’ The ICC maintains varying degrees of control over route abandonment by carriers which it regulates. ICC control over rail abandonment is more strict than for other modes. Under the 4R Act, early notice by railroads of proposed abandonment is required.'** A complete system map showing lines to be aban- doned within three years must be filed with the ICC and the states. Opponents of efforts to deregulate the motor car- rier industry (for both passengers and freight) often state the likelihood of deteriorating service to small communities, if such changes were made. Discontin- uation of service by motor carriers to small communi- ties has not been carefully controlled by the ICC, however.'%9 The CAB has regulated entry, exit, and fares of most intercity air carriers. The CAB has not, how- ever, strictly regulated air commuters, air taxis, or private general aviation, which are especially impor- tant to the provision of air service in the rural market.'4° To be exempt from regulation, a commuter or air taxi must restrict itself to the operation of small aircraft (previously a maximum capacity of 30 seats and a maximum payload capacity of 7,500 pounds, although these limits were changed in 1978 to 56 passengers and 18,000 pounds). These air carriers are subject to the FAA’s safety regulations. Air taxis and commuters were not eligible for the CAB subsidy paid to local service airlines (even though certain commuters may enplane more passengers and oper- ate in a more efficient manner) until Congress changed its policy in October 1978.'*' OTHER REGULATION Non-economic regulation of transport in the rural market is virtually the same as for the intercity and urban markets. Pursuit of development goals for the rural market may often conflict with Federal restric- FEDERAL TRANSPORTATION POLICIES AND PROGRAMS e 39 tions imposed to protect the environment. Congress has adopted a compromise set of regulations for Minnesota’s boundary waters wilderness areas that permits the use of motor boats on only a few lakes and severely restricts the use of snowmobiles. '*? Lo- cal residents opposed such restrictions as infringing on their mobility and economic well-being. Finance, Pricing and Taxation UMTA has administered a $500 million capital-grant program for transit projects for cities under 50,000 population,'*? but these smaller cities were not eligi- ble for assistance to help cover operating deficits, as provided in the 1974 National Mass Transportation Assistance Act for cities of over 50,000 population.’ The result was a policy gap between the small urban and rural markets and the urban market. Congress acted in October 1978 to give more transit aid to rural and small urban places and established special categorical programs to permit transit and highway improvements resulting in better service.'45 Autho- rized aids now, for the first time, include the intercity bus mode, which often provides the only form of public transport in rural areas.'*6 Capital grants are also available through UMTA’s 16(b)(2) program to private non-profit groups for specialized transportation services for the elderly and handicapped in rural and urban areas.'*’? The 16(b)(2) program has funded more than 3,000 vehi- cles, many of which operate in rural areas. It is al- leged that such vehicles, like those funded through other Federal programs (e.g., HEW’s Older Ameri- cans Act Titles III and VIl),148 have been used to com- pete with established, privately owned, for-profit transportation firms.'49 The FHWA manages several highway programs of particular importance in the rural market. The Bridge Inspection and Replacement Program mandates standards and requires biennial inspections.'®° Fed- eral funds are authorized to cover 80 percent of the cost of replacing certain structurally deficient and functionally obsolete bridges. Many of these bridges are not part of the Federal-Aid Highway System, but rather are on state and county roads in rural Ameri- ca. Congress acted in October 1978 to greatly in- crease the categorical funds available for bridge re- placement.'>' Section 803 of the 4R Act created an FRA pro- gram to help states continue rail branch-line service, rehabilitate facilities, and replace lost service by less costly means.'5* A separate program is administered by FHWA for rail/highway grade improvement or se- paration projects, providing funds with a 90 percent Federal share.'®* Aid for branch lines was limited to those approved for abandonment, giving no incen- tive to seek ways to prevent abandonment in the first place. Congress acted in 1978 to make the subsidy 40 e TRANSPORTATION ACTIVITY AND INSTITUTIONS program permanent at a matching ratio of 80 percent Federal, 20 percent non-Federal and to permit some funds to be used to prevent abandonment.’ The National Scenic and Recreational Highway program (Great River Road) funds 10 states along the Mississippi River to provide a scenic route for leisurely automobile travel.'*° The Forest Service of the Department of Agricul- ture is responsible for designing and constructing a road system in national forests consistent with sound policies for managing forest lands.'** It appears that Forest Service planning and engineering of these roads is duplicative of DOT capabilities, as FHWA has designed few such roads. Private lumbering firms contract for construction of roads in national forests.'’ The Appalachian Regional Commission (ARC) provides 70 percent Federal grants to states in the region for design and construction of highways, al- though the ratio may be increased to 80 percent by the ARC as a result of recent congressional action.'*8 The primary purpose of these highways is to provide access to rural Appalachia as a means of fostering economic development. Highway investments seek- ing such a goal may be different from those invest- ments guided by a goal of strict economic efficiency. Through the U.S. Army Corps of Engineers, the Federal government provides 50 percent of the cost of construction of general navigation facilities serv- ing recreational boat traffic and the full costs of oper- ating and maintaining navigational aspects of small boat harbors. Non-Federal interests bear one-half of construction costs and provide all lands, easements, rights-of-way, public wharf servicing, necessary po- licing, and other essential services.'*9 The Treasury Department administers the general revenue sharing program which provides Federal block grants to state and local governments.'© Rural counties and cities rely on these funds for transpor- tation purposes. Overall, it is estimated that as much as 15 percent of the revenue sharing funds is spent on transportation-related services of state and local governments.'®' Ownership and Operations The Federal government, primarily through Action, the Community Services Administration (CSA), and HEW, provides transportation services to the rural disadvantaged. These services exist primarily to transport the elderly, the poor, the handicapped, and other disadvantaged citizens to locations where they can obtain social services which they need. HEW alone has over 65 programs with annual expendi- tures of $800 million to provide such transportation services in rural (and urban) areas.'®* Throughout the rural and urban markets, the provision of special transportation services by several agencies can en- courage the proliferation of small, underutilized, un- coordinated, and duplicative services. Several forms of Federal involvement are evident in Alaska’s transportation system. The FRA owns and operates 482 miles of railroad, in addition to riv- erboats, to provide transportation services to rural Alaska.'®* A federally funded facility, the Alaskan Highway, also exists (originally designed primarily for defense purposes).'™ Planning and Information The 3R and 4R Acts thrust the states and local gov- ernments into rail planning activities as a condition of eligibility for state rail assistance from the Federal government. Congress acted in 1978 to establish a Rural Transportation Advisory Task Force to report on ways to achieve better transportation in a more coordinated manner.'®& The movement of agricultural resources and prod- ucts almost always involves a combination of modes. This signals a gap as there are no Federal require- ments for intermodal rural transportation planning. The Transportation Research Board (of the National Research Council of the National Academies of Sci- ences and Engineering) administers research on ru- ral multimodal planning, including a National Cooper- ative Highway Research Program study of statewide, multimodal, freight-demand forecasting. '® A major problem in the rural market is that the definition of ‘“‘rural’’ varies by agency and program. For example, ‘UMTA’s capital grant program sets aside funds for small cities of between approximately 2,500 and 50,000 population,'®” but FHWA’s Section 147 rural highway public transportation demonstra- tion program was directed (with some exceptions) to places of up to 5,000 population.'® The U.S. Census Bureau defines rural areas as those remaining areas not consisting of places of 2,500 population or more, and not at the densely settled fringe of urbanized areas.'® Due to confidentiality requirements, detailed data for particular geographic units within sparsely populated rural areas may not be available from the Census Bureau.’ Such data, if made available, might prove useful to planners of rural public trans- portation. Government Organization NTPSC identified 17 congressional committees and 51 Federal agencies that have jurisdiction of impor- tance to the rural market. NTPSC found 243 policies and 404 programs relevant to rural transportation. THE INTERNATIONAL MARKET Transport in the international market encompasses Carriage of all passengers and goods across national boundaries, except traffic between domestic ports via international routes. Governments enter the inter- national market as regulators, suppliers, and con- sumers of transportation. Market intervention is couched in terms of national defense, promotion of peacetime national objectives, protection of citizens, realization of foreign exchange earnings, attainment of economic efficiency, and promotion of local indus- try. The inability of individual governments to regu- late externalities which affect the welfare of other nations has given rise to a variety of United Nations- sponsored intergovernmental organizations (such as the Inter-Governmental Maritime Consultative Orga- nization—IMCO). These organizations have been in- strumental in setting transportation safety and envi- ronmental standards. Regulation ECONOMIC REGULATION The scope of regulatory power and jurisdiction dif- fers greatly between the maritime and aviation indus- tries. Federal maritime regulation (by the FMC) is much less pervasive than in the aviation industry, even after substantial air deregulation in 1978. Entry and exit of individual carriers into the shipping field are based totally on economic factors and are not subject to regulation. Although membership in the rate-fixing associations of steamship liners (confer- ences) has been made immune to antitrust action,’ to insure competition and improve service, the U.S. has insisted that the conferences remain open to any carrier willing to take part in the trade. The Maritime Administration (MarAd) in the Department of Com- merce regulates the routes of U.S.-flag carriers re- ceiving subsidies under the various financial pro- grams which it oversees.'’? Rates are set by the liner conferences. Although the FMC has the power to disapprove rates following a hearing showing that they are predatory or unjustified on cost or other grounds, the power is rarely used. Such hearings have taken an average of two years.'’° The costs of foreign-flag vessel operations may not be easily ob- tained, so that determining whether rates are below cost may be impractical in these cases.'”4 Because the U. S. is the only major trading nation which insists on open conferences, ships which have been kept out of closed conferences in other parts of the world have come to the U.S. trade. Worldwide excess capacity, produced by competitive govern- ment subsidies and by other factors, has resulted in some U.S.-flag carriers experiencing economic diffi- culties.'75 Regulation of aviation routes, entry, exit, and fares is much more complete than for the maritime sector. Airline entry in the international market is tied to a process of bilateral negotiations. Responsibility for the designation of U.S. air carriers to the routes FEDERAL TRANSPORTATION POLICIES AND PROGRAMS e 41 gained as a result of bilateral negotiations is dele- gated to the CAB.'76 CAB route designations can be overturned by the President for foreign policy rea- sons. The President was also empowered to award a route to another carrier after deciding to overturn a CAB decision,'”” a power which was ended by Congress in 1978.18 Development of rates has generally been left to the carriers in the International Air Transport Associ- ation (IATA). The CAB has the right to suspend pro- posed rates if it feels that they are discriminatory or unjustified, but it may not put alternative rates into force.'”? In 1978 the CAB indicated that it may not accept rates determined within IATA, considering them to be anti-competitive. Subsequently, members of IATA altered its structure to permit individual mem- bers to set their own rates while retaining member- ship; nonetheless, IATA has challenged this CAB pol- iGyore U.S. international aviation and maritime policies both nominally stress the benefits of competition based on the premise that market competition will cause inefficient operators to improve or leave the market and allow efficient operators to provide ser- vice at prices reflecting costs. However, national de- fense, prestige, balance of payments considerations, and other concerns affect both U.S. and foreign-flag carriers, so that open competition may not drive out many marginal operators. Interpretations of national interests tend to make it impossible to accept the demise of a flag carrier and result in subsidy. Finally, U.S. attempts to regulate practices of oth- er flag carriers have met with resistance from foreign countries. U.S. restrictions on rate-cutting, rates be- low costs, and rebating by liners involved in U.S. trade have met with legislation in some countries which prohibits their carriers from cooperating with the U.S. initiatives. As a result, the regulations have been stringently applied only to U.S. carriers, even though the CAB and the FMC are empowered to bar U.S. ports to flag carriers of nations which discrimi- nate against U.S. carriers.'*' The U.S. International Trade Commission investi- gates injuries that may result from dumping (the practice of selling below cost),'® including the dump- ing of transportation equipment. U.S. firms and labor which have been displaced by competition may re- ceive counseling and some short-term funding under programs of the Department of Labor.'® OTHER REGULATION Enforcement of congressionally mandated environ- mental standards and safety regulations comes un- der the jurisdiction of the U.S. Coast Guard and the FAA.1& Certain Coast Guard standards apply to the water carriers of all nations at U.S. ports of entry, although in practice some standards may be more strictly applied to U.S. carriers than to foreign-flag 42 e TRANSPORTATION ACTIVITY AND INSTITUTIONS carriers due to possible ill effects on foreign policy.'* A more beneficial approach might be the multilateral application of uniform standards (e.g., those of IMCO). Rulemaking by the U.S. Coast Guard has for- malized certain of these IMCO standards. '® Finance, Pricing and Taxation Programs which affect the supply of U.S.-flag trans- portation include a variety of subsidies under the auspices of MarAd. U.S. shipyards are aided through construction differential subsidies which equalize the costs to the buyer of ships built in the U.S. with those built in foreign countries. Federal support is limited to payment of a maximum 50 percent differential.'®” The maritime sector is aided through government-guar- anteed loans under the Federal Ship Financing Guarantee Program.'® Additional capital is made available for investment in the U.S. maritime industry through tax deferral options granted to shipowners and operators under the Capital Construction Fund'®? and the Construction Reserve Fund.'® The higher cost of using American labor to crew U.S. ships is partially offset by the Federal government through operating differential subsidy.'*" Compared to the U.S., other countries rely more: on indirect subsidies, inflation offsets, tax moratoria, and the like. A different form of indirect financial aid is given to both U.S. international airlines and ocean liners through the observance of ‘‘buy American’ cargo preference policies, preserving 50 percent of U.S. Government commercial cargo and 100 percent of U.S. military cargo for carriage by U.S.-flag carri- ers.'2 For example, two Federal programs, foreign agricultural aid as provided in Pub. L. 83—480, and the sale of military equipment abroad, directly affect the financial status of U.S.-flag carriers as a result of “buy American’ provisions. Preserving government cargo for U.S. carriers may result in higher prices for shippers.’ The Jones Act restricts U.S. domestic waterborne traffic to U.S. ships, but the Virgin Islands are exempt.’ U.S. air carriers receive little Federal aid for inter- national operations. The authority of the FAA to pro- vide equipment-loan guarantees lapsed in 1977, but was renewed by Congress in 1978, and government loans to aerospace manufacturers have been grant- ed only under exceptional circumstances.’ The health of the airline industry is monitored by the CAB, which has authority to subsidize the industry indirect- ly by approving rates for the carriage of international mail by U.S.-flag carriers. These rates, if CAB so ruled, could reflect the fact that foreign carriers gen- erally receive compensation for carriage of mail ac- cording to Universal Postal Union rates, which are higher than U.S. Postal Service rates.'% Demand for U.S.-built aerospace products is aid- ed by loans and guarantees afforded foreign inves- tors by the Export-Import Bank.'®”? These loans are often made to finance foreign purchases of U.S.-built aircraft.’ Such loans run the risk of placing the U.S. in competition with other countries to provide greater levels of subsidy. Both aviation and maritime statutes state the need to ensure the survival of a healthy, privately-owned commercial fleet for reasons of national security. Maritime subsidies have been granted to the U.S. Merchant Marine (and, in the past, subsidies have gone to international air carriers) for reasons of na- tional defense and security. Many container ships, very large crude carriers, and liquified natural gas carriers, some of which are built and operated under Federal subsidy, may require extensive port facilities or deeper and wider waterway channels. However viable such ships may be in the commercial market, their worth to the military in the event of mobilization is questioned by the DOD. The agency reports that modern ship types such as roll-on, roll-off (RO/RO) are especially efficient in transporting military equip- ment.'9? On the other hand, subsidized vessel design features incorporated to improve military usefulness are not reimbursed from the DOD budget.?© Ownership and Operations With the exception of Federal ownership and opera- tion of Dulles International Airport?°' and systems of air traffic control, navigation aids, and flight informa- tion,2°? Federal involvement in the provision of inter- national airport facilities is limited to financial aid. Currently the Federal financial share in the planning and construction of air carrier airports is 75 percent.*°° Grants are made from the Airport and Air- ways Trust Fund? at the discretion of the FAA.?°5 The Department of State, with CAB and DOT as- sistance, represents American interests in bilateral aviation negotiations.2°° The State Department also leads negotiations of cases dealing with expropria- tion and seizure of goods and vessels. Federal involvement in the provision of water port facilities is relatively small. Ports are either privately- Owned or are owned and operated by local, state, and regional authorities, rather than by the Federal government.2°” The Economic Development Adminis- tration provides some funds for port construction, perhaps more than 5 percent of total port investment.2°° For reasons of safety, all navigation aids are main- tained by the U.S. Coast Guard in harbors and along coasts and inland waterways.”°9 In addition, the U.S. Army Corps of Engineers provides dredging services for the nation’s ports.2'° Planning and Information Most coastal states are formulating plans pursuant to the provisions of the Coastal Zone Management Act.2"' Once plans are approved, new port develop- ment will occur in accordance with these state plans. The Deep Water Port Act of 1974 gave coastal states the authority to veto offshore terminal devel- opments affecting their coasts.?'2 Lack of coordination is a problem endemic to the international transportation field. There exists no sin- gle formal group or agency to which matters con- cerning international transport policy can be ad- dressed, either within the U.S. or in an international forum. Lack of coordination also exists among the regulatory agencies responsible for overseeing the transport of U.S. cargo in international trade. While the FMC has jurisdiction over oceanborne cargo until it reaches U.S. shores, thereafter it becomes the re- sponsibility of the ICC. Disparate rate regulations and liability requirements may serve to discourage the free flow of goods through intermodal channels.?"% Regarding international coordination, the U.S. is active in the International Civil Aviation Organization (ICAO) because, as the leading aviation and aero- space manufacturing country, the U.S. has strong interest in the coordination of aviation standards. Pressure has been growing from many nations to shift ICAO’s emphasis from technical to economic issues (Such as fares and rates, capacity, and the role of non-scheduled airlines). The U.S. view with regard to economic issues in international aviation generally conflicts with the views of a majority of ICAO nations.?"4 Government Organization NTPSC found 19 congressional committees and 47 Federal agencies whose jurisdictions impact the in- ternational transport market. NTPSC discovered 193 policies and 290 programs of the Federal govern- ment involving this market. CONCLUSIONS The U. S. has no unified ‘‘national transportation poli- cy.” Instead, there is an assortment of policies and programs which have been developed in an ad hoc fashion to achieve sundry goals or resolve various issues. The sheer bulk of Federal transport policies and programs (as demonstrated by NTPSC Special Report No. 6) is enough evidence to convince many observers of the ad hoc nature of Federal transporta- FEDERAL TRANSPORTATION POLICIES AND PROGRAMS e 43 tion policymaking. The NTPSC identified 64 Federal agencies that implement approximately 1,000 poli- cies and programs. An examination of Federal transport policies and programs reveals that there exist inconsistencies in the application of policies. For example, regulatory policies are not applied uniformly between markets, between modes, or even within modes. All for-hire modes, with the exception of air cargo, are subject to some form of economic regulation. Even when a mode within a market is regulated, Congress has au- thorized numerous exemptions. For example, both rail and motor carriers are regulated by the ICC, but motor carriers of agricultural commodities are ex- empt from regulation, while railroads carrying most agricultural commodities are not. The Federal government often exempts itself from the policies which it imposes on its citizens. For example, railroads must obtain permission from the ICC to discontinue or abandon rail service, but Federally controlled Amtrak is exempt from this requirement. Similarly, commercial shippers of regu- lated commodities may negotiate contract rates with most regulated carriers, but they must abide by the published contract terms. Congress has exempted any government body in the U.S. from this restraint under Section 22 and similar sections of the Inter- state Commerce Act. An examination of Federal financial assistance re- veals that Federal funding shares are not uniform.2'5 Federal funding of 90 percent of the costs of the Interstate highway program, compared to 75 percent for the cost of most other Federal-aid highway pro- grams, does reflect a considered decision to attach a higher priority to completion of the Interstate System. But the criteria used to determine Federal shares of 100 percent for pavement-marking projects, 80 per- cent for bridge-replacement projects, 90 percent for rail/highway grade-crossing projects, and 95 per- cent for rail/hignway grade-crossing demonstration projects are not evident. Examples of overlapping and conflicting jurisdic- tion of Federal agencies are numerous. For instance, the Forest Service of the Department of Agriculture, the National Park Service of the Department of Interi- or, the Appalachian Regional Commission, and the DOT’s Federal Highway Administration all share road designing, building and funding responsibilities. Conflicts exist where more than one agency claims jurisdiction over a particular matter, or when an agency publicly opposes the policies and pro- grams of another. Both UMTA and the FRA are be- lieved by various parties to have jurisdiction over rail safety. A recent court ruling held that UMTA, not FRA, has jurisdiction over rail safety for a particular urban transit operation.?'® 44 e TRANSPORTATION ACTIVITY AND INSTITUTIONS The DOJ and the Federal Trade Commission op- pose many decisions of the FMC and the ICC as they relate to competition in water, rail, and motor car- riage. The CAB’s recent efforts to expand air compe- tition have been generally supported by the DOT and FTC. The Department of Agriculture opposes the ICC’s prohibition against rate publication by indepen- dent truckers, believing that such publication would insure lower rates to farmers and shippers. Another conclusion which can be drawn from NTPSC research is that many non-transportation pol- icies have a serious impact on the transport sector, yet potential impacts are not carefully considered in advance of the adoption of such policies. For exam- ple, Section 504 of the Rehabilitation Act of 1973 provides that no person shall be denied access to a federally funded program because of a handicap. This very important Federal policy may cost the Fed- eral government an estimated $1.7 billion to bring about compliance in urban transit systems alone if current policies are implemented, while state and lo- cal governments and the private sector might also bear enormous costs. Department of Housing and Urban Development home mortgage guarantee programs and Federal tax deductions for mortgage interest payments are ex- amples of non-transportation Federal actions affect- ing transportation in the U.S. In one view, urban ge- ography has been changed as a result of Federal actions such as these, by influencing highway devel- opment in urban areas and contributing eventually to the demand for Federal transit funds to alleviate congestion and pollution resulting from vehicle use. Another conclusion to be drawn from a study of Federal transport actions is that the Federal govern- ment has no accurate calculation of its expenditures for transportation. The conventional Federal trans- port accounts consider only the most obvious exam- ples of Federal aid. Other Federal actions which aid transportation are not usually measured in calculat- ing the Federal role. Examples of these include gen- eral revenue sharing grants which are used by state and local governments for transport purposes (in- cluding providing the matching funds for other Fed- eral categorical programs); social service programs which provide transportation services or funds for clients to purchase such services; and the Compre- hensive Employment and Training Act program which funds transportation jobs, including paratransit operators for social service programs. Coordination of programs and efficient use of Federal dollars for transportation cannot be achieved until all of this in- formation is gathered and analyzed regularly as a cohesive unit. The Federal government does not have a clear picture of how other levels of government aid trans- portation. In addition, the Federal government has limited data on the physical performance of the U.S. transportation system, so that it is impossible to de- termine whether Federal policies and programs are effective, or if more or less Federal spending is re- quired to achieve Federal goals. NOTES AND REFERENCES 1. For a complete listing of policies and programs, see U.S. National Transportation Policy Study Commission (NTPSC), A Compendium of Federal Transportation Policies and Pro- grams, Report No. NTPSC/SR-78/06, Washington, D.C.: 1979. (Cited hereafter as NTPSC, A Compendium.) The re- port highlights potential problems with many of the pro- grams. These problems were considered by the NTPSC in its research, and in formulating the policy recommendations given in Chapter 13. 2. U.S. General Accounting Office, U.S. Transportation Sys- tem—Federal Government’s Role and Current Policy Is- sues, Report No. RED—76—34, Washington, D.C.: 1975, p. i. (Cited hereafter as GAO, U. S. Transportation System.) 3. U.S. Office of Management and Budget, The Budget of the United States Government—Fiscal Year 1979, Washington, D.C.: 1978, p. 144. 4. See Congressional Record, 124 14 October 1978, p. H12933. 5. Federal Maritime Commission v. Pacific Maritime Associa- tion, 435 U.S. 40 (1978). 6. Atchison, Topeka and Santa Fe Railway Co. v. Calloway, 382 F. Supp. 610 (D.C.D.C., 1974). 7. Complete Auto Transit v. Brady, 430 U.S. 247 (1977). 8. Michelin Tire Co. v. Wages, Tax Commissioner, 423 U.S. 276 (1977). 9. National Highway Traffic Safety Administration v. The Pac- car, Inc., 573 F. 2d 632 (9th Cir. 1978), cert. denied, 99 S. Ct. 184 (1978). 10. For a more complete listing of intercity transportation poli- cies and programs, see NTPSC, A Compendium, Appendix Cc 11. Airline Deregulation Act of 1978, 49 U.S.C. Section 1371(d)(1979). 12. Interstate Commerce Act (IC Act), Parts I-IV, 49 U.S.C. Section 10101 et seq. (1978). The ICC, on its own initiative, has acted to shift the burden of proof in motor carrier entry proceedings to those protesting. See: Ex Parte 55, Sub. No. 26, Protest Standards in Motor Carrier Application Pro- ceedings (reported in Traffic World 177, 5 March 1979, p. 113) and Liberty Trucking Co.-Ext. Gen. Com., 130 MCC 243 (6 October 1978). 13. Department of Energy Act of 1977, as amended, 42 U.S.C. Section 7171 (1978). 14. Airline Deregulation Act of 1978, 49 U.S.C. Section 1371 (1978). 15. IC Act Section 203(b\7a), 49 U.S.C. Section 10526(aX5) (1978). 16. IC Act Section 203(bX7a), 49 U.S.C. Section 10536(a)(1978). 17. IC Act Section 303, 49 U.S.C. Section 10542 (1978). 18. IC Act Section 1(18), as amended; Railroad Revitalization and Regulatory Reform Act of 1976, 49 U.S.C. Section 10901 (1978). 19. See, for example: Texas and Pacific Railroad v. Gulf Rail- road, 270 U.S. 266 (1926). 20. 4k 22. 23. 24. 25. 26. 27: 28. 29. 30. 31. 32. 33. 34. 35. 36. 37. 38. 39. 40. 41. 42. 43. Contract carriers may deal only with a limited number of firms, IC Act Section 203(aX15), 49 U.S.C. Section 10102(12\ 1978). IC Act Section 203(c), 49 U.S.C. Section 10524 (1978). IC Act Section 1(8), 49 U.S.C. Section 10746 (1978). IC Act Section 203(aX15), 49 U.S.C. Section 10102(12) (1978); Ex Parte No. MC—3101 Sub. No. 4, ‘‘Shaum Trans- fer Co.—Extension” (1978); Ex Parte No. MC-119 (1979). The carriers themselves sometimes seek quite limited oper- ating authority. Ex Parte No. MC—119 (1979). A gateway can be under- stood by way of example: If a motor carrier has a certificate to provide service between St. Louis and Kansas City, and a certificate to provide service between Kansas City and Minneapolis, but no certificate to provide direct service be- tween St. Louis and Minneapolis, then Kansas City would become the carrier’s gateway to providing service between St. Louis and Minneapolis. Ex Parte No. MC—55 (Sub. No. 28) (1978). William McWorkman, Director of Logistics Systems, U.S. Postal Service, Washington, D.C., interview, March 1978. IC Act Section 1(18), 49 U.S.C. Section 10903 (1978); Ex Parte No. 374 (Sub. No. 2) (1978). Amtrak Improvement Act of 1975, 45 U.S.C. Section 564c (1978). Department of Energy Docket No. CP—77-—83 (1978). IC Act Sections 216(a) and (b), 218(a), 49 U.S.C. Sections 10701, 10702 (1978). IC Act Section 22, 49 U.S.C. Section 10721 (1978). Dudley F. Pegrum, Transportation: Economics and Public Policy, 3rd edition, Homewood, Illinois: Richard D. Irwin, Inc., 1973, pp. 234—235. Such bureaus incorporate involve- ment in their activities on the part of shippers and shippers’ organizations as well as carriers. Traffic World 175 (25 September 1978), p. 11. Traffic World 177 (26 February 1979), p. 1. DOJ release, 21 July 1977. Wall Street Journal, 5 December 1977. Rail Passenger Service Act of 1970, as amended, 45 U.S.C. Section 501 et seq. (1978). See U.S. National Transporta- tion Policy Study Commission, Amtrak: An Experiment in Rail Service, Report No. NTPSC/SR-78/02, prepared by Frank P. Mulvey, Washington, D.C.: 1978. But the ICC does become involved in disputes arising between Amtrak and the railroads that provide Amtrak with facilities and ser- vices. Ex Parte No. 252 (Sub. No. 2) (1977). Coal from Kentucky, Virginia, and West Virginia to Virginia, 308 ICC 99 (1959); Coal to New York Harbor Area, 311 ICC 355 (1960). In November, 1978. See: Ex Parte No. 358—-F, Change of Policy Railroad Contract Rates (General Policy Statement), (1978); Traffic World, 176 (20 November 1978), pp. 46-48. The Railroad Revitalization and Regulatory Reform Act of 1976, 49 U.S.C. Section 1(5), amended the Interstate Com- merce Act to provide new standards for determining the justness and reasonableness of rates subject to ICC regula- tion. Under the new section, no rate may be found to be too low if it contributes to the going concern value of the pro- ponent carrier, and a rate which equaled or exceeded vari- able costs, as defined by the ICC, was presumed to contrib- ute to going concern value. U. S. Congress, House, Committee on Interstate and For- eign Commerce, Conference Report on the Railroad Revi- talization and Regulatory Reform Act of 1975, H. Rept. 94-768 to accompany S. 2718, 94th Cong., 1st sess., Washington, D.C.; U.S. Congress, Senate, Committee on Commerce, Conference Report on the Railroad Revitaliza- tion and Regulatory Reform Act of 1975, S. Rept. 94-585 to Accompany S. 2718, 94th Cong., 1st sess., Washington, D.C.: Government Printing Office, 1975, p. 120. FEDERAL TRANSPORTATION POLICIES AND PROGRAMS e 45 44. 51. 52. 61. 62. 63. Airline Deregulation Act of 1978, Section 418, 49 U. S. C. Section 1482 (1979), Pub. L. 95-504, and CAB ER-1080, Docket 33093(1978). 49 U.S.C. Sections 1373, 1376, 1482 (1970). Airline Deregulation Act of 1978, 49 U. S. C. Section 1551 (1979), Pub. L. 95-504. 14 C.F.R. 399.92 (1978). Executive Order 12009, 15 September 1977. 49 U.S.C. Sections 304(a), (b), 1655(e), (f) (1970). U.S. Department of Energy, Energy Emergency Planning Guide, Winter (1977-1978), prepared by Interagency Task Force for Winter Emergency Planning, Washington, D.C.: 1977. Rail Passenger Service Act of 1970, as amended, 45 U.S.C. Section 501 et seg. (1978); Rail Transportation Improve- ment Act of 1976, as amended, 45 U.S.C. Section 601(a), (1978). Rail Passenger Service Act of 1970, as amended, 45 U.S.C. Section 501 et seg. (1978); Amtrak Improvement Act of 1974, as amended, 45 U.S.C. Section 563 (1978); Rail Transportation Improvement Act of 1975, as amended, 45 U.S.C. Section 563 (1978). 49 U.S.C. Section 1301 (1970). Airline Deregulation Act of 1978, as amended, 49 U.S.C. Section 1376(b) (1970); Surface Transportation Assistance Act of 1978, as amended, 49 U.S.C. Section 1618 (1970). The Highway Revenue Act of 1978, Pub. L. 95-599, Sec- tion 503, extended the Highway Trust Fund through FY 1985. The Energy Tax Act of 1978 (Title Il, Pub. L. 95-618) eliminated the Federal excise taxes levied on intercity bus fuel, parts, tires, and equipment. 23 U.S.C. Sections 129, 301 (1978). 33 U.S.C. Section 988 (1970); 33 CFR 401.75 (1978). Féderal-Aid Highway Act of 1973, as amended, 23 U.S.C. Section 130 (1978). 33 U.S.C. Section 401 (1970). It should be noted that the Corps’ projects are multi-pur- pose; only a portion of Federal water resource expendi- tures is attributable to waterway transportation. See, for example, U.S. Congressional Budget Office, Financing Wa- terway Development: The User Charge Debate, Washing- ton, D.C.: Government Printing Office, 1977, p. 21. Inland Waterways Revenue Act of 1978, as amended, 26 U.S.C. Sections 4041, 4042 (1970). Statement of Deputy Attorney General, Antitrust Division, 1977. See: Jonathan C. Rose, “Surface Transportation and the Antitrust Laws,’’ ICC Practitioners Journal 44 (May— June 1978), pp. 431-438. AR 55—355. As of January 1, 1979 there were 2,830 cars in the fleet. Defense Freight Railway Interchange Fleet cars are lent to other Federal agencies on a non-reimbursable basis when not required for DOD use. Cars are leased to private shippers only when they are not required by other government agencies and the shipper has shown that he cannot obtain the necessary cars from the commercial sec- tor. The cars are then leased to private shippers at compet- itive rates and made subject to immediate recall. James S. Matteson, staff, Rail Fleet Branch, Inland Traffic Director- ate, Military Traffic Management Command, Department of Defense, telephone communication with NTPSC on Febru- ary 1, 1979. U.S. Army Corps of Engineers, “Summary of Activities, Corps & Industry, Dollars & Yardage,’ 19 September 1978. 38 Stat. 305. Traffic World 173 (13 March 1978), pp. 30—31. U.S. Federal Railroad Administration, Rail Planning Manual, 5 volumes, prepared by JWK International Corp. and Roger Creighton Assoc., Washington, D.C.: 1976. 49 U.S.C. Section 1701 (1970). Ibid. 49 U.S.C. Section 1713 (1970). 46 e TRANSPORTATION ACTIVITY AND INSTITUTIONS (fl 82. 83. 84. 98. 99. 100. LOU: Rail Passenger Service Act of 1970, as amended, 45 U.S.C. (1970), as amended. ICC No. 36312, 28 December 1977. DOJ release, 21 July 1977. U.S. Constitution, Article |, Section 8. For a more complete listing of Federal urban transport poli- cies and programs, see NTPSC, A Compendium, Appendix Cc Short Haul Survival Committee v. United States, 572 F.2d 240 (9th Cir., 1978), aff’g Ex Parte No. MC—37 (Sub. No. 26), Commercial Zones and Terminal Areas, 122 M.C.C. 422 (1976). Federal-Aid Highway Act of 1973, 49 U.S.C. Section 1692a (1976). 49 U.S.C. Section 1612 (1970). 49 U.S.C. Section 1604(m) (1970). 49 U.S.C. Section 1612 (1970). See, for example, U.S. Representative Robert W. Edgar, ‘Must Transit Trip the Disabled?” in Passenger Transport, 36, September 1, 1978, p. 2. For an opposing viewpoint, see: Council on Wage and Price Stabilization, ‘Department of Transportation’s Proposed Regulations on Nondiscrimi- nation on the Basis of Handicap,’’ Washington, D.C.: 20 October 1978, p. 22. Rehabilitation Act of 1973, as amended, 29 U.S.C. Section 794 (1970). 49 C.F.R. 27 (1978). American Public Transit Association, Memorandum to the Department of Health, Education and Welfare, Office of Civil Rights, Washington, D.C. regarding Proposed Rule Concerning Coordination of Federal Agency Enforcement of Section 504 of the Rehabilitation Act of 1973, January 1978, p. 8. 49 U.S.C. Section 1609(c\1970). 42 U.S.C. Section 185 et seq. (1970). 23 C.F.R. 6581 (1978). Wall Street Journal, 21 April 1978. Energy Policy and Conservation Act of 1975, as amended, 42 U.S.C. Section 6295 (1970). Noise Control Act of 1972, 42 U.S.C. Sections 4901-4906 (1977). Wall Street Journal, 16 March 1978. Chicago Transit Authority v. Flohr et al., 570 F. 2d 1305 (7th Cir., 1977). Federal Railroad Safety Act of 1970, as amended, 49 U.S.C. Section 1604(a)(1970). 15 U.S.C. Section 2056 (1970). 49 C.F.R. 177 (1978). 23 U.S.C. Sections 103, 104 (1970). See letter of 18 December 1978 from U.S. DOT Secretary Brock Adams to Representative Glenn Anderson illustrating the situation: ‘‘The number of FAUS grants for mass transit purposes is somewhat lower than anticipated. Transporta- tion projects are prioritized by local elected officials in the Transportation Improvement Plan (TIP) and most cities have chosen to use their FAUS funds for highway projects and utilize UMTA Section 3 discretionary funds for transit projects. However, we believe that as the country becomes more environmentally and energy conscious and as de- mand for transit projects exceeds available UMTA funds, increased usage of FAUS funds will result. New York City, Chicago, Philadelphia and other major cities have actively used FAUS funds for transit, and are increasing their use.” Federal-Aid Highway Act of 1973, 23 U.S.C. Section 402(c)(1978). Surface Transportation Assistance Act of 1978, 23 U.S.C. Section 146 (1978). Ibid., 23 U.S.C. Sections 146, 217 (1978). Federal-Aid Highway Act of 1976, 23 U.S.C. Section 103(c\4) (1978). 108. 109. 110. ual Ata 113. 114. ios 116. UT. 49 U.S.C. Section 1602 (1970). Surface Transportation Assistance Act of 1978, 49 U.S.C. Section 1602 (1978). 49 U.S.C. Section 1604 (1970). Ibid. Surface Transportation Assistance Act of 1978, 49 U.S.C. Section 1614 (1978). The 4R Act (Pub. L. 94—-240 (1976)) began the program which became Section 17 of the UMT Act (49 U.S.C. Section 1613 (1977)). In 1977 Congress created Section 18 of the UMT Act (49 U.S.C. Section 1614 (1977)) to fund operating losses of commuter rail services outside the Northeast, while establishing the matching ratio of both Sections 17 and 18 at 80% Federal, 20% non-Federal. In 1978 Congress abolished Sections 17 and 18 in favor of including commuter rail assistance under Section 5 of the UMT Act (49 U.S.C. Section 1604, as amended by Pub. L. 95—599). 23 U.S.C. Section 105(e1970). Pub. L. 89-774, 80 Stat. 1324 (1967). The planned system is now 100 miles, although the lack of non-Federal sources of funding may preclude its full development. U.S. General Accounting Office, Hindrances to Coordinat- ing Transportation of People Participating in Federally Funded Grant Programs, CED-77-119, Washington, D.C.: pp. 1, 8-10 (Cited hereafter as GAO, Hindrances.) 31 U.S.C. Sections 1221-1263 (1970). Housing and Community Development Act of 1974, as amended, 42 U.S.C. Section 5301 et seq. (1970). Jerry D. Ward and Norman G. Paulhus, Suburbanization and Its Implications for Urban Transportation Systems, pre- pared for the U.S. Department of Transportation, Washing- ton, D.C.: 1974. See David W. Harvey, ‘‘The Political Economy of Urbaniza- tion in Advanced Capitalist Societies: The Case of the United States,’’ in The Social Economy of Cities, edited by Gary Gappert and Harold M. Rose, Beverly Hills, Calif.: Sage Publications, 1975, pp. 119-163; Michael A. Kemp and Melvyn D. Cheslow, ‘Transportation’, in The Urban Predicament, edited by William Gorham and Nathan Glazer, Washington, D.C.: The Urban Institute, 1976, pp. 281-356; and Rolf R. Schmitt, ‘‘Predicting the Impacts of Transporta- tion on the Spread of Urban Blight’, in Transportation Research Record 634 (1978), pp. 27-32. Richard F. Muth, ‘‘Urban Residential Land and Housing Markets,” in Issues in Urban Economics, edited by Harvey S. Perloff and Lowdon Wingo, Jr., for Resources for the Future, Baltimore: Johns Hopkins Press, 1978, p. 302. See also Richard Goode, ‘‘Imputed Rent of Owner-Occupied Dwellings under the Income Tax,”’ in Journal of Finance 15 (December 1960), pp. 504-30. Revenue Act of 1978, 26 U.S.C. Section 164 (1978). U.S. Urban Mass Transportation Administration, Sympo- sium Proceedings on Community Development and Passen- ger Transportation, held November 8—9, 1977, Report No. UMTA-DC-06-0106-78-1, Washington, D.C.: 1978, pp. 15— 174. 42 U.S.C. Section 3121 (1970). Statement of President Jimmy Carter on urban policy, March 27, 1978. Federal Register, 22 September 1976. 16 U.S.C. Section 3 (1970). 42 U.S.C. Section 2790 (1970). A survey in 1977 by the Southern California Association of Governments resulted in identifying over 862 providers of transit and paratransit services in Los Angeles County alone. Funding sources ranged from individual donations to Federal, state, and local government grants and subsidies. — See Marilyn Westfall and Jenifer Vargas, Inventory of Para- transit Services, Vol. I: Analysis of Survey Results, Los An- 124. 125. 126. 127. 128. 129. 130. 131. 132. 133. 134. 135. 136. 137. 138. 139. 140. 141. 142. 143. 144. 145. 146. 147. 148. 149. 150. 151. 152. 153. 154. 155. 156. 157. 158. 159. 160. 161. 162. geles, California: Southern California Association of Gov- ernments, 1978. 49 U.S.C. Section 1602 (1971). 23 U.S.C. Section 134 (1970). 23 U.S.C. Section 142 (1970). 49 U.S.C. Section 1604 (1970). 13 U.S.C. Sections 4, 6, 8 (1970). 15 U.S.C. Sections 1151-1157 (1970). 49 U.S.C. Sections 1602, 1604 (1970). GAO, Hindrances. IC Act, Section 203(b), (aX5X 1978). Agricultural Transportation Alliance v. ICC et al., U.S. Court of Appeals for the District of Columbia, Civil Action No. 78— 1196, dated March 1, 1978, and others consolidated there- with. IC Act Section 203(c), 49 U.S.C. Section 1092 (1978). It should be recognized that certificated motor carriers may also trip lease to other certificated motor carriers. More- over, certificated carriers may also return empty on the back-haul if traffic is insufficient. Clayton Act, Section 1, 16 U.S.C. Section 12 et seq. (1973). Ibid. Ex Parte No. 374 (Sub. No. 2), Abandonment of Railroad Lines and Discontinuance of Service (1978). IC Act Sections 212(a), 204(aX1), 49 U.S.C. Sections 10925, 11101 (1978). For a recent discussion of this issue, see: U.S. Congress, Senate, Committee on Commerce, Sci- ence and Technology, The Impact on Small Communities of Motor Carriage Regulatory Revision, 95th Cong., 2d sess., Washington, D.C.: Government Printing Office, 1978. 14 C.F.R. 298 (1978). Airline Deregulation Act of 1978, 49 U.S.C. Section 1386 (1978). Boundary Waters and Canoe Area Act of 1978, 16 U.S.C. Sections 1132, 1133 (1978). 49 U.S.C. Section 1603 (1970). Ibid. Surface Transportation Assistance Act of 1978, 49 U.S.C. Section 1614 (1978). Ibid. Surface Transportation Assistance Act of 1978, as amend- ed, 49 U.S.C. Section 1611 (1978). 42 U.S.C. Sections 3021-3025 (1970). The Governor’s Committee on Rural Public Transportation, Final Recommendations: Transportation Options for Rural and Small Community Populations in North Carolina, Ra- leigh, North Carolina: December 1978, pp. 5—6. 23 U.S.C. Section 144 (1970). Surface Transportation Assistance Act of 1978, 23 U.S.C. Section 101 et seq. (1978). Railroad Revitalization and Regulatory Reform Act of 1976, as amended, 49 U.S.C. Section 1654 (1970). Surface Transportation Assistance Act of 1978, 23 U.S.C. Section 130 (1978). Local Rail Service Assistance Act of 1978, as amended, 49 U.S.C. Section 1654(g) (1970). 23 U.S.C. Section 148 (1970). 16 U.S.C. Sections 532—538 (1970). Ibid. 40 App. U.S.C. Section 201 (1970). 16 U.S.C. Sections 4606-461 2 (1970). 31 U.S.C. Sections 1221-1263 (1970). GAO; U.S. Transportation System, p. 67. ‘White House Rural Transportation Initiatives,’’ Remarks of Dr. Berry Crawford, Office of Intergovernmental Affairs, Ex- ecutive Office of the President, at Session 71, ‘‘Rural Public Transportation,’ Transportation Research Board 58th An- nual Meeting, Shoreham-Americana Hotel, Washington, D.C.: 1979. 49 U.S.C. Section 10526 FEDERAL TRANSPORTATION POLICIES AND PROGRAMS e 47 163. 164. 165. 166. 167. 168. 169. 170. 171i 172: 194. 195. 196. 197. 198. 199. 200. 201. 202. 203. 204. 38 Stat. 305. 23 U.S.C. Section 218 (1970). An Act to Establish a Rural Transportation Advisory Board, 49 U.S.C. Section 1653 (1978). NCHRP Project 20-17. 49 U.S.C. Section 1603(c\1970). Federal-Aid Highway Act of 1973, 23 U.S.C. Section 142 (1978). U.S. Bureau of the Census, 1970 Census Users’ Guide, Washington, D.C.: Government Printing Office, 1970, p. 82. Detailed Census tract statistics from the 1970 Census are published for 241 SMSAs. The average tract has about 4,000 residents. See U.S. Bureau of the Census, Census Tract Manual, 5th Edition, Washington, D.C.: Government Printing Office, 1966. 46 U.S.C. Sections 914, 817 (1970). Merchant Marine Act of 1936, 46 U.S.C. Section 1111 et seq..(1970). 46 U.S.C. Sections 816, 817 (1970). Harbridge House, Inc., The U.S. Merchant Marine and the International Conference System, prepared for MarAd, Washington, D.C.: August 1978, p. I-2. Irwin M. Heine, The United States Merchant Marine: A Na- tional Asset, Washington, D.C.: National Maritime Council, July 1976, p. 51. Airline Deregulation Act of 1978, 49 U.S.C. Section 1371 (1978). 49 U.S.C. Section 1461(a) (1970). Airline Deregulation Act of 1978, 49 U.S.C. Section 1461 (1978). 49 U.S.C. Sections 1373, 1376, 1482 (1970). Traffic World |76 (25 December 1978), p. 82. 46 U.S.C. Sections 820, 841 (1970). 19 U.S.C. Sections 160, 1337, 2251-2253 (1970). 19 U.S.C. Sections 2271—2322 (1970). 49 U.S.C. Sections 1301, 1431(6\1) (1970); 49 U.S.C. Sec- tion 361 et seg. (1970). 33 U.S.C. Sections 157, 243, 353, 1221 (1970); 46 U.S.C. Sections 375, 416, 526 (1970). Traffic World 174 (1 May 1978), p. 21. 49 U.S.C. Section 1151 et seq. (1978). 46 U.S.C. Section 1271 (1978). Merchant Marine Act of 1970, Pub. L. 91-469, 84 Stat. 1018, amending the Merchant Marine Act of 1936, 46 U.S.C. Section 1101 et seq. (1970). 46 U.S.C. Sections 1114-1161 (1978). 46 U.S.C. Section 1171 (1978). 46 U.S.C. Section 1114 (1978). J. David Richardson, ‘“‘The Subsidy Aspects of a ‘Buy American’ Policy in Government Purchasing,”’ in U.S. Congress, Joint Economic Committee, The Economics of Federal Subsidy Programs, A Compendium of Papers, Part 2 International Subsidies, Joint Committee Print, 92d Cong., 2d sess., Washington, D.C.: Government Printing Office, 1972. 46 U.S.C. Sections 861 and 877 (1970). Airline Deregulation Act of 1978, as amended, 49 U.S.C. 1324 (1978). International Air Transportation Fair Competitive Practices Act of 1974, as amended, 49 U.S.C. Section 1159 (1978). 12 U.S.C. Section 635 (1978). Wall Street Journal, 14 April 1978. Department of Defense, Communication to NTPSC, 19 Jan- uary 1978. 10 U.S.C. Section 2304 (1978). 49 U.S.C. Section 1301 et seq. (1970). 49 U.S.C. Section 1301 (1970). 49 U.S.C. Section 1713 (1970). 49 U.S.C. Section 1701 (1970). 48 @ TRANSPORTATION ACTIVITY AND INSTITUTIONS 205. While the balance has grown in recent years (from airline 206. 207. 208. 209. ticket taxes and other user fees), the trust fund is not used to cover operating expenses of the FAA, which operates the U.S. air traffic control system. The Washington Post, 30 March 1978. John L. Hazard, ‘‘National and State Roles in Port Develop- ment,” in U.S. National Transportation Policy Study Com- mission, Papers on Selected Transport Policies of Devel- oped Countries, NTPSC Special Report No. 5, Washington, D.C.: (forthcoming). 42 U.S.C. Section 3121 (1970). 33 U.S.C. Sections 1221-1227 (1970). 210. 211. 212. 213. 214. 215. 216. 16 U.S.C. Section 4606 (1970). 16 U.S.C. Section 1432 et seq. (1970). 16 U.S.C. Section 460 (1970). Journal of Commerce, 30 August 1978; Handling and Ship- — ping, 19 April 1978, p. 14. Steven G. Pilla, Office of Maritime Affairs, U.S. Department — of State, Correspondence, 17 January 1978. Some lack of uniformity occurs as a result of different and more favorable matching ratios in states where larger Fed- eral land-holdings exist. Chicago Transit Authority v. Flohr et al., 570 F.2d 1305 (7th Cir., 1977). STELCH- Talo Meler-) Transportation Policies and Programs INTRODUCTION This chapter discusses transportation at state and local levels from an intergovernmental perspective. It is at the state and local levels of government that many national policies are carried out; therefore, national policies must take state and local concerns and interrelationships between governments into account. The chapter discusses: government institu- tions which are responsible for the creation of policy and its implementation; programs of Federal aid in which state and local governments participate; state and local transport issues as expressed by interest groups and witnesses at NTPSC hearings; and gaps and conflicts apparent in the policies and programs administered by Federal, state, and local govern- ments. BACKGROUND OF INTERGOVERNMENTAL RELATIONS Government at every level establishes policies, pro- grams and regulations that affect transportation, but states and localities are the primary implementors of public transportation projects. The functions per- formed by each government are not always separate and distinct, nor are they always compatible. While the goals of all may be the provision of efficient and ubiquitous transportation for persons and freight, each government responds to a different set of priorities, for a different constituency, and under different and changing conditions. Over the years, state and local governments have come to demand greater Federal participation to help defray public transportation costs.* The latter has responded with an array of grants and programs that vary in scope, funding level and requirement. Increasing Federal involvement can have adverse effects because of diverse goals; state and local governments may find themselves carrying out vari- ous national objectives which may or may not parallel their own.? A complicating factor in relationships among levels of government is the array of government, quasi-government, and special bodies which exist to plan, regulate, fund and coordinate transport ser- vices. Although ultimate authority regarding trans- portation services and facilities usually lies with state and local governments, multistate regional bodies, substate districts, and transportation authorities all influence decisionmaking, and many of these are created or perpetuated by the Federal government. In 1913, the percent of local public expenditures from local sources in the U.S. was 58 percent, while the Federal government accounted for 30 percent and state governments contributed 12 percent. By 1975, the relative shares had shifted dramatically; the Federal share of local public expenditures rose to 61 percent, the state level reached 22 percent, while the local share decreased to 17 percent.‘ Shifts in relative shares for transportation expenditures are more difficult to determine, except in the case of highways, where states have provided an appreci- ably greater share all along.® PHASES IN INTERGOVERNMENTAL RELATIONS In the past century, intergovernmental relations passed through distinctive phases. From the 19th century until the 1930s, dominant policy issues in intergovernmental relations involved identifying and demarcating spheres of government power and jurisdiction. Local governments searched for the exact limits of their legal powers, while the states sought to assert their supremacy over local govern- ments through the courts. The administration and financing of roads, for example, which had tradition- ally concerned only local governments, became a policy area of considerable importance to state governments as well.© Because state regulation was struck down by the Supreme Court, Federal regula- tion of railroad rates was established through the ICC in 1887.7 Federal-state cooperation in highway policy be- gan in 1916.8 A significant policy innovation, the formula-based grant-in-aid, institutionalized a pattern of fiscal and administrative relations between the Federal government and the states.° After World War Il, intergovernmental relations were influenced by a growing suburban population and demands for deferred public projects. The 49 50 @ TRANSPORTATION ACTIVITY AND INSTITUTIONS number of grant-in-aid programs doubled from the Depression years.'° Through the 1956 Federal-Aid Highway Act and the Highway Revenue Act of 1956, user fees were increased and placed in a trust fund to build a national system of Interstate and Defense Highways." The Great Society programs of the1960s had the effect of increasing Federal-local interactions.'? Pro- gram planning in transportation was reinforced and expanded in the Federal-Aid Highway Act of 1962, with its 3C requirements," following the local urban planning requirements of the National Housing Act of 1954,'4 which led to the expansion of transportation planning activities. In 1964, the Urban Mass Trans- portation Act was passed.'* After creation of the U.S. DOT in 1966,'® most major modal transportation agencies in the Federal government were assembled in one cabinet-level agency. Similar organizational changes ensued at the state level, with the development of a number of multimodal state DOTs. In the 1970s, intergovernmental relations were characterized by Federal involvement in transporta- tion at the state and local levels through new Federal programs for airport development, railroad continua- tion and revitalization, and mass transit operating subsidy. Federal activities have channeled or stimu- lated financial commitment and program develop- ment by state and local government. The expansion of Federal grant programs in transportation, with the continuation of traditional programs, led to a bewildering array of grant catego- ries, with various formulas and matching ratios. State and local government officials testifying at NTPSC hearings view today’s situation as overempnasizing Federal priorities at the expense of their own, and believe that excessive demands on their finances are Caused by pressures to respond to Federal grant opportunities. INSTITUTIONAL FRAMEWORK The following section describes state and local institutions important to transportation. Some of the institutions examined are neither state nor local governments, but impact transportation within those jurisdictions. STATE INSTITUTIONS State institutions active in transportation include governors’ offices, state transportation agencies, and state legislatures. Usually non-transportation agencies, such as a state environmental protection agency, a public utility or public service commission (PUC/PSC) and, in some cases, special modal regulatory authorities, regulate transport activities. Major transportation functions of states are plan- ning and programming, funding, construction, opera- tion and maintenance, and regulation. Since the turn of the century, a primary state duty has been the construction, maintenance, and operation of trans- portation facilities, particularly highways. The level and type of state involvement in trans- portation varies with the urbanization of the state, its geographic location, and a number of other vari- ables, including interrelations between the gover- nor’s office and the state legislature. In the example of the federally funded West Virginia TRIP demon- stration program, which offers discount transporta- tion coupons to elderly, handicapped and low-in- come residents, success of the program varied with the political climate. It was favorably received in 1974 as a program of the West Virginia Department of Welfare. After a change in state administration, responsibility for different segments of the program was divided between the state welfare department and the newly created Office of Economic and Community Development in the governor’s office. By 1977, state and Federal support for the program appeared to be faltering, and in 1978 it operated under the auspices of the state highway department. For 1979, West Virginia anticipates a decreased program."” Typically until the 1960s, state modal agencies planned for transportation and implemented projects individually, undertaking little or no coordination with other modal or regulatory agencies. Most planning was undertaken in compliance with Federal require- ments, which at that time did not emphasize coordi- nation.'® Many factors contributed to the states’ forming multimodal transportation agencies, including estab- lishment of the U.S. DOT, and enactment of the Federal-Aid Highway Act of 1962.19 Another stimulus may have been the Federal-Aid Highway Act of 1970, requiring action plans considering both environmen- tal factors and the impact of highways on other modes.?° The Airport and Airways Development Act of 1970, the Regional Rail Reorganization Act (38R Act) of 1973, and the Railroad Revitalization and Regulatory Reform Act of 1976 (4R Act) also call for the development of statewide plans, requiring inte- gration with plans for other modes.*' Finally, the National Transportation Reports of 1972 and 1974 provided impetus to extending modal planning.?2 Federal incentives aside, states have also reor- ganized their governments independently, with the formation of a state DOT as one of the products. According to the Advisory Commission on Intergov- ernmental Relations, these state departments may STATE AND LOCAL TRANSPORTATION POLICIES AND PROGRAMS e 51 have resulted from the states’ desire to coordinate their own planning efforts more efficiently, in order to achieve a balanced transportation system.*° How- ever, it is likely that other factors may have been important, including . revenue shortfalls for a particular mode, the energy crisis, environmental and social concerns, general government reorganization and consolidation, and Federal regulations.*4 As of 1977, 38 states had such departments, ostensibly with the goal of providing a multimodal system. However, a number of these organizations remain dominated by one or two modes, usually the highway agency; in fact, of the 38 state DOTs in1979, 5 still have the word ‘‘highway’”’ in the title of the transportation agency. (See Table 6.) As part of the NTPSC’s research, a survey was conducted of the enabling legislation for 28 state DOTs, revealing that virtually all those states trans- ferred the powers and duties of the state highway department to the DOT. Some also transferred the transportation segment of the PUC/PSC to the DOT. Most of the 28 states transferred aviation agencies, rail authorities and departments of motor vehicles; some transferred agencies dealing with a specific facility, such as the Kansas Turnpike Authority, or service, such as the Wisconsin State Patrol. The structure of a DOT does not necessarily presage the range of the activities in which it may become involved, nor the extent of the involvement. (The range of state DOT functions as of 1979 is shown in Table 7.) Vermont, for example, which has a multimodal department with responsibility for aero- nautics, highways, motor vehicles, buses, rail, water- ways and motor carrier services, currently conducts no long-range planning.*® Utah’s state legislature established a DOT “‘... to provide balanced and coordinated transportation systems,’’*® but the de- partment plans separately for each mode. State DOTs generally have constrained budgeting func- tions, because funds are allocated along modal lines, with no provision for: . intermodal funding flexibility. This is a liability for most state DOTs since it can prevent the realization of the DOT’s potential for intermodal planning and policymaking.?’ There are quite interesting relationships between state DOTs and state regulatory agencies. In some instances, as with rail abandonments, the PUC/PSC’s functions may overlap those of the transport agency. It is not uncommon for a state transportation agency, PUC/PSC, Attorney Gener- al’s Office, and the Federal government to be involved simultaneously in a particular abandonment. TABLE 6. State departments of transportation and multimodal agencies, 1979 Year State Effective Title Alaska ............. 1977 Department of Transportation and Public Facilities Arizona............ 1974 Department of Transportation Arkansas......... 1977 State Highway and Transportation Department California......... 1973 Department of Transportation Connecticut .... 1969 State Department of Transportation Delaware......... 1968 Department of Highways and Transportation District of Columbia..... 1975 Department of Transportation Florida: aus c 1967 Department of Transportation Georgia........... 1972 Department of Transportation Hawaii ............. 1960 Department of Transportation idaho.uncsa. 1974 Transportation Department HHNOIS cs hasteesecs 1972 Department of Transportation 1OWaisccsscrestek. 1974 Department of Transportation Kansas............ 1975 Department of Transportation Kentucky......... 1973 Department of Transportation Louisiana......... 1977 Department of Transportation and Development Maine .............. 1972 Department of Transportation Maryland ......... 1972 Department of Transportation Massachusetts 1971 Executive Office of Transportation and Construction Michigan ......... 1978 Department of Transportation Minnesota ....... 1976 Department of Transportation Missouri........... 1974 Department of Transportation New Jersey .... 1967 State Department of Transportation New Mexico ... 1978 Department of Transportation New York....... 1967 State Department of Transportation North Carolina 1971 Department of Transportation and Highway Safety Ohio eee 1972 Department of Transportation Oklahoma........ 1976 Department of Transportation Oregon............. 1969 Department of Transportation Pennsylvania... 1970 Department of Transportation Puerto Rico.... 1973 Department of Transportation and Public Works Department of Transportation Department of Transportation Rhode Island.. 1970 South Dakota. 1973 Tennessee....... 1972 Department of Transportation Texas ............. 1975 Department of Highways and Public Transportation RIUPY cforecet ncacnce 1975 Department of Transportation Vermont .........- 1975 Agency of Transportation Virginia............ 1974 Department of Highways and Transportation Washington..... 1977 Department of Transportation Wisconsin......... 1967 Department of Transportation SOURCE: Information provided by the U.S. Federal Highway Administration, Program Management Division, 7 September 1977 and the lowa Department of Transportation, Division of Planning and Research, ‘‘State Departments of Transportation as of February 1979,’’ Ames, lowa. alncludes the District of Columbia and Puerto Rico. 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In the few states that have not reorganized, the predominant transport agency is the highway depart- ment, usually coupled with a division of motor vehicles. The highway department in such states is important because it ‘*. . . is normally an independent agency, and typically includes over 90 percent of the state’s transportation funds and personnel.’’26 Usual- ly in states without multimodal DOTs, an independent PUC/PSC regulates motor carriers and, sometimes, pipelines, rail, air and water transportation. LOCAL INSTITUTIONS Local governments are also responsible for transpor- tation. Further, quasi-governmental bodies with re- gional responsibilities participate in planning and funding projects and, in some cases, in operating transport systems. Cities Cities have traditionally provided many transporta- tion services, including: street construction, mainte- nance and repair; parking; water transport; airport access, maintenance and operation; and transit. (Some of these responsibilities may fall to special districts.) Cities have financed these services through general revenues and user fees. As mass transit problems increased, many local governments began to take over provision of urban transit services from the private sector. Publicly owned and operated transit became increasingly prevalent, and by 1977 such systems carried 91 percent of all revenue passengers, although only 45 percent of the nation’s transit systems were publicly owned.”% Cities also undertake certain planning functions. Counties and Parishes Both rural and urban counties and parishes have historically been involved in highway projects, with special districts or city governments usually provid- ing other transportation functions. In recent years, counties and parishes have begun to assume certain other functions as well. A survey conducted in 1971 showed that one-third of all counties were then involved in the provision of airport services, and a smaller number participated in water transport, park- ing and transit.°° A county’s size and geography bear directly on the type and extent of transport services it provides. Generally, the more urbanized a county, the more likely it is to plan and manage its own transportation system and have its own DOT. Highly urbanized Montgomery County, Maryland, has a DOT that engages in a whole range of transport activity, including long- and short-range planning, transit operation and the provision of various services. Montgomery County runs its own bus system (funded independently of the Federal government), which supplements the areawide Metrobus and Metrorail system.*' Although responsibility to plan, construct and operate rural transportation facilities or services usually rests with either state or county government, rural counties have begun to assume more of these tasks themselves.*? Regional Bodies Substate regional organizations increasingly plan and implement metropolitan transport projects.** Be- cause they are quasi-governmental in nature (that is, with some of the responsibilities and powers normally vested in governments that provide transport ser- vices), their interactions with local governments may appear confusing. For example, regional bodies plan for and coordinate planning by local governments, but most have no implementation power. The Federal government has encouraged the development of such bodies for particular Federal programs. As a result, there has been a proliferation of these sub- state entities, many with overlapping responsibilities. Three regional bodies affecting transportation are: regional planning commissions or agencies (RPCs or RPAs); councils of government (COGs); and metro- politan planning organizations (MPOs). Both RPCs and COGs came about following the 1954 Housing Act, and both proliferated in the late 1960s.* By and large, they provide comprehensive regional planning services involving land use and transportation. By contrast, MPOs resulted from both amended UMTA legislation and the 1973 Federal-Aid Highway* Act, through which DOT asked each governor to appoint MPOs to receive and coordinate Federal funds and programs emanating from the FHWA, UMTA, and to the extent possible, FAA.°° Other requirements affect the responsibilities of regional agencies. These in- clude Office of Management and Budget (OMB) Circular A—95, which directs the governors to desig- nate agencies, one at the state level and one for each metropolitan or non-metropolitan area, with area-wide review and clearinghouse powers.*® Sup- port for regional bodies was also provided through the National Environmental Policy Act of 1969.97 In 1969, the Environmental Protection Agency (EPA) began requiring the preparation of environmental impact statements, which were then to be submitted for review by the designated A—95 agency. In June 1978, the U.S. DOT and EPA released a series of jointly developed guidelines designed to help urban areas meet established ambient air quality standards, 54 e TRANSPORTATION ACTIVITY AND INSTITUTIONS with the goal of integrating air quality and transporta- tion plans developed by MPOs or other agencies.® In 1973, 17 additional Federal programs offered planning-related assistance to metropolitan organi- zations to meet Federal standards.*° The same regional body does not necessarily coordinate all these Federal programs. It should also be empha- sized that neither COGs, MPOs, or most RPCs have the power to raise revenues or implement plans. Special Districts Another form of substate body which can affect transportation is the special district. Special districts are incorporated through local initiative, with state authorization, to provide a particular service not being rendered by a state or local government to a given area. Districts usually have a single function and are administered by a board of directors that is either appointed or elected. Typical special districts provide soil conservation, cemetery, sewer, or transit services. Special districts may have taxing powers or may derive revenue from user charges, in order to defray costs. Public transit authorities are a major type of special district. These bodies typically de- pend on revenue from users as well as funds from Federal, state and local governments. In 1972, 93.9 percent of all transit special districts were located in Standard Metropolitan Statistical Areas (SMSAs).4° A variation on the special district theme is provided by some port authorities, such as the Massachusetts Port Authority (Massport), which is responsible for more than.one mode of transportation.“ MULTISTATE REGIONAL ORGANIZATIONS Another form of regional organization bears mention: the multistate regional organization (MRO). As broadly defined, MROs may be created by interstate compacts, parallel state legislation, Federal and state legislation, or executive action.4* MROs may be separate legal entities and sometimes possess sub- stantial indigenous revenue-generating powers. They may depend on congressional or state appropria- tions, or both. Many bistate and multistate regional organizations construct and operate transportation facilities such as bridges, ferries and tunnels. Others perform planning and engage in intergovernmental coordination. Still others possess regulatory powers which may directly or tangentially affect transporta- tion, particularly inland navigation and international maritime transportation. While most MROs have a transportation component, this is usually not their primary concern. Some bistate commissions, how- ever, were formed specifically to deal with transpor- tation problems. The Port Authority of New York and New Jersey, for example, constructs and operates many of the region’s transportation facilities. STATE AND LOCAL TRANSPORTATION PROGRAMS A review of the transport activities carried out at state and local levels of government helps explain the policy priorities of those jurisdictions. This review proceeds by reference to functions performed by state and local institutions: planning; finance and operation; and regulation of transportation. PLANNING Multimodal transportation planning is a fairly recent function of the states. It generally has been undertak- en by states on their own initiative, but certain mode- specific plans are produced to qualify for Federal aid. State and local governments have traditionally planned for highways and roads within their jurisdic- tions, and, except for Federal-aid highways, have done so with little Federal intervention. For several decades prior to the 3R and the 4R Acts, the Railroad Passenger Service Act, and the Federal Railroad Safety Act, state and local govern- ments did little in the rail sector.44 Much of the planning that occurred concerned suburban rail passenger service, urban rail transit, or Amtrak.“* The 3R Act established planning processes for reorganiz- ing the systems of the 17-state Midwest and North- east region in order to create financially viable rail services. The act established the Rail Services Planning Office (RSPO) in the ICC, with duties directly related to state rail planning. For example, the RSPO has assisted state, local and regional transportation authorities in determining whether particular rail properties are suitable for subsidy.*® Many local governments carry out planning func- tions through their community development depart- ments; some, however, have a DOT. Typically, localities plan streets, roads and transit, and may undertake port and airport planning. Some states, though, carry out metropolitan transportation func- tions.46 When a city does not have a DOT and does not come under state control for its local planning, a regional agency, a special district, or a transporta- tion authority may do the planning. State and local governments have undertaken planning to accommodate pedestrians and bicycles, both of which are subject to hazardous conflicts with motor vehicle traffic. Attempts by cities to create a more desirable walking environment include the provision of auto-free zones (in which buses may be permitted), and urban and suburban pedestrian shopping malls (frequently enclosed), which allow no vehicles. A number of states and the District of Columbia have produced plans for bicycle routes, which have been implemented to varying degrees.*’ Bicycles are often relegated to bike routes, much like STATE AND LOCAL TRANSPORTATION POLICIES AND PROGRAMS e 55 bus routes. Some abandoned rail lines have been converted for use by bicycles.“ MPOs are responsible for the production of Trans- portation Improvement Plans (TIPs) and either the MPO or a local government may develop concomi- tant Transportation Systems Management (TSM) measures.‘*? Typical TSM options—such as contra- flow or priority bus lanes, parking restrictions, one- way streets and signalization—may be suggested by an MPO for local consideration. Conversely, local governments may design TSM plans appropriate to their unique needs and submit them to the MPO for regional review. In either case, the MPO is responsi- ble for integrating a TSM element with the TIP.© Although TSM activities are eligible for general Federal transportation aid, no categorical funds are specifically allocated for TSM projects.*' The Federal government has often required plan- ning as a condition for receipt of aid. However, ... most “state plans’’ called for by the Federal grants are not plans in accepted parlance; instead, they are assurances of state intent to comply with federally prescribed pro- gram specifications.°? National planning efforts conducted by the Feder- al government may also be insensitive to the needs of states and localities. The FAA’s National Airport System Plan has been criticized for several short- comings. State and local governments complain that the FAA does not integrate state airport system plans and airport master plans into its own planning. Consequently, priorities for airport expen- ditures may not be reflected in federally determined grants for ADAP funds. A lack of airport system planning at all levels has also been criticized by those who argue that airports are not viewed as a system when financial ‘‘needs’’ for individual airports are determined, nor is there sufficient long-term planning of airport investment. FINANCE AND OPERATIONS Funding transportation projects is a major state concern, and one which requires considerable intergovernmental activity. States may fund entire projects, as in the case of state highways, or they may provide financial aid to local governments, frequently on a matching basis with Federal funds.* Table 8 summarizes state transportation expendi- tures over three recent years.5’ In most states, highway expenditures predominate. Airports States and localities administer, promote and devel- op the nation’s airports. As of January 1, 1977, there were 13,830 airports in the U.S. (including heliports, sea plane bases and STOL—short takeoff and landing—ports), about half of which were open to the public. Of those open to the public, 2,649 belonged to private operators and 4,265 were public- ly owned.*® Most publicly owned airports are oper- ated by municipalities, counties, special authorities or airport districts, or states. State expenditures on airports totaled over $350 million in 1976.59 In that year, the largest U.S. cities that operate airports (including, among others, Chi- cago, Atlanta, Houston, Cleveland, Philadelphia and Los Angeles) also spent over $350 million.© This compares to Federal government expenditures of $290 million under airport development and planning grant programs for fiscal year 1976 plus the transi- tional quarter.®' These figures indicate that over 70 percent of government expenditures on airports in the U.S. come from state and local sources. All but five states fund airport development. State aviation programs may include: planning state airport systems; installing, operating, and maintaining navi- gation and landing aids; conducting aviation safety programs and providing aerospace education; and regulating intrastate air carriers. States have also assisted communities in obtaining and retaining scheduled air carrier service. States encourage airport development with grants or loans, and through the provision of technical and engineering assistance to local bodies responsible for airports. Airport policies of local governments are con- strained by Federal and state laws governing air traffic control, safety, and air carrier rates and service. Federal and state laws determine how local governments may acquire, develop, finance, zone and operate airports. However, the local airport authority makes the decisions that affect the public most directly, because it must effect compromise between the needs of air travelers and shippers on the one hand and those of local residents on the other. An airport may become the focal point of controversy over such issues as runway extension, noise abatement, zoning, and the adequacy of terminal areas.® Highways Since colonial times, the primary responsibility for construction and maintenance of roads has shifted among the levels of government. The Federal gov- ernment initially limited its participation in road building, but since the turn of this century, has steadily increased its aid to the states for highway construction. The role of local government has been largely to finance and construct facilities not part of the Federal-aid primary, secondary, or urban sys- tems. Local governments generally maintain all ex- cept state or Federal roads, usually with a large 56 @ TRANSPORTATION ACTIVITY AND INSTITUTIONS TABLE 8. Summary of transportation expenditures by state, FY 75—77 * Fiscal Year 1977 Public Public State Highways Transit Air Water Othere Total Highways Transit Vek Ae ce 131,415,109 Alaska ie. eghks =. 272,606,214 30,469,555 35,681,557 338,727,320 209,759,764 , Arizona s0nicssiseh., 179,949,291 234,413 765,632 80,000 181,028,336 199,383,911 232,000 Arkansas .............00008 3 Californlaiasn..-sceerree 1,044,970,605 4,500,000 2,400,000 247,900,000 68,901,225 1,368,671,830 963,551 ,237 3,000,000 Colofado 4h 8.228 245,005,000 356,000 32,000 245,393,000 160,282,000 353,000 Connecticut.............. Delaware ..............00.. 53,318,018 3,300,000 Florida ewer 525,498,000 4,862,900 Georgia. jc cok 397,840,801 537,162 271,012 250,000 571,217 399,470,197 429,431,614 633,984 Pawalll.ioi.\ Aco eetecsh 90,800,000 33,140,000 80,978,000 204,919,000 111,700,000 27,418,000 Idaho'seee ck cece aces 111,144,900 961,800 969,600 113,076,300 103,530,600 435,500 HNINOUS ick. secu. acveccest eee 1,939,099, 900 253,032,200 indianaiz.4..34% <2 242,654,084 242,664,084 249,118,695 loWai tS reach ee 216,630,478 1,424,861 436,501 68,593 26,216,943 243,777,376 238,822,017 118,817 Kansas... occa ites 224,786,196 2,157,983 25,613 6,108 65,366 227,041,266 234,648,358 2,043,063 Kentucky seer 421,380,170 Louisiana.................. 489,173,284 Maines. cai caeey 106,875,000 Maryland .................. 374,052,000 108,226,042 29,883,546 34,058,768 136,649,836 828,869,992 380,093,983 Massachusetts ......... 173,100,000 Michiganiews sos 431,500,000 44,100,000 13,100,000 3,150,000 493,850,000 416,100,000 30,100,000 Minnesota................. 305,047,596 13,581,500 10,200,481 5,343,082 334,172,659 294,074,716 15,413,700 Mississippi ................ 312,682,000 Missounlexise Sees 437,914,623 437,914,623 446,968,679 Montana 154,091,319 150,000 89,000 154,330,319 87,573,158 Nebraska.................. 136,605,000 1,473,000 5,498,000 143,578,000 142,906,000 Nevadacaviee ca." 73,322,771 73,322,771 70,863,028 New Hampshire ....... 97,595,919 New Jersey.............. 113,249,000 186,706,000 9,372,000 6,589,000 315,916,000 186,441,000 152,311,000 New Mexico............. 168,401,600 328,750 168,730,350 141,833,030 464,570 New York........0.0..00. 555,000,000 119,700,000 600,000 10,500,000 112,600,000 798,400,000 698,100,000 116,900,000 North Carolina......... 350,025,625 North Dakota........... 106,835,062 260,822 410,819 107,508,703 88,420,423 Ohigge ieee eee 542,952,600 leniele 859,704 167,587 556,751,018 539,949,877 Oklahoma................. 169,563,014 654,915 170,217,929 185,416,154 COTGQOMN treat aoe 185,500,000 3,180,000 1,190,000 23,000,000 212,850,000 225,894,217 Pennsylvania ....... Seats 260,678,000 126,330,000 7,077,000 1,255,000 28,487,000 1,421,833,000 1,370,857,000 97,295,000 Rhode Island ........... 35,978,963 4,536,900 1,537,217 44,053,080 35,245,890 2,707,877 South Carolina......... 208,364,000 208,364,000 235,070,000 South Dakota........... 103,050,109 199,750 1,008,910 116,178 112,374,947 82,219,033 Tennessee ................ 323,912,700 TOxas iii er 757,343,349 1,104,630 2,041,726 2,415,780 782,905,494 813,333,948 Fg Rese ant teers sara 123,529,000 100,000 309,000 1,050,000 124,988,000 117,598,300 VOGPIMOMUss..ccccc--cs-cscexs 56,740,908 Virginias.2. eS 854,344,000 14,263,843 3,035,000 4,381,770 3,478,536 685,500,149 531,232,000 Washington .............. 281,000,000 3,100,000 1,200,000 41,000,000 41,600,000 367,900,000 208,100,000 2,500,000 West Virginia ........... 403,567,000 2,491,000 Wisconsin ...........00.... 243,018,200 3,189,400 1,485,100 175,645,000 430,337,700 273,108,500 Wyomiing................... 100,064,009 17,181 1,953,090 102,034,260 109,019,231 Puerto Rico?............ 180,900,000 35,100,000 11,800,000 13,900,000 249,700,000 215,900,000 Dist. of Columbia .... 59,149,000 300,084,000 Total 10,321 ,509,874 980,541,153 234,632,421 359,233,000 47,524,000 410, 380,745,163 604,422,183 12,521,850,704 16,228,252,086 1,072,973,530 SOURCE: Survey of state governments for summary of total expenditures conducted by the American Association of State Highway and Transportation Officials (AASHTO), Standing Committee on Planning, Washington, D.C.: 1977. alncludes the District of Columbia and Puerto Rico ’Oregon and Puerto Rico data for 1977 derived from telephone interview with John Huett of AASHTO “Other” includes rail, bikeways, transportation for elderly and handicapped citizens, etc. 6,374,000 600,000 381,204,540 31,193,924 194,500,000 100,000 430,000 19,010,400 45,813 450,000 1,722,310 32,674,045 18,643,000 19,900,000 5,681,078 10,000 1,277,000 451,000 2,215,978 35,500,000 17,500,000 5,200,000 54,167,452 653,264 4,358,300 24,650,307 4,089 20,000,000 119,210,717 8,719,988 5,771,000 823,000,000 10,528,000 61,646 19,513,600 4,500,000 147,839,900 1,046,176,263 19,044,932,260 131,415,199 279,694,685 205,444,043 1,217,318,680 180,635,000 56,618,018 533,019,000 431,460,700 198,215,000 104,753,000 2,267,068,000 249,116,695 264,572,834 236,707,569 449,459,170 493,293,461 111,739,041 646,063,699 341,333,000 466,400,000 316,703,661 331,681,000 446,968,679 87,821,158 151,569,000 70,863,028 104,315,907 353,203,000 142,097,600 1,461,300,000 358,994,190 89,008,080 552,314,512 185,775,052 227,854,602 1,486,331 ,000 41,846,141 235,070,000 89,212,130 357,664,000 818,160,304 ‘ 118,405,900 57,474,493 532,984,406 251,200,000 408,562,528 433,767,000 111,166,078 291,500,000 90,894,000 6,006, 194,397 STATE AND LOCAL TRANSPORTATION POLICIES AND PROGRAMS e 57 259,431,650 165,704,743 166,057,555 1,359,471,148 158,449,260 21,893,737 574,700,000 437,058,891 87,300,000 82,023,400 ,727,247,000 270,072,632 234,977,033 202,424,933 417,082,436 385,397,571 109,228,000 350,304,000 226,600,000 411,800,000 271,410,000 221,318,000 —_ 88,191,117 127,763,000 63,298,344 99,267,426 211,812,183 129,218,000 795,700,000 507,187,681 69,567,720 536,823,502 148,094,809 192,902,303 348,606,000 29,814,257 247,600,000 89,291,877 298,019,400 905,130,168 95,782,800 54,092,371 558,185,000 269,729,674 371,300,830 195,888,600 136,759,366 244,500,000 42,652,000 _ 1,028,004,039 Public Transit 220,000 2,055,000 4,678,145 507,733 29,114,000 234,000 254,741,900 59,859 78,701 83,232,000 51,200,000 25,800,000 6,969,000 207,000 57,170 107,783,956 228,750 125,900,000 40,684 2,508,310 174,632 109,814,000 2,448,083 14,201,000 181,248 217,145 2,165,317 3,500,000 40,800,000 159,288,000 Fiscal Year 1975 Air 44,026,100 2,029,635 3,545,855 925,082 117,705,000 383,500 40,053,900 600,435 440,544 740,742 1,309,674 24,570,000 533,000 19,900,000 270,000 1,000,000 1,333,745 261,789 818,288 358,857 972,568 8,751,000 5,750,553 8,017,378 11,999,700 1,155,244 576,200 1,349,198 1,788,366 817,386 889,041 14,264,000 3,064,509 20,900,000 339,099,367 Water 32,342,035 10,000 430,000 17,895,000 18,653,900 388,590 1,509,669 35,092,000 16,180,000 21,702,000 18,800,000 8,425,880 1,361,000 500,900 2,012,002 8,449,021 22,400,000 5,021,590 37,948,357 626,078 1,498,500 3,133,166 20,000 19,104,996 141,891,000 6,058,434 159,000,200 49,000 29,425,600 45,081,781 142,224,800 7,000,000 200,152,073 598,283,102 18,171,732,978 259,431,550 242,072,378 173,328,780 1,397,419,505 168,449,260 23,948,737 582,934,000 439,547,784 252,014,000 82,640,000 2,040,195,200 270,072,632 238,710,634 202,504,792 437,095,270 386,138,313 112,047,363 635,089,000 294,513,000 457,500,000 278,379,000 243,287,000 88,191,117 127,960,000 63,355,514 105,325,860 319,596,139 129,443,750 1,098,600,000 518,947,279 69,870,173 540,250,184 148,253,766 194,049,503 1,466,332,000 38,012,893 247,600,000 97,358,255 354,147,000 908,478,742 96,359,000 56,331,569 559,971,366 322,295,000 374,145,188 355,877,200 139,823,875 335,400,000 201,938,000 58 e TRANSPORTATION ACTIVITY AND INSTITUTIONS portion of the money expended generated through local taxes. In contrast to local governments, which pay for their roads with property taxes, states have tradition- ally defrayed their share of highway construction and maintenance with revenues from user fees. The amount collected has remained relatively stable for some years,™ while the costs of construction, mainte- nance, and rehabilitation have escalated sharply, particularly over the last decade.® The transportation of coal presents particular problems, especially for the Appalachian states. As of 1977, coal-producing states were experiencing a backlog of needed expenditures for repair and rehabilitation of roads totalling $4.06 billion, 75 percent of which was required for Federal-aid roads.© A recent estimate of the number of bridges requiring replacement is 105,500, about one-third of them on Federal-aid highways.®’ The Federal-Aid Highway Act of 1970 authorized funding through fiscal 1978 for a Special Bridge Replacement Pro- gram.® In the 1978 Surface Transportation Act, Congress altered and extended the program, funding states to replace their more deteriorated bridges.® Some states are reconstructing bridges using solely state or local funds.’”° The Special Bridge Replacement Program illus- trates how Federal funds induce action on the part of the states. The DOT Secretary’s Sixth Annual Report on this program notes that: ... The states’ high enthusiasm for this pro- gram is reflected in the increasing number of applications being submitted for the replace- ment of deficient bridges. Last year (1976), there were 15,587 replacement bridge applica- tions reported; this year 16,452 bridges have been submitted.” However, the Seventh Annual Report on the program indicates that, as of 1978, only 1,648 bridges had been replaced or were in the process of being replaced as a result of the Special Bridge Replace- ment Program.’ Railroads The role of states in rail transport has varied significantly over the years. States actively promoted and regulated railroads during the 19th century, until they were largely pre-empted by the Federal govern- ment. More recently, Federal and state governments have developed a cooperative approach to railroad problems. States have confronted problems arising from the financial difficulties of the railroads, focused first on the threatened curtailment of commuter rail passenger services, and then on abandonment of freight service and trackage in light-density areas. Other matters of concern have been intercity pas- senger service, and safety, especially at grade crossings and in the transportation of hazardous materials through densely populated areas. State solutions have ranged from subsidy to outright purchase and operation of rail properties. For example, Georgia has owned a major railroad line for over a century, and North Carolina has owned a controlling interest in the North Carolina Railroad for many years. In 1963, Vermont pur- chased the lines and facilities of the defunct Rutland Railroad, and in 1973 enlarged its state-owned system to nearly 300 miles. State-owned railroads are leased back to private operators under contracts which generally prescribe performance and mainte- nance standards. In some instances, operation is undertaken by connecting Class | railroads, while in others, the properties are run as short lines.”° The 3R Act brought about the creation of Conrail and Federal purchase of the Boston-Washington corridor. The act also led to federally subsidized service on about 3,000 miles of light-density freight lines, with subsidies administered by the states.”4 In 1978, Congress acted to make the program perma- nent, with a standard matching ratio of 80 percent for capital projects.”> The states determine which ser- vices are to be subsidized, but to be eligible for funds, a state must have established a plan for rail transportation and local rail services. In 1978 all 17 Northeastern and Midwestern states as well as ten others had completed their state rail plans, with all other states in some stage of development of a plan.’ / -As to rail passenger transport, state and local interactions with Amtrak have developed through Section 403(b) of the 1970 Rail Passenger Service Act, which stipulated that if state, regional or local agencies desire additional service beyond that which Amtrak is providing, they must assume ‘‘a reasonable share’”’ of the costs, first defined to be not less than 66.6 percent.” In 1974, exactly 66 and 2/3 percent was specified.’? In early 1976, Congress changed the ratio to 50 percent, and later that year required non- Federal sources to cover 50 percent of both solely related costs and associated capital costs for 403(b) routes.’”? A number of states and regional agencies have taken advantage of this provision and expand- ed or added services not otherwise provided.® | To ensure commuter rail services, some states make payments directly to the carriers providing the services. Several states have also created special regional transportation authorities, composed of the counties and municipalities requiring these services.®' Ports and Waterways Port activity is carried out by both public and private interests. Public port authorities, functioning under cities, counties, and states, are the primary devel- STATE AND LOCAL TRANSPORTATION POLICIES AND PROGRAMS e 59 opers of transfer facilities for general cargo. Private corporations usually own and operate bulk facilities, particularly for petroleum, as a part of overall physical distribution systems. Ports are located in 38 states (those bordering the Atlantic, Pacific and Gulf Coasts, the Great Lakes and inland waterways).®*? The institutions responsible for ports at the state and local level vary considerably. A recent survey found that 12 of 33 states had state port authorities, 12 had a ports agency within a state DOT and 9 had no particular state port agency.® In states without port administration capabilities, local public port functions are administered by municipal and county authorities. The same survey indicates that: ‘... the financing and management of the port is divided among state and local governments, and private enterprise.’’® A port-related issue is containerization. Present warehousing facilities are becoming obsolete, and containers require additional space. Because most ports are located in metropolitan areas, their ability to expand is limited. In addition, equipment needed for moving containers is expensive, posing financial burdens for ports.® Foreign trade is expected to expand from the current 800 million tons annually to 1.4 billion tons by the year 2000, pressuring ports to achieve further productivity.°” However, more funding for port devel- opment may be difficult to obtain from state and local governments, simply because ports are not an integral part of the state financing system and must compete with other budgetary priorities. Conse- quently, states may have to seek new sources of funding; perhaps ports may have to become finan- Cially independent, increasing user charges to cover costs.® Mass Transportation Mass transportation historically was provided at the local level by private firms. Although local govern- ments and non-profit organizations are commonly involved today in the provision of transit, some transit functions are performed by states. These functions can include financing, conducting technical studies, collecting and analyzing data, administering pro- grams for rural, elderly and handicapped passen- gers, as well as actuaily operating a system. Wide- spread public takeovers have changed the nature of local regulation.®° Title Ill of the Surface Transportation Assistance Act amended Section 16(b)(1) and provided a new Section 18 to the 1964 UMT Act,” authorizing capital grants to states for the provision of public transpor- tation services to the elderly, the handicapped and residents of rural and small-urban areas. Section 504 of the 1973 Rehabilitation Act requires all programs or projects receiving Federal aid to be accessible to elderly and handicapped persons.*' On June 6, 1978, DOT issued a series of proposed rules and in April 1979 submitted a program to HEW with phased steps for ensuring that transportation facilities comply with Section 504.9 States may also plan for public transportation, and new Section 8 of the 1964 UMT Act® provides planning requirements and funding for this purpose. Under Section 5 of the National Mass Transportation Assistance Act of 1974, local areas with a population between 50,000 and 200,000 can receive Federal operating assistance via the states,% and under new Section 18 of the UMT Act, operating assistance is also available to small cities and rural areas.% In some states, intercity buses may provide impor- tant service for residents of non-urban areas. Six states assist intercity bus companies, with programs ranging from no-interest loans to operating subsidy. Local governments support transit, with substan- tial Federal participation. The figures in Table 9 indicate how much money the Federal government may provide. The 1964 UMT Act, as amended, offers 80-percent Federal, 20-percent local matching grants for capital costs, and 50-50 percent matching grants for operating expenses. By mid-1974, UMTA grants to local areas for transit capital projects exceeded $3 billion. Over 90 percent of the capital grants were appropriated to 6 cities starting new rail transit lines, and to 230 cities buying some 20,000 new buses.*’ The Federal-Aid Highway Act of 1973% offered $2.38 billion from the Highway Trust Fund over two years (1974 to 1976) for construction of urban transportation facilities, fringe or corridor parking facilities, and bus purchases, as well as for the construction or improvement of rail facilities. An important and controversial aspect of the UMTA legislation, Section 13(c), protects employees of projects receiving UMTA funding ‘... against worsening of their positions with respect to their employment.’’8? Some local government officials per- ceive compliance with this regulation as expensive and thus in certain cases have foregone Federal financial assistance in favor of local funding of transit.‘ Although some studies have been done regarding the overall effects associated with 13(c),'" controversy continues. '° The provision of public transport services in rural areas is hindered by low-density patterns and dis- persed activity, combined with the fact that rural public transportation traditionally has received little Federal attention. However, change came with a 1974 amendment to the UMT Act, which provided $500 million for planning, capital costs and demon- stration projects, reserved specifically for transporta- tion in non-urbanized areas.’ In 1978, this program was amended to offer $420 million through fiscal year 1982.'% One partial answer to the problems local govern- ments face in serving special groups may be found ‘sueo| UO!ISINboe puke] BOUBAPE U! OS/‘'ZZ L7H PUE |IE4 JOJNWWWOD U! By¥G‘EGE‘SL LG ‘WSUeI} IIE Ul B~7T‘ZSE‘LZES ‘12}0} SIU} JOP "SOSN U! 89'P¥ZE'EEF ‘[!E4 sOINWWOD UI! G8Z‘Z98‘LLS ‘Wsued} pide j!e1 Ul GZE‘~Ss‘E9$ ‘1E}0} SIU} JO>o "syeoq A1s8}5 000'80E$ “SUes} pide [121 0O0'O0Z$ :}de0xe pISUe. 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UMTA has stipulated that for taxicabs to be considered a paratransit mode, they must be available on a regular and continuing basis, as is mass transit. Because exclusive-ride taxi service is usually not included in the definition, only shared-ride taxi trips meet the criterion.' Funding Problems Major issues are engendered by Federal programs that disperse funds to state and local governments. How the money is apportioned, to what purpose it is put, what provisions are made for interface with all jurisdictions below the Federal level, and how de- pendable the funding is over time—are all factors profoundly influencing which projects and programs will be undertaken by states and localities. State and local governments receive either project funds or other forms of assistance from the Federal transportation administrations. Assistance is provid- ed at different matching ratios for each mode, with some modes receiving far more aid than others. Even though many Federal agencies have supported inter- modal planning, allocation formulas do not reflect that goal. State and local governments wish more flexibility to use Federal funds for different demands based on their geography, demography or economy. Distributing funds along modal lines not only may impede planning for efficient, coordinated transpor- tation services, but it also can create biases for one mode over another, strictly on a financial basis. In January 1978, President Carter proposed to consoli- date transport funds and increase their flexibility, and to decrease disparities in matching ratios of FHWA and UMTA grants.'°’ Such a proposal faces consid- erable opposition from highway and transit support- ers. Also, Congress has appeared to favor modal, categorical programs. In some cases, state and local governments receive Federal aid when it might be more efficient for them to deal directly with their own problems. Some states believe proceeding under FAA’s pro- cess demands more time and money than state control would require in those states having adminis- trative capacity.'°° Considerable inefficiency is be- lieved to result from the process of collecting user Charges, placing the funds in the Airport and Airways Trust Fund, and then channeling the bulk of the funds collected back to hub airports (based on enplane- ments) through the ADAP program. Perhaps a great- er problem is that this source of funding creates biases in spending decisions. Another funding conflict emerges when needs change, but allocations do not. For example, while highways and bridges have been promoted through funding for construction, littke money was provided until recently for reconstruction or rehabilitation. Some states believe that Federal money should be available for repair and maintenance.’ Yet, left to their own devices, states might find alternatives themselves, such as abandonment or transfer of low- use roads and bridges. In other words, the possibility of receiving Federal dollars can create expectations which might eliminate a creative or more cost-effec- tive approach by the recipient. Some local officials find applications for aid too complex to bother filing;'*° others complain that excessive ‘‘red tape’ involved in grant applications causes a time lag between filing and grant approval. This delay, sometimes lasting 10 to 15 years,'"' can escalate project costs 100 percent in dollar terms.''2 Even after funds are allocated for a program, there is no assurance of continuity of a grant. Local officials insist that a guaranteed source of funding is vital to maintaining transport services.''? The cost of complying with a Federal program may also prove troublesome. For example, the cost for Washington’s Metro System to comply with UMTA’s Section 16 is expected to be $4.9 million a year in 1973 dollars.'* The total cost of compliance with Section 504 of the 1973 Rehabilitation Act will be $1.7 billion in 1977 dollars, according to UMTA estimates, while FRA and FAA project costs will total $56.6 and $40.0 million respectively.'"® A final area of intergovernmental discord on funding occurs when the Federal government cir- cumvents a government level by providing financial aid to an area within that government’s boundaries. Mass transit funds frequently go to local govern- ments without channeling through the states, even though a state may be asked to assist in the local match for Federal money.''® Similarly, funding for paratransit or special transport services may go to several private, non-profit organizations within a city, county or parish, a process that often results in duplication of service.’ A recent administration proposal would provide direct funding for MPOs, which in the past have been strictly planning organi- zations.''® Representatives of MPOs, local, county, and state governments, all support direct Federal funding to themselves because it would reduce red tape; at the same time, they often fail to consider the effects on other governments of the particular solu- tion they desire.''9 REGULATION State and local governments may regulate economic, environmental and safety aspects of transportation. 62 e TRANSPORTATION ACTIVITY AND INSTITUTIONS Generally, PUCs and PSCs regulate the intrastate transport of freight and passengers by truck, rail, intercity bus and occasionally air. Not all PUCs restrict themselves entirely to economic regulation; they may regulate abandonments or discontin- uances, safety, construction projects, equipment, security issues and rail grade crossings. Local governments may regulate transit in instances where it is privately owned. Since public ownership became predominant, local governments have usually con- fined themselves to regulating taxicabs and some forms of paratransit, such as limousines. Environmental Regulation Most state governments have had agencies respon- sible for water pollution control since the 1940s, but they have been slower to create similar institutions to control air pollution.12° The 1970 Clean Air Act required each state to develop and submit to the EPA a State Implementation Plan (SIP) that would provide for the attainment, maintenance, and en- forcement of national air quality standards by 1977.'*' However, through the 1977 Amendments to the Clean Air Act, Congress stipulated that urban areas with the worst problems would have until 1987 to attain national standards. The amended act also mandates that, if a plan is not approvable, EPA is to develop one in its place. For urban areas where the standards for mobile-source-related pollutants are being violated, the states are required to submit, as a distinct portion of the SIP, a transportation control plan (TCP) consisting of measures to reduce emis- sions from those sources. The 1977 Amendments require that each state have mandatory inspection and maintenance programs for automobiles, as well as various other plans. ‘22 Through the Clean Air Act Amendments, Congress also sought to remedy shortcomings of the first TCPs by shifting responsibility for TCPs from states to MPOs.'23 This created controversy, however, as MPOs have the responsibility for coordinating plan development, but lack any implementation power. Nevertheless, if a TCP is not submitted to EPA on time, or if reasonable efforts towards doing so are not made, or if annual emissions reductions do not occur, the Clean Air Act states that for such an area: The Secretary of Transportation shall not ap- prove any projects or award any grants under title 23, United States Code, other than for safety, mass transit, or transportation improve- ment projects related to air quality improve- ment or maintenance. 124 Both state and local governments are also re- quired to prepare environmental impact statements whenever they consider developing a project that may have environmental, economic or social im- pacts.125 Safety Regulation Safety regulations have been promulgated for all modes, involving the movement of unsafe or hazard- ous cargo, the operation of vehicles, driver licensing and behavior, and numerous other aspects of vehicle use and interaction. Safety regulation is enforced by state or local DOTs, PUCs and policing agencies such as highway patrols and sheriffs’ departments. Regulation Problems Regulations of one state can create problems that affect other states. For example, motor vehicle sizes and weights are regulated, but where the permitted dimensions differ among the several states through which a vehicle must travel, interstate commerce may be impeded. Another problem at the state level arises when the organizations responsible for regula- tory activities do not coordinate their activities with state agencies responsible for planning or projects, despite the fact that their jurisdictions overlap. Regarding local regulation, restrictions on taxis and jitneys may have put such forms of paratransit at a competitive disadvantage versus the private auto and conventional transit, despite paratransit’s ability to provide accessibility to special populations that are not otherwise well-served. With both Federal and state environmental regula- tions for local transportation projects, duplicate standards face local officials. As of 1976, 26 states had EIS requirements,'?6 causing local governments to file a statement to both the Federal and state government, according to each level’s standards. Local officials point to such duplication as contribut- ing to the mass of red tape surrounding project approval.'?”? Federal project regulations may also be too stringent for every case, giving local govern- ments incentive to avoid them. States regulate pipelines as long as their regula- tions ‘‘... do not interfere with or occupy an area already occupied by ICC or DOT regulations.’’'78 Railroads consider promotion of coal slurry pipelines to be contrary to their interests. Because such pipelines may need to cross railroad lands, the issue of eminent domain has become critical, particularly to states in which coal is produced. The use of water by slurry pipelines is subject to stringent water-use laws in most Western states. Two states’ statutes specifically prohibit the use of their water in coal slurry pipelines,'*9 and others allow it only if there is a water surplus. 1° STATE AND LOCAL TRANSPORTATION POLICIES AND PROGRAMS e 63 STATE AND LOCAL TRANSPORTATION POLICIES State and local transportation policies are expressed through legislation, plans and policy statements, and through the interest groups representing those gov- ernments. As part of its activity of gathering policy information from state and local parties, the NTPSC conducted public hearings in Washington, D.C., Seattle, Denver, Los Angeles, Newark and several other locations, during which officials from around the country expressed their views on transport issues and policies. Statements submitted to the NTPSC identified policy issues, and recommended policies either on a modal basis, or on the basis of govern- ment’s role in the provision of transportation. Testimony was received from local officials throughout the country, as well as from the National League of Cities (NLC), the U.S. Conference of Mayors (USCM) and the National Association of Regional Councils (NARC). State legislators and governors testified, as well as public interest groups representing the states, such as the American Asso- ciation of State Highway and Transportation Officials (AASHTO), the National Governors’ Association (NGA) and the National Conference of State Legisla- tures (NCSL).1*' STATE GOVERNMENT ROLE According to policy statements submitted to the NTPSC, state representatives feel that the state function should be to set statewide transportation priorities. Major recommendations were that the states: develop a uniform set of planning guidelines; design multimodal state plans; design TIPs in coop- eration with local governments; provide technical assistance and ffinancial aid for transportation projects; pass laws in support of policies; continue to develop state DOTs; coordinate Federal funding for transportation planning in urban areas; and maintain full responsibility for transport programs within their borders. LOCAL GOVERNMENT ROLE Representatives from state government see three major roles for local governments in transportation: the construction of local transport facilities; the Operation of special transport services; and the planning of facilities and services in cooperation with state governments. Local government representatives focused on the need for increased local control of transportation decisions. Local officials emphasized decentralizing the responsibility for planning, developing and imple- menting urban transportation, allowing municipalities that differ demographically, physically and economi- cally to meet their own needs and goals. FEDERAL GOVERNMENT ROLE Policy statements submitted to the NTPSC recom- mended various modifications to the Federal govern- ment’s role in transportation. State officials empha- sized the need to produce policies for a truly multimodal transportation system, responsive to the needs of the states. They urged that the Federal government continue to give financial and technical assistance. At the same time, they advocated discre- tionary power for states in using these funds, with dollars earmarked for local and regional projects channeled through the states. Officials emphasized the need for less Federal control, especially in the number of categorical grant programs. They also stressed a desire for cooperation in such areas as the A-95 review process, and a need for clarification of a variety of environmental acts. Finally, they called for a restructuring of the U.S. DOT. PLANNING POLICIES Representatives from local governments advocated multimodal, regional transport policies that are con- sistent with other regional programs and plans. Transportation funds should be used to develop programs based on regional needs rather than on funding sources. Railroads and public transportation in particular should be emphasized as stimuli vital to the encouragement of balanced regional growth. FINANCE POLICIES State issues regarding transportation aid include: the need for assured Federal funding of transportation projects, combined with the need for transferability of these funds to different projects with minimal restriction; the provision of Federal aid for transpor- tation projects of national scope; the provision of Federal transit support for construction only; and the elimination of categorical funding restrictions. Local recommendations for funding to urban ar- eas include: provision of long-term Federal financing; making funds available for multimodal purposes; amending Federal-aid highway laws to increase the minimum Federal share of all projects to 80 percent, and to enable any major unit of local government implementing highway programs to distribute high- way dollars under state law; apportioning Federal-aid urban system funds directly to urban counties and parishes according to a formula based on popula- tion; and allowing local officials to control block 64 e TRANSPORTATION ACTIVITY AND INSTITUTIONS grant programs for capital, maintenance and operat- ing expenses. INDIVIDUAL MODAL POLICIES Aviation Major issues identified regarding aviation were: the need for runway rehabilitation; the need for providing commuter air service to smaller communities, as well as for simplifying certification procedures, rules, and regulations affecting commuter airlines; the need for providing funds on a continuing basis so that states may schedule projects in support of their plans; the need for intermodal connections at airports; the need for greater state participation with Federal agencies such as FAA and CAB; the need for the Federal government to develop plans regarding the use of the Airport and Airways Trust Fund; and the partici- pation of states in the development of the National Airport System Plan. Highways Representatives from state governments emphasized construction, maintenance and rehabilitation require- ments of the Interstate System, rural and urban primary roads, and bridges. Among the issues identi- fied were the need for: additional Federal funds for Interstate highways; Federal support of the rural secondary road system; improved traffic manage- ment; continued Federal-aid and simplification of requirements for the Highway Safety Program; reso- lution of truck size and weight issues, either allowing more individual state discretion or more extensive standardization; and modification of Highway Trust Fund allocations. Local officials emphasized that the deteriorating condition of the nation’s highways and bridges is crucial. They advocated flexible funds so that local areas can decide on appropriate use and set effi- cient standards to meet local needs. Bridges both on and off the Federal-aid system are a primary example of such local needs. Railroads The major policy issues formulated by state officials regarding railroads involve planning and rehabilita- tion of facilities and systems. Statements submitted to the NTPSC expressed the following needs: Feder- al programs to fund reconstruction; regulatory re- form policies; programs that support more produc- tive rail labor; Federal funding for railroad facilities handling energy-related traffic; timely funding for states preparing rail plans in accordance with the 4R Act; legislation that would allow transfer of property from carriers to states without the present abandon- ment process, in instances when abandonment seems imminent; programs for rehabilitation of equip- ment and upgrading of deficient bridges and unsafe grade crossings; interaction between states and Amtrak when that organization is planning to change levels of services; and a rail trust fund, financed through user fees or general funds. Transit Major transit interests include: the concept of mass transit corridors; upgraded facilities and rolling stock; a stronger role for states in programs of Federal assistance to local governments; strong local participation in the development of transit for elderly, handicapped and rural residents; all levels of government to participate in funding; and funding to be exempt from the Department of Labor’s interpre- tation of Section 13(c). Multimodal Transportation Because of the need for a national, multimodal, transportation system, recommendations empha- sized: the transfer of money for non-essential sec- tions of the Interstate system to urban transit, as well as for the rehabilitation, restoration and resurfacing of the Interstate system; and more Federal funds for multimodal planning at the state and local levels. Water Transportation Key issues regarding water transportation include the need for: comprehensive planning of waterway systems and their inclusion in national transportation plans; improved coordination of water transport with other modes, with the provision of intermodal trans- fer capabilities in port development; assessment of user fees according to the benefits accruing to the area around a water project; and development of uniform safety standards for construction, mainte- nance, and operation of watercraft. REGULATORY POLICIES The extensive red tape and regulations emanating from various Federal agencies cause major problems for local governments. Policy issues from the local viewpoint include the need for streamlining the EIS process for all TIPs, and the need to end duplication in the Federal review process. 10. ive 2. 13. 14. 15. 16. We STATE AND LOCAL TRANSPORTATION POLICIES AND PROGRAMS ¢ 65 NOTES AND REFERENCES Transportation Association of America (TAA), Transporta- tion Facts and Trends, 14th ed., Washington, D.C.: July 1978, Table: ‘Federal and State Expenditures for Transport Facilities,’ p. 26. See also: Advisory Commission on Inter- governmental Relations (ACIR), Toward More Balanced Transportation; New Intergovernmental Proposals, Report No. A-49, Washington, D.C.: Government Printing Office, 1974, p. 9. “How Washington Is Moving in on the States,’ U.S. News and World Report, 12 June 1978, pp. 41-42. Ibid., p. 42. U.S. Bureau of the Census, Governmental Finances in 1974 and 1975, GF 75, No. 5, Washington, D.C.: September 1976, Table 4. TAA, Transportation Facts and Trends, ‘‘Federal and State Expenditures,”’ p. 26. See, for example: Charles L. Dearing, American Highway Policy, Washington, D.C.: The Brookings Institution, 1941; and Robert S. Friedman, ‘‘State Politics in Highways,” in Politics in the American States, 2nd ed., ed. by Herbert Jacobs and Kenneth N. Vines, Boston: Little, Brown, and Co., 1971, pp. 477-519. See: Dudley E. Pegrum, Transportation Economics and Public Policy, 3d ed., Homewood, Ill.: Richard D. Irwin, Inc., 1973, pp. 268-279; and Peter Wall, American Bureaucracy, 2d ed., New York: W. W. Norton and Co., 1977, pp. 39-47. Federal-Aid Road Act of 1916, 39 Stat. 355. V. O. Key, Jr., The Administration of Federal Grants to States, Chicago: Public Administration Service, 1937, pp. 376-383. Daniel J. Elazar, ‘‘The Shaping of Intergovernmental Rela- tions in the 20th Century,” in The Annals of the American Academy of Political and Social Science, 359 (May 1965), pp. 10-22. The Federal-Aid Highway Act of 1956, Pub. L. 627, 70 Stat. 374; and Highway Revenue Act of 1956, Pub. L. 627, 70 Stat. 387. For a discussion of the Great Society programs and policies, see: James L. Sundquist, Making Federalism Work, Washington, D.C.: The Brookings Institution, 1969; and David M. Littig, ‘‘The Politics of Mass Transportation: State and City Policy-Making in a Federal System,” unpubl- ished Ph.D. dissertation, University of Wisconsin, 1974, pp. 57-82. Program planning refers to Federal legislative and adminis- trative requirements that comprehensive plans be submit- ted and approved prior to the receipt of grant funds. 3C refers to continuing, comprehensive, and cooperative plan- ning, as stated in the Federal-Aid Highway Act of 1962, 23 U.S.C. Section 134 (1978), Pub. L. 87-866, 76 Stat. 1145. National Housing Act of 1954, section 701 as amended, 40 U.S.C. Section 461 (1978), Pub. L. 83-560, 68 Stat. 590, 640. Urban Mass Transportation Act of 1964, 49 U.S.C. section 1601 et seg. (1976), Pub. L. 88-365, 78 Stat. 302. (Hereafter cited as UMT Act). Department of Transportation Act of 1966, 49 U.S.C. Section 1651 (1976), Pub. L. 89-670, 80 Stat. 931. The State Assembly authorized approximately half the funds requested by the Welfare and Highway departments for tickets and transport services respectively in 1979. For the first time in TRIP’s history, there was also minimal financial assistance from the localities. Program officials anticipate the balance of their budget will come via emergency relief funding from the Governor's office. L. Andre Roy, Senior Planner, Rural Transit, Transportation 18. 19. 20. el: 32. 37. 38. 39. Division, West Virginia Department of Finance and Adminis- tration, Charleston, West Virginia, telephone interview, 10 October 1978, and Susan O’Connell, Accountant, Rural Transit, Transportation Division, West Virginia Department of Finance and Administration, Charleston, West Virginia, telephone interview, 27 April 1979. TRIP refers to Transpor- tation Remuneration Incentive Program, which was original- ly financed by several Federal agencies. U.S. Department of Transportation (DOT), Office of Trans- portation Planning, ‘‘Status of Statewide Multimodal Plan- ning,” by Barbara Ducoff, unpublished staff report, Wash- ington, D.C.: 1978, p. 2. See U.S. Department of Transportation (DOT), Office of Transportation Systems Analysis and Information, Urban Analysis Program, Evolution of Urban Transportation Plan- ning, by Edward Weiner, Washington, D.C.: April 1976, p. 10. Federal-Aid Highway Act of 1970, 23 U.S.C. Section 101 ef seq. (1978), Pub. L. 91-605, 84 Stat. 1713. Airport and Airways Development Act of 1970, Pub. L. 91— 258, Title Il, 84 Stat. 236; and the Regional Rail Reorgani- zation Act of 1973, Section 402(c\(1), 45 U.S.C. Section 762, Pub. L. 93-236. ACIR, Toward More Balanced Transportation, p. 141. Ibid., p. 140. DOT, “Status of Statewide Multimodal Planning,” p. 1. Ibid., appendix, p. 12. Utah Code Annotated, Replacement Vol. 7A (1977 Supp.), Section 6349-3. ACIR, Toward More Balanced Transportation, p. 300. Ibid., p. 152. American Public Transit Association, Transit Fact Book, 1975—76, Washington, D.C.: 1978, p. 39. It should be noted that the UMT Act allowed only public bodies to be the recipients of Federal funds. ACIR, Toward More Balanced Transportation, p. 55. Royce Hanson, Chairman, Montgomery County Planning Board of the Maryland National Capital Park and Planning Commission, Silver Spring, Maryland, interview, 12 June 1978. National Association of Counties Research Foundation, County Involvement in Rural Passenger Transportation: A Report on the Findings of the Rural Public Transportation Project, by Scott Forsyth, Draft Report, Washington, D.C.: November 1977, p. 2. ACIR, Toward More Balanced Transportation, p. 56. Ibid., p. 162. Federal-Aid Highway Act of 1973, 23 U.S.C. Section 121 et. seq. (1978), Pub. L. 93-87, 87 Stat. 250. See also: U.S. DOT, Evolution of Urban Transportation Planning, p. 24. U.S. Office of Management and Budget (OMB), Evaluation, Review, and Coordination of Federal and Federally Assisted Programs and Projects, Circular A-95 Revised, 2 January 1976, Federal Register, Vol. 41, No. 8, 13 January 1976, p. 2057. National Environmental Policy Act of 1969, 42 U.S.C. Section 4321 et. seq. (1977), Pub. L. 91-190, 83 Stat. 852. These guidelines are set forth in: U.S. Department of Transportation (DOT) and U.S. Environmental Protection Agency, ‘‘Memorandum of Understanding . . . Regarding the Integration of Transportation and Air Quality Planning,”’ Washington, D.C.: 16 June 1978. In December 1978, grants were also made available to MPOs for joint air quality and transportation planning. See CleanAir Act Amendments of 1977. Pub. L. 95-95, Section 175. ACIR, Toward More Balanced Transportation, p. 56. 66 e TRANSPORTATION ACTIVITY AND INSTITUTIONS 40. 41. 42. 43. 44. 45. 46. 47. 48. 53. 54. Do} 56. 57. ACIR, ‘‘Regional Decision Making: New Strategies for Substate Districts,” in Substate Regionalism and the Feder- al System, Vol. 1, Report No. A-43, Washington, D.C.: 1973, p. 31. Massachusetts Port Authority Enabling Act, M.G.L.A. c. 91 App., section 1-1 et. seg. (1969), Chapter 265 of the Acts of 1956, Commonwealth of Massachusetts. A more complete discussion of MROs is contained in NTPSC’s Special Report No. 4. See National Transporta- tion Policy Study Commission (NTPSC), State and Local Transportation Policies and Programs, Report No. NTPSC/SR-79/04, Washington, D.C.: April 1979. Rail Passenger Service Act of 1970, 45 U.S.C. Section 501 (1972), Pub. L. 91-518, 84 Stat. 1328; Federal Railroad Safety Act, 45 U.S.C. Section 421 et. seq. (1972), Pub. L. 91-458, 84 Stat. 971; and Railroad Revitalization and Regulatory Reform Act of 1976, 45 U.S.C. Section 801 (1978), Pub. L. 94-210, 90 Stat. 33. John Fuller, ‘‘Second Generation State Rail Planning,” in Proceedings of the Regional Rail Planning Seminars, Fall 1976, held in 5 FRA regions under the cosponsorship of the Office of National Rail Freight Assistance Programs, U.S. Federal Railroad Administration (FRA), and the Council of State Governments, ed. by James F. Runke and Norbert Y. Zucker, Report No. FRA-RFA-77—01, Washington, D.C.: FRA, 1977, p. 103. Michael J. Dalton, “Rail Subsidy Costs and Other Stan- dards,”’ in Proceedings of the Regional Rail Planning Seminars, Fall 1976, pp. 19, 21. Milton Pikarsky and Daphne Christensen, Urban Transpor- tation Policy and Management, Lexington, Mass.: Lexing- ton Books, 1976, p. 63. For an example of a bicycle route plan, see: Barton- Aschman Associates, Inc., Bicycle Transportation Plan and Program for the District of Columbia, prepared for the District of Columbia, Department of Highways and Traffic, Washington, D.C.: June 1975. See: Harbridge House, Inc., Availability and Use of Rights of Way: pursuant to section 809(a) of the Railroad Revitali- zation, and Regulatory Reform Act, submitted to the U.S. Department of Transportation, Report No. DOT—-TES—77— 001, Boston, Mass.: Harbridge House, Inc., 1977. (Avail- able through National Technical Information Service.) See also Citizens’ Advisory Committee on Environmental Quali- ty, From Rails to Trails, Washington, D.C.: Government Printing Office, 1975. Albert Grant, Director of Transportation Planning, Metro- politan Washington Council of Governments, Washington, D.C., interview, 16 June 1978. Ibid. Ibid. The Council of State Governments, State Planning and Federal Grants, Chicago: Public Administration Service, 1969, p. 9. Jean Lloyd, Acting Director, National Association of State Aviation Officials, Washington, D.C., interview, 31 July 1978. Ibid. John Nammack, Director of the Office of Community and Congressional Relations, Civil Aeronautics Board, Wash- ington, D.C., interview, 3 August 1978. An NTPSC study compares the transportation expenditures of each level of government. See NTPSC, Government Financial Involvement in Transportation: An Analysis of Data prepared by Mitre Corporation, Draft Special Report No. 8, Washington, D.C.: March, 1979. Such comparisons tend to generate considerable controversy over data bases and accounting. Because some states did not participate in the survey which furnished the data for Table 8, the table provides a 58. 59. 60. 61. 62. 63. 64. 65. 66. 67. 68. 69. 70. tik fe; 73. 74. 75. 76. ee 78. 79. selected overview of how state transport dollars were spent. U.S. Federal Aviation Administration, National Airport Sys- tem Plan, 1978-1987, Washington, D.C.: Government Print- ing Office, 1978, pp. 1-2. U.S. Bureau of the Census, State Government Finances in 1976, Washington, D.C.: Government Printing Office, Au- gust 1977, p. 39. U.S. Bureau of the Census, City Government Finances in 1975-1976, Washington, D.C.: Government Printing Office, 1977, pp. 98-99. U.S. Federal Aviation Administration, Seventh Annual Re- port of Operation under the Airport and Airway Develop- ment Act of 1970, Washington, D.C.: 1977, p. 20. The Council of State Governments, The Book of the States, 1978-1979, Lexington, Ky.: 1978, p. 355. For a detailed discussion of these issues, see: Dorothy Nelkin, Jetport: The Boston Airport Controversy, New Brunswick, N.J.: Transaction, Inc., 1974. American Transportation Advisory Council (ATAC), Trans- portation Financial Needs During the Next Decade (1978- 1987), Washington, D.C.: 1977, p. 15. U.S. Federal Highway Administration, Highway Statistics; Summary to 1975, Washington, D.C.: Government Printing Office, 1977, Table PT 205: “Cost Trends—Highway Maintenance and Operation,”’ p. 161. U.S. Department of Transportation (DOT), Office of the Secretary, Transporting the Nation’s Coal—A Preliminary Assessment, prepared by the Coal Transportation Task Force, Washington, D.C.: January 1978, p. II-10. U.S. Department of Transportation (DOT), Special Bridge Replacement Program—Seventh Annual Report of the Secretary of the Department of Transportation to the Congress of the United States in Compliance with Section 144, Title 23, United States Code, Washington, D.C.: Government Printing Office, 1978, p. 4. Federal-Aid Highway Act of 1970, 23 U.S.C. Section 144 (1978), Pub. L. 91-605, Title Il, Section 204a. Surface Transportation Assistance Act of 1978, 23 U.S.C. Section 144 (1978). U.S. DOT, Special Bridge Replacement Program—Seventh Annual Report, p. 6. U.S. Department of Transportation (DOT), Special Bridge Replacement Program—Sixth Annual Report of the Secre- tary of the Department of Transportation to the Congress of the United States in Compliance with Section 144, Title 23, United States Code, Washington, D.C.: Government Print- ing Office, 1977, p. 1. DOT, Special Bridge Replacement Program—Seventh An- nual Report, p. 6. William R. Black and James F. Runke, The States and Rural Rail Preservation: Alternative Strategies, Lexington, Ky.: The Council of State Governments, 1975, pp. 61-62. See also: State of Vermont Transportation Board, First Biennial Report of the Vermont Transportation Board, July 1, 1974- June 30, 1976, pp. 61-62. Dalton, ‘‘Rail Subsidy Costs and Other Standards,” pp. 15-16. The Local Rail Service Assistance Act of 1978, Pub. L. 95— 607, 91 Stat. 3059. Clifford Elkins, Assistant Deputy Director, American Associ- ation of State Highway and Transportation Officials (AASH- TO), Washington, D.C., interview, 18 July 1978. Rail Passenger Service Act of 1970, 45 U.S.C. Section 563 (1978), Pub. L. 91-518. Amtrak Improvement Act of 1974, 45 U.S.C. Section 563 (1978), Pub. L. 93-496. The Regional Rail Reorganization Act of 1976 specified that non-Federal sources should cover 50 percent of total operating losses and associated capital costs (45 U.S.C. 80. 81. 82. 83. 84. 85. 86. 87. 88. 89. 90. 91. 92. 93. 94. 95. 96. 97. 98. 99. STATE AND LOCAL TRANSPORTATION POLICIES AND PROGRAMS e 67 Section 563 (1978), Pub. L. 94-210). The Rail Transporta- tion Improvement Act of 1976 amended this requirement by substituting the phrase ‘‘solely related costs’’ for ‘‘total operating losses” (45 U.S.C. Section 501 note (1978), Pub. L. 94—555). National Railroad Passenger Corporation (Amtrak), ‘‘Rail Passenger Services,’”’ in Proceedings of the Regional Rail Planning Seminars, Fall 1976, p. 70. For example, the Massachusetts Bay Transportation Au- thority, Southeastern Pennsylvania Transportation Authori- ty, and the Chicago Regional Transportation Authority. John L. Hazard, “The States’ Role in U.S. Port Develop- ment,’’ unpublished report, East Lansing, Michigan: Gradu- ate School of Business, Michigan State University, 1978, p. rae Ibid., p. 4. Ibid. Ibid., p. 6. For some of the potential problems of containerization, see: U.S. Maritime Administration, Office of Commercial Devel- opment, Office of Port and Intermodal Development, Cur- rent Trends in Port Pricing, prepared by Paul A. Amundsen, Washington, D.C.: 1978; and U.S. Maritime Administration, Office of Ports and Intermodal Systems, Division of Ports, Public Port Financing in the United States, Washington, D.C.: Government Printing Office, 1974, p. 9. These projections were derived from the U.S. Maritime Administration, Division of Economic and Operational Anal- yses, A Long Term Forecast of U.S. Waterborne Foreign Trade, Vol. 1, Washington, D.C.: November 1977, p. Il-2, and adjusted for the NTPSC scenarios by Peat, Marwick, Mitchell and Co., Washington, D.C., 1978. John L. Hazard, ‘‘The States’ Role in U.S. Port Develop- ment,”’ p. 9. R. L. Banks and Associates, Stanford Research Institute, and Real Estate Research Corporation, Study and Evalu- ation of Urban Mass Transportation Regulation and Regu- latory Bodies, Vol. 1: Summary and Main Report, prepared for the Office of Program Planning, U.S. Urban Mass Transportation Administration, Report No. UMTA-TRD—65— 72—1, Washington, D.C.: May 1972, pp. 5-6. Surface Transportation Assistance Act of 1978, 49 U.S.C. Sections 1612, 1614 (1978), Pub. L. 95-599, Section 311, 313, 92 Stat. 2748-50 (amending the UMT Act, Section 16(bX1).) Rehabilitation Act of 1973, 29 U.S.C. Section 794 (1978). See: DOT, Notice of Proposed Rulemaking, Part 27: Nondiscrimination on the Basis of Handicap in Programs and Activities or Benfitting from Federal Financial Assis- tance, Washington, D.C.: June 1978; and DOT, Office of Assistant Secretary for Governmental and Public Affairs, “Adams Proposed Plan to Give Handicapped Access to Transit Systems,’’ News Release, Washington, D.C.; 3 April 1979. STA Act, 49 U.S.C. Section 1607 (1978). National Mass Transportation Assistance Act of 1974 Section 5, 49 U.S.C. Section 1604(d)1) (1977), Pub. L. 93— 503, 88 Stat. 1565. STA Act, 49 U.S.C. Section 1614 (1978). U.S. Interstate Commerce Commission, Bureau of Econom- ics, The Intercity Bus Industry: A Preliminary Study, Wash- ington, D.C.: May 1978, p. 101. Wilfred Owen, Transportation for Cities, Washington, D.C.: The Brookings Institution, 1976, p. 16. Federal-Aid Highway Act of 1973, Pub. L. 93-87, Section 104(aX(2), 87 Stat. 250. See also: U.S. General Accounting Office, Why Urban Systems Funds Were Seldom Used for Mass Transit, Report No. CED-77—-49, Washington, D.C.: TIAA eke UMT Act, 49 U.S.C. Section 1609(c) (1977). 100. 101. 102. 103. 104. 105. 106. 107. 108. 109. 110. aaive gfe eb 113. 114. Edward A. Daniel, Director, Office of Transportation Plan- ning, Montgomery County Department of Transportation, Rockville, Maryland, interview, 22 June 1978. For example see: David M. Alshuler, Labor Protection, Labor Standards and the Future of Paratransit, prepared for the 58th Annual Meeting of the Transportation Research Board, Washington, D.C., January 1979, and the Special Conference on Paratransit of the Transportation Research Board, Williamsburg, Virginia, 12 February 1979, Cam- bridge, Mass: Multisystems, Inc., 1979. See also: U.S. Department of Labor, Office of the Assistant Secretary for Policy, Evaluation, and Research, The Economic Cost Impact of the Labor Protection Provisions of Section 13(c) of the Urban Mass Transportation Act of 1964, Part One: Executive Summary: Description of Study Methodology, Analysis and Conclusions, Part Two: Appendices: Summar- ies of the 13(c) Experience in the Thirteen Transit Systems Interviewed for the Study, by Fredric B. Siskind and Ernst W. Stromsdorfer, Report No. PB 279 918 and PB 280 072, Washington, D.C.: May 1978; James L. Stern, et al., The Legal Framework for Collective Bargaining in the Urban Transit Industry, prepared for U. S. Department of Trans- portation, Madison, Wisconsin: Industrial Relations Re- search Institute, University of Wisconsin, 1976. Charles River Associates, Inc., An Analysis of the Impacts of Selected Transportation Issues on National Transporta- tion Goals, prepared for the NTPSC Final Report, Vol. II of Two Volumes, Report No. CRA 371, Cambridge, Mass: April 1978, pp. R—22 to 24. UMT Act, as amended, Section 5 49 U. S. C. Section 1604 (1978). STA Act, Sections 303, 313, 92 Stat. 2738, 2748-50. For a more detailed discussion of this concept, see: National Academy of Sciences, National Research Council, Transportation Research Board, Paratransit: Proceedings of a Conference held November 9-12, 1975, sponsored by the U.S. Urban Mass Transportation Administration, Spe- cial Report No. 164, Washington, D.C.: 1976. Ibid., p. 31. U.S. President, Highway and Transit Programs; Message from the President of the United States to the Congress, House Document No. 95—284, 95th Cong., 2d sess., Washington, D.C.: Government Printing Office, 1978, p. 1. National Association of State Aviation Officials, prepared statement and testimony, in U.S. Congress, Senate, Com- mittee on Commerce, Aviation Subcommittee, Extension of the Airport Development Aid Program: Hearings on S. 1455, held 9 September 1975, Serial No. 94-33, 94th Congress, 1st Session, Washington, D.C.: Government Printing Office, 1975, p. 146-180. See NTPSC, unpublished transcript containing testimony of various state government officials presented to National Transportation Policy Study Commissioners in Public Hear- ings held in Los Angeles, California, 8 August 1977; Seattle, Washington, 10 August 1977; and Denver, Colorado, 12 August 1977. U.S. General Accounting Office, Need for More Federal Leadership in Administering Nonurbanized Area Public Transit Activities, Report No. CED—78—134, Report to the Secretary, U.S. Department of Transportation, Washington, D.C.: 1978, p. 4. Royce Hanson, interview. National League of Cities, Statement of the National League of Cities on Issues in Transportation for the National Transportation Policy Study Commission, Wash- ington, D.C.: 1 July 1977. Ibid. William Gorham and Nathan Glazer, eds., The Urban Predicament, Washington D.C.: The Urban Institute, 1976, p. 337. 68e TRANSPORTATION ACTIVITY AND INSTITUTIONS 115. 116. Use 118. 119. 120. 121. 122. 123. U.S. DOT, Office of Environment and Safety, ‘‘Total Estimated Costs of Compliance with Proposed DOT Sec- tion 504 Regulations,’’ Table | ina memorandum transmit- ting a summary of the U.S. DOT’s Notice of Proposed Rulemaking (NPRM) to implement Section 504 of the Rehabilitation Act of 1973, Washington, D.C.: 6 June 1978. ACIR, Toward More Balanced Transportation, p. 287. Mary King, Deputy Director, ACTION, Washington, D.C., interview, 23 January 1978. U.S. President, Highway and Transit Programs, p. 1. See NTPSC, unpublished transcript containing testimony of various state and local government officials at: Washington, D.C. Public Hearings, 22-24 June 1977; and Denver, Los Angeles, and Seattle Public Hearings. J. Clarence Davies, Ill, and Barbara S. Davies, The Politics of Pollution, second ed., Indianapolis: Bobbs-Merrill Co., 1975, p. 15. Air pollution, safety and other externalities are covered more fully in Chapter 7. The Clean Air Act, as amended August 1977, 42 U.S.C. Section 7506(a) and (b) (1978), Pub. L. 95-95, Section 176(a), (1), (2), (3), and 176(b), 91 Stat. 749-50. Ibid. Ibid., 42 U.S.C. Section 7504 (1978), Pub. L. 95~—95, Section 174(a), 91 Stat. 748. 124. 125. 126. 127. 128. 129. 130. 131. Ibid., 42 U.S.C. Section 7506(a) and (b) (1978), Pub. L. 95-95, Section 176(a), (1), (2), (3) and 176(b), 91 Stat. 749-50. Ibid. Council on Environmental Quality, Environmental Quality— 1976, Annual Report, Washington, D.C.: Government Print- ing Office, 1976, p. 13. Royce Hanson, interview. University of Tulsa, College of Law, National Energy Law and Policy Institute, ‘‘The Legal and Regulatory Issues for Transporting Coal by Slurry Pipeline,’’ Task Report IV, in U.S. Office of Technology Assessment (OTA), Task Re- ports: Coal Slurry Pipelines, Vol. \|, Part 2, Washington, D.C.: 1978, p. Em—14. OTA, Task Reports: Coa/ Slurry Pipelines, Task Report IV, p. W—38. See also: 82 OKI. St. Ann., Section 105.12 (1978); and Section 89-867(2), Vol. 6 (Part 1) Revised Codes of Montana, 1977 Cumm. Supp. OTA, Task Reports: Coal Slurry Pipelines, Task Report IV, p. W-41. The testimony of state and local government officials before the NTPSC is more fully described in NTPSC, State and Local Transportation Policies, Report No. NTPSC/SR-— 79/04, Washington, D.C.: 1979, especially Chapter 4. Comparative Transportation Policies in Other Countries INTRODUCTION Developments in the past few decades have brought the United States and the developed countries of Europe and Asia closer together in terms of transpor- tation experience and public policy issues. This growing comparability makes the experience of other nations with various transportation policy ap- proaches—both the successes and _failures—in- creasingly relevant to U.S. policy formation. The shared nature of the energy crisis, in particular, has reinforced the commonality of problems and poten- tial solutions facing all developed nations. Still, care is required in transferring experience, given the real differences in physical and economic circumstances between nations. Materials identifying the domestic transportation policies of selected countries, relating to all modes and market sectors, are assembled in this chapter. Five major policy categories used in the Commis- sion’s work provide a framework for discussion. These categories are: regulation; ownership and op- eration; finance, pricing, and taxation; planning and information; and government organization. The energy situation illustrates the benefits that can be derived from international discussions of technology and public policy. Prior to the energy cri- sis, domestic policies were generally not discussed in international forums for two reasons: (1) nations did not want other countries intruding in their internal affairs; and (2) nations believed their unique circum- stances precluded application of policies developed in other countries. Discussions among developed na- tions were limited mainly to those national policies which directly affected other countries, and the dis- cussions were formal and self-interested. There were exceptions, of course. The European Conference of Ministers of Transport and the Organization for Eco- nomic Cooperation and Development (OECD) had addressed domestic policy questions in several ar- eas well before the stimulus of the energy crisis. However, the common threat of energy shortage made clear that the policy tools available to nations (even those with substantially different political sys- tems and physical circumstances) were not dramati- Cally different, and that policies tried and proved suc- cessful in one nation could also prove successful in other nations, if care was used in selection and appli- cation.' The range of comparative transportation policy is as broad and diverse as the disparate problems and circumstances of the nations involved. In order to focus this review, nations and policies have been se- lected on the basis of relevance to U.S. concerns, and comparability with U.S. experience. BENEFITS OF COMPARATIVE POLICY STUDIES Time and money may be saved and mistakes avoided if nations learn from the policy experiences of other countries. Many reasons exist for studying domestic policies: 1. Policy alternatives under consideration in the U.S. may have been considered and researched else- where. Experience may have demonstrated the outcome of a particular policy, at least for a given set of circumstances. Even if circumstances are dissimilar, the experience may help reduce the number of avenues to be investigated. Again, the energy situation is an excellent example. The tools available to each nation were roughly the same. But innovative ideas arose as each nation selected different policy tools to suit its situation and values. The U.S. learned about alternatives selected elsewhere, how they worked, why and what factors controlled success. For instance, the U.S. avoided gasoline rationing. Two countries in Europe, Sweden and the Netherlands, did try it. They discovered that unless the shortage is great- er than 20 to 25 percent, rationing creates more problems than it solves.? 2. Other nations facing comparable problems may have generated innovative solutions. Often simply identifying where a similar problem has occurred, and where it has not, can be instructive. (An ex- ample of this point is the Singapore road-pricing experiment in which auto access to downtown at 69 70 @ TRANSPORTATION ACTIVITY AND INSTITUTIONS peak hours requires an expensive permit. Al- though there are few more dissimilar countries than the U.S. and Singapore, the U.S. DOT is pro- viding funds to monitor the effects of the Singa- pore project.)® 3. Methods and institutions developed in disparate circumstances provide a_ sensitivity test for choice. Often the very differences between na- tions are valuable. Distortions introduced by these differences illustrate the strengths and weaknesses of prospective policies under varying conditions. Different values employed in decision- making elsewhere can provide a methodological and political testing ground for prospective condi- tions in the U.S. (The demand for autos and sin- gle-family homes in Sweden, despite excellent town planning, extensive transit service and high auto-related costs, indicates a great deal about the strength of individual demand for these goods.) DETERMINING RELEVANCE AND COMPARABILITY Some of the examples of benefits presented above support the point that strict comparability between nations is not always essential to benefiting from the experiences of other nations. Sometimes the differ- ences themselves are a valuable part of the lesson. However, in many cases, the comparability between circumstances in different nations is highly important to the relevance of the potential policy interchange. The factors to be considered in determining com- parability are presented briefly here. Because the success of many policies depends on their ability to affect choices made by purchasers and providers of transportation, the comparability of the environment in which choices are made is often the central issue in determining transferability. Comparative analysis involves three major considerations: 1. Socio-Economic Comparability. Are the earning power and demographic characteristics of the populations involved similar? 2. Comparability of the General Decision Environ- ment. Are the general goals for transport the same? Is the marketplace context comparable? 3. Comparability of the Specific Decision Environ- ment. How broad is the decision context? What constraints are placed on alternatives? While extensive research could be undertaken on each occasion where comparability is in question, in fact, most cases of policy comparison are sufficiently self-limiting as to make the bounds of comparability clear. FACTORS IN TRANSFERABILITY Comparability determination leads naturally to as- sessment of transferability. However, the transfer of public policies from one country to another intro- duces the political decision-making process, which rests on a combination of attitudes shaped by culture and history. The attitudes underlying the formulation of government transportation policies in Europe and Japan differ significantly from U.S. attitudes. The Eu- ropean and Japanese outlook was influenced by the early formation of state railways of national scope (mainly before 1940) and the late rise of the motor vehicle as a widely used means of transportation (af- ter 1955 or 1960, except in England).® Railways in other countries have been instruments of national policy for 50 years or more. State proprie- tary interest has been expressed in a very strong “railroads first’ policy, reflected in part in intermodal coordination and the division of markets. Railroad enterprises have been directed to support the devel- opment policies adopted by a state, and have been expected to give full cooperation.’ This policy con- trasts sharply with U.S. practice, which has assumed that the sum of actions of individual enterprises act- ing in their own interest (or under regulatory re- straint) would satisfy a national interest not defined in any plans or explicit statements of objectives. An effect of long-time public ownership is that rail- roads in other countries became instruments of so- cial policy. In addition to ubiquitous service, the rail- roads provided free and reduced-fare transportation for select groups and they became employers of last resort. The latter function has been widespread, es- pecially in the southern tier of European countries bordering the Mediterranean.® This role has been so comfortable politically that reduction of rail employ- ment has been very difficult, even under extreme pressure from the World Bank in connection with modernization loans. Social burdens are a major cause of the huge deficits incurred by practically all state railways, and have prompted many of the steps taken to maximize railway revenues, even to the ex- tent of very restrictive controls on for-hire truck and bus transport.'° Some countries have become disenchanted with using railways as instruments of national policy. De- spite strong promotional support, most nationalized railways incur huge deficits and, in fact, no national- ized railway has reported a profit since 1964."' Also, nationalization is failing, in the long run, to prevent rail rationalization. An example is the British railway system which was nationalized in 1948. Since that time the British government has eliminated 387,000 jobs (60 percent of its work force), and 9,000 track miles (45 percent of its total).'* Similar cutbacks are COMPARATIVE TRANSPORTATION POLICIES INOTHER COUNTRIES e 71 either occurring or proposed in Japan, France, and West Germany.'* Attitudes toward the motor vehicle, especially pri- vate cars, were shaped during a 50-year period in which cars were universally viewed as a highly taxa- ble luxury of the wealthy, not an everyday necessity supplanting public transportation. In Europe, high gas taxes, restricted parking, and heavy purchase taxes are common, even though auto owners are now in the majority.'* During this same period the U.S. was fostering, by public actions, the widespread use of private cars. LESSONS AND OPPORTUNITIES There may be policies of other nations that are worth significant consideration in U.S. policy formulation. Such policies are explored below, using the NTPSC’s functional categories to link the observations of oth- er national experience to sectors of U.S. policy con- cern. Relevant policies in each sector are set out, followed by a brief discussion of differences in goals and objectives between the U.S. and the nations whose policies have been investigated. REGULATION Regulation is one of the more important areas for cross-national comparison, although it is also the one in which comparability is the most difficult to establish. Regulatory policy often moves through phases emphasizing greater or less control. Exami- nation of the policies of countries in advanced regu- latory phases can provide significant insight. Intercity Passenger Transport A notable regulatory policy affecting intercity trans- port service is the complete ban on intercity buses in some countries, where they might compete with rail services. In Switzerland, this policy is determined by national planning in which the best mode is selected by government planners; service by that mode is then supported and the competing mode is banned.'® In the U.K., bus is most often used as the mode provid- ing intercity access to inhabitants of rural low-income areas, where demand does not support rail service.'® In many countries, bus and rail are seen as alterna- tive solutions to the same problem, with selection of one or the other based on demand levels, existing rail right-of-way and terrain. They are rarely offered as services operating in parallel. In Spain, for in- stance, bus carriers have been taxed at three levels, at an increasing rate as the carrier’s route comes closer to paralleling rail service.'? Regulatory con- straints do not usually extend to charter bus opera- tions.'® In European transportation, fewer than 10 percent of the major airports are interconnected.’ Route controls generally support a “‘hub’’ approach, with the national capital as the hub fed by flights from the national hinterland.?° Few flights from secondary cit- ies provide direct service, national or international, to other cities.2’ Air entry in Australia is controlled by strict rules on the import of commercial aircraft.?2 Freight Transport European freight transport has been moving toward rate and entry deregulation. Most European coun- tries, Australia, and Canada have shown preference for deregulated rail and truck services. West Germa- ny and Japan, on the other hand, have retained sub- stantial regulatory control. Several trends are dis- cernible in this policy area: 1. Entry and rate deregulation is practically com- plete in the U.K. and France. Although both coun- tries are interested in protecting their rail systems, the approach has been to strengthen the rail- roads by freeing them from regulation. The na- tionalized rail system in the U.K. also provides trucking services. Safety regulation of trucking in the U.K. has been transferred to motor vehicle licensing authorities.?° 2. Controls on the capacity of the truck fleet were used in the past in France, West Germany, and the U.K. to limit trucking growth. Similar capacity controls are employed for coastal shipping in Ja- pan to limit competition with Japan’s railroads. In France, a ‘‘normalizing’’ subsidy to the rail system is provided because it is believed that truckers do not fully pay the costs to the roadway engendered by heavy vehicles. In West Germany, a truck quo- ta system has caused high prices for truck operat- ing certificates. In the U.K., truck deregulation has caused a shift from private to for-hire truck- ing.24 3. The Common Market (EEC) has exerted consider- able influence on international surface-freight regulation, which affects domestic policies. An important EEC regulation is control of truck driver activity, including maximum hours per day (8), and per week (48). A Swiss regulation prohibits large trucks from moving on weekends, a policy de- signed to support rail and reduce conflicts with tourism. A similar policy is employed in France.% Urban Transport Regulation in urban transport is limited, but more ex- tensive than in the U.S. The focus of most regulatory 72 @ TRANSPORTATION ACTIVITY AND INSTITUTIONS Extensive use of quasi-public corporations in France to operate toll roads is an important part of — French ownership and operating policies. However, | high tolls and poor road quality have had the effect | of diverting trucks back onto the older rural-road | policy is toward protecting city centers from impacts of the auto and truck. Particularly significant policies include: 1. Extensive use of pedestrian areas, or ‘‘auto-free zones.”’ Almost all major European cities have such areas, generally encompassing and protect- ing medieval city centers. In some cases only transit access is permitted; in others no vehicles at all are permitted. Extension of these concepts to residential areas is a recent change.”° 2. Acomplementary policy to pedestrian areas is the use of traffic ‘‘cells.”” The downtown is divided into ‘‘cells’’ and access to each is possible only from the periphery. No access between cells is permitted, thus forcing through traffic onto cir- cumferential facilities.2” 3. Strict on-street and off-street parking regulations are often employed to reduce the amount of park- ing available or to make it prohibitively expensive for all-day use.?8 4. Right-of-way policies are considerably more strin- gent than in the U.S. In most major cities, regula- tion almost prohibits additional land-taking for transportation, particularly for freeway-type de- velopment. This ban has placed design emphasis on intense utilization of existing road space, in- cluding use of exclusive facilities for transit or bi- cycles. It has also focused on diverting traffic, especially trucking, around cities via ‘‘ring-roads”’ (i.e., U.S. “‘beltways’’).?9 OWNERSHIP AND OPERATION Operating and service policies in Europe emphasize integrated and coordinated transport service to a greater degree than in U.S. practice. Intercity Passenger Transport In intercity passenger transport, the organization of bus and rail services into an integrated system, with coordinated schedules and prices, has proceeded far beyond the U.S. At least in part, integration is a product of replacement bus service following the routes of abandoned rail passenger service. There are also strong links between intercity and urban sur- face-transit modes and between transit and airports. It is recognized that terminal delays strongly deter- mine the ability of transit to compete with the auto- mobile. For trips under 200 miles, terminal delays make rail 30 to 40 percent slower than the auto; rail’s potentially higher speeds do not compensate for ter- minal delay up to distances of approximately 500 miles. To overcome these constraints, operating poli- cies are directed at attaining rail speeds in excess of 60 mph (100k/h), including all stops.*° system.*' National development policies recognize the role of transport service availability in regional develop- ment. For example, the Japanese national transport plan is specifically designed to promote the shift of population and economic activity away from the pop- ulous Pacific corridors.*? In Europe, proposals of the OECD for policy consideration have included special services to assist the development of secondary cor- ridors.** Tourism plays a major role in service poli- cies, unlike the U.S. situation. Thus, although regular air service between cities is high priced, substantially discounted fares have traditionally been available on special services, such as charters to non-urban tour- ist centers. FINANCE, PRICING, AND TAXATION The major outlines of pricing and finance policies in other developed countries are similar to U.S. polli- cies. Although the general principle behind many of these European policies is that users should pay the costs generated by their use of the transportation system, the degree to which this principle is applied varies considerably from country to country and from mode to mode. Despite this variation, the principle still serves to characterize the direction and intent of pricing policies in most developed countries. A signif- icant result of application of the principle is that ex- ceptions to it must be openly identified and carefully justified.*° The major controversies regarding the ap- plication of this principle have occurred in the area of highway finance. Although highway users as a group may pay more than the cost of highway use, in many countries—notably England, France, Germany, Swit- zerland, and Australia—statements suggest that the heaviest trucks are not adequately covering the costs they exact on the road system.** In each of these countries, remedial policies are under consid- eration in the form of higher user fees for motor car- riage. There are also significant policy differences to be noted. Some of those relevant to U.S. policy con- cerns are discussed below. Intercity Passenger Transport In intercity passenger transport the extent to which pricing and finance policies are employed to direct activity toward a preferred mode are extraordinary, by U.S. standards; for example: COMPARATIVE TRANSPORTATION POLICIES IN OTHER COUNTRIES e 73 . Highway use taxes not only repay highway costs, but also generate large surpluses assigned to oth- er transport areas or to general revenue. In France these funds accrue from high fuel taxes (approximately $2.00 per gallon) and an extensive toll system on the major intercity express highway routes. In West Germany surplus highway fees are allocated to support rail deficits. In addition to high taxes on fuel, the fuels themselves are priced at current world prices, as opposed to U.S. regu- lated prices. Thus, fuel has typically cost four times as much per gallon as in the U.S. In Austral- ia local user fees and property taxes cover road costs but national revenues from user taxes ex- ceed costs, thus generating net revenue.*” . Rail fares are generally subsidized by a variety of mechanisms, including: 50 percent discount fares for commuters on the Japanese National Railway; discount fares to different social groups (e.g., large families, veterans); allocation of mainte- nance costs to the freight sector, as in France; or, also as in France, subsidy for rail labor costs in excess of ‘‘typical’’ labor costs. Coupled with these efforts at reduced rail fares are policies that keep intercity air fares high. With discount inter- national air fares on the North Atlantic, fares from New York to cities in Europe are often cheaper than fares between European cities. (However, recent events indicate that the discounting of air fares will become significant in European domes- tic markets. )*8 induced by regulation have made rail traffic highly susceptible to truck competition.” . In France, Spain, Sweden, and Finland, freight rates may be subsidized to promote regional de- velopment. Subsidy is often coupled with tax in- centives to foster industrial relocation in underde- veloped areas.‘ . Port pricing and finance policies vary considera- bly. Generally, large subsidies go to ports for dredging and harbor improvements (also aided in the U.S.) and for terminal facilities as well. In France and Belgium these are national subsidies. In West Germany and the Netherlands they are provided locally. The U.K. requires public-owned ports to earn a 9 percent return on investment. It has also encouraged user-charge pricing of chan- nels and navigation aids.*° . Pricing freedom, particularly for rail services, is an area of volatile policy change differing considera- bly from country to country. At one extreme is Japan, where both rail freight and passenger rates are established by the Diet and promulgated by legislation.44 The nationally-owned rail system in Australia has pricing freedom for freight, but attempts to obtain passenger fare increases have been prevented by state and national govern- ment.4§ . Many other countries have moved toward pricing freedom, even for nationalized rail systems, in or- der to permit greater opportunity for rail to re- spond to truck competition. In Canada, the Na- tional Transportation Act of 1967%* liberalized and substantially deregulated rail ratemaking, with the significant exceptions of statutory rates set for grain movements in the prairie provinces and all rates in the maritime provinces. Because of the similarities in conditions between the United States and Canada, Canadian experience under the act provides an important source of informa- tion for both opponents and proponents of regu- _ Freight Transport | In freight transport, policies based on payment of full ' costs by users are pursued with varying degrees of _ adherence and success. Notable policies are the fol- lowing: 1. In England the nationally-owned rail system has pricing freedom, including permission to negoti- ate private contract rates, and is expected to re- cover all costs attributable to freight service. In its 1977 transportation policy ‘‘White Paper,” the government indicated that it did not intend to pro- vide further support to rail freight. (In fact, in 1977, British Rail did incur a small deficit of just over $10 million, down from $132 million in 1975.)°° An exception to this policy provides sub- sidies to businesses to establish direct rail sidings _ at their facilities. This support is based on the view that the most significant opportunities for rail competition to trucking lie in siding-to-siding movements where truck interchange is unneces- sary.4° Almost an opposite condition exists in Ja- pan, where the distances from factory to siding latory change in the U.S. The premise of the act is that sufficiently competi- tive conditions exist in Canada to permit almost complete pricing freedom by the railroads. The few rail pricing constraints that remain involve a 20-day advance notice for increases (none for decreases); a successful showing by a shipper that he is ‘‘captive’’ to rail services; a successful showing of a prima facie case of conflict with the public interest; and a prohibition on rates below variable costs. The treatment of ‘‘captive shippers’’ under sec- tion 278 of the Act differs considerably from U.S. approaches.*’ The criterion for captivity is the rail- road’s ability to charge rates many times higher 74 e TRANSPORTATION ACTIVITY AND INSTITUTIONS than cost because of the lack of competitive forces, rather than the apparent lack of intermo- dal competition used to define dominance in U.S. regulatory practice. It is believed that shippers, particularly large shippers of bulk commodities, have sufficient market power to assure protection from monopoly pricing. Where a captive shipper condition exists (few cases have arisen) maximum rates are set by the Canadian Transportation Commission at 250 percent of variable cost. To obtain this rate ceiling, the shipper must commit all the affected traffic to rail for a one-year period. The public interest constraint in the Canadian law reflects the continuing conflict between a policy based on assuring the efficiency of transportation in meeting demand and one that perceives trans- portation as a tool of social and regional develop- ment goals. Although the Act is fundamentally based on the former view, elements of the latter persist in the maintenance of statutory grain rates and subsidized rates for all goods moving by truck or rail to or from the economically de- pressed maritime provinces. The principle of gov- ernment remuneration of required services ex- tends to the maritime rates and to uneconomic branchlines and passenger services maintained for public benefit, but does not include compen- sation.for the below-cost grain rates which ac- count for 18 percent of all Canadian rail ton-miles and only 6 percent of revenue.*8 The effects of Canadian deregulation have gener- ally been successful, to date, in that negotiations between shippers and carriers have not resulted in monopoly rates, and the profitability of rail ser- vices has improved. Significantly, the greatest complaints have been received from those areas still protected by statutory rates.*9 6. A factor of general importance related to pricing policy is government response to the cost recov- ery of government-mandated services. In Japan no provision is made for the remuneration to Ja- pan National Railways of government-directed services.°° In Canada, as pointed out above, the government pays for certain government-required service, which focuses attention on the cost con- sequences of service decisions.*' 7. In Europe, the Common Market has played a sig- nificant role in codifying the nature of government support to transport. A process formalized by reg- ulation in 1969 to 1970 set out common rules for the normalization of accounts for transport by surface modes, particularly rail. Those rules reach beyond simple normalization of accounts toward an attempt to normalize the context of competi- tion among different transport modes. This proce- dure includes identification and classification of subsidies by purpose, reimbursement of costs generated by government actions beyond those required by proper ‘‘commercial management,” and attempts to equalize infrastructure costs.*? Urban Transport In urban transport, European and U.S. pricing and finance policies are becoming increasingly similar as regards extensive capital and operating subsidy of transit, and growing consideration of pricing and oth- er policy actions to inhibit auto use in central cities. A major stimulus for such policies in Europe, not pre- sent in the U.S., is the desire to preserve medieval centers of cities which have street systems inappro- priate to auto use. Europe and the U.S. share a con- cern for increasing transit subsidies and search for a transit support rationale. European policies include the following: 1. Substantial expense for transit subsidy in the U.K. prompted a reevaluation of previous support poli- cies, leading to increased fares to reduce deficits. 2. Since 1975, France has permitted cities of over 100,000 population to levy employment taxes of 1 to 2 percent on all employers with more than 10 employees. The receipts, equivalent to $500 mil- lion per year in the Paris region, are used to sup- port transit investment and operating costs.“ 3. Innovative fare systems, in general, have been a policy precept. These include monthly passes good for unlimited use on all transit facilities, e.g., the carte orange in Paris, hourly tickets good for unlimited use in a specific time period, as in Gene- va, and “‘honor systems’”’ without turnstiles or bar- riers, as in Hamburg and Geneva.*® 4. In Canada direct national government support to urban transit is very recent. Previously, the exten- sive Canadian urban transit system received pro- vincial and urban government support.*® A closely-followed pricing innovation has been the Singapore road-pricing project, in which entry into - downtown by auto requires a special license pur- chasable for $25 per month. As might be expected, substantial shifts to transit and car pools have re- sulted for trips destined to the downtown, and through trips have been diverted around the central area onto bypass roads. While the project has been a success in its near-term goal of reducing auto use (with a decline of 70 percent in autos destined to downtown in the early morning peak), its long-term effects on broader goals, and its direct costs and benefits, have yet to be fully assessed.°*’ ) COMPARATIVE TRANSPORTATION POLICIES IN OTHER COUNTRIES @ 75 PLANNING AND INFORMATION In Europe, planning for transportation is made part of overall planning. Overall economic and social plan- ning occurs at the national level on a multi-year basis and comprehensive urban planning, encompassing transportation, takes place at the local level. 1. In the five-year development plans of both social- ist and non-socialist countries, significant priority is often given to promoting development in lag- ging regions, stimulating exports and providing a minimum of mobility to all areas of the nation. In the Netherlands this process includes consider- ation of the transport support needs of the ports, although port planning itself is a matter of local responsibility.°* In France it means stimulus to de- velopment of low-income regions of the nation.%? Both Canadian and Japanese transport plans em- phasize regional economic and population devel- opment away from existing coastal areas.© How- ever, recent trends toward deregulation have shifted emphasis back to the commercial role of transport, deemphasizing the use of transport as a ‘‘tool’’ of other policies. The high cost of subsi- dizing transport has been a major cause of this policy shift.*' . In urban areas, all services are integrated in sup- port of comprehensive government-implemented, land-use plans. In Hamburg, planning has led to an integrated transit authority which controls fares, services, schedules, and the distribution of revenues among service providers.® This policy of supporting land-use plans has resulted, in many cities, in controlled development of busi- ness and residential areas keyed to minimizing transport needs and environmental disruptions. GOVERNMENT ORGANIZATION There are both positive and negative lessons to be ‘learned from the experience of other countries in government organization. At the national level, most countries have cabinet- level agencies like the U.S. DOT. Often these agen- cies are more comprehensive, including water-relat- ed and regulatory functions found outside the U.S. DOT. Attempts to place transportation into super agencies, such as the Ministry of Environment in the U.K., have apparently proven unsuccessful. (The U.K. recently reestablished a separate Ministry of Transport.) In Europe and in developing nations, transportation is often linked with communications in a cabinet-level agency.® In Japan, the Ministry of Transport is the product of an unusual organizational history. Each section of the Ministry is directly related to specific legislation, and little interaction or coordination occurs between units. A significant factor affecting the Ministry’s ef- fectiveness is that the highway-related activities of the national government are housed in the Ministry of Construction.™ A strong element of national organization and pro- cedure in many countries, including the U.K., Belgi- um, the Netherlands, Japan, and the Federal Repub- lic of Germany, is the extensive use of economic tools, such as multi-criteria and benefit-cost analysis in investment evaluation. Not only are analytical tools more extensively applied in these countries than in the U.S., they also aid transportation-wide and na- tional-level decisionmaking.© More extensive ownership of transport systems by national governments elsewhere has often led to very protective government policies seeking to sustain and support the investment. This has been particular- ly true with railroads and ports. In effect, govern- ments have acquired an entrepreneurial interest and have sought to protect that interest not only by pub- lic investment, but by use of their regulatory powers. Results of such action have been mixed and, at least in the rail sector, some governments have reduced rail services and employment to counter deficits. An- other consequence has been the evolution of public- enterprise management. Public enterprises are held more accountable for both service quality and fiscal results than parallel public operations in the U.S. They are often expected to make a profit, or break- even and show a reasonable rate of return on public investment. As a result, a quasi-public, quasi-private sector of transportation has developed, perhaps most analogous to U.S. port or turnpike authorities.© At the local level, many different arrangements of national-local powers and responsibility exist. As a general rule, central governments bear a greater share of the burden of local investment and take a more direct role in the provision of local services and facilities than does the national government in the U.S. However, this is by no means universal. In Cana- da, national government involvement in local transit began only recently.®’ Truck regulation is a provincial matter, with the constraint that interprovincial and intraprovincial traffic must receive identical treat- ment.® In the Netherlands, the great ports have de- veloped without direct aid from the national govern- ment. Similarly, in the Federal Republic of Germany, port investment is the role of the cities or landers.© A feature of local transportation institutions in Eu- rope is the apparent greater ability and willingness to experiment with innovative approaches to urban transportation problems. This willingness to experi- ment makes Europe a resource for American ana- lysts to observe the successes and failures of new ideas. The greater autonomy and authority of local government officials may serve to explain this attri- bute of local policymaking. Also, the lack of funds for 76 @¢ TRANSPORTATION ACTIVITY AND INSTITUTIONS large-scale investment may have induced a flexible approach.”° DIFFERENCES IN GOALS AND OBJECTIVES Many goals guiding policy formulation are shared by all countries, including those supporting general eco- nomic development of a nation, providing for national defense, assuring reasonable mobility to all as a mat- ter of equity, and efficiently utilizing resources. How- ever, the differences in weight given to certain goals tend to leave each country with a different policy perspective. Some of these differences are present- ed below. In some countries, the government assumes a greater responsibility to provide a basic level of mo- bility to all citizens. The lower income levels of many nations, with a consequent dependence of large seg- ments of their population on public transport, is a related factor. This focus on mobility via public trans- portation is manifest in support for urban transport and intercity ground transport services. In urban ar- eas, there is a strong public role in providing exten- sive collective transport systems at prices that can be afforded by lower income groups. This practice results in substantial public subsidy. American policy perspectives on the role of urban transport have been moving in the same direction. In Europe, inter- city transport is treated in a manner similar to the urban case; extensive rail services and complemen- tary bus services (in areas unable to support rail) provide many specialized fares for the poor, the eld- erly, large families, and war veterans. There is a will- ingness to assure some public service even in the remotest areas, and policies are designed to shift auto and air demand onto public transport. In Scot- land and Germany, the use of mail vehicles to pro- vide post-bus service has extended at least a mini- mum of service to passengers in isolated areas.”' Ja- pan has legislated a ‘“‘civil minimum’ of transport ser- vice to rural populations.” Policies affecting national freight systems are of- ten formulated in the light of broad national interests. These interests include support of national trade pol- icies, national employment goals and regional devel- opment objectives. National interests are frequently stated as very explicit objectives, and are manifested in financial, regulatory, and service policies.’ Cer- tainly the greater interdependence among close-by nations is a partial explanation for this difference, but not a complete one. Indications of this policy view are reflected in the aids for construction of rights-of- way, tax support, or freight-rate benefits in all modes given to certain regions of Sweden, Spain and France.” Tourism plays a strong role in formulating national passenger and freight policies. This is clearly tied to the same sense of broad national interests identified above in terms of effects on freight system policies. Moreover, the travel activity of tourists represents a far greater share of total travel in many countries than in the U.S. Thus, it is not surprising that supply | decisions are made with greater recognition of tour- | ist needs. If foreign tourism continues to grow in the tt N } : | U.S., passenger service will certainly change to re- - spond to that new sector of demand. U.S. policies regarding tourism do not include the relatively wide- spread European practice of accepting deficits in transport in order to obtain positive net benefits from tourism on the national scale.’”© The perceived necessity to use transport policy to sustain or develop desired land-use patterns is great- er in most other developed countries. This perspec- tive clearly places goals internal to transport in a subordinate position to overall land use and develop- ment goals. It is most evident in cities where motor- ized vehicle use has been restricted or prohibited to protect areas of historic or cultural value. But it is also manifest on a nationwide basis, particularly in the smaller countries, in the evaluation of land-taking for transport right-of-way. There is a strong emphasis on policies that utilize existing capacity, particularly rail, or provide new capacity within existing transport corridors. Some countries have taken the further step of determining the location of production activi- ties in ways that minimize resultant transport require- ments.’® APPLICATIONS TO U.S. POLICY This section discusses the domestic transportation policies of other nations, by transport market, and highlights their relevance to U.S. policies. A more exhaustive and detailed analysis of candidate poli- cies could be required before adoption by the U.S. THE URBAN MARKET European urban transport policies have been suc- cessful, for the most part, in two interrelated areas: (1) providing pervasive transit service at reasonable cost; and (2) preservation of downtown areas. Euro- pean transit can generally be described as superior to U.S. service in every city category.’’ Perhaps the most significant contribution to this success is the fact that policies toward transit support have been consistent since World War Il. Thus, the present level of quality is a product of several decades of continu- ing investment providing incremental improvements over substantial periods of time. In contrast, the U.S. is currently in a period of readjustment and catching-up after decades of neglect of transit needs. The U.S. has been approaching transit on a | COMPARATIVE TRANSPORTATION POLICIES IN OTHER COUNTRIES @ 77 massive project basis, similar to the large-scale per- spective of the freeway-system-planning period of the fifties and sixties. This approach fails to recog- nize that all the great rail transit systems of the world, including those of the U.S., have been built in small segments over long periods of time, with additions made only as need was fully established. U.S. transit policy has just begun to recognize the value of this approach.’® Policies regarding transit finance and pricing have gone through several phases in parts of Europe. These phases are significant because they parallel the development of transit finance and pricing issues in the U.S. Many European cities and countries are beginning to move away from a policy that the U.S. is just moving toward in transit, i.e., a policy that sees transit as a utility, like police or fire protection, to be provided pervasively and financed by all taxpayers rather than by users or direct beneficiaries.”? The ap- plication of this policy in the past helps explain the quality and scale of service available in many Euro- pean systems today. The premises for such a policy perspective, particularly the view that the benefits of transit are of a broad-based, public-good nature go- ing well beyond benefits to immediate users, have only recently been adopted in the U.S. As U.S. policy has moved strongly in this direction, often without careful identification and qualification of ostensible benefits, European policies have begun to swing back to a more modest set of expectations regarding transit benefits, and a more conservative perspective toward public expenditures for transit. Thus, today, moving from opposite points on the scale, U.S. and European policies have converged on a common point where farebox revenues pay about the same share of transit operating costs in all the major U.S. -and European rail transit cities.®° In London, after a few years in which transit fares had become a negli- gible part of revenues, policy shifted to a philosophy of full cost recovery from the farebox. This objective has not been achieved, but the direction of policy is toward fares that recover a greater share of costs.®' The French employment tax to support local transit appears based on identifying employers as major beneficiaries of the transit system, and has much in common with the ‘‘value-capture’’ philosophy now prevalant in U.S. transit strategies. The area of cov- erage of such a tax (in terms of center city versus its suburban competition) and the jurisdictional bound- ary issues in many cities would have to be carefully evaluated. Such a policy might best go hand-in-hand with a related package of supportive public policies to help justify the expense to employers. Financing and pricing policies for pervasive ser- vice relate to the other area of successful urban transport policy in Europe—the preservation of downtown areas. Americans concerned about down- town revitalization can learn from successes in other countries. European transit practices have support- ed downtown development goals, as have European policies controlling auto access to central areas. Heavy taxation of parking, with control of available spaces, has been central to the effectiveness of these policies. Diversion of autos and trucks away from protected areas has also been significant. The emerging area of U.S. urban transport policy labeled Transportation Systems Management (TSM) has bor- rowed strategies and programs from early European experience. However, U.S. policy, as exemplified by TSM regulations, has not incorporated two important elements of the European experience. First, the U.S. process has not integrated short-range TSM strate- gies into a long-range transport perspective, bringing the transportation role into the overall planning phi- losophy for the city and its non-transport goals. Sec- ond, U.S. experience has not overcome institutional and jurisdictional impediments to a comprehensive local policy framework that ensures the coordination and mutual support of investment policies, operating and regulatory policies, and development policies. In much of Europe, unlike the U.S., jurisdictional con- flicts are not major roadblocks to concerted action.® There have been significant failures in European urban policies that are also instructive. Some of these failures highlight potential weaknesses in U.S. policy. In London, control of downtown parking without directly controlling the private sector was not suc- cessful. Over a period of 5 years, more than 30,000 parking spaces in publicly-owned garages were closed. The private sector responded by building more private garages, so that total spaces available downtown diminished only slightly. The London poli- cy has now shifted to one of strong control of new facilities and taxation of existing spaces. In Sweden, attempts to retard auto-ownership by high auto fees, inexpensive transit and orientation to apartment living have not proven successful. De- mand for single-family homes and for autos has con- tinued to be strong despite considerable barriers. Emphasis has shifted to retarding second-car pur- chases and reducing auto use for downtown work trips.® An area of weakness in urban policy has been failure to effectively control the development of rap- idly growing cities. In general, Europe has not experi- enced the kinds of dramatic urban growth seen in some U.S. cities of the South and West. Where simi- lar growth has occurred, European policies have not proven particularly more successful than U.S. ap- proaches. New town policies have not succeeded in absorbing or channeling growth, nor has transit ef- fectively guided development in suburban areas.® This reality identifies an area of policy weakness in Europe and America, as well as elsewhere in the world. The problems of rapid urban growth stemming 78 © TRANSPORTATION ACTIVITY AND INSTITUTIONS from rural migration are universal, and have not been effectively ameliorated by public policies. INTERCITY FREIGHT MARKET Although some factors governing freight flows in the U.S. are considerably different from those of any in- dividual country in Europe, or even the European continent as a whole, some policy issues are striking- ly similar to those in the U.S. The most important similarity in all countries re- lates to implicit (or sometimes explicit) policies pro- moting a desired modal split in intercity freight flows. Almost categorically, all European countries in re- cent years have decided that rail service is the ‘“‘backbone”’ of their freight systems and that rail us- age is to be supported. Correspondingly, movements by truck, which are growing everywhere, should be constrained so as to support rail. The reasons for this perspective vary widely, but energy and environmen- tal factors are often cited. Economic efficiency, meaning considerably different things in different places, is also cited as a goal to be met by greater utilization of rail facilities. In countries where the rail system is nationalized, part of the rationale is to pro- tect public assets and to avoid large public expendi- tures for a higher-capacity highway system. The Eco- nomic Commission for Europe has identified the effi- cient utilization of existing system capacity as a ma- jor goal behind national modal policies, which tend to favor greater rail utilization. Part of the rationale is linked to a mutually reinforcing set of policies favor- ing rail for intercity passenger service.® Recognizing these modal-split goals helps explain many of the attendant policies toward the individual freight modes. Many European nations have arrived at the conclusion that the heaviest trucks impose costs on the road system in excess of their payments in road-user fees, even when these fees increase sharply with vehicle weight. Changes in fee sched- ules to compensate for this disparity are under devel- opment in most countries.®’ As in the U.S., efforts to arrive at an appropriate allocation of highway costs are hampered by the lack of adequate research. In recent surveys, only the Swiss government felt it had adequate road-cost data by truck-size category to make definitive taxation decisions.26 The unique Swiss geography makes the transferability of these studies questionable. The clear trend in policies is to increase the already high user fees imposed on vehi- cles.®° In addition to taxation, West Germany and oth- er countries have used controls on total truck capac- ity to constrain trucking growth.® The British control flows by sharply limiting truck access to many roads, even though a large share of British trucking is na- tionalized.*' Truck size and weight questions have not been as major a set of issues as Could be expect- - ed in Europe, given the considerable differences in | permissible dimensions from country to country.% . Railroad nationalization per se has not mitigated the necessity in many countries for rationalization of © over-developed systems and operating staffs. A sec- ond phase of policies to support rail by regulatory - constraints on the competitors to rail, particularly trucking, has also failed to ensure the economic via- bility of national rail systems. Substantial pressures everywhere to reduce rail subsidies have produced a third phase of policy, increasing the commercial free- dom of railroads. The most significant aspects of this phase, in terms of U.S. interests, are programs for increasing rate-setting freedom, freedom to contract for services and freedom from some common carrier responsibilities. Deregulation of rail rates has been paralleled in many countries by truck rate deregula- tion, which has had the effect of shifting trucking flows from private to common carrier trucking.% A major stimulus to freight rate and subsidy ration- alization has been provided by the Common Market. Its influence has been substantial in developing a “rationalization of accounts’”’ system. In this process, the cost accounting framework includes the identifi- cation of direct and indirect support to transporta- tion, aS a possible first step toward eventual reduc- tion. The international trade ramifications of internal transport subsidies is the major factor creating pres- sure for reform within the EEC. The goals of this reform policy are equalization of the starting point in transport competition, and more freedom to compete in transport services. The EEC has also harmonized national truck safety policies on driver operating hours and vehicle utilization.” Thus far, port regulation and subsidy have not been major focal points of common policy. The diver- sity of roles played by national and local government and private interests in European ports is dramatic. Valuable lessons can be learned from the very breadth of approaches taken. A test case for any potential U.S. port policy could be found somewhere in the European port policy array. One area where there is considerable uniformity of purpose has been in national support of port development. Almost all nations support ports by direct financial aid, or, where local governments are the source of aid, na- tional support occurs through provision of respon- sive regulatory policies or necessary connecting transportation services. A similar statement could be made for policies toward shipbuilding and ocean trade. A great diversity of goals and policies, suc- cesses and failures is exhibited in European maritime experience. The major applicable lesson from this experience seems to be the relative superiority of indirect forms of shipping support, compared to di- COMPARATIVE TRANSPORTATION POLICIES INOTHER COUNTRIES @ 79 rect construction and operating subsidies. In Europe, the direct subsidies appear to reward and support higher costs.% A final pertinent aspect of national policies that should not be lost to U.S. consideration is the strong integration of freight policies into national develop- ment and social policies in almost all European na- tions, including those with and without planned econ- omies. National goals such as increased exports, balanced national growth and enhanced regional de- velopment of backward areas serve to guide and mo- tivate transport policies. Such goals have rarely been directly incorporated in U.S. national policy consider- ations.%” A note regarding policy failures is significant as a closing perspective on European freight policies. De- spite a common mode-split goal, and a broad and potent array of policies aimed at supporting rail and retarding the growth of trucking, European coun- tries, at least to date, have failed to arrest the growth of the trucking share of freight movement. This is attributable to numerous factors, including changing industry locations, and a changing mix of industrial production to which trucking service characteristics are more responsive.% Significantly, this is true even in planned economies where extensive and draconi- -an policies are implemented in support of rail. In mar- ket economies, these policies have often tended to undermine the vitality of market forces and private enterprise without achieving their modal goals. INTERCITY PASSENGER MARKET Policies parallel to those in the intercity freight case exist for intercity passenger transport in the Europe- an community. Most countries on the continent have adopted rail as the preferred mode of travel for all but the longest intercity passenger trips. Policy has evolved to support rail use and to constrain highway and air travel growth. The most significant of the spe- cific constraints are the heavy gasoline taxes im- posed on highway vehicles and the prohibition of competing bus services whenever rail service exists.°9 These European policies have relevance to cur- rent U.S. transportation issues. The integration of rail -and bus services is particularly noteworthy. These services are rarely permitted to compete directly on an individual route; rather, intercity bus service is treated as a feeder to rail service and as a line-haul mode where demand is insufficient to support rail service. Were integrated management of the U.S. intercity bus and rail systems to exist, it might lead to the same philosophy in many markets. Intercity rail service is also heavily integrated in service design, fare structure, and physical structure with local ur- ban transport systems.'” Failure to integrate intercity modes, and to integrate intercity with urban services, is a weakness in current U.S. systems planning. A final significant aspect of intercity passenger travel policy is the greater recognition in European countries of intercity travel as a personal mobility “right.’”’ Programs to provide basic services to disad- vantaged populations in the U.S. have not extended to intercity travel. Far greater concern is focused in Europe on assuring linkage of isolated areas with the intercity system, and providing special fares to permit low-income persons to obtain the benefits of intercity travel. In this regard, foreign policies also more spe- cifically demarcate business travel from social-recre- ational travel, establishing different services and fare structures for each.’ The U.S. air system, under the new deregulation environment, is moving toward this kind of service and pricing strategy by private deci- sion, rather than government fiat. In review of these policies, it must be noted that there has been considerable foreign success in re- gard to secondary goals: for example, rail transit ser- vice is effective and heavily utilized. In terms of pri- mary goals, however, other countries have been less successful. Despite preventive policies, a shift of population and employment from cities to the sub- urbs has occurred in Europe, as in the U.S. This mi- gration has reduced the attractiveness of center-city oriented rail service, and has supported the expan- sion of auto use. SUMMARY AND CONCLUSIONS The four chapters in this section have summarized the present state of transportation in the U.S. today. The physical transport system and the ways in which it is used have been described. The private and pub- lic institutions participating in transportation activi- ties have been identified. The Federal, state and lo- cal systems of policymaking were presented, with important policies and policy gaps considered. These presentations are supported by extensive compilations of existing government policies and programs for all transportation modes and markets. The final chapter of the section presents those do- mestic transportation policies of other developed countries relevant to U.S. policy concerns. Together the chapters of this section provide a comprehensive statement of the facilities, activities, participants, policies, and issues that constitute the national transportation system today. The next sec- tion sets out the NTPSC’s forecasts to the year 2000, as a further basis for the development of new poli- cies. 80 e TRANSPORTATION ACTIVITY AND INSTITUTIONS NOTES AND REFERENCES Wp 10. aile 2k 13. 14. For example, the Energy Policy and Conservation Act of 1975, 42 U.S.C. Section 6201 et seg. (1977), set U.S. fuel economy standards for new autos ranging from 18 mpg for 1978 models to 27.5 mpg for 1985 cars. But by 1975 the European auto fleet had attained a fuel consumption aver- age equivalent to the 1985 U.S. standard. The U.S. sought changes in technology to achieve fuel economy but Euro- pean fuel economies were based on a combination of tech- nology and complementary public policies, suggesting that fuel savings objectives could be achieved without substan- tial impairment to mobility and other goals. See Alan E. Pisarski and Niels De Terra, ‘““American and European Transportation Responses to the 1973-74 Oil Embargo,” Transportation 4 (1975), pp. 291-312. Ibid., p. 310. World Bank, Relieving Traffic Congestion: The Singapore Area License Scheme, Staff Working Paper No. 281, Wash- ington, D.C.: 1978. (Hereafter cited as Singapore Area Li- cense Scheme.) U.S. Department of Transportation, Office of the Assistant Secretary for Policy and International Affairs, ‘‘Report to the Secretary Re: Bilateral U.S./Swedish Energy Research Opportunities Based on Meetings with the Swedish Trans- port Commission, Swedish Energy Forecasting Committee, and the Swedish Transport Research Commission,” un- published staff memorandum prepared by Alan E. Pisarski, Washington, D.C.: May 1974. They are more extensively treated in NTPSC, Papers on Selected Transport Policies of Developed Countries, Re- port No. NTPSC/SR-79/05 Washington, D.C.: January 1979. (Hereafter cited as Selected Transport Policies.) C. Kenneth Orski, ‘‘Urban Transportation in Europe,”’ in Selected Transport Policies. See discussion of common carrier obligation in James R. Nelson, ‘‘Surface Freight Transportation in Europe,”’ in Se- lected Transport Policies. In Spain, Portugal, and Italy, over 50 percent of all rail pas- sengers travel on discounted fares. Eligible groups include teachers, soldiers, government employees, veterans, and journalists. Ralph E. Rechel, consultant to Spanish State Railway and Portugese State Railway (circa 1963 to 1967), interview about potential World Bank modernization pro- grams, Washington, D.C., January 1979. The World Bank required the Spanish State Railway to cut 30,000 employees over a 10-year period as a condition of loans for capital investment for railway modernization—a condition the railway failed to meet. /bid. See, for example, the description of the Leber Plan by Ken- neth D. Boyer, ‘West Germany: Search for Marktordung,”’ in Foreign Regulatory Experiments: Implications for U.S.: An Analysis and Evaluation of Foreign Transportation Reg- ulatory Experience, prepared for U.S. Department of Trans- portation, Federal Railroad Administration, Office of Policy and Program Development, ed. by James R. Nelson, Report No. FRA-OPPD-—77-—24, Washington, D.C.: Government Printing Office, 1977. (Hereafter cited as Foreign Regula- tory Experiments.) Jim Loveland, ‘‘Nationalization: Not the Attractive Answer Some Believe It to Be,’’ Southern Pacific Bulletin 62 (May 1978), pp. 6-7. Ibid. Ibid. See study by Edward J. Lincoln, ‘‘Japan: Profitable Shinkansen and Deficit Freight,’’ in Foreign Regulatory Ex- periments, pp. 10—32. Also based on communications with the author, 20 June 1978. Motor Vehicle Manufacturers Association, MVMA Motor Vehicle Facts & Figures ’78, Detroit, Michigan: n.d., p. 29. 15. 16. eee 18. 23. 24. See United Nations, Economic and Social Council, Eco- nomic Commission for Europe, Inland Transport Commit- tee, Ad Hoc Meeting for Reviewing Transport Development Trends, Replies from Governments on Concepts of Trans- port Policy with Regard to the Modal Split, Doc. TRANS/AC.1/R.5/Add.1, (Geneva, Switzerland), 25 July 1978. (Hereafter cited as Concepts of Transport Policy, Addendum 1.) United Kingdom, Department of Transport, Scottish Devel- opment Department, Welsh Office, Transport Policy, White Paper presented to Parliament, June 1977, London: Her Majesty’s Stationery Office, 1977, pp. 21-23, 31-33. World Bank, The Economic Development of Spain: Report of a Mission Organized by the World Bank at the Request of the Government of Spain, Baltimore, Md.: Johns Hopkins Press, 1963, p. 224. Organization for Economic Cooperation and Development, The Future of European Passenger Transport, final report on the OECD study on European intercity passenger trans- port requirements, Vol. A, Paris: 1977, p. 69. Ibid., pp. 174-176. Ibid. Ibid. See chapter by Theodore E. Keeler, “‘Regulation and Mo- dal Market Shares in Long-Haul Freight Transport: A Statis- tical Comparison of Australia and the United States,’’ in Foreign Regulatory Experiments, pp. 9-1-—9-44. Also based on communications with the author, 20 June 1978. James C. Nelson, ‘‘Great Britain: Decline and Fall of Sur- face Transport Regulation,’’ Foreign Regulatory Experi- ments, pp. 3-30 to 3-34. One of'the first effects of the Transport Act of 1968 (Great Britain, Transport Act, 1968, c. 73) was increased own-ac- count (private) trucking, due to the new freedom of private carriers to fill empty back-hauls for hire. But this trend soon reversed and, since 1970, for-hire trucking has grown con- tinuously, while private carriage has actually declined in tons and ton-miles. /bid., pp. 3-41 to 3-43. See U.N., Concepts of Transport Policy, Addendum 1, and J. R. Nelson, “Surface Freight Transportation in Europe,” in Selected Transport Policies. Orski, ‘‘Urban Transportation in Europe.” Ibid. Ibid., and see case studies of five European and two Asian cities provided by the Organization for Economic Coopera- tion and Development, Environment Committee, in Pro- ceedings of an O.E.C.D. Conference: Better Towns with Less Traffic, held April 14-16, 1975, Paris: 1975. U.K., Transport Policy, pp. 42-43. OECD, The Future of European Passenger Transport, pp. 100-104. J. R. Nelson, ‘‘Surface Freight Transportation in Europe,” Selected Transport Policies. See Lincoln, ‘‘Japan: Profitable Shinkansen and Deficit Freight.’’ Also based on communications with the author, 20 June 1978. OECD, The Future of European Passenger Transport, p. Soir Ibid., p. 100. J. R. Nelson, “Surface Freight Transportation in Europe,” in Selected Transport Policies. The following government statements cover truck payments in relation to infrastructure cost. Their relevance to the U.S. situation depends on the extent to which highway construc- tion and maintenance practices in Europe compare with those in the U.S., and the extent to which similar axle and gross-weight loadings occur. 37. 38. 39. 40. 41. 42. COMPARATIVE TRANSPORTATION POLICIES INOTHER COUNTRIES e 81 Switzerland. The Swiss government articulated this problem in a reply to a UN-sponsored survey of transport develop- ment trends: ‘‘In particular, a federal inquiry has revealed that the taxes paid by lorries and drawing-vehicle-and-trail- er assemblies do not cover the cost of the wear-and-tear on infrastructures that is attributable to those vehicles. In addi- tion, injury to the environment (pollution, noise) and the encroachment of roads on land earmarked for other pur- poses are causing increasing concern; there is a growing resistance in public opinion to what is called ‘covering Swit- zerland with concrete’ (‘le betonnage de la Suisse’).’’ See U.N., Concepts of Transport Policy, Addendum 1, p. 7. United Kingdom. Responding to the same survey, the U.K. government refers to possible remedial actions, as follows: “For road freight transport, the Government of the United Kingdom proposes to modify the vehicle taxation system to enable full account to be taken of vehicles’ laden weight, and their resultant costs in environmental and road mainte- nance terms. The Government will also carry forward meas- ures for civilising the heavy lorry, by supporting research into more efficient distribution systems, and by improving the standards of the vehicles themselves, in terms of safety, noise and pollution for instance.’’ See United Nations, Eco- nomic and Social Council, Economic Commission for Eu- rope, Inland Transport Committee, Ad Hoc Meeting for Re- viewing Transport Development Trends, Replies from Gov- ernments on Concepts of Transport Policy with Regard to the Modal Split, Doc. TRANS/AC.1/R.5, (Geneva, Switzer- land), 27 July 1978, p. 15. (Hereafter cited as Concepts of Transport Policy.) A comprehensive government White Paper on Transport Policy, presented to Parliament in June 1977, included this perspective: ‘‘The Government will maintain the progress it is making to secure that the taxation on lorries covers their share of the public costs of roads, including the cost of policing them and of accidents. In 1976—77, transport taxes on goods vehicles as a whole just fell short of their costs, but taxes on certain of the heaviest lorries fell short by as much as 40 percent.” (p. 40). Australia. For a discussion of government taxation and sub- sidy policies towards highways, see Keeler, ‘“‘Regulation and Modal Market Shares,’’ pp. 9-9 to 9-16. France. See J. R. Nelson, ‘‘France: Dirigisme and Its Diffi- culties,’’ in Foreign Regulatory Experiments, pp. 4—55, 4-56. Germany. See Boyer, ‘‘West Germany: Search for Marktor- dung,”’ pp. 646, 6-47. Keeler, ‘‘Regulation and Modal Market Shares,’’ p. 9-16. See, for example, ‘‘Europeans Reduce Fares, Improve Food Services,’’ Aviation Week & Space Technology 109 (9 October 1978), p. 30. U.K., British Railways Board, Annual Report and Accounts 1977, Westerham Kent, England: Westerham Press, Ltd., 1977, p. 5. In response to an NTPSC inquiry, the U.K. De- partment of Transportation has indicated that ‘’. . . if a loss is incurred by British Rail in 1978, the government will not make up the deficit.’’ (Telex received from Meg Wilson, 21 February 1979.) Great Britain, Laws, Statutes, etc., Railways Act, 1974, ch. 48, s. 8. Aiso, see U.N., Concepts of Transport Policy. Lincoln, ‘Japan: Profitable Shinkansen and _ Deficit Freight,” pp. 10-17. Also based on communications with the author, 20 June 1978. United Nations, Economic and Social Council, Economic Commission for Europe, Inland Transport Committee, /m- portant Trends in Transport Developments and Transport Policy, Doc. TRANS/R.45, (Geneva, Switzerland), 26 No- vember 1976. (Hereafter cited as U. N. Trends in Transport.) 43. 44. 45. 46. 47. 48. 68. 69. 70. “1s te. 73. See John L. Hazard, “National and State Roles in Port Development,” in Selected Transport Policies. Lincoln, ‘‘Japan: Profitable Shinkansen and _ Deficit Freight,” pp. 10-20 to 10—21. Also based on communica- tions with the author, 20 June 1978. Keeler, ‘‘Regulation and Modal Market Shares,” pp. 9—10. Also based on communications with the author. Canada, Revised Statutes of Canada, The National Trans- portation Act, 1966-67, c. 69, s. 2. See chapter by John R. Baldwin, ‘‘The Canadian Experi- ence: Increased Rail Rate Freedom and Increased Subsidi- zation as Successors to Rail Cross-Subsidization,”’ in For- eign Regulatory Experiments, pp. 2—30 to 2-32. T. D. Heaver and James C. Nelson, Railway Pricing Under Commercial Freedom: The Canadian Experience, Vancou- ver, Canada: Center for Transportation Studies, University of British Columbia, 1977, pp. 77—78. Ibid., pp. 331-340. Lincoln, ‘‘Japan: Profitable Shinkansen and _ Deficit Freight,” pp. 10-25 to 10—26. Also based on communica- tions with the author, 20 June 1978. Baldwin, “The Canadian Experience,’”’ pp. 2-31. J. R. Nelson, ‘Surface Freight Transportation in Europe,” in Selected Transport Policies. See, for example, U.K., Transport Policy, pp. 28-29. Orski, ‘‘Urban Transportation in Europe,” in Selected Transport Policies. Ibid. A. Bach, “Canadian Directions for Urban Transportation Policy,’ presented at the Annual Meeting of American Soci- ety of Civil Engineers, July 1974, Ottawa, Canada: Ministry of Transport, 1974, pp. 8-9. World Bank, Singapore Area License Scheme. Hazard, ‘‘National and State Roles in Port Development.” J. R. Nelson, ‘Surface Freight Transportation in Europe,” in Selected Transport Policies. OECD, The Future of European Passenger Transport, p. 351. Baldwin, ‘‘The Canadian Experience,” pp. 2—34. Also based on communications with the author. J. R. Nelson, ‘Surface Freight Transportation in Europe,”’ in Selected Transport Policies. Orski, ‘‘Urban Transportation in Europe,’ in Selected Transport Policies. For example, the governments of Ecuador, Thailand, In- donesia, Belgium, Finland, and Sweden. Lincoln, ‘‘Japan: Profitable Shinkansen and_ Deficit Freight,’’ pp. 10-16. Also based on communications with the author, 20 June 1978. U.N., Trends in Transport. John L. Hazard, ‘‘National Transportation Policy Adminis- tration (Transitional Lessons from Home and Abroad),” Transportation Journal 16 (Summer 1977), pp. 5-19. Bach, ‘Canadian Directions for Urban Transportation Poli- cy,’’ presented at the Annual Meeting of American Society of Civil Engineers, July 1974, Ottawa, Canada: Ministry of Transport, 1974, pp. 8-9. T. D. Heaver and James C. Nelson, Railway Pricing Under Commercial Freedom: The Canadian Experience, Vancou- ver, Canada: Center for Transportation Studies, University of British Columbia, 1977, p. 190. Hazard, ‘‘National and State Roles in Port Development,” in Selected Transport Policies. See, for example, Orski, ‘‘Urban Transportation in Europe,”’ in Selected Transport Policies, pp. 2, 9. U.K., Transport Policy, p. 31. Lincoln, ‘‘Japan: Profitable Shinkansen and _ Deficit Freight.” Also based on communications with the author, 20 June 1978. U.N., Trends in Transport. 82. ¢ TRANSPORTATION ACTIVITY AND INSTITUTIONS 74. 75. 76. he Ibid. The entire industry of international Inclusive Tour Charters, which often feature reduced air fares, is a direct outgrowth of this approach. See U.N., Trends in Transport. Note particularly replies of the U.S.S.R. and Czechoslovakia. The availability in Europe of extensive transport services in smaller cities (below 250,000, or even 100,000 population) contrasts sharply with the U.S. where, until recently, transit services in such sized cities were almost non-existent. For extensive discussion of the difference in services, see OECD, Proceedings of an OECD Conference: Better Towns with Less Traffic, and United Nations, Transporta- tion and the Cities, report on the Second Seminar on the Role of Transportation in Urban Planning, Development, and Environment, held June 13-19, 1976, Washington, D.C.: National League of Cities, 1977. Orski, ‘“‘Urban Transportation in Europe,” in Selected Transport Policies. See, for example, U.K., Transport Policy. Orski, ‘“‘Urban Transportation in Europe,’’ in Selected Transport Policies. U.K., Transport Policy, pp. 28-29. Ibid., pp. 18-22. U.K., Transport Policy, pp. 26—28. DOT, ‘‘Report to the Secretary Re: Bilateral U.S./Swedish Energy Research Opportunities.” See U.N., Transportation and the Cities. See, for example, C. Kenneth Orski, “‘European Intercity Passenger Transportation,” in Selected Transport Policies. See commentary and references in Note # 36. Ibid. Ibid. Also see discussion of EEC policies in J. R. Nelson, “Surface Freight Transportation in Europe,” in Selected Transport Policies. 90. OT. 92. 93. 94. 95. 96. 97. 98. 99. 100. 101. 102. See J. R. Nelson, ‘‘France: Dirigisme and Its Difficulties,” pp. 4-31, and Boyer, ‘‘West Germany: Search for Marktor- dung,” pp. 6-24. U.K., Transport Policy, pp. 42-43. In most countries, considerably greater weights are permit- ted than in the U.S: (which allows a maximum gross weight for the Interstate System of 80,000 pounds, subject to state approval, with singie- and tandem-axle maximums of 20,000 and 32,000 pounds. Representative gross weights in Eu- rope (in pounds) are: U.K., 71,663; France, 83,790; Germa- ny, 83,790; Netherlands, 110,250. Canada permits from 76,000 to 126,000; Japan permits 44,100 to 74,970. See equivalent, metric-ton figures in International Road Federa- tion, Limits of Motor Vehicle Sizes and Weights, Doc. IRF No. 7700, Geneva, Switzerland and Washington, D.C.: 1977, pp. 4, 6. J. C. Nelson, ‘‘Great Britain: Decline and Fall of Surface Transport Regulation,” pp. 41-43. J. R. Nelson, ‘Surface Freight Transportation in Europe,” in Selected Transport Policies. Hazard, ‘‘National and State Roles in Port Development,” in Selected Transport Policies. [ See concluding observations of John L. Hazard, ‘‘Relevant Maritime Policies of Other Countries,”’ in Selected Trans- port Policies. U.N., Trends in Transport. U.N., Concepts of Transport Policy. | OECD, The Future of European Passenger Transport, p. 70. Orski, ‘‘European Intercity Passenger Transportation,” in Selected Transport Policies. Ibid. See discussion of system design alternatives in OECD, The Future of European Passenger Transport, p. 333. eke) «=\er: Koy k to the Year 2000 “ General Social Lalo Mm ero) ae)pitiom ate) a-\er: fy ts Com day-m (-1-) er 018) INTRODUCTION Transportation demand is influenced by the demo- graphic and geographic distribution of the popula- tion; types of transportation service and the state of technology currently available; energy supply condi- tions; the supply of capital, land and labor; and the relative cost of transportation compared to other goods and services. This chapter describes the general framework used by the NTPSC to project some basic socio-eco- nomic conditions through the year 2000, focusing on growth and distribution of the population and gross national product. These projections used three alter- native sets of socio-economic conditions. For each set, detailed internal consistency checks as well as external comparisons with other studies were made. ' This chapter alone does not represent a definitive statement by the NTPSC on future transportation needs and resources; rather, it is an introduction toa series of chapters which collectively presents trans- portation forecasts. Expected technological change to the year 2000 is outlined in Chapter 6; Chapter 7 takes up externalities that influence the transporta- tion forecasts and evaluates the significance of envi- ronmental and safety mandates to the transportation activity of the future. Patterns of energy supply, avail- ability and use are covered in Chapter 8. Resultant transportation activity forecasts are described in Chapter 9. Chapter 10 deals with capital require- ments for the transport forecasts. Finally, Chapter 11 presents estimates of the relative price of transporta- tion to the year 2000 and the expected government expenditures for transportation purposes. RESEARCH APPROACH In predicting the course of key social and economic trends, there are two realistic options. One employs a macroeconomic model, based on time-tested inter- relationships between social and economic factors. Macroeconomic models forecast the short-run paths of economic variables and can be used to derive information about potential transportation activity. But formal models allow little flexibility for the simula- tion of unprecedented events, because they hold re- lationships between variables constant over time. A second option is to describe alternative future sce- narios, using a combination of socio-economic fac- tors that is believed to affect transportation activity. The strength of this approach lies in its ability to al- low for unprecedented or unexpected future events. A dual approach using scenarios and macroeco- nomic models was chosen by the NTPSC. Scenarios were postulated as a means of bracketing a range of realistic futures. Three scenarios were developed, termed: (1) low growth; (2) medium growth; and (3) high growth. Those scenarios illustrate the general structure of the U.S. economy and the broad nature of its society between now and the year 2000. Alter- native scenario values were developed for 18 select- ed socio-economic factors. Scenario values then be- came input to a formal macroeconomic model, termed Inforum, and other transportation and energy models linked to Inforum. Inforum is an input-output model. The scenario values, for such variables as population, gross na- tional product (GNP), disposable personal income, government expenditures, and labor productivity, were part of the input used by the Inforum model to forecast final demands, disaggregated by industrial components. The output was sales in constant dol- lars for 200 sectors of the U.S. economy and employ- ment for 96 sectors. Although such energy commodities as coal, crude oil, and petroleum products were among the goods whose sales were forecast, those forecasts were re- placed by other estimates of the SRI, International National Energy Model (NEM). The NEM used price- quantity relationships (demand curves) and pro- duced market-clearing quantities and prices of fuels. It yielded data on production quantities, flows of fuels through transmission links, and capacities of the conversion processes. Moreover, NEM encom- passed alternative technologies and fuels with their costs of production, which permitted the output re- sults to vary with changes in the prices of alternative energy supplies. The NEM results included disaggre- gations for 11 domestic supply regions and imports; 85 86 e FORECASTS TO THE YEAR 2000 it yielded estimates of consumption in 9 U.S. Census regions for 22 end-uses. In addition to Inforum and the NEM, other models or techniques were used in forecasting transporta- tion measures to the year 2000. The full list, with the purpose of each technique, follows. 1. An auto fleet process simulated changes in the stock of vehicles due to aging and the addition of cars. It produced estimates of numbers of vehi- cles, vehicle-miles traveled (VMT), gasoline con- sumption and other related values. The process did not provide information about vans or light- duty trucks. 2. TRANS, a transportation submodel to Inforum, calculated national results, involving 48 commodi- ty classes, on performance of the transportation modes: railroads; maritime trade; domestic water- borne commerce; for-hire trucking; air carriers; pipelines; local transit; intercity buses; transporta- tion services and warehousing; private trucking; private autos; private ships; general aviation; and private buses. 3. A regionalization process was used, employing data on population, 1975 commodity flows, plus forecasts of population and industrial activity by Bureau of Economic Analysis (BEA) zone, to di- vide GNP and activity forecasts into regions. 4. A National Transportation Planning model (NTP) had inputs such as time and cost per person-mile or ton-mile of transport and forecast passenger and commodity flows between BEA zones for 17 commodities. 5. For the urban market, a model using population, freeway miles, area, bus fleet size, transit fares and parking charges was applied to forecast highway speed, transit load factors, fatalities, and benefit-cost ratios of investment by investment class. That urban model dealt with 6 city-size groups, recognizing that cities of different sizes are heterogeneous. 6. An international air process used forecasts of passengers and tons to calculate passengers and traffic leaving and entering the U.S. plus the num- ber of aircraft operations necessary to accommo- date the freight and passengers. 7. An international maritime process used scenario parameters and produced estimates of the value of imports and exports by direction (east, west and south). The process used a forecasting pack- age with a fleet-forecasting model. The results are port-specific and commodity-specific. 8. Rural passenger travel was estimated using infor- mation on population in rural areas and the VMT per capita results of the urban model (number 5, above). 9. Urban and rural freight movement by motor car- riage was estimated as a function of GNP. These models and processes interacted in a unified way to create the forecasts presented in Chapter 9. For example, Inforum was used to fore- cast the production of selected commodities, and this was allocated to regions. The NTP was used to determine which mode would convey each commodi- ty from its origin to its destination. Coal traffic was assigned to individual routes and those routings checked to identify overloaded or underutilized links. The NTPSC’s technology surveys, presented in the next chapter, were employed as inputs to models to change some parameters, such as increasing fuel efficiency figures in the auto and airline sectors. KEY ECONOMIC AND SOCIAL TRENDS The remainder of this chapter presents the more out- standing trends that are evidenced by the NTPSC’s three scenarios. Those scenario trends are depicted in Table 10. Demographic and lifestyle trends, as shown in the table, concern population and labor force size and distribution among regions, ages, and sexes. These trends influence the aggregate demand for transpor- tation, the demand for particular modes, and the dis- tribution of demand by place and time. Economic and financial trends affect the conditions for devel- opment of new transportation infrastructure. Social factors depict elements of lifestyle that can deter- mine patterns of mobility and the propensity to travel. Technological trends emphasize innovation and re- source use which influence transport demand and supply. Potential, realistic trends in all these areas were estimated for each of the three alternative scenarios developed by the NTPSC. DEMOGRAPHY AND LIFESTYLE The past two decades have witnessed significant changes in lifestyle, social values, work ethic, and leisure and recreation trends. Although most of these changes may not be quantitatively measured, their impact has already been felt on the economy. The rising marriage age and divorce rate have combined to produce a smaller percent of married people and a greater number of individual households. Significant- ly greater labor participation rates among women have motivated increasing demands for employment, often for part-time or flexible-hours jobs. They have resulted in greater real earned income per house- hold, and greater pressure on transportation for jour- ney-to-work trips. Longer life expectancy and in- creased economic independence for the elderly have multiplied the number of elderly households. These trends are expected to continue over the near-term future. Also expected are increases in the number of service and professional employees, changed distri- GENERAL SOCIAL AND ECONOMIC FORECASTS TO THE YEAR 2000 @ 87 TABLE 10. NTPSC scenario components and trends Scenario Components Low-Growth Scenario Trends Medium-Growth High-Growth Low population growth Continued migration to South and West Regions Urban consolidation to con- serve resources Work-ethic replaced by rise of avocational interests Restrained lifestyles Low economic growth Low capital formation Moderate to high unemploy- ment Demography and Lifestyle ........ Economic Factors.................066 Limited exploitation of do- mestic resources Restrained technology in accordance with low growth Resources and Technology...... Substantial influence in suc- cessful adoption of low- growth policies Income redistribution through tax policy Ameliorative social welfare focus U.S. withdraws from global leadership BSCSVGIENTIGN Eco. cu cco seetccriccceseseCeccee International Posture.................. bution of U.S. incomes, and increased business-re- lated travel. Significant increases in crime and vandalism, es- pecially in cities, have affected some downtown com- mercial and entertainment areas, contributed to resi- dential flight from urban areas and substantially in- creased the costs of providing some services. A rise in incidents of political and social terrorism has forced governments and private business to increase their expenditures for safeguards. These trends are expected to decline, but may remain a problem in the low-growth scenario. POPULATION U.S. population has increased over the last few decades, while fundamental demographic changes have been taking place. The economy has already felt these changes. The population is older on the average. Aging of the ‘‘baby boom’’ cohorts, a lower fertility rate and longer life expectancy portend an increase in the median age from 29 years in 1975? to an estimated 39 by 2005. The economy has just begun to feel the far-ranging effects of accommodat- ing the ‘‘baby boom’’—tthe burst of children born in the post-war era, which continued into the early Low population growth Highest migration to South and West regions Significant increase in rec- reation and leisure Thriving unconstrained ur- ban environment Moderate population growth Increased migration to South and West regions Central city revitalization Voluntarily frugal, yet satis- fying, lifestyles Rapid economic growth Rapid capital formation spurred by liberal govern- ment tax policy for busi- ness Full employment Balanced resource exploita- Full exploitation of domestic tion resources enhanced by Efficiency stressed in adop- technical break-throughs tion of new technologies Technology spurred by pri- vate investment is a prime mover Limited government influ- ence in all sectors Strong, autonomous free enterprise system Government relief for less- affluent classes Moderate economic growth Healthy capital formation Moderate unemployment Major governmental role in planned growth Significant federal social welfare programs U.S. is dominant power in the free world U.S. is a stabilizing interna- tional influence 1960s. The last decade, on the other hand, has witnessed a sharp decline in the fertility rate? from 3.8 in the mid-1950s to 1.7 by 1976; this rate is expected to fluctuate in the 1.7 to 2.1 range through the year 2000. The medium scenario assumes the higher 2.1 fertility rate; the low and high scenarios assume the 1.7 rate. The household formation rate is expected to con- tinue growing faster than population growth, al- though at a reduced rate from the past decade’s experience. Therefore, more but smaller households will exist, totaling between 90 and 109 million in the year 2005, an increase of 23 to 50 percent above the 1976 level. All factors considered, population is ex- pected to total between 248 and 267 million by the year 2005, an increase of 15 to 24 percent over the 1976 total. (See Figure 5 for depiction of the popula- tion projections adopted by the NTPSC.) Most of those who will be mature workers, pensioners or consuming adults in the U.S. in the next 21 years are already born. Although those being born between now and 2000 will contribute to the dependent popu- lation, constrain the older population’s pocketbooks and lifestyles, and generate transportation demand attributable to their own needs, the growth of youn- ger cohorts will slow from what it has been over the 88 e FORECASTS TO THE YEAR 2000 FIGURE 5. U.S. population projections, by scenario, to 2005. Medium-Growth Scenario ax People (millions) 1950 1960 1970 1980 1990 2000 Year SOURCE OF HISTORICAL DATA: U.S. Department of Commerce, Bureau of the Census, Current Population Reports, Series P—25, No. 704 (Washington, D.C.: U.S. Government Printing Office, July 1977), Table 1, p. 21. SOURCE OF PROJECTIONS: U.S. Department of Commerce, Bureau of the Census, Current Population Reports, Series P—25, No. 704 (Washington, D.C.: U.S. Government Printing Office, July 1977), Table 2 and 3, pp. 23-74. (The medium scenario corre- sponds to Series II projections which assume a fertility rate of 2.1. The low and high scenarios correspond to Series Ill projections which assume a fertility rate of 1.7.) past few decades. Appendix Table 10 lists assump- tions, trends, and transportation implications regard- ing population for the three scenarios. Population migration from rural to urban areas is expected to continue, with urban areas continuously expanding, though the recent trend of non-SMSA growth exceeding urban-area growth may continue.® The predominance of non-SMSA growth has been witnessed only since 1970 and, in fact, represents a reversal of the trend in the previous five-year period.® More evidence is needed to discern the future direc- tion of this trend. Population distribution assumptions are given by scenario in Appendix Tables 11, 12 and 13 for the several regions of the country. SMSA growth is expected to increase in the South and West as people migrate from the Northeast and North Central regions. Shifts of population and indus- try into the South and West, witnessed since 1970, are expected to accelerate due to the availability of land, natural resources, energy, a skilled labor force and social amenities. Appendix Figures 2, 3 and 4 describe urban area population as a percent of total population for the several regions of the country. While population growth in the South and West is expected to occur at 4 to 6 percent annually over the period, growth in the population living in urban areas in these regions will likely be somewhat slower. Ap- pendix Figure 4 and Appendix Table 13 depict redis- tribution assumptions from the Northeast and North Central regions to the South and West. LABOR FORCE The labor force is expected to total between 121 million and 139 million by the year 2005, representing a 25 to 43 percent increase over 1976.’ Over the next decade a labor surplus should develop, with unem- ployment gradually dropping afterwards as the rear guard of the baby boom generation enters its mature working years. Productivity should increase for the short-term, to 1985, reflecting a more experienced work force. By the mid-1980s, as the subsequent “baby bust’’ generation enters the work force, rela- tive labor scarcity will replace relative labor surplus. The effects of this gap will be felt even more strongly post-2000 when the baby boom generation reaches retirement age and requires support by subsequent, smaller generations. The total labor force participation rate is expected to bracket the present 62 percent participation rate,® ranging from 60 to 64 percent among the three sce- narios. This may result in the participation rate ap- proaching a plateau. However, the NTPSC forecasts that participation by women and young people will continue to increase, although at a reduced rate. ECONOMIC FACTORS The rate of growth in the economy’s output repre- sents an important influence affecting transportation demand and supply. GNP represents the dollar value of the nation’s production of goods and services. ‘Real GNP”’ represents the same production, but valued at the prices of a chosen valuation year. It was instructive to examine a range of potential GNP values and their effects on transportation activi- ty. The NTPSC used GNP growth rates ranging from a high of a sustained 4 to 5 percent annual average growth in real terms to the year 2000 (the high- growth scenario), to a low of less than 1 percent annual average growth to 2000 (the low-growth scenario). The third scenario (medium growth) falls between the two extremes and somewhat parallels the post-World War Il economic performance. Each scenario has a set of business and economic condi- tions, though similar structural economic trends are pervasive across all. See Figure 6 and Table 11. The recent shift in the U.S. economy away from a manufacturing base toward greater consumption of services is expected to continue in all scenarios, though more rapidly in a high-growth economy. Im- portant among these services are recreational amen- ities, which involve increased personal travel. Final GENERAL SOCIAL AND ECONOMIC FORECASTS TO THE YEAR 2000 @ 89 U.S. gross national product in constant 1975 dol- lars, projected to 2005. FIGURE 6. 1 0 9 8 “bs 6 a) real ele 2 a Val ult Ht Lal a c a4 = = nn a a i) a) ie) ~ Oo - RRBERIREIRS ite . Ewa NOTE: This graph has been plotted on semi-logarithmic paper 1980 2000 Year SOURCE OF HISTORICAL DATA: U.S. Bureau of Economic Analysis, Business Statistics 1975 (Washington, D.C.: U.S. Gov- ernment Printing Office, May 1976), p. 1; Survey of Current Business, Vol. 57, No. 3 (August 1977), p. S—1. SOURCE OF PROJECTIONS: Estimates developed for the NTPSC by The Futures Group, Glastonbury, Connecticut, 1978. aAdjusted by implicit price deflator for GNP. 1950 1960 1970 1990 sales of goods as a percent of total final sales are expected to decline to about 43 percent in 2005 from 45 percent in 1976 and 48 percent in 1950.9 The geographic shift of industry away from the Northeast and North Central regions to the South and West is also expected to continue, paralleling the rate of economic growth. Growth in individual real income is a measure of change in the consumer’s ability to purchase goods and services. Individual real earned income is ex- pected to grow in direct proportion to the macroeco- nomic growth of the entire economy. Real GNP per Capita may lie between a low of $9,500 and a high of TABLE 11. ario. Low Scenario Medium U.S. gross national product assumptions, by scen- High GNP growth de- clines from 4.89%? in 1978 to under 1% in the 1990s Slow productivity improvement Limited capital in- vestment Shortages of criti- cal raw materi- GNP growth mod- erate and com- parable to histo- ry at 3%°> over the period Improved produc- tivity Moderate rates of capital invest- ment and tech- nological devel- GNP growth high in the 4 to 5% range Much improved productivity Expansive capital investment Technological in- novation and high levels of R&D als opment Full exploitation of Low levels of Stable inflation domestic re- technological rates sources development Improved resource Higher inflation allocation aU.S. Council of Economic Advisors, Economic Report of the President, Government Printing Office: Washington, D.C., January 1979, p. 184. (Updated to units of constant 1975 dollars.) ‘U.S. Bureau of Economic Analysis, Business Statistics 1975, Government Printing Office: Washington, D.C., May 1976, p. 1; Survey of Current Business, 57 (August 1977), p. S—1. $18,200 by the year 2000, versus $7,500 in 1976,° depending upon the growth rate of the economy. Individual purchasing power is likely to grow in proportion to real earned income, save for changes in taxation. Disposable personal income is a more precise measure of what consumers will actually have to spend. Future values of per capita dispos- able personal income may lie between $6,700 and $13,100 by the year 2000, versus $5,200 in 1976." See Figure 7 and Appendix Table 14. Growth in labor productivity, or change in output per employee-hour, is a critical influence on the rate of economic growth. In turn, influences on productiv- ity such as technology, the capital-per-worker ratio, efficient resource use and labor quality are all in- terrelated and depend upon the macroeconomic per- formance of the economy. Labor productivity is ex- pected to achieve a sustained annual average growth rate of about 4 percent under the high-growth scenario, and decline to less than 1 percent under the low-growth scenario. Private domestic investment in plant, equipment, research and development is another factor inter- twined with the growth of the economy. A proxy for this form of private sector spending is the trend in business non-residential fixed investment, as depict- ed in Figure 8 and Appendix Table 15. Private deci- sions about investment will depend on future expec- tations of the rates of return to capital and of infla- tion. 90 e FORECASTS TO THE YEAR 2000 FIGURE 7. U.S. disposable personal income per capita in constant 1975 dollars, 1950 to 2005. 1975 Dollars (thousands) 1960 1970 -1980 1990 2000 Year SOURCE OF HISTORICAL DATA: U.S. Bureau of Economic Analysis, Business Statistics 1975 (Washington, D.C.: U.S. Gov- ernment Printing Office, May 1976), p. 8; Survey of Current Business, Vol. 57, No. 3 (August 1977), p. S—1. SOURCE OF PROJECTIONS: Estimates developed for the NTPSC by The Futures Group, Glastonbury, Connecticut, 1978. aAdjusted by implicit price deflator for personal consumption expenditures. 1950 The NTPSC described the long-term trend in investment rather than short-term cyclical fluctua- tions. The rates of real return to capital are assumed to range from 2.5 to 3 percent, and average sus- tained rates of inflation over the period to be from 4 to 6 percent. These expectations will produce ap- proximate bond yields for AAA corporate bonds of 6 to 9 percent by the year 2005, compared to 8.5 percent in 1976 and about 10 to 11 percent in 1979.2 GOVERNMENT Under each scenario of economic conditions, gov- ernment spending has a different profile. Total gov- ernment spending as a percent of GNP is expected to range from 38 to 50 percent in the year 2005 among the scenarios, versus 34 percent in 1976.3 Yet the composition of this government spending dif- fers radically with the performance of the private economy. In a low-growth economy, transfer pay- ments by governments to individuals in the form of unemployment and welfare benefits are expected to FIGURE 8. U.S. nonresidential fixed investment, 1950 to 2005.* ri SS ee soreereerze 600 500 High-Growth Scenario ce Medium-Growth Scenario Low-Growth Scenario 400 300 a felis 2 5 2 100 | £ 90 LED alia st x 60 15 NOTE: This graph has been plotted on semi-logarithmic paper 0 1950 1960 1970 1980 1990 2000 2005 Year SOURCE OF HISTORICAL DATA: The Economic Report of the President (January 1977), Table 3—2, p. 188. SOURCE OF PROJECTIONS: Estimates for the NTPSC devel- oped by The Futures Group, Glastonbury, Connecticut, 1978. aAdjusted by the implicit price deflator for nonresidential fixed investment. be a large component of government spending. In a high-growth economy, government purchases of goods and services or Federal grants-in-aid to state and local governments might be the largest expendi- tures. Federal expenditures are expected to repre- sent the most quickly expanding portion of total gov- ernment spending. Under any set of economic condi- tions, social security retirement benefits are expect- ed to be a significant share of Federal expenditures by the year 2000. IMPLICATIONS OF THE TRENDS FOR TRANSPORTATION Expected social and economic trends will have vari- ous direct and indirect effects on future transport GENERAL SOCIAL AND ECONOMIC FORECASTS TO THE YEAR 2000 @ 91 activity. Although population size changes have had considerable impact in the past they will have only minor effects to 1985 on transportation. Transport activity clearly will be affected by the aging of the present population. Much of the baby boom generation will have passed through its mature working years by the year 2000. Because of this in- flux, the most rapidly increasing element of the popu- lation to 1990 will be 25 to 44 years old, which is traditionally the most employable and productive age group with the highest spending profile. This implies that leisure and business travel can be expected to increase substantially and then fall off sharply as the subsequent baby bust generation reaches the 25 to 44 age cohort in the early 1990s. Also, as a result of population age redistribution, there will be a major increase in high-travel-propensity age groups. The decline in the number of young drivers is expected to improve safety. Although the relationship of freight demand to to- tal population growth is complex, it is expected that the movement of the baby boom generation through the high-consumption age groups will increase over- all demand for goods and freight transport. Growth in the number of households will put in- creased pressure on auto ownership in particular, and trip-making for the journey to work, leisure, shopping and services delivery in general. The distri- bution of this new demand, and the effect on particu- lar modes, will depend on the geographic dispersion of the new households and of the transportation net- work presently serving those areas. Migration of population and employment toward the South and West will require readjustment of trav- el and intercity freight-flow patterns (particularly for consumer goods) in proportion to population and employment shifts. Revised intercity business-travel patterns will also result. Significant population shifts will affect the transportation facilities left behind as well as tax those in growth areas. The urgency of building new passenger and freight transportation fa- cilities in growth areas not presently served by ade- quate facilities will depend on the rapidity of interre- gional population and employment shifts. Continued urbanization of the population will re- quire some readjustment of rural and urban freight- flow patterns as urban areas expand faster than cen- tral cities grow. In fact, many central cities may con- tinue to lose population. Continued suburbanization of residences around SMSA fringes should serve to increase average journey-to-work and shopping trip lengths, but there exists potential for decline in these average trip lengths according to the pattern of em- ployment suburbanization. On balance, this urban structure favors the use of the auto compared with traditional fixed-route transit. All of these urbaniza- tion patterns will be more pronounced in the South and West. Transportation demand for journey-to-work trips should grow in proportion to total labor force growth, slightly reduced by combined journey-to-work trips per single household and, perhaps, the use of com- munication as a substitute for transport. The macroeconomic performance of the economy affects investment levels and inflation rates, which directly influence transport activity. Projections of real GNP and real disposable personal income per Capita suggest changes in the purchasing power of the consumer over time. It is believed that individuals realizing more disposable income will tend to in- crease their shopping trips and leisure travel, change their modal-choice patterns, and perhaps move fur- ther outside older cities to outer-SMSA suburban de- velopments. Private domestic investment to 2000 is expected to affect transportation by supporting a share of re- search and development and much of the growth in transport productivity. Government spending over the period may provide the same type of support for research and innovation in transportation and, more broadly, is anticipated to stimulate private invest- ment. Selective business and government investment may favor one or more of the modes, for either pas- senger or freight, inducing greater technological in- novation and labor productivity in that sector. Changes in life styles, values and institutions af- fect transportation activity indirectly, for the most part, by causing changes in the rate of household formation, the relative mobility of selected classes and ages, the labor force profile, purchasing power of consumers, and urbanization or regional migra- tion. Increased rates of crime and vandalism and growing incidents of terrorism impact transportation demand and supply. High rates of crime in certain areas undoubtedly affect demand for some passen- ger modes—urban bus and transit systems, for ex- ample. Vandalism and terrorism have already, in the air mode for instance, significantly affected the man- ner and cost of providing transportation services. NOTES AND REFERENCES 1. Details concerning consistency and method can be found in Appendix II. 2. Brian Berry and Donald Dahmann, Population Redistribution in the United States in the 1970s, Washington, D.C.: National Academy of Sciences, 1977, p. 6. 3. Fertility rates are expressed as the average number of life- time births per woman. The U.S. replacement rate is estimat- ed at 2.1. 4. George Sternlieb and James Hughes, Current Population Trends in the United States, New Brunswick, New Jersey: The Center for Urban Policy Research, 1978, p. 12. 5. The term “urban area,” as defined by the U.S. Bureau of the 92 e FORECASTS TO THE YEAR 2000 10. Census, basically comprises all persons living in places of 2,500 inhabitants or more, or living in the densely settled fringes of urbanized areas. Urbanized areas are basically those places consisting of population of at least 50,000 per- sons. See U.S. Department of Commerce, Bureau of the Census, 1970 Census Users’ Guide, Part I, Washington, D.C.: U.S. Government Printing Office, October 1970, p. 82. Brian Berry and Donald Dahmann, Population Redistribution in the United States in the 1970s, Washington, D.C.: National Academy of Sciences, 1977, p. 7. U.S. Department of Labor and U.S. Department of Health, Education and Welfare, Employment and Training Report of the President, Washington, D. C.: Government Printing Of- fice, 1977, Table A—1, p. 135. Ibid., and U.S. Bureau of Labor Statistics, Employment and Earnings, Vol. 23, No. 3, September 1976, Table A—1, p. 19. U.S. Council of Economic Advisors, Economic Report of the President, Washington, D.C.: Government Printing Office, 1977, Table B-7, p. 195. GNP: U.S. Bureau of Economic Analysis, Business Statistics, 1975, Washington, D.C.: Government Printing Office, May 1976, p. 1; Survey of Current Business, Vol. 57, No. 8, Au- ale Mies 13. gust 1977, p. S—1; Total U.S. Population: U.S. Bureau of the Census, Current Population Reports, Series P—25, No. 632, July 1976, Table 7, pp. 14-16. U.S. Bureau of Economic Analysis, Business Statistics, 1975, Washington, D.C.: Government Printing Office, May 1976, p. 8; Survey of Current Business, Vol. 57, No. 8, August 1977, p. S—1. U.S. Council of Economic Advisors, Economic Report of the President, Washington, D.C.: Government Printing Office, 1977, pp. 260—261. It should be noted that yields of industrial bonds rated AAA by Moody’s have risen substantially since 1976. For example, in May 1979 a sample of six such new bond issues was quoted at nominal annual yields ranging from 9.73% to 11.18% (Wall Street Journal, May 7, 1979, p. 3I). Total government expenditures: U.S. Bureau of Economic Analysis, Survey of Current Business, Vol. 56, No. 1, January 1976, Part Il, Table 3.2, pp. 52-53, and Table 3.4, pp. 58-59; Vol. 57, No. 8, August 1977, Table 13, p. 9; GNP: U.S. Bu- reau of Economic Analysis, Business Statistics, 1975, Wash- ington, D.C.: Government Printing Office, May 1976, p. 1; Survey of Current Business, Vol. 57, No. 7, August 1977, Table 1, p. S. 1-1. = Technological Trends in Transportation and Communications INTRODUCTION For a complete picture of the future U.S. transpor- tation system, it is necessary to examine possible technological advances that may alter transport characteristics. In the past, improvements in trans- port technology were so frequent that they are difficult to catalog. Continued evolution has been the norm in the highway, waterway, rail, maritime, transit, and pipeline sectors since the turn of the century, and a new mode—air transportation—has emerged. In addition, telecommunications is of growing impor- tance for the transport of data and information and may affect present transportation demand patterns; thus communications technology too is considered in this chapter.’ Whether technological changes in transportation and communications will continue at a rapid pace, and how change might influence trans- port policy determinations, are important uncertain- ties. The primary objective of this chapter is to help resolve uncertainty by identifying potential techno- logical innovations which may have significant im- pact on transportation by the year 2000. Because the range of opportunity for technological change is broad, embracing innovation in hardware, design concepts, system processes and better use of exist- ing technology, the NTPSC sought the viewpoints of numerous industry and government transportation and communications experts. From an initial list of several hundred possible changes, 21 were selected for detailed investigation. To these 21 transport innovations were added potential new developments in communications which could significantly impact transportation. In Figure 9 these innovations are displayed according to mode. For each innovation, a literature search was conducted to determine: technical descriptions; probable effects and costs; major barriers to imple- mentation; a likely introduction date; and, where possible, an estimate of market penetration through the year 2000. A similar analysis was made for telecommunications technologies. This chapter de- scribes the factors that motivate innovation, reports the findings of the NTPSC’s investigation and con- cludes with an assessment of the net effect on transportation associated with each innovation. MOTIVATING FORCES Technological innovation will no doubt continue to be spurred by traditional motivations and market forces—to reduce capital and operating cost, im- prove service, meet consumer demands, and expand markets. But there are new forces of government regulation that influence change and help determine which innovations emerge. In some cases, govern- ment influences are peripheral to traditional trans- portation goals, and reflect national goals in other fields. There is public concern in such fields as: safety; environmental protection; energy conservation; mo- bility for the elderly, handicapped, and poor; national security; enhanced economic welfare; and a variety of other matters. In pursuit of varied ends, govern- ment influences the nature of technological develop- ment in several ways: 1. Specific regulations are imposed that foster or inhibit technological change, e.g., automobile energy efficiency and emissions standards; 2. Direct government support of research and devel- opment, and indirect government support through tax policies, may lessen the risk and quicken the rate of technological innovation, e.g., electric vehicles; and 3. Technological spinoff from other Federal efforts, especially national defense and space explora- tion, may occur, e.g., civilian aircraft have benefit- ed from innovations developed for military pur- poses. Both traditional market motivations for the trans- portation industry and its suppliers, plus motivations produced by government pursuit of various national goals, are likely to influence the nature of technologi- cal innovation in transportation during the remainder of the century. TECHNOLOGY FINDINGS AUTOMOBILE TRANSPORTATION During the 1970s, the Federal government became a major force influencing automobile technology, and 93 94 e FORECASTS TO THE YEAR 2000 FIGURE 9. Key innovations selected for analysis. Alternative Automobile Engines * Diesel * Stratified-Charge Spark-Ignited * Continuous-Combustion — Gas Turbine — Stirling Electric and Hybrid Vehicles * Transbus * Urban Traffic Control Systems for Preferenctial Bus Treatment Truck Transportation: Size and Weight Increased Automation of Monitoring and Advanced Intermodal Rolling Stock and Automated/Mechanized Intermodal Terminals Railroad Electrification Automated Guideway Transit Energy Recovery Systems Engine Component Improvements Supercritical Wing Design Active Controls Technology Energy-Efficient Engines Composite Materials in Primary Structures Air Traffic Control Improvements Liquified-Natural-Gas Carriers Highway Bus Transportation Variations Control Processes Guideway Air Marine Deepwater Oil Ports Fuel-Saving Engines, Diesel, Nuclear and Gas Turbine Pipeline ———__—_______________ Sjurrry Pipelines Data Transmissions Communications reece Voice and Video Communivation government influence is expected to be strong to the year 2000. Autos accounted for over 90 percent of total passenger miles traveled in recent years, so it is not surprising that the auto is a prime target for government efforts to conserve petroleum, reduce air pollution and improve travel safety. The 1975 Energy Policy and Conservation Act (EPCA) and its amendments set average fuel econo- my standards weighted by sales for new cars; those standards rise from 18 mpg in 1978 to 27.5 mpg in 1985.° To meet EPCA objectives, auto industry ~ research can be expected to focus on innovations TECHNOLOGICAL TRENDS IN TRANSPORTATION AND COMMUNICATIONS e 95 which increase fuel economy, such as engine modifi- cations or alternative engines, drag reduction, and greater use of lightweight materials in vehicles. The 1977 Clean Air Act Amendments set strict standards that are to be met in the early 1980s for new car emissions of hydrocarbons, carbon monox- ide, and oxides of nitrogen.* Future standards may include other classes of emissions. These standards affect the development of both alternative engines and alternative fuels. In the area of safety, pressure from both the government and consumer groups is likely to con- tinue to promote structural changes that improve crashworthiness and further the incorporation of passive and active restraint systems and accident avoidance systems. Aside from government directive, the profit motive continues as an incentive for automobile innovation. Domestic producers, wishing to maintain their com- petitive positions, will advance innovations which reduce vehicle maintenance, improve reliability and enhance comfort. A market expansion opportunity which is being watched closely is the small urban auto; the likely candidate is an electric or hybrid vehicle. Automobiles will require extensive modification to reach the objectives established for fuel economy ‘and emissions. Many vehicle components will be subject to change, especially engines. With improve- ments such as electronic fuel metering, fuel injection, and three-way catalysts, today’s standard—the uni- form-charge, spark-ignited engine—may continue to be preferred. This engine has a 60-year history of manufacturing and maintenance experience. How- ever, without drastic size and weight reduction, ‘vehicles equipped with these engines will be unable to meet 1985 EPCA standards.° Likely alternatives for the early 1980s include the stratified-charge, ‘spark-ignition engine and the diesel. In the late 1980s, other alternatives may be available, such as gas turbine and Stirling engines, plus electric or hybrid propulsion systems. These four types of alternative engines for the 1980s were chosen for further investigation.® Diesel Engine The diesel has held only a small fraction of the total engine market for autos, taxis, and light trucks, but diesels are increasingly viewed as a practical means of building profitable cars while meeting current ‘regulations on emissions and offering a 25 to 30 percent mileage improvement over comparable gas engines.’ General Motors Corporation has made a considerable commitment to automotive diesels, as have several foreign automakers. Despite good fuel economy, durability, and low maintenance characteristics, the future of the auto- motive diesel is tightly linked to its emission charac- teristics. Because of impurities in diesel fuel oil, diesels emit more oxides of nitrogen (NO,) than Current gasoline engines.® While diesels can meet current NO, standards of 2.0 grams per mile, it is generally agreed that the economically practical lower limit for a diesel, using current emissions- control technology, is 1.0 gram per mile for a full-size car.’ Such a level of emissions will enable diesels to meet 1981 standards, but not the 1977 Clean Air Act Amendments goal of 0.4 grams per mile.'° Another factor weighing against the diesel is its high level of particulate emission."' Health effects of these particulates are currently not well defined. The only method known for reducing particulates is filtration or trapping and such devices require fre- quent service. Thus, further developments in particu- late control systems could be needed if emissions regulations are established for particulates. Stratified-Charge, Spark-ignition Engine This engine is similar to the uniform-charge, spark- ignition engine now commonly used, except the fuel- to-air mixture in the combustion chamber is much richer near the spark plug than elsewhere, permitting lower peak temperatures, higher compression ratios, and more complete combustion. The result is better fuel economy and reduced emission levels, benefits which make stratified charge technology an attrac- tive near-term addition to the basic spark-ignited engine. One version of this engine was introduced into the domestic market in 1973—the Honda CVCC (com- pound vortex-controlled combustion) engine. This design is available only in relatively small four-cylin- der engines. It is uncertain whether the CVCC’s fuel efficiency and emission characteristics will remain favorable in larger engines.’ Another version, the Ford Motors PROCO (programmed combustion) en- gine, is in the developmental stage. Its open-cham- ber design may offer more potential for solving the dual problems of emissions and fuel economy in larger engines. '* Continuous-Combustion Engines: Gas Turbine and Stirling Two continuous-combustion engines, the gas turbine and the Stirling, are long-term candidates for alterna- tive auto engines. Both engines are characterized by a process in which a fuel is burned continuously. In the gas turbine engine, compressed, heated air rotates a turbine which drives the propulsion chain. 96 e FORECASTS TO THE YEAR 2000 In the automotive version of the Stirling engine, a gas such as hydrogen or helium is sealed in pistons and alternately heated and cooled to produce work. These engines are attractive on several counts. They both are potentially more efficient than spark- ignited engines and neither is constrained by the emissions characteristic of the diesel. Too, both engines can tolerate a wide range of fuel types and qualities, as opposed to the strict requirements of the spark-ignited and diesel engines."* Prototypes of the gas turbine and the Stirling engines have been built, and research and develop- ment programs are underway. With Department of Energy (DOE) support, the Chrysler Corporation is investigating the gas turbine engine.'® Until 1978, Ford conducted a DOE-supported research and development program on the Stirling, but now Ford focuses its research on the stratified-charge engine. However, Stirling research is expected to continue under DOE auspices.'® In addition all auto manufac- turers conduct extensive, independent engine re- search. Widespread utilization of these continuous-com- bustion engines cannot occur without several engi- neering developments. The gas turbine engine will work most efficiently if a continuously variable trans- mission can be developed. Because the turbine rotates at a constant speed, the engine will have poor fuel economy at low speeds and idle unless it is equipped with such a transmission. Developers of the Stirling engine face the challenge of sealing the working gas in the pistons for mass production application. Too, an efficient Stirling awaits the development of alloys for use in certain engine components required to withstand extremely high temperatures. These engineering hurdles alone are expected to delay introduction of either engine until after the mid-1980s.'” If these problems are sur- mounted, others remain, including enormous capital and development costs, market risk, and the need to develop new maintenance capability. Electric and Hybrid Vehicles There has been growing emphasis on electric vehi- cles in the U.S. The Electric and Hybrid Vehicle Research, Development, and Demonstration Act of 1976'® authorized a federally funded program to promote electric and hybrid vehicle technology and to demonstrate the commercial feasibility of these vehicles. Even without Federal backing, some 2,000 electric vehicles reportedly have been built and offered for sale in the U.S.'9 Hybrid vehicles which are powered by a combination of electric motors and internal combustion engines are not yet commercially available. Interest in electric and hybrid vehicles is based on the following expectations: | 1. Electric or hybrid vehicles would successfully compete with conventional vehicles in the urban market; 2. The net effect of using electric-powered vehicles would be a reduction in petroleum demand; 3. If batteries are charged during periods of low electricity demand (i.e., night), utility peak-power requirements would not be affected and electric generation could become more efficient; and 4. Environmental protection would be facilitated because it is easier to control emissions from a few stationary electric power stations than from a large number of moving vehicles.” The extent to which these expectations are met hinges primarily on battery development. The battery is the main constraint on the ability of electric or hybrid vehicles to compete with liquid-fuel vehicles, although other extensive vehicle system and infra- structure modifications would be required. | In the near term, three batteries, lead-acid, nickel- iron, and nickel-zinc, have a reasonable chance of. becoming commercially available. Promising ad- vanced batteries are the lithium-metal sulfide, sodi- um-sulfur, and zinc-chloride.*’ At present, none of these batteries possesses the power, endurance or conversion efficiency which would enable battery- powered vehicles to match the performance of conventional autos. Due to their limited range and acceleration, near- term applications of electric vehicles are likely to be confined to a few commercial vehicles for urban use, and special-purpose markets such as golf carts. Electric and hybrid vehicles are not expected to be common as second family cars until the 1990s at the earliest. The extent of market penetration through 2000 is uncertain and depends heavily on the rate of battery development and government incentives for commercialization. BUS TRANSPORTATION Traditional market incentives are expected to be important forces for innovation in bus technology. Strategies which increase energy efficiency will not be nearly as significant for buses as for other modes. However, energy conservation technologies devel- oped for autos and trucks may be adapted for buseg if cost savings are foreseen. Transbus In the urban market, a recent force behind techno-. logical change is the Federal government. Section TECHNOLOGICAL TRENDS IN TRANSPORTATION AND COMMUNICATIONS @ 97 504 of the Rehabilitation Act of 19732 has been interpreted as requiring all transit projects receiving Federal funds to be accessible to persons in wheel- chairs. 23 In response to the act, Federal design specifications for all new buses purchased with Federal aid after September 1979 require low floors _and either ramps or lifts for wheelchairs.”4 It is hoped that this type of bus, called Transbus, can increase ‘the ease and speed of entry and exit for certain passengers. The effect on time spent at each stop is -unknown because introducing the Transbus may alter the ridership composition. Manufacturers ex- pect these design changes to increase manufactur- ing costs by up to $30,000 per bus, and they may affect operating costs as well.2° A barrier to wide- spread availability of Transbus in the near future has been reluctance on the part of bus manufacturers to change from their own designs to the mandated design. Urban Transportation Control Systems for Preferential Bus Treatment ‘New emphasis on traffic engineering techniques which are non-capital-intensive and readily applied to improve existing transportation services has fo- cused attention on applications to urban bus net- works. A possible application is an Urban Traffic Control System (UTCS), developed by DOT, which can give buses preferential treatment at signalized intersections. A UTCS consists of a set of signals at various ‘network intersections that are computer-actuated to minimize traffic delays on the network. Existing UTCS systems detect traffic flows through buried ‘detectors, then adjust traffic signals. When a system ‘is designed for preferential bus treatment, on-board ‘transmitters interact with detectors which recognize ‘buses and activate a longer green signal. On bus ‘routes with many signalized intersections, significant ‘reductions in travel time plus some fuel savings are possible.6 UTCS systems can be implemented as part of an overall strategy to optimize traffic flows on a road ‘network, including autos and trucks. Such a system could conceivably be designed to give preference to all high-occupancy vehicies, including vans and car pools. A UTCS system may be implemented rapidly compared with constructing new facilities and avoids ‘the high capital costs, externalities and other difficul- ties associated with new construction. In urban areas with strong need for efficient transit, UTCS can have considerable market potential. A barrier to UTCS is the resistance of bus Operators to install on-board transmitters. Develop- ‘ment of detectors that recognize the magnetic signatures of vehicles may eliminate this barrier. In addition, to the extent that granting preference to buses requires other motorists to suffer delays, there is likely to be opposition to UTCS. TRUCK TRANSPORTATION Technological innovations in trucking are expected to encompass: improvements in engines, drive-trains, and aerodynamic design; structural weight reduc- tion; and increased dieselization.2’ Government mandates to improve safety will moti- vate change in trucking. Innovation will be sought to improve crashworthiness, and accident avoidance systems similar to those under development for automobiles may become available for trucks.° Increases in vehicle sizes and weights appear to be a major change in the physical characteristics of trucks and truck-tractor combinations which might occur over the next two decades. Truck sizes and weights were selected for further review in this report.?9 Prior to 1956, the individual states had exclusive jurisdiction in the regulation of vehicle size and weight. However, following passage of the 1956 Federal-Aid Highway Act,°° no Federal highway funds could be allocated to states which allowed vehicles to operate on the Interstate System with axle loads, gross vehicle weights, and widths greater than federally imposed limits.*' However, if a state’s limits prior to July 1956 were greater than Federal limits, the higher limits could be kept in effect by the state. (Federal limits apply only to the Interstate System and do not include height and trailer or combination length.) Because vehicles of larger size or heavier weight Can carry more cargo, and often be operated with less energy and at lower cost per ton-mile to the trucker, there is a continuing question as to whether size and weight restrictions ought to be increased. Several options are commonly considered for ex- tending these limits. 1. Increase length while maintaining maximum gross weight limits. Such change would benefit the transport of light-density goods. However, signifi- cant increases in length pose concern to motor- ists.%2 2. Increase gross-vehicle-weight limits but retain limits on the weight each axle can bear. Depen- dent on axle spacing (and the use of ‘“‘bridge formulas’) this would encourage the use of multiple axles or (if lengths also were increased) multiple trailers. Such proposals have been criti- cized on safety grounds and in light of potential negative impacts on structures and competing modes, especially rail.*% 98 e FORECASTS TO THE YEAR 2000 3. Increase axle-load and gross-weight limits. This would encourage heavier loadings. Greater axle loadings are expected to increase some highway maintenance and construction requirements.“ For this reason and due to safety concerns, such proposals have considerable opposition. Ar; important consideration in any move to raise size and weight limits is the impact on other motor- ists. The question of who would bear the cost of any increased maintenance and any additional construc- tion required with higher weights, and the potential safety problems with heavier and longer vehicles, are of particular concern to other motorists and to highway agencies. A final concern is a possible increase in motor vehicle freight traffic which might add to highway congestion and could reduce rail- road haulage.* RAIL GUIDEWAY TRANSPORTATION Two facets of rail transport—long-haul freight car- riage and urban transit—have potential for techno- logical innovation. In rail freight, the search for profitability in a competitive environment is likely to spur operation and service innovations. Better utili- zation of existing equipment, more efficient use of labor and the introduction of new equipment, espe- cially in the intermodal area, are targets for techno- logical advances. However, implementing advances that require substantial investment requires overcom- ing the difficulties railroads face in raising capital. In urban rail transit, efforts to reduce costs have focused On innovations to decrease labor, energy, or capital construction costs. Five guideway technologies were singled out for review. Three freight technologies are concerned with upgrading rail Operations, saving energy and improving intermodal operation. Two urban guide- way technologies were selected for examination; the first potentially improves service levels and reduces labor requirements in comparison with conventional transit, while the second may provide savings in electricity consumption. Increased Automation of Monitoring and Control Processes Railroads make extensive use of computers and other elements of automatic control systems. Addi- tional use of sensors, detectors and computer hard- ware to monitor or control operations and provide information for management and planning could improve train scheduling, terminal operations and equipment utilization. A recent railroad industry application is the Train Il program which monitors the flow of freight cars to provide information on car shortages and distribution.*® The amount of automatic control may increase, but major barriers must be overcome for the imple- mentation of a national system, which could yield the greatest benefits. Expense will be a major barrier, and problems with obtaining uniform data quickly, fears of revealing proprietary information, and diffi- culties in enticing small but essential lines to join the network will impede the progress of the rail industry toward a full system.°” Advanced Intermodal Rolling Stock and Automated/Mechanized Intermodal Terminals Technological developments are being pursued that will enhance the ability of railroads to move contain- erized freight. Service improvement is a primary goal of new rolling stock and terminal designs, and a factor of importance because rail container transport competes with trucks, which by and large offer superior service. Reducing costs by decreasing capital and operating expenses is also a goal. New, more efficient rail cars have been designed to serve specialized regional markets and as prototypes for a standardized car for the entire system. There are proposals for a variety of intermodal terminals aimed at reducing terminal delay. Less delay would improve service to shippers and cut costs through better equipment use. Some carriers favor expensive, automated terminals that can quick- ly and efficiently handle existing line-haul equipment.%? Other terminal concepts require retrofit- ting or replacing existing equipment with designs that minimize handling at the terminal.*° Market applications for these intermodal concepts will depend on: resolution of conflicts about stan- dardization of rolling stock; the level of demand for intermodal transport; the ability of the railroads to raise capital; solving outstanding technical problems; and the modification of existing union work rules.*" Railroad Electrification Intercity rail fuel demands may be positively altered by increased track electrification.** While net energy savings from the switch may be small, railroad diesel- fuel consumption could be reduced if the 20,000 miles of highest-traffic-density routes (carrying about one-half of rail tonnage) were electrified. Petroleum equalling 1.5 to 2.0 billion gallons per year could be saved provided all utilities supplying the electric power relied on non-petroleum energy.** Change from dependence upon a scarce, expensive fuel— petroleum—to dependence upon a plentiful, relative- ly cheaper and domestic energy source—coal— could provide both transportation and non-transpor- tation benefits. Nevertheless, electrification is highly Capital intensive and would require huge levels of © investment, in return for decreasing fuel and other operating costs. TECHNOLOGICAL TRENDS IN TRANSPORTATION AND COMMUNICATIONS @ 99 Automated Guideway Transit Automated Guideway Transit (AGT) is a class of fixed guideway systems operating unmanned vehi- cles along an exclusive right-of-way. Shuttle-Loop Transit, the simplest system, operating in Morgan- town, West Virginia, involves a loop with the vehicles stopping at every station. The most elaborate sys- tem, Personal Rapid Transit, consists of extensive, area-wide grids offering direct, personalized service. AGT systems are expected to provide efficient, speedy service while cutting capital outlays, com- pared with conventional subways. They may also reduce operating costs through labor savings, if outstanding technical and safety barriers are over- come.** About $200 million, split nearly 50-50 between the private and public sectors, had been spent to 1975 on research and development in this area.** The most promising near-term application appears to be the deployment of simple AGT systems at airports and other high-density activity centers. However, five systems have been proposed for demonstration projects in urban areas under the auspices of UMTA’s Downtown People Mover Demonstration Project.*” Energy Recovery Systems Mass transit vehicles are attractive candidates for energy recovery through flywheel storage. During braking, energy is dissipated as waste heat; how- ever, it can be stored in a rapidly rotating flywheel. During acceleration, this energy can be used to reduce the power drawn from a third rail. The frequent stops and starts characteristic of urban rail 'systems make flywheels particularly effective. One type of on-board flywheel has been tested on New York City rail cars and has reduced energy consump- tion per car by one-third over conventional equip- -ment.*® The Office of Technology Assessment esti- mated that if these energy reductions could be duplicated on all U.S. rail transit systems, 741 million kilowatt-hours would have been saved in 1974.49 The significance of this savings is magnified because the maximum use of power by rail transit occurs at the same time as other peak electrical demands. The market potential for flywheel systems will be influ- enced by the price of electricity compared with the cost of flywheels, the number of new rail cars purchased, the number of new systems built and the feasibility of retrofitting existing cars. AIR TRANSPORTATION From its inception, air transport has been a rapidly changing, high-technology field. Government fund- ing, particularly for defense, fostered many of the technological advances. Innovations in the civilian sector are motivated primarily by economic forces; changes which increase productivity, reduce operat- ing costs, or enhance customer appeal have been incorporated into each new-generation aircraft. The chief means of improving efficiency has been to increase aircraft speed and capacity. But increasing speed became less cost-effective once jet fuel prices escalated in the mid-1970s. Fuel prices have emerged as a key force for technological innovation, which is expected to continue throughout the centu- ry, spurring innovations in engines, airframes, and flight control systems. To accelerate the develop- ment of fuel-saving innovations, the Federal govern- ment is sponsoring a massive research and develop- ment effort, the Aircraft Energy Efficiency Program.© Even though fuel use has become a major concern to aircraft operators and designers, it is not the only factor anticipated to motivate future innovation. Maintenance cost reduction may receive more atten- tion and safety should continue to be an important design parameter. Federal legislation is likely to require technological solutions to reduce aircraft noise and air pollutants. Deregulation of domestic air transport may focus attention on innovations in commuter aircraft®' and air cargo.*? Several technological innovations were reviewed that are expected to have significant impact in air transport by the year 2000. For the six aircraft innovations covered, the anticipated total savings in fuel by the year 2000 compared with the base-case situation ranges from 32 to 40 percent. Engine Component Improvements The present commercial jet fleet is powered by a limited number of engine types. These turbofan engines®* and their variants are expected to be produced for many years and remain in service well into the twenty-first century. Evolutionary improve- ments which reduce fuel consumption, maintenance, noise and emissions are likely to be incorporated into new production versions of these engines.“ Compo- nent improvements to turbofan engines could alone result in a five percent increase in fuel efficiency, a significant savings in view of the large number of these engines to be produced and operated in the future. Supercritical Wing Design Airfoil technology has improved considerably over the last decade because of rapid advances in computer-aided design techniques. As a result, new wing designs are available today which are superior to those of existing aircraft.5° The use of a transonic or “‘supercritical’’ shape increases the stability of airflow over the wings, reducing drag and thereby saving fuel.’ The amount of fuel saved depends on 100 e FORECASTS TO THE YEAR 2000 cruise speed and distance. The use of supercritical wings on current medium- and long-range wide-body aircraft could provide fuel savings of approximately five percent.5® Fuel savings for short-range aircraft would be less. Other potential applications for this wing shape include general aviation and special- purpose aircraft, and helicopter rotors. Active Controls Technology The use of active controls on an aircraft's wings and tail can permit increased wingspan—with resulting drag reduction—and smaller tail areas—with corre- sponding aircraft weight reduction. Active controls operate by linking sensors on various aerodynamic surfaces to a computer that can automatically limit unwanted motion or stress on the aircraft structure. Estimates of reduction in fuel consumption are around five percent.5? Such controls also improve ride quality in turbulent conditions.© Energy-Efficient Engines The next generation of turbofan engines is not likely to be in service until the 1990s.®' The approach to that next-generation engine is expected to be through evolutionary improvement of current high- bypass-ratio turbofans, incorporating new materials and advanced components.® The National Aeronau- tics and Space Administration is funding much of the initial research leading to a new turbofan through its Energy Efficient Engine program.® The goal of that program is for 12 to 15 percent fuel savings com- pared to current high-bypass-ratio engines. Addition- al benefits of such a new engine include reductions in emissions and noise.“ Two barriers exist which could delay introduction of the engine: the high capital costs associated with engine development; and the need for major innovations in manufacturing to make engine performance gains affordable.®© Composite Materials in Primary Stfuctures Strong, lightweight materials composed of fibers of boron or graphite arranged in epoxy or aluminum are now being tested in secondary airframe com- ponents.® Such composite materials could per- mit substantial weight reductions if used in primary aircraft structures such as the wings and tail. Design studies indicate that weight savings of 20 to 30 percent could be achieved with extensive use. Such savings would permit a 10 to 15 percent improve- ment in fuel efficiency over aircraft of conventional structure.®’ Extensive use is not expected until the 1990s because long-term flight experience is re- quired to prove the reliability of composites. The cost of composite materials is high compared to alumi- num, but costs are expected to fall with further manufacturing experience and scale economies are possible if the market for these materials expands.® Composite materials may also permit cost savings in aircraft assembly because of reductions in the num- . ber of required parts and fasteners. Composite materials can also be used in the general aviation sector. As one example, some helicopters now use composite rotor blades because the material permits aerodynamic blade shapes which are not practical in metal.”° Air Traffic Control Improvements Technological changes may also occur in the Air | Traffic Control System. Besides striving for improve- ments in the traditional areas of safety, navigation, and communication, emphasis seems likely to be placed on finding technological means to increase | the capacity of existing airports. There has been little © construction of new major airports while air traffic | has continued to increase. At this time the technolog- | ical solution with the greatest potential for increasing | capacity appears to be reducing the minimum spac- - ing required between aircraft during instrument ap- | proach and landing. It is anticipated that current ; spacing of 4 to 5 miles between large aircraft could | safely be reduced to 2.5 miles, were there reliable | systems to detect and avoid the hazardous wake | vortices which trail large aircraft.”1 In addition to efforts to minimize turbulent wakes by aerodynamic | changes in large aircraft,” the FAA is seeking a. ground-based sensor system to help controllers” detect these hazardous conditions and determine optimum aircraft spacing.” | Increasing airport capacity by increasing the number of airplanes that can land in a given period | has the drawbacks of increased noise, terminal | burdens and reduced runway occupancy time. It is | probable that airport capacity can best be raised through a combination of operational improvements — | and new facilities, as well as technological innova- | tion.” MARINE TRANSPORTATION During the past two decades, technological changes in the marine sector have increased efficiency through greater vessel specialization. Ocean ships) ae tremendously in size, especially bulk carriers. 8, Larger vessels cut capital and operating expenses (principally labor and fuel costs) for each unit of | cargo moved, but reduce flexibility.” General cara handling was revolutionized by container and roll- on/roll-off ships, which lowered labor needs and: raised productivity, but greatly increased capital requirements.”’ TECHNOLOGICAL TRENDS IN TRANSPORTATION AND COMMUNICATIONS e 101 In the domestic trades, barge tows on the inland waterways grew to the maximum practical sizes for different reaches of the system.’® Specially designed coastal barges are now in service.”? On the Great Lakes, new bulk carriers have expensive automatic- cargo-handlers,® and mammoth vessels confined to the upper four lakes are being constructed.®' Experi- mental efforts have been underway to extend the Great Lakes shipping season through technological means.®2 Lakers normally are idle three to four months each winter, entailing costs to the shipping industry and forcing shippers to employ alternate means of transport or stockpile goods. Efforts to cut costs and improve service should continue to play a key role in creating new marine technology. The development of equipment tailored to specialized tasks should continue. Ships and equipment that will allow entry into new markets are expected to be developed.™ The technological innovations examined within the marine sector involve cost reduction, performance improvement, or the development of new types of _ service. The two most significant, near-term innova- tions appear to be liquefied-natural-gas (LNG) carri- ers and deepwater ports. Three engine technologies _ examined would reduce cost through fuel savings: _ diesel engines, nuclear ships, and gas turbine en- _ gines. | | Liquefied-Natural-Gas Carriers To augment the energy available to the U.S., projects to import natural gas are in operation and numerous others are proposed. Many sources of supply are on other continents and because this natural gas must be shipped as a liquid (called LNG) at temperatures below —259°F, extremely expensive, specialized ships and terminals are required. The safety of LNG ships is in dispute. The concern is that a collision could cause a ship’s tanks to rupture, allowing spilled LNG to revaporize and form a cloud which could ignite. Advocates and oppo- i nents of LNG operations hold widely divergent views on the physics of cloud formation, movement, and hazard. The establishment of ports in less populous areas or offshore sites is a possible solution. The number of LNG ships needed for the U.S. trade will be determined by import demand, which is largely dependent on factors external to the marine ' sector. Based on a volume of imports similar to that Nj | forecast by the NTPSC modelling efforts, one esti- ' mate places the number of LNG ships (of 125,000 Cubic meters capacity) serving the U.S. at 15 in 1980, and 50 in 1990.8° In June 1978, four LNG vessels were in the U.S. fleet, and as of September ' 1978, fourteen LNG vessels were under contract to U.S. shipyards.®’ Deepwater Oil Ports The past two decades have witnessed phenomenal growth in the size of oil tankers, because larger tankers can operate at substantially lower costs. However, the East and Gulf coasts of the U.S. contain no port deep enough to accommodate supertankers, so the maximum possible savings have not been achieved. Man-made deepwater oil ports could cut the cost of shipping crude oil to the U.S. Deepwater ports involve sizeable capital outlays, but lower total operating expense compared with current oil importation methods. A study conducted for DOT indicated that the transportation costs of oil from the Persian Gulf could be reduced up to 30 percent by the utilization of LOOP (the Louisiana Offshore Oil Port), the only U.S. facility that has received a license and begun construction.®? A deepwater facility con- sists of an off-shore terminal for unloading super- tankers, pipelines for getting the oil to shore, and on- shore facilities that merge the oil into the distribution system. The net consequences of deepwater ports are uncertain, and there is vigorous debate whether regular methods of delivery or deepwater ports pose more threat of oil spillage and damage from associ- ated on-shore development.” One or possibly two deepwater terminals may be built on the Gulf Coast.%' It is unlikely in the near term that deepwater oil ports will be built on the Atlantic or Pacific coasts. No single location on the Atlantic coast has adequate refinery capacity to process a high volume of imports, and environmental sentiment exists against them.9* The West coast is expected to rely less on imports than on oil from Alaska, moved in smaller tankers.9* But even if only one port were constructed on the Gulf, it would have significant impact because of its size. Fuel-Saving Engines: Diesel, Nuclear and Gas Turbine Worldwide, diesel engines are the most common marine power plant, but they are rare in the U.S. international fleet. Most U.S. ships are powered by steam engines which burn residual fuel, and no U.S. manufacturer currently fabricates large marine die- sels. Slow-speed diesel engines consume 20 per- cent less fuel than comparable steam plants.% If the U.S. fleet switched to diesel, a considerable fuel savings would take place, but other matters than fuel economy need to be compared. Diesels are not suitable for every vessel type and certain undesirable operating characteristics may outweigh potential fuel consumption advantages.% It is unlikely that other engine types will play a major role during this century. Nuclear-powered 102 e FORECASTS TO THE YEAR 2000 ships would substitute uranium for petroleum, giving diversification of energy sources. However, con- struction costs are enormous while economic poten- tial has not been demonstrated, and environmental, regulatory and liability problems may arise.%” Marine gas-turbine engines will offer fuel savings if technological improvements occur at the fast pace foreseen by the engine’s proponents. They expect that fuel consumption by 2000 will be less than one- half that of present steam turbines. However, achiev- ing that level would require major advances in the use of composite materials, the development of a combined cycle, and improved fuel additives.% PIPELINE TRANSPORTATION: SLURRY PIPELINES Technological changes in pipeline transport to the year 2000 are expected to be evolutionary in nature, motivated either by the prospect of operating effi- ciencies with conventional systems or by the need to meet engineering challenges posed by harsh envi- ronments. Examples of future innovations motivated by the former include: 1. Greater use of computers to control pressure variations, optimize duty cycles and monitor leak- detection systems; 2. Metallurgical improvements to permit higher oper- ating pressures; 3. Friction-reducing coatings or additives to reduce friction losses, improve energy utilization and extend capacities of existing systems; 4. Heat-engine improvements such as bottoming cycles and gas turbine regenerators to improve energy efficiency through waste heat utilization; and 5. Corrosion control improvements to increase safe- ty and reduce maintenance.° Examples of innovations which will facilitate pipeline operations in harsh environments include: 1. Metallurgical improvements allowing very low temperature operation; and 2. Engineering solutions to frost-heave and ground- subsidence problems.1©° Market expansion is a strong motivation for inno- vative change in the pipeline industry. Traditionally, pipelines have transported liquid and gaseous prod- ucts almost exclusively. Before the end of the century, however, it is conceivable that solids and slurry pipelines could become important elements of the transportation system, either in competition to or in conjunction with conventional freight transporters. Because of the impact this market expansion could have, slurry pipelines were selected for further review. In order for solids to be transported in slurry form, the material must be finely ground and suspended in a liquid’ before being pumped through a line. These requirements limit the materials which can be trans- ported to such commodities as coal, ores, minerals, and gravel.'° Technological feasibility is not in question; slurry pipelines are operating in many countries on a limited scale. Total U.S. slurry pipeline length is less than 400 miles.’ This total could increase significantly in the 1980s through increased western coal produc- tion and the subsequent need to move the coal by rail, barge, and perhaps slurry pipeline.1% In general, transport conditions which favor slurry pipelines over competing modes are long distances, high volumes, no existing rail lines or inadequate capital to improve poor rail conditions, and high rates of inflation.'° Aside from feasibility, which can be determined on an origin-destination basis, the future of the coal slurry pipeline is likely to hinge on the ability of organizers to obtain both rights of eminent domain and adequate water supplies.' One intriguing scheme for coal-slurry pipeline development is the conversion of under-utilized oil and natural gas pipelines to carry slurry. If this change can be made, the flexibility of the entire pipeline system would be enhanced and slurry pipe- lines would be in operation with far less capital cost. The technical feasibility of conversion hinges on the question of whether the greater abrasiveness of coal will Cause excessive wear on the steel used in existing pipelines.1° POTENTIAL BENEFITS FROM TRANSPORT TECHNOLOGY INNOVATION Table 12 summarizes potential effects from imple- mentation of the key transport innovations investi- gated by the NTPSC. Major effects are divided into eight categories, including traditional concerns such as costs, level of service, safety and accessibility, plus areas of more recent concern, namely energy and environmental effects. Within each category in the table, a plus indicates a beneficial effect, a minus indicates a potential detrimental effect and ‘‘U” indicates that the potential effect is uncertain. Blanks indicate that no major change is expected. The overall impact on transportation was derived through subjective evaluation by the NTPSC staff of the eight individual categories. The right half of Table 12 presents information on six potential barriers to technology and three current government roles, indicating how each potential technology is likely to be affected by barriers and how government is presently concerned with the technology. Each in- Stance of a barrier or a government relationship TECHNOLOGICAL TRENDS IN TRANSPORTATION AND COMMUNICATIONS e 103 TABLE 12. Potential benefits to be gained from technological innovation Major Effects on Transportation Current Government Potential Major Barriers Role 5 S e HE - ® ” = B 5 2 D € a 5 a 6 > 8 § 2 5 2 § aires) oe aro Gere aS oa @ Songs shi Sivas iS 3 B 2 @ 2.4.5 i. Sei Bon Bongos: o ithe Rieie & aie aaeck - bilinae o 6 oe ® s Taso Beatie WAST BRR See wet Bir gy ibereh ee Ip : go. Ww Dib ea ANG EOinki Rive vie ee je KS PPE, PERERPE DERE Be ES > ~ — ® S i) Oo a = ” Sind ohh BS Ha: ee ghee rag! Pek ag Technology Highway Alternative Auto Engines: RM ett ck vacielrs vers + + + uot x x BUSl SAVING-ENGINES 0... 2c. c.ccscccisscsesnevsesencedens re? G u ord og. x 5 alee haat Pipeline RT Ma UO oa diis svshesadsnarsocsoaneysoaxtecenessaniess | eae See Uses uy expt x x SOURCE: Compiled in the course of NTPSC research. KEY: + Technology may have beneficial effect — Technology may have detrimental effect u Effect of technology is uncertain (Blank indicates no major change expected) x Factor applicable to implementation of a technology 104 e FORECASTS TO THE YEAR 2000 applicable to a key technology is marked by an ‘‘x.” The table therefore indicates some of the forces that may affect the development of new technologies. Twelve of the technologies were judged to offer overall benefits. Improved spark-ignited engines (uni- form and stratified charge) are being designed to help meet energy and emissions mandates for automobiles and they do not have significantly higher capital costs. Urban transportation control systems* improve traffic flow, especially for buses. The main result is improved service levels with secondary positive impacts on energy and the environment. Electric/hybrid vehicles cannot promise similar per- formance characteristics to automobiles powered by heat engines, but may shift a portion of auto fuel consumption away from petroleum-based fuels and may simplify emission control problems. Further, the purpose of electric/hybrid vehicles is not to replace conventional automobiles in full, but to serve urban and short-range markets. Energy-recovery systems for heavy-rail transit conserve energy dissipated in car braking. In addition, the on-board flywheel does not increase capital cost significantly when installed on new cars. Increased automation of monitoring and control processes, advanced _ intermodal rolling- stock design, and intermodal terminals for rail freight transport reduce operating costs and improve ser- vice levels. However, such intermodal terminals have high capital costs. Except for energy-efficient en- gines and air traffic control improvements, all the aircraft innovations have unqualified positive bene- fits. Finally, in the marine sector, the use of super- tankers at deepwater ports offers reduced operating costs, but has uncertain environmental effects. The use of diesel engines for ocean-going ships reduces fuel costs. Nuclear ships, although high-speed, are capital-intensive and may entail safety risks. Other technologies have an uncertain net effect at this time. The automotive diesel engine has unattrac- tive environmental characteristics, but offers fuel economy advantages over spark-ignited engines. The automotive and marine gas-turbine engines and the automotive Stirling engine offer potential fuel economy improvements and emissions reduction but require large development and capital costs. While Transbus enhances the mobility of the handicapped and elderly, it entails higher capital costs than Standard buses and an uncertain effect on travel times. Increased truck size or weight limits reduce motor carrier operating costs but result in increased highway costs, and safety aspects have been ques- tioned. Rail electrification likewise requires a great deal of capital for reducing dependence on petrole- um. Automated Guideway Transit potentially offers a high level of service and greater mobility, but it is expensive and poses safety questions. The net effect of LNG carriers depends both on the desirability of importing natural gas and on safety aspects. Finally, the overall impact of coal slurry pipelines must be determined on a point-to-point basis. Capital costs and water availability are two important consider- ations. COMMUNICATIONS Today, an electric circuit on a chip perhaps a quarter-inch square can embrace more electronic components than the most complex piece of elec- tronic equipment that could be built in 1950. At the same time, circuit reliability has improved sharply while power consumption and price have dropped dramatically. A microcomputer ‘‘at a cost of perhaps $300, has more computing Capacity than the first large electronic computer, ENIAC,’’8 built in 1946. More importantly: .. . itis 20 times faster, has a larger memory, is thousands of times more reliable, consumes the power of a light bulb rather than a locomo- tive, occupies 1/30,000 the volume and costs 1/10,000 as much.1° Advances in electronics are taking hold in tele- communications. Transmission capacity is greater and the variety and capability of terminals, such as telephone handsets and computer input and output devices, are increasing dramatically. In the early 1960s, communications satellites were in the experi- mental stage. In 1965, the International Telecommu- nications Satellite Organization launched INTELSAT | with a design lifetime of 1.5 years, a capacity of 40 telephone circuits, and cost per circuit per year of $32,500. In 1979, INTELSAT V is scheduled for launch with a design lifetime of 7 years, a Capacity of 12,000 circuits, and a cost of $800 per circuit per year.'10 While satellites are revolutionizing long-distance communication, developments in coaxial cable and optical-fiber transmission systems are likely to alter local or urban communication. Optical fibers in particular can carry 100 or perhaps even 1,000 times aS many conversations as today’s coaxial cable systems." In the future of telecommunications technology, several trends are discernible. The first is that the telephone will become a more powerful tool, for both data communications and voice interaction. Second, new and different telecommunications alternatives will become available as hybrids, made up of a telephone connection in conjunction with another instrument—such as a facsimile machine or a televi- sion set. Methods other than today’s analog lines will be used to distribute telephone signals locally. Finally, expanded use of non-telephone communica- tions paths will soon become possible.112 TECHNOLOGICAL TRENDS IN TRANSPORTATION AND COMMUNICATIONS e 105 The potential impacts of the above on transporta- tion are far-reaching. Telecommunications applica- tions can enhance the efficiency and reduce the costs of operations of all modes of transportation, through improved rail-car scheduling, advanced air traffic control, urban vehicle-monitoring systems, and urban traffic-control systems, among others. As these improvements were already considered in transport technology discussions earlier in this chap- ter, they will not be reviewed further. The remainder of this section considers the impact of telecommuni- cations technology on future transportation demand. IMPACT OF COMMUNICATIONS TECHNOLOGY ON TRANSPORT DEMAND Innovations in communications affect transportation demand in three principal ways: 1. Eliminating the need for some trips or shipments; 2. Stimulating economic activity, generating new demand; and 3. Altering urban and regional development pat- terns. Two primary areas of communications technology that will potentially affect transportation demand are: (1) voice/video, and (2) data communications. The transmission of data is the most promising area of development in its potential to influence transport. Some of the major innovations are focused on the electronic transfer of funds, electronic mail, and two- way, point-to-point communications via cable televi- sion. The principal development in the voice/video field is the teleconference.''% In both areas it is believed that telecommunication offers potential to reduce the need for transporta- tion, although how much reduction is uncertain. It has been pointed out that, like the early telegraph, there is some chance that advances in telecommuni- cations may actually stimulate the demand for travel.'"4 Historically, the improvement of communi- cations and the expansion of transportation have gone hand-in-hand, so that the assumption of tele- communications substituting for travel may be un- warranted. It is therefore necessary to be cautious in assuming that rapid expansion of the market for telecommunications in the U.S. implies significant displacement of demand for transportation. In many respects, the fields of transportation and telecommu- nication may ultimately be related to one another through substitution, or mutual reinforcement of demand. DATA TRANSACTIONS The vast majority of today’s data and image trans- mission occurs over telephone lines; a small percent- age takes place via microwave and satellite. Be- cause most of the information travels over standard telephone lines, which were originally designed to carry voice signals, it must travel as an analog, or continuous but varying, electrical signal. But data transaction terminals typically generate and process digital, or discrete, electrical signals. The conversion from analog to digital not only increases cost, but limits efficiency. Present-day voice circuits can han- dle a maximum 9,600 bits per second (bps).''* On the other hand, the data transaction devices using these telephone lines are capable of handling information at speeds which are orders of magnitude higher—in the megabits per second range. There are two kinds of data transactions: (1) computer or data processing equipment input and output transactions, and (2) ‘‘correspondence”’ type transactions, such as memos, contracts, short re- ports, or what might be called electronic mail. Data Communications In computer input and output exchange, large com- puters process information received from remote terminals and send back reports. In returning pro- cessed information, the lack of a reasonably-priced, high-capacity circuit precludes some uses of data communications to return reports. Instead, reports are loaded into a truck, either in paper form or computer tape, and shipped back to remote sites, in some cases as often as every night. A firm which distributes data in this fashion could realize signifi- cant savings if high-capacity communications were readily available at reasonable cost. The major reason the data cannot be transmitted is that tran- smitting volumes of data at 9,600 bps, the highest speed possible over present phone lines, would take days. Although leasing higher-capacity lines or other high-capacity transmission systems is possible, they are extremely expensive relative to low-capacity lines. Electronic Correspondence Electronic mail is expected to emerge rapidly, through use of facsimile, communicating word pro- cessors, terminal and computer-based message sys- tems and optical character recognition. Electronic developments have already reduced the need for mail delivery to businesses and for messenger ser- vices to carry memos, proofs and other documents. Some U.S. cities have facsimile centers, where one can pay to use a privately-owned facsimile terminal just as one can use a duplicating machine in a copying center.''® Several large firms which use computers extensively have replaced almost all terminal correspondence with computer-based mes- 106 e FORECASTS TO THE YEAR 2000 sage systems.''? Also, Electronic Funds Transfer Systems (EFTS) promise to alleviate not only paper transactions, but the travel necessary to make transactions. Bank-to-bank funds transfer is already almost totally electronic.''® Facsimile, which can transmit information § in graphic or written form over telephone lines, is the most prevalent form of electronic mail. There are now 170,000 terminals installed in the U.S.,"'% serving a wide range of purposes. Facsimile equipment is available from a number of manufacturers, with current transmission speeds ranging from 20 sec- onds to 6 minutes per page.'2° Future Handling of Data Communications and Electronic Correspondence The field of data communications appears at the threshold of creating cost-effective, energy-efficient products that will preclude the necessity for shipping most information-bearing parcels and letters. The Capability to send and receive documents electroni- cally is already feasible from a technological stand- point. In the next decade, prices are expected to fall, making such products commercially attractive.12' VOICE AND VIDEO COMMUNICATIONS The information that travels over various transmis- sion media, such as telephone lines, microwave, satellite, or fiber optics, can itself take on various forms. In business, different modes of telecommuni- cations satisfy different requirements for information exchange, from a simple phone call to a teleconfer- ence with several people. Non-complex exchanges of information are han- died by telephone, or (as with facsimile) over tele- phone lines. The telephone is the foundation for most teleconferences which do not require video interac- tion. An audio teleconference may be enhanced by the use of facsimile machines, to transmit and receive copies of documents for conference partici- pants. These machines can be linked by regular phone lines, as are the participants, so that when illustrating a particular point, a copy of the relevant graph or chart may be sent to all concerned. A step towards face-to-face effectiveness in tele- conferencing is the implementation of interactive, audiovisual communications. The American Tele- phone and Telegraph Company’s (AT&T) entry into this mode of telecommunication is called Picture- phone Meeting Service, or PMS. There are PMS Centers in New York City, Los Angeles, Chicago, San Francisco and Washington, D.C., and PMS Conferees must use one of these centers. 122 While a few private systems are in operation, aside from PMS there are no commercial offerings of video confer: encing at present. FUTURE OF, COMMUNICATIONS TECHNOLOGY A major change likely over the next decade is the convergence of data with voice and video communi- cations. This trend, which can be seen today, may be accelerated by an increase in the amount of informa- tion sent in digital form.'29 Digital facsimile exists, and its use should become: more widespread as the cost of channel capacity decreases. Color facsimile terminals for perhaps $3,500 to $4,000 could be available by the middle and late 1980s. The price should drop to $1,500 or $1,000 within 5 to 10 years after that.124 With microprocessors becoming significantly more. powerful, and with inexpensive, accessible memory approaching the terabit (one trillion bit) level, the early 1980s should herald the coming of multifunc-. tional terminals, with color video displays, large memories, high-speed, non-impact color printers, optical image readers for input without retyping, and’ the ability to communicate with other terminals or terminal-based message systems. '?5 As the cost of channel capacity decreases, and video technology improves while prices fall, the market for teleconferencing products and services should expand. The extent of market growth is unclear, but indications are that there will be no mass. movement to teleconferencing by business and cer-' tainly none by home users. It seems likely that the’ primary market developing in the 1980s will be. limited to large corporations and to government organizations—perhaps 300 to 500 user groups. | These groups will use a variety of teleconferencing equipment, from slow-scan video to full motion color. Some hospitals and medical centers may use tele- conferencing for discussing emergency medical pro- cedures both among themselves, and with remote’ stations. Some colleges may use teleconferencing on. a limited basis, probably through two-way cable television. In addition, AT&T’s Picturephone Service should continue to attract a segment of intermittent teleconferencing users. 176 CONCLUSIONS Transportation requirements could be directly affect- ed by the increased use of telecommunications. While analyses to date have been largely conjectural, the broad outline of impacts on transportation can be discerned. With regard to the use of telecommunications as a substitute, two areas which appear to be likely candidates are the electronic transfer of funds and TECHNOLOGICAL TRENDS IN TRANSPORTATION AND COMMUNICATIONS e 107 » electronic mail. It is estimated that from 13 percent to 31 percent of all U.S. mail could be delivered | electronically, were the necessary systems in place. _ Another 23 percent could be electronically transmit- ted between central distribution centers, to be , physically disseminated locally.'?” Eventually the role , of the postal service could be reduced to that of , delivering parcels and objects. Besides electronic / mail, the electronic transfer of funds is achieving more widespread use. It is expected that this will : become ubiquitous by the 1990s. As early as 1980, the Federal Government will have converted nearly , half of its 62 million monthly payroll checks to Heels,’ , Introduction of teleconferencing technology is _underway, although it may as often stimulate as : replace or supplement the need for travel. Telecon- | ferencing’s total effect on the demand for transporta- , tion is uncertain. There could be some impact on air . transport, replacing business trips with audio/visual , transmission.'?° A second area of potential impact is commuting. Telecommunications has already permit- , ted some decentralization of business sites and it ) may encourage work at home. Estimates indicate that over 30 percent of commuter travel'*° and 20 to (60 percent of local business travel'S’ could be ‘eliminated. Other areas that may be influenced ‘include entertainment and shopping. _ In many respects, the question of human accep- , tance represents a more substantial problem than /the development of the technology. Acceptance of {telecommunications by individuals is likely when it / provides access to new sources of information or / entertainment. Cable television gained its initial pop- _ularity by providing good reception in isolated areas, {and by diversifying its programs it acquired an urban | audience as well. As the range of accessible informa- ition increases, the use of telephone, cable TV, and ‘other avenues of access should increase. Another , spur to telecommunications is its ability to increase _ available leisure time. Electronic funds transfer, | payment of bills by telephone, and shopping from the _ home can reduce the time consumed by transporta- _ tion. | Institutions, though, are almost the exclusive users of teleconferencing, facsimile, and electronic mes- | Sage systems. In general, teleconferencing can be _ used most effectively for relatively routine exchanges . of information between people who have already met _ frequently. Decreased travel costs due to telecom- _ munications are a significant factor in some cases. | However, in most organizations where teleconfer- /encing is in use, the overall travel budget has not | been reduced; rather, money has been redirected for travel other than to and from meetings.'*? One ‘possibility that could make teleconferencing more significant in terms of substituting for transportation would be a drastic increase in the cost of energy. There are limitations on both institutional and individual use of telecommunications. At the institu- tional level, depersonalization and lack of familiarity with telecommunications, problems associated with security, and overall corporate inertia may impede innovation. For the individual, many of these same problems appear, combined with other barriers such as cost and a threat to privacy. A further barrier in both sectors could be government regulation. At- tempts by regulation to prevent competition in com- munications in order to promote economies of scale and utilization might inhibit the development of communications technology.'*® A series of court rulings and FCC decisions has served to reduce the extent of Federal, state and local regulation of telecommunications.'™“ It is too early to say with certainty what the effect of telecommunications will be upon transportation. Numerous factors combine to create this uncertainty. In some cases, a technology may reduce demand; in others, it may have the opposite effect. The cumula- tive results of these separate effects, when combined with the uncertain state of the market for telecommu- nications, the role of government and the possibility of unforseen inventions, make it impossible to predict what may develop in terms of the impact of telecom- munications upon transportation by the year 2000. SUMMARY Technological innovations in both transportation and communications will continue to be spurred by economic incentives. Additionally, the last decade has witnessed significant government-directed or mandated requirements that reflect objectives exter- nal to the transport or communications markets. Safety, environmental, energy conservation, and anti-inflationary requirements can constrain or re- direct the supply and performance of transport services away from a path dictated solely by internal efficiency criteria. A challenge for transportation is balancing these different goals with existing and proposed transport services. Technology can play a role in meeting the numerous goals established for transportation. In the passenger market, external objectives im- posed by government strongly influence technology, particularly for auto and air transport. There are significant targets of opportunity for these modes such as energy-efficient, clean-burning, quiet propul- sion systems, that could be supported or accelerated by stronger government promotion designed to re- 108 e FORECASTS TO THE YEAR 2000 duce private risks On advanced, unproven, yet potentially beneficial designs. In the freight market, traditional economic forces continue to be the impetus behind technological innovation. In this sector many of the physical changes that occur are likely to be ‘‘soft’’ technologi- cal changes, involving more efficient use of existing technology. These targets of opportunity could be aided by effort on the part of government to reduce unnecessary regulatory barriers. External forces will play a greater role as a constraining factor in the development of innova-. tions. Eminent domain and water availability con- straints surrounding coal slurry pipeline development give an example. During the remainder of this century a variety of technological changes is expected to alter transpor- tation. Although the introduction of new technologies has long been the norm, technological development in transport and communications is now being stimu- lated and limited in novel ways. Innovative develop- ments are evaluated not only by their impact on traditional transportation goals, but also by the way change supports national goals previously external to the transport sector; the result is profound but complicated influence on the nature and rate of technological development. NOTES AND REFERENCES 1. The results summarized in this chapter are discussed in detail in U.S. National Transportation Policy Study Commis- sion, Telecommunications and Transportation, Report No. NTPSC/SR-78/03, Washington, D.C.: 1979; and U. S. National Transportation Policy Study Commission, Trans- portation Technology, Report No. NTPSC/SR-79/09, Washington, D.C.: 1979. It should be noted that some NTPSC Commissioners are convinced that telecommunica- tions will become a transportation mode. 2. Oak Ridge National Laboratory, Transportation Energy Conservation Data Book: Edition 2, prepared for U.S. Energy Research and Development Administration, Oak Ridge, Tennessee: 1977, p. 27. 3. Energy Policy and Conservation Act, 42 U.S.C. Section 6201 et seq. (1975), Pub. L. 94—163, 89 Stat. 871. 4. Clean Air Act Amendments of 1977, 42 U.S.C. Section 7401 et seq. (1977), Pub. L. 95-95, 91 Stat. 685. The effects of this Act are described more fully in the next chapter. 5. The Federal Task Force on Motor Vehicle Goals Beyond 1980, The Report by the Federal Task Force on Motor Vehicle Goals Beyond 1980, 2 volumes, prepared for the Energy Resources Council, Washington, D.C.: Government Printing Office, 1976. (Hereafter cited as the Task Force Report.) 6. Although numerous other engine changes (such as versions of the rotary engine) may be introduced in the 1980s, expert advice ranked the four engine types selected for study as the more significant. 7. Brian Ketcham and Stan Pinkwas, ‘‘Diesels and Man,” New Engineer, April 1978, p. 24. 8. Ibid., p. 26. 9. E.G. Barry, F. J. Hills, A. Ramelia and R. B. Smith, ‘“‘If Autos Go to Diesel Fuel,” Hydrocarbon Processing 56 (May 1977), p. 115. (Hereafter cited as “If Autos Go to Diesel.’’) 10. The Clean Air Act Amendments of 1977, (Pub. L. 95-95, 91 Stat. 685, amending 42 U.S.C. Section 7401 et seq. (1977)) postponed imposition of the 0.4 gm/mi NO, standard set by the Clean Air Act of 1970 (Pub. L. 91-614, 84 Stat. 1676 amending 42 U.S.C. Section 1857 et seq. (1978) recodified Section 7401 et seq.) until further research is conducted. 11. ‘If Autos Go to Diesel,” p. 115. 12. Lawrence H. Linden, ‘‘Alternative Automotive Engines and Energy Conservation,’ presented at the Fourth National Conference on Effects of Energy Constraints on Transpor- tation Systems, August 1977, Union College, Schenectady, N.Y., Washington, D.C.: U.S. Department of Energy, 1977, p. 88. 13. Ibid. 14. California Institute of Technology, Jet Propulsion Laborato- ry, Should We Have a New Engine? An Automobile Power System Evaluation, Vol. |, Pasadena, Calif.: 1975, pp. 59-60. 15. U.S. Office of Technology Assessment (OTA), Technology Assessment of Changes in the Future Use and Characteris- tics of the Automobile Transportation System, Volume II: Technical Report, Washington, D.C.: Government Printing Office, 1979, p. 336. 16. /bid., p. 338. 17. Federal Task Force on Motor Vehicle Goals Beyond 1980, Task Force Report, Vol. 1, p. 17. 18. Electric and Hybrid Vehicle Research, Development and Demonstration Act of 1976, 15 U.S.C. Section 2501 et seq. (1978), Pub. L. 94-413; as amended by the Department of Energy Act of 1978, Civil Application, Pub. L. 95~—238, Sections 601-603, 92 Stat. 47. 19. U.S. Department of Energy, Electric and Hybrid Vehicle Demonstration 1978, Report No. DOE/CS—0046, Washing- ton, D.C.: 1978, p. 3. 20s lbidsips 5: 21. University of California/Livermore, Lawrence Livermore Laboratory, Energy Storage Systems for Automobile Pro- pulsion, Vol. 1—Overview and Findings, draft report, prepared for U.S. Energy Research and Development Administration, Livermore, California: 1977, p. 5. 22. The Rehabilitation Act of 1973, 29 U.S.C. Section 701 (1973), Pub. L. 93-112, Section 504. 23. Since passage of the Rehabilitation Act, an intense debate has occurred between those who believe the handicapped have the right to use public transportation with the same ease as able-bodied individuals, regardless of cost, and those who believe the handicapped can be served more efficiently by other forms or mixes of transportation ser- vices. 24. David Young, ‘‘The Transbus Compromise,’’ Mass Transit, January/February 1979, p. 12. 25. U.S. Office of Technology Assessment (OTA), Urban Transit Vehicle Development: A Preliminary Analysis, Wash- ington, D.C.: Government Printing Office, 1977, p. 38. Purchase cost estimates are uncertain at this time, though one estimate is $250,000, more than twice what a new standard bus sells for at present. See: ‘‘Transbus for Handicapped Stalled by Lack of Bidders,’’ Washington Post, 3 May 1979, p. A—3. 26. See: Harvard University, Improving Urban Mass Transpor- tation Productivity, prepared for Urban Mass Transit Ad- ministration, Washington, D.C.: 1977, p. 122. A reduction in Rie 28. 29. 30. 31. 32. 33. 34. 35. 36. 37. TECHNOLOGICAL TRENDS IN TRANSPORTATION AND COMMUNICATIONS e 109 air pollution emitted by buses also can result from more ideal driving cycles, but any extra pollution emitted by other vehicles forced to delay should be netted out to determine pollution effects from UTCS. See: Federal Task Force on Commercial Motor Vehicle Goals Beyond 1980, /nteragency Study of Post-1980 Goals for Commercial Motor Vehicles, draft report, prepared for the Energy Resources Council, Washington, D.C.: 1976, p. ll-28. Ibid. It should be noted that the U.S. DOT is performing a major study of vehicle sizes and weights; the study is required by Section 123 of the Surface Transportation Act of 1978, 23 U.S.C., Section 141 (1978), Pub. L. 95-599. It will be subject to public participation and review by a technical panel established under DOT contract with the Transporta- tion Research Board of the National Academies of Science and Engineering. Federal-Aid Highway Act of 1956, 23 U.S.C. Section 127 (1956), Pub. L. 84-627. 23 U.S.C., Section 127 (1975) amendments set the follow- ing limits on the Interstate Highway System unless higher state limits were allowed before July 1, 1956: Single Axle 20,000 Ib. Tandem axle 34,000 Ib. Overall Gross Weight 80,000 Ib. Width 96 inches. There is some interest in trailer width increases from 96” to 102” (as now allowed for intercity buses) but such a change appears constrained by lane width. Increases in combination lengths raise further questions of off-tracking with certain vehicle and road configurations. For a discus- sion see: Robert E. Whiteside, et al., Changes in Legal Vehicle Weights and Dimensions, Some Economic Effects on Highways, National Cooperative Highway Research Program Report 141, Washington, D.C.: Highway Research Board, 1973. For a discussion of added costs to highway structures, see John W. Fuller, ‘‘Current Issues in the Regulation of Motor Vehicle Sizes and Weights,’’ Congressional Record CXIV(18—-29 July 1978), pp. H7615—H7616. Regarding safety, see /bid., pp. H7617—H7620. As to the effects on railroads, see Edward B. Hymson, “Effect of Increased Motor Carrier Sizes and Weights on Railroad Revenues,”’ Transportation Research Record 668 (1978), pp. 30-35. For one estimate regarding the costs of extra weights on construction, see Fuller, /bid., Table 27, p. H7613. For further discussion of isst#és surrounding Federal size and weight limits see: National Transportation Policy Study Commission, Current Transportation Issues in the United States, Vol. Il: Issue Papers and Source Materials, Report No. NTPSC/SR-78/01-—B, Washington, D.C.: 1978, pp. 89-97 (Available through National Technical Information Service); R. J. Hansen Associates, Inc., State Laws and Regulations on Truck Size and Weight, National Coopera- tive Highway Research Program Report 198, Transporta- tion Research Board, Washington, D. C. : 1979; and U.S. Department of Transportation, Office of the Assistant Secretary for Policy and International Affairs, Truck Size and Weight: An Issue Paper, by Philip J. Barbato and Carl N. Swerdloff, Washington, D.C.: 1978, especially pp. 36-40. W. H. Van Slyke, ‘‘Train Il Advanced Computerized Freight Car Control,”’ Traffic World, 23 June 1975, p. 27. Kenneth F. Troup Ill, ‘““‘The Application of Management Information and Process Control Systems to Intercity Freight Transportation,” Freight Transportation Digest, October 1975, p. 100; and U.S. Federal Railroad Adminis- tration, ‘‘Optical ACI — A New Look,” by R. L. Wiseman et 38. 39. 40. 41. 42. 43. 44. al., in Overview of Freight Systems R&D, Report No. FRA/ORD-77/58, Washington, D.C.: October 1977, p. 45. Peat, Marwick, Mitchell, & Co., Systems Engineering for Intermodal Freight Systems, prepared for U.S. Federal Railroad Administration, FRA contract No. DOT—FR—749— 4273, Washington, D.C.: March 1978, Vol. Il, Task Ill, pp. II-1 to II-7, I-14 to II-18, I-23 to II-26; Vol. Ill, pp. C41 to C45. (Hereafter cited as Intermodal Freight Systems.) Herbert O. Whitten, ‘‘Still Years Behind,’’ Modern Rail- roads, November 1977, pp. 48—51. Robert Roberts, ‘‘Flat- back’s Bid for the 2lst Century,”” Modern Railroads, Novem- ber 1977, pp. 44—48. Other intermodal rail-car proposals include those for the ‘‘Roadrailer.’’ See: Bi-Modal Corpora- tion, The Roadrailer Opportunities, Greenwich, Conn.: 1978; and “It’s a Truck—lt’s a Train—lt’s Roadrailer,”’ Container News (April 1979), pp. 16, 17. Two examples of terminals of this type are the General Electric ITRAN and the Kaiser Speed-Tainer. For discus- sions of ITRAN see: ‘‘GE’s Plan for Road, Rail, TOFC and COFC and ITRAN,”’ Modern Railroads, September 1971, pp. 76-78; Peat, Marwick, Mitchell, /ntermodal Freight Systems, Vol. Ill, p. C-47. For a discussion of the Speed- Tainer, see the same work, Vol. Il, Task Ill, pp. II-7 to Il—11, and Vol. Ill, p. C—46. Two examples of terminals of this type are the Variagate and Rolloader. For a discussion of the Variagate, see Peat, Marwick, Mitchell, Intermodal Freight Systems, Vol. ||, Task Ill, pp. I-23 to II-26; and Vol. Ill, p. C-65. For a discussion of Rolloader, see Leonard D. Barry, Container and Trailer Loader and Storage System, Detroit, Michigan: The Bi-Rail Co., 1977; and Peat, Marwick, Mitchell, Intermodal Freight Systems, Vol. Il, Task Ill, pp. I-23 to Il-24. Peat, Marwick, Mitchell, Intermodal Freight Systems, Vol. ll, Task I, pp. V—1 to VI-+4. There have been recent savings in energy by the U.S. rail fleet of some 27,400 diesel locomotives in 1978. See Frank Malone, ‘‘Output, Deliveries, Fuel Economy: Going Up,” Railway Age 180 (29 January 1979), pp. 42-44. However, cost trends for railroad fuel are higher than for wages or other materials, and have risen over 360 percent since 1967. See ‘Review of 1978 Record-High Activity, but Little Profit,’’ Railway Age 180 (29 January 1979), p. 64. C. G. Swanson and H. H. Vogel, Energy and Environmental Factors in Railroad Electrification, prepared for the Federal Railroad Administration, MITRE Technical Report MTR-7052, McLean, VA: September 1975. A. N. Addie, “The Future Trends in Railroad Motive Power in the United States,’ and M. D. Meeker, Jr., ‘Railroad Electrification for Freight Movement in the 80’s and 90’s — Available Now!”’ in Conference Proceedings on America’s Freight System in the 80’s and 90’s . . . but how to get there?, sponsored by the U.S. Department of Transportation, Transportation Systems Center, 1-2 December 1976, prepared by Har- bridge House, Inc., Cambridge, Mass: 1977, pp. 127-140 and 119-126. A. N. Addie, ‘Future Trends in Railroad Motive Power;”’ and Meeker, M. D. Jr., “Railroad Electrification for Freight Movement.” Arthur D. Little, Inc., Engineering Cost Data Analysis for Railroad Electrification, by E. G. Schwarm, Report No. 79189, prepared for U.S. Department of Trans- portation, Transportation Systems Center, Contract No. DOT-—TSC—1156, Washington, D.C.: 1976. Energy Re- search and Development Administration, Market Oriented Program Planning Study, Review Draft, Paul J. Brown, Transportation Working Group, Washington, D.C.: Septem- ber 1977. Arthur D. Little, Inc., Factors Affecting Rail Electrification As Applied to Conrail, by E. G. Schwarm, Report No. 78567, prepared for the United States Railway Association, Contract No. USRA-—C—50124, Washington, 110 ¢ FORECASTS TO THE YEAR 2000 45. 46. 47. 48. 49. 50. 51. 52. 53. 54. 55. 56. 57. D.C.: 1975. The Role of the U.S. Railroads in Meeting the Nation’s Energy Requirements, Proceedings of a confer- ence sponsored by the U.S. Federal Railroad Administra- tion and the Wisconsin Department of Transportation, 6-8 May 1974, ed. by J. W. Fuller, Madison, Wisconsin: Graduate School of Business, Univ. of Wisconsin, 1974. U.S. Urban Mass Transportation Administration, Innovation in Public Transportation—A Directory of Research Devel- opment and Demonstration Projects, Washington, D.C.: 1976, p. 20. A. L. Kornhauser, ‘“‘Automation and UMTA’s R&D Priori- ties,” and G. J. Pastor, “UNITA Involvement in R&D for New Systems and Automation,” in Urban Mass Transporta- tion Proceedings of the UMTA/APTA R&D Priorities Con- ference, held I9—20 February 1976, Report No. UMTA—DC— 06—0136—1, Washington, D.C.: 1976, pp. 63—64 and 53—58. (Hereafter cited as Proceedings of R&D Priorities Confer- ence.) Steve Barsony, Director, AGT Applications, U.S. Urban Mass Transportation Administration, telephone interview, February 1979. Joseph S. Silien, ‘‘The UMTA Rail Technology Program,”’ in Proceedings of R&D Priorities Conference, p. 42. OTA, Urban Transit Vehicle Development, p. 72. In 1975, the U.S. National Aeronautics and Space Adminis- tration (NASA) initiated the Aircraft Energy Efficiency (ACEE) Program, a ten-year multiphased effort for the accelerated development of technology to improve the energy efficiency of transport aircraft. The ACEE effort encompasses propulsion, aerodynamics and structures. Investigations by NTPSC Commissioner William H. Tucker and staff member Samuel Colwell at the September 1978 Farnborough International Airshow suggest that foreign aircraft producers have special innovative aircraft which are likely to be placed in U.S. service in the next few years. These European, Canadian and Australian craft may be better suited to commuter carrier service to and from small communities than most current products of U.S. manufac- turers. If the air cargo market continues to develop at a moderate rate, current and derivative freighters and bellyholds of passenger transports can be expected to meet demand. If growth rates are high, there may be demand for a new dedicated air freighter in the 1990s. Joint military-civilian development of the next generation of cargo aircraft may be a means of reducing development costs. See: U.S. National Aeronautics and Space Administration (NASA), Prospects for a Civil/Military Transport Aircraft, by Charles E. Jobe, Larry W. Noggle, and Allen H. Whitehead, Jr., Report No. NASA TM 78724, Hampton, Virginia: Langley Research Center, 1978; and Lockheed-Georgia Company, Cargo/Logistics Airlift System Study (CLASS) Executive Summary, by J. M. Norman, R. D. Henderson, F. C. Macey, and R. P. Tuttle, for National Aeronautics and Space Administration, NASA Contractor Report 158959, Marietta, Georgia: 1978. JT8D, JT9D, and CF6. U.S. National Aeronautics and Space Administration, Air- craft Fuel Conservation Technology Task Force Report, Washington, D.C.: 1975, p. 27. (Hereafter cited as Conser- vation Task Force Report.) Ibid. The Airbus Industrie A300 is one exception. It incorporates an advanced airfoil profile which delays the formation of sonic shock waves and permits a 7-degree sweep reduc- tion over comparable wide-body aircraft. At jet transport speeds, regions of supersonic and subsonic airflow develop over the wing. These are defined as transonic regions. Airfoils with transonic or “‘supercritical’’ 58. 59. 63. 64. 65. 66. 67. Wa: 73. 74. 75. 76. CR . (NASA's designation) shape are designed to minimize the | shock in the airflow that develops between these two > regions. ! W. J. Overend, Chief Engineer, Programs and Perfor- | mance, Delta Airlines, Atlanta, Georgia, correspondence, | 15 March 1978. | L. E. Frisbee and R. H. Hopps, ‘‘The Changing Horizons for — Technical Progress,’’ presented at the 15th Anglo-Ameri- can Aeronautical Society, 31 May to 2 June 1977, London. Burbank, California: Lockheed-California Company, 1977, oh alle Ibid., p. 10. NASA, Conservation Task Force Report, p. 37. Bruce N. Torell, “‘The Significance of Propulsion in Com- mercial Aircraft Productivity,” an Address delivered to the | Royal Aeronautical Society, 17 September 1975, Sydney, Australia: 1975, p. 27. The Energy Efficient Engine Program is one program within the Aircraft Energy Efficiency Program; see footnote 50. Ultra Systems, Inc., Examination of the Costs, Benefits, and Energy Conservation Aspects of the NASA Aircraft Fuel Conservation Technology Program, prepared for NASA, Report No. 8291-01, Irvine, California: 1975, pp. 35-37. W. L. Rodenbaugh, Strategic Planning, Aircraft Engine Group, General Electric Co., Lynn, Massachusetts, corre- spondence, 4 January 1978. Examples of composite secondary structures now being tested under NASA aegis include: rudder Sections (DC 10), — fairing panels (L1011), spoilers (B—737). John M. Klineberg, ‘‘Technology for Aircraft Energy Effi- ciency,” presented at The American Society of Civil Engineers International Air Transportation Conference, 4-6 April 1977, Washington, D.C.: National Aeronautics and Space Administration, 1977, p. 25. Ibid. Ibid. W. G. O. Sonneborn, Manager, Engineering Laboratories and Research, Bell Helicopter Textron, Fort Worth, Texas, correspondence 2 February 1978. Peat, Marwick, Mitchell and Co., Technology Assessment of Future Intercity Passenger Transportation Systems, Vol. 3 prepared for National Aeronautics and Space Administra- tion and U.S. Department of Transportation, Washington, D.C.: 1976, p. Ill-6. (Hereafter cited as Technology Assess- ment.) Selective use of spoilers is one aerodynamic means of diffusing wake vortices during landings. Peat, Marwick, Mitchell and Co., Technology Assessment, Vol. 3, p. Ill-63. U.S. Federal Aviation Administration, Proceedings of the Consultative Planning Conference (on New Engineering and Development Initiatives, Policy and Technology Choices), 22-23 March 1978, Washington, D.C.: 1978, p. 71 United Aircraft Research Laboratories, U.S. Ocean Ship- ping Technology Forecast and Assessment: Volume IliI— State of Maritime Technology, report prepared for U.S. Maritime Administration, Report No. MA—RD—940—75036, 1974, pp. 153-156. (Hereafter cited as U.S. Ocean Ship- ping Technology.) For example, many large bulk carriers have drafts exceed- ing that of all U.S. East Coast harbors. Thomas W. Pross, ‘‘Marine Transportation ‘State-of-the- Art’’”’ paper presented at The American Society of Mechani- cal Engineers Intersociety Conference on Transportation, 24-27 September 1973, Washington, D.C.: U.S. Maritime Administration, 1973, pp. 4-22. (Hereafter referred to as — “Marine Transportation.’’) United Aircraft Research Labo- ratories, U.S. Ocean Shipping Technology, pp. 18-23. TECHNOLOGICAL TRENDS IN TRANSPORTATION AND COMMUNICATIONS e 111 _ 78. American Waterways Operators, Big Load Afloat, Washing- | / 81. «83. 79. 80. 82. 84. | 85. 86. 87. 88. 89. ton, D.C.: 1973, pp. 103-104. Ibid., pp. 1-2, 42-44; and Pross, ‘‘Marine Transportation,’’ pp. 59-65. Eric Schenker, Harold M. Mayer, and Harry C. Brockel, The Great Lakes Transportation System, Technical Report No. 230, Madison, Wisconsin: University of Wisconsin Sea Grant College Program, 1976, p. 18; U.S. Department of Transportation, Office of the Secretary, National Transpor- tation: Trends & Choices (to the Year 2000), Washington, D.C.: Government Printing Office, 1977, p. 265. (Hereafter cited as DOT, Trends and Choices); and ‘‘The Five Great Lakes: A Major Transportation Resource,’ Marine Engi- neering/Log, November 1977, p. 48. Schenker, et a/., The Great Lakes Transportation System, pp. 3-7; and Lake Carriers’ Association, Annual Report 1976, Cleveland, Ohio: 1976, pp. 24—27. The Great Lakes—St. Lawrence Seaway Winter Navigation Board, Demonstration Program Report, Detroit, Michigan: U.S. Army Corps of Engineers, 1976. For example, efforts are being made to tailor containers to the goods they transport (see David A. Cawthorne, “Space-Age Metals May Lighten Boxes,’’ Journal of Com- merce, 19 June 1978, p. 1A) and make cargo handling more specialized and efficient (see ‘‘Cargo Handling: Innovative Systems Speed Vessel Turnaround,” Marine Engineering/Log, September 1977, pp. 33-47). For example, LNG carriers are being developed to respond to a new market. Other possibilities such as high-speed ships for express goods and passengers, submersible carriers for bulk goods, nuclear cargo ships, and a variety of service vessels for offshore industries have been dis- cussed. For a discussion of some new vessel types see Zelvin Levine, Robert Dickinson, and Alvin Winall, ‘‘Nuclear Energy—A Viable Alternative,” prepared for The Society of Naval Architects and Marine Engineers STAR Symposium, 25-27 May 1977, New York: Society of Naval Architects and Marine Engineers, 1977, pp. 61-67; and Temple, Barker & Sloane, Inc., Merchant Fleet Forecast of Vessels in U.S.-Foreign Trade, prepared for U.S. Maritime Adminis- tration, Report No. PB—285 071, Wellesley Hills, Massachu- setts: 1978, pp X—1 to X—16. Also United Aircraft Research Laboratories, U.S. Ocean Shipping Technology, pp. 41-45. U.S. Office of Technology Assessment (OTA), Transporta- tion of Liquefied Natural Gas, Washington, D.C.: Govern- ment Printing Office, 1977, pp. vii, 63; and Elisabeth Drake and Robert C. Reid, ‘‘The Importation of Liquefied Natural Gas,”’ Scientific American 236 (April 1977), p. 29. Edward K. Faridany, LNG Review 1977, Workingham, United Kingdom: Energy Economics Research, 1977, pp. 22, 39. See also Table 11-14 of this report for U.S. and world fleet estimates. U.S. Maritime Administration, Vesse/ Inventory Report, Washington, D.C.: October 1978, p. 5; and U.S. Maritime Administration, U.S. Merchant Marine Data Sheet, Wash- ington, D.C.: September 1978, p. 8. In the mid 1950s tankers in the 40,000 to 50,000 dead- weight ton-range were considered large. At the beginning of 1977, the largest tanker in service weighed 550,000 deadweight tons. As of April 1, 1977, the world tanker fleet contained 1,021 vessels of over 100,000 deadweight tons. The average size of these supertankers was over 218,000 deadweight tons and they constituted 70 percent of the total world fleet. See American Petroleum Institute, Large Tankers—Our Energy Lifelines, Washington, D.C., 1977, pp. 3-4; and “Existing World Tanker Fleet,’’ Marine Engineering/Log Yearbook Issue, 82 (15 June 1977), p. 91. U.S. Department of Transportation, The Secretary’s Deci- sion on the Deepwater Port License Application of LOOP 90. 91. 92. 94. 95. 96. 97. 98. 99. 100. 101. 102. Inc., Washington, D.C.: Government Printing Office, 1976, pp. 5, 60. Because supertankers would dock further out at sea, avoid entering ports congested with other vessels, and be equipped with advanced safety and navigation equipment, some studies have concluded that these vessels pose fewer hazards than current oil importation methods. For this point of view, see U.S. Coast Guard, Final Environmental Im- pact/4(F) Statement for the LOOP Deepwater Port License Application: Executive Summary, Washington, D.C.: 1976, pp. 16-23; and Office of Technology Assessment, Coastal Effects of Offshore Energy Systems, Washington, D.C.: Government Printing Office, 1976, pp. 193-196. (Hereafter cited as Coastal Effects.) In addition to LOOP, a second deepwater terminal has been proposed for the Gulf of Mexico. Seadock, off of the Texas coast, was issued a license in 1976, but that license expired. However, interest has revived and the Texas Deepwater Port Authority has filed a new application with DOT. See: AAPA Advisory 12 (25 September 1978) p. 4. OTA, Coastal Effects, pp. 180-183, 186—188. DOT, Trends and Choices, pp. 271-273. Booz, Allen and Hamilton, Inc., Energy Use in the Marine Transportation Industry: Volume IV—Efficiency Improve- ments, draft report prepared for Energy Research and Development Administration, Division of Transportation Energy Conservation, Contract No. E (04—3)}-1175, Be- thesda, Maryland: 1977, pp. A(3) and A(7). (Hereafter cited as Energy Use, Vol. IV.) Ibid., p. A(1). Factors lessening the diesel’s attractiveness include re- duced reliability, more stringent fuel requirements and greater maintenance costs, weight and noise levels than comparable steam plants. N. H. McConochie and M. V. Jones, ‘Prospects For a Steam Revival,’’ The Motor Ship 58 (February 1978), pp. 61-64; and Booz, Allen, and Hamilton, Energy Use, Vol. IV, p. A(8). Still, some switching has begun to take place in the U.S. fleet. In February 1979, the United States Merchant Marine Academy announced a course in diesel vessel operation to accommodate new interest in slow-speed diesels, and Sealand Corporation has announced the: conversion of 12 steam vessels to diesel. U.S. Merchant Marine Academy, Public Information Office, telephone interview, 9 April 1979. R. T. Young, “The Future of Nuclear Propulsion in Mer- chant Ships,’’ The Motor Ship 57 (October 1977) pp. 114— 116. S. M. Kaplan, Z. Levine, W. G. Bullock, and F. X. Critelli, “Projected Growth and Application of Heavy-Duty Marine Gas Turbines through the 1980s,”’ presented at the Annual Meeting, International Society of Marine Engineers, 1973, Washington, D.C.: U.S. Department of Commerce, 1973. W. O. Gray, Exxon Corporation, New York, N.Y., corre- spondence 24 May 1978. Cesar DeLeon, Acting Director, Office of Pipeline Safety, Materials Transportation Bureau, U.S. Department of Transportation, telephone interview, 23 November 1977. Methanol, crude oil and sewage treatment effluent have also been proposed in addition to water as coal slurry media. Pipelines transporting encapsulated solids in liquids or gases are being investigated, but this technology is at an early stage of development for long-distance bulk move- ments. See, for example, University of Pennsylvania, De- partment of Civil and Urban Engineering, Transport of Solid Commodities Via Freight Pipeline, Vol. I, by |. Zandi, prepared for the U.S. Department of Transportation, Report No. DOT—TST-—76T-—36, Washington, D.C.: 1976, p. E-6. 112 e FORECASTS TO THE YEAR 2000 103. 104. 105. 106. 107. 109. 110. pee 113. 174. 115. 116. This includes two coal slurry pipelines: the 273 mile Black Mesa Pipeline and the 108 mile Consolidated Coal Co. pipeline (which is no longer in operation). President Carter, in his energy program presented on 5 April 1979, endorsed coal slurry pipelines as an economic and competitive method for coal movement, and he sup- ported legislation to provide rights-of-way. See U.S. Presi- dent, Office of White House Press Secretary, ‘‘Fact Sheet on the President’s Program,” Press Release, Washington, D.C.: 5 April 1979, p. 18. Paul Souder of General Research Corporation, briefing to NTPSC staff, April 1978. Mr. Souder is author of A Study of the Economic and Competitive Impact Associated with Coal Slurry Pipeline Implementation, prepared for the U.S. Office of Technology Assessment by General Research Corporation, McLean, Virginia: 1977. Ibid. Congressional Research Service, National Energy Trans- portation, Volume Ill, Issues and Problems, prepared for U.S. Senate, Committee on Energy and Natural Resources, and Committee on Commerce, Science and Transportation, Washington, D.C.: Government Printing Office, 1978, p. 198. R. N. Noyce, “‘Microelectronics,’’ Scientific American 237, (September 1977), p. 62 ff. Ibid. B. I. Edelson and L. Pollack, ‘‘Satellite Communications,” Science 195 (March 1977), p. 1125 ff. C. J. Lucy, ‘‘Optical Waveguides in Telecommunications,”’ presented to the Electro-Science Analysts Group, New York, New York, February 1976. Conclusions drawn from trends presented in National Transportation Policy Study Commission, The Impact of Telecommunications on Transportation Demand Through the Year 2000, Report No. NTPSC/SR-—78/03, Washing- ton, D.C.: 1978, pp. 49-100. (Hereafter cited as Impact of Telecommunications.) Ibid. U.S. Department of Commerce, Office of Telecommunica- tions, The Contribution of Telecommunications to the Conservation of Energy Resources, M. Tyler, et al., Wash- ington, D.C.: July 1977, p. 35. (Hereafter cited as Contribu- tion of Telecommunications.) Dr. Norman Vogel, Director of System Communications Technology, interview held during meeting with the System Communications Division, International Business Machines Corporation (IBM), Raleigh, N.C., 24 May 1978. Robert W. Ross, Counsel for Southern Pacific Communica- tions Company, interview held during meeting with the 127; 128. 129. 130. 131. 132. 133. 134. Southern Pacific Communications Company, Washington, D.C., March 1978. Howard ‘Anderson, President, Yankee Group, interview held during meeting in Washington, D.C. with The Yankee Group of Cambridge, Massachusetts, 21 February 1978. Ibid. The Yankee Group, Report on Electronic Mail, Boston, Masssachusetts: July 1978. Ibid. Tyler, Contribution of Telecommunications, p. 42. Curran Tiffany, Executive Assistant Attorney, American Telephone and Telegraph Company, telephone interview, Washington, D.C., June 1978. See NTPSC, Impact of Telecommunications, p. 88. Telephone Market Research Co., Distribution of Bell Sys- tem Operating Company Telephones, and Distribution of Selected Independent Operating Company Telephones, — Chicago, Illinois: January 1977. The Yankee Group, The Technical Office, Boston, Massa- — chusetts: August 1978. Conclusions drawn from trends presented in NTPSC, Impact of Telecommunications, pp. 91-92. Tyler, Contribution of Telecommuncations, p. 38. H. Geller, Testimony before the Committee on Governmen- | tal Affairs, U.S. Senate, in Hearings Before the Subcommit- tee on Energy, Nuclear Proliferation, and Federal Services, — held May and June, 1977, 95th Cong., 1st sess., Washing- | ton, D.C.: Government Printing Office, 1977. There are some estimates that as much as 36 percent of all . business meetings could be handled by teleconferencing; _ see: Tyler, Contribution of Telecommunications, p. 15. Others believe it unlikely that this percentage will be reached; see: NTPSC Impact of Telecommunications, p. 92. | D. Jones, Must We Travel: The Potential of Communica- ° tions as a Substitute for Urban Travel, Stanford, California: — Institute for Communication Research, Stanford University, _ March 1973. S. Henneman, and R. Krzyczkowski, Reducing the Need for — Travel, Santa Barbara, California: INTERPLAN Corpora- | tion, May 1974. Conclusions drawn from trends presented in NTPSC, Impact of Telecommunications. For a discussion of this view, see Alfred E. Kahn, The Economics of Regulation: Principles and Institutions, Vol- ume II: Institutional Issues, New York: John Wiley & Sons, | 1971, p. 149. For a discussion, with references on this point, see Stanley _ M. Besen, “‘Reregulating Telecommunications: Sorting Out © Mixed Signals,"’ Regulation (March/April 1978), pp. 30-36. Transportation Talo =>.4c-) a oF- Vike -t> ' INTRODUCTION This chapter describes the impacts that transporta- tion has on the physical and social environment, with special attention to safety and pollution effects. In the post-World War Il period, these external effects _of transportation have become more broadly com- | prehended and research has been applied to miti- | gate them. Moreover, extensive Federal, state and _local laws now control the production of some _ externalities, and these laws, plus the administrative | regulations they require, have far-reaching impact on transportation supply and demand. The NTPSC reviewed pertinent U.S. environmental and safety laws and regulation to ascertain their effects to the _year 2000. No forecast would be complete without attention being paid to the ways in which the U.S. has chosen to treat externalities, and to the benefits and costs engendered in the transportation field by U.S. policies. | APPROACH Transportation externalities are categorized in six major fields of concern and for each area present regulations and their effects are described. Appendix _Table 16 displays present U.S. environmental laws by transport market and mode. Appendix Table 17 displays, likewise by market and mode, the safety regulations applicable to transportation administered by U.S. agencies. The six fields of concern investi- gated by the NTPSC cut across the modes and 'markets of transportation, affecting both passenger transport and freight movement. The six fields were ‘selected in consultation with expert opinion and the literature in transport, safety, and environmental research, and reflect information obtained from ‘hearings of the NTPSC. It should be noted that this \chapter’s coverage of externalities is not all-encom- ‘passing. The next chapter deals with externalities \that result from developing, transporting and using valternative fuels. Undoubtedly other external effects ‘besides the six explored here in detail, plus fuel- related externalities, will be of import in the years to come. However, transport policy to the year 2000 surely must take into account the safety and environ- mental matters discussed below. AIR POLLUTION Transportation is the single largest contributor to air pollution in the U.S., accounting for 49 percent of total hydrocarbon (HC) emissions, 85 percent of carbon monoxide (CO) emissions, 47 percent of nitrogen oxide (NO,) emissions, and 9 percent of particulate emissions.’ These figures reflect the fleet of cars, trucks, buses, motorcycles, aircraft and railroad engines in use as of 1975. As transport activity and the number of transportation emission sources increase, the decline in transport emissions is expected to cease after 1990, even with complete compliance to present statutory standards. If trans- portation vehicles convert to alternative fuels, the pollution situation may worsen. Emissions do vary from area to area, particularly for mobile-source pollutants. For example, the mo- bile-source sector in Washington, D.C. is responsible for 74.5 percent of regional HC emissions, in contrast to the national average of 48.5 percent, while in Houston the mobile-source sector is responsible for only 39 percent.? In order to meet national ambient air quality standards for photochemical oxidants,° controls on CO and NO, emissions from both transportation and stationary sources have been established. Despite emission restrictions, the number of areas not attain- ing ambient standards grew from 31 in 1973 to more than 100 in 1978—encompassing virtually all urban areas over 200,000 population.* Because the harm- fulness of pollutants varies, as do the costs of lessening pollution, cost-effective strategies in non- attainment areas might focus first on one pollutant (such as HC).§ Major Federal control of air pollutants from motor vehicles began with the Clean Air Act of 1970.® This act established pollutant emission standards to be met by manufacturers of automobiles and light-duty trucks. It mandated a 90 percent reduction in tailpipe emissions of HC and CO by 1975, and of NO, by 113 114 e TRANSPORTATION ACTIVITY AND INSTITUTIONS 1976. Although it contained no requirements for particular emission control technologies, the Clean Air Act forced manufacturers to research, test, develop, and market cleaner-burning engines. Due to technological shortcomings, the statutory deadlines were extended three times by administrative and congressional action, and the standards tightened, primarily reflecting advances in control technology.’ In spite of deadline extensions, the emission control program has contributed to nationwide reductions of HC and CO emissions. Emissions of NO, oxide by transportation have increased slightly in concert with small increases in U.S. totals for all sources. How- ever, NO, emissions control programs appear to have prevented a growth in emissions proportional to transport activity or economic growth. Trends in emissions of various air pollutants, from transporta- tion plus all other sources, since 1970 are displayed in Figure 10 and Appendix Table 18. Amendments to the Clean Air Act in 1977 tighten existing regulations on trucks and buses (over 6,000 pounds) by requiring a 90 percent reduction in HC and CO emissions in model year 1983 and a 75 percent reduction in NO, emissions by model year 1985.2 By 1987, it is estimated that total truck emissions will be reduced by 30 to 40 percent over 1975 levels.2 New in the 1977 amendments is the provision that particulate emissions from trucks are to be regulated, effective with the 1981 model year. Concern has been expressed that very fine particu- lates in diesel exhaust could be injurious to health, and possibly carcinogenic.'° The EPA is also reviewing auto emission stan- dards for NO, to examine whether public health needs require a 0.4 grams per vehicle-mile standard and, if so, what the cost and technological require- ments would be to attain such a standard. To supplement its effort, EPA required manufacturers to submit research vehicles that emit low amounts of NO, beginning with the 1979 model year."' Present and foreseeable diesel autos are not capable of meeting the standards of the 1977 amendments,’ yet automakers are planning on larger diesel fleets in order to meet Federal fuel-economy regulations. Clean-burning diesels capable of meeting NO, stan- dards are important for the future, especially consid- ering the potential large increase in NO, emissions that could come from coal-fired power plants. Motorcycles, which were unregulated until the 1977 amendments, emit twice the CO and six times the HC permitted by 1977 auto standards.'* EPA is now directed to establish motorcycle standards. The 1977 amendments also grant EPA and DOT authority to regulate aircraft emissions and direct EPA to study the effects of ozone in the stratosphere, particularly the effects of ozone emitted by aircraft." Emissions control programs established under the 1970 Act were designed to ensure that vehicles comply with EPA standards. Parts of the programs affect virtually every supplier and user of motor vehicles. The following section describes the major program components. The series of programs is separated between those that are administered | directly by the Federal government and those that — are administered by state or local agencies. PROGRAMS ADMINISTERED BY FEDERAL AGENCIES Title Il of the Clean Air Act, as amended in 1977, authorizes the EPA Administrator to carry out several programs designed to ensure that motor vehicles meet legislated emission standards. The programs involve: certification, selective enforcement audits | (SEA), recall, warranties, anti-tampering incentives, — and unleaded fuels. Certification This program commands the lion’s share of EPA resources devoted to mobile-source pollution con- trol.15 Authorized by Section 206 of the Clean Air Act, certification involves testing prototype vehicles for emission performance. If a vehicle passes the tests, the engine type is certified for mass production. Certification is to ensure that vehicles, given proper maintenance and use, are designed to meet emission standards throughout their useful lives. The strength of the program has been its success in preventing production and sale of vehicles which are not appropriately designed. Certification requires manufacturers to prepare prototype vehicles, maintain vehicles during testing, and file reports. The administrative requirements of the certification process alone are estimated to cost domestic manufacturers roughly $32 to 40 million annually, or $4 per car produced. This estimate is above and beyond the costs of the pollution-control equipment itself. Pollution-control equipment on au-- tomobiles is estimated to cost the consumer an additional 4 percent above the base sticker price of a vehicle.'6 Certification has been instrumental in modifying motor vehicles so they pollute less. Catalytic convert- : er technology is one example of such a change. Field - testing has shown, however, that many vehicles do not meet emission standards throughout their useful » lives. Violations result from several factors, predomi- | nantly the failure of parts, poorly adjusted engines, tampering with pollution control devices and improp- | ! er or inadequate maintenance. Violations can also be > 29 27 = 25 2 a] = | & 23 > HC > B21 | a ¢ i 19 | 17 . | 0 1940 1950 1960 1970 1976 Year 25 cee ne? (1 c S E 15 5 > een le: ra oO = 5 0 1940 1950 'SOURCE: See Appendix Table 18. attributed to inadequate basic design (i.e., the design “slips through’”’ the certification process), but one EPA report estimates this factor to account for only 3 percent of all excess automobile emissions."” Certification is an important ‘‘first hurdle’ for new ‘vehicles. Adequate design alone, however, does not | guarantee satisfactory performance of vehicles on /the road. The programs to be discussed next have | been authorized precisely because design certifica- ‘tion alone would not solve emissions problems. 196 Year TRANSPORTATION AND EXTERNALITIES #115 FIGURE 10. Nationwide pollutant emissions, by sector, 1940 to 1976. 115 110 105 100 95 90 co 85 Tons Per Year (millions) 80 75 70 1950 1960 Year 1970 1976 NO 0 1970 1976 Selective Enforcement Audits (SEA) To ensure that an approved vehicle design is trans- lated accurately into production, EPA tests autos coming off the assembly line. Under Section 206 of the Clean Air Act, EPA has the authority to test (or have the manufacturer test) new vehicles for emis- sion standard compliance. EPA has chosen to administer the assembly line test through selective enforcement audits, meaning that it randomly selects 116 ¢ TRANSPORTATION ACTIVITY AND INSTITUTIONS vehicles from a product line for testing. EPA is empowered to revoke the certificate authorizing production of a vehicle model, and to stop produc- tion unless 60 percent of a sample passes the emissions test.'® SEA is used primarily as a ‘‘spot check”’ of the certification process and cannot claim substantial pollution reductions in and of itself. Instead, it supplements and bolsters the effectiveness of certifi- cation. Conducted in tandem, certification and SEA programs minimize emission violations due to poor design or poor translation of design into production. Recall lf a particular line of vehicles has significant emis- sions violations, EPA may request or order the manufacturer to recall those vehicles for repair. Recalls, authorized under Section 207 of the Clean Air Act, take place at the manufacturer’s expense. Through recall, the manufacturer is held responsible for the performance of vehicles in use. . In the mid-1970s, approximately 7 percent of the automobiles of a given model year were recalled.'9 When a recall was ordered, roughly 50 percent of the vehicles were returned for repairs by the owner. Costs to the manufacturer for repairs generally range from $10 to $30 per vehicle.2° Because some recall actions resulted in the repair of as many as 500,000 vehicles, recall can be costly. The premise of recall is that a manufacturer will find initial conformity with standards more prudent than repairing the vehicles at a later time. Recall imposes a responsibility on the manufacturer to consider the emissions performance of vehicles throughout their useful lives. Warranties In another attempt to increase the manufacturer’s liability for vehicle performance, the Clean Air Act requires that a manufacturer warrant its product against emission control defects and emission stan- dard violations. For this warranty to become effec- tive, EPA has had to develop a short test procedure for vehicles in use which correlates to the full-scale test undertaken during certification. Further, EPA must specify criteria for determining whether a vehicle has been properly maintained, which is the responsibility of the vehicle owner. The act provides that the emissions performance warranty is applica- ble only when a vehicle owner faces a sanction or penalty for an emission violation. Conditions placed on implementation of the war- ranty program have limited its impact. The expenses involved in showing correlation with the certification: test, and the limited applicability of the performance’ warranty, appear to be the greatest deterrents to full- scale adoption of the program.”' Warranties may be: more effectively used by EPA to supplement other state and local programs. Other Programs Still other programs are conducted by EPA to control mobile-source pollution. Section 203 of the Clean Air Act prohibits tampering with pollution-control de- vices (e.g., for the purpose of increasing fuel efficien- cy). EPA enforces this provision through surveil- lance, investigation, and prosecution. Because of the large number and wide distribution of service estab- lishments, full enforcement would be very expensive. EPA also has a mandate to ensure that all unleaded gasoline contains less than 0.05 grams of lead per gallon. This level is set so that catalytic converters may operate effectively. EPA’s enforce- ment program has shown that there are very few violations of the lead content standard (0 to 2 percent) and that when they do occur, the lead content only slightly exceeds the standard.2? A more serious problem is that auto owners are introducing leaded fuel into their tanks by adjusting tank open- ings. As the price differential between leaded and unleaded fuel increases, this problem grows in severity. If this practice becomes widespread, EPA may place higher priority on preventing improper use of leaded fuel by either service stations or vehicle owners, although at present there exists no legal penalty for violation by an auto owner. In summary, Federal programs monitor the performance of motor vehicles from the early design phase through their lifetime on the road. Substantial resources from EPA, manufacturers, and the driving public have been committed to the programs, and emissions have been reduced markedly. Further reduction can be achieved through programs which are more localized in scope. The next section discusses such programs. STATE AND LOCAL PROGRAMS Even though they benefit from the national pollution control efforts, some parts of the country need (or may need in the future) to achieve further pollution reductions to comply with Federal standards. The Clean Air Act (as amended in 1977) provides two major tools for further emission reduction from mobile-sources: inspection/maintenance (I/M) pro- grams; and transportation air-quality plans (also. referred to as transportation control plans or TCPs). ‘Inspection/Maintenance Programs 1/M is an umbrella term for a variety of programs in which an owner tenders a vehicle to be tested for compliance with emission standards. EPA studies show that significant reductions in HC and CO emissions can be attained. Estimated reduction of these two pollutants range from a low of 8 percent to a high of 40 percent for the vehicles covered under an|/M program. |/M programs offer several benefits: 4. 1/M can lessen emissions due to poor mainte- nance, misadjustment and tampering. These are difficult to address on a national basis once vehicles leave the manufacturer; 2. The localized nature of |/M makes it a flexible tool - for achieving regional air quality goals. |/M thus | helps meet goals of ambient air quality and compliance with vehicle emission standards; 3. I/M can provide useful data to EPA and other air pollution control agencies on emissions levels and technology effectiveness; and 4. 1/M can serve as a basis for implementing -_ warranty provisions.*4 ' Despite these attributes, there are uncertainties and costs which detract from I/M’s desirability. These include: 1. States’ unwillingness or inability to provide the funds for initiating programs, giving publicity or training emission inspectors; 2. Uncertainty as to how much pollution reduction an |/M program can provide. Many effectiveness estimates rely on computer simulations and de- batable assumptions regarding amounts of emis- sions between |I/M tests. Empirical data that verify |/M effectiveness are limited; and 3. Public resistance to a program that might require people to pay out-of-pocket costs for vehicle repairs when the problem—poor emission perfor- mance—is not readily apparent to the driver. (Median repair costs have ranged from $8 to $20 per failed vehicle.)° Only nine |/M programs were in operation prior to 1979.22 The Clean Air Act amendments of 1977, however, place I/M on a stronger statutory footing; Section 172 mandates I/M programs as part of an area’s air pollution control program if that area cannot otherwise meet ambient air quality standards ‘for oxidants or carbon monoxide by December 31, 1982. This provision could result in an increase in the ‘number of I/M programs throughout the country (though recent relaxation of the oxidant standard?’ -makes the result uncertain). TRANSPORTATION AND EXTERNALITIES @ 117 Transportation Control Plans Transportation Control Plans (TCPs) are prepared by states to coordinate their transportation and air quality planning efforts in’ preparing required State Implementation Plans for compliance with the Na- tional Ambient Air Quality Standards. EPA has suggested, and states have tried, various traffic and travel-control measures to reduce mobile source emissions. In the 1977 Clean Air Act Amendments, Congress called for adoption of ‘“‘reasonably avail- able” transportation control measures on the state or local scale to attain air quality standards. Transpor- tation control measures are aimed at controlling traffic (both volume and travel behavior), not engine emissions. They have been directed primarily at passenger travel, especially work trips, and serve much the same function as DOT transportation system management (TSM) measures. TCP measures include the following: 1. Transit service improvements—route and sched- ule modifications, express bus service, park-ride facilities, and transfer improvements to attract riders. Improvements and costs vary widely by region, from experimenting with low fares or expanding express bus service for commuters, to purchasing new fleets of buses or building rail systems;8 2. Preferential treatment for high-occupancy vehi- cles permitting buses and carpools to bypass congested roadways and improving travel times. Unless priority lanes effect significant diversion to high-occupancy vehicles, they have no percepti- ble effect on peak emissions. Capital costs can vary widely, from millions for a separate roadway to several thousand for traffic controls;?9 3. Ride-sharing programs to encourage travelers to shift to carpools, such as: carpool matching programs; carpool parking priority; toll reduction; and vanpool programs. Significant reductions in vehicle miles of travel (VMT) can be achieved for low costs;*° 4. Parking management (restrictions and fees for parking). Coupled with transit and carpool incen- tives, this can have a dramatic effect on traffic flow and VMT, although outright restrictions and surcharges are very unpopular. Costs for park- and-ride lots are nominal; parking programs may, in fact, generate municipal revenues;*" 5. Pricing strategies, which involve fuel taxes, bridge tolls according to auto occupancy, or vehicle ownership taxes. These too are unpopular, but can yield significant VMT reductions. 6. Traffic-flow improvements to reduce congestion, aimed primarily at CO hotspot problems. These include traffic signalization to improve speeds, 118 e TRANSPORTATION ACTIVITY AND INSTITUTIONS peak-period reversible lanes, and ramp metering onto freeways. Costs vary widely from very little to millions for some traffic signal projects.*% 7. Commercial vehicle control to minimize trucking in commercial areas at rush-hour, including: on- street loading zones; off-street loading zones; peak-period restrictions of on-street loading; and truck route systems. Other than for special truck routes, which may be prohibitively expensive, the costs are nominal. In any sound implementation plan, comprehensive packages of complementary control measures would be undertaken. Analyses of the measures listed above indicate that regional emission reductions of less than 1 and up to 3 percent might result if they were implemented individually.*5 Reductions up to 9 percent could be expected through a comprehensive package approach. Not all TCP measures are expensive, and effectiveness depends on political feasibility and enforceability.°” The programs described are directed at traffic control to curb mobile-source pollution, and are primarily for autos and other light-duty vehicles, trucks, and motorcycles. Aircraft pollution emissions are not yet regulated. (The major environmental concern with aircraft is noise pollution, which is discussed later in this chapter.) The 1977 Clean Air Act Amendments grant EPA authority to regulate aircraft emissions, requiring consultation with DOT to assure that standards present no hazard to aircraft safety.*® INDIRECT REGULATION OF MOBILE SOURCES Provisions in the 1977 amendments ensure that areas not attaining national ambient standards are brought into compliance by 1983. All new or substan- tially modified stationary sources are required to secure a pre-construction permit and to demonstrate progress toward emission reduction. Construction permits for new industrial sources will be issued only if it is demonstrated that any increase in air pollution resulting from the new source is more than offset by emission reductions from existing sources beyond those levels required by the applicable State Imple- mentation Plan. Because a significant portion of the non-attain- ment problem in metropolitan areas is due to auto emissions (although varying significantly over differ- ent metropolitan regions), transportation controls and tradeoffs among new or modified industrial and transportation-related stationary sources are part of the strategy required of non-attainment areas. The difficulties surrounding the imposition of transporta- tion controls in non-attainment areas are reflected in a provision of the 1977 amendments which extends the attainment deadline to as late as 1988 for areas with especially severe oxidant and carbon monoxide problems. State Implementation Plans for such areas must include all available measures to attain the primary standards. A schedule for implementation of a motor vehicle |/M program is also required. But the EPA Administrator is prohibited from requiring that States implement indirect-source review programs, except with respect to federally funded projects. States are free to adopt such programs voluntarily, however, and the Administrator is authorized to approve and enforce voluntary programs. If states fail to comply with requirements relating to non- attainment, they risk the cutoff of Federal aids.°9 Another issue raised by the 1977 amendments is the provision of explicit statutory guidelines for regulation of industrial development that would Cause air quality deterioration in areas where the air is currently better than the national ambient stan- dards. Such regulations may inhibit synthetic fuel development and coal mining. These provisions are relevant to mobile-sources only insofar as states regulate the classified sources as indirect sources and restrict mobile-source access, or to the extent these sources themselves may be transportation- related, such as rural general aviation airports or pipeline pumping stations.*° PROGNOSIS THROUGH 2000 From the NTPSC’s transportation activity forecasts, aggregate projections were derived of air pollutant emissions from mobile sources.’ Personal passenger vehicles are the primary source of air pollution generated by transportation, particularly in urban areas. On a national basis, levels of pollution gener- ated by urban personal passenger vehicies are forecast to continue to decline until 1990, and then to increase slightly due to increasing travel. Figure 11 and Appendix Table 19 illustrate the findings. There is special difficulty with NO, emissions, due to growth in NO, from coal burning at stationary sources. These emissions plus those from mobile sources may force postponements of certain U.S. air quality objectives. NTPSC projections indicate substantial growth in intercity and international air transport. This may result in some increased emissions of air pollutants, ifs more aircraft operations offset the improvements to individual aircraft. TRANSPORTATION NOISE Federal recognition of transportation noise problems and involvement in noise regulation began with the FIGURE 11. Forecast urban transit emissions, 1975 to 2000, medium-growth scenarlo.* 120 112 E104 xe) & 96 ° G 88 S Fa CO 5 2 80 . 2 72 8 5 = — 64 a) 2 3 3 56 B has 5 = 40 — 32 Ww 3 24 fa 16 HC 8 NO, 0 1975 1980 1990 2000 Year SOURCE: See Appendix Table 19. aForecast differences among scenarios are insignificant. Medi- um-growth values are used in plotting the Figure. This forecast was based on status quo policies of NOx control, such that a primarily gasoline-powered auto fleet was assumed. Chapter 8 suggests dieselization is likely. 1968 amendment to the Federal Aviation Act that authorized the FAA to establish standards for the measurement of aircraft noise and sonic booms, and to issue regulations for noise control.4? DOT was given authority to regulate noise from surface trans- portation in the Federal Highway Act of 1970.47 A 1976 amendment to the Airport and Airway Develop- ment Act broadened Federal funding eligibility for airport projects to include the control of noise in the impact zone adjacent to airports.** Controversy sur- rounds the issue of Federal subsidy to individual manufacturers and carriers to retrofit the present air fleet to reduce noise. H.R. 8729, the Airport and Aircraft Noise Reduction Act considered in the 95th Congress, contained provisions for assistance to air carriers faced with the obsolescence of nearly three- fourths of their active fleet, through a series of surcharges on the users of air transportation. A number of significant noise sources for the future remain unregulated. Noise from the Concorde of the type already in operation is exempt from Federal Aviation Regulation (FAR) 36.4° Such aircraft may not, however, exceed their current noise levels. TRANSPORTATION AND EXTERNALITIES @ 119 Noise from the Concorde is louder than noise from most regulated subsonic aircraft, especially on de- parture.4” Future SSTs, built after January 1, 1980, must adhere to FAR 36 standards.** General aviation noise remains largely unregulated. The large number of general aviation aircraft in comparison to aircraft operated by commercial carriers may constitute an obstacle to reducing noise at many airports. Finally, autos and light trucks, which are the most pervasive source of transportation noise, have not been sub- ject to Federal noise control measures. Despite the Noise Control Act of 1972, that authorized EPA to coordinate Federal noise pro- grams,‘ the Federal role in controlling transportation noise remains unclear. On the one hand, the courts ruled that local airport operators bear liability for any aviation noise damage. On the other hand, Federal courts say the Federal government bears responsibil- ity for regulating noise from local rail yard facilities. Responsibility for noise control is divided among various Federal agencies. EPA’s responsibility to propose noise standards to FAA, which sets aircraft noise regulations, is likely to remain an issue. Many have argued EPA should have sole responsibility for noise regulations in all modes, while others feel FAA should continue to set noise rules because of safety and other concerns.*' A division of responsibility also exists between EPA, which sets surface transporta- tion noise regulations for interstate motor carrier and railroad operations, and the U.S. DOT, which en- forces them.5? At the local level, conflicts between various jurisdictions are a major impediment to reducing harmful aviation noise.°? The costs of compliance with Federal noise regu- lations are twofold. The monetary costs of financing compliance with noise regulations are large. The low rate of return of the airlines in the early 1970s made it difficult for air carriers to finance replacement or retrofit of noisy aircraft in order to comply with Federal regulations. A similar problem now exists in the rail industry. Railroads in financial difficulty may not wish to purchase low-noise equipment. Also, firms in the bus and motorcycle industries may not easily afford the changes required by Federal noise regulations. There may also be safety costs associated with noise regulation compliance, to the extent that there are tradeoffs between safety and technological or procedural solutions to noise problems. With respect to aircraft noise, proposed procedural changes of reducing air speed immediately after takeoff while within a certain proximity to the ground may have safety risks.% Although improved fuel efficiency and noise re- duction may go hand in hand, in other instances there are trade-offs to be made between less noise 120 e TRANSPORTATION ACTIVITY AND INSTITUTIONS and less fuel consumption. The cost of many techno- logical improvements appears to be an obstacle to realizing both noise reduction and fuel efficiency for aircraft operations. The optimal noise abatement strategy remains unclear. Lack of definitive information on impacts of noise, technologicial feasibility of noise control measures and their economic costs, and localized estimates of future travel and population growth make it difficult to determine with certainty the best control strategy. More effective regulation of trans- portation noise will require information on the incre- mental costs and benefits of reducing noise. HAZARDOUS MATERIALS TRANSPORTATION The substances currently designated hazardous by EPA include some industrial and municipal wastes, chemicals, petroleum and related fuel products, and toxic substances.°> A summary follows of the perti- nent legislation and the issues that emerge from control over these substances. Not included in this discussion, but covered later under transportation Safety, are explosives (regulated by the DOT) and radioactive materials (regulated by the Nuclear Reg- ulatory Commission). The Resource Conservation and Recovery Act of 1976 (RCR Act) gives EPA authority to regulate waste materials which are designated hazardous. As of mid-1979, EPA had not completed the techni- cal documentation of the materials which will eventu- ally be subject to regulation. Key provisions of the RCR Act involve the development of criteria to determine which wastes are hazardous: institution of a transport tracking system; and establishment of a permit system for hazardous waste treatment, stor- age, and disposal. " The RCR Act was not intended to set restrictions on the transport modes carrying hazardous sub- stances. Its regulations require only clerical duties of recordkeeping and placarding vehicles. As these functions are already performed by the transporters under DOT safety regulations, RCR Act regulations will be of insignificant direct impact to the transport sector. The RCR Act does mandate that EPA develop regulations for disposal practices and desig- nated disposal sites.*” Thus, RCR Act regulations will likely increase the demand for transportation ser- vices if on-site disposal is displaced, primarily in the rail, barge and truck modes. The Toxic Substances Control Act of 1976 (TSC Act) restricts disposal of toxic materials at regulated sites.°® Similar to RCR Act regulations, the TSC Act can be expected to increase demand for transporta- tion services, primarily by truck, for disposal of toxic wastes in approved sites. | | | | Regulatory control of petroleum and hazardous. substance spills falls under the authority of several statutes. 1. The Clean Water Act of 1977, Section 311, grants | EPA authority to develop and enforce penaities | for spills of petroleum and _ hazardous — substances.*® Penalties, based on technical evi-. dence of spill removability, quantity released, and extent of damage, were developed by EPA. In one. case, transporters sought judicial relief from the ° penalties and won. The court found EPA’s techni- cal support inadequate, and the liability to the | transporters (mostly barges) for the penalties | uninsurable. The plaintiffs argued that the penal- . ties had the potential for putting some small barge operators out of business and severely restricted the types of cargo carried by other operators. Presently the Section 311 regulations are in abeyance.® It is possible that EPA will lower the penalties and strengthen its technical evidence. 2. Through international treaties and conventions, the provisions of the Oil Pollution Prevention Act of 1961°' and the Ports and Waterways Safety Act of 1972, as amended in 1978, the U.S. has developed guidelines and agreements for tanker construction, operation, navigation, and manning. The Coast Guard issues these regulations. There has been recent activity in Congress toward | creating a ‘‘superfund’’ to pay for oil spill clean-up. — Bills introduced in the 95th Congress differed in » Provisions on: the fees to create a fund; the size of a fund; pre-emption of state charges; liability limits; the inclusion of certain hazardous substances; and the question of insurability.* If pre-emption of state funds is not part of a bill, shipments may be more costly to customers in states where additional state fees are charged. The shipping industry favors pre-emption by the Federal government, exclusion of certain hazardous materials, and minimal liability limits. WATER POLLUTION The Federal Water Pollution Control Act of 19728 (FWPC Act) reorganized the ways in which water quality goals are to be achieved in the U.S.% Besides increasing the authority of the Army Corps of Engj- neers over the regulation of water quality, the FWPC Act charged EPA with major Federal responsiblity for water quality protection. Section 404 of the act pertains to dredged and fill material disposal, indicat- ing that: 1. The Corps issues permits, after public hearings, for the disposal of dredged material in navigable waters at specific disposal sites; } 2. Dumping sites be specified by the Corps using guidelines developed by EPA; and | 3. EPA may veto the Corps’ designation of disposal == "EE =—_— === | 1163 FIGURE 12. Transportation fatalities by mode, 1977 and 1978. 60,000 o N 2 is 2 2 “i wo ©o SE 5 8 50,000 Yt bo 40,000 x = = ‘5 30,000 od 2 E — Zz 2,000 S © © eee < oo 6%) ne 1,000 | wo Ww © 0 77 78 LIS 77 78 77 78 v/7/ o a r) ae OF Sirocco abe se 5 .ds Vhs eaters cea ge Mh Sees gt 2a ® 8 o> Ee a oa < ra oc ~ ~ TRANSPORTATION AND EXTERNALITIES e123 @ 1977 [] 1978 N N [Cw Ye ae op Paz ro) ie) JT wo 9 19 Oo =) Nan © ‘0 ry oo oT 77 78 77 78 77 78 77 78 77 78 77 78 me) ne) o ” fon S Q: e ~ os tas = ce 5 rc) vt Le wo ‘o © a 2 o 2 ope x aE 5 a. Os O cc $ oe = SOURCE: U.S. Department of Transportation, Transportation Safety Information Report, Washington, D.C.: March 1979, p. 2. aWaterborne transportation (reported on a fiscal-year basis) is not included in total transportation. >Based on a 30-day fatality definition. 1978 data are preliminary (as of 1/30/79). eGeneral aviation and air carrier each include 144 fatalities resulting from mid-air collision over San Diego, California. However, these fatalities are counted only once in the total transportation figure. Safety legislation has usually been a response by state or Federal legislators to conditions which were not being rectified thoroughly or soon enough by transportation service operators. Safety regulations are frequently viewed by operators as costing money -unnecessarily. The need for safe operation is recog- nized, but the standards and procedures for obtain- ing them are often contested by operators. The first item of Federal railroad safety regulation is a classic case. Passed in 1893, this act required the installation of air brakes on freight trains to replace hand braking on each car.% The manual system was accident prone and dangerous to em- ployees. A power braking system had been available since its first passenger train application in 1868, 25 years prior to congressional action.% In an era of trackage expansion, air brake installation and retro- fitting had to compete with other expenditures and brakes were not always given priority. Today, with variable levels of enforcement from state to state,“ options for eluding enforcement of safety regulations include, for example, truck drivers exceeding regulated hours to earn more money, or stretching the life of tires beyond maximum allowable tread wear to reduce expenses. That is, the practices legislated against by both Congress and state legis- 124 ¢ TRANSPORTATION ACTIVITY AND INSTITUTIONS latures may persist because of the cost and political repercussions of enforcement. Most safety improvements require the use of resources, either public or private. To assess the effectiveness of safety expenditures, economic measures such as the internal rate of return can be applied, assuming agreement on the approximate value of life and limb. Such calculations have been carried out in the U.S., but not necessarily used. A NHTSA report to Congress did present data on the cost, per fatality forestalled, for a variety of highway traffic accident countermeasures. Appendix Table 20 ranks countermeasures by cost effectiveness. Economic analysis of this type should be applied to proposed countermeasures. Contemporary public-carrier safety issues may be grouped in four categories, as described below. These issues have received public and private atten- tion, but specific problems persist. QUALIFICATION AND FITNESS OF OPERATORS Accident investigation reports often indicate that operators—singly or as crew members—are solely or largely responsible.% Better supervision and high- er-caliber employees should improve safety. Fatigue, apathy, lack of alertness, failure to adhere to estab- lished operating rules, inattention, or use of alcohol and drugs are all involved. Almost all public passen- ger and freight-carrier operations require repetitive trips or runs over the same route. No matter what the mode, the trip may become routine and boring, alertness is not maintained, and discipline breaks down. Only the tightest kind of supervision can reduce these hazards which are common to all transport. The alertness problem does not appear amenable to further regulation but may be affected by heavy civil or criminal penalties when disclosed, as in an accident report. For any mode, improvement in the on-duty performance of operators and crew members appears obtainable only through increased supervision. While higher outlays for supervision will be unlikely to increase capacity or efficiency to a measurable degree, or even to significantly reduce insurance costs, such operating cost increases are unlikely to exceed two or three percent. Lack of technical qualification on the part of operating personnel appears a problem with some foreign-flag vessels.’ Tightening crew qualifications might increase cost. The potential effect on U.S. import-export traffic appears nominal. PHYSICAL CONDITION OF RIGHTS-OF-WAY AND VEHICLES Deterioration of rail track and structures due to deferred maintenance and, to a lesser extent, deteri- oration of older highways and road bridges, are primary causes of accidents. Train service accidents, largely derailments, have increased in dollar terms by about 50 percent in the last 10 years. Deferral of railroad maintenance, which affects cars and locomotives as well as track, is essentially a financial problem of insufficient revenues for many carriers. Its solution is likely to be difficult and time- consuming, and conditions will worsen further before a turnaround occurs. Deferred maintenance of rail plant and equipment was estimated at over $4 billion in 1976 by the FRA.°9 Deteriorated vehicle conditions appear to be serious among trucks, for which brake deficiencies and excessive tire wear are safety problems.1™ Freight car and locomotive maintenance have also been underfunded on many rail properties.‘ Acci- dent reports, particularly for trucks, have shown that improved brake and tire conditions should measur- ably reduce the number and severity of accidents.'@ Deficiencies are found to some extent among all types of operators.'°° While these problems are in part financial, they may be corrected through third- party inspection programs and enforced removal of vehicles from service by state or Federal inspectors. The hazards of highway accidents have been lessened by removing fixed obstructions from the margins, widening lanes and rights-of-way, improving sight distances, changing guard-rail designs, and so forth. Both airways and waterways are being scruti- nized for changes that would reduce collisions in the vicinity of terminal areas. SOURCES AND METHODS OF ENFORCEMENT Safety enforcement problems for the highway and railway modes revolve around the limited scope of inspection programs and the variety of actions among the states. Under the federal system of government, states have had wide latitude in the use of police powers. Efforts by FHWA and other DOT agencies to improve state performance have had uneven results although in some cases receipt of highway capital grants has been made contingent by Congress on state operation of such programs as anti-alcohol enforcement, driver education, and emergency medical services.1% States have used a variety of methods for truck safety enforcement. Many have combined safety enforcement with enforcement of economic regula- tions (prevention of illegal carriage by unauthorized operators) or with truck weight enforcement at truck scales. Other states use state police forces to inspect trucks and buses, either at fixed or random locations. Accident reporting (except for aviation and rail) is generally the concern of state and local government. This process is so lacking in uniformity that there are no national statistical bases from which to measure any changes due to program actions. Truck accident reporting, to date, is less complete than for light-duty vehicles, which have been subject to recent attention by U.S. DOT agencies.’ HAZARDOUS MATERIALS HANDLING AND ACCIDENTS The volume and variety of substances which are highly inflammable, explosive, toxic, or radioactive (either in natural states, under stress of an accident, or when accidentally combined with other materials) have rapidly increased. Recent catastrophic acci- dents on the railways and highways have pushed this problem to the fore. The emergency forces on the scene are often rural or small-town fire and police forces with little technical understanding of the _ materials’ behavior except for such common sub- stances as refined petroleum products or industrial acids.'° They also often do not know the exact contents of overturned or ruptured rail cars or trucks. Lack of handling knowledge has apparently caused secondary explosions during wreckage- clearing operations.'°” As a result, industry is taking steps both to reduce the chances of accidents involving hazardous materi- als and to minimize the consequences should such accidents occur. For example, the Manufacturing Chemists Association has established a Chemical Transportation Emergency Center (Chemtrec), which is available on a 24-hour basis to provide emergency response information and to contact shippers whose hazardous commodities are involved in an _ accident.’ An Inter-Industry Task Force on Rail _ Transportation of Hazardous Materials, comprised of railroad, rail-car manufacturer, and shipper repre- _ sentatives, has been formed to accelerate present _ programs and take steps to reduce the number and severity of rail accidents involving hazardous materi- als by installing sophisticated failure detection sys- tems that identify defects in rail equipment or track before they cause accidents. The industry has agreed to special handling which restricts switching and speed for trains containing hazardous materials. Company specialists trained to handle hazardous materials are available to deal with emergencies and to instruct firefighters in cities and towns located along rail rights-of-way. In addition, most firms are placing emergency response information on trains _ handling hazardous materials.’ Increased protective strength of vehicles in case of collision has been required by regulation in the past, and by a recent mandatory action by the _ Secretary of Transportation for railroad tank cars.'"° It appears likely that the problem of accidents with TRANSPORTATION AND EXTERNALITIES @ 125 rail cars, trucks, barges, or ships containing hazard- ous materials will Continue to be met, in part, by revising and tightening design specifications of both packaging and vehicles. This appears to be one of the more immediate practical actions the Federal government can take. SUMMARY AND CONCLUSION interrelations between the transportation system and the externalities of its operation—environment and safety—are complex; numerous regulations affect all modes and markets. NTPSC forecasts suggest that environmental and safety issues will persist over the next two decades, but with greater attention to economic and energy-resource pressures. Mobile-source air pollution regulation has had perhaps the most pervasive impact on transportation of any externality. The latest regulations extend deadlines for air quality improvement but impose stricter standards and regulate more vehicles. Emis- sion levels are predicted to start rising slightly after 1990, primarily due to steady growth in motor vehicle traffic (due, in large part, to the increased driving- age population). Widespread operation of the diesel engine, which offers significant potential for energy savings, will depend on NO, and proposed particu- late standards. Many emission-control strategies are costly to implement, but may be adopted when they can be shown to achieve other goals simultaneously (e.g., energy efficiency). Institutional conflicts are embodied in the Federal noise program through divided responsibility for noise control among various agencies. The costs of compliance with noise regulations may be large and involve safety tradeoffs. Regulations now exist for the transport of industri- al and municipal waste, chemicals, petroleum and related fuel products, and other toxic substances. Liability for compliance and cost are still issues to be resolved. If on-site disposal is displaced, RCR Act regulations for hazardous waste disposal could in- crease the demand for transport of these materials, primarily in the rail, barge, and truck modes. Interpretation of the Federal Water Pollution Con- trol Act’s dredge and fill provisions (Section 404) has substantially expanded Army Corps of Engineers jurisdiction over U.S. waterways. The regulations impose costs on new port development or expansion of existing operations, while benefits are unmeas- ured. NEPA requirements for EIS submittal, even as modified by recent CEQ regulations, may pose problems of delay or increased cost to new transpor- tation development. Again, the benefits of such regulations are often unmeasured. 126 e TRANSPORTATION ACTIVITY AND INSTITUTIONS Historically, the environmental consequences of transportation activities have been ignored or misun- derstood. Until perhaps the last decade, environmen- tal concern over transportation activity has been slight. The last decade witnessed a proliferation of environmental regulations, many with severe cost or operational consequences for transportation. In a recently published survey of environmental attitudes, Kathryn Utrup, of Resources for the Future, con- cludes that ‘‘... even though economic and energy resource pressures have increased, the public main- tains a continued strong commitment to environmen- tal quality.’’''? She compared major national surveys on environmental issues, covering the period from 1960 to 1978, focusing on how the public views the amount of Federal money spent on environmental | protection, and found that strong support exists in all | segments of American society.''? Nevertheless, environmental endeavors compete for limited resources, and allocating resources to one activity may work at cross-purposes with respect to the others.''S Clearly the next decade, and per- haps the following one, will see continued economic and energy pressures, as experienced in the latter half of the 1970s. In some cases, these competing pressures may take precedence over environmental values. NOTES AND REFERENCES 1. U.S. Environmental Protection Agency (EPA), 1975 Nation- al Emissions Report, Research Triangle Park, N.C.: 1978, p. 5, 2. U.S. Environmental Protection Agency, National Air Quality and Emissions Trends Report: 1976, Research Triangle Park, N.C.: 1977. 3. HCisachemical precursor of photochemical oxidants. 4. U.S. Council on Environmental Quality (CEQ), Environmen- tal Quality: Ninth Annual Report, Washington, D.C.: Gov- ernment Printing Office, 1979, pp. 62-66. 5. U.S. Environmental Protection Agency, ‘‘Cost Effectiveness and Feasibility of Selected Transportation Control Plan (TCP) Strategies to Reduce Oxidant Air Pollution: Policy Summary,”’ unpublished staff report by Edward Bentz, Washington, D.C.: 1977. 6. Clean Air Act of 1970, 42 U.S.C. Section 1857 (1975). 7. Standards for motor vehicles, as they stand under the 1977 amendments to the Act, are shown in U.S. Environmental Protection Agency, Progress in the Prevention and Control of Air Pollution in 1977, Washington, D.C.: 1977, pp. 60—61. (Hereafter cited as EPA, Progress in the Prevention and Control of Air Pollution.) 8. Clean Air Act Amendments of 1977, 42 U.S.C. Section 7401 et seq. (1978). 9. U.S. Environmental Protection Agency, Appendix N to 40 CFR Part 51: Emission Reductions Achievable Through Inspection and Maintenance of Light-Duty Vehicles, Motor- cycles, and Light and Heavy-Duty Trucks, Washington, D.C.: 1977, p. 3-3. 10. ‘Diesel cars emit between 30 to 70 times as many particulates as catalyst-equipped gasoline-powered cars. Particulates emitted from diesel cars are small in size and can penetrate deeply into the lungs . . . .We are conduct- ing health-effects research to determine if this pollutant can cause cancer. However, the standards being proposed are not based on any such effect,’ according to EPA Adminis- trator Douglas Costle. See Larry Kramer, ‘“‘Diesel Exhaust Rules Set Stage for Fights,’’ Washington Post, 11 January 1979, p. D9. EPA recently proposed new standards for particulate emission controls in diesel-fueled cars and trucks. The standards would set maximum emissions from 1981 model diesel cars at 0.6 grams per mile, dropping to 0.2 grams for the 1983 and later model years. In contrast, EPA estimates General Motor’s 1979 diesel-powered Oldsmobile emits 0.78 to 1.02 grams/mile; the VW Rabbit emits 0.23 grams/mile; and Mercedes’ diesel model emits from 0.45 to 0.83 grams/mile. In 1979, EPA is undertaking a $9.5 million research program on diesel emissions. This research will cover not only health effects, but also control technology, and instrumentation and methods development. The health effects research will include invitro testing, toxicology work — with animals, and epidemiology. An article in Environment Reporter (‘‘EPA Initiates $9.5 Million Program to Study Effects of Diesel Exhaust’), dated November 10, 1978, quotes the following from a draft EPA ‘‘Mobile Sources Research Plan”: “".. recent test results and the usual carcinogenic properties of soot from incompletely burned organic material have raised the question of whether particles emitted from diesel engines are carcinogenic.”’ Further, according to Ronald Bradow, EPA’s Chief of the Mobile Source Emissions Research Branch: “What we found out was that certain fractions of samples of the diesel exhaust organic material had an awful lot of activity, and some of these were fractions we wouldn’t have anticipated would have been active at all ” The entire research program will take several years, although parts of the program will yield earlier results. Additional discussion of potential health problems asso- ciated with diesel can be found in an article by Brian Ketcham and Stan Pinkwas, ‘Diesels and Man,” New Engineer, April 1978, pp. 23-32. 11. Clean Air Act Amendments of 1977, 42 U.S.C. Section 7521 (b)(7) (1978). 12. E. G. Barry, F. J. Hills, A. Ramella, and R. B. Smith, “If Autos Go to Diesel Fuel,’’ Hydrocarbon Processing, May 197 feo 13. EPA, Progress in the Prevention and Control of Air Pollution, p. 67. 14. Clean Air Act Amendments of 1977, 42 U.S.C. Section 7453 (1978). 15. U.S. Environmental Protection Agency, ‘‘Review of EPA’s Emission Control Program for Light-Duty Vehicles,’’ unpub- lished draft report, Washington, D.C.: 1977. (Hereafter cited as EPA, Review of EPA’s Emission Control Program.) 16. U.S. Congress, Senate, Committee on Environment and. Public Works, Proposed Clean Air Act Amendments of 1977: Hearings Before the Subcommittee on Environmental Pollution, 95th Cong., 1st sess., Washington, D.C.: Govern-— ment Printing Office, 1977. 17. 18. 33. 34. 35. 36. 37. 38. 39. 40. 41. U.S. Environmental Protection Agency, ‘‘Review of EPA’s Emission Control Program,’’ unpublished draft report, Washington, D.C.: 1977. See U.S. Environmental Protection Agency, “Control of Air Pollution from New Motor Vehicles and New Motor Vehicle Engines: Selective Enforcement Auditing Procedures,” Federal Register, 28 July 1976, p. 31475. This SEA program has been estimated to cost manufacturers be- tween $200,000 and $600,000 annually for administrative costs alone. This, plus costs for design changes, testing and adjustments to equipment, translates into a 0.2 percent increase in sticker price to consumers. U.S. Environmental Protection Agency, ‘‘Economic Impact of Selective En- forcement Audit Regulations,”’ unpublished draft report by Tom J. Alexander, Washington, D.C.: 1976. EPA, ‘‘Review of EPA’s Emission Control Program.”’ Ibid. Ibid. Ibid. U.S. Environmental Protection Agency, I/nspec- tion/Maintenance Cost-Effectiveness and Feasibility of Implementation, by Edward Bentz, et a/., Report No. PB— 274-078, Washington, D.C.: 1977, p. 3. Ibid. Ibid. Wall Street Journal, 24 April 1979, p. 15. Margot Hornblower, ‘‘EPA Set to Ease Smog Standards for Urban Areas,”’ Washington Post, 21 January 1979, p. 1. System Design Concepts, Inc. and J.H.K. & Associates, TSM Planning, Volume II, pp. 7-11. Ibid.; and Interplan Corporation, Transportation System Management: State of the Art, prepared for U.S. DOT, Washington, D.C.: 1977, pp. 23-42. Sydec and J.H.K., TSM Planning, Volume II, pp. 46—49. Interplan Corp., Transportation System Management, pp. 59-72. Sydec and J.H.K., TSM Planning, Volume II; and Cambridge Systematics, Inc., Carpooling Incentives: Analysis of Trans- portation and Energy Impacts, prepared for the Federal Energy Administration (FEA), Washington, D.C.: 1976. ACO hotspot problem refers to a very localized violation of the CO air quality standard which is characteristic of traffic intersections, parking lots and densely congested auto areas. Sydec and J.H.K., TSM Planning, Volume Il; and Interplan Corp., Transportation System Management. Sydec and J.H.K., TSM Planning, Volume II, pp. 60-62. Cambridge Systematics, Inc., Implementation and Adminis- tration of Air Quality Transportation Controls: An Analysis of the Denver, Colorado Area, Executive Summary, pre- pared for U.S. Department of Transportation in cooperation with U.S. Environmental Protection Agency, Washington, D.C.: 1978, p. 7. Ibid. U.S. Environmental Protection Agency, Carpools, Van- pools, and High Occupancy Preference Lanes: Cost-Effec- tiveness and Feasibility of Implementation, by Edward Bentz, et a/., Washington, D.C.: 1977. (To be distributed by National Technical Information Service.) Clean Air Act Amendments of 1977, 42 U.S.C. Section 7571 (1978). Surface Transportation Assistance Act of 1978, Pub. L. 95— 599, 92 Stat. 2689; and Chris Shaver, Office of Transporta- tion and Land Use, U.S. Environmental Protection Agency, Washington, D.C., telephone interview, 30 March 1979. “The Clean Air Act Amendments of 1977: Expedient Revisions, Noteworthy New Provisions,’’ Environmental Law Reporter, October 1977, pp. 7ZELR 10183-10184. All emission factors are computed using the U.S. Environ- mental Protection Agency, EPA Mobile Source Emission 42. 43. 44, 45. 46. 47. 48. 49. 50. 51: 52. 53. 54. TRANSPORTATION AND EXTERNALITIES @ 127 Factor Document, Report No. EPA—400/9—78—006, Wash- ington, D.C.: 1978. Aircraft Noise Abatement Act of 1968, 49 U.S.C. Section 1431 (1970). Federal Highway Act of 1970, 23 U.S.C. Section 109 (1970). U.S. Congress, House, Airport and Airway Development Act Amendments of 1976, H.R. 9771, 94th Cong., 2d sess., 1976. Howard Cannon, “Aviation Safety and Noise Reduction Legislation,’ Congressional Record 125 (31 January 1979), p. S 928. Federal Aviation Regulations, Part 36, Noise Standard: Aircraft Type and Air Worthiness Certification, adopted Nov. 3, 1969, effective Dec. 1, 1969. Published in Federal Register 18355, Nov. 18, 1969. This amendment to the FAR implemented 49 U.S.C. Section 1432 (Pub. L. 89-726, Title IV, Section 611, amending Pub. L. 90-411, Section 1, July 21, 1968, 82 Stat. 395). The following table displays Concorde noise levels, com- pared with noise levels from selected subsonic aircraft, on departures and arrivals at Dulles International Airport, Washington, D.C.: Departure Arrival Noise Level Noise Level Aircraft Type (EPNdB) (EPNdGB) Concorde 119.3 116.6 Boeing 727 104.3 107.7 Boeing 707 AV3 117.3 Boeing 747 108.2 115.0 DC-—8 1117 116.6 DC-9 1013 109.0 These data were gathered from U.S. Department of Trans- portation, Concorde Monitoring Monthly Report, Washing- ton, D.C., May 1977; and from data on initial Concorde trials (1975-1977) reported in U.S. General Accounting Office, The Concorde—Results of a Supersonic Aircraft’s Entry into the U.S., Washington, D.C.: 1977. (Hereafter cited as CEQ, Ninth Annual Report.) Edmund Seliman, Chief, Noise Technology Branch, Office of Environment and Energy, Federal Aviation Administra- tion, telephone interview, 9 May 1979. Noise Control Act of 1972, Pub. L. 92-574, 86 Stat. 1234 (1972). U.S. Environmental Protection Agency, EPA Noise Control Program, Progress to Date, Washington, D.C.: March 1978. U.S. Congress, House, Committee on Government Opera- tions, Report on Aircraft Noise and the Concorde, H. Rept. 95-879, 95th Cong., 1st sess., Washington, D.C.: Govern- ment Printing Office, 1978, p. 5. Noise Control Act of 1972, Pub. L. 92-574, 86 Stat. 1234 (1972). U.S. Congress, Senate, Committee on Public Works, Re- port on Aircraft—Airport Noise, Report of the Administrator of the Environmental Protection Agency, Serial No. 93-8, 93d Cong., ist sess., Washington, D.C.: Government Printing Office, 1973; and U.S. Congress, House, Commit- tee on Public Works and Transportation, Airport and Aircraft Noise Reduction: Hearings before the Subcommit- tee on Aviation on H.R. 4549 and Related Bills, held March to May 1977, 95th Cong., 1st sess., Washington, D.C.: Government Printing Office, 1977. U.S. Congress, House, Committee on Public Works and Transportation, Hearings on Airport and Aircraft Noise Reduction, 95th Cong., 1st sess., Washington, D.C.: Gov- ernment Printing Office, 1977, p.161. 128 ¢ TRANSPORTATION ACTIVITY AND INSTITUTIONS 55. 56. 57. 58. 59. 60. 61. 62. 63. 64. 65. 66. 67. 68. 69. 70. TA 72. U.S. Council on Environmental Quality (CEQ), Environmen- tal Quality: Eighth Annual Report, Washington, D.C.: Gov- ernment Printing Office, 1978, pp. 1-10. (Hereafter cited as CEQ, Eighth Annual Report.) Resource Conservation and Recovery Act of 1976, 42 U.S.C. Section 6921 (1977). Ibid.; and Resource Conservation and Recovery Act of 1976, 42 U.S.C. Section 6924 (1977). Toxic Substances Control Act of 1976, 15 U.S.C. Section 2601 et seg. (1978), 90 Stat. 2003. Federal Water Pollution Control Act, Section 311, 33 U.S.C. Section 1321 (1978), amending the Clean Water Act of 1977, 49 U.S.C. Section 1321 (1978). Manufacturing Chemists Association v. Costle, 455 F. Supp. 968 (W.D. La. 1978). Oil Pollution Act, 1961, Pub. L. 87-167, 75 Stat. 402 (1961). Ports and Waterways Safety Act of 1972, 46 U.S.C. Section 391(a(1978). Major legislation on this issue before the 95th Congress included: S.1187, Comprehensive Oil Spill Liability and Compensation Act; S. 2083, Oil Pollution Liability and Compensation Act; H.R. 6803, Comprehensive Oil Spill Liability and Compensation Act; and S. 2900, Oil Spill Liability Fund and Compensation Act. For highlights of bill provisions and legislative action, see CEQ, Environmental Quality: Ninth Annual Report, pp. 368—369. CEQ, Ninth Annua! Report, pp. 368-369. Federal Water Pollution Control Act, 33 U.S.C. Section . 1251, et seq. (1978). U.S. Congressional Research Service (CRS), Environmen- tal Protection: Legislation and Programs of the Environ- mental Protection Agency, by John E. Blodgett and Mark E. Anthony, Washington, D.C.: 1977, p. 2—CRS—1. U.S. Maritime Administration, Region IX Office, Untangling Dredging Regulations, San Francisco: 1976, pp. 12-13. U.S. Congressional Research Service, Water Pollution Control: Disposal of Dredge and Fill, by Malcolm Simmons, Issue Brief No. 77026, Washington, D.C.: 1978, p. CRS—7. Clean Water Act of 1977, 33 U.S.C. Section 1251, et seq. (1978), amending 33 U.S.C. Section 1251, et seq. (1977). Federal Water Pollution Control Act, 33 U.S.C. Section 1251, et seq. (1978). Nationwide permits are issued by the Corps’ headquarters office, while general permits are issued by district offices. Safeguards are included in the regulations to ensure that the nationwide permit system does not adversely affect water quality. “Environmental Fight May Curtail Dredging on Upper Mississippi,”’ Traffic World, 27 March 1978, p. 16. U.S. Maritime Administration, The Effect of Federal Stan- dards on U.S. Public Port Development, Washington, D.C..: 1978, p. 15. Ibid. Ibid., Table 8, p. 34. Ibid., pp. 50-53. National Environmental Policy Act of 1969, Pub. L. 91-190, 83 Stat. 852 (1969). U.S. Council on Environmental Quality (CEQ), Environmen- tal Quality: Sixth Annual Report, Washington, D.C.: Govern- ment Printing Office, 1976, p. 627. (Hereafter cited as CEQ, Sixth Annual Report.) Ibid., p. 628. 42 Fed. Reg. 26967 (1977), amending Executive Order 11514 (1970). See discussion of NEPA and regulations in CEQ, Eighth Annual Report, pp. 396—415. U.S. Council on Environmental Quality, ‘‘National Environ- mental Policy Act: Implementation of Procedural Provi- sions: Final Regulations,’ Federal Register 43 (29 Novem- ber 1978), p. 56003. 90. 91. 92. 93. 94. 95. 96. SIG 98. 99. 100. Ibid. Michael Kane, Transportation and Land Use Division, Council on Environmental Quality, Washington, D.C., tele- phone interview, March 1979. Ibid. CEQ, Sixth Annual Report, pp. 636-637. “A Legacy in the Making,’’ Marathon World, No. 4, 1977, pp. 20-23. CEQ, Sixth Annual Report, p. 639. Ibid., p. 638. Estimates from agency budgets are shown below. Safety Budgets Department of Transportation (Billions of $) FHWA & NHTSA 1.200 FRA 0.030 FAA 2.500 CG 0.900 MTB 0.005 TOTAL $4.635 See, U.S. Office of Management and Budget, The Budget of the United States Government, Fiscal Year 1977, Washing- ton, D.C.: Government Printing Office, 1976; and U.S. Congressional Budget Office, 1979 Congressional Budget Scorekeeping Report, Report No. 4, Washington, D.C.: Government Printing Office, 1978. Herbert Colcord, Office of Public Information, National Fire Protection Association, Boston, Massachusetts, telephone interview, 13 April 1979. See, for example, the following Association of American Railroad publications: Standard Code of Operating Rules, Washington, D.C.: 1965; and Manual of Standards and Recommended Practices, Chicago, Illinois: (revised to 1978). Safety Appliance Acts, 45 U.S.C. Section 1 et seg. (1964). Dudley F. Pegrum, Transportation: Economics and Public Policy, Homewood, Ill.: Richard D. Irwin, Inc., 1973. For information on the variations in state performance, see: H. J. Anderson, ‘“‘The Federal Approach to Highway Safety,” in Compendium of Technical Papers, Institute of Transportation Engineers, 48th Annual Meeting, held in Atlanta, Ga. on August 8, 1978, Arlington, Va.: Institute of Transportation Engineers, 1978. National Highway Traffic Safety Administration (NHTSA), The National Highway Safety Needs Report, Washington, D.C.: 1976. See National Transportation Safety Board summaries of accident investigations in U.S. Department of Transporta- tion, Transportation Systems Center, Transportation Safety Information Report, Cambridge, Massachusetts: quarterly. (Hereafter cited as DOT, Transportation Safety Information Report.) James R. McCaul, President, International Maritime Asso- ciates, Washington, D.C., telephone interview, 27 April 1979. DOT, Transportation Safety Information Report, March 1978, p. 84. Also, it should be noted that reportable accidents, for all modes, are often defined by a dollar cutoff of estimated damage. Inflation alone makes more accidents “reportable’”’ each year. Further, rail accident experience appears to differ greatly by line and rail property. U.S. Federal Railroad Administration (FRA), A Prospectus for Change in the Freight Railroad Industry, Washington, D.C.: 1978, p. 24. (Hereafter cited as FRA, A Prospectus for Change.) See discussion of roadside truck inspections in U.S. DOT, Transportation Safety Information Report, March 1978, pp. 88-93. 101. 104. — 105. 106. 107. FRA, A Prospectus for Change, p. 24. See DOT, Transportation Safety Information Report for summaries of accident investigations. Ibid. Both public budgets and private maintenance ex- penses would be increased by unknown amounts with more extensive safety inspection programs. Although there ap- pear to be no accepted cost figures for added inspection, best NTPSC estimates suggest a range from $500 to 800 million per year on a national basis. It is not clear whether the benefits of accident reductions would justify such outlays. U.S. Department of Transportation, National Highway Traf- fic Safety Administration (NHTSA), National Highway Safe- ty Report, Washington, D.C.: 1976, Chapter III. Sally Adams, Staff, Senate Committee on Commerce, Science, and Transportation, Washington, D.C., telephone interview, 27 April 1979. DOT, Transportation Safety Information Report, June 1978, p. 45. Ibid.° 108. 109. 110. ali mee 113. TRANSPORTATION AND EXTERNALITIES #129 See account of Waverly, Tenn. accident in DOT, Transpor- tation Safety Information Report, September 1978, p. 49. U.S. Office of Technology Assessment, An Evaluation of Railroad Safety, Washington, D.C.: 1978, p. 144. U.S. Department of Transportation, Materials Transporta- tion Bureau, ‘‘Docket No. HM—144, Amend. No. 179-24,” Federal Register 43 (7 September 1978), p. 39792. Resources for the Future, ‘‘Environmental Public Opinion: Trends and Tradeoffs, 1969-1978,” draft paper by Kathryn Utrup, Discussion Paper D—36, Washington, D.C.: 1978, p. 3. Ibid., p. 2. Utrup finds that the public response is more strongly in support of environmental goals in the case of indirect tradeoffs—when economic, energy, and environmental goals are pitted against one another—than when direct tradeoffs are required—for example, when a choice must be made between jobs and environmental quality. /bid., pp. 2-3. See also, Robert Mitchell and Kathryn Utrup, ‘‘The Public’s View,’’ EPA Journal 5 (January 1979), pp. 26—28. 0 “ Transportation INTRODUCTION This chapter deals with interrelationships between transportation and energy. Transportation is a major consumer of energy (especially petroleum) and is essential to move energy in various forms from point of production to point of consumption. For its forecasts to the year 2000, the NTPSC investigated energy supply characteristics for transport and for other sectors of the U.S. economy, in the context of worldwide energy conditions. These energy condi- tions are volatile and uncertain, but estimates of energy prices are important for forecasts of transpor- tation activity. This chapter describes the patterns of energy consumption, production, and movement expected by the year 2000. Significant findings are: the rate of growth in energy consumption by trans- portation is expected to decline; there will be great reliance on synthetic petroleum, thereby reducing dependence on oil imports; and coal consumption will rise, requiring additional transportation of coal. The forecasts in this chapter used the National _ Energy Model described in Chapter 5. That model _ forecasts amounts and prices of energy consumed by end users, based on relative costs of production and movement. The model assumes that high enough energy prices would elicit sufficient energy supplies for future levels of consumption. It is further assumed that no major interruptions would occur in petroleum imports and that Federal regulation of energy prices would cease. Appendix Ill lists uncertainties that | could alter the forecasts. | NATIONAL ENERGY CONSUMPTION AND PRODUCTION ENERGY CONSUMPTION | The nation’s energy is consumed by three end-use sectors: transportation, residential/commercial, and industrial. Table 13 presents forecasts of energy consumption by each of these sectors for each of the / NTPSC’s three growth scenarios. From the table it can be noted that growth rates among the sectors are expected to differ for each time period to the } | and Energy year 2000 and for each scenario. In the medium- growth scenario,' the total consumption of energy is expected to increase from almost 54 quads (quadril- lion British thermal units) in 1975 to 89 quads in 2000, an average annual increase of 2.1 percent.? For the transportation sector, average annual growth of 1.1 percent is anticipated to the year 2000, well below the average annual increase of 2.7 percent between 1947 and 1975.° The decline is largely attributable to improved efficiencies in auto- mobiles and aircraft. Industrial consumption is ex- pected to show the greatest rate of growth, an average of 3.5 percent annually over the course of the forecast period. This rate is based upon expect- ed rapid growth in energy-intensive industries (par- ticularly chemicals and primary metals), increased use of coal with low end-use efficiencies, and a rapid increase in the value added in industrial products. The residential/commercial sector forecast shows the slowest annual average growth, 0.7 percent between 1975 and 2000, a sharp decline from that sector’s historical average of 3.3 percent.* This slowdown is based on expectations of decreased population growth, saturation of the markets for appliances and air conditioning, improved efficien- cies in buildings, appliances, and furnaces, and increased electricity use, which has a high end-use efficiency. During the forecast period, transportation is envi- sioned to drop from 33 percent to 26 percent of energy consumption, while by the year 2000 the industrial sector may consume 54 percent of the nation’s distributed energy compared with 39 per- cent in 1975. NTPSC forecasts call for greater use of coal in the industrial sector of the economy and for electrical generation. Coal is to displace oil and natural gas consumed by industrial end-use and the intermediate stage of electrical generation. (It is assumed that many industrial and electrical generation processes presently using oil or gas can employ coal if it is economical.) Due to the availability of large, relative- ly inexpensive coal reserves, coal production can increase without a significant increase in the price per Btu. This will tend to reduce the demand for oil, 131 132 e FORECASTS TO THE YEAR 2000 because the more expensive oil will not be used for processes that can accommodate either oil or coal. The amount of nuclear energy used for electrical power generation also is forecast to rise between 1975 and 2000 because of favorable economics, although environmental and safety factors may delay and reduce the projected growth. In 1975, nuclear fuel accounted for under 2 quads of the resources used for electric power generation; by 2000, nucle- ar’s contribution is forecast to increase to over 23 quads. Between 1975 and 2000, the total energy used for electrical generation is expected to increase by almost 32 quads, to 50.6 quads in 2000. During the period, the amount of coal and nuclear power used by utilities is forecast to increase by 34.7 quads, while oil’s contribution drops by over 1 quad to 1.6 quads in 2000. Abundant, relatively inexpen- sive supplies of coal and nuclear power are expected to support all of the growth in power generation. ENERGY PRODUCTION The major energy products which supply the needs of the U.S. are depicted in Figure 13, which traces their projected outputs to the year 2000. The production of energy in the U.S., plus energy products that are imported, equaled about 71.6 quads in 1975. The figure is expected to rise to over 138 quads in 2000 under the medium-growth scenar- io. These figures, it should be noted, differ from those given in Table 13, because they are for “primary energy production,’’ energy required during a given year to supply domestic energy consumption plus exports of energy products. Table 13, on the other hand, presented data on end-uSe consumption of energy by sector; these figures are smaller because energy commodi- ties may pass through several production stages before they are finally consumed as end products. FIGURE 13. Forecast primary energy production? for the U.S., 1975 to 2000, medium-growth scenario. 180.0 150.0 120.0 © 4 ~) fo) o =) Production per Year (in quadrillion Btu) 30.0 1985 SOURCE: NTPSC forecast. See Appendix Table 21. alncludes imports. Hydro, Geothermal, and Biomass Shale Syncrude Domestic Crude Imported Crude? Gas Imports® Domestic Gas Domestic LPG Eastern L.S. Coal Western L.S. Coal 1990 1995 ‘Includes petroleum products and small quantities of imported methanol. ¢Includes imported LPG. defined as the quantity of TRANSPORTATION AND ENERGY e 133 TABLE 13. Forecast distributed energy product consumption by end-use sector,* 1975, 1985 and 2000, by scenario (quadrillion Btu per year) Low-Growth Scenario aS _ SOURCE: NTPSC forecasts. aCoal exports and lubricants, asphalts, and the like are excluded. The near doubling of energy production forecast by the NTPSC translates into an average annual growth rate of 2.7 percent. This rate is markedly slower than the historic rate of 3.2 percent between 1947 and 1973.5 That energy growth rate is also less than the expected growth in real Gross National _ Product (GNP) to the year 2000, pointing to a decline in energy input per unit of GNP as shown in Table 14. The projected slower growth in U.S. energy pro- duction masks substantial shifts in the makeup of total energy supply. As shown in Figure 14, the share of the U.S. energy market accounted for by oil and ' natural gas is expected to shrink, while coal and nuclear power grow. Primary domestic production of _ Oil is forecast to remain constant and natural gas is forecast to decline between 1975 and 2000. Imports of oil and natural gas are projected to grow at an annual rate of 1.4 percent, dropping their share of ' energy production from 18 percent in 1975 to 13 Forecast primary energy production and GNP, 1975 | TABLE 14. to 2000, medium-growth scenario Energy GNP- Production (Billion (Quadrillion 1975 $) Btu Per Year) Btu/GNP 46,808 46,929 43,215 2,055 96.44 Medium-Growth Scenario High-Growth Scenario 2000 17.35 33% 18.72 31% 17.34 28% 20.68 30% 22.76 26% 21.76 25% 25.75 25% ae 20.72 39% 2688 44% 29.81 48% 31.51 46% 4850 54% 3338 47% 57.88 57% jal/ 15.19 28% 15.20 25% 1442 23% 16.05 23% 17.93 20% 16.20 238% 19.42 18% AUD sccnis seuss 53.26 100% 60.80 100% 61.06 100% 6824 100% 89.19 100% 71.28 100% 105.05 100% percent in 2000. In contrast, U.S. coal production is expected to increase from about 14.6 quads in 1975 to 53 quads in 2000, representing an annual average rate of growth of 5.3 percent. Nuclear fuel produc- tion is expected to increase by over 10 times during the forecast period. A major projected development is the establish- ment of a synthetic fuel industry to transform coal into synthetic oil and gas. During the last decade of this century tremendous growth in synthetic fuel production is expected. In the year 2000, over 11 quads of synthetic oil and gas are projected to be produced, representing 18 percent of the total domestic supplies of these fuels. Of this synthetic production, 74 percent is expected to be coal-based. With the development of a large synthetic fuel industry, the availability of petroleum and gaseous fuels in the economy is not anticipated to shrink to the extent indicated by their diminished share of primary energy production. ENERGY PRICES Forecasts of prices charged for energy resources (in 1975 dollars) are provided in Table 15. Consonant with the model rationale that the least-cost source of supply is preferred, sharper increases are forecast in crude oil and natural gas prices than for coal and uranium, making the latter more attractive over the coming decades. These price forecasts are based on the assumptions that production costs in domestic oil and gas fields will increase with continued extrac- tion, that the Organization of Petroleum Exporting Countries (OPEC) will be able to raise real prices through the remainder of the century, but that large amounts of coal and uranium can be mined with only minimal real price increases. 134 e FORECASTS TO THE YEAR 2000 FIGURE 14. Forecast production of leading primary energy products, 1975 to 2000, medium-growth scenario. / Natural Gas / 1975 : or y) Coal@ Nuclear ia ‘| _VIm!m™; ~~ Q 1985 Coalt p22 UM ] Natural Gas y A ian Nuclear ieeeeeeest 2000 Coal? aut oa TehG ico so! Oman a! aaa, 9,4 cai S le) cm Be 0 10 20 30 40 50 Production per Year (in quadrillion Btu) SOURCE: Appendix Table 22. aCoal includes export metallurgical coal. TRANSPORTATION AND ENERGY @ 135 TABLE 15. Forecast prices* of leading primary energy resources, 1975 to 2000, medium-growth scenario, (mid-1975 dollars per million Btu) i Price Annual Price Annual Price Annual ¥ Per Average Per _Average Per Average a M. Btu Change M. Btu Change M. Btu Change b Resource 1975 1975-85 1985 1985-2000 2000 1975-2000 Domestic Crude Oll ..........l.cccclcepeecsecscessceeesnees 2.07 3.2% 2.85 1.0% 3.29 1.9% Eo. pe a ee ane ee 2.20 2.4% 2.78 1.4% 3.43 1.8% Domestic Natural Gas ...............ccccceeeeeeeeeseees 2.04 3.1% 2.78 0.6% 3.06 1.6% MN IN asa si sas catinonas osmrrennenenesns none 0.50 3.4% 0.70 0.1% 0.70 1.4% Low Sulphur Coal eae nls has ci aod aie, 0.63 3.0% 0.85 —1.0% 0.73 0.6% a LEY a ese ea ee ee 0.44 0.9% 0.49 0.1% 0.50 0.4% ie (Mid-1975 Dollars per Conventional Units) h Resource and Unit 1975 1985 2000 5 mene More: Ollie seit. oid oh iecie ss cbesencaeaes Beareehae: B20 saci secant iera ne ene eee estate 12.01 16.53 19.08 TUN ON ios scart iniepicine nnn nensannpunionss BRAT ON sa sorenaintdedpcas- sen sua etter teeta eee mba: heels 12.75 16.12 19.90 CSA i oy og ners ccna yav nanan ania ‘Thousand cubic feet...giiiiaiig.. ie. 2.12 2.88 3.17 EMIT NON. nev sscete adhe sspeansteccsvoivejeosnynes SOE COM Soe sla th om opine apes ae oe 11.71 16.97 16.79 Mmtouipnur Coal f...10.600.0k au. SHON MLO he Ae 13.46 17.65 13.77 INR Seine ete cass tainn ee ceecdecnencenedaseneeaes Sia Ul doar tise. Steere J ssartateacsteo tee vesue umes 21.00 23.45 23.99 SOURCE: NTPSC forecasts. aWellhead and minemouth prices, assuming no energy price regulation. >Based on 145 million pounds / 33% thermal plant efficiency equals 47.9 million Ib. Because of the importance of petroleum fuels for the transportation sector, price ffends in petroleum are of special significance. The real prices of crude oil and petroleum products are forecast to increase faster than the rate of inflation, amounting to a rise in constant dollars of 59 percent for domestic crude oil between 1975 and 2000, or an average of 1.9 percent annually. Nevertheless, the domestic pro- duction of crude oil is expected to continue decreas- ing until after 1985, returning to approximately the 1975 production level in 2000. The forecast prices of energy for end-use in the transportation sector are presented in Table 16. These prices for gasoline, diesel fuel, electricity, and the like are given in terms of Btu equivalents for comparison. NATIONAL PETROLEUM CONSUMPTION AND | PRODUCTION PETROLEUM CONSUMPTION Petroleum fuels are of utmost importance for the _ transportation technology of 1979. Four key trends in total petroleum consumption by the U.S. to the year _ 2000 emerge from the NTPSC’s forecasts: ' 1. The rate of growth in consumption by all end-use sectors of distributed petroleum products will slow to a lower rate than the increase in total end- use Consumption of energy; 2. The rate of growth in consumption of petroleum- based fuels by the transport sector will slow markedly, shrinking transportation’s share of dis- tributed petroleum-product consumption; 3. Petroleum-based fuels will be employed more for industrial feedstocks, increasing the industrial sector’s share of distributed petroleum-product TABLE 16. Forecast energy prices (less Federal and state excise taxes) for transportation, 1975, 1985 and 2000, by scenario (1975 $ per million Btu equiva- lent) Low Medium High Growth Growth Growth Transportation 1975 1985 2000 1985 2000 1985 2000 Gasoline ............. 3.95 4.11 461 448 5.04 4.78 5.19 Diesel Fuel......... 3.38 3.67 4.33 4.03 4.75 4.28 4.86 Electricity ........... N/A N/A 8.43 N/A 8.43 N/A 8.43 Methanol ............ N/A 4.68 5.13 5.00 549 5.28 5.60 JOU FUG ee vsscscis.2 2.62 2.89 3.56 3.25 3.97 3.97 4.01 Marine Bunker FUGIAD. AB, cae 2.48 2.73 3.27 3.06 3.58 3.30 3.68 SOURCE: NTPSC estimates based on use of the SRI, Inc. National Energy Model 136 e FORECASTS TO THE YEAR 2000 consumption and skewing petroleum-product consumption toward regions that have industries based on petroleum feedstocks; and 4. Use of petroleum-based fuels for electricity gen- eration will decline, making more petroleum avail- able for end-use consumption. The average annual increase in petroleum con- sumption is expected to be 1.6 percent to the year 2000, well below the 3.9 percent rate of 1947 to 1975.° Transport’s annual rate of increase in petrole- um consumption will be slightly under 1 percent. The residential/commercial sector is expected to decrease its use of petroleum products, partly be- cause that sector will consume more electricity. The industrial sector, though, may consume 151 percent more petroleum products in the year 2000 than in 1975. The annual average increase in petroleum product use by the industrial sector is projected at 3.7 percent, above its historical annual average growth of 3.3 percent.’ The industrial sector will be using more petroleum-based feedstocks as input to industrial processes (such as petroleum in the manu- facture of plastics). The use of petroleum feedstocks, which have no ready substitutes, is to grow 4.7 percent annually, while the direct industrial use of distillate and residual fuels will increase 2.2 percent annually. These several changes in growth rates are expect- ed to reduce the share of distributed petroleum products consumed by transportation. In 1975, trans- portation consumed 70 percent of distributed petro- leum products. This will drop to 61 percent by 2000. While the share consumed by the residen- tial/commercial sector is also forecast to drop over the same period, from 13 percent in 1975 to 8 percent, the industrial sector is to gain in share from 17 percent to 31 percent in 2000. PETROLEUM PRODUCTION Although overall U.S. petroleum production is ex- pected to be relatively stable, considerable change is forecast in production locations. NTPSC projections indicate an extreme decline in production in the presently paramount Gulf Coast and West Texas regions. Production from these two regions is fore- cast to be 8.19 quads lower in the year 2000 than in 1975, in spite of an 82 percent increase in the average wellhead price for these regions’ crude. During the forecast period, the other U.S. production areas (with the exception of Alaska) will also show aggregate production declines. Production is to begin in the Atlantic offshore region, but will remain below 0.2 quads per year throughout the century. Annual production in the Pacific region is forecast to increase by approximately 1 quad between 1975 and 2000, but these gains will not offset sharp declines (a net decrease from 1975 to 2000 totaling 2.9 quads) in the midcontinent, Rocky Mountain, and Appdla- chian regions.8 Declining U.S. production in most states is to be partly countered by large gains in production of Alaskan oil. In 1975, Alaskan production was under 0.5 quads. This is expected to rise to over 10.5 quads per year by 2000. Annual imports of crude oil are to increase sharply from their 1975 level of 11.73 quads and reach 20.42 quads in 1990. (Throughout the decade of the 1980s, crude imports will exceed domestic crude produc- tion.) By 2000, imports will drop off to 14.10 quads. In real terms, the price of imported crude is forecast to rise as shown in Table 15, averaging 1.8 percent annually over the entire forecast period. This assumption of slowly rising real prices for imported crude, with essentially unlimited quantities available for import during any year and throughout the forecast period, has major effects. Through 1990, greater volumes of imports will serve as a ceiling for the market price of crude oil, checking the development of more expensive sources of domestic crude. In spite of the forecast of no gains in domestic production, the total amount of oil entering U.S. refineries from domestic production plus imports is to climb 5 quads between 1975 and 1980 and continue up until 1995, when these two sources will supply 37.2 quads of enéPgy to refineries (almost 7 quads more than in 1975)."° ALTERNATE FUELS In the final decade of this century, a rival for the markets presently belonging to domestic and import- ed oil is forecast: the production of synthetic oil from coal and oil shale. Shale can be transformed into crude oil that is similar to naturally produced crudes. Both low and high-sulphur coal can be transformed into a variety of products. Of special significance to transportation is the production of synthetic crude oil, which is suitable as an input for oil refineries, and methanol, a type of alcohol that may be used as a transportation and utility fuel. Research and develop- — ment of processes to accomplish these transforma- — tions are now going on, and within the logic of the — model applied by the NTPSC these will become — commercially available in the 1990s. Due to the — relatively low costs projected for material inputs and capital and operating expenses, significant produc- tion of synthetic crude oil is foreseen. In 2000, 6.2 quads (equivalent to 2.9 million barrels per day) of crude oil and residual fuel from coal and 2.2 quads © (equivalent to 1.1 million barrels per day) of shale syncrude are to be produced. These 8.4 quads will represent 20 percent of the crude oil available to refineries from all sources—domestic oil production, imports, and synthetics—and the prices at which large supplies of syncrudes can be produced will act as a ceiling on the acceptable price of domestic crude production and imports."' There are, however, uncertainties in the development of alternative ener- gy sources, as described in Appendix III. Transportation’s dependence on liquid fuels limits the possibility for fuel switching to alternate forms at the end-use level. In this respect, transportation is more vulnerable to petroleum disruptions than other sectors. For this reason, the manufacture of synthet- ic liquids is critical to transportation. Similarly, syn- thetic fuels and other alternative energy sources can be used by other end-use sectors to free scarce petroleum for transportation. A host of other products can be created from coal. Chief among these are substitute natural gas (SNG) of pipeline quality and low-Btu gas that can be manufactured locally for use by industry. Coal also can be transformed into residual fuel oil, hydrogen, solvent-refined coal, and additional energy products. Although none of these are directly consumed by transportation, their use by other sectors of the ' economy can reduce national dependence on petro- leum, such as the burning of SNG in lieu of heating oil. By 2000, the NTPSC forecasts production of 1.73 quads of SNG, representing over 7 percent of the nation’s total supply of gas. The development of synthetic fuels has major implications for the transportation sector. Moving synthetic fuels instead of coal will necessitate differ- _ ent transportation systems.'* The NTPSC forecasts a _ huge increase in coal production, but much of it will _ be moved as oil or gas, from synthetic plants located TRANSPORTATION AND ENERGY @ 137 near the mine-mouth, to oil refineries or to centers for gas distribution. The projected uses of coal to the year 2000, and Btus consumed, are shown in Table ive Biomass can be used to produce synthetic gas and ethanol. This production will occur at local sites and require little long-distance transportation. Al- though during the forecast period only limited pro- duction from biomass is projected, the long-term potential of this renewable resource may be great. Solar energy may become significant during the next century. The long-term significance of these energy sources and others, such as nuclear fusion or geothermal energy, should not be minimized, espe- cially as their transport requirements differ radically from those of the principal current and near-term energy commodities. TRANSPORTATION AND ENERGY CONSUMPTION TRANSPORTATION’S SHARE OF NATIONAL ENERGY CONSUMPTION Because of differences in the concentration of energy-intensive industries, significant variations are forecast to occur in transportation’s share of region- ‘al end-use consumption as shown in Table 18. In 1975, transportation’s share was higher in regions where labor-intensive industries predominate and lower where energy-intensive industries are concen- trated. While the transportation sector’s share is anticipated to decline in each demand region, it is not expected to fall uniformly. With a concentration of energy-intensive petrochemical industries, the East and West South Central regions’ transport in | TABLE 17. Forecast uses of coal, 1975 to 2000, medium-growth scenario * (quadriliion Btu per year) aes te Py End-Use PORE e Ree RR eee eee em EERE REET HEHEHE EE EEEEEEEEEEEEEE HEHE EEEEEEEEEEEHHHSEREEHSEEESEEEEES teen tee ee ee ee ene eee e ee Eee HEHEHE EE EEH EET EE EE OE EEE EE EERE RE EHEESESEESEEEEEEEEEEEEEEEES PreeeerUeeerererer rere ert rrr Tet SOURCE: NTPSC forecasts. @Projections by tonnage are displayed in Table 20. PEE (COMES AUOFES s.1i. oss ACR iccsueatdcsdenbveosdccsese RRR A Rete ee neem eee ETE E EEE HEHEHE EE EE EHS EE EERE EE TH THREE EEEEEEE EEE EE EEEEEEH TEED Year 1975 1980 1985 1990 1995 2000 pa eae 8.141 IOS L Lt tA Oo) Hire LDSt vent O.hd Oye, a9: 558 bee Hee oa — .005 .013 2.477 9.671 Fae § 4 — cee — 0.133 0.833 3.156 sacaettee = oo — 0.024 0.153 .325 Sa eens 0.190 0.345 0.563 1.048 1.601 2.189 Sos 2.221 2.833 3.404 3.987 4.570 5.167 eas 1.800 2.057 2.334 2.707 3.103 3.507 Stee 2.250 3.338 4.695 6.187 7.722 9.294 14.602 20.890 25.884 31.252 39.177 52.866 >These end uses of coal are supplied entirely from Appalachian low-sulphur, high-Btu coal. 138 e FORECASTS TO THE YEAR 2000 TABLE 18. Transportation’s share of regional end-use con- sumption of energy, 1975 to 2000, medium-growth scenario * New England... bees, Sena Mid Atlantic ....0......:i enna peti ede coupes South AvQMtic 0 scssncb isp tempapeceoonssaaiieds West South Central.........csssu0- ante SO West North Centra ce ee e ae. Paice ica ccasttes purcanavesinage pacaatenetdees i National AVerage......cccccssrninne 94% 2 SOURCE: NTPSC forecasts. @Coal exports, lubricants, asphalts, and similar products are omitted from these percentages. 2000 will have a low share of all the energy con- sumed in those areas—less than 20 percent of the total. At the end of the century, the projections show that the Pacific and New England regions will still use almost 40 percent of their total energy for transporta- tion. TRANSPORTATION’S CONSUMPTION OF PETROLEUM PRODUCTS NTPSC forecasts of petroleum fuel consumption in the transportation sector highlight six trends: 1. Transportation will consume more fuel, but the rate of increase will be far below the historic trend, due largely to efficiency gains in autos and aircraft; 2. Per capita fuel use will stay nearly level. Growth in travel and freight movement will counter-balance efficiency gains; 3. Transportation will be dependent on petroleum- based fuels for over 97 percent of its energy needs through the remainder of the century; 4. Gasoline use in absolute terms will decline, due to more diesel-powered autos and local trucks, and improved efficiencies for gasoline-powered vehi- cles; 5. Consumption of diesel and jet fuel’? will grow during the forecast period, but at rates below historic trends; and 6. Real prices of transportation fuels will increase, with the rise in diesel and jet prices exceeding that of gasoline. Even with transportation’s use of petroleum grow- ing at under 1 percent annually, well below the 1947 to 1975 rate of 4.2 percent annually,'* transportation is not expected to diminish its dependence on petroleum-based fuels. This is so even with some introduction of alcohol fuels and electric vehicles for urban use. In 2000, the forecast is for consumption of 0.5 quads of methanol and 0.08 quads of electricity; these two fuels will represent 2.5 percent of trans- portation fuel consumption in 2000. Unlike the rest of the economy, transportation will remain dependent on petroleum fuels (including oil from shale and synthetic petroleum from coal). Yet even a rate of growth under 1 percent means that by 2000 annual fuel consumption by transporta- tion will be 31 percent greater than in 1975. Fuel consumption per capita will remain constant over the forecast period, in spite of efficiency gains. More travel (discussed in Chapter 10), combined with a shift from autos to aircraft for intercity travel and a limited role for more energy-efficient forms of transit, make reduction of energy consumption in passenger transportation an elusive goal. On the freight side, small gains in vehicle efficiencies are expected, while traffic carried will rise. Slower growth in transportation fuel consumption is due in large part to projected efficiency gains for autos and aircraft. The NTPSC incorporated the efficiency standards contained in the Energy Policy and Conservation Act (EPC Act), assuming that the fuel efficiency of new automobiles will increase throughout the forecast period. After 1980, diesel engines for autos and local trucks are to become increasingly available. (It is assumed that all intercity trucks throughout the forecast period are diesel- powered). Reduced highway fuel consumption in the forecasts is due not only to the impetus provided by the EPC Act standards, but also to higher costs of fuel and the concomitant penetration of diesel-pow- ered vehicles into the passenger car and local truck fleets. With increased fuel efficiency projected for gaso- line-powered vehicles, and their declining share of the auto and local truck market, absolute gasoline consumption is forecast to drop by 2000. The average annual change during the forecast period is to be —1.5 percent, leading to over a 30 percent decrease in gasoline consumption between 1975 and 2000. This, of course, is a sharp reversal of the 1947 to 1975 historic trend, which saw gasoline consump- tion growing 4.1 percent annually.'5 In line with decreasing consumption, gasoline is expected to show the smallest price increase of the three major transportation fuels—gasoline, jet, and diesel. Lower consumption of gasoline could have implications for the refining industry, especially as the reduction is in part caused by a shift to diesei vehicles that require distillate fuels. Using the NTPSC’s examination of technological innovations for aircraft during the remainder of this century (see Chapter 6), a projection of decreasing energy consumption per passenger-mile by commer- cial aircraft was made. Fuel constitutes a significant portion of airline operating expenses, and motivation for reduced fuel consumption comes from recent fuel price increases and expectations of yet higher prices. Significant increases in the amount of air travel are forecast, as air is expected to capture a greater fraction of the growing intercity personal travel market. This growth will overshadow the efficiency gains built into the energy consumption projection, so that jet fuel use is forecast to grow at an annual rate of 3.7 percent (still well below its annual 5.2 percent historic growth between 1965 and 1975).'® However, over the course of the 25-year - period, consumption of jet fuel is forecast to increase by 148 percent. TRANSPORTATION AND ENERGY e 139 Consumption of diesel fuel is expected to show the greatest average growth, 5 percent annually over the forecast period. The projected rise in diesel consumption is due to significant growth in diesel- powered autos and local trucks. By 2000, these vehicles will account for 30 percent of diesel fuel consumption. Intercity truck, rail, and marine use of diesel is also expected to grow rapidly, with these sectors showing an annual average growth in diesel consumption of 3.4 percent. However, the growth projected for diesel consumption is lower than the historical growth trend of 7.4 percent annually be- tween 1947 and 1975.1” The transportation fuel mix will be altered signifi- cantly by 2000, as shown in Figure 15. In 1975, gasoline accounted for 73 percent of the fuel con- sumed for transportation, diesel for 13 percent and jet for 12 percent. By 2000, gasoline is projected to drop to 38 percent of the total, but diesel will rise to FIGURE 15. Forecast consumption of energy products in the transportation sector, 1975 to 2000, medium-growth scenario. 25 20 Quantities per Year (in quadrillion Btu) * 1975 1980 1985 SOURCE: Appendix Table 24. 4For electric cars. >‘Excludes marine diesel. ¢Intercity truck, bus, rail and marine diesel. Electricity? Bunker Marine? ee Diesel (auto)© Diesel (non-auto) Methanol Gasoline 1990 1995 2000 Year 140 e FORECASTS TO THE YEAR 2000 33 percent, and jet to 22 percent. Still, even in the year 2000, transportation will consume virtually no energy products other than those based on petrole- um. Because increased consumption of petroleum products by the regionally concentrated industrial sector will not take place uniformly throughout the U.S., transportation’s share of delivered petroleum products will have significant regional variation, as shown in Table 19. In 1975 transportation’s share of petroleum varied from about 54 percent of total petroleum consumption in New England, where oil is widely used in heating and industrial applications, to roughly 85 percent in the West North Central region, where natural gas and coal are used extensively for heat and power. The declining regional share of petroleum use by transportation is most pronounced where naphtha feedstocks constitute an important use of petroleum. In the East South Central and West South Central regions, less than half of the projected petroleum consumption in the year 2000 is to occur in transportation. TRANSPORTATION OF FUELS The NTPSC forecasts indicate one potential way in which the future energy needs of the nation can be met, and it requires a radically altered pattern of energy movement. More local coal consumption, coupled with a westward shift in the center of production, will require increased coal transport. Shifts are foreseen for other energy products, not- ably crude oil, refined petroleum products, and natural gas. New or enlarged transport systems for these commodities will be required, if a pattern of TABLE 19. Transportation’s share of regional distributed pe- troleum product consumption, 1975 to 2000, medi- um-growth scenario ® Region 1975. 1985. 2000 obama AI Ee RETA te va si NMR Oo AD Satis gle Ie New’ England’ cis cares 53% 538% 61% Mid ‘Atlantic 22000 A ot See 57% 60% 63% South: Atlantic sisi sos pes a ea 76% 74% 71% East South Centralia nce got 66% 57% 46% East North-Central kG ee yee 74% 66% 61% West South Central... ceececcceees 56% 46% 37% West North Central ..........0.0..c:ccssssscsceees 84% 82% 78% Pacific iis eres can. nei eaaee oie 82% 76% 74% Mountain is, 339) 26a Roeash, Johan ie 82% 83% 85% National Average...............::ccccceee 70% 66% 61% ne Ee a ee eee SOURCE: NTPSC forecasts. aLubricants, asphalts, and similar products are omitted from these percentages. energy production and consumption similar to that forecast by the NTPSC is to be achieved. Maps that illustrate the projected changes in energy move- ments for coal, crude oil, and natural gas are contained in Appendix III. ANTICIPATED CHANGES IN ENERGY COMMODITIES AND THEIR TRANSPORT The production of syncrude from coal is projected to occur near the mines, with most of the production in the Northern Great Plains; oil from shale will come mainly from the Rocky Mountain region. Coupled with changes in the sites of domestic crude oil production and for imports, the origins of crude flows to refineries are forecast to change dramatically. Flows from Alaska will increase, with the forecast volumes exceeding the capacity of the Alaska pipe- line; the Northern Great Plains will emerge as a major new source of supply, requiring complementary development of a transport system; production from the fields in Texas, Oklahoma, and Louisiana, pres- ently the origin of the major pipelines, will shrink, a development exacerbated by parallel decreases in gas production from these regions; and imports, also handled through the existing pipeline systems, will increase slightly by the year 2000 in comparison to 1975, after peaking in 1990. National growth in refining capacity over the forecast period is not expected to be great, but the shifting patterns of crude supply will make several regions more attractive for refinery development. West Coast and Chicago refining capacities are expected to grow substantially on the basis of accessibility to supplies of crude from Alaska and synthetic production. In the Southeast, refineries stocked by imports are expected to grow. During the forecast period, Gulf Coast refining is expected to decrease. Given the current dominance of the Gulf area, these shifts would transform the prevailing north and east pattern of flow into a more nationwide network with several major centers. The aggregate consumption of natural gas is expected to decline over the forecast period, with major production shifts occurring. Supplies from the Gulf Coast and Southwest are expected to fall Sharply and largely be consumed locally by 2000. These losses will be partly recouped by extensive development of Alaskan natural gas, and by lesser developments in several other regions: Atlantic off- shore (for natural gas); Appalachia (for natural and synthetic gas); Philadelphia and the Southeast (liquid natural gas imports); Rocky Mountain region (for natural and synthetic gas); and the Interior and Great Plains regions (for synthetic gas). Coal as a Commodity to be Moved The movement of coal is of great significance to the transportation sector, because: 1. Future increases in demand for coal transporta- tion will be of such magnitude that they will have significant impacts on transport systems, the economy, and the environment; 2. Increases in coal tonnages will require massive capital expenditures for transportation; 3. Increases in demand for coal may spawn the growth of a relatively new transport mode, the coal slurry pipeline; 4. Development of coal slurry pipelines may in turn contribute to modifications in present railroad regulation; and 5. Transportation is a major determinant of the rate of growth of coal use, for transport costs often comprise as much as 50% of the delivered price of coal.'® THE MARKET FOR COAL Factors that affect the market for coal include: the price of coal (and coal-derived products) as con- trasted with other competing fuels. Also, non-eco- nomic factors the foremost being regulatory require- ments which govern the extraction, transport conver- sion, and consumption of coal, heavily influence the coal market.'? Regulation indirectly affects capital formation by introducing costs, uncertainties, and delays. Regulatory matters affecting the coal market include: 1. Federal and state land reclamation requirements; 2. Federal leasing requirements; 3. Mine worker health and safety requirements; 4. Taxation policies administered by Federal, state, local, and Indian governments, including sever- ance, production and ad valorem, environmental taxes, and prossessory interest taxes; and 5. Federal and state environmental standards affect- ing production and utilization which are aimed at curbing adverse air and water pollution. Key among them are the EPA’s New Source Perfor- mance Standards for coal-fired utility boilers and non-degradation and non-attainment require- ments for site location in production and con- sumption areas, respectively. Other factors affecting the coal market include: 1.. Ownership and divestiture concerns impacting coal ventures (including foreign ownership); 2. Socio-economic impacts and disruptions that may occur in mining locales and end-use areas; 3. Labor and industrial relations in mining; TRANSPORTATION AND ENERGY e 141 4. Coal conversion requirements of Federal energy policy; 5. Export potential of U.S. steam and metallurgical coal in the world market (involving U.S. export- import policies); 6. Use of local lignite and peat deposits to meet localized energy demand; and 7. Capital availability. FACTORS AFFECTING TRANSPORT’S ABILITY TO MOVE COAL Of concern is whether the U.S. transport system will be capable of moving the projected amounts of coal between various origins and destinations at a level of service acceptable to different coal users. Can the system provide the necessary physical capacity to handle coal traffic at reasonable rates and compen- sate for the social and environmental costs of hauling coal? An answer requires a look at the physical system and attention to the following issues: 1. Is there sufficient infrastructure, including ade- quate rail trackage, uncongested locks on the waterways, properly constructed and maintained highways, and efficient loading and unloading (including transhipment) facilities? 2. Is there sufficient hauling equipment, including rail hopper cars, locomotives, barges, towboats, lake carriers, and trucks? 3. Do present operating practices permit efficient use of infrastructure and equipment? In assessing the capability of the national system to respond effectively, issues which have already arisen include the following: 1. Will there be government funding for the modes which haul coal? Will Conrail funding and other Federal rail financing programs be continued? Will waterway investment continue to be funded main- ly from the Treasury? How will states and locali- ties pay for the maintenance of roads that carry substantial coal traffic? 2. Does economic regulation of the railroads hinder Carriers’ abilities to raise capital from private sources by limiting rate flexibility? Are recent ICC decisions and proposed changes in economic regulatory policy (including recent rate increases on major coal lines and changed accounting procedures on which those rates are based, the permitting of contract rates, and proposed zones of freedom for rate changes) sufficient to gener- ate capital investment while protecting shippers against monopolistic pricing practices?” 142 e FORECASTS TO THE YEAR 2000 3. What obstacles discourage the development of alternative transport modes such as coal slurry pipelines? 4. Are the social and environmental costs associ- ated with developing and using additional trans- port capacity so great that more innovative approaches to providing transport service must be found? With the above factors in mind, the next section discusses the NTPSC’s forecast of coal movements. FORECAST OF COAL MOVEMENTS According to NTPSC projections, total coal produc- tion in the U.S. will rise from 660 million tons in 1975 to 1.2 billion tons in 1985 and 2.6 billion tons in the year 2000, if the social and economic conditions established in the medium-growth scenario occur. Through 1985, the Appalachian region is expected to maintain its substantial share of total production with 60 percent, while the Great Plains region is antici- pated to experience rapid production increases. By the year 2000, a significant change is expected to occur in that Great Plains production will surpass that of Appalachia, resulting in a 43 percent share for the Great Plains and a 37 percent share for Appalac- hia (see Table 20). In order to assess transport needs, the NTPSC’s coal production forecasts were distributed between coal which must be moved beyond the local area (defined as a Bureau of Economic Analysis zone)?" and coal which is consumed locally. The former category is referred to as ‘‘transported”’ tonnage and excludes short-distance hauls mainly by truck (but also by rail and waterway). Transported coal is expected to increase from 400 million tons in 1975 to 830 million in 1985 and 1.4 billion tons in the year 2000. The volume of transported coal from Appalachia is anticipated to almost double between 1975 and 1985, rising from 228 to 429 million tons. Transport- ed coal from the Great Plains is forecast to almost quadruple, from 48 to 184 million tons during the same period. From 1985 to 2000, coal transported from Appalachia is projected to increase by less than 60 million tons, while Great Plains coal production grows to over 500 million tons. Transported coal from the Interior region,22 which is expected to increase by only 35 million tons from 1975 to 1985, will increase by more than 120 million tons to a total of 262 million from 1985 to 2000. The demand for coal output has been disaggre- gated on the basis of consumption regions which correspond to the nine U.S. Census regions (see Figure 16). The major demand region for transported coal is the East North Central region, including Wisconsin, Illinois, Michigan, Indiana, and Ohio, with an expected 28 percent share of national demand in 1985. The next highest demand region (with an 18 percent share in 1985) is the South Atlantic region, stretching from Delaware to Florida along the Atlan- tic Coast. Some of the fastest growth will be in the West South Central region encompassing Texas, Louisi- ana, Oklahoma, and Arkansas. From a base tonnage of 9 million annually in 1975, demand is expected to grow to 97 million tons in 1985 and reach 257 million tons in the year 2000, becoming the second highest demand region in the last forecast year. Prior to estimating a modal split for transported coal tonnage, the forecasts were converted to traffic flows between region pairs. This step illustrates the relationship between the forecast trends and the transport network. In 1975, the largest interregional flow was 100 million tons between the Interior production region and the East North Central region. By 1985, the flow from Appalachia to the South Atlantic region is expected to reach 147 million tons. By 2000, the largest single flow is expected to be TABLE 20. Coal production and movement projections, 1975 to 2000, medium-growth scenario (millions of short tons) Regions Great Rocky q Forecast Type Year Appalachia Interior Plains Mountain Total — Total ‘Production’ :.....s.0cstssdossscchestoeneatans 1975 447 134 60 19 660 1985 719 166 228 84 1197 2000 968 371 1122 160 52° Transported Production? .......ccccsssssesssesseees 1975 228 106 48 18 40 (Only inter-BEA flows) 1985 429 140 184 77 830 2000 486 262 504 147 1399 SOURCE: NTPSC forecasts, 1979. @Does not include local, intra~-BEA movements, nor transport requirements due to the movement of solid waste created by the burning of coal in coal-fired power plants. FIGURE 16. Coal supply and end-use demand regions. Atlantic Atlantic West North Central States West South WN ountain States ‘7 ‘ ‘ = KK “Uy Sa ING = SKK Qe cS Wl “if? ? S ae jam <3 C7 =O ray (8) 8 5 a & ge Il ll q- Rocky Mountain Coal Region Great Plains Coal Region RM = GP 143 144 © FORECASTS TO THE YEAR 2000 from the Great Plains to the West South Central region with 211 million tons. Significant growth in coal flows should occur along the following corridors (see Table 21). Appalachia — Middle Atlantic; Appalachia South Atlantic; Appalachia — East North Central; Interior — East North Central; Great Plains — East North Central; Great Plains — West North Central; and Great Plains — West South Central. In only one instance is there expected to be a major shift in the traditional relationship between a source and a demand region. By the year 2000, the East North Central region is expected to shift from Appalachian to Great Plains and Interior sources to meet its coal needs. Based on the flow of coal between BEA pairs, the most appropriate transport mode was selected and tonnage distributed by the NTPSC between either railroads or waterways. In the case of energy com- modities, the model used would select only the mode at the point of origin, so adjustments were made to account for transhipments of coal from rail to barge. The resultant forecast for coal is presented in Table 22. By including only inter-BEA flows, the coal volumes in the base year vary from reported statis- tics for each mode. In the case of railroads, in 1975, 418 million tons of coal were reportedly carried as opposed to the NTPSC estimate of 351 million tons. The difference could be accounted for by local movements within BEA zones. Comparisons of the NTPSC rail forecasts with projections used in other studies (Table 23) suggest the NTPSC estimates to be reasonable, versus the extremes represented by the Manalytics high fore- cast and DOT’s low forecast. In the case of waterways, the NTPSC’s estimates are significantly lower than those of other studies. Waterway statistics show 153 million tons of coal carried in 1975, excluding exported coal across the TABLE 21. Forecast inter-regional coal flows,* 1975 to 2000, medium-growth scenario (millions of short tons) Production Regions Great Rocky Demand Regions Year Appalachia Interior Plains Mountain New England 22.0.2 oe cal on 1975 2.2 1985 13.1 2000 16.0 0.1 Middie:Atlantion:2ac ea nceuetrute smarter 1975 42.6 1985 103.7 2000 146.8 0.7 South Atlante ich ae ras hetenee ee 1975 90.9 1985 146.9 2000 202.8 0.1 0.3 East North, Central. ic se5 ee 1975 31.0 100.4 1985 116.5 102.4 16.1 2000 78.0 163.5 133.7 East South: Centrali:o. ccf ciccckcsareapa escent 1975 60.8 1985 48.4 26.0 0.8 2000 42.4 65.4 16.4 West, North: Centraly. 50) uso laemee tise 1975 48.3 1985 1.2 91.8 2000 3.0 136.6 West South Central.............c.cccccscesseecssccceeene 1975 5.2 4.0 1985 10.7 73.3 13.1 2000 30.0 211.2 16.0 Muriel so th lies uke ge casiutcter uo ena ees 1975 13.3 1985 1.8 36.7 2000 3.9 73.4 PACIIG cities str Suc tease A hassel era 1975 5 1g 1985 0.5 27.3 2000 Tt 57.3 MORI nen ies cheer asd ote yatlae eel 1975 — 227.5 105.6 48.2 18.4 1985 428.6 140.3 184.3 77.1 _ 2000 486.0 262.0 504.0 146.7 SOURCE: NTPSC forecasts, 1979. aOnly inter-BEA coal flows. TABLE 22. Forecast modal distribution of coal flows, 1975 to 2000," medium-growth scenario (millions of short tons) ou ni SA ¥ PS a , Year — 5 ey " 3 351. 7653 1285 —§2 101 199 SOURCE: NTPSC forecasts, 1979. Excludes local movements and mine-mouth generation. >Includes transhipped coal from rail to water. Great Lakes to Canada.24 The NTPSC shows 52 million tons. This discrepancy is due to two factors: first, intra-BEA movements are not included in the NTPSC estimates; and second, there is apparently much transhipment of coal which could not be isolated without a detailed evaluation of current coal flows. Adequacy of Service and Railway Capacity There have been statements about the capability of the rail system to handle future coal traffic, but Surprisingly few studies have applied a detailed segment analysis of the system and future require- ments, and even fewer studies look beyond 1985. Currently there are two government efforts to ana- lyze coal movements: a joint DOT-DOE study which will review energy transport needs to the year 1999, and a joint Department of Agriculture-Environmental Protection Agency study on coal movements to 1985. Both are expected to apply a detailed segment analysis for the rail network, but neither as of mid- 1979 had published any reports of this work. TABLE 23. Comparison of coal movement forecasts by rail, 1985 and 2000 (millions of short tons) eel a pris bs : Year and Tonnages 2000 Annee nena een eneeennnesssseseees SOURCE: NTPSC forecasts, 1979. } ‘The high figures represent implementation of the “National =nergy Plan (1977),”’ and the lows represent the flow without the ‘Plan.” 1975 1985 2000 TRANSPORTATION AND ENERGY e 145 Of the prior studies, there are reports by Manalyt- ics, Inc. and by Barber Associates (which used an extremely high tonnage-projection for 1985).25 Also an unpublished, confidential study performed for a private party was reviewed by NTPSC staff in 1978. That study used flows similar to those of the NTPSC. One significant conclusion which can be drawn from the NTPSC regional forecasts is that to judge energy transport needs on the basis of 1985 flows could result in shortsighted policies. The critical shift in coal movements after 1985 from eastern to western coal sources is expected to change the relative balance of flows over different segments of the coal rail network. Also, the increase in coal tonnages and the concentration of some flows could justify the use of alternative modes such as slurry pipelines. To verify this conclusion, the NTPSC assigned each flow (projected rail tonnage) of more than 500,000 tons annually between BEA pairs to the rail segments that would most likely carry the tonnage. In general, current network conditions and shipper practices were used to select an appropriate routing, with the exception of new segments in the west which are presently being considered, such as a connection between the Chicago & North Western and the Union Pacific to handle Powder River Basin coal after 1985. Capacity constraints were not applied to the assignments, unless in extreme cases it was obvious that a parallel routing on an existing line was more logical than assuming extensive im- provements to the primary line. The results are summarized in Table 24. A review of line capacity was undertaken, however, to ascertain the railroads’ capability to handle the consigned traffic. Both the capacity of present lines and the potential for upgrading were assessed. From the NTPSC’s investigations, it is believed that by 1985 many segments of the nation’s rail system may experience some degree of deficiency. The key corridors requiring investment will be those which connect the Great Plains coal region to the West North Central and West South Central Census Regions and the corridor which connects the Appa- lachian coal region, especially Kentucky and Tennes- see, to the South Atlantic Census region. The elimination of these deficiencies is not expected to require a significant amount of new rail infrastructure by 1985, but rather indicates improvements should be made to existing lines in the form of signalization, shorter spacing between sidings, and upgraded maintenance. By the year 2000, dramatic changes are forecast to occur (see Table 24). Of 21 railroads which are expected to haul more than 20 million tons each of coal annually, 8 will carry more than 100 million tons each. Based on the existing infrastructure and 146 e FORECASTS TO THE YEAR 2000 TABLE 24. Forecast distribution of coal by rail, 1976 to 2000 (miilions of short tons)* 1976> 1985¢ Rail Carrier Originating Other Originating Atchison, Topeka & Santa Fe.........ccccecccscesesseeeeseeees iets 3.3 8.0 Baltimore:'&: Oiow 32.2375 ee eae 23.2 19.2 35.9 Burlington: Northern. ac .siggicz. scab sasict beaten ee 42.9 2.9 123.6 Chesapeake: 6 Ottio.:i.. .:ccdetetnen sere tpoeaes karate 48.2 10.4 71.0 Chicago, Milw.,. St. Paul &: Pa@e sic... sssepserexsstees. comes 5.0 4.0 9.5 Chicago & North Western... ccsseeeerceseeesreeeenees 3.4 12.3 7.1 Chicago’.Rock Island’ & “Paci 7 /iriicc..dice wines neeeecas 1.4 0.9 —— Clinchfieldce i522. in Soe Se Ee ae ee ie 5.9 4.3 Colorado: Southern... iatact ieee Sie tee ee ee — 3.8 — CONT alll «scent ondnesccsssaske tte eccaecasaies wer tie ee ee 41.3 40.1 65.2 Denver & Rio Grande Western ................ccccsescseeseceeeee Tees 2.0 47.2 Fort ‘Worth'& Denvericcn.iics aes. os 1.0 — lilincis: Central: Gulf 4:2. 2A eas 21.2 2.6 31.7 Kansas City & Southerm..............:ccccccccssssssssseees bi Seccuts 0.1 0.5 —_ Louisville &*Nashvilletci. 0 ee oe ee Ses 56.7 By 68.1 Missouri-Kansas-T @XxaS ¢2...50.éo:5:049c.505i> dues Soreness 0.9 — _ Missouri’ Pacific’ 26:0 2), Shes ee rere eee Tee 3.4 0.9 Norfolk &:Western:n:.cdnvck iis eect ean eee 67.0 8.4 100.9 Seaboard Coastline iss. Rts ect ee ee — 16.4 0.6 Southern, 2.5 trees scot etic tcc seac cs eee ae an 26.5 8.8 23.1 southern: Pachfic.. cick ane iach Cate ieee ee - 0.5 — Sti bouts San: Francistd, } cca. aeuce ee 3.9 5 Neo — Union’ PaChices, steecsetesestve ees crater dc cele soe een eet 14.1 3.2 18.6 Western, Maryland i540 2e de se es a 6.2 4.5 — Total cock ec A Re ater a Seren 394.7 158.3 615.7 SOURCE: NTPSC estimates, 1979. Assignments generally made without regard for capacity constraints. includes all tonnage carried, local and inter-BEA movements from National Coal Association, Coal Traffic Annual, 1977, pp. 3-5. ‘Includes only tonnage carried between BEA regions and excludes local movements. shipper practices, the concentration of coal produc- tion in the southern Powder River Basin in southeast- ern Montana and northern Wyoming will result in the growth of Burlington Northern (BN) coal traffic from 46 million tons in 1976 to over 380 million tons in the year 2000 moving towards Duluth, Minnesota, across North Dakota; towards St. Louis across Nebraska; and south towards Texas through Colorado.”6 Other significant but less dramatic traffic in- creases are expected to occur on the Chicago & North Western, the Atchison, Topeka & Santa Fe, the Colorado Southern, the Missouri Pacific, the Fort Worth & Denver, the Denver & Rio Grande Western and the Union Pacific railroads in the West. In the East, Conrail will continue to be crucial to coal movements and there will be large increases on the Louisville & Nashville and the Illinois Central Gulf. A review of individual line segments reveals the severe impact of coal traffic on line-haul capacity. The most extreme cases are on the BN lines. Across North Dakota (Bismark to Fargo) the BN line, cur- rently single track with automatic block signals, will be expected to handle over 80 million tons of coal annually by 2000, or 27 trains of 100 cars each, daily, in each direction. Similarly, from Alliance to Grand Island, Nebraska, over 116 million tons of coal annually are projected. (That line currently is a single track with centralized traffic control.) To illustrate the effect on capacity, it has been estimated that a single-track system could handle from 20 to 50 million net tons of cargo annually, depending on the cargo mix and the proportion of traffic represented by unit train movements.27 For an illustration of coal movements by eastern and western rail as projected for 1985 and 2000, see the maps in Appendix III. Other Rallroad Capacity Issues In the transportation of coal by rail, shippers and receivers generally stress hopper car availability over other service elements such as transit time. This has led to controversy over the ability of rail carriers to meet hopper car demand, especially in the case of small mines and small industrial coal consumers. The larger shippers have responded to service uncertain- ties by using privately owned hopper cars and by obtaining unit train service in which the cars, either privately or carrier-owned, are dedicated to ship- pers’ routes. Problems may remain with regard to small mine operators and coal users for whom unit train service or private cars are not feasible alternatives. Service to these shippers usually results in poorer utilization of hopper cars. For example, a car in unit train service may complete as many as 50 trips per year compared to a car in regular service which often completes only 20 trips.2® The problem of the small shipper and receiver may grow as industrial coal conversion efforts are stepped up. A forecast was made of hopper car and locomo- tive needs to 1985, taking into account the varying utilization characteristics of eastern and western utility coal and non-coking industrial and export coal. To carry projected new flows from 1977 to 1985, the carriers or the shippers will have to add 8,690 hopper cars and 290 locomotives annually, not including units required to replace the aging stock. Car production capacity to meet this demand was found to be adequate. A summary of the NTPSC and Association of American Railroads (AAR) coal car and locomotive forecasts for 1985 is presented in Table 25. Waterway Capacity The following discussion of waterway capacity to meet the demand of future coal traffic is divided between the inland and intracoastal system and the Great Lakes. According to the NTPSC forecast, by 1985, the Mississippi River south of St. Louis and the Ohio River System? will experience significant in- creases in coal tonnage with volumes more than doubling on most segments, compared with 1975. By the year 2000, with a dramatic shift to western coal, a large rise in the Interior region’s coal production, and the stabilizing of Appalachian production, the TABLE 25. Projected car and locomotive requirements for coal movements, 1977-1985. Replacement Additional Cars Cars NTPSC AAR_ NTPSC AAR?’ 4,700 4,100 8,690 5,600 to 9,300 r Cars*.. ames 205 288 280 to 456 heer 240 SOURCE: NTPSC forecasts, 1979, and the Association of American Railroads, ‘‘Background on Transportation: Coal and the Railroads, 1978’’ p. 8. 2100-ton capacity cars ~ %3000 hp °Range represents “‘high’’ and ‘‘low’’ unit train scenarios. TRANSPORTATION AND ENERGY @ 147 trend on the Ohio River changes such that only from Louisville, Kentucky, westward are there significant increases in coal movement. The Mississippi, south of St. Louis, will continue to experience unprece- dented traffic volumes with a tripling of 1985 coal flows, due to the transhipment of western coal from rail to barge near St. Louis, which is expected to rise from 14 million tons in 1985 to 53 million tons in 2000. The identification of constraining locks by three previous studies is shown in Figure 17 and Appendix Table 25. For the most part, the findings are similar. The timing of the deficiencies is presented in Appen- dix Table 26 for the constraining locks identified by the Mid-America Ports Study sponsored by the U.S. Maritime Administration.*° From the studies these conclusions can be drawn: 1. Due to the increase in all waterway traffic, bottlenecks will arise at locks along the inland waterways; 2. Coal movements along the Ohio River System and the Illinois River will be significantly affected by limited lock capacity; 3. Coal moving down the Mississippi to Gulf Coast ports east and west of New Orleans will be affected by limited capacity on the Gulf Intracoas- tal waterway; and © 4. New coal traffic on the inland waterways, espe- cially after 1985, will be concentrated on the lower Mississippi, originating near St. Louis, and will not be affected by constraining locks. The increase in hopper barges required to meet additional coal demand was not regarded as a problem, considering current barge production ca- pacity. No assesssment of towboat requirements, however, could be made. Although no analysis has been made of the ability of parallel rail lines to handle diverted traffic if the locks are not improved, future waterway investment needs should be evaluated from a multimodal per- spective. In the case of the Great Lakes, the NTPSC forecasts a directional shift in coal movements (which has begun to occur). The transhipment of western coal from rail to lake carrier at Duluth, Minnesota on Lake Superior, to Detroit Edison power plants on the St. Clair River, is expected to expand to other lake facilities such that by the year 2000 over 25 million tons of western coal will be shipped from Duluth-Superior. In contrast, traditional coal sources on Lake Erie will increase shipments until 1985, after which time western coal will meet most additional demand. The shift in the movement of coal from west to east on the lakes, as well as the projected increase in grain, iron ore, and limestone movements originating on Lake Superior, has caused concern over the capacity of the Locks at Sault Ste. Marie, only one of which (the Poe Lock) can accommodate 1,000-foot lake carriers. The U.S. Army Corps of Engineers estimates that lock capacity will be reached in the 1990s.°' The Corps has also estimated that the Welland Locks will face severe capacity constraints in the mid-1980s as grain and Canadian ore traffic grow. At present, 7-1/2 million tons of coal pass through the series of eight locks from Lake Erie ports to Canadi- an consumers on Lake Ontario. Thus, there is little effect on domestic coal traffic but a considerable effect on the movement of coal to Canada. One other capacity problem, mentioned in previ- ous studies, is construction capacity for the required 1,000-foot vessels to move coal and other commodi- ties on the Lakes; studies have differed in their assessment of vessel-building capacity and the Corps of Engineers finds that it is a short-term problem which could be easily resolved.°? Another capacity concern which relates to west- ern coal traffic across Lake Superior is the limited 250-day navigation season on the lakes. This limita- tion leads to traffic peaking factors which are much higher than under full 12-month operating conditions. The Corps of Engineers has been investigating the technical and economic feasibility of extending that season. A current proposal is a request for authori- zation of an ‘operational plan’ which will help maintain a 10-month navigation season on the upper four Lakes.** The request does not include funds to clear harbors which are limited by ice formations during the winter; thus, coal traffic from Duluth would not benefit, except when weather permits vessel loading at the harbor. The Corps estimates that a 12- month navigation season could postpone capacity constraints at the Sault Ste. Marie locks for as many as 20 years beyond the expected time (1990 to 1995) without the season extension.“ The Corps is conducting a feasibility study for a 12-month extension of the upper four lakes and an 11-month extension through the Welland Canal and the St. Lawrence Seaway.** As for the latter, the need for Canadian cooperation and the environmen- tal issues which have been raised make the analysis and implementation of any season extension plan more complex than on the upper lakes. Pricing strategies offer another alternative that may be more cost-effective. UNCERTAINTIES IN ENERGY TRANSPORT To summarize, the following discussion of uncertain- ties in the movement of energy commodities, includ- ing coal, is presented. Near-term policy decisions in transport and other functional areas, by all levels of TRANSPORTATION AND ENERGY e 149 government, will greatly affect the resolution of these uncertainties.*6 Disposition of Alaskan Oil and Natural Gas Although the first important link with Alaskan re- sources, the Trans-Alaskan pipeline for crude, has been completed, other transport systems appear to be needed: a pipeline to deliver Alaskan natural gas to the lower states (planned, but not yet construct- ed); additional crude pipeline capacity both within Alaska and eventually to the lower states; and both tanker facilities and pipelines to handle Alaskan oil along the West Coast. Hazardous Material Transport Regulations Many energy commodities are considered hazardous materials and their transport is regulated by an array of Federal, state, and even local agencies. Hazard- ous materials transport is discussed in Chapter 7. Specific energy concerns are: tanker safety and design; nuclear shipment rates and safeguards, by rail and motor carrier; and movements of pressurized gases by pipeline, rail, and motor carrier. Pipeline Divestiture Petroleum pipelines owned by major oil companies connect producers, refiners, and marketers. This special status has been criticized as being potentially anti-competitive.*” Divestiture, prohibiting oil compa- ny ownership of pipelines, has been proposed as one way to increase competition with the oil industry and to increase accessibility to pipelines by non-owner shippers. Deepwater Ports Increasing petroleum imports and shipments from Alaska have created a demand for very large tankers to lower unit costs over necessarily long shipping distances. Because most U.S. ports are not deep enough for these tankers, their cargo must be off- loaded into smaller vessels, significantly raising costs. Construction of offshore deepwater ports requires Federal review and approval. Cargo Preference and Cabotage Laws Cabotage laws require waterborne cargo moving between U.S. ports to be carried in domestic ships with domestic crews. Transport between Alaska, Hawaii, Puerto Rico, and the mainland is thus regulated. U.S. cargo preference laws require half of all government-originated cargo to be transported in U.S.-flag carriers. Consideration has been given toa 150 ¢ FORECASTS TO THE YEAR 2000 requirement that a percentage of all imports of energy commodities also be carried in domestic vessels. LNG and LPG Transport Importation of liquefied petroleum gases (LPG) and liquefied natural gas (LNG) from Alaska and abroad is expected to increase, but may be hampered by delays in construction of special receiving facilities and uncertainties about safety requirements for tankers to carry the cooled, liquefied gases. Northern Tier Refineries’ Supply Problems A shortage of crude in the northern tier states and upper midwest, caused primarily by curtailments of Canadian crude exports to the U.S. and a surplus of Alaskan crude on the West Coast, has led to a decision to build a Northern Tier pipeline. Permit delays have held up construction since 1975 and the affected refiners are searching for alternative short- term solutions, including tanker transport to Wash- ington State and the Great Lakes, pipeline supplies from Canada and the Midwest, and even ‘‘unit” tanker trains.°9 Transport of Oil from Strategic Petroleum Reserves (SPRs) With SPRs established along the Gulf Coast and currently being filled, attention is being given to transportation problems associated with using re- serves in an emergency. Waterborne transfers to refineries may be hampered by Jones Act restrictions that require use of U.S.-flag vesseis. In addition, because emergency consumption of SPR crude could strain Gulf Coast refineries, connections to refineries in other sections of the country may be needed.*° Transport of Synthetic Fuels West of the Mississippi If by the year 2000, syncrudes from Great Plains coal and Rocky Mountain shale, and synthetic gases, become a significant part of U.S. oil and gas production, their development will depend to a large extent on the construction of a transport network to get these synthetics into the national crude and gas systems. Present systems are oriented to the Gulf Coast.*' Energy Movement Vulnerability to Sabotage and Natural Disasters Severe winters, earthquakes, and other natural dis- asters can seriously affect the transportation sys- tem’s ability to supply energy commodities by rail, water, pipeline, and motor carrier. Sabotage of transport links is also a possible danger, and pipe- lines, because of the quantities and distances in- volved, are probably most vulnerable. There is a noticeable lack of security measures and procedures to minimize disruption from both natural disasters and sabotage.‘ Concerns Affecting Coal Movement COMMUNITY DISRUPTION BY LARGE-SCALE TRAIN MOVEMENTS Several studies of this matter are underway in Colorado, Minnesota, and North Dakota.*3 The princi- pal causes of difficulty are: 1. Delay and disruption of vehicle traffic at non- separated grade crossings. This causes restric- tion of local vehicle movements, including police and emergency vehicles; and 2. Noise and pollution resulting from 4 to 5 locomo- tives and 100 open-top cars (with engine noise at 90 to 100 decibels and cars at 75 to 85 decibels). Secondary effects are property depreciation and interference with community development in the vicinity of the rail line. Principal solutions envisioned or sought by most communities surveyed are separated grade cross- ings, and the construction of rail by-passes. HIGHWAYS Principal impacts on highways brought about by expanded coal movement are dust, noise, safety problems, and premature highway deterioration. These matters have been studied by the Appalachian Regional Commission, the Kentucky DOT, and the U.S. DOT.*4 Local roads and other highways not designed for heavy coal traffic create road safety problems in the form of deterioration of roads and hazardous driving and passing conditions. Funds appear inadequate to correct the problem. RAILROADS The capital required to meet coal-haul demands may strain the railroads’ financing abilities. Concentration of future coal shipments in certain corridors served by only one railroad could consti- tute a monopolistic situation in the event of railroad deregulation. The potential abandonment of both branchlines and parallel main routes presents problems of timing. In the future they may be required or desired to handle excess loads on other lines and highways—in some cases perhaps not for 15 or more years. How can these resources be kept in reserve without placing unreasonable burdens on private firms? Is it desirable from the future viewpoints of economics ~ and civil defense to permit concentrated movements of basic energy resources on a single transportation mode or corridor? Can branchlines in coal-reserve districts (principally in the East) be extended, up- graded, and maintained for less cost than building and maintaining highways? Will development of coal slurry pipelines damage the economic viability of coal-hauling railroads? The issue raises questions concerning the unequal regu- latory frameworks that govern rail and pipeline ratesetting. Should railroads be permitted or encour- aged to enter into long-term contracts with coal shippers (as pipelines would do)? COAL SLURRY PIPELINES Should Federal power of eminent domain be extend- ed to coal slurry pipelines? This question contains a host of issues, including: 1. Water availability for pipeline use; TRANSPORTATION AND ENERGY e 151 2. Environmental impacts of pipelines, particularly at sources and destinations; 3. Traffic and revenue impacts on competing rail- roads; 4. Comparative costs of pipeline versus unit train service; and 5. Large coal slurry pipelines, being ‘‘one-stop”’ movers of coal, may pose potential distribution capability limitations. WATERWAYS What will be the impact of user charges on the waterway share of coal traffic? How much diversion to other modes might take place? What will be the impact on delivered price of coal and how sensitive to this price rise will coal use be? Will the Great Lakes offer a more attractive route for West-to-East coal shipments and, if so, what will be the environmental impacts of greater utilization of this route? NOTES AND REFERENCES 1. In this chapter, unless otherwise noted, all forecasts are based on the medium-growth scenario described in Chapter 5: 2. Aquad is a measure of a fuel’s heat content. It represents a quadrillion (1,000,000,000,000,000 or 10'5) Btus and is frequently referred to because it facilitates comparisons among fuels, although, for the same purpose, different energy forms have different levels of useful energy output. A Btu (British thermal unit) is the quantity of heat required to raise the temperature of one pound of water 1°F at or near 39.2°F. As an illustration, a barrel of crude oil contains approximately 5,800,000 Btus, and 172.4 million barrels constitute 1 quad. It should be noted that the use of energy of various types in electric generation complicates the discussion presented in this chapter because power plants often generate electric- ity with fuels that can be used directly as distributed energy products. However, electricity is the end-use product con- sumed, so the generation of electricity is an intermediate conversion stage rather than a process at the level of distributed energy products. 3. American Petroleum Institute, Basic Petroleum Data Book, Washington, D.C.: 1978, Section 1, table 11. (Hereafter cited as API, Data Book). 4. Ibid. 5. U.S. Department of Energy, Energy Information Administra- tion, Annual Report to Congress 1977: Statistics and Trends of Energy Supply, Demand, and Prices, Washington, D.C.: Government Printing Office, 1978, pp. 3 and 9. (Hereafter cited as Department of Energy, Statistics and Trends.) This historic rate of growth refers to domestic use of primary energy. During the postwar period the fraction of production accounted for by exports steadily decreased, so including exports in a measure of the nation’s historic demand for energy could be misleading. The exclusion of export coal from the forecasts would not alter the growth rate reported in the text. 6. Ibid., p. 35. The petroleum consumption increase is for end- use demand in the residential/commercial, industrial, and transportation sectors, plus a sector termed other; use by electric utilities is excluded. 7. Ibid. 8. Many factors, including tax treatment, regulation, and the general investment climate play roles in exploration and production decisions. Also, uncertainties associated with resource estimation and production potential are great. Different geological outcomes would affect aggregate pro- duction, price, and the location of extractable resources. For example, current U. S. Geological Survey estimates for undiscovered oil and gas resources vary between 49 and 142 billion barrels for oil, and 312 to 768 trillion cubic feet for natural gas. For countries not as well explored as the U.S., estimates are even broader. For further discussion see: John J. Schanz, Jr., ‘‘Oil and Gas Resources-Welcome to Uncer- tainty,’’ Resources, No. 58, March 1978. 9. The uncertainties in the international energy market make tenuous any assumptions about future supplies and price. A large number of studies of the international energy market are available and they differ on key points such as: the worldwide demand for energy (the U.S. purchases only a fraction of the internationally traded oil); the production and export potential of currently exporting countries (such as Saudi Arabia) and of pioneer exporting countries (such as Mexico and China); trends in international prices; and political developments that could affect the energy market. 10. See Appendix Table 23, ‘Production of Primary Energy Resources, Medium-Growth Scenario.” 11. These forecasts are more bullish than most in their estima- tion of the growth of synthetics. Similarly, the projected price at which synthetics compete with conventional fuels is optimistically low. In light of recent (and forthcoming) increases in the price of imported oil, the role of domestic synthetic fuel production may not be underestimated. It is likely, however, that the price of synthetics will be higher than projected. This is due in part to additional costs imposed by the necessary consideration of environmental, safety, and occupational health concerns. 12. Synthetic low-Btu gas will involve little transport of coal. Also, because of the low energy content per cubic foot, it is uneconomical to ship this gas through pipelines. Although the NTPSC forecasts little low-Btu gas production, this technology offers the possibility of utilizing coal deposits that currently are not developed because of their low energy content, such as lignite. As many deposits are located close 152 13. 14. 15: 16. ue 18. 19. 26. Hf 28. 29; e FORECASTS TO THE YEAR 2000 to consumers, this would affect the long-distance movement of both coal and synthetics. This forecast does not include the recent impact of deregula- tion which may increase, at least in the short term, jet fuel consumption. Department of Energy, Statistics and Trends, p. 25. With the virtual disappearance of coal as a transportation fuel during the historic period, consumption of petroleum by the trans- port sector grew faster than total energy usage. Ibid., p. 33. The 1947 figure includes naptha-type jet fuel and special napthas. Ibid. The historic period used for this calculation is 1965 to 1975. Before 1965, data for kerosene-type jet fuel were included with data for kerosene. API, Data Book, section VII, tables 11 and 11a. This rate is based on sales of distillate fuel to railroads, for vessel bunkering, and all diesel type fuels, both for on highway and off highway use. T. C. Campbell, M. J. Wang and F. Shahrokh, ‘‘The Influence of Coal Transport Costs on the Optimal Distribution of Coal and the Optimal Location of Electric Power Generating Plants,”’ prepared for the U.S. Department of Transportation, 1979, p.1. Tradeoffs among different regulations can have a significant effect on the choice of energy to be used in a demand region. For example, local use of lignite in Texas as a primary source for low-Btu gas, as well as on-site generation of electricity as compared to the use of long distance rail- hauled Western coal reflects rising rail coal rates, environ- mental regulation, and energy conversion regulation. See recent Ex Parte 347: ‘‘Western Coal Rate Investigation and Proceedings”’ of the ICC. BEA zones used by the NTPSC are those delineated in U.S. Water Resources Council, 1972 OBERS Projection, Vol. 2, 1974. The Interior region consists of Illinois, Indiana, western Kentucky, Missouri and Kansas. National Coal Association, Coal Traffic Annual—1977, Wash- ington, D.C.: 1978, p. 12. Ibid., p. 37. Manalytics, Inc., Coal Transportation Capability of the Existing Rail and Barge Network, 1985 and Beyond, Palo Alto, California: Electric Power Research Inst., September, 1976, p. 72; and Richard J. Barber Associates, Inc., The Railroads, Coal and the National Energy Plan: An Assess- ment of the Issues, Washington, D.C.: 1977, p. 80. National Coal Association, Coal Traffic Annual—1977, Washington, D.C.: 1978 pp. 3—5. Also see text, Table 24, Footnote b. Estimate developed for the NTPSC by Peat, Marwick, Mitchell, May 1979. Railway Age, July 31, 1978, p. 24. Ohio River System includes the Ohio, Monongahela, Keha- wha, Kentucky, Green and Barren Rivers. 30. 31. 32. 33. 34. 35 36. 44. Tippetts-Abbett-McCarthy-Stratton, ‘Steering Committee Briefing’ for Mid-America Ports Study for U.S. Maritime Administration, July 1978. Economics Branch of North Central Division of the U.S. Army Corps of Engineers, 1978. D. Ward Fuller, ‘‘The Great Lakes: A Valuable Link in the Inter-Modal Movement of Western Coal Eastward,’’ 1978, pp. 4-5; Manalytics, Inc., op. cit., p. 60; and Economics Branch of North Central Division of the U.S. Army Corps of Engineers, 1978. Currently being reviewed by U.S. Office of Management and Budget. Robert Mcintyre, Economic Branch, North Central Division, U.S. Army Corps of Engineers, Interview: 1979. U.S. Army Corps of Engineers, Survey Study for Great Lakes and St. Lawrence Seaway Navigation Season Extension, Draft Main Report and Environmental Statement, Detroit, Michigan: March 1979. Congressional Research Service, National Energy Transpor- tation—Volume Ill, Issues and Problems, Washington, D.C.: March 1978, Section 3.1.11, p. 125. Ibid., also see: Department of Energy, ‘‘Financial Analysis of Vertical Divestiture,” September 1977, Contract No. EM— 76—C—01-—8387. Ibid., p. 147. Ibid., p. 5. Ibid., p. 333. Ibid. Ibid., pp. 159, 189. See (1) Minnesota Energy Agency, The Minnesota Coal Study, St. Paul, Minnesota: September 1978; (2) U.S. Department of Agriculture, Economics, Statistics, and Coop- eratives Service, Coal Development in the Northern Great Plains: The Impact on Revenues of State and Local Govern- ments, prepared by Thomas F. Stinson and Stanley W. Voelker, Agricultural Economic Report No. 394, Washington, D.C.: January 1978; and (3) URS Company, Coal Train Assessment: Final Report, prepared for the Four Corners Regional Commission, Denver, Colorado: December 1976. See (1) Appalachian Regional Commission, An Assessment of the Effects of Coal Movement on the Highways in the Appalachian Region: Final Report, prepared by Research Triangle Institute, North Carolina State University and Appa- lachian Regional Commission, Washington, D.C.: November 1977; (2) Kentucky Department of Transportation, Ken- tucky’s Coal Transportation Highway System, Fall 1977, Report No. 5 in a series entitled Freight Transportation in Kentucky, Frankfort, Kentucky: March 1978; and (3) U.S. Congress, Senate, Committee on Environment and Public Works, Highway Needs to Solve Energy Problems, Report of the Secretary of Transportation in Compliance with Section 153 of the Federal-Aid Highway Act of 1976, Doc. No. 95— 126, 95th Cong., 2d sess., Washington, D.C.: Government Printing Office, October 1978. Forecasts of Future Transportation Activity INTRODUCTION This chapter presents transportation activity esti- mates—national, regional, and by transportation market—through the year 2000. The discussion focuses on general market and modal trends, but additionally provides limited discussion of region- specific detail. These NTPSC ‘“‘baseline’’ forecasts assume status quo transportation policies. ACTIVITY FORECASTS BY MARKET NATIONAL OVERVIEW For the base year 1975 and the forecast years 1985 and 2000, Table 26 displays data on GNP, popula- tion and its components, disposable personal in- come, the resultant transportation demand, the ener- gy required to accommodate that demand, highway fatalities and air pollution levels in urban areas. The GNP, population component, and disposable person- al income data were assumptions to the NTPSC’s demand models. Person-miles, ton-miles, energy consumed, fatalities, and air pollution were model outputs. Although the range of economic growth presented is wide, a central theme is discernible across the three scenarios. Demand for transportation in the form of person-miles and ton-miles is growing at a rate considerably faster than population. This is not surprising. Rising real income is expected to encour- age more consumption of goods and more travel by individuals. Further, increases in the number of households relative to population should bring about more consumer goods purchases per capita, be- cause the establishment of a household implies the purchase of certain basic items. The effect of relative affluence on transportation energy consumption is clear. For the scenario show- ing the lowest transportation growth between 1975 and 2000, energy consumption will increase by 7 percent over the period. Improvements in modal efficiency are expected to almost compensate for the growth in traffic and there will actually be a decrease in Btus used in transportation per capita. In the medium-growth scenario, Btus per capita rise only slightly over the period, despite substantial growth in person-miles and ton-miles. Modal efficiency im- provements will not, however, be enough to keep total transportation energy from growing. The scen- ario showing the highest level of growth indicates a large increase in energy requirements, both in an absolute sense and per capita. Gains in modal efficiency will be offset by the large growth in demand. Fatalities on the nation’s highways are forecast to grow as highway travel increases, despite reductions in the fatality rate per mile travelled. Meanwhile, air pollution levels are anticipated to decline due to Federal standards. URBAN PASSENGER MOVEMENT' Census figures show between 75 and 80 percent of the U. S. population lives in urban areas; thus the urban passenger market is by far the most visible to the largest number of people. Daily movements of persons in urban areas, by car, bus, rapid rail and commuter rail, presently generate about one-third of all person-miles travelled nationally. To forecast changes in this activity level to the year 2000, the TRANS model was used. Underlying those forecasts is the philosophy of status quo government policy. However, the im- mense data appetite of TRANS necessitated some departure from this baseline. The only complete and consistent source of the urban data needed by the model is the Urban Data Supplement of the 1974 National Transportation Report (NTR).? Because the system-supply numbers in the NTR report represent needs as estimated by urban areas themselves, the values are not necessarily fiscally constrained or compatible with Federal expenditure policy. As the 1974 NTR provided needs estimates only to 1990, simple extrapolation beyond 1990s was used for both highway and transit supply. The result is a relatively small variation of values across scenarios. Because the NTR includes only the largest 240 metropolitan areas in the U.S., NTPSC factored its TRANS results to reflect the Census definition of 153 154 © FORECASTS TO THE YEAR 2000 TABLE 26. National overview, by scenario (1975, 1985, and 2000) 2000 Low-Growth Scenario GNP (billions Of 1975. $8 cic. hake ys cacasvpearerierevdc antl uhehe aa ceases ede na tokyo 1529 2034 2342 TE Population, (miliOns)*.,;...5..1.s2c0c0.ascesh seteshdotonvdl ec pabensncbeuk-lelioa) saat Rletee ects Smeets eae 214 229 246 4 | TIOUSEMONES= CINMMIONS 9 sc nocaceyecntatevsurshgtienstecuncanscowesh-ian excl epi doovadaaabadaan UemeRae eS ema 71 79 89 1.25 Civilian’ Labor Force (millions ic... stssicsscsss ae taht eneame eka Seen ee ee 95 105 117 ‘4 Disposable Personal Income per Capita (1975 $)?............cccccescscsscsesssscesererseeseneccees 5078 6195 6688 1.32 POLSON M ISG: CTEMONS )ou2i. 5 Scene cvsue ravteceakens nave puede adden beg sieaseind- aki gd Cement ty celta 1a ann 2.6 3.2 4.2 a TOMS, (UTMOMB SY? 2s. dade secy sacha -lgade teawctah pene les Aegoes ores bs acuies wact Eee 2.4 3.1 4.0 1.67 Energy Consumed by Transportation (QUadS)..............:cc:ccccsssccessssssceesssceecscesacenseress 17.4 16.8 18.6 1.07 Highway, Fatalities, (thousands) 532). <% ;sscarpaxhssnaimnaeen ina loceeoade, tics se rae ea 46.0 47.7 56.1 1.22 Metric Tons of Air Pollutants in Urban Areas (millions)?..............ccccccccscccssseesesescesees 50.8 37.5 31.3 62 Medium-Growth Scenario GNP: (DINONS | OF 7975S) 0. sayescsteoy schol die oxide ondvarssilogri dnunyikecseieteet Nai eccen Oboe eaten 1529 2276 3588 2.35, PODUIBGON, LATIUORS IS 5. ciccacenes-tactsicnedace asa ragsneauutsicanstadh faeaaitae aces ay A ae 214 233 260 1,24) FIOUGEMOIG (UIHORS Fo. scenncacssstatnese hed-coadas secu, tateete luccatisas Mutagen aca katte ea eee 71 90 104 1.46 Civillan: Labor: Force: (millions -25.2. 85) al en iseecc ees eben ete 95 109 124 1.31) Disposable Personal Income per Capita (1975 $)P......cccccsssccescescscescesceecescessserscceecees 5078 6853 9826 1.94 Person- Miles: (trillions)? siccctnni stacked os cay ap eae ie a gaan ek ee 2.6 3.3 4.6 1.7% Tonevilles. (COM Se te ee ea ao eet meena’ 2.4 3.5 6.3 2.63 Energy Consumed by Transportation (QUadS)°...........ccccccsssssceccssesssssesescsscseacerescececees 17.4 17.7 22.3 1.28 Highway Fatalities (thousands)! cane pooh ie re keen oi. a ed 46.0 53.4 66.9 1.45 Metric Tons of Air Pollutants in Urban Areas (millioNs)?...........cccccccescscessscsssseceeceeees 50.8 38.8 38.6 76 High-Growth Scenario GNP (billions Of° 197503 tise ene Le ei i a ol 2 ae 1529 2418 4474 2.93 Population (milllons *iaee Nid, git. meena er es ee a oe ae 214 229 246 1.15 Househoids ‘(milllgne yt. ediics dccnit cea ikea ane ew aus EN ee a eee ee 71 92 105 1.48 Civillan Labor Force’ (millones yy sisccs-nsss-acteaserse tueeee secon ie 95 110 124 1.31 Disposable Personal Income per Capita (1975 $)8.....ccccccccccccsccssssssscescscececeececsecececese 5078 7429 13051 2.57, Person-Miles (trillions )R ies. ahi Needs ea oy) ae ie | eee ae 2.6 3.4 5.0 1.92 THOn-Miles | (trillions Pc, 0 eee co2,, ccs ns cael ess, bee pcg ae ys de ere 2.4 3.8 reve 3.21, Energy Consumed by Transportation (QuadS)°.......ccccscccsssessssesesesesececsecececerececeesceeeees 17.4 19.5 26.3 1.51, Highway ‘Fatalities: (thousands)? ii chelates en em ea ee ee 46.0 55.2 75.2 1.63 Metric Tons of Air Pollutants in Urban Areas (MmillioMS)*..........ccccccccccecsccsssssseseeceesese. 50.8 39.4 44.0 .87 UDF aSee Chapter 5. >See Table 32. ‘See Table 34. These values differ from those of Chapter 8 by about 10 percent. This results from differences in emphasis and accounting between two modeling approaches. Conclusions drawn in this chapter and Chapter 8 are not affected. 9See Figure 24. eSee Chapter 8. urban areas. The population of the 240 cities repre- sents about 83 percent of what the Census considers urban. - Figure 18 illustrates that person trips in urban areas are expected to grow at a fairly steady rate over the 25-year period, 1975 to 2000. The growth will be directly proportional to changes in population, and the activity projected assumes no further con- trols on travel. This is consistent with the status quo notion of the NTPSC baseline. Over all, about 7 percent of urban trips are expected to use transit during the forecast period. Differences among scenarios, generally less than 1/2 of a percent, are primarily the result of changes in highway congestion levels that are associated with differing population estimates. A closer look, by city type, helps explain these results. Figure 19 illustrates percentages of daily trips by transit for the base year and the year 2000, by city group, for the medium- growth. scenario. With the exception of city group 5 (over 1,000,000 population), the percentage of tran- sit travel is forecast to drop or remain the same between 1975 and 2000. The increase for city group 5 reflects an anticipated expansion of rail service. FIGURE 18. Forecast urban person-trips, by scenario, 1975 to 2000. 500 “* Cr ihe eae? oor? wae? eoen® eoee” oo econ” ooo” — .* sere . . 7" - Daily Urban Passenger Person-Trips (in millions) wo 8 1975 1980 1990 2000 Year SOURCE: Based on Appendix Table 27. aUrban includes 240 metropolitan areas of the U.S. See Department of Transportation, 1974 National Transportation Re- port, Urban Data Supplement, Washington, D.C.: 1976, p. 2. >The medium-growth scenario assumed a higher growth in population than the other two. This explains the higher value for urban trips in that scenario. Appendix Figures 5 through 7 (and associated Appendix Tables 29 and 30) illustrate other urban transportation market changes. Appendix Figure 5 shows a fairly constant, moderate rate of growth in miles of urban arterials (including freeway-type facili- ties). However, as the number of miles increases, the number of miles of freeway-type facilities is expected to increase more rapidly in all city groups. Appendix Figure 7 illustrates the forecast growth in arterial Capacity measured in hourly vehicle-miles. (That measure takes account of lanes as well as number of arterial miles.) Capacity grows faster than facility miles because the average capacity of new facilities is higher than for existing ones and the capacity of some existing facilities will be increased through TSM projects and reconstruction. The supply of future transit service is specified primarily in terms of seat-miles provided by bus and rail. Figure 20 shows seat-miles of service on an average weekday in urban areas by bus and rail transit and commuter rail. As with highways, these data are based on the 1974 NTR. The growth rate for bus seat-miles is forecast to decline somewhat after 1980, but for rail, seat-miles will increase slightly after 1980. Rail seat-miles are anticipated to consti- FORECASTS OF FUTURE TRANSPORTATION ACTIVITY @ 155 tute about half of total transit seat-miles by 2000, more than doubling during the 1975 to 2000 period. The relatively high growth in rail service can be attributed to new rail systems in a number of areas which are now without such service, but expect it in the future.® These system changes will affect average highway speeds as indicated in Figure 21 and Appendix Figure 8. (Differences among scenarios are small and thus not shown.) During the 1975 to 2000 period, weighted average speeds on freeways and surface arterials in peak hours are expected to drop 3.3 m.p.h. This indicates that the increase in arterial travel is not, on average, matched by a commensu- rate increase in arterial capacity during peak peri- ods. However, forecast average speeds during the off-peak will increase 4.5 m.p.h., which may be due to the increase in freeway mileages. The decline in average peak arterial speeds forecast at the national level is not true for every city group. In most groups, the increase in capacity, and percent of capacity which is freeway, overcomes the expected increase in traffic. However, for cities over one million popula- tion the base-year peak speeds are relatively low and are anticipated to drop quite a bit by the year 2000. (See Appendix Table 32.) These larger metropolitan areas are expected to opt for increased rail transit rather than improved highway systems, with the net effect of decreasing peak-period highway speeds. It is a safe assumption that the U.S. will remain an auto-oriented society. Whether people buy cars, trucks or vans, the personal passenger vehicle seems likely to continue to dominate the urban transport market. A simple trend extrapolation would result in 0.583 autos per capita in the year 2000. This is still below the 0.6 to 0.7 autos per capita of today’s highest income groups. All three scenarios show average income rising faster than the average cost of owning and operating a car. Demographic shifts are toward smaller households. Average age is rising with more people reaching driving age. The net results are the projections in Figure 22 of the urban personal vehicle fleet. Implications of the ever-grow- ing number of vehicles in terms of fuel requirements are displayed in Figure 23. If the fleet remains primarily gasoline powered, energy consumption is expected to return to 1975 levels by 2000 after dropping during intermediate years, despite improvements in modal efficiency required by Federal standards. Greater gas mileage per gallon will be more than offset by more travel. If use of diesel becomes more significant, as NTPSC forecasts suggest, transportation energy consump- tion in urban areas can be expected to drop below 1975 levels in 2000. Air pollution was discussed in Chapter 7. 156 e FORECASTS TO THE YEAR 2000 FIGURE 19. City group* comparison of 1975 and year 2000 medium-growth scenario” forecasts, by modal split. 20 I L910) 1975 Percent of Daily Trips by Transit© £ N = | E ; 1 2 3 4 5 aot ae 0 6 (50,000- (100,000- (250,000- (500,000- (over (“Big 4” 100,000) 250,000) 500,000) 1,000,000) 1,000,000) Rail) City Group (population range) SOURCE: Based on Appendix Table 28. aCity groups defined in terms of population expected in 1990. Virtually the same for all scenarios. ‘Transit includes commuter rail. As Figure 24 shows, fatalities due to auto acci- dents in urban areas are expected to rise steadily over the forecast period. This assumes that the effects of projected increases in traffic will not be fully counteracted by safety improvements. URBAN GOODS MOVEMENT Urban goods movement is defined as the transport of goods and services within urbanized areas. Move- ments are generally by truck and include those from wholesalers to retailers, retailers to customers, urban pickup and delivery operations of for-hire and private carriers, and service-related trucking. Excluded are: (1) shipments of goods by personal vehicles (e.g., shopping trips); (2) shipments on other than the conventional surface transportation modes (e.g., gas, water and electricity); and (3) through ship- ments. Although many discussions have focused on the subject, particularly its impacts on transport costs, FIGURE 20. Forecast urban transit seat - miles, 1975 to 2000.* 500 b 3 300 Rail® 200 8 Average Weekday Seat-Miles of Service (millions) 0 1975 1980 1990 Year SOURCE: See Appendix Table 31. @The same for all three scenarios. Includes both expansion of existing systems and building of new systems. The following cities have at least engineering money approved: Atlanta, Baltimore, Buffalo, Miami, Pittsburgh, Honolulu, and Cleveland. Based on U.S. Urban Mass Transportation Administration, Office of Program Analysis, telephone interview, 13 June 1978. ‘includes commuter rail. 2000 FIGURE 21. Forecast average speeds on urban arterials, 1975 to 2000.® Off Peak Peak Average Arterial Highway Speeds (m.p.h.) w ros) 1975 1980 1990 2000 Year SOURCE: See Appendix Table 32. "Forecast differences among scenarios insignificant. Medium- growth scenario used in constructing plot. FORECASTS OF FUTURE TRANSPORTATION ACTIVITY e 157 FIGURE 22. Forecast fleet of private urban personal passen- ger vehicle, by scenario, 1975 to 2000.* co © r=) Oo ro! r=) ~ o ol oO Private Urban Personal Passenger Fleet (millions) oO 1975 1980 1990 Year SOURCE: See Appendix Table 33. @Based on linear extrapolation of autos per capita using fleet size data from R. L. Polk, and census population data. 2000 FIGURE 23. Forecast urban personal passenger. vehicle con- sumption of energy, 1975 to 2000.* 7.84 oo ~N aD Energy Consumption (in quadrillion Btus) o 1975 1985 Year SOURCE: NTPSC forecasts. aApproximately the same for all scenarios. 2000 158 e FORECASTS TO THE YEAR 2000 FIGURE 24. Forecast annual auto fatalities In urbanized areas, 1975 to 2000.2 40 = 29.9 > 30 G 2 FS 23.1 £ & 20 = 19.5 oO © LL be} Z 10 0 1975 1985 2000 Year SOURCE: NTPSC forecasts. 21975 values estimated using U.S. Department of Transporta- tion, National Transportation Statistics, Washington, D.C.: Novem- ber 1977 and the percent which is urban based on proportion of VMT in urban area. Future years based on traffic growth rates produced by TRANS model. Assumes number of fatalities per vehicle mile travelled drops to 2.8 by 1985 and remains constant to 2000. This implies introduction of some form of passenger restraint in autos. See U.S. Department of Transportation, Nation- al Transportation Trends and Choices (to the year 2000), Wash- ington, D.C.: 1977. traffic congestion, energy consumption, air pollution, noise, and land use, little success has been achieved in collecting data. This is especially true at the national level.* Figure 25 shows a larger number of truck-miles for the movement of goods in urban areas is expected as goods movement requirements increase. Because fleet size is projected to grow at a somewhat lower rate, average miles per truck will increase. This increase results primarily from changes in distribution patterns as terminal facilities, which were once located in central business districts, move to subur- ban areas with good access to freeway _ inter- changes. Contributing to the increase in trucks are demands for lighter-density, high-value commodities and more frequent deliveries of smaller shipments. More trucks on the urban street network is expected to be a problem. Reference to the number of truck-miles may understate localized impact on congestion and air pollution. Goods movement adds to congestion primarily on arterial streets at peak and midday hours and in central business districts at midday. Similarly, air pollution emissions may be concentrated in certain areas during peaks. Too, not only would the trucks add to the vehicles moving FIGURE 25. Projections of truck-miles In urban goods move- ment by scenario 1975 to 2000." 100 90 80 2 2 70 Ss : : Ves a High-Growth Scenario ¥ & vs = 60 Medium-Growth Scenario ch (S} ze od ao o 40 30 20 1970 1975 1980 1985 Year SOURCE: Appendix Table 34. aMedium-growth scenario based on A. T. Kearney, Inc., Urban Goods Movement Demonstration Project Design Phase IV, Chica- go, Illinois: 1976. Low and high scenarios based on adjustments according to GNP. 1990 1995 2000 through the streets, but stops for pickups and deliveries can be devastating to smooth flows of traffic. Total operating costs are expected to grow at a rate commensurate with growth in the fleet (see Appendix Figure 9). Fuel consumption represents about one-half quad. Differences over time and scenario are about one-fourth quad. These figures assume only slight improvements in modal efficiency. INTERCITY PASSENGER MOVEMENT For the purpose of this study, intercity passenger trips were defined as those greater than 30 miles and with a destination outside the urban or rural locality of origin. The NTPSC analysis separated the irips into those between 30 and 100 miles and those greater than 100 miles (partly because most trips less than 100 miles are by auto). While a simplified manual approach was used for the shorter trips, the method for longer trips was that developed for use in DOT’s National Transportation: Trends and Choices.° This method generated trip origins and destinations for 171 Bureau of Economic Analysis regions (excluding Alaska and Hawaii) based on population; trip rates were adjusted to reflect level of affluence. Tables 27 and 28 show projections of passenger- miles and passengers for intercity travel by mode. While all modes exhibit absolute growth, auto and air clearly dominate, accounting for over 97 percent of all intercity travel. The most significant shift is from auto to air, which grows at the highest rate. Large increases in air travel reflect the effect of more real income per capita. As income rises, the value of time rises, and air travel becomes more desirable be- cause of its speed. Table 29 shows fuel consumption by mode for intercity travel. As in the urban market, the effects of TABLE 27. Forecast intercity passenger-miles, by scenario, 1975 to 2000 (billions) Year Mode 1975 1985 2000 Low-Growth Scenario ocean Shea a Ta Re eS bad Ee 2 ree 1123 1258 1505 oc BEF ORES OOO SRE RENE SEL 25 25 25 OO ayo AAS laa Es on en 5 6 Tf EMG hirp tee veeensacticth sure tay orcad iens 1302 1481 1795 Medium-Growth Scenario “oh aad Bre beads Sieselie spain aie eal Ts 148 232 472 de UIE RN SENN Sled th ites ticri 1630 1 Sc Diag ARE SRS LE is Se od BE 25 27 31 SN RORY fois devises. Vato iec de bvisue Bh occscats 5 6 6 csi Ro cikisnrs'a darks sannisons 1d0200 1652.45 2640 High-Growth Scenario ce occ Sait ds Oo andon amnathsbersos 148 268 651 Dc net pede te sp citune 123i 4302145 a EARS SS I eh Bic ia oe am 25 30 34 con REE RR Se a lac Ses 5 7 10 (7S) iba ee Er eh aS ota a SUB UB 1302 1742 2840 SOURCE: NTPSC forecasts. #1975 values from U.S. Department of Transportation, Trans- portation Systems Center, National Transportation Statistics, Report No. DOT-TSC—OST-77-68, Cambridge, Massachusetts: _ November 1977, p. 8. Auto value obtained by subtracting urban and rural values from NTS national total. Future year values estimated using growth rates developed from passenger portion of _ NTP model. Air includes general aviation. Totals may not add due to rounding. FORECASTS OF FUTURE TRANSPORTATION ACTIVITY @ 159 TABLE 28. Forecast intercity person trips, by scenario, 1975 to 2000 (milliions)* Year Mode 1975 1985 2000 Low-Growth Scenario PCs eee eek eS oe sen oe a, 282 359 476 fi) Co Berek, WED 5, SO Ue ee SN ee Meee 12,976 14,883 18,149 BUS) Sete Sik he i eh oe 239 243 244 PRUE cscs ches ee er Rte 1, (Aim TS 31 34 41 Potala eas Poe Gee ey 13,528: 15,519: =18,910 Medium-Growth Scenario Bit Se ELE ee cena es 282 430 866 BRUNO 522 oe ee ed eras 12,976 16,513 24,170 ES 2o cetera ode e ee cates veossetaetan iaueee 239 - 268 412 gil eg ae | oto eye ene ARE NATL A 31 37 52 Total etece Sey Fs ace at 13,528 17,249 25,499 PANG s scale eb Riise AC oap ART se capeaksaPhstbacrdantane te 282 493 1,209 FRED caiccdld Rar te scninrde Means sdatanderanaa cela sd 12,976 17,656 29,541 BUG Bs csetes epee ae renbacde seca puet aap cad bates os 239 294 334 FREES sits saseoves ate Coal PEO... chc-escasautererayeaseioesece deimnncees son erie evant manta epee eal dys eh .9400 1.311 1.523 1 2 Petroleum oo sec Soestsenavsabentdas yan ethan gdlbaear eased veannilas ellie tea ern eee Eat .8470 1.344 1.634 2 5 Food: Kindred; Products 0.2/5 5... icosteeenasea seve nese ee ee 1.478 1.938 2.200 7 8 Metallic Ores ss ssacectisesgsondeauctoasscys scons sobastie{sbssnssna ato ys eee aie ear Soest Mid 1.222 2.042 2.828 5 6 Lumber: Gi Furniture: 2.05 Ss cealeectubets Ais u hates yates cane eae eae ae aca 1.273 2.072 2.829 11 11 Primary Metal: Prod. c00,.i6ic32., igs sieigeciccckibeavali as be cee toes Saeco 1.299 2.132 2.767 8 9 Electrical: Machinery... .5.:.0.-<.cc:0sscndssnesqosdees dvedebostatateovansneardeeie vor mibeiS eee enteaie 1.318 2.270 3.009 16 1 Textile Mill Prod: -& App. 5 tecsssscictts satnenracusarsgpnnunedasiscssaihpaabanvneeevemcemeaer eae 1.366 2.340 3.188 17 15 Paper’ and All6d@: Prod .2i..0.<..16,-4.-ccar)ok Transportation Equipments), td nuvinauciael satiate Stewoiivec Ma veeer 1.298 3.172 2.820 Rail — ail Non-Metallic Mineralsici::. sus Gh ee aa io Bie = ea 2.234 3.524 4.803 Water 2ail GOA sp saris ssesdediccnen ine colipiyis Rae SANNA ab teas Lhe eat: act Man 2.743 5.561 7.886 Rail a Chemicals. & Allied Prodi. e7 i iilercsueccieasccelterscnc cance eeshim tet, ccs oie caeniides 2.260 3.660 4.860 Rail Bes eee SOURCE: NTPSC forecasts. @Based on NTP model results. See Table 30 for explanation. movements are those which occur within a short distance of a residence, store, farm, factory, mine, or place where a vehicle is parked. In view of the limited availability of public transportation, mainly automo- biles and small vans or pick-up trucks are used. Through travel and intercity trips are excluded. Given no readily available source of information, a simplified approach was employed for estimating the magnitude of these movements over time. It was assumed that local VMT per person was the same in rural areas as in urban areas. This assumption, arising from the notion that there are fewer trips per capita but longer trip lengths than in urban areas, provided a manageable approach to the problem. Values for fuel consumption and pollution emission rates were the same as those noted in the section on urban passengers. However, because speeds are higher on rural roads than on urban streets, these estimates of energy used and air pollution generated are probably high. The forecast vehicle-miles of travel for rural passenger movement, which represented about 30 percent of total travel on rural roads in 1975 and about 20 to 25 percent by 2000, grow for all three scenarios between 1975 and 2000. (See Figure 29.) Interestingly, the scenario with the highest economic growth has the lowest VMT in 2000. This results from the lower rural population of the high-growth scenar- io. Assuming only small changes from gasoline to diesel-powered vehicles, energy consumption is to stay approximately at 1975 levels, which implies the mandated fuel economy standards are sufficient to counteract the growth in travel. Introduction of substantial numbers of diesel vehicles could lower energy consumption. RURAL GOODS MOVEMENT Rural goods movement is defined as the local movement of goods in non-urban areas. These movements are largely between production (or con- sumption) sites and long-haul intercity modes. Trucks are generally used. Movements excluded are: (1) transportation of goods by private auto (e.g., shopping trips); (2) outside the conventional surface transportation system (e.g., gas, water, and electric- ity); and (3) through shipments. Discussions have focused on the role of rural goods movement in the transportation of agricultural and energy resources, but little effort has been made to collect data in the market. However, a 1976 report® in which total local goods movement by truck is examined makes it possible to estimate rural movement. Two important assumptions were made: (1) that the rural mix of diesel and gasoline trucks used for local goods and service delivery is the same as the urban mix; and (2) that the average annual miles travelled per truck remains constant over time, FORECASTS OF FUTURE TRANSPORTATION ACTIVITY @ 163 FIGURE 29. Forecast rural passenger travel, by scenario, 1975 to 2000.* 360 350 340 330 320 .310 w o o Medium-Growth Scenario Highway Vehicle-Miles (billions) 260 250 240 230 220 210 200 1970 1975 1980 1985 1990 1995 2000 Year SOURCE: See Appendix Table 39. alncludes only travel with both ends of the trip in the same rural locality; does not include intercity. 164 © FORECASTS TO THE YEAR 2000 which implies that there will be no major change in truck operations. Projections of rural goods move- ment by truck are shown in Figure 30. INTERMARKET CONSIDERATIONS Having examined each of the national transportation markets separately, it is instructive to assume a broader perspective and consider their relative mag- nitudes and interactions. Table 32 shows the NTPSC’s forecasts of person-miles and ton-miles, by market, for each scenario. Personal demand for FIGURE 30. Forecast of truck-miles in rural goods movement,* by scenario, 1975 to 2000. 300 280 260 240 220 N fo) oO 180 Truck Miles (billions) 160 140 120 100 80 1970 1975 1980 1985 Year SOURCE: Appendix Table 40. aMedium-growth scenario results based on reports cited at Appendix II, Figure lI-13 (see Appendix II footnotes 1 to 5). High- and low-growth scenarios estimated based on GNP. 1990 1995 2000 TABLE 32. Forecast person-miles and ton-miles, by market and scenario, 1975, 1985, and 2000, and percent change (trillions) Ratio 1975 1985 2000 2000/1975 Low-Growth Scenario (All modes, annual) Person-Miles Urban Locale.. .81 1.10 1.58 1.95 Rural Locale... 46 .60 81 1.76 Intercitys ......... 1.30 1.49 1.80 1.38 Total i.n¢! 2.57 3.19 4.19 1.63 Ton-Miles Urban Locals.. .014 .022 .027 1.93 Rural Locale... .005 .007 .008 1.60 Intercity‘.......... 2.342 3.103 3.979 1.7 otal ste. 2.361 3.132 4.014 1.70 Medium-Growth Scenario (All modes, annual) Person-Miles Urban Locale.. 81 Ait 1.58 1.95 Rural Local... .46 56 .70 1:52 Intercitys ......... 1.30 1.64 2.36 1.82 Totals 2433 2.57 Ot 4.64 1.81 Ton-Miles Urban Locals.. .014 .026 .043 3.07 Rural Locale... .005 .008 .011 2.20 Intercity'.......... 2.342 3.480 6.210 2.65 otalvrane 2.361 3.514 6.264 2.65 High-Growth Scenario (All modes, annual) Person-Miles Urban Locaile.. 81 a fe 1.58 1.95 Rural Locale... 46 5G 61 NSS Intercity® ......... 1.30 Wie 2.85 2.19 Totalieaece, 2.57 3.39 5.04 1.96 Ton-Miles Urban Local?.. .014 .029 .058 4.14 Rural Locale... .005 .008 .013 2.60 Intercity’.......... 2.343 3.801 7.616 3.25 Total a 2.361 3.838 7.687 3.26 aSee Figure 18, note a. >See Figure 28, note a. °See Table 27, note a. ¢Medium-growth scenario based on A.T. Kearney, Inc., Urban Goods Movement Demonstration Project Design Phase IV, Chica- go: March 1976. Low- and high-growth scenarios based on adjustments according to GNP. Ton-miles per truck-mile comput- ed in 1975. That ratio multipled by truck-miles in future years yields the corresponding ton-miles. *Medium-growth scenario results based on reports cited in note d and footnote 6. Low- and medium-growth scenarios results based on GNP. Ton-miles per truck-mile computed in 1975. That ratio multipled by truck-miles in future years yields the correspond- ing ton-miles. ‘See Footnote 6. transportation appears almost equally divided be- tween local and intercity travel. However, as 85 to 90 percent of all passenger-miles are by auto, examina- tion of highway vehicle-miles is illuminating. Table 33, for the medium-growth scenario, shows that personal vehicles account for over 80 percent of national highway travel. Urban passenger vehicles represent a little less than half of all vehicular miles of travel and about two-thirds of all local travel. This is not surprising considering the relatively low vehicle oc- cupancy rates (between 1.2 and 1.5) in most urban areas.° TABLE 33. Forecast highway VMT by market for medium- growth scenario, 1975, 1985, and 2000 and percent change (trillions of vehicle-miles) &. Ratio if 2000/ 1975 1985 2000 1975 ee Urban Local _ Personal Vehicle? ............ .63 .86 1.22 1.94 BP RUCI ecccsccei a csscsesscncpseee .03 04 07 2.33 Total 66 .90 1.29 1.95 __ Personal Vehicle°............ 21 ro) .32 1.52 Eee eerie eee 10 14 24 2.40 a 31 .39 56 1.81 Personal Vehicle? ............ .37 A6 61 1.65 Truck’ 6 Na a a pee .06 10 15 2.50 BOA oes opooc oo eoescsecsicccs 43 56 76 1.77 National Personal Vebhicle.............. 1.21 1.57 2.15 1.69 SS Ae ana 19 28 46 2.42 Mattel eo oc 140 185 261 1.79 aSee Table 32, note a. >See Appendix Figure 9, note a. °See Figure 28, note a. ‘Results based on reports cited in footnotes 4 and 8. *See Table 27, note a. VMT estimated by dividing vehicle Occupancy into passenger-miles. Vehicle occupancy estimated by using overall occupancy obtained from National Transportation Statistics, November 1977, Figures 4 and 5. As Trans indicated urban auto occupancy at about 1.3, and NTS implied overall Occupancy at about 2.2, intercity occupancy was assumed to be about 3. 1975 total national truck VMT for movement of freight from Oakridge National Laboratory, Transportation Energy Conserva- tion Data Book: Edition 2, prepared for U.S. Energy Research and Development Administration, Report No. ORNL-5328, Oak Ridge, Tennessee: 1977, Figure 1-2. Urban and rural local truck VMT Subtracted from national VMT to get intercity truck VMT. Future values estimated using a growth rate based on growth in intercity truck ton-miles. FORECASTS OF FUTURE TRANSPORTATION ACTIVITY e 165 Freight transportation demand, in ton-miles, is virtually all in the intercity sector. However, this is somewhat misleading because ton-miles are not always an appropriate output measure, especially for local movement of goods. Local traffic would include messenger and repair services and other such non- weight-related activities. In urban areas, as can be calculated from data in Table 33, truck travel repre- sents only about 5 percent of the total VMT. How- ever, its effect on congestion and air pollution is disproportionate to the volume, due to loading and unloading. For rural roads, however, the story is quite different. Most intercity truck travel takes place on non-urban (or rural) roads. Thus, looking at the rural, local and intercity markets, trucks constitute about 20 to 30 percent of the highway traffic. In terms of energy consumption, Table 34 shows passenger travel. to be the largest user, with the urban market being dominant. In 1975, personal travel consumed about 70 percent of national trans- portation energy. Personal passenger vehicles used about 60 percent of the total Btus. Urban personal passenger vehicles consumed about 40 percent. By 2000, these percentages are expected to drop to within the ranges of 50 to 60 percent, 40 to 50 percent, and 30 to 40 percent, respectively, which shows the effect of presently legislated standards for auto efficiency. However, except in the low-growth scenario, passenger-vehicle fuel consumption is an- ticipated to rise in absolute terms, despite efficiency improvements. This is due to the expected increase in travel. While freight used only 30 percent of all national transportation energy in 1975, its growth is forecast to be considerably higher than that of passengers. By 2000, this percentage is expected to rise to between 35 and 45 percent depending on the scenario. This growth is explained by the lack of improvement in freight fuel efficiency. While there is room for savings, Table 34 suggests that passenger travel, and in particular the personal passenger vehicle, should receive the most attention for de- creasing transportation energy requirements. INTERNATIONAL AVIATION’ The process of developing international aviation projections was dependent on historic data and projected gross domestic product for Western Eu- rope, Latin America, and Japan. Extensive use was also made of international air cargo forecasts devel- oped by the U.S. DOT. International aviation is one of the more volatile areas of transportation to forecast. Activity depends on the world economy, aviation costs, technology, and government policy. Traffic has grown dramati- cally over the last three decades. In constant dollars, 166 e FORECASTS TO THE YEAR 2000 TABLE 34. Forecast domestic transportation energy consump- tlon, by market and scenario, 1975 to 2000 (quads)* 1975 1985 2000 Low-Growth Scenario (All modes, annual) Urban Local PASSENQEIS Oz rh SI ri ot 31 S| ra SL eI e1 SL ge ne eysely SSL. zk +8 eet © 11-299 Oz LOL gs g0l LoL ze 16 6 6 ee ee ee WeMeH a27 OCF | #90. EE. vee - bse 9S. OOS 0%. Lhe 962° 692 Sec O92: cSt “Zein sexe] }B815 2OY 2 20 Ulloa. Sl0 Ole. Fed EOC. OSS] Oe be. Ste SOS SRL. eel IL a eee JSOMULON JIB yeol S/8 S6S 856 S08 09 968 OL %fI9 Z2S2 E02 OF9 199 ZEQ E19 GO rire BIUIOJED vote vst EScl Brel LEGL B22 OS9L ELL BOTL GOP GOEL QMpzt BESL VOSL MOLL SOLE ee 4INS Oly 916 992 O68 See 9M OE 162 G6 C62 wle G62 O92 Gre Ze GOL oNUeY 4yINOS O'S8h S8BE PHIc EBlb GISE Q9E9%7 EO9E LIze Bese HSZe IPOE LOZ SBS 16l2 LOLS VSGL “CCC SNUB YON ee Neeceeps cece ee can Sree ee ae aS Se eS RE a ee ee ee ySIH = PON =6MOT MBI ‘pew OMOFCBIHs ‘pa = oMODs BINH, ‘PAW = OMOD]—sCUBIHH,s ‘PAW MO7 (eseg) }OUNISIG GZ6L jeyseop 0002 S661 0661 S86L 0861 ara Sg ee ee et ee OR i ES ee ce OUBUBDS puUe Jed, apes, Yoduwy ervsL cecoo tO0lp- S6e8sS OS6ry Bile Zesy OOlv soee Le LEVE Bzle sree LZS9e2 Sle Sore “CC Se [E}OL a a ee ee ee a ot as eer Os oe 92 rt Sz re 1 61 rrr aT aT ron ol rT oy re FO ott aaes cooly vend By 39 ae 09 Os re Sy ee re o¢ re ce 62 92 rz ree ee nr oe eysely r0 EO 20 20 20 20 20 20 0 20 20 20 20 20 30 eee ere ee WeMeH ete OFS OE . 969 = L0G Sve S6r-- Sey Goes = Or § -O6e. 96: Oley = .2006. = f0cS “Clev. < ceces “ceer-=09ers S766 = 2sop = Lesh SG6S = zPre.-“vIey “SCle. 6.3 percent of truck investment is assumed to be government investment. °May include some private transit (less than 4 percent). 487 percent of the total investment in buses is assumed to be for government expenditures. ¢See Table 75 for detail. Includes some private investment. ‘3.0 percent of general aviation aircraft are assumed to be government vehicles (excludes military aircraft). 9Excludes any ownership in Conrail. TABLES 38, 39 DEFINITIONS Highways: All expenditures by Federal, state and local governments on ail classifications of roads and highways. Autos: Company-owned, government-owned, rented, and leased autos when used in business. Personal autos, motorcycles, trucks, and vans for personal transportation. Taxicabs and passenger charter services. For-Hire Trucks: Local freight associated with goods shipped by truck within the area in or around a city or its suburbs, or within a short distance of the place where the vehicle is based. Intercity freight associated with goods shipped by truck beyond the local area. Private Trucks: Local freight associated with private trucks within the area in or around a city or its suburbs, or a short distance from the place where the vehicle is based. Intercity freight associated with private trucks transporting persons and equipment rather than freight. All civil government trucking. Intercity Buses: Intercity and rural bus transportation. School Buses: All school buses (government and private). Other private buses associated with non-school, not-for-hire activities (including church, government, and business-owned). Railroads: Intercity passenger—excluding commuter operations; freight. Ports, Harbors and Facilities: For domestic and international marine transport. Expenditures by Federal, state, and local governments, and the private sector. U.S. International Marine: U.S.-flag vessels in U.S. foreign trade. Domestic Water: All domestic water freight investment associated with for-hire and private carriers (includes inland waterways, Great Lakes, and domestic ocean carriage). Private Boats: Private inboard, outboard and other craft (sail) for personal use, recreation and other purposes. Commercial fishing boats. Oil and Gas Pipelines: Pipelines for high-Btu gas, petroleum, and petroleum products. Airports: All public airports and expenditures by Federal, state, and local governments, and the private sector. Airways: Federal Aviation Administration investment for air traffic control, navigation, and flight-information services. Domestic Air Carriers: All domestic passenger and freight investments by domestic U.S. airlines, including commuter airlines. International Air Carriers: A\l international passenger and freight investment by U.S international air carriers. General Aviation: Business aircraft not-for-hire, e.g., business-owned aircraft used for passenger or freight shipments. Aircraft for personal use. Other aircraft associated with aerial application, instructional, industrial/special, and other uses. (Includes appropriate government aircraft.) Local Public Transit: A\l transit (public and privately owned) associated with local and sightseeing bus, rail transit, rail commutation and airport buses. 174 e FORECASTS TO THE YEAR 2000 TABLE 40. Highway capital investment, 1976 to 1990 Capital Investment Market and Highway System Billions of 1975 $ Urban interstate 2. os skates cale es eet eee 46.9 Other Freeways and Expressways............. 29.7 Other Principal Arterials ....................:::000+ 40.0 Minor Arterials s.css:c.ccncsceass oo ccnsecnteceese recurs 37.8 CONOCLONS wots tac dein cau carson sass aode aban eee 15.1 LOCA RROGGSE 8,2 toccscclan accion epee eran seca _ 69.1 SUDO Lehi celay vocantadies artes AU ioeeat ea oes 238.6 Rural INCOr State or. Feta cock cseosderecsetem Oetivarcumantee messes 21.0 Other Principal Arterials ..................ccccc 36.7 Minor Artenials = oo -o.c) notes scares 41.4 Major Collectors 3.acc..cs. cin osessceeeccaee 42.1 Minor GONBCUOIS Foc: ots Sereersustenee eee ee ee 18.5 Local |. Roads tera aie een epee we 79.9 Subtotal be tec. occas ae 239.6 TOUR steatosis on Sonn reas cae eee recat 478.2 SOURCES: ‘“Basic’’ assumption for all items except local roads, U.S. Department of Transportation, The Status of the Nation’s ‘Highways: Conditions and Performance, September 1977, p. 167. Local roads from information prepared for U.S. Department of Transportation, National Transportation: Trends and Choices (to the Year 2000), Washington, D.C.: 1977. TABLE 41. Highway needs alternatives, 1975 to 1990 (billions of 1975 $) State- | Economic Reported Analysis Highway System Needs¢ Needs¢ ee hnnreenmsisennsnisonnsnsenrunemumnens Local Roads LITA: cic cus cecuspeiseecis oe eee ae 53 53 PRU EF feccanddonsevl ch acim alee tc. ate ee 89 89 Arterials and Collectors UMDANIZOG fh inact ok ee ee 147 4127 Small rban sc Se ae see a 28 a8 Prune ing sted eee be ees ae 154 ad Interstate> LOCH a ters cit Seas eae eee Aime 16 16 MGIC si25 cen 6 oo ae eer ge ari le nee 25 25 PERRI 2 lark Na Ay it Ghia pak od teh $512 $322 SOURCE: 1974 National Transportation Report. 21972 National Transportation Report estimates. °A Revised Estimate of the Cost of Completing the National System of Interstate and Defense Highways, Committee Print, 95th Cong., 1st sess., Washington, D.C.: Government Printing Office, 1977, p. 25. ‘The figures in both columns were modified from those reported in the sources to put them in 1975 dollars and to account for the slightly different time periods involved. This was done to facilitate comparison with the statistics in Table 40. Forecasts of highway revenues, 1975 to 2000 | medium-growth scenarlo.* FIGURE 31. 40 Total Revenue User Impost Revenue 20 B te. i a 1975 Dollars (billions) 1975 1980 1985 1990 1995 2000 Year SOURCE: NTPSC estimates. aGNP deflater used. Legend: Line B = Revenue from highway user fees and user charge © taxes. Line A = Total revenue, i.e., all of B plus general revenue and borrowing. PRIVATE HIGHWAY RESOURCE NEEDS PERSONAL VEHICLES Highway-related investments in the auto are shown in Table 38. The definition of auto also includes vans and small trucks for personal transportation, but excludes motorcycles. The investment figure in Table 38 represents total purchases of new vehicles, with autos accounting for the preponderance. The fore- cast characteristics of the auto fleet yield some interesting trends as shown in Table 43. Both the autos in use and auto sales data reflect similar patterns, with larger autos dominating the personal vehicle mode. Smaller autos are expected to lose ground to medium-size autos by 1985 and continue to do so through the year 2000. The CAPITAL REQUIREMENTS FOR THE TRANSPORTATION FORECASTS e 175 FIGURE 32. Capital investment as a percent of total public expenditure for highways, 1962 to 1975 and estimate to 1980. 100 90 % Debt Service & Administration 80 70 % Maintenance 60 e 8 50 ~ tin, 2 le Steg) 40 % Capital Investment 1960 1965 1970 Year SOURCE: NTPSC forecasts and U.S. Federal Highway Adminis- tration, Highway Statistics Summary to 1975, Washington, D.C.: Government Printing Office, 1977, Table HF 212, pp. 120-135. 1975 1980 TABLE 42. NTPSC revenue forecasts, 1975 to 2000 (billions of 1975 $) ie b Federal User Impost ‘State and : b Local Other Total Nonuser- User Fixed % User Tax Grand Year Imposts? Fuel’ Ratec Rate* Impost Revenue* Total 1975 es 0 4. | 0 6 18.6 96 28.2 1985 13.4 3.15 9 9 18.4 11.3. 29.7 13.4 1.42 6 1.3 16.7 15.0 31.7 SOURCE: NTPSC forecasts and U.S. Federal Highway Adminis- tration, Highway Statistics Summary to 1975, Washington, D.C.: Government Printing Office, 1977, Table HF 212, pp. 120-135. @Projection of ten-year historical trend. >’Computed assuming 5% annual inflation and NTPSC fuel consumption forecasts. ‘Computed assuming 5% annual inflation and NTPSC vehicle miles traveled forecasts. *Computed using NTPSC forecasts of vehicle miles traveled. TABLE 43. Forecast auto fleet characteristics, medium-growth scenario, 1976, 1985 and 2000 Auto Composition 1976 1985 2000 Autos in Use STG coc, cata aint escalates 27 19 14 RO CW I Fede sade ices on Nearly two- thirds of this amount will be used to purchase locomotives and rolling stock. The Corporation projected a 38 percent increase in ridership over this period.5” The elements of Amtrak’s five-year plan were produced prior to a report by the U.S. DOT recom- mending that the Amtrak system be reduced in size. According to the DOT report, the operating support required by Amtrak in the 1980 to 1984 period would drop from $4.087 billion to $3.009 billion with only a9 percent decrease in ridership. The DOT estimates Capital requirements would decrease in current dol- lars, by $313 million in the same period. These capital estimates, even after system reductions, are higher than the 1978 to 1982 Amtrak estimates, because they include NEC purchase costs plus labor protection payments, and are expressed in current dollars. The joint DOT-Amtrak passenger-mile forecasts for the period indicate that growth in the new recommended system would be approximately 1.0 percent per year, whereas it was forecast to be approximately 0.5 percent per year if the current system was retained. (The DOT-recommended sys- tem is to be deemed approved unless either House of Congress adopts a resolution of disapproval within 90 calendar days of continuous session.) Amtrak’s projections of capital requirements are not devised primarily from ridership forecasts, but, rather, represent the Corporation’s determination of what improvements are necessary to rehabilitate intercity rail passenger service. This process has continued since 1971. At that time, Amtrak inherited a seriously debilitated system. Nearly all passenger cars and locomotives were more than 20 years old; passenger stations, terminal conditions, and many other elements of the passenger service infrastruc- ture were in a serious state of disrepair.5° Amtrak has attempted to correct the situation and to modernize service. Thus, capital needs were particularly heavy in the early years but should be expected to stabilize. It is unlikely that subsequent five-year periods will have needs greater than the $1 billion requested by Amtrak for 1978 to 1982, particularly if the DOT’s recommendations are adopted. Thus, Amtrak capital requirements should be less than $4 billion (in constant dollars) through the year 2000, exclusive of federally funded work in the NEC, purchase of the NEC, and any labor protection costs if the system is cut as proposed by DOT. RAILROAD EMPLOYMENT The employment-to-output ratio for the rail industry is expected to continue improving over the forecast period, although at a rate considerably below that of the past two decades. The railroads have achieved a continuous reduction in work force, from 1,326,000 employees in 1947 to less than 500,000 today.” CAPITAL REQUIREMENTS FOR THE TRANSPORTATION FORECASTS e 183 Despite this large reduction, the total railroad wage bill has risen.®' An important source of increased productivity has been the trend toward larger cars and longer trains. The average weight of a carload of freight increased from 35.4 tons in 1929 to 61.1 tons in 1977.® A train of larger or heavier cars can be handled by approxi- mately the same size crew, and longer trains can be handled by relatively less labor per car than shorter ones. Productivity increases have also resulted from important technological developments such as die- selization, mechanization of the maintenance-of-way function, automated classification yards, computers, and centralized traffic control. Further, some of the improvement in private-sector rail labor productivity traces to the virtual cessation of activities which were the most labor-intensive (i.e., passenger train services and less-than-carload freight). These trends are reflected in Appendix Table 48 employ- ment projections. Railroad employees have made substantial gains in purchasing power. From 1967 to 1976 the average wage in the industry rose 112 percent®™ compared to a 70 percent rise in the Consumer Price Index.© Wages in manufacturing, contract construction, and wholesale and retail trades climbed 81 percent, 85 percent and 62 percent respectively. By 1976 the average annual non-supervisory wage in the railroad industry was $17,180 compared to $11,600 for the total of private, non-agricultural employment.®’ Amtrak projects that labor productivity will exhibit significant improvement over the next five years.® It would appear that there will be little change in the absolute level of employment in rail passenger service over the 1975 to 2000 period if the current system is retained.. PIPELINES OIL PIPELINES There are 440,000 miles of major intercity oil pipe- lines in the U.S. Crude oil pipelines run from produc- ing areas and ports to the major refining centers. Refined product lines carry gasoline, heating oil and other products from refining centers to major con- suming markets. Major anticipated projects include pipelines to deliver Alaskan crude oil to the Midwest from the West Coast and hookups with sources of synthetic fuel production and off-shore oil facilities. Otherwise, significant expansion is not expected.© U.S. oil consumption has been growing slowly, but non-Alaskan production is stagnant. It is expected that further growth in the U.S. economy will not induce significant expansion of new crude pipelines. As new fields are discovered, short lines will be required to tie them into the existing pipeline net- work, or to move cruae oil to suitable locations for refining or further transportation. Most such projects are likely to be in established producing areas and are expected to be completely financed by private industry. It is probable that new off-shore discoveries will require expensive lines to connect them to shore. Some areas of Alaska, such as the National Petrole- um Reserve, could yield discoveries on-shore, requir- ing substantial investments in pipelines to ocean ports. While the location and cost of any lines required by new Atiantic offshore or Alaskan discov- eries are unknown, it is likely they can be financed by the large firms in the industry. The Trans-Alaskan pipeline can be cited as a successful precedent. _ Further growth of the American economy will call for relatively slow increases in interregional crude pipelines. Because of increasing U.S. dependence upon imported crude, new refinery capacity typically will be proximate to ocean ports. Two Gulf Coast deepwater ports designed to handle imported crude have been proposed. One— the Louisiana Offshore Oil Port (LOOP)—is under construction. The other is being licensed by the Texas Deepwater Port Authority. LOOP would cost in the range of $1 billion.”? An eventual need might materialize for additional pipeline capacity between these ports and the Midwest. These requirements would probably be met by expanding existing capaci- ty. Requirements for additional investments could arise from a decline in crude deliveries from Canada, and the ‘‘surplus’” of crude on the West Coast. The Canadian government has announced its intention to phase out most crude deliveries to U.S. refineries which have traditionally used Canadian crude.” These are the so-called ‘‘northern tier refineries,”’ many of which lack alternative sources. At the same time, a surplus of high-sulphur Alaskan crude oil has been accumulating on the West Coast because of the inability of many local refineries to process it and California anti-pollution laws requiring the use of low- sulphur oil.’2 These circumstances have led to proposals for pipelines from the West Coast. One calls for a line from Puget Sound to the upper Midwest, serving northern tier refineries in route; another would run from British Columbia.“ The Northwest Pipeline Company has proposed a line from Skagway, Alaska.’° Still another plan would utilize the existing Trans-Mountain pipeline.”© Any of these proposed pipelines would move Alaskan crude and low-sul- phur, imported crude to new northern tier refineries.”’ Each project could cost up to $1 billion.”8 If the lack of petroleum for northern tier refineries was the only problem, it probably could be solved by relatively low-cost investment schemes. Refineries on Puget Sound can easily receive crude by water. Michigan, Wisconsin and Minnesota can be supplied 184 e FORECASTS TO THE YEAR 2000 from the Gulf Coast. Low-cost alternatives could supply U.S. crude to Montana and North Dakota via pipelines from other parts of Montana and Wyoming or unit trains of tank cars. The lowest-cost alternative would be an arrangement with Canada, for U.S. crude to be provided to Eastern provinces in ex- change for continued supplies of Canadian oil.’9 The West Coast surplus has been a problem because of U.S. prohibitions on exports of Alaskan crude. Calculations show that the minimum-cost solution involves exchanges by which Alaskan crude would be replaced with crude purchased abroad and delivered to the East Coast.®° This option has been tentatively rejected for both security and political reasons, but remains under study.® However, the U.S. is committed by the Internation- al Energy Agreement to share the available oil supply in the event of embargo. The share is determined by a formula based on net imports.® Should the large-scale synthetic fuels production forecast in Chapter 8 materialize, pipelines will be required from oil shale or coal plants. If there is a surplus of oil on the West Coast, such lines would run eastward to major deficit markets in the Midwest. Pipeline costs should be small in relation to costs of the synthetic fuel projects, and the pipelines could be financed by obtaining commitments for their use from the synthetic fuel owners. Studies suggest that pipelines are cheaper than ships (via the Panama Canal) for the movement of oil from the West Coast to the East.® Financing any of these pipelines is probably feasible, but could present problems. Traditionally, pipelines have been financed by the agreement of customers (major oil companies) to use them enough to recover investment costs. With assured usage, debt financing can be employed. Still, some of these proposals might run into problems. West-to-East movements of oil make sense only so long as Federal regulations forbid international oil exchanges and West Coast refineries are not modified to use Alaskan and California crude. Over the 20 or more years that a pipeline would be in use, export restrictions could be changed, the surplus might be reduced by normal growth, or refineries could be modified. Consequently, refining companies might be reluctant to commit themselves to paying the high cost of a pipeline. Without commitments, some projects may encounter financing difficulties. Major, new, refined product lines are not antici- pated chiefly because improved fuel efficiency for autos is expected to result in little increase in the volume of gasoline to be transported. Any additional investment that might be necessary will be used to expand existing lines. Owners of existing lines should be able to finance these expansions using traditional methods. . Table 38 shows anticipated oil pipeline capital investments. NATURAL GAS PIPELINES The gas pipeline network totals 255,000 miles,®4 most of it radiating from the producing areas in the Southwest to markets elsewhere. With the exception of projects to facilitate the importation of foreign gas or movement of Alaskan gas, major new projects are not anticipated. As existing fields are gradually depleted, considerable excess capacity develops in many of the lines from the mid-continent and the Gulf Coast producing areas to major markets. Marketed production of natural gas declined from 22,532 trillion cubic feet in 1972 to an estimated 19,952 trillion Cubic feet for 1976.85 While some recovery in production levels is possible, increases in domestic production sufficient to require construction of major new, interregional pipelines are not anticipated other than for Alaskan gas. Any imports of Mexican gas are expected to be fed into the existing pipeline network in south Texas, by a short connecting line yet to be built. Some construction would be required to connect new discoveries with the gas pipeline network. Facilities to transport new Alaskan gas could be quite costly, especially if it proves neces- sary to liquefy the gas. For the natural gas industry the major problem will be financing the gas pipeline from the Alaskan North Slope.®* The presently approved route parallels the oil pipeline to the vicinity of Fairbanks, and then follows the Alaskan highway into Canada, finally re- entering the U.S. in Montana. One branch is to serve the West. Gas for parts of the country not directly served will likely be supplied by exchange. Southern California will receive gas through existing pipelines by redirecting gas from Texas and New Mexico which now goes to supply other markets. Midwestern customers now supplied with Gulf Coast gas will receive Alaskan gas, with their Gulf Coast supply being redirected to the Northeast.®” The project will be one of the more expensive undertaken, with total costs estimated at $10 to $12 billion.86 The project consists of several different sections, each the responsibility of a different group of companies. Because of requirements that the Canadian segment be Canadian controlled, it will be built by a Canadian consortium and financed largely by Canadian equity capital.®9 The project is to be financially self-sufficient. The gas transmission companies will contract to take the gas on a long-term basis. Purchase commitments will be used as security to borrow most of the funds required.® In effect, the consumer will be bearing most of the risk and, presumably, receiving a lower price for gas, as the financing can be obtained at | CAPITAL REQUIREMENTS FOR THE TRANSPORTATION FORECASTS e 185 lower interest rates and less equity participation will be required. Traditionally, stockholders have borne the risk. For most gas pipelines risk is fairly low because gas has usually been available at prices substantially below the costs of competing fuels, and rate adjustments have been permitted which recover costs. The delivered price of gas was usually low enough to ensure that the final user would willingly pay higher prices for gas rather than shift to another source of fuel. However, Alaskan gas is expected to have a delivered cost which will be near or above the costs of alternative fuels.%' If the gas is separately priced, it is possible that many distributors and consumers would be reluctant to contract for it as other fuels may be available in the future at lower cost. The Alaskan gas will be “rolled-in’’ rather than separately priced.°* This means that a gas transmis- sion company buying Alaskan gas will average its cost with that of other sources and charge its customers a single price. Gas transmission compa- nies will be willing to sign long-term contracts agreeing to tariffs adequate to recover the costs of pipeline construction, given the benefit of ‘‘rolled-in”’ prices. With the security of such contracts, most of the costs can be financed by debt. This is to permit 75 percent debt financing with the remainder to be financed by sales of stock.* If earnings are assured, the stock will be attractive to investors. The key to this financing scheme is the provision that the fuil cost of constructing and operating the pipeline is to be paid by the customers for the natural gas. The Northwest Pipeline Company has proposed that construction be assisted by tax-free bonds. This would be done by having an agency of the State of Alaska issue (but not guarantee) these bonds, and then use the proceeds to purchase $1 billion worth of pipeline company debt. The net effect would be to provide tax-exempt financing to the pipeline compa- ny. This form of financing would require special legislation from Congress.” A number of other large projects, including LNG and coal gasification, will also be financed by these same companies. Projects to import LNG will not create the need for new pipelines as they will generally be located near the markets served. In- deed, by supplying gas that might otherwise come from domestic producing areas, the LNG projects will tend to create surplus capacity in the pipeline system. If the large-scale gasification projects discussed in Chapter 8 occur, additional pipelines will be re- quired. The cost of these new pipelines will be generally small relative to the total cost of the projects, and transmission companies should be able - to finance them in the traditional manner. In some | cases, gasification sites are near existing pipelines which have excess capacity, such as those proposed to utilize New Mexico or Arizona coal. Table 38 shows only the gas transmission and distribution costs. It indicates modest increases under the medi- um-growth scenario for the period 1975 to 1985, followed by record growth from 1985 through the year 2000. The same general pattern prevails in the other two scenarios. The dramatic increase after 1985 is largely accounted for by the anticipated development of Alaskan gas and its shipment to the contiguous 48 states. Table 50 provides detailed estimates for gas pipeline capital investment. AVIATION This section discusses capital and labor require- ments of the aviation industry, including airways, airports, commercial air carriers, and general avia- tion. AIRPORTS Air traffic growth will put added pressure on the nation’s airport facilities. Because it is widely agreed that few new large airports will be built by the year 2000, many airport authorities have called for the physical expansion of existing air carrier airports, and more rapid development of commuter and reliever airports.% Airports generate revenues predominantly from the rental of space and facilities, not from landing fees or other operating charges.°* Except for the largest facilities, net income is usually insufficient to pay for land and capital.2? Operations, including landings, are thus supported out of other airport income, the argument being that the community at- large, not merely the facility users, benefits from the airport. In effect, the reason for providing an air- port—to accommodate the landing and take-off of aircraft—becomes of secondary significance in terms of revenue requirements of the facility. The airport pricing mechanism therefore offers no guid- ance in resource allocation. Landing fees neither cover the out-of-pocket cost of providing runways nor the increased marginal costs resulting from peak- period use. Direct Federal involvement in airport development increased with ‘the establishment in 1970 of the present Airport Development Aid Program (ADAP).% Legislation enacted in 1976 expanded ADAP.%? A sum of $625 million has been authorized for airport development in fiscal year 1980 and the 96th Congress is considering extending the program.'© Despite growing Federal involvement, airport capital requirements are met chiefly at the local level, mostly through the sale of general obligation or revenue 186 © FORECASTS TO THE YEAR 2000 TABLE 50. Cumulative capital investment in gas pipelines (billions of 1975 $) Conversion/ Extraction Source Processing 1985 1995 2000 1985 1995 2000 1985 1995 2000 1985 1995 2000 1985 1995 2000 Transmission Distribution Total i 4 t TET NT ee SRT Te Anaahat TG ee ane aah ign oe ten a aaa Low-Growth Scenario BING stee ties oie eta e .31 .66 Hi Btu Synthetic.............. 33 88. 1.81 Offshore Atlantic ............. 4.30 5.19 3.16 .08 .09 Alaska teen sen 1.59 12.79 15.15 .08 .60 Lower 48s aia ee ICs .06 Lo Btu Synthetic............. .09 .23 21 hota ee. cise ers Medium-Growth Scenario .67 4.99 05 70 o7 NG ee reece ORE MD In re 74 89 96 Hi Btu Synthetic.............. 1.51 4.45 7.10 24.62 Offshore Atlantic ............. 2.83 6.31 6.19 .06 .10 .10 Alaskassroe ica io .37 14.55 17.81 03 .68 .84 Lowen4 6 oie ae as 1.48 1.89 1.89 .08 11 11 Lo Btu Synthetic............. .28 .82 -f0) 2.01 NT Otalesckieot Noes Ree 4.68 24.54 31.16 91 9.58 28.64 ENG ee ee .88 -90 .93 Hi Btu Synthetic....0000...... 12305 54:67. 7.13 25:79 Offshore Atlantic ............. 2.12 7.10 6.96 .03 M2 12 Alaska seis. 2 aii oat 16.68 20.09 78 .93 Lower: 48 oicce eae 4.14 3.30 3.18 .23 19 18 Lo Btu Synthetic ............. 59. -.-1:38 1.45 3.40 Ota ein er ee 6.26 28.97 36.28 1.14 10.57 31.35 25 1.86 118 1.28 920828 oo. aia 05 14 02 09 221 64 26 32 20 07 09 05 4.71 569 3.46 3.96 31.91 37.59 07 61 .71 5.70 45.91 54.15 06 06 1.30 7 OT 2004 ork! ae 38 1.02 7.01 18.40 19.42 53 3.37 698 4.41 32.57 38.26 32 1.08 1.28 12.27 55.37 65.94 1.43 O16 589 G1 2500189, eG iso ered ? 26.177 14... 43 9.01 30.27 17) 30 37 06 17" 10. 312 60)" ae 91 36.34 44.20 02 70 84 1.33 5227 63.69 08)8AT TY), 08M OOO Wigan oor 0416.13 22 n68 1.24 3.59 1.47 37.53 45.69 .41 1.60 2.46 7.47 73.25 107.95 28,58. 236. 33. 33.2) 1.59. 161 an 360 Ty 26 a6 8.78 31.69 AS! 1480 Shae: 772038" 18° e261 7776 ee 41.63 49.83 79 95 59.88 71.80 23), 19 18 1.22... 18 AB 44.82 686 1a 08. 24 46 1.07 2.59 6.06 74 42.95 51.77 58 2.02 *3.10 8.72 84.51 122.50 OO EO eee SOURCE: NTPSC forecasts. bonds, with some state assistance.’ General obliga- tion bonds are serviced out of general tax receipts. For revenue bonds, income from airport operations is pledged against the debt requirements. Revenue bonds are somewhat less burdensome to the com- munity, but are available only to airports having large volumes of air traffic. In these instances, the airlines typically pledge that airport income from space rentals and landing fees will be sufficient to pay interest and principal. The fees charged the airlines are raised, if necessary, to pay operating expense and capital charges, but reduced if a surplus materi- alizes. Forecasts of airport capital and land requirements by the NTPSC are based on projected trends in the relevant input/output ratios, air traffic growth projec- tions, and the most recent National Airport System Plan. The projected levels of capital investment are decidedly more cohservative than those of other recent forecasts. They reflect the slowdown in the rate of traffic growth during the early- and mid- 1970s, increased barriers to airport construction and development, and the understanding that the NASP is based on pre-existing state airport plans. Few State plans are so long term as to include capital development two decades hence. The NTPSC esti- mates appear in Table 51. If traffic growth exceeds that projected by the NTPSC medium-growth scenar- io, and barriers erected by environmental, economic and land-use considerations can be overcome, the NTPSC capital and land requirements forecasts can be considered conservative. To date, much airport development has been designed to meet the needs of peak-period travelers. Forecasts of airport land and capital requirements, including those by the NTPSC, are usually based on a continuation of current public policy and airport operating procedures. Airports, it is assumed, will continue to rely on facility rentals rather than landing fees. Airport capital needs, then, will remain a function of peak-period travel demands. The result will be more investment in facilities than would be necessary if the landing fees charged were commen- surate with the costs of providing long-run capacity or resolving short-run congestion. A recent study by Smith, Maxfield, and Fromovitz,'°* carrying forward earlier work by Carlin and Park,'°$ used an airport cost simulation model to CAPITAL REQUIREMENTS FOR THE TRANSPORTATION FORECASTS @ 187 TABLE 51. Alrport capital investment and land requirements (millions of 1975 $) ( Struc- Equip- f Period tures ment Land Total Low-Growth Scenario BO 76—1980 .....cosesccncosesnt 4411 O87 4381 6029 91981-1985 .......-nersneseeses 4261 221 1445 5927 ‘ NT II oe sein soncstys 3766 202 1477 5445 B9091—1995, ......--.cceceneesse 3536 190 1573 5299 1996-2000 .....:..:......-000: 3459 186 1573 5218 G ee 19433 1036 7449 27918 Medium-Growth Scenario CS bl 4411 237 1894 6542 fr 1961-1985 ...............0.... 4438 239 2312 6989 \g 319-2729.) 7024 Ee 216 2858 7092 4 211 2858 6994 E.. 1122 12651 34641 BI9I6—-1980 ooo. ccccsccesess 4411 237 2376 7024 ; ST Ce Siem 4595 247 2922 7764 1986-1990 oes 4413 237 3661 8311 1991-1995 oe 4403 237 3661 8301 By 1996-2000 .......asseoeseccees 4311 232 2822 7365 115 ER RR ae aR 22133 1190 15442 38765 Airport land requirements 4 Airport Land (millions of acres) Low-Growth Medium-Growth High-Growth Year Scenario Scenario Scenario ae 2.58 2.58 2.58 1980 ........... 3.01 347 3.32 | pe We 3.46 3.89 4.23 ae 3.92 4.74 5.37 BO95 .......... 4.41 5.63 6.51 2000 nen 4.90 6.52 7.42 Total 22.28 26.53 29.43 SOURCE: Estimates prepared for NTPSC by Jack Faucett Associates. investigate methods (other than investment) of ex- panding airport capacity. The purpose was to ana- lyze how requirements for additional land and capital might be reduced by either diverting general aviation traffic to reliever airports or charging landing fees based, not, as now, on aircraft weight, but on the marginal costs of congestion and capacity engen- dered by peak usage. The authors found that both policies would sub- stantially reduce requirements for airport expansion and construction. The policy of peak spreading has the additional advantage of providing planners with information useful for investment decisionmaking. The study also found that nearly all of the major airport investment requirements reported in state system plans were either avoidable or could be postponed if peak-period pricing or general aviation diversion were instituted. These findings support those made earlier'™ that the value of time to the traveler must be very high to justify general aviation operations during peak periods at major airports. Finally, it should be noted that the charges necessary to divert general aviation traffic may be below the cost imposed by it. For example, Carlin and Park estimated that the peak-period general aviation traveler at John F. Kennedy International Airport in 1969 would have to value his time at $2,000 per hour to justify his position in the queue. An increase in the general aviation landing fee from $5 to $25 was all that was required to reduce congestion considerably.'© THE AIRPORT AND AIRWAY TRUST FUND Since 1970, the Federal government has contributed to airport and airway capital projects from the Airport and Airway Trust Fund established under the Airport and Airway Development Act of 1970.'°° Since the signing of the original act, the use of the Trust Fund has undergone several changes. In 1971 the DOT’s Federal Aviation Administration, which administers the Trust Fund, was prohibited from using Trust Fund receipts for operation and maintenance expenses of air navigation facilities, which represent 70 percent of total Federal aviation outlays.'°’ Through further amendments in 1973 and in 1976,'°% Trust Fund authorizations and the Federal share of matching grants were increased. The 1976 amendments also provided a new formula for distributing funds and permitted some FAA operation and maintenance expenditures to be covered by Trust Fund receipts. Over 80 percent of annual receipts to the Trust Fund come from an 8-percent ticket tax imposed on domestic passenger tickets. A domestic air cargo 5-percent way bill tax, a $3 international passenger enplanement tax and a 7-cents per gallon fuel tax on general aviation each currently contributes about equal amounts to the Trust Fund. Up to two-thirds of the annual appropriations for the development of air carrier airports is distributed according to an enplanement formula, with a fixed share allocated to each state based on population and land area; the rest is left to the Secretary of Transportation’s discretion. Only those public airports which are included in the National Airport System Plan (NASP) prepared by the FAA may receive ADAP grants.’ The entry criteria for inclusion in the NASP vary for each type of airport. Typical projects eligible for funding have been:''° 1. Land acquisition; 2. Runway construction; 188 e FORECASTS TO THE YEAR 2000 . Apron and taxiway construction; . Airport lighting; . Passenger terminals; . Obstruction removal; . Fire/rescue equipment and buildings; . Airport access and service roads; and . Electronic and visual approach aids. It should be noted that the Federal share for ADAP grants may vary due to the type of airport and the type Of project in accordance with the 1976 amena- ments. The Federal share is as follows: OSOnonuw a Ww Air Carrier Airports Large and medium hub airports 75% Others 80% Terminal Buildings 50% Commuter Airports 80% Reliever Airports 80% General Aviation Airports 80% PROJECTED TRUST FUND REVENUES AND FAA EXPENDITURES Revenues for the Airport and Airway Trust Fund were projected on the basis of the NTPSC and the FAA activity forecasts to the year 2000 in 1975 constant dollars (Table 52). The results illustrate the different growth patterns in real terms of an ad valorem versus a flat-rate fee. Revenues from the domestic passen- ger ticket tax and domestic air cargo tax are expected to more than triple in constant dollar terms by the year 2000, following increased passenger miles and freight ton-miles. On the other hand, the international passenger enplanement and_ aircraft registration and weight taxes will hardly keep up with projected inflation, despite the growth in new aircraft and international passenger movements. By the year 2000, domestic passenger and air cargo taxes will comprise 94 percent of total Trust Fund revenues compared with their 1975 share of 86 percent. Revenues from the general aviation fuel tax are expected to increase in real terms in spite of the flat fee per gallon. This is because general aviation hours flown are anticipated to increase substantially, more than compensating for inflation. The additional tax revenues, however, will not be commensurate with the rapid growth in general aviation activity. Projected Federal aviation expenditures were esti- mated based on NTPSC aviation activities forecasts, the NASP distribution of capital expenditures for 1978 to 1987, and presently mandated Federal shares for various airport development projects. Table 53 shows the type of expenditure and whether the financing is to be generated from the Trust Fund or from general revenues. Accrued revenues to the Trust Fund and funding requirements for 1976 to 1985 and for 1986 to 2000 TABLE 52. Forecast annual revenues to the airport and alrway trust fund,* medium-growth scenario (millions of 1975 $) 1975 1980 Type of Tax. 1985 1. Domestic Passen- ger Ticket Tax, fy ARAN A SINS Me TEX, SIO oa. 54.0 3. International Pas- senger Enplane- ment Tax, $38....... 553 61.4 61.9 61.6 4. Aircraft Registra- tion Tax, $25/ alrcraftic 5. Aircraft Weight Tax, 2¢/lb non- turbine, 3 1/2¢/Ib ; turbine os 19.7 25 ena 6. General Aviation Fuel Tax, 7¢/ galloni .............. oe 54.4 73.1 83.1 89.3 7. Aircraft Tire & : Tube ‘Taxes. sss: 0.9 0.9 0.9 O37..3 963.1 1204.1 1483.7 1833.4 2814. aThese projections are approximations using various growth factors and assuming inflation of 5% per year. >Base year value from Charles River Associates, An Analysis of The Impacts of Selected Transportation Issues on National Transportation Goals, Vol. Il, prepared for NTPSC, Cambridge, Mass: April 1978, p. M—17. ‘Base year value increased in proportion to domestic passen- ger travel growth forecast by the NTPSC. ‘Base year value increased in proportion to U.S. domestic air freight ton-miles forecast by the NTPSC. *Base year value increased in proportion to NTPSC forecast growth in U.S. international air travel. ‘Projection of FAA estimates to 1990 and NTPSC extrapola- tions to 2000. Federal Aviation Administration, FAA Aviation Forecasts, Fiscal Years 1979-1990, Washington, D.C.: Govern- ment Printing Office, September 1978, pp. 55, 57. 9Base year includes both registration and weight tax. "Projection of FAA estimates to 1990 and NTPSC extrapola- tions to 2000. FAA, Accrued Liabilities to the Airport and Airways Trust Fund, FY 1978-1990, Washington, D.C.: September 1978. ‘Projection of FAA estimates to 1990 and NTPSC extrapola- tions to 2000. FAA Aviation Forecasts, Fiscal Years 1979-1990, pp. 59, 62. Tires: 5¢/lb.; tubes: 10¢/lb. Base year value increased in Proportion to forecast operations at airports with FAA traffic control service. are presented in Table 54. According to these estimates and the NTPSC capital needs projections for airway and airport development, funds will be just sufficient to meet the Federal government's share of capital investment through 1985. After 1985 the Trust Fund will begin to.accumulate a significant Surplus as revenues increase and investment needs remain steady. CAPITAL REQUIREMENTS FOR THE TRANSPORTATION FORECASTS @ 189 TABLE 53. Annual Federal funding requirements for airports and airways (millions of 1975 $) 1975 1985 2000 Gen- Gen- Gen- eral eral eral Type of Trust Reve- Trust Reve- Trust Reve- _ Expenditure Fund nues Fund nues Fund nues \irway Obligations Operations.......... 1,418 296 2,013 408 3,513 Facilities & _ Equipment...... 235 285 319 Rese arch & Development .. 61 80 80 Obligations a 324 896 788 ROR sc .csssesece-0is 620 1,418 1,558 2,013 1,595 3,513 SOURCES: For 1975 estimate: Charles River Associates Inc., An Analysis of the Impacts of Selected Transportation Issues on National Transportation Goals, Vol. II, prepared for NTPSC, April, 1978, p. M—14. For forecasts: NTPSC, 1979. aNumber rounded to the nearest million. AIRWAYS Responsibility for the operation, maintenance and development of the nation’s airways is vested in the Federal Aviation Administration (FAA). Federal ex- penditures for aviation purposes for the period 1977 to 1986 are estimated at $30.9 billion in 1975 dollars.''* Over the period 1977 to 1986, according to NTPSC estimates, the FAA will allocate $2.8 billion to upgrade the air traffic control system. An additional $800 million will be dedicated to research, engineer- ing, and development programs designed to improve the safety and efficiency of aviation. TABLE 54. Accumulated Federal funding requirements for air- ports and airways (millions of 1975 $) 1976-1985 1985-2000 Trust General Trust General Fund Revenue Fund Revenue Type of Expenditure 5,280 36,167 Pree e cere errr SM TONNE es sia arezieinnuhini 2,575 4,611 Facilities & Equipment....... 669 1,200 rt Obligations Peeks seb idsasbebet edie: 10,216 15,938 RMP ells Sea tees waster tet ss 16,074 14,542 27,029 36,167 Fund Revenues............. 12,200 32,200 5,171 Pere r eer eee eee eee eee eee eres SOURCE: NTPSC, 1979. The NTPSC forecast of capital investment in airway facilities and equipment through the year 2000 is presented in Table 55. Forecasts for the medium-growth scenario are based primarily on the FAA’s most recently published National Aviation System Plan and subsequent FAA modifications.‘ Expenditures beyond 1986 were projected on the assumption that replacement investment needs would increase at a rate of 2 percent annually, growth-related investments would remain proportion- al to the growth in enplanements, and the remaining share would decline at a 2 percent annual rate. The NTPSC estimates of airway capital require- ments are similar or somewhat below those of several earlier forecasts. For example, while the NTPSC estimate over the 1976 to 1990 period calls for $4.4 billion, a 1973 estimate by the Aviation Advisory Commission projected $4.0 billion over the 1973 to 1985 period.''* Trends and Choices reported that between $5.2 and $5.4 billion would be invested in airways over the 1975 to 1990 period, depending on whether or not general aviation is charged the full cost of its use of the aviation network.''5 The NTPSC estimate differs from the earlier ones, partly because of differences in projected traffic growth rates and assumptions about improvements in capital produc- tivity. Nevertheless, the differences among the fore- casts are not large. TABLE 55. Forecast airways capital investment, by scenario (millions of 1975 $) Period Structures Equipment __ Total Low-Growth Scenario 19/61 SB ne eee isvicaes 188 960 1,148 108 FT BS ie cp iicacasossecnss 258 1,169 1,427 BOG LAO eee concent 282 1,204 1,486 I I ee ee cake 301 1,231 1,532 BAS ;°/ <4 0, 0) 0 317 1,276 1,593 POU sarees srencironsfalacccessate 1,346 5,840 7,186 Medium-Growth Scenario ISZB— 1980 isn ae eit 193 990 1,183 as Bod AS,

No revenues calculated in 1980 because the user-charge will not go into effect until October 1, 1980. KEY: n.a. =not applicable. only a small portion expended for capital construc- tion or improvement. No new navigation facilities are expected to be built by TVA; however, some facilities may require rehabilitation during latter years of the projection period. Coast Guard expenditures are of two _ types: “operating expense”’ and ‘‘acquisition, construction, and improvement” (ACI). The first category includes such items as search and rescue, aid to navigation, marine safety, environmental protection, law en- forcement, and military readiness. ACI includes equipment and construction necessary to various Coast Guard missions plus navigation aids, including: TABLE 63. Federal expenditures for water transportation, 1966 to 1975 (obligations in millions of current dollars) Army Corps of Engineers Opera- RRS. Fiscal Con- tion Coast Grand Year = struction & Maint. Other Total TVA Guard Total 1966 ...... 285.7 126.0 76.6 490.3 4.0 1225 614.8 1967.5 264.4 121.8 67.4 453.6 3.4 122.6 579.6 1968 ...... 257.6 134.6 70.8 463.0 — 130.0 593.0 1969 ...... 194.1 146.2 57.7 398.0 — 130.1 528.1 1970...... 179.1 179.8 50.4 409.3 — 153.2 562.5 197762 209.7 193:3°-.57.6 460.60: 0:7 5153.1 614.4 1972) 211.7 223.1 56.1 490.9 2.4 176.7 670.0 1973.22 237.3 247.7 . 55.8 540.8: =-4.1'188.8** 733.7 1974.0 az. 220.9 303.8 89.3 614.0 1.5 187.1 802.6 19/572 216.6 362.1 49.3 628.0 06 1848 813.4 SOURCE: U.S. Department of Transportation, Study of Federal Aid to Rail Transportation, Washington, D.C.: January 1977, Appendix 12. Includes aid for domestic and international marine transportation. Does not include Maritime Administration subsi- dies. 194 e FORECASTS TO THE YEAR 2000 “long range aids to navigation’”’ (LORAN); floating and fixed aids; the issuance of bridge permits; bridge alterations; and ice breaking operations. According to DOT, the Coast Guard has spent approximately $2.9 billion in the last 30 years on direct aid to water transportation.'78 Of this amount, $1.1 billion (11 percent of all Coast Guard expenditures) is estimat- ed to have been spent on inland waterways.' Appendix Table 52 displays Coast Guard expendi- tures by type in current dollars. In the strictest sense, few of these expenditures were for capital improve- ments. For this study, only ACI navigational aids were considered capital expenditures, of which 40 percent were allocated to domestic transportation and 60 percent to international marine transportation. Recreation vessels impact water transport facili- ties, particularly inland navigation locks. In some cases, projects which were originally justified and built as commercial navigation facilities are used almost exclusively by recreation craft. For new locks and those not heavily utilized there is little interfer- ence or impact on lock capacity, but this changes where commercial traffic is heavy. No attempt was made to separate such costs or to allocate lock facility use by recreation craft versus commercial tows, but lock records indicate that non-commercial use is very significant. '°° DOMESTIC CHANNELS, HARBORS, PORTS, AND FACILITIES As shown in Table 64, about $270 million will be required to complete 16 improvements to the existing inland waterway system that were under construction as of July 1978. Table 64 also shows that nearly $2 billion will be required to complete three major additions to the existing system now under construc- TABLE 64. Corps of Engineers projects (millions of 1975 $) Total Balance Inland and Federal To Intracoastal Number Cost Complete Improvements to Existing System Under Construction............00... 16 2,078.2 270.6 Authorized, not started........... 12° 71,813.4. + 1,813.4 Additions to Existing System Under Construction .....0....0000... 3 2,596.0 1,970.5 Authorized, not started........... 5 3,098.4 3,097.5 Deep Draft Harbors Under Construction................. 24 1,337.2 904.4 Authorized, not started........... 19 488.9 476.5 SOURCE: U.S. Army Corps of Engineers, July 1978. Adjusted to include Locks & Dam 26. tion, and about $900 million will be needed to complete 24 harbor additions that are being con- structed. Table 65 displays estimates of total Federal invest- ment for water transport for the 1975 to 2000 period.'*' These estimates include capital for har- bors, ports, and facilities in addition to channels. Projected capital requirements after 1986 may ap- pear conservative, but Corps projects shown in Table 64 include all authorized projects that may possibly be constructed over the next 25 years. Some of these projects, though authorized, appear marginally justified at best and may never be funded. There are some 2,400 marine terminal facilities in the U.S. In 1974, 50 ports accounted for nearly 87 percent of total foreign and domestic waterborne commerce.'*? Over 60 percent of all U.S. port facili- ties are privately owned and operated. (See Appen- dix Table 53.) Statistics on private port development are difficult to obtain, but investment in inland shallow-draft and Great Lakes ports is expected to be modest, with the exception of massive terminals for the transshipment of western coal.1%3 In addition to a $45 million facility at Superior, Wisconsin, new or expanded ports on the Great Lakes, near St. Louis on the Mississippi River, and on the Gulf Coast are being planned’ to handle both domestic and export coal. The coal market is expected to be a major influence upon future water transportation, particu- larly in the Great Lakes. Coal terminals are usually privately owned, as are most inland waterway ports. Unlike general cargo ports, which are often owned by city or state governments, most bulk terminals are privately financed. For purposes of estimating total capital requirements, private investment was added to that of state and local government, as shown in Table 66. According to a 1971 American Association of Port Authorities (AAPA) survey, the typical port earned a net return on investment between +2 and -2 percent after debt service.'** Few public ports are financially successful as autonomous entities.1%6 As TABLE 65. Projected Federal capital requirements for domes- tic water transportation, 1976 to 1985 and 1986 to 2000 (millions of 1975 $) Existing System Additions Years Total — 1,050, |. 2am 3,520 5,350 5,470 AQT GAO OB iis iets unetee TBO tO OD i cisursecaecres $ 820 1,830 $2,650 Peer eee eee eee errr ee rere SOURCE: NTPSC forecasts. CAPITAL REQUIREMENTS FOR THE TRANSPORTATION FORECASTS e 195 TABLE 66. Forecast of state, local government, and private capital requirements for domestic ports, harbors and facilities, 1976 to 2000 (millions of 1975 $) Capital Requirements 1976-1985 1986-2000 Total Replacement ................... 85 315 400 BRON oofeskcnonsetsscscereens 190 520 710 1 121} Re Shanta eee 275 835 1,110 SOURCE: NTPSC estimates. such, public ports may find it increasingly difficult to finance major expansion. Until recently, ports have resisted Federal assis- tance for fear that Federal involvement would restrict the competitive structure of the industry. In the fall of 1978 a resolution approved by the AAPA warned that state and local port agencies are finding it ‘‘increas- ingly difficult’’ to pay for Federal regulatory and development requirements.'*’? Chairmen of the AAPA’s committees were authorized to advise Congress that the Federal government should pro- vide funding assistance whenever it imposes addi- tional financial obligations on state and local port _ agencies through the implementation of its policies and laws.'%® The NTPSC’s forecasting assumption, however, is that the Federal policy of non-involve- ment in port development will continue. DOMESTIC MARINE EQUIPMENT _ CAPITAL REQUIREMENTS ' : | | As of September 1977, there were approximately 214 U.S.-flag vessels in the U.S. domestic ocean fleet, including 43 freighters and 170 tankers, with respec- tive vessel capacities of 640,000 and 7,796,000 Dwt. There was one passenger vessel, and that too was used to transport cargo.'%* Under the Merchant Marine Act of 1920 (popularly known as the Jones Act), domestic-use ships must be constructed in the U.S. As of June 1977, the average age of the domestic fleet under the U.S. flag was 20.6 years, compared to 10.4 years for international trade ves- Seis. '40 The Great Lakes fleet contained 150 bulk carriers (2,674,361 Dwt) and 9 tankers (55,450 wt) as of September 30, 1977.'41 Because these vessels oper- ' ate only in the Great Lakes, they are not exposed to | the deteriorating effects of salt water. Consequently, | a large percentage of the Great Lakes vessels built Lu ) | | | : between 1900 and 1930 continue in operation today. Thus, total capital needs are less, because equip- ment can be replaced at a lower rate than the ocean fleet. The Great Lakes fleet experienced a major transi- tion as a consequence of the opening of the St. Lawrence Seaway in 1959. The old 14-foot Lauren- tian canal system limited ships to a maximum length of 250 feet. The larger dimensions of the Seaway can accommodate vessel lengths of up to 750 feet. Most of this transition construction has been completed. Demands for the shipment of western coal have led, however, to the construction of new 1,000-foot ships. About 1,850 towing firms operate on the inland waterways.'** Table 67 shows the characteristics of the towboat and barge fleet in 1975. While the trend is to larger towboats, those over 5,000 horsepower (h.p.) usually restrict their operations to points below St. Louis where open river conditions exist. Some older towboats of less than 500 h.p. are likely to be retired, but many may be used for short-haul move- ments and localized operations. Towboats exceed- ing 8,000 h.p. are expected to be built, but the medium-range boat with between 1,800 and 5,000 horsepower is likely to continue as the mainstay of the fleet. The 1975 cost of towboats was about $1.9 million for a 4,000 hp. unit, $2.3 million for a 5,000 hp. boat, $2.7 million for a 7,000 hp. unit, and $3.7 million for those in the 10,000 hp. class. Barges cost between $200,000 and $300,000 each and have a useful life in excess of 30 years.'43 TABLE 67. Number, size and types of towboats and barges, Mississippi River and Gulf intercoastal waterway, 1975 Towboats Barges Class Total Total (horsepower) Number Type Size Number OH 245x35 245 SOO Treats 748 OH 19535 5,490 600! Se 436 OH 175xX26 2,890 i200 ere eel ae 610 OH 12030 1,172 BOO eae aa 210 Chia 95% 35 4,650 2 DOU eke ee 91 DK 200x50 348 3,300 si clitse 134 DK 195x35 510 4:300 a 73 DK 15032 810 5,000 so 36 DK 100x26 1,230 5 700 ae 32 TN 290x53 573 T OOD Stes aaa 22 ™T 24050 760 S400 sae 11 TN 18554 322 S000 a ccecessaees 2 TN 195X335 790 10, O00 anes pikes 4 TN 135x40 458 Total Number 2,409 20,248 SOURCE: U.S. Corps of Engineers, 1977. KEY: OH = open hopper DK = deck CH = covered hopper TN = tank 196 e FORECASTS TO THE YEAR 2000 Table 68 contains estimates of capital require- ments for all domestic ocean vessels, including those of the Great Lakes and inland waterways. EQUIPMENT FINANCING The return on investment of the inland towing industry appears adequate to refinance replacement equipment; expansion equipment can be financed internally or through commercial sources. Barges are often owned by shippers, particularly grain compa- nies who rely on this equipment during seasonal peaks when for-hire equipment is scarce. Still, Fed- eral assistance is available. The Merchant Marine Act of 1970'** provides equipment financing aid for domestic waterway carriers from three sources: the Federal Ship Financing Program, the Capital Con- struction Fund (CCF), and the Construction Reserve Fund (CRF). The Federal Ship Financing Program, established under Title XI of the 1936 Merchant Marine Act (as amended in 1970), provides Federal guarantees of debt obligations for ships built in U.S. yards.'4 Any towboat, barge, or tank vessel of 25 gross tons or more is eligible for assistance. The amount guaran- teed generally does not exceed 75 percent of the actual cost of the vessel, tug or towboat, but may reach 87.5 percent under certain conditions. Since the program’s inception, 101 river tugs costing $171 million have been involved, and about 1,650 barges costing a total of $346 million have been built under guarantee.'*© The amount committed thus far is 6 percent of total guarantees provided under Title XI (which was designed primarily to assist deep-draft ocean shipping engaged in foreign trade). In NTPSC interviews, representatives of the inland towing industry expressed mixed views as to the value of the Title XI Program. Most firms engaged in inland water transportation are small and unable to meet the cost of the filing and reporting requirements TABLE 68. Forecast of capital requirements for domestic water transportation equipment, 1976 to 1985 and 1986 to 2000 (millions of 1975 $) 1976 to 1986 to Equipment (Private) 1985 2000 Total cO00 rn we cee ree 5,145 SOURCE: NTPSC estimates based on Jon Burkhardt ef al., “Impacts of Rural Transit Funding Options,” paper presented at the 5th Annual Conference of the Transportation Research Board, Washington, D.C.: 1978. 202 © FORECASTS TO THE YEAR 2000 can be expected to be about $5.1 billion for the period 1976 to 2000. If status quo policies are maintained, 80 percent of the total ($3.8 billion) would be paid by the Federal government. THE TRANSPORTATION EQUIPMENT INDUSTRIES The future capital needs discussed so far are for operating equipment such as automobiles, locomo- tives, trucks, ships, and accompanying infrastruc- ture. Demand for the equipment, in turn, will create further demand for goods and services by the industries that supply the equipment manufacturers. Successive rounds of induced demand can be traced through the economy. Notice should be _ taken, therefore, of the capital requirements and Capacity levels of the transportation equipment industry. The Inforum model used by NTPSC in its forecast- ing was applied to assess the ability of industry to produce needed transportation equipment. Esti- mates were made for production increases implied for various industries by the expansion of activity and capital requirements forecast for transportation. The results were compared with the production capaci- ties currently being used by the industries. Estimates of capacity utilization in the transporta- tion equipment industries were made in 1978 by the Bureau of Economic Analyses of the Department of Commerce.'”? The survey estimated capacity utiliza- tion and the ratio of actual to desired utilization under normal conditions. The BEA survey indicated substantial unused capacity in manufacturing, with no trend to full utilization. This may reflect the oligopolistic nature of the transportation equipment industry and the resul- tant excess capacity built in anticipation of demand. However, the utilization ratio may also imply that the transportation equipment industries have additional capacity to meet sudden increases in demand for conventional equipment. The fact that the capacity | utilization percentages have not approached 100 © percent over the period 1965 to 1977 implies that, barring a significant change in market or industry — Structure, excess capacity can be expected to persist. An examination of second-round capital goods — producers, that is, those supplying the transport equipment industries, shows that bottlenecks are unlikely even if the expansion of transportation equipment supplies becomes necessary. The BEA has compiled tables describing the value of pur- chases of capital goods by 80 industries in 1963 and 1967. Although these tables are old, it is unlikely that these capital expenditure profiles have changed substantially (in relative terms). By far the largest expenditure on capital goods in the motor vehicles | and equipment, aircraft and parts, and other trans- portation equipment sectors (amounting in either year to about 30 percent of dollar outlays by those sectors on capital expenditure) was for new struc- tures.175 NOTES AND REFERENCES 1. U.S. Federal Highway Administration, Highway Statistics Summary to 1975, Washington, D.C.: Government Printing Office, 1977 , p. 120. Figures do not add due to rounding. 2. Interagency Task Force on Motor Vehicle Goals Beyond 1980, ‘‘Marketing and Mobility,” March 1976, p. 2-107. 3. The Energy Policy and Conservation Act, Pub.L. 94-163 (1975). 4. American Trucking Associations, Motor Carrier Financing, Washington, D.C.: 1968, pp. 53-55. 5. “I.C.C. Rules Equity Return Key to Revenue,” Transport Topics, 4 December 1978, p. 1. 6. Ibid. 7. American Trucking Associations, American Trucking Trends, 1976 Statistical Supplement, Washington, D.C-.: 1976, p. 15. 8. American Trucking Associations, Research Review, No. 201, ‘Employment Outlook for Truck Drivers,”’ 15 August 1978, p. 1. 9. Ibid. 10. U.S. Department of Transportation (DOT), Office of Trans- portation Planning Analysis, Industrial Shipper Survey, Plant Level, by J. Richard Jones, Washington, D.C.: 1975, p. 85. 11. Robert M. Butler, “Preliminary Data on Private Trucking Show 77 Percent Don’t Have Exempt Commodities,” Traffic World 130 (17 June 1967), p. 50. 12. Ibid. 13. D. Daryl Wyckoff and David H. Maister, The Motor-Carrier Industry (Lexington, Mass.: Lexington Books, 1977), pp. XXxiv, I. 14. “ATA Will Sue ICC Over Policy Allowing Private, For-Hire Mix,’ Transport Topics, 27 November 1978, pp. 1, 23. 15. Interstate Commerce Commission, Bureau of Economics, The Intercity Bus Industry, A Preliminary Study, Washing- ton, D.C.: Government Printing Office, 1978, p. 61. (Hereaf- ter cited as ICC, Intercity Bus.) 16. Interstate Commerce Commission, Transport Statistics in the U.S., 1971-1974; Interstate Commerce Commission, Annual Reports. 17. American Bus Association, America’s Number 1 Passenger Transportation Service, Washington, D.C.: 1977, p. 14. 18. Transportation Association of America, Transportation Facts and Trends, 14th ed., Washington, D.C.: 1978, p. 18. 19. Loving, Rush, Jr., ‘‘The Bus Lines are on the Road to Nowhere,” Fortune, 31 December 1978, p. 60. 20. ICC, Intercity Bus, pp. 101-104. 21. Interstate Commerce Commission, Ex-Parte No. 271, Net Investment—Railroad Rate Base and Rate of Return, 22 December 1976, (Hereafter cited as ICC, Ex Parte No. 271.) 22. Federal Railroad Administration, A Prospectus for Change in the Freight Railroad Industry, A Preliminary Report by the ee 23. 24. 25. 26. 27. 28. 29. 40. 41. 42. 43. 44. 45. 46. 47. 48. 49. CAPITAL REQUIREMENTS FOR THE TRANSPORTATION FORECASTS @ 203 Secretary of Transportation, Washington, D.C.: October 1978, p. 3. (Cited hereafter as FRA, A Prospectus for Change.) Association of American Railroads, telephone interview, 28 April 1979. ICC, Ex Parte No. 271. First City National Bank, A Capital Market’s Analysis of the Final System Plan as Imposed by the United States Railway Association, New York: 1975, pp. 75, 88. Harbridge House Inc.,-A Review of National Railroad Industries, prepared for the U.S. Senate, Committee on Commerce, Cambridge, Mass.: 1975, pp. 11, 19. Association of American Railroads, ‘‘Coal and the Rail- roads—1978,” in Background on Transportation, series released by the Office of Information and Public Affairs, Washington, D.C.: 1978, pp. 8-9. Calculated from data in Association of American Railroads, Yearbook of Railroad Facts, 1978, Washington, D.C.: 1978. (Hereafter cited as AAR, Railroad Facts, 1978.) National Commission on Productivity and The Council of Economic Advisors, Task Force on Railroad Productivity, Improving Railroad Productivity, Washington, D.C.: 1973, p. 110. (Hereafter cited as NCP, Improving Railroad Produc- tivity.) Traffic World, 176 (25 December 1978), pp. 19-20. FRA, A Prospectus for Change, p. 23. For a discussion of Federal aid see Chapter 11. James C. Nelson, Railroad Transportation and Public Policy, Washington, D.C.: The Brookings Institution, 1959, p. 219. Railway Age 176 (10 November 1975), pp. 34-35. U.S. Congress, Senate, Committee on Commerce, Science, and Transportation, Intercity Domestic Transportation Sys- tem for Passengers and Freight, 95th Cong., ist sess., Washington, D.C.: Government Printing Office, 1977, p. 133. From data in AAR, Railroad Facts, 1978. NCP, Improving Railroad Productivity, pp. 115-116. Regional Railroad Reorganization Act of 1973, 45 U.S.C. Section 721(1977). Traffic World, 177 (February 1979), pp. 122-126. Article summarizes report by Jesse J. Friedman & Associates, Washington, D.C., for the Water Transport Association. For the complete report, see: Jesse J. Friedman & Associates, Federal Aid to Railroads, Part Il: Government Capital - Assistance Programs, report prepared for Water Transport Association, Washington, D.C., January 1979. (Hereafter cited as Friedman Associates, Federal Aid to Railroads.) Regional Railroad Reorganization Act of 1973, 45 U.S.C. Section 725(1977). Railroad Revitalization and Regulatory Reform Act of 1978, 45 U.S.C. Section 726(1978), as amended, Pub. L. 95-565, 92 Stat. 2397. United States Railway Association Amendments Act of 1978, 45 U.S.C. Section 726(1978), as amended, Pub. L. 95-565, 92 Stat. 2397. Railroad Revitalization and Regulatory Reform Act of 1978, 45 U.S.C. Sections 711, 741(1977). Friedman Associates, Federal Aid to Railroads, p. 10. General Accounting Office, Conrail Faces Continuing Prob- lems, Report No. CED—78—-174, Washington, D.C.: October 1978, p. 43. Railroad Revitalization and Regulatory Reform Act of 1976, 45 U.S.C. Section 825(1977). Power Plant and Industrial Fuel Act of 1978, 45 U.S.C. Section 8481(1978). Railroad Revitalization and Regulatory Reform Act of 1976, 45 U.S.C. Section 831(1977). Friedman Associates, Federal Aid to Railroads, p. 23. 50. 51. 52. 53. TAN 72. 78. 80. Railroad Revitalization and Regulatory Reform Act of 1976, 45 U.S.C. Section 5 (1977). Railroad Revitalization and Regulatory Reform Act of 1976, 45 U.S.C. Section 853(1 977). Amtrak's performance and potential receive more thorough treatment in NTPSC Special Report No. 2, Amtrak: An Experiment in Rail Service, by Francis P. Mulvey, Report No. NTPSC/SR-—78/02, Washington, D.C.: 1978. The read- er is referred to this report for a detailed discussion of rail passenger operations. National Railroad Passenger Corporation (Amtrak), Am- trak: Five Year Corporate Plan Fiscal Years 1978-1982, Washington, D.C.: 1977, p. 58. (Hereafter cited as Amtrak, Amtrak, 1978-1982.) Ibid., p. 23. Ibid., p. 170. Ibid., p. 63. Ibid., p. 1. U.S. Department of Transportation, Final Report to Congress on the Amtrak Route System, Washington, D.C.: January 1979, pp. 4-4, 5-3. Francis P. Mulvey, ‘‘The Economic Future of Amtrak,’ Ph.D. dissertation, Washington State University, 1974, pp. 175-190. AAR, Railroad Facts, 1978, p. 57. Ibid. Ibid., p. 40. Paul Banner, “Utilization of Capital and Labor in the Rail Industry,”’ in Proceedings of the Transportation Engineer- ing Conference, New York: 1968, pp. 130—139. AAR, Railroad Facts, 1978, p. 57. U.S. Council of Economic Advisors, Economic Report of the President, Washington, D.C.: January 1978, p. 314. Ibid., p. 298. Transportation Association of America, Transportation Facts and Trends, Washington, D.C.: July 1978, p. 24. Amtrak, Amtrak 1978-1982, pp. 38-42. U.S. Department of Transportation, Office of The Secre- tary, National Transportation: Trends and Choices (to the Year 2000), Washington, D.C.: Government Printing Office, pp. 291-302. (Hereafter cited as DOT, Trends and Choices.) Business Week, 15 August 1977, p. 36; The Journal of Commerce, 19 March 1979. Federal Energy Administration, Petroleum Supply Alterna- tives for the Northern Tier States Through 1988, Washing- ton, D.C.: June 1977, pp. 1-9. U.S. Department of Energy, Assistant Secretary for Policy and Evaluation, Office of Policy Analysis, ‘‘Draft Report— Petroleum Supply Alternatives for the Northern Tier and Island States Through the Year 2000,”’ Washington, D.C.: February 1979, pp. 1-11. (Hereafter cited as DOE, ‘‘Petro- leum Supply.’’) Ibid. Ibid. Northwest Energy Company, ‘‘Northwest Energy Seeks to Build Alaska Highway Oil Pipeline,” Press Release, Wash- ington, D.C.: 8 December 1978. DOE, ‘‘Petroleum Supply,”’ pp. 1-11. Ibid. Further, Sohio had suggested converting an existing natural gas pipeline and using it to carry crude from Long Beach, California, to Texas, for distribution by existing pipelines to refineries in the Middle West and Southwest. The oil carried would be predominantly Alaskan. Ibid. Ibid. Congressional Research Service, National Energy Transpor- tation, Volume Ill, Issues and Problems, Washington, D.C..: Government Printing Office, March 1978, pp. 252, 261. 204 e FORECASTS TO THE YEAR 2000 81. 93. 94. 95. 96. 97. 98. 99: 100. 101. 102. 103. 104. Ibid., pp. 252, 261. See also President Carter’s energy message, U.S. President, Office of The White House Press Secretary, ‘Fact Sheet on The President’s Program,”’ Press Release, Washington, D.C.: 5 April 1979. Ulf Lantzke, ‘“‘The OECD and Its International Energy Agency,” Daedalus 104 (Fall 1975), pp. 223-225. DOT, Trends and Choices, p. 129. American Gas Association, Gas Facts, 1977, Washington, D.C.: 1978, Table 42, p. 53. Ibid. U.S. Department of the Interior (DOI), Alaskan Natural Gas Transportation Systems, A Report to the Congress pursu- ant to P.L. 93-153, Washington, D.C.: December 1975, pp. 148-169. (Hereafter cited as DOI, Alaskan Natural Gas.) Northwest Energy Company, “Alaska Highway Pipeline Fact Sheet,’ Press Release, Washington, D.C. and Salt Lake City, Utah: 14 November 1978. Ibid. Ibid. Ibid. DOI, Alaskan Natural Gas, pp. 114-119. Northwest Energy Company, “Effects of the Natural Gas Policy Act of 1978 on the Alaska Highway Pipeline Project,’’ Press Release, Washington, D.C. and Salt Lake City, Utah: 14 November 1978. Northwest Energy Company, ‘Alaska Highway Pipeline Fact Sheet,”’ p. 3. Northwest Energy Company, ‘‘Financial Participation by the State of Alaska,’’ Press Release, Washington, D.C. and Salt Lake City, Utah: 14 November 1978. National Association of State Aviation Officials, prepared statement and testimony, in U.S. Congress, House, Commit- tee on Ways and Means, Airport and Airways Trust Fund; Hearings before the Subcommittee on Oversight, held 24 January 1978, Serial No. 95-60, 95th. Cong., 2d sess., Washington, D.C.: Government Printing Office, pp. 62—71. U.S. Federal Aviation Administration, Office of Aviation Economics, Economics of Airport Operations, by Joseph A. Neiss, Washington, D.C.: 1974, pp. 9-17. Howard W. Voss, “Elements of Municipal Debt Financing,”’ in Airport Economic Planning, edited by George P. Howard, Cambridge, Mass.: Massachusetts Institute of Technology Press, 1974, pp. 283—294. Airport and Airway Development Act Amendment of 1976, 49 U.S.C. Section 1714 (1977). Airport and Airway Development Act Amendments of 1976, 49 U.S.C. Section 1714(aX3), (41977). Peat, Marwick, Mitchell & Co., Airport Development Aid Program, prepared for National Transportation Policy Study Commission, Washington, D.C.: August 1978. National Association of State Aviation Officials, testimony and prepared statement in U.S. Congress, House, Commit- tee on Ways and Means, Review of General Aviation Programs: Hearings before the Subcommittee on Over- sight, held 19 May 1978, Serial No. 95-94, 95th Cong., 2d sess., Washington, D.C.: Government Printing Office, 1978, pp. 370-388. David Smith, Daniel Maxfield, and Stan Fromovitz, An Analysis of the Financial Aspects of Non-Capital Planning Alternatives at the Large Air Transport Hubs of the United States, prepared for Federal Aviation Administration, Wash- ington, D.C.: February 1977; David Smith, Daniel Maxfield, and Stan Fromovitz, The Airport Investment Model: A Methodology for Airport Investment Planning, prepared for U.S. Federal Aviation Administration, Washington, D.C.: February 1977. Alan Carlin and R. E. Park, ‘“‘Marginal Cost Pricing of Airport Runway Capacity,’’ American Economic Review 60 (June 1970), pp. 310-319. Ibid. 105. 106. 107. 108. 109. 110. uh bo ae 113. 114. 115. 116. Us 118. 119. 120. TZ 122: 123. 124. 1285. 126. 127. 128. Ibid., pp. 314-315, 317. Airport and Airway Development Act of 1970, 49 U.S.C. Section 1742 (1977). Pub. L. 92—174. Pub. L. 93-44 and Pub. L. 94-353. Latest version is FAA, The National Airport System Plan 1978-1987, Washington, D.C.: Government Printing Office, December 1977, p. 466. Ibid. p. 8. Ibid., p. 8. DOT, Trends and Choices, p. 223. The low-growth and high-growth forecasts were projected by assuming that the growth-related portion of investment is directly proportional to the projected annual increase in aircraft operations. See project report to the NTPSC by Jack Faucett Associates, ‘‘Projections of Infrastructure on Public Capital,’’ 30 October 1978, p. 56. U.S. Aviation Advisory Commission, The Long Range Needs of Aviation, Report of the Aviation Advisory Commis- sion, Washington, D.C.: January 1973, p. 72. DOT, Trends and Choices, p. 243. William Fromm and John Rodgers, Policy Analysis of the Projected Third Generation Air Traffic Control System, prepared for Federal Aviation Administration, Washington, D.C.: January 1977. Peat, Marwick, Mitchell & Co., Transportation Needs: A Review of Recent Estimates, prepared for U.S. Congressio- nal Budget Office, Washington, D.C.: January 1978, p. IlI- 50. Air Transport Association of America, testimony, in U.S. Congress, Senate, Committee on Commerce, The Econom- ic Condition of the Air Transport Industry: Hearings Before the Subcommittee on Aviation, held 2 February 1971, Serial No. 92-84, 92nd Cong., 1st sess., Washington, D.C.: Government Printing Office, 1971, pp. 6-16. U.S. Congress, House, Committee on Science and Technol- ogy, The Future of Aviation: Hearings Before the Subcom- mittee on Aviation and Transportation, Held 4—20 May 1976, Serial No. 94-82, 94th Cong., 2d sess., Washington, D.C.: Government Printing Office, 1976. William H. Gregory, ‘‘Airline Reequipment Financing Stud- ied,’ Aviation Week and Space Technology, 107 (11 July 1977), pp. 26-29. Unless otherwise stated, the NTPSC’s projections of marine transportation capital employed the medium-growth sce- nario. U.S. Army Corps of Engineers, Planning Division, Systems Analysis Applications Branch, Office of Chief of Engineers, January 1979. Inland Waterways Revenue Act of 1978, 33 U.S.C. Section 1802 (1978), Pub. L. 95-502. For further reading on the impacts of inland waterway policy, see; Joseph L. Carroll and Srikanth Rao, ‘‘Economics of Public Investment in Inland Navigation: Unanswered Questions,’’ Transportation Journal, Vol. 17, No. 3, Spring 1978 pp. 27—54; and Robert H. Haveman, The Economic Performance of Public Invest- ments: An Ex Post Evaluation of Water Resources Invest- ments, Baltimore Md.: Johns Hopkins University, 1972. CACI, Inc., Potential Impacts of Selected Inland Waterway User Charges, for the U.S. Army Corps of Engineers, Washington, D.C.: Dec. 1976, p. 4. Ibid., p. 5. NTPSC calculation. Tippets-Abbett-McCarthy-Stratton, Mid-America Ports Study, for U.S. Department of Commerce, New York, New York: July 1978, preliminary estimates. This figure was obtained through NTPSC correspondence with the U.S. Coast Guard, (G-AGA/83) per review and submission of data for Table 63 of this chapter, January 1979. 129. 130. 131. 132. 133. 134. 135. 136. 137. 138. 139. 140. 141. 142. 143. 144. 145. (146. — 147. 148. CAPITAL REQUIREMENTS FOR THE TRANSPORTATION FORECASTS @ 205 Ibid. DOT, Trends and Choices, p. 276. No allowance was made for the possible extension of winter navigation on the Great Lakes—Seaway System in the projections of capital needs. The estimates in Table 65 include capital for domestic ocean shipping and for interna- tional marine transport. DOT, Trends and Choices, p. 285. U.S. Maritime Administration (MarAd), Office of Ports and Intermodal Systems, North American Port Development Expenditure Survey, Washington, D.C.: March 1974, pp. 31, 33. On the other hand, the recent Mid-America ports study estimates a need for $9 billion in new port facilities on the Mississippi, including berths, development of waterfront land for handling, and dredging for berth construction. See U.S. Department of Commerce, Mid-America Ports Study, Final Report, New York, New York: Tippetts-Abbett-McCar- thy-Stratton, 1979, p. 21-1. U.S. Department of Transportation, Transporting The Na- tion’s Coal—A Preliminary Assessment, prepared by the Coal Transportation Task Force, Washington, D.C.: 1978, p. ll-38. U.S. Maritime Administration, Public Port Financing in the United States, June 1974, pp. 15—17. Ibid. American Association of Port Authorities, Report of the Business Sessions—1978, Washington, D.C.: 1978, p. 62. Ibid., p. 63. U.S. Maritime Administration, MarAd—‘77, The Annual Report, Washington, D.C.: Government Printing Office, May 1978, p. 28. (Hereafter cited as MarAd, MarAd—‘77.) Irwin M. Heine, The U.S. Merchant Marine—A National Asset, (An Addendum), Washington, D.C.: National Mari- time Council, February 1978, pp. 3-4. (Hereafter cited as Heine, Merchant Marine—An Addendum.) MarAd, MarAd—‘77, p. 41. American Waterways Operators, Inc., Big Load Afloat: U.S. Domestic Water Transportation Resources, Washington, D.C.: 1973, p. 3. Information based on NTPSC survey conducted by Du- Wayne Koch, Washington, D.C., September 1978. Merchant Marine Act of 1970, 46 U.S.C. Section 1177 (1977). MarAd, MarAd—‘77, p. 1. U.S. Maritime Administration, Office of Ship Financing Guarantees, unpublished data, May 1979. Prices obtained from U.S. Maritime Administration, Division of Domestic Costs, unpublished data, 27 November 1978. MarAd, MarAd—‘77, p. 1. 152. 153. 154. 155. 156. 157. 158. 159. 160. 161. 162. 163. 164. 165. 166. 167. 168. 169. 170. var 172. 173. Ibid., p. 16. Ibid., pp. 16-17. “ICC Proposes Sweeping Changes to Deregulate Barge, Offshore, Intermodal Service; Asks Comments,’’ American Shipper, 21 (January 1979), pp. 18-21. Some waterway operators fear the involvement of railroads, as outside investors, perhaps eventually leading to takeover. While the ICC has historically limited rail participation in water carriage, it is currently considering rule changes that would promote the emergence of multimodal companies. DOT, Trends and Choices, p. 375. MarAd, MarAd—‘77, p. 30. Merchant Marine Act of 1970, 46 U.S.C. Sections 1151— 1161, 1171-1176 (1977). Heine, Merchant Marine—An Addendum, pp. 25-27. Ibid. U.S. Maritime Administration, Foreign Flag Merchant Ships Owned by U.S. Parent Companies, Washington, D.C.: May 1978, p. 12. U.S. Maritime Administration, Merchant Fleet Forecast of Vessels in U.S. Foreign Trade, Washington, D.C.: May 1978, p. 8. U.S. Maritime Administration, An Adequate and Well-Bal- anced Merchant Fleet, Washington, D.C.: March 1978, p. 6. From data in MarAd, MarAd—‘77, pp. 87-88. Ibid. Ibid. Information from U.S. Maritime Administration, Division of Domestic Costs, 27 November 1978. MarAd, MarAd—‘77, p. 162. Ibid. Ibid. Traffic World 177 (8 January 1979), p. 7. U.S. Maritime Administration, Deck and Engine Officers in the U.S. Merchant Marine, Supply and Demand, 1976- 1985, Washington, D.C.: March 1977, p. 6. DOT, Trends and Choices, p. 334. John O. Wells, et al., Economic Characteristics of the Urban Public Transportation Industry, prepared for U.S. Department of Transportation, Arlington, Va: February 1972, pp. 8-9. Jon Burkhardt et a/., “Impacts of Rural Transit Funding Options,’’ paper presented at the 57th Annual Conference of the Transportation Research Board, Washington, D.C..: National Academy of Sciences, January 1978. U.S. Department of Commerce, Survey of Current Busi- ness, March 1978. U.S. Department of Commerce, Survey of Current Busi- ness, Sept. 1975. ” 24 | The Relative Price of Transportation Con ial- mm @-y-1er4ele INTRODUCTION This chapter builds on the preceding chapters of this report that deal with forecasts to the year 2000. It concludes the presentation of the NTPSC forecasts by highlighting ways in which the relative use of resources by transportation is likely to change in the U.S. compared with the base year 1975. A SET OF TRANSPORTATION ACCOUNTS The concept of the U.S. ‘‘transportation bill’ is used in this chapter. The bill is defined as the sum across all markets of: (1) the revenues of for-hire modes; (2) the annual costs (including capital) of private trans- portation; and (3) government subsidies to transpor- tation (where government subsidies equal govern- ment’s expenditures for each mode minus receipts from user charges). The transportation bill is only part of the cost of transportation to the nation. The time spent in movement by both people and goods has economic value. Further, transportation may create externalities, e.g., hazards, air pollution, or higher noise levels. (Such costs were discussed in Chapter 7 and are not covered further in this chapter.) Table 80 contains data showing how the U.S. transportation bill is likely to grow in relation to gross national product (GNP) and population. Figures for government subsidies and the labor force have been included to illustrate relationships in per capita expenditures occurring over time. Historically, the percent of resources used for transportation, as indicated by the ratio of the U.S. transportation bill to GNP, has been remarkably constant. The NTPSC forecasts that if the U.S. GNP rises in real terms to the year 2000, the percentage of resources devoted to transportation will most likely decline. From Table 80 it can be seen that under the medium-growth scenario, the transport bill per person will increase in 1975 dollars from the 1975 level of about $1,500 per capita to a little over $2,700 by 2000. The amount of government subsidy, as defined above, per labor force member is likewise expected to increase across scenarios and time periods if current practices are continued, from the 1975 level of $184 to $571 in 2000 for the medium- growth scenario. Note that estimates of the transpor- tation bill include transportation’s share (based on its consumption) of all the costs associated with fuel conversion as described in Chapter 8. The freight and passenger bills are anticipated to grow at different rates. The growth in intercity ton- miles per capita is due in part to efforts to achieve energy independence. The development of domestic energy resources, such as coal, will lead to in- creased domestic ton-miles but decreased interna- tional import tonnages. The ratio of the passenger bill to disposable income is forecast to decrease from 17.69 percent in 1975 to 13.2 percent in 2000 under the medium-growth scenario. Table 81 shows the changing shares of the transportation bill incurred by the U.S. international, intercity, and local transportation markets. In gener- al, with increasing affluence over time or between scenarios, the longer-haul international and intercity markets will increase their shares. Changes in unit costs (or average prices) used in calculating the transportation bill are derived from four basic sources. First are changes in the composi- tion of transportation activity. For example, in- creased costs per ton-mile by truck may result from carrying a greater percent of light, high-value com- modities which cost more to haul per unit. Second, changes in the costs of material inputs and value- added components of cost (wages, interest, rents, and profits) may push up ton-mile costs.’ A third source of cost data is estimates of increased fuel expense. Oil and gas prices tend to be administered either by major foreign suppliers or by U.S. govern- ment regulation, although some end-use products (e.g., aviation fuel) are not regulated, and others are scheduled to be deregulated. The longer-term fuel prices presented in Chapter 8 were developed under the assumption that foreign fuel prices will not exceed the costs to the U.S. of substitutes for foreign oil, and further that domestic oil prices will be allowed to rise to a level where domestic substitutes 207 208 © FORECASTS TO THE YEAR 2000 TABLE 80. Transportation bill comparisons forecast by scenario, 1975 to 2000 Low- Medium- High- Growth Growth Growth Scenario Scenario Year , 1975 1985 2000 1985 2000 1985 GNP. (billions of- 197579) cite nerensevasvicanneessd partaneteatrerere ieee Population (muons) 22. ee ect ckect sacoeceaciseeeraaste unc eet cote eee Labor Force: (Millions). 25 oie siusccsnscpt-ncaseuatessnnscostanunereuvenes tee taleiR einer Transportation : Bill (billions 19757 $))...cieves.cist-cnes tess ee ee Trans: Bill/GNP: % ck, tete ancetasrssadece eatyicannst ace cata meeet .resau neta eat ‘rans: Bil/ Capita (1975.98) ..5 2.2. Ganseecent hee een Ge rein eee Government Subsidy (billions 1975 $)................cccsscsccssserrcccssesssernerens Government Subsidy/Capita (1975 $/persom) ...........::cccccccccccsseseeeeens Subsidy/ Labor: Force’ (19755 $) tice. eee er ea Subeidy/ Trane: Bill 9630 ii Acs ce N i ea ee a Bs die eee ee ee Freight. Bill/ Trans: BINS 96 i. 5 cic carcinomas ss SMiakaavues seateat ieanhee oe Pass.‘ Gill/ Trans. ° Sih Sr oc os cacc ongsaacerdacipte ea eecasesaheceats CC namin eae Freight Bill/Capita’ (1975: S$ yearn ccc cctetcecccadevs er scccate stun on tceteee eae Pass: Bill/Gapita\(19757$) 23ers eee ee Pass. Bill/Capita % Dispos. Inc/Capita................:cccccscccesreceessscceseeseees Ate 21.1 22.0 24.1 21.3 19.8 20.8 Pee 6 1509. 2093, © 2205 © 2082: 2727, .,.2201 suvukes 17.4 42.1 68.9 42.8 70.8 42.8 oevetes 81 184 280 184 2r2 187 an 183 401 589 393 571 389 % 8. 53 skure 1529. 2034 «= 2342-—«s«2276-Ss 3588 «= «2418 = 4474 Since 214 229 246 233 260 229 congas 95 105 117 109 124 110 447.9 5646 485.0 709.0 ae 5.4 94 122 8.8 10.0 8.5 see 39.8 941.6"! 41.479 agg! Ueog haan 2 a 59.4 57.2°' 57.2 (838° °47.5) 9533 om ae 593 813 950 933 1389 1017 1 ian 896 1119. 1314 1120 1296 1175 1 Rie 176 181 196 163 132 158 Taxis and limousines driven for hire. 210 e FORECASTS TO THE YEAR 2000 TABLE 82 (Part B). Elements of the transportation bill for 1975, 1985, and 2000, medium-growth scenario (millions of 1975 $) 1975 1985 2000 Govern- Govern- Revenues Revenues ment Revenues ment and Subsidy Total and Subsidy— Total and Subsidy— _ Total Private by Trans- Private User Trans- Private User Trans- Expendi- Govern- portation Expendi- Charge portation Expendi- Charge portation Market tures ments Bill tures Deficit Bill tures Deficit Bill U.S. International................ 9419 864 10283 16957 1049 18006 31557 1232 32789 Freight :eie eda 5693 829 6522 9608 972 10580 17064 1161 18225 Water sence aces 4928 761 5689 7574 917 8491 11088 ATi 12199 FN go Op anh i MeL AR ote 765 68 833 2034 55 2089 5976 50 6026 PASBONGEN Goud ct iced 3726 35 3789 7349 77 7426 14493 71 14564 Alr 22h Coe Area abte 3445 34 3507 7001 76 7077 14013 70 14083 Waters eid nice ae 281 1 282 348 1 349 480 1 481 PATER CRYy Soca a a 159137 8756 167893 243211 23956 267167 355057 39571 394628 Prelit s..ccdisnnibeastomensccaces 69517 2962 72479 130862 8812 139674 216971 15154 232125 THICK ica eins Le ee 47272 1667 48939 84223 7588 91811 140129 13689 153818 Regus he 22000 NA NA NA NA NA NA NA NA Othericisc 25272 NA NA NA NA NA NA NA NA Rail. (ct bete cree 16509 282 16791 32007 216 32223 48804 216 49020 Water 2:8.e55i..0. lates 2434 768 3202 4802 821 5623 9602 1079 10681 Dom. Ocean. .............. 1136 NA NA NA NA NA NA NA NA IWWY atest ee te 950 NA NA NA NA NA NA NA NA Gt.) Lakes )..2eee ae 348 NA NA NA NA NA NA NA NA Pineline\.Seauiccaveeee 2229 26 2255 8072 26 8098 15263 26 15289 Od Nena A aa eee 1317 NA NA NA NA NA NA NA NA CGS ns eines su cc ceascendents 912 NA NA NA NA NA NA NA NA Aviation eee 1073 219 1292 1758 161 1919 3173 144 3317 PASSENGET .........-.c.ccsees0000 89620 5794 95414 112349 15144 127493 138086 24417 162503 AURORA Ue cementite aa 71933 4361 76294 82568 13066 95634 80159 21769 101928 Aviation aocae eile: 16315 1115 17430 27968 1239 29207 55490 1490 56980 Carriersani teins 11581 NA NA 17459 NA NA 34726 NA NA Generalis.cisi cise 4734 NA NA 10509 NA NA 20764 NA NA Rah eect eee 340 308 648 454 681 1135 424 979 1403 BUS i waa ae 1016 0 1016 1339 141 1480 1984 141 2125 Water iii, cence dinee 16 10 26 20 17 37 29 38 67 Bates: | Rui nUn reece mt mim 133008 7532 140540 175743 17552 193295 240887 29759 270646 Freight, Truck.......:....:0... 47790 209 47999 66209 970 67179 108366 1840 110206 PASSONGEF .0.....c..cecccccnnpeas 85218 7323 92541 109534 16582 126116 132021 27919 159940 Put coh ey bas rate 82732 3397 86129 106619 10225 116844 128330 17110 145440 Own ODO ieee 81150 NA NA 104323 NA NA 124295 NA NA RE» PMS VOR MEMO! 1582 NA NA 2296 NA NA 4035 NA NA TANSIE Ly vee: oo essen 2200 2038 4238 2450 3690 6140 2852 6267 9119 Lb OBL My Lae SPREE 600 NA NA 675 NA NA 791 NA NA Rall in cSeccanuin coteyeeine 1401 NA NA 1580 NA NA 1846 NA NA COMMULCL ack Wicsarsonae 199 NA NA 195 NA NA 215 NA NA Other ein sears aes 0 NA NA NA NA NA NA NA NA School’ Bus yas cae ica 286 1888 2174 465 2667 3132 839 4542 5381 MISC Aah a ae ee 3973 263 4236 6301 263 6564 10800 263 11063 Boate st ee se 1754 263 2017 2573 263 2836 4454 263 4717 Recreation...........cccc.ccee0e0 NA NA NA NA NA NA NA NA NA COM. /FISHE tc aaa eee NA NA NA NA NA NA NA NA NA Other escitares eee 2219 0 2219 3728 NA NA 6346 NA 6346 Grand Total ............ 305537 17443 322980 442212 42820 485032 638301 70825 709126 SOURCE: NTPSC forecasts. NOTE: NA stands for ‘‘not available.” In some cases the values were estimated to be too small to be computed in detail. In general, the higher level subtotals and totals include the full subsidy values. aAutomobiles and user operated small trucks. >Taxis and limousines driven for hire. j t THE RELATIVE PRICE OF TRANSPORTATION TO THE YEAR 2000 e 211 | TABLE 82(PartC). Elements of the transportation bill for 1975, 1985, and 2000, high-growth scenario (millions of 1975 $) ? 1975 1985 2000 se Govern- Govern- nd Revenues Revenues ment Revenues ment a and Subsidy Total and Subsidy— Total and Subsidy— Total 4 Private by Trans- Private User Trans- Private User Trans- ; Expendi- Govern- portation Expendi- Charge portation Expendi- Charge portation Market tures ments Bill tures Deficit Bill tures Deficit Bill U.S. International................ 9419 892 10311 102832 19148 20239 48391 1443 49834 J+) 0 Sa 5693 829 6522 10812 1015 11827 27060 1380 28440 a da olst es saaiinns 4928 761 5689 8356 962 9318 16717 1362 18079 4 ae 765 68 833 2456 53 2509 10343 18 10361 BEPASSONGET .............00..000000 3726 63 3789 8336 76 8412 21331 63 21394 eo Se 3445 62 3507 7959 75 8034 20693 62 20755 Ee eee 281 1 282 377 1 378 638 1 639 Bo SSS eres 159137 8756 167893 258686 23381 282067 442576 39288 481864 REITs encnarsscenansosnee seins 69517 2962 72479 141238 8841 150079 269999 15525 285524 bt + ea 47272 1667 48939 89078 7645 96723 172567 14145 186712 re 2 oy 22 RRS 22000 NA NA NA NA NA NA NA NA 6G Seay anemia gh 25272 NA NA NA NA NA NA NA NA BE desi ncsech a2 scvednesyresonns 16509 282 16791 36429 216 36645 64981 216 65197 bn be dnhvar cnscis seins 2434 768 3202 5087 819 5906 10906 1076 11982 oe Dom. Ocean ............... 1136 NA NA NA NA NA NA NA NA aA ee ad 950 NA NA NA NA NA NA NA NA eekat. Lakes ':.....0....04....... 348 NA NA NA NA NA NA NA NA REMEIENOHIIOS, .Fu.b san a.ceccstdaciscenes 2229 26 2255 8711 26 8737 17607 26 17633 BEN aia sansa dsnnrs seen ncnesseneees 1317 NA NA 4101 NA NA 10907 NA NA oh asco bacsnhcntne 912 NA NA 4610 NA NA 6700 NA NA ee a a 1073 219 1292 1933 135 2068 3938 62 4000 ee 89620 5794 95414 117448 14540 131988 172577 23763 196340 MPMI sce ciccccvasssesccaosescns 71933 4361 76294 84608 13193 97801 98167 22587 120754 So aa ae a 16315 1115 17430 30895 508 31403 71534 18 71552 TT ae 11581 NA NA 20127 NA NA 47899 NA NA DME MOT EAN 05 ccs ccohsnvacnse 4734 NA NA 10768 NA NA 23635 NA NA eS AS a 340 308 648 470 681 1151 695 979 1674 RESUS svecdudeetcectesveccccessseoes 1016 0 1016 1454 141 1595 2149 141 2290 i oe 16 10 26 21 17 38 32 38 70 ii ccieks ecniicns van 133008 7532 140540 181472 18102 199574 270610 31807 302417 i Freight, Truck................. 47790 209 47999 70210 785 70995 135435 1820 137255 ~ Passenger enter svskshes4s 85218 7323 92541 111262 17317 128579 135175 29987 165162 BENG oes. docccsceasccccecendascc 82732 3397 86129 107737 10371 118108 131053 17759 148812 Me OWN, OP? oles. cvis eee 81150 NA NA 105004 NA NA 125161 NA NA BENG hsb cc ois snstnsdeeieecasee 1582 NA NA 2733 NA NA 5892 NA NA EE 2200 2038 4238 3071 4279 7350 3402 7686 11088 og Sh ae ee 600 NA NA NA NA NA NA NA NA RE SORat Lh, cis coos eseeees 1401 NA NA NA NA NA NA NA NA Commuter.................... 199 NA NA NA NA NA NA NA NA MIMO chet arte S vids vct sdobbase 0 NA NA NA NA NA NA NA NA meocnool Bus ................+:... 286 1888 2174 454 2667 3121 720 4542 5262 IR a rerehscxs panes ieces senses 3973 263 4236 6699 263 6962 13249 263 13512 Sg ESC 1754 263 2017 2664 263 2927 5081 263 §344 BePOCreatiON......:.....6.0.00000. NA NA NA NA ’ NA NA NA NA NA ET | a re NA NA NA NA NA NA NA NA NA Tee eat scion dcas-3 2219 0 2219 4035 NA NA 8168 NA 8168 Grand Total ............ 305537 17443 322980 466005 42837 508842 774826 72801 847627 | SOURCE: NTPSC forecasts. ' NOTE: NAstands for ‘“‘not available.” In some cases the values were estimated to be too small to be computed in detail. In general, the | higher level subtotals and totals include the full subsidy values. aAutomobiles and user operated small trucks. | ’Taxis and limousines driven for hire. 212 ¢ FORECASTS TO THE YEAR 2000 changed foreign or U.S. economic conditions. Fol- lowing are discussions of each transport market and mode. U. S. International Marine Bill NTPSC forecasts indicate the U.S. international marine bill may grow at a rate comparable to or slightly exceeding the growth in real GNP during the 1975 to 1985 period, and slightly less than real GNP from 1985 through 2000. Shipping rates in the liner trade (the liner trade is only a portion of U.S. trade) are established by conferences. A conference agreement is defined by the Federal Maritime Commission (FMC) as an agreement among ocean carriers which will or could reasonably be expected to cause the parties to become a dominant force in the trade.? Usual attri- butes of conferences are the collective establish- ment of uniform rates, charges and practices relating to the receipt, carriage, and delivery of cargo by all members of the conference, the filing of a common tariff and the designation of a conference administra- tion. Independent operators can, and typically do, publish rates below conference rates. This system of open conference rate setting is permitted under Section 15 of the 1916 Shipping Act, which has in large part exempted liner shipping from the operation of the antitrust laws. The FMC, as part of its regulatory jurisdiction over domestic offshore commerce, considers the ‘‘fairness’”’ of ocean freight rates and the competitive practices of carriers.® Although the FMC must approve all liner rates in U.S. foreign trade, it can disapprove rates only if they are “so unreasonably high or low as to be detrimental to the commerce of the United States.’ Also, U.S. Carriers are not permitted to be members of closed conferences, as are their foreign competitors.’ This prohibition limits the control of rates by conferences and prevents limitation of entry in U.S. foreign trade. Thus, the prices, rates, and revenue of U.S.-flag Carriers are significantly influenced by competitive factors outside their control or that of the U.S. government. Rate structures in the liner trades have largely been demand based, according to ‘‘value of serv- ice.”’ As a result, many commodities move at rates different than their individual share of fully distributed costs of carriage.® High utilization is a basic criterion for profitability in the liner trade. Profits can accrue if a ship operates slightly above its break-even point.? This is particularly true for capital-intensive vessels such as container ships and barge carriers. Chapter 10 projected the evolution of a highly capital-intensive U.S.-flag fleet between 1975 and 2000. Port handling costs provide an opportunity for improvement; however, many gains in productivity have already been realized in this sector. Based on MarAd estimates of International Longshoreman As- sociation (ILA) workforce size and total cargo ton- nage handled (excluding bulk and transhipments), labor productivity increased from a 1967 base of 100 to a 1975 comparative index of 150.'° Here too, high capital cost (of container cranes at approximately $2 million each) tends to require high-volume capacity utilization. Port charges may, in fact, have to be increased in order to meet costs. Few public ports make a profit, and they often are subsidized for the purpose of attracting industry.'’ Port management, however, is becoming attuned to the objective of revenue financing.12 , The government subsidies shown in Table 82 for U.S. International Marine Transportation will be covered in detail in the ‘‘Government Accounts” section of this chapter. In general, the subsidies consist of MarAd operating and construction differ- ential subsidies and the share of U.S. Corps of Engineers and U.S. Coast Guard expenses allocable to U.S. international ocean movements. Not included are estimates of value to U.S.-flag shipping that accrue from various forms of cargo preference. U.S. International Aviation Bill The U.S. International Aviation bill is expected to grow much faster than real GNP. Route authorities for scheduled carriers in the international market are gained as a result of bilateral agreements between governments. Authorities to serve the routes are awarded to U.S. carriers by the Civil Aeronautics Board upon proof that the carrier is financially fit. The President may disapprove certification of a carrier to engage in foreign air transportation on grounds of foreign relations or national defense considerations.'* In general, charter rights are sepa- rately treated. Traditionally, both international passenger and air cargo rates have been established by carriers at meetings of the International Air Transport Associa- tion (IATA). U.S. carriers have participated in IATA rate-making sessions through CAB-approved agree- ments which grant the carriers antitrust immunity. However, all IATA rates have been subject to CAB approval.'4 Studies of the international fare structure have concluded that IATA promoted inefficiency, stifled traffic growth, and caused higher fares than justified by costs.'* These studies provided impetus for recent revisions of CAB policy to stress competition. The CAB has approved applications for low-fare flights from U.S. cities to destinations abroad. In addition, THE RELATIVE PRICE OF TRANSPORTATION TO THE YEAR 2000 e 213 the agency tentatively has decided to withdraw its approval of IATA ratemaking agreements.'§ If this decision becomes final, U.S. air carriers would not be able to participate in IATA ratemaking deliberations. The legality of participation in IATA ratemaking is moot to some carriers which have already left the organization to meet the competition of low-fare flights. A greater percentage of passengers taking advan- tage of discount rates has meant that the yield—the amount per mile paid by each passenger—has declined. As the breakeven load factor rises close to the ceiling of available capacity due to a decrease in yields, the airlines have been devising fare structures to attract both full-fare and discount passengers as well as return sufficient profits to enable capital replacement and expanded service. The future of international air cargo rates is unclear. At this point, all carriers have continued to follow the rates set by IATA and no significant rate changes have occurred in any markets. The air cargo market is developing rapidly, and has not experienced overcapacity problems. With the introduction of price competition, im- provement in overall efficiency is predicted, even when allowance is made for increased fuel costs. However, rates may not fully reflect the reduced costs. Aviation is a field which has been inextricably linked by many nations with prestige and national defense considerations. Most foreign air carriers are government-owned entities whose primary purpose may not be profitmaking. U.S. subsidies to international aviation consist of an allocable share of Federal assistance to airports and airways, NASA aeronautics research, and costs of the National Oceanographic and Atmospheric Administration. INTERCITY TRANSPORTATION BILL Definitions used for the intercity market are shown in Appendix Table 56. Motor Carriage Motor carriage accounted for the major portion of the intercity freight bill in 1975. Forecasts indicate trucking’s share will decline slightly by 1985, but it will retain its dominant position through the year 2000. The decreased share will be due to the larger growth forecast in domestic (as contrasted to U.S. international) movements of energy products com- pared to other products. The distinction between regulated and private motor carriage is due in large part to government categorization. Federal regulatory change now being considered by Congress could weaken, redefine, or even eliminate the distinction. Thus a comparison of the rates of growth of the two categories could be misleading. The NTPSC estimated the potential increase in fuel prices as a percent of truck revenues. Fuel price rises are expected to outrun any gains in fuel efficiency. The increase amounts to roughly one percent of expected 1985 revenues and three per- cent of year 2000 revenues (in constant 1975 dollars). NTPSC forecasts indicate gains in trucking productivity may not be sufficient to overcome increases in the cost of resources going into trucking (in addition to fuel prices), causing an increased cost per ton-mile of five percent by 1985, continuing to the year 2000. The government subsidy to trucking derives large- ly from attributing to trucking a share of the general and property tax revenues (Federal, state, and local) used to pay a share of the cost of highways, highway patrol and related items. Rail Freight A unique consideration is involved in estimates of the rail freight bill—particularly the division between the market and government share. Rail activity is expect- ed to increase sharply. However, for more than a decade the rail industry (see Chapter 10) had a relatively low return on equity compared to other industries. For this and perhaps other reasons, there has been an apparent deterioration of rail plant in some regions. The U.S. DOT and others have estimated that the industry as it now operates cannot raise the funds needed to bring its plant up to proper standards.'” The question is who will pay for desired improvements—government or industry. For pur- poses of the transportation bill accounts in. this chapter, it was assumed that funds would come from the rail industry. This assumption was incorporated in the forecasts in the following way: DOT projected a 1976 to 1985 shortfall of 7 percent of rail revenues over that time period, were the amount of deferred maintenance to be reduced by 50 percent.'® Thus, the NTPSC’s forecast rail revenues based on activity increases were raised 7 percent for 1985, to provide for a 50 percent reduction in deferred maintenance. Assuming that the last 50 percent of deferred maintenance costs roughly the same as the first 50 percent, and takes another ten years to remove, the comparable percent of revenues for the 1985 to 2000 time period would be about 2.8 percent, given increased revenues. Therefore, the NTPSC revenue forecast based on activity for the year 2000 was increased by 2.8 percent to cover the remaining 50 percent of deferred maintenance. 214 e FORECASTS TO THE YEAR 2000 Gains in rail energy efficiency are not expected to keep pace with increasing fuel prices. Consequently, rail costs may be forced up by as much as 4 percent by the year 2000 (medium-growth scenario) due to fuel price increases. Coal, a relatively low-value commodity with fairly long hauls, is anticipated to account for much of the gain in rail ton-mileage. This should have a down- ward effect on average revenue per ton-mile hauled (although, due to coal traffic increases, average ton- mile costs of haulage may fall as well). In addition to the above effects on ton-mile costs, the NTPSC forecasts increases in rail unit costs amounting to an additional 4 percent increase in rail cost per ton-mile in 1985 over the 1975 level. This figure drops to 2.5 percent by the year 2000. Table 83 summarizes expected changes in rail cost per ton-mile. Waterborne Freight U.S. intercity waterborne freight movements fall into three general categories: domestic ocean; inland waterways; and Great Lakes. Each has different characteristics. The Inforum model used by the NTPSC does not distinguish between the various categories of domes- tic intercity water transport. It does, however, indi- cate how costs for the sum of all three categories may change, forecasting a 12.7 percent increase in constant dollar cost per ton-mile hauled by 1985 and a 19.1 percent increase by 2000. Inforum does not account for the full increases in fuel costs expected. These would likely add several more percentage points (3 to 4) to constant dollar costs per ton-mile by the year 2000. DOMESTIC OCEAN Domestic ocean trade has coastal and non-contigu- ous categories. The coastal category generally in- TABLE 83. Forecast changes in railroad costs, by influencing factor, 1985 and 2000 (1975 $) Percent Change 1985 from 2000 from Influencing Factor 1975 1975 Capital Needa (over and above present industry CADGDHIY) 5 6.0. coat veaasenanovennstaeh cures +7.0 +2.8 Fuel) PriCGse io Co nn, ee ee nae +5.0 +4.0 Value added and Materials¢................. +4.0 +25 Bor Mee Pele AARC is 6 ps Sore x fo + 16.0 +9.3 aU.S. Department of Transportation estimate °NTPSC energy model ¢Inforum outputs Ss volves ocean trade between points in the contiguous 48 states. The non-contiguous category involves domestic trade with Hawaii, Alaska, Puerto Rico and the Virgin Islands. Over 75 percent of domestic ocean trade is carried in self-propelled vessels. In terms of tonnage carried, petroleum dominates, accounting in 1974 for some 77 percent of the total.'9 About 76 percent of domestic ocean petroleum tonnage is coastal.2° Changes in the patterns of energy use may thus substantially affect domestic ocean trade. Chapter 10 shows substantial increases in Alaskan oil shipments by domestic ocean trade are projected, accounting for much of the future capital needed. There appear to be few direct Federal subsidies to domestic ocean trade. However, some share of Corps of Engineers port and harbor expenses and U.S. Coast Guard activities associated with ports, coastal policing, and research and rescue appear reasonably allocable to this sector. GREAT LAKES The five Great Lakes, their connecting locks and channels, and the St. Lawrence River form a water- way system extending 2,342 miles from the western end of Lake Superior to the Atlantic which competes for cargo with parallel overland routes. Some of the key elements of the system are U.S.-owned, some Canadian (such as the Welland Canal), and some joint (the St. Lawrence Seaway). Channel depth and length of the locks limit the size of the vessels which may use the entire system. The Great Lakes are typically open to navigation 9 months of the year. Due to ice, the Seaway is usually closed from late December until early April. Both U.S. Coast Guard and Canadian icebreakers assist shipping at the beginning and end of the season. Contracts have been let to increase the carriage of coal from western coal fields, via the Great Lakes, to points on the Lakes. This, in addition to growth in the haulage of other commodities, is expected to cause Great Lakes traffic to reverse its generally downward trend. Revenues from the Seaway generally cover oper- ating and maintenance costs, but the initial capital costs may take an extremely long time to recover. U.S. Coast Guard activities, the operation of aids for navigation, research,and rescue are subsidized from Federal general tax revenues. INLAND WATERWAYS The inland waterways of the U.S. (except for the St. Lawrence Seaway) are developed, operated and maintained by the U.S. government, primarily under the auspices of the Army Corps of Engineers. Other Federal entities also contribute to the maintenance and operation of this system; these include the Coast Guard and the Tennessee Valley Authority. THE RELATIVE PRICE OF TRANSPORTATION TO THE YEAR 2000 e 215 The passage of P.L. 95-502 in 1978 provided for a fuel charge to be levied on the inland waterways (not including the Great Lakes and domestic ocean trades).*’ Although the present waterway user charge is not based on cost recovery, the constantly increasing expenses of waterway construction, oper- ation, and maintenance need to be recognized in assessing the cost of future transportation by water. The cost to operate and maintain the current system is increasing. AS new components are added to the system, the mileage needing future maintenance is increased as well. If full-cost recovery is to be considered as a policy option, there must be trade- offs between annual maintenance of the existing system ($494 million in 1978), improvement of the existing system (e.g., Locks and Dam 26 at $432 million with no marginal increase to operations and maintenance) and new waterways (such as the Trinity River, at a first cost of $2.3 billion which is authorized but not started and which would margin- ally increase the costs of operations and mainte- nance).?2 Inland water transport offers low costs to shippers with access to the waterways. (An example of unit operating cost is given in Appendix Table 57. Fuel and wages are the largest cost components.) Most products shipped by water are bulk commodities such as petroleum, coal, and grain. The industry depends upon long-hauls and large unit volumes, rather than high-value cargo. About eight percent of all traffic nandied by inland | and intercoastal water carriers is subject to ICC regulation.23 Many water carriers can respond rapidly to changes in their operating cost and adjust prices at peak periods or during times of low demand. This allows for efficient equipment utilization and permits higher prices when equipment is scarce. The unregu- lated competition of barges is of concern to the railroads, which are regulated and less able to change prices seasonally. Return on investment in the inland water industry has generally been adequate to permit financing of vessel operations through retained earnings or tradi- tional commercial sources. However, operating and new equipment cost have increased dramatically. Table 84 contains return on investment and return on equity data for a cross-section of the industry and includes both regulated and unregulated carriers. Environmental protection legislation has been charged with driving up insurance’ costs significantly.24 Another factor, higher fuel costs, now represents about 16 percent of total operating cost. (See Appendix Table 57.) Further, severe winters in 1976 and 1977 shortened the operating season on the Upper Mississippi and Illinois Rivers. These factors interacted to reduce operating profits below those of more prosperous times. Yet the industry appears viable and prices are not expected to TABLE 84. Financial performance indicators for inland water- way operators, 1972 to 1978 ROI ROE Year (WFB Carriers) (WFB Carriers) POTD ice sueturrenacaa mee eaes 8.9 14.3 NOLS i eran vbaecellnoni eee: 6.9 9.7 1974 cco 8.3 12.4 N OTS ecu sia te. crepe ae 6.6 9.3 UOT Gia seat cheese Set Da i cae 7.3 10.6 NOT usp tieek au eset aren bal 5.1 6.3 OTOP dems syerwste serait ntennds 4.3 4.2 SOURCE: ICC Suspension Board Case No. 68652. a6—month period ending June 30,1978 determined from latest available figures. KEY: ROE =Return on equity. RO! =Return on investment. WFB =Waterway Freight Bureau. increase substantially except in response to in- creased fuel cost and user charges. The recently enacted inland waterway user charges are forecast to cover a small part of the Federal expenditures attributable to navigation on the inland waterways. Continuation of current prac- tices thus results in substantial Federal subsidy. Pipelines The growth in revenues and activity forecast for pipelines tends to obscure the fact that large capital investments are being made due to the changes in origin-destination patterns described in Chapter 10. Recovery of this investment is expected to be reflected in charges made by the pipelines. NTPSC forecasts oil and gas pipelines costs to increase by 42 percent (in 1975 dollars) to 1985 and 69 percent by 2000. By comparison, the Pace Company of Houston shows trunk pipeline costs per ton-mile between 1975 and 1990 increasing 75 percent for crude oil, and 34 percent for gas.*° The only general government costs attributed to pipelines are an allocable share of the costs to regulate transportation. Airlines U.S. airlines are in transition from a highly regulated economic environment to one that is much less regulated. Deregulation has had the effect of spur- ring competition, reducing prices, providing more price-service options and promoting efficient opera- tion. Both passenger and freight services are in- volved. During the 1960s, conversion to jet aircraft with their increased size and speed resulted in great productivity improvement. Opportunities for increas- ing speed and size will be more limited in the future. 216 e FORECASTS TO THE YEAR 2000 Productivity improvements are thus expected to come from improvements in other types of vehicle efficiency, as discussed in Chapter 6. Based on historic cost and productivity trends of expected inputs to the industry, the NTPSC forecasts that real airline costs per passenger-mile will con- tinue to decline. A 6 percent decline from 1975 is expected by 1985, and 12 percent by the year 2000. Countering these reductions will be fuel cost increases. Chapter 6 described possible airline fuel efficiency gains by the year 2000 of 32 to 40 percent. However, the cost of jet fuel is expected to increase 51 percent in constant dollars during the same period. Rising fuel costs will increase the air passen- ger transportation bill by 2.8 percent by 1985 and 6.4 percent by the year 2000. These two independent effects result in decreased costs per unit of service of 3.2 percent by 1985 and 5.6 percent by 2000. The government account indicates that in 1978 airlines are expected to pay about 88 percent of attributable Federal aviation costs. If present Federal user charge practices continue, and the air-carrier growth forecast by the NTPSC materializes (per medium-growth scenario), by 1987 air carriers would pay 103 percent of costs. General Aviation General aviation is changing in fleet composition and growing rapidly. The Federal Aviation Administration (FAA) forecasts that general aviation hours by air- craft type will increase as shown in Table 85. Piston aircraft will continue to fly the preponderance of general aviation hours in future years. Table 86 presents a slightly different perspective. It shows the ratio of hours expected to be flown in 1990 divided by the 1975 hours for each aircraft type. Multi-engine piston aircraft activity is expected to grow faster than that of single-engine piston aircraft, turbo-prop jet activity will exceed that of piston aircraft activity, while jets will have the great- greatest percentage increase. Table 87 shows general aviation fuel consumption forecasts. Using statistics from Tables 85 and 87, plus the fuel price increases forecast by the NTPSC, an increase in general aviation costs per hour flown due to fuel cost increases can be calculated. This amounts to approximately 11 percent higher cost per hour flown by 1985 and 16 percent higher by 2000 compared with the constant 1975 dollar cost per aircraft hour. Higher Federal user charges could also increase general aviation costs. A recent FAA cost allocation study showed that general aviation now pays about 14 to 25 percent of FAA expenses attributed to general aviation, but this percentage is decreasing.”6 Consequently, FAA recently recommended changes TABLE 85. Hours flown in general aviation, by aircraft type, 1973 to 1978 and forecast to 2000 (millions of hours) Fixed Wing Piston. ae Ballons, Fiscal Single Multi- Turbo- Turbo- Roto- Dirigibles Year Total Engine Engine Prop jet Craft Glide : Historical# 1973 20.0 eke 4.7 Act “Go fat 1974. 313 025, S213 oe as a 1975... 33.3. 23.9 5.4 1.3 ogi Pe, me | 1976°....°°95.1 25.4 5.5 1.3 tO cL, a 1977... 06.0% (26.4 6.0 1.4 10°18 Be 1978... 38.6: = 27.2 6.4 1.6 4. 4:9 ar y Forecast° ee) 1979... 41.4: ~ 29:1 6.8 1.8 2.0 ‘ol 1.2 1980.... 43.6 30.4 Y 63 2.0 1.4 198) 0.46.2. 32.4 7.6 2.2 1.5 1982... 48.6 33.5 8.1 2.4 BE 28 1983... ..:51.0°- 35.2 8.4 2.5 1.8 1984... 53.6 36.7 8.9 27 2.0 1985 .... °56.0 38.4 9.3 2.8 Ble esl. 1986... 58.5 39.9 Mg 30. es ee 1967;..... 60:6" 41.3: 10.1 3.2 2.5 72.9 1988... 62.9 ° 42.6% 10.5 3:0 SAl 2.627 3,0 1989 ....; 65.3. 43.8. 10.9 3.7 VE Re I 7 1990 i. OFA « 45.10 11.8 3 38 3.0 33 2000°... : oe aU.S. Federal Aviation Administration, Statistical Handbook of Aviation. Prior to 1977, the Federal fiscal year ended on June 30. Detail may not add to total because of rounding. >Estimate. cU.S. Federal Aviation Administration, FAA Aviation Forecasts Fiscal Years 1979-1990, Washington, D.C.: September 1978, p. 59. *¢Year 2000 figures based on a projection of the FAA statistic by NTPSC. eFAA and NTPSC forecasts differ in assumptions and method of calculation. The corresponding NTPSC statistics are: 1985: 63 hrs.; 2000: 123 hrs. (medium-growth scenario). in user charges to the Congress. In the past, however, Congress generally has not adopted the executive branch’s general aviation user charge recommendations, evidently for fear such charges might stifle general aviation and related economic activity. Automobiles, Vans, and Light Trucks By far the largest portion of the transportation bill has been and is expected to be for privately owned and operated small trucks and vans. These typically account for over 45 percent of the total.?” Table 88 exhibits the components of the bill associated with these vehicles and indicates how the components are expected to change over time. The THE RELATIVE PRICE OF TRANSPORTATION TO THE YEAR 2000 e 217 TABLE 86. Ratios of general aviation hours, by aircraft type, forecast to be flown in 1985, 1990 and 2000 to 1975 hours flown Piston Single Multi- Turbo- Turbo- Rotor- Total Engine Engine prop jet craft Other 1.68 2.02 2.74 1.61 1.89 2.51 1.72 2.07 2.96 2.15. 2.625. 1.80 1.75 R00 aes Wy d= Seana IR <2 Bid) 4.07 5.375 3.06 3.25 SOURCE: NTPSC (based on data in Table 85). TABLE 87. Fuel consumed by general aviation, 1973 to 1978 and forecast to 2000 (millions of gallons) Total Jet Fuel and Aviation _ Fiscal Gasoline Aviation Jet Fuel Gasoline PARRA e eee eee eee ew en ene eee n ea eeneenene eee errr ESC eee ee ee reer rere etree eerie ee SAAR nee eee ener een eee wareeeeeeeeeee SRR e eee eee eee een ean e enna naeeearee Pree eee PCOS CCPC CSC eee Pere Perera Pere CEU CSCC Seer Cree eee ree eee SAREE eee eee meee ee een ee ereeeeeeeses ere eee ORR ERR eee e eee eee eeeeeeaeas ewan eseen® reer cere reer eee e reer rere reer rere rere ss POeee CEU TE eee CCCre rere e eee rere eer r Henne eee n enn nnee ae eeenseneeeeereeeees ARR eee e ene e eee eneeeeennaenenereenseeee PRR een eee nee eeneneeeaseernreeneeeeeneee Penne Renew ener eee enaeneenasesnsenereee Pree ee eee Cee CeCe CeCe eres aFAA Estimates. Prior to 1977, the fiscal year ended June 30. Domestic civil aviation is defined for purposes of the table to include all civil aircraft flights which originate and terminate within the 50 states. Estimates of fuel consumed by airframe and aircraft engine manufacturers, whether for flight testing or ground testing, are not shown here because they are not available for domestic industry as a whole and accurate estimates cannot be developed. It should also be noted that general aviation fuel consumption is not reported and historical series are estimates. >Revised. Estimate. 4U.S. Federal Aviation Administration, FAA Aviation Forecasts Fiscal Years 1979-1990, Washington, D.C., September 1978, p. 62. eYear 2000 figures based on an NTPSC projection of FAA Statistics. TABLE 88. Forecast components of the personal automobile vehicle bill, medium-growth scenario, 1975 to 2000 (millions of 1975 $) Components 1975 1985 2000 Purchase Price ...2..5..ii.iadiceviaes-- >57,605 71,918 85,609 Tires, Tubes, Accessories .......... 48,889 11,014 13,930 Gasoline and Oil ...........cceee eee 452,080 °65,594 °63,837 TONS Ri ee ees 4907 °832 °62 Insurance Less Claims................ 44,268 °9,420 °12,300 Interest on Debt... 47,451 °10,676 °11,890 Registration Fees ..............::ssee 42,053 °2,826 °2,460 Operator Permit Fees................- 4264 e408 e430 Repair, Maintenance, Parking, Storage, Rental........ 423,696 [32,436 '43,155 Ota ee ro emer snc 157,213 204,124 233,673 CINNAT ES EG Re ee es 15.3 15.3 13.4 PINT Sisvetccs zp riccesratansaae ube 15:3 16.8 15.3 aTransportation Association of America, Transportation Facts and Trends, Washington, D.C.: July 1978, p. 5. ‘NTPSC estimate based on prices and fleet sales reported in Chapter 10. ©1975 figure increased by percentages indicated by energy cost and efficiency parameters in Chapters 6 and 8. 4VMT was computed by using Chapter 9 VMT growth for 1975 to 1985 and 1975 to 2000 and a base-year 1975 VMT historical estimate from Highway Statistics 1976. This estimate assumes the historical rate of government user-charges. eEstimates were computed by using Transportation Facts and Trends historical data from 1965 to 1976 converted to 1975 dollars to trend a line to 1985 and 2000. fCalculated using Inforum forecasts of unit price changes for rubber products and NTPSC forecast growth in vehicle-miles traveled. 9Potential user charges were added to account for the full costs of financing highway needs at the level of development presented in Table 38. figures probably understate the costs associated with the auto because they do not include such items as private garages, carports and auto-related per- sonal-use items sold as general merchandise. As shown in Table 88, almost every auto cost component is anticipated to become more expensive by 2000. In 1975 repair and maintenance was 15 percent of the total personal vehicle bill, while the purchase price of an auto was 36.6 percent. By the year 2000, repair and maintenance costs are estimat- ed to increase to 18.4 percent, while the purchase price is estimated to remain the same, at 36.6 percent. In constant dollars, repair and maintenance cost will nearly double by the year 2000, while gas and oil expense is forecast to rise by 1985 and decline slightly by 2000. The total auto bill is forecast to increase to the year 2000, but at a decreasing rate from 1985 to 2000. Comparisons of forecasts for all modes show auto expenses declining relative to all competitors except commercial aviation. 218 e FORECASTS TO THE YEAR 2000 Table 88 also illustrates that the cost of owning and operating an auto is forecast to decline by 1.9 ¢/VMT by 2000. If potential user charges are added to account for the full cost of highway facilities, auto cost would rise 1.5 ¢/VMT from 1975 to 1985, but would fall thereafter until the year 2000 when it would just equal the 1975 ¢/VMT figure. A note of caution may be warranted. Disposable personal income per capita (in 1975 dollars) is forecast to double by the year 2000, as illustrated in Chapter 9. With auto costs in 2000 being equal to 1975 costs, the expense of owning and operating an auto would thus decline relative to the average income. The automobile or its equivalent accounts for the single largest share of the nation’s transporta- tion bill through the year 2000 in all the NTPSC’s scenarios. Auto expenditures are so large that what happens to auto travel affects almost all other modes of transportation. The NTPSC forecasts in Chapter 9 show the equivalent of a 2.5 percent annual growth in vehicle miles of travel for the nation. The U.S. DOT recently forecast the same rate of growth.2® These forecasts anticipate a decline in the historic growth rates of the last several decades which have general- ly exceeded 4 percent.?° Continuation of a 4 percent trend rather than the anticipated 2.5 percent (or establishment of a trend of less than 2.5 percent) would impact many of the statistics reported in Chapters 5 through 11. Growth in highway travel implies increased auto sales which could affect the economy and modify the forecasts of goods movement patterns. The result might mean increased congestion with consequent time and fuel losses, or more highway construction, particularly in urbanized areas. It should be noted that other modes could accommodate only a small portion of the passengers and freight now served over the highways unless massive sums were invest- ed in railways, waterways, aviation, and transit. (Two year’s growth in auto travel exceeds the total current transit ridership in the U.S.) The government accounts indicate a large and potentially growing subsidy to all forms of highway travel. Though the sum is large, it is modest on a dollar subsidy per market-dollar-expended basis. The government accounts section of this chapter deals more fully with this topic. Rail Passenger Service The price to the purchaser of rail passenger services appears to be dictated almost totally by the extent to which government chooses to subsidize the service. More than half the costs of Amtrak are now borne by the general taxpayer. The Secretary of Transporta- tion recently recommended a substantial cut in the network, to reduce expected Amtrak subsidies for the 1980 through 1984 period by roughly one billion dollars.*° The taxpayer, nevertheless, would still be paying 60 percent of the cost of Amtrak operations in 1985 and 70 percent in 2000, based on projections of the trend indicated by the Secretary’s report (medium-growth scenario). Intercity Buses Intercity bus travel is expected to grow moderately (see Chapter 9), but to decline as a percent of the intercity passenger market. Package freight haulage by buses is expected to continue growing. The Bureau of Labor Statistics (BLS) computes price indices for intercity buses. Examination of these indices relative to the GNP indicates bus prices in the past decade have grown faster than prices in the economy in general.*! Extrapolating this trend indicates a potential increase of 21 percent by 1985 and 60 percent by 2000. The index apparently reflects the large proportion that wages constitute of total unit costs in the bus industry. The 1978 Surface Transportation Act provides limited, and not yet funded subsidies for intercity bus service. In addition a small share of the more general highway subsidies may be attributed to buses, especially now that intercity buses are exempt from Federal fuel taxes. Water Passenger Services Intercity water passenger service consists primarily of ferry boat activity. NTPSC forecasts indicate water travel will grow almost proportionally to the nation’s growth in personal automobile vehicle travel. Fuel prices may force water passenger costs up, but economies of utilization, and possibly some de- creases in shipbuilding costs, may counter this tendency. A number of Federal, state and local programs subsidize domestic water passenger transport. For example, some of the Coast Guard’s marine safety programs may be attributed to such service, and Alaska subsidizes ferry services along its coasts. LOCAL TRANSPORTATION Highway transport is forecast to continue to domi- nate local transportation in both rural and urban areas. Highway activities accounted for 96 percent of the U.S. local transportation bill in 1975. By 1985, this is expected to decrease slightly to 95 percent (under the medium-growth scenario). Local Trucking Chapter 9 forecast vehicle miles of travel for local trucks and projected operating costs. The projec- tions assumed constant cost per vehicle mile of THE RELATIVE PRICE OF TRANSPORTATION TO THE YEAR 2000 @ 219 travel, an assumption that may be somewhat low because it does not reflect forecast increases in fuel prices. The government subsidies attributed to local trucking are an allocated share of the subsidies to highways. Mass Transportation Urban mass transportation falls largely into the categories of bus and rail transit. Both are almost totally government owned and operated. In the past decade both have been increasingly subsidized, as the fares charged have decreasingly reflected the costs associated with providing the services. Exami- nation of BLS figures from June 1964 to June 1978 shows that transit fares rose at about the same rate as the consumer price index (CPI).** Federal, state and local subsidies have risen to cover the increas- ing gap between revenues and costs. NTPSC’s computer simulations assumed continuation of this general policy. They also assumed a constant cost per unit of service in the future. Public policies aimed at providing more pervasive rather than more intensive service may escalate this cost trend. NTPSC forecasts indicate services in urbanized areas in 1990 will include 14 percent more seat miles of bus service per capita and 62 percent more seat miles of rail transit service per capita, while service per square mile will decline in the largest cities but increase significantly in smaller cities. As transit service extends farther to gain passen- gers from competing modes, the costs of reaching a potential passenger increase. Concurrently, competi- tion from autos will increase as autos obtain im- proved energy efficiency, lower emission rates and improved safety rates. Transit is heavily subsidized by Federal, state and local governments. Too, a share of more general highway subsidies may be attributable to urban transport by bus. (This latter value is not included in the amount shown in Table 82.) Taxis The BLS calculates price indices for taxis. The increase in the price index from June 1964 through June 1978 was 21 percent greater than the change in GNP.%° Extrapolation of this relationship to 1985 indicates that taxi fares can be expected to increase by 14 percent over 1975 and by 41 percent to 2000. These estimates appear low. The preponderance of taxi costs are the wages of the driver. The NTPSC forecast, by comparison, projects increases in aver- age disposable incomes per capita to the year 2000 of 32 percent (low-growth scenario), 93 percent (medium-growth scenario) and 158 percent (high- growth scenario). If taxi drivers’ incomes keep pace with general disposable incomes, either some un- foreseen productivity improvement will occur, or taxi fares would be expected to increase at a similar rate. A small portion of general highway subsidies may be allocated to taxis. Miscellaneous Items Miscellaneous items include costs for loading and unloading vehicles, and for freight department and freight forwarder operations. The NTPSC forecasts the constant dollar increases that can be expected at 5 percent by 1985 and 4 percent by 2000. Private and commercial fishing boats also fall in the miscellaneous category. Because no information on the constant dollar costs per unit of these user- operated segments of transportation was readily available to NTPSC, the unit costs were assumed to be constant. THE GOVERNMENT ACCOUNT Ideally, any set of government transportation ac- counts would show, for each level of government, the receipts by source (e.g., general tax revenues, user charges, borrowing) for each mode, the expendi- tures going to each purpose (e.g., capital, land, operations, administration, debt service) for each recipient, and the transfers of funds between govern- ments. The accounts described here cover only the first two items: receipts and expenditures. Appendix IV contains a table which lists all the items, both expenditures and receipts, considered in the ac- counts as of 1975. Recent statistics have added new items that will appear in the accounts for later years. Line items for 1975, such as the operation of the St. Lawrence Seaway and the Panama Canal, for which user-charge revenues approximate current expendi- tures, were excluded from the accounts for future years. Table 89 summarizes total government subsi- dies, Federal, state and local. The government accounts serve several purposes. First, they provide the estimates of government subsidy shown in Table 80. Second, they give estimates of the total magnitude of government funds involved in each market and modal sector. Third, they show that the Federal government is but one of several levels of government heavily supporting transportation. A few general comments are in order regarding basic data on which the accounts were based. Some line items have labels such as ICC, CAB, FMC, NASA, National Mediation Board, NTSB, and Depart- ment of Commerce, National Oceanic and Atmos- pheric Administration. In each case, the part of an agency’s budget attributable to transportation has been allocated to the related transportation modes. 220 ¢ FORECASTS TO THE YEAR 2000 There are different ways to attribute and allocate such items. Each way will yield a somewhat different answer for a given mode. In general, the allocations shown in the succeeding sections are based on 1975 data.** Forecasts of the government accounts are more difficult and speculative. Wherever practical they reflect NTPSC forecasts of activity combined with extrapolations of present practices into the future. Forecasts were made of individual line items. The subsidies were then calculated by subtracting gov- ernment user charge receipts from government ex- penditures. In general, those items with small financial impact on overall modal accounts (such as _ regulation, weather services, and research and development) were assumed to continue at their 1975 constant dollar values. The amounts of subsidy to any mode from these items were small relative to other pro- grams. The larger and more direct government financing items were each analyzed and forecast separately on an item-by-item basis. In the several instances where government user charge receipts exceeded government expenditures, the surplus was not subtracted from the overall subsidy totals. These instances are noted in the tables. The basis for computing specific subsidy values for alternative scenarios was insufficient for some line items and such calculations were not made. Thus the ‘Government Accounts” in Table 89 display medium-growth scenario values. Values for the other scenarios where different, are presented in separate tables. U.S. INTERNATIONAL GOVERNMENT ACCOUNTS Marine-related items dominate the U.S. international government subsidy accounts of Table 89. The Federal ship Operating and Construction Differential Subsidies administered by MarAd, and the attribut- able portion of the ports and harbors work of the Corps of Engineers, are the largest subsidy items. Each is expected to rise through the year 2000. NTPSC forecasts of Operating Differential Subsi- dies were based on U.S.-flag fleet forecasts de- scribed in Chapter 9. They therefore differ across scenarios. Table 90 gives the numbers for each scenario and time period. It should be noted that the world shipping situation is one determinant of this subsidy and it may be subject to broad fluctuations. NTPSC forecasts suggest some decreases in the constant dollar costs of U.S. shipbuilding, but the construction differential subsidy depends on both U.S. and world shipbuilding costs. The construction differential subsidy forecasts will thus be affected by world construction price trends for which no estimate TABLE 89. Government subsidy accounts by market, medium- growth scenario, 1975, 1985 and 2000 (millions of 1975 $) 1975 1985 2000 Fed- Fed- Fed- eral Other eral Other eral Other International Water Freight Opr. Diff. Sub......... 243 361 398 Const. Diff. Sub...... 241 268 460 DOD USA Co....... 143 154 219 FMCG ee eee 3 3 3 DOS Ue eo ties 2 2 2 DOT Off. Sec......... 6 6 6 ae USOGi aa 119 119 119 q Ports & Terminals .. 4 4 4 Subtotal............... 4 913 41107 ° a Grand Total .... 761 917 1114 4 International Air 4 Freight a CAB recast 1 1 1 | NTSB ese eee aon q 1 1 . 4 DOC NOAA............. 2 2 2 | DOS: Neg sidan 3 3 3 2 DOT OS 2h es 2 2 2 a FAA 23 10 5 | NASA 2 eee 36 36 36 oy State Program ........ a a al EE ED PERL NA STL ELUM | Grand Total ........ 68 55 50 4 International Air a Passenger “ GAB es eh ese 2 0 0 + NTSB ioc aie tk 1 1 1 ms DOC NOAA............. 2 2 2 4 8 Neh ne anes ain 4 4 4 i: DOT; OSo ee Aes 2 4 4 4 FAA es c 14 8 4 NASAL ee ae 51 51 Sie a c c ret | DN Pyap ech aaeoe gentry ne Prcin tir ge oat gt a new cae eer a Subtotalh...:225..005 62 76 70 4 PT See TE IROTS ERT. Grand Total .... 62 76 10-3338 International Water Passenger State and Local ..... nil nil nil zs Ports & Terminals .. 1 1 4 $e Subtotals nil 1 nil 1 nil 4 Se Grand Total .... 1 1 LoS Intercity (and Rural) Truck Freight ICG as a ea a 22 22 22 Nisb 1 1 1 DOT OST. 5 5 S) | Highways................. 9 1639 1593 5967 3317 10344 Subtotal............... 28 1639 1621 5967 3345 10344 Grand Total.... 1667 7588 13689 Intercity Water Freight IWW i TVA Channel........... 12 12 12 ‘A USA COE................ 536 532 776 a UISCG ees eid: 153 156 153: 24 Alaska Ferry ........... 8 aia ae ‘Ports & Terminals. 59 59 59 p SBUDLOUAL suet (701) OF Ban) ga Hoe) Grand Total.) 768) 74 THE RELATIVE PRICE OF TRANSPORTATION TO THE YEAR 2000 ® 221 TABLE 89. Government subsidy accounts by market, medium- growth scenario, 1975, 1985 and 2000 (millions of 1975 $)—Continued pa TO7S 21985. 2000 Fed- Fed- Fed- eral Other eral Other eral Other Intercity Rail Freight OS ee 22 22 22 _ Nat. Mediation CTs ae 2 2 2 LS ae seer 1 1 1 0S 6 i aR ae 22 22 22 y + Saale ey Be 64 64 64 Rail Sys. Asst......... 169 -72 31. -72 31 _ Disaster Relief........ 2 2 2 SUDLOLA ......5éoc000 meine eh leo. S18. 185.431 Grand Total.... 284 216 216 Intercity Pipelines 5 a RR 12 12 12 DS UES es eee 14 14 14 Grand Total .... 26 26 26 Intercity Air Freight CAB: Reg................ 3 0 0 CAB: Subsidy ......... 5 NE io] 2 Fe eee eee ane gle 1 1 1 DOC NOAA............. 3 3 3 85 RR ho Oa 2 5 5 FAAS. es 144 80 44 BPIRSAS foc. eoiins. 47 47 47 - State & Local : é Programs...-.....1:.... 14 Pk. 44 Subtotal ssc: eens AASB rs 255) 1000 44 f Grand Total .... 219 161 144 Intercity & Rural _ Autos, Small Trucks _ Passenger [OLGA A ee ane 1 1 1 mats: DOT OS...::::.. 8 8 8 Highways................. 1187 3165 3585 9472 5982 15778 Subtotal ............... 1169 3165 3594 9472 5991 15778 Grand Total... 4361 13066 21769 Intercity Rail Passenger PARICAK ss 0kik a eeibisc0s 308 677 4 975 4 fa) 6 hoa stein a Sirtae 308 681 979 Pag Sani Oss Oe e Sm, ies BONiid2 ie a a Oi Oi A Ouielis Aoi AQs soe 55 55 oe OeaiOc eauai tO TI Grand | Total... ak 0 141 144 TABLE 89. Government subsidy accounts by market, medium- growth scenario, 1975, 1985 and 2000 (millions of 1975 $)—Continued 1975 1985 2000 Fed- Fed- Fed- eral Other eral Other eral Other Intercity Aviation Passenger CABS Regie eice.. 12 CAB Sunes 58 NISB ee en 4 App. Reg. Com...... 3 1 DOC NOAA............. 11 11 11 DOT OS ain ences if Ch 77 eC PAR Gor 582 538 295 NASAs ene 170 178 178 State & Local Programs............... 268 424 929 Subtotals <2) o2): 8475. 268.815 ° 424°)“ 561% 929 Grand Total .... AAS 1239 1490 Intercity Water Passenger USCG ie lene eieee 1 1 1 Alaskan Ferry ......... 8 15 36 Ports & Terminals .. 1 1 1 Subtotalizz 1 9 1 16 1 37 Grand Total .... 10 We 38 Local (Urban) Highways PASSENGEL ..........000eeeeee 924 2473 2805 7450 4688 12422 Grand Total........ 3397 10225 17110 Local Passenger Urban Mass Trans... 928 1109 2158 1532 3596 2671 Grand Total ........ 2038 3690 6267 Local (Urban) Freight Highways .. £209... 250 720 | :,540 . 1300 Subtotal inc os: 8209." 250 720 540.1300 Grand Total .... 209 970 1840 Local Passenger School: Bus o.ae 1888 2667 4542 Miscellaneous Boats USCG ea aa 251 251 251 USA COR ew, 8 8 8 DOC NOAA............. 4 4 4 Subtotal esc) .c) 263 263 263 Grand Total .... 263 263 263 SOURCE: NTPSC forecasts. aState and local receipts from fees and charges are expected to cover program costs. ‘International user charge receipts covered FAA expenditures cState and local user charge receipts are expected to cover their expenditures. 4According to the methods of allocation used by the MITRE Corporation, user-charge receipts covered attributed costs. For a discussion of the topic, see the section on the Highway Trust Fund in the text. elbid. 222 @ FORECASTS TO THE YEAR 2000 TABLE 90. Variations in operating differential subsidy, all scenarios, 1975 to 2000 (millions of 1975 $) Low- Medium- High- Growth Growth Growth Scenario Scenario Scenario Base Year Ree TA tes, ah ORR REY Aaa Ce: wee | 1975 1985 2000 1985 2000 1985 2000 a SEA le a RN EA es ta ON toate Koay 243 312 304 361 398 406 649 2 Aes Racing A SUNT ASE A ae 2 Cee elk Be Cn Ml SOURCE: NTPSC forecasts. was prepared. Corps of Engineers port and harbor expenditures are more predictable because these costs increasingly involve the maintenance of exist- ing channels. Total U.S. international marine subsidies consti- tuted about 11 percent of the U.S. international marine bill in 1975. Under medium-growth scenario conditions the projections are 9 percent for 1985 and 8.6 percent for 2000. The subsidies to U.S. international aviation made up about 1.5 percent of the U.S. international aviation bill in 1975. Under medium-growth scenario conditions the corresponding figure for 1985 and for 2000 is 1.4 percent. DOMESTIC TRANSPORTATION GOVERNMENT ACCOUNTS The largest subsidies to domestic transportation are for highways, aviation, inland waterways, urban mass transportation and railroads (in order of decreasing total amount). This list excludes pipelines. The only Federal expense items attributable to pipelines are the relatively low costs associated with government regulation. The major individual line subsidies for domestic transportation in Table 89 are all alloca- tions of broader major subsidy programs. Each modal program has unique characteristics. The fol- lowing sections describe the nature of each broad major program. Highways Chapter 10 discussed the NTPSC’s forecasts of highway revenues and the need for highway invest- ment. It indicated that highway ‘‘needs’’ encom- passed more than capital investment. Federal, state and local governments spend more on highways than they receive in user charge revenues. NTPSC fore- casts show a continuation of this pattern if highway financing practices do not change. (See Table 91.) The Federal Highway Administration has main- tained a set of continuous financial accounts on the nation’s highways for many years. Table 92 shows its summary account for 1975. TABLE 91. Forecast highway finances, all scenarios, 1985 and 2000 (billions of 1975 $) Low-Growth Scenario Government Disbursements. ............ccccccccecccecceeee. User Charge Revenues...............ccccccccesssescsceseeee Medium-Growth Scenario Government Disbursements ............:.ccscscecceceeesee User Charge Revenue...........cccccccecsccecssscescseees High-Growth Scenario Government Disbursements ...............cccccccccceceeeee User Charge Revenues...............ccccccscssssccsesseecees SPE ROP DO Ses ereses sae res eres eee ees eases ee Ee ees eesenneeeueeerones SOURCE: NTPSC forecasts. It should be noted from Table 92 that Federal disbursements account for about 25 percent of national highway expenditures, while states account for about 54 percent and local governments about 21 percent. In 1975, each level of government contrib- uted funds from general fund appropriations. For purposes of the government accounts these were considered subsidies. At the Federal level, the contri- butions from general funds come largely from agen- cies other than DOT. For example, general revenue sharing funds distributed by the Treasury and used by the recipient governments for highway purposes would fall in this category. Another example is the funds appropriated for regional development that the Appalachian Regional Commission expended on highways. Local governments spend funds on highways that in part were raised from property taxes. These are accounted for in the government accounts tables as subsidies. A few such taxes could be considered a form of user charge—particularly in the case of a local assessment on property abutting a road where the assessment is related to the costs associated with roads serving the property (for example, snow removal, annual maintenance, or curbs and gutters). The remainder of the funds expended on highways are largely derived from user fees or borrowing. HIGHWAY REVENUE SOURCES The subsidy shown for highways in Tables 82 and 93 assume the same disbursement of funds across highway uses as existed in 1975. Note that in 1975 the Federal government disbursed about $2 billion more for highways than it received in user charges. The figure for state and local governments was THE RELATIVE PRICE OF TRANSPORTATION TO THE YEAR 2000 @ 223 TABLE 92. 1975 highway receipts and disbursements by agency, 1975* (millions of $) Agencies Local Federal State Rural Govern- Agencies Govern- Munici- ment and D.C. ment palities Total Receipts Imposts on Highway Users:> MOTOr-FUGIIANG EVENICIO TAXES Fe: de sseicn. sity auees «che Seaueenvonghcnep send sdeoeieasettoadeeees 5,699 11,335 84 123 17,241 RCH nO ere PO ee Sone de cosl acyn cass Su cuessntare sos oatte ctungneel csssenvncvoaeece On os 1,052 32 179 1,263 MENACING Oca eccet iste te vd Groce coca ecoa de accrues tecyua seh Jo) dcloevde ede savs ctv apes vscdeogh en _ aod 1 119 120 SEs ohEl 5. 2) nha ene 4) 2 RE ORB Oe EAR AC o! AER Som SG 5,699 12,387 117 421 18,624 Other Taxes and Fees: PIOna IV etaxORvanG (ASSESSMOMIS o205 oe jaciiesekkcrsgiee: scnuntczar docs: “Qivseane's+ 0000s sBaRee — oe 958 704 1,662 PCH aal PRCCIIA TPAD FOP TIA OUS privet screcr cat cas oeiecrs .ansovs ncusas duneea< tector cs mee ines eeeeol 1,298 504 472 1,803 4,077 MISCEIENBOUS) LAXOS; ANCL GOS oe 5b see acc es chess co voc ed Hodeeeubadlsel Fob nace ncoscodboaeieeed 21 220 39 128 408 Sito) Colt Bee os ce cA pepe ede Ba Re: GORA CMOS OLS BE BROS nore ie 7 ees PO RC 1,319 724 1,469 2,635 6,147 INVESUNGHE INCOME & TOUICT, FRECOIDIS:.i5.<.000-.s.!0-0+-cc.5-nvertervesdvavecvecavouas ossicdesapmante 723 538 169 254 1,684 SHEDCCRE PASTE RESCIU TAT ACOT NG sete oo ooo ose ae voces Sa tne Se ncdse'ca pv ocagogcealapec bon ds Ves bes ravenecele Ree 7,741 13,649 a2 755 3,310 26,455 Band ISSUE ETOGEEUS: (Fal VAIIG Fis. ococccceccccecccsars.ccssevsdsosanvssatisecans cave dueavivhoatesele —_— 1,412 235 546 2,193 We fee gle URGE TIONS Crete ¢ Sep AI Ui ia dy ai Ue a ee POL CA RET er hs a 7,741 15,061 1,990 3,856 28,648 Intergovernmental Payments: OTHE CE Tae) Eades Opps oe es MAN Ae Oe ie PNA EY a Coke RP ree Pa oP —6,655 5,887 457 311 a BSE ANCE NSS a i ce srg icp Fgh ews ce dca ash sid gs neeadens dppastnrvenssvatevatan dense? _ -3,033 1,878 1,155 _ HESS AL PREM abr HOV EN CHTHOT UES noc 6 ts Sal sata cane cesncee Auicrncscsieisveadpinosenshedvaseeraredas ce QeCOnten — 101 —192 91 — WAL HCILI ISR cep PTAA ats onde ce th cky- sates tvi tsi svevtes scbsosicsddh those cuiiees covensorss Excludes amounts allocated for collection expenses and non-highway purposes. cProceeds of short-term notes and refunding issues are excluded. Premium and discounts on sale of bonds are included with “Investment Income and Other Receipts.” Includes forest highway and other funds administered by the FHWA, as well as funds of other Federal agencies not derived from the Highway Trust Fund. ; *Minus signs indicate that funds were placed in reserve. ‘Includes data for Puerto Rico. sIncludes small amounts of miscellaneous expenditures and engineering and equipment costs not charged to capital outlay and maintenance. "Redemption premiums and discounts are included with interest payments. Redemption of short-term notes, or by refunding, is excluded 224 © FORECASTS TO THE YEAR 2000 TABLE 93. Highway cost responsibility based on 1975 dis- bursement and revenue practices, medium-growth scenario, 1975 and 2000 (millions of 1975 $) 1975 1985 2000 Federal Disbursement ................ —7,741 -13,814 -—19,519 Federal User Charge Revenues +5,699 +5636 +5,116 Net (Subsidy)..............0.0004. —2,042 —8,178 14,403 State and Local Disbursement. —20,412 -36,436 —-—51,461 State and Local User Revenue +12,925 +12,764 +11,584 Net (Subsidy). uke; —7,487 -—23,672 -—39,877 Total Disbursements................... —28,153 50,250 70,980 Total User Charge Revenues?.. +18,624 +18,400 +16,700 Net (Subsidy).................0..54 —9,529 -—31,850 -—54,280 SOURCE: NTPSC calculations. aFrom Table 42. almost $7.5 billion. Continuation of the present practice would increase the Federal figure more than sevenfold and the state and local figure more than fivefold by the year 2000. Federal subsidies would grow from 26 percent of Federal disbursements to 74 percent while state and local subsidies would rise from 37 percent of disbursements to 72 percent. Another approach is to assess what the various Federal and state tax rates would have to be in order to maintain the same percentage relationships be- tween disbursements and user charge revenues that existed in 1975. These percentages of subsidy to total bill are 26 percent for Federal funds, 37 percent for state and local funds, and 34 percent overall for total disbursements. Appendix Table 58 shows this alternative. The general taxpayer would pay less in future years in this alternative compared to a contin- uation of 1975 disbursement and revenue practices. Appendix Table 59 compares the resulting Federal tax schedules for the two alternatives. Present practice would retain the 1975 rates. The alternative distributes the user charge burden for future years to each form of user charge tax in proportion to its share in 1975. The burden in each tax category is then divided by the forecast activity for the year to yield the new tax rates. Some rates decline. Fuel taxes show the greatest percentage increases due to lower fuel consumption per VMT. Appendix Table 60 puts the topic in a more current perspective. It shows what the constant 1975 dollar prices would amount to in current dollars, assuming a 5 percent inflation rate per year. One result is a fuel tax price of just over $3 per gallon in the year 2000 under medium- growth scenario conditions. FEDERAL HIGHWAY FUND ALLOCATIONS Federal highway disbursements go mostly to state and local governments for their use. In turn, a portion of state disbursements go to local governments for expenditure on their projects. The Federal funds come chiefly from a Highway Trust Fund supported by user charge revenues. Highway Trust Fund disbursements are earmarked for variously defined categories of capital invest- ment. The allocation of funds in a given category among recipients is based almost totally on statutory formulas. Formulas for the Federal-aid categories of rural primary and secondary roads were established in the early 1900s, and despite minor changes have never been modified substantially. The formulas for the Interstate Highway and Urban Systems were estab- lished when these programs began in the 1950s and 60s. On a national level it does not appear that the formulas were based on what Federal allocation might provide the greatest net benefits from the expenditure. This does not mean that the distribution formulas were developed without benefit of analysis. Goals other than economic efficiency—such as equity, national connectivity, and full employment— may have guided the establishment of some of the formulas. Too, some states use sophisticated eco- nomic techniques in establishing priorities for the expenditure of funds under their control, including the funds disbursed to them by the Federal govern- ment. States and localities are required to match the Federal funds they receive with their own funds. The percentage matching ratio depends on the category of program and, in some cases, on the amount of Federal land in the state. Several characteristics of this method of allocation are worth noting. A state or locality may receive more than it wishes to spend ina specific category. Congress in the past decade has increasingly recognized this by allowing recipients to switch percentages of some categories of funds to specific other categories. This tends to weaken any relationship that was intended among the categories for which the Congress appropriated money and the desired ends to be achieved, and the relationship is further weakened to the extent states withdraw their funds from a category and spend them elsewhere (not necessarily on highways). Studies indicate that except for tightly controlled categories of programs in which the Federal government foots the prepon- derance of the bill, and forbids expenditures else- where, Federal highway disbursements have much the same effect as general revenue sharing, i.e., they tend to act like an infusion of general purpose funds.°’ However, unlike general revenue sharing, highway disbursements are based on historically fixed formulas which may not be related to present objectives. One alternative to the present practice that has been advanced is transportation revenue- sharing, in which Federal highway funds would be allocated in accord with a formula to each state, for THE RELATIVE PRICE OF TRANSPORTATION TO THE YEAR 2000 @ 225 use without categorical constraints. This might sim- plify administration and provide states more flexibility to do what they feel best serves their interest, but would reduce the Federal government’s capacity to focus funds on specific categories of national inter- est. Another alternative would be to have even more categories with a formula for allocation to each category. Each recipient could be allowed broad flexibility to transfer funds from one category to another (perhaps depending on notification of DOT or DOT’s approval). No matter what scheme is adopted, so long as the Federal government collects and disburses highway funds, a rational basis for allocating the funds among states appears needed. Present methods result in some states being major donors and others major recipients. The effects of the formulas do not appear to be based on explicit income redistribution goals. HIGHWAY NEEDS Needs estimates have been prepared on a continu- ing basis to determine national highway funding requirements. Table 94 compares alternative sets of needs state- by-state. One set is based on reports by states in the 1974 National Transportation Report. The second consists of Economic Analysis Needs developed by the NTPSC, based on an analysis of arterial and collector needs reported in the 1972 National High- way Needs Report. The second approach spends less and would minimize Federal subsidy. Unfortu- nately, the FHWA ‘‘Basic’’ alternative published in the 1976 National Highway Inventory and Perfor- mance study,** and used by NTPSC to estimate the nationwide capital needs reported in Chapter 10, is not available in state-level detail for comparison with the two alternatives shown in Table 94. Table 95 compares four alternative allocations among the states, shown to illustrate the degree of difference that may resuit from different methods. The first column reflects fiscal year 1979 Federal-Aid Apportionments, based on all the separate formulas previously mentioned. The second column is based on the percentage of travel expected in each state over the 1975 to 1990 period. It not only indicates where the travel will take place, but may be viewed as a Crude indicator of the amount of Federal user charge revenue originating in each state. Funds allocated on this basis would tend to eliminate the donor-recipient situation. (The Federal government could make receipt of the fund contingent upon Support of any national objective the Congress deemed appropriate.) The third column reflects needs reported to DOT by each state for the 1974 National Transportation Report and National Trans- portation: Trends and Choices in 1977. The fourth column reflects Economic Analysis needs as comput- ed in 1972, apparently the last time a state-by-state TABLE 94. Highway needs alternatives, 1975 to 1990 (millions of 1975 $) State Reported Economic Analysis “Needs” “Needs” 1975-1990» 1975—1990¢ Alabama’ 2.5... soe 7,911 7,298 Alaskan: iene he 6,328 1,256 PUI ZOM agi heer elccae eveas 12,722 7,346 Arkansasicais scott 6,128 5,805 Callfornia ses. oe 38,743 42,633 Colorado-sss--c+-e oe 6,964 4,629 Connecticutiz..--..-nst 7,363 8,064 DelaWal ils. acs sas cssntes otes 2,236 941 District of Columbia..... 3,820 2,590 Florida cose 37,916 27,599 Georgia anise ae 15,796 10,112 Hawalise ee en 4,289 2,430 Idaho 23 ee eee ee 2,161 1,109 ltinoisS 4a ee 50,572 24,206 lndianda..2iceeeees cee 12,637 iekyé lOWa a. oe ete teeter 17,692 10,047 Kansas si eS oe 8,801 4,782 Kentucky sani: 8,839 7,633 Louisiana: iets 16,247 11,118 Maine ce one 3,049 1,898 Maryland bist. detest toast 14,977 eealré Massachusetts .............. 16,611 16,984 Michigans...) ccc areas ee 20,737 21,226 Minnesota.....................5 12,224 7,027 Mississippi: 2a 8,717 4,560 Missouriisy sisters sites tecoers 28,385 15,974 Montanas nes 4,061 2,479 Nebraska.................00005: 6,833 3,892 Nevada: 5-2 sr es eed 2,211 1,835 New Hampshire ............ 2,613 OST, New Jersey.....6........... 37,536 26,296 New Mexico..............06 3,688 PMGSY New Yorkies 81,783 57,381 North Carolina .............. 28,327 16,475 North Dakota..........00.... 2,835 1,071 ONIO ese eS 24,631 24,783 Oklahomatss.22-. TL TAO 6,775 Oregoniy... ss :scusteseeee 6,299 Gnlio2 Pennsylvania ................. 30,477 22,914 Rhode Island ................ 3,293 4,102 South Carolina.............. 8,617 4,307 South Dakota................ 3,100 1,656 Tennessee so ee 153123 10,421 TEXAS ee el §9,343 33,784 Utah vee eo eee eet 2,800 2,266 Vermont.c2 eee ts oe ee 1,559 1,190 Virginia 2.25 ..05dyotta sts 16,847 14,410 Washington ................. 12,152 7,639 West Virginia ................ 6,319 3,477 WISCONSIN Soiyesicc eee: 24,083 lteate Wyomingcc oreo: 2,354 1,301 National Total?...... 766,500 542,893 aNeeds figures include requirements for expenditures on capital, operations, maintenance, administration and interest on debt. >U.S. Department of Transportation, National Transportation: Trends and Choices (to the Year 2000), Washington, D.C.: Government Printing Office, 1977, p. 315. The NTPSC adjusted the statistics to account for 1972 through 1975 expenditures in each state and estimated operations and maintenance costs over the 1975 to 1990 period based on 1975 data from Highway Statistics and 1980 and 1990 data reported in National Transpor- tation: Trends and Choices. °U.S. Secretary of Transportation, 1972 National Highway Needs Report, 92nd Cong., 2d Sess., Washington, D.C.: Govern- ment Printing Office, 1972. The NTPSC used unpublished comput- er outputs that led to the nationwide results reported as one alternative in this source. 4Excluding Puerto Rico, Samoa, Guam, and the Virgin Islands. 226 @# FORECASTS TO THE YEAR 2000 TABLE 95. Comparison of alternative allocation of Federal highway funds % of FY 1979 % of % of % of Federal- 1976 to 1976 to 1976 to Aid 1990 1990 1990 Highways Vehicle State- | Economic Appor- Miles Reported Analysis tioned to of Travel Needs Needs Each in Each in Each _ in Each State? State> States State IAIKANGAS teats: 00.93 01.16 00.80 01.06 Califormia ex ceene ef 06.72 09.99 05.06 07.85 Colorado’ tka 01.36 01.25 00.91 00.85 Connecticuta.28. sie 01.85 O13 00.96 01.48 Delaware i.ii.c/nik ce 00.47 00.28 00.29 00.17 District of Columbia.. 01.13 00.21 00.50 00.47 Floridals sacs acest 02.94 02.99 04.94 05.08 ASQOT GG: uovendops senevores 02.40 03.39 02.06 01.86 Hawalllzs.2 ce sereaueme 00.86 00.30 00.56 00.44 idahiO' sn ees ee 00.66 00.44 00.28 00.20 linois = Poe tee 04.66 04.33 06.60 04.45 indlana wise 01.45 00.26 01.65 01.35 IOWA eat ee 01.54 01.46 02.31 01.85 Kansas 01.50 01.06 01.15 00.88 Kentucky i..i0.. hia 02.12 01: 7890/0115 01.40 Louisiana..so823 02.73 01.56 02.12 02.04 Malhiete2): Ase ts 00.57 00.51 00.40 00.34 Marian 2. n.2<U.S. Secretary of Transportation, The Status of the Nation’s Highways: Conditions and Performance, Report of the Secretary of Transportation to The United States Congress, 95th Cong., 1st Sess., Washington, D.C.: Government Printing Office, September 1977, pp. 61-65, 402-404. The NTPSC used 1975 and 1990 traffic estimates by state to estimate the entire time period for each state. °U.S. Department of Transportation, National Transportation: Trends and Choices, (to the year 2000), Washington, D.C.: Government Printing Office, 1977, p. 315. Figures were adjusted by the NTPSC to reflect 1972-1975 expenditures in each state. These expenditures by state came from source ‘‘b’”’ above. 9U.S. Secretary of Transportation, 1972 National Highway Needs Report, 92nd Cong., 2d Session, Washington, D.C.: Government Printing Office, 1972, p. VI-34. The NTPSC used unpublished computer reports as one alternative source. economic analysis of the preponderence of the nation’s highway needs was performed. Though dated, it indicates the form of distribution which gives the greatest economic benefit per Federal dollar expended. Chapter 10 (see Table 38) discussed highway capital needs estimates under the NTPSC’s three scenarios, pointing out that highway needs are broader than capital investment. Government funds pay debt service, administration, maintenance and operation, and other expenses amounting to about half of the government-controlled highway expendi- tures in 1975. It may be recalled that the NTPSC highway cost estimates are based on the cost of retaining today’s levels of highway condition and performance. There appear to be reasonable eco- nomic arguments for improving service levels on some classes of roads, such as arterials in urbanized areas, rather than maintaining the status quo. COST ALLOCATION A perennial debate concerning the Federal Highway Trust Fund and a number of state highway programs is whether a particular user group or geographic entity (rural vs. urban) pays its proper share. The issue seems to center on the method used to allocate joint and common costs of highways. ) THE RELATIVE PRICE OF TRANSPORTATION TO THE YEAR 2000 @ 227 A recent and thorough study by the Urban Institute addressed these issues as related to the Federal Highway Trust Fund, finding that:%9 1. Rural road expenditures exceeded rural user- charge revenues; 2. Urban road revenues from users exceeded urban road expenditures; 3. Total expenditures on all classes exceeded user charge payments; and 4. User charge revenues derived from medium and heavy trucks did not fully cover all the public costs potentially attributable to them. Receipts from truckers equal or exceed the public costs for which they are directly accountable (see Appen- dix Table 61). But the degree to which payments exceed direct costs is so slight that almost any reasonable allocation to them of a share of the costs common to all users (i.e., columns marked “Common Expenditures” in Appendix Table 61) would result in underpayment. Aviation The Airport and Airways Trust Fund covers a portion of the U.S. DOT’s expenditures for aviation. States, local governments and public airport sponsors are the recipients of Federal aid for aviation. More than two thirds of Federal aid to airports is disbursed ona formula basis, with the remainder disbursed at the discretion of the Secretary of Transportation. Dollars from the Trust Fund are restricted largely to use for capital investment. In 1975 this category comprised 70 percent of total Federal aviation expenditures. According to the forecasts, although a significant increase in total funds is expected, operations and maintenance may decline to 65 percent of total expenditures by 1985, due to an increase in Airport Development Aid Program funding. By the year 2000, operation and maintenance may account for 69 percent as the number of airports remains constant while funding for operations needs increase. It should be mentioned that the NTPSC forecasts of operations and maintenance costs, which consist mainly of labor costs at enroute and terminal air traffic control centers, assume a very slight increase in labor productivity. Current FAA policy is to signifi- cantly increase labor productivity through capital expenditure in facilities and equipmerit.*° Increased productivity would lower operations and mainte- nance expenditures and increase facility and equip- ment outlays coming from the Trust Fund. A significant increase in Airport Development Aid Program funding will be required according to NTPSC capital projections. These funding levels are somewhat higher than those which would result from the NASP estimates. Once higher levels are attained, however, annual airport expenditures should not increase (in constant dollar terms) and are even expected to decline. Table 96 compares for each scenario the Trust Fund revenues, Trust Fund expenditures, and FAA expenses not covered by the Trust Fund. The credit for public use includes costs attributable to military and other government aviation. The degree of Feder- al subsidy (or surplus) varies greatly between sce- narios. However, Trust Fund expenditures were assumed constant for all scenarios. Further, in some scenarios and for some years, the amount expended exceeds Trust Fund revenues. The information as presented shows the potential for a deficit. However, the table assumes that in a deficit situation, expendi- tures for Trust-Fund-eligible items would be con- strained by Trust Fund revenues. The “FAA Operation and Maintenance Expendi- tures’’ shown in Table 97 may be severely understat- ed. These expenditures are largely associated with FAA employment (because most capital is covered by the Trust Fund). The numbers shown reflect employment increases due to increased traffic han- dled, but assume salaries remain at the 1975 con- stant dollar level. NTPSC’s national economic as- sumptions indicate the increases in constant dollar disposable income per capita shown in Table 97. (lf the average wages of FAA employees were to increase by the same percentage, FAA non-Trust Fund expenditures would increase accordingly, and the last line of Table 96 would be as shown in Appendix Table 62.) Increases in the productivity of FAA employees might offset increased salaries, but the degree of offset was not forecast. The subsidy to various categories of civil aviation as aresult of FAA services has been a sporadic issue over the past two decades. Controversy has cen- tered around these questions: 1. To what degree, if any, should general tax revenues be used to pay FAA costs attributable to civil aviation? 2. What method of attributing costs is most reason- able? 3. By what amounts do the various user groups fail to pay their share of attributed costs? Since the mid-1950s, the FAA has periodically calculated the shares of its costs attributed to various user categories. In 1978, the FAA undertook the most recent aviation cost allocation study, con- cluding that 14 to 16 percent of FAA costs might be considered a ‘‘public good”’ appropriate for payment from general tax revenues. (This includes credit for the handling of military and civil government aircraft.) In the past, Congress has apparently considered the public good percentage to be greater than that estimated by the DOT. Of the remaining FAA costs, 228 e FORECASTS TO THE YEAR 2000 TABLE 96. Variation in airport and airway trust fund revenues and FAA operating and maintenance costs for all scenarios, 1975 to 2000 (millions of 1975 $) Trust: Fund: Revenues: fee ar ee Exmericitires: i -cniscsecoicrbddecascrdnstcesadovsnchecucksann pprevanaweans Sob eewassiObel reileuneny FAA Operations and Maintenance’ ..............ccccccesseeseceeeserereeseenenees Credit for Public Use errr eowcve snaneumasaccpatass sa cusspahn poieee Low-Growth Medium-Growth — High-Growth Scenario Scenario Scenario 1975 1985 2000 1985 2000 1985 2000 eis | | 21,058 857 1,595 1,484 2,815 1,689 4,100 2587 -1,558 -1,595 -1,558 -1,595 -1,558 -1,595 471 701 0 =74°° 4,220 131 2,505 «1,305 -1,858 -3,011 -2,013 _=9,513 2.109 3,747 308 1,298 1,261 1,357 1,941 1,393 2,030 560 <1,750 °656 -352 -585 +788 SOURCE: NTPSC forecasts. aSee Appendix IV regarding aviation expenditures. >With minor exceptions trust fund revenues cannot be spent for FAA operations and maintenance. A surplus cash flow to the fund may be spent on fund-eligible items in future years. However the net annual cash flow method was used for all modes in the government account calculations and subsidy for a given year was decreased by government expenditures minus government revenues. °NTPSC calculations based on the method reported in U.S. Federal Aviation Administration, An Econometric Analysis of Enroute and Terminal Air Traffic Control, Washington, D.C.: June 1976. dFor 1975 see Appendix Table 56 and Appendix IV regarding aviation expenditures. For other years a constant 38 percent of the Trust Fund plus FAA operations and maintenance expenses was used. This is based on FAA forecasts reported in U.S. Federal Aviation Administration, Financing the Airport and Airway System: Cost Allocation and Recovery, Draft, Washington, D.C.: November 1978, pp. 19-46. eAssumes expenditures for trust fund eligible items would be limited to funds entering the trust fund in the year. It is possible that previous surpluses in the fund could be carried forward to cover the total expenditure. air carriers pay 88 percent and general aviation pays 14 to 25 percent of the FAA costs attributable to them. It is forecast by the FAA that by 1987 the corresponding figures would be 103 percent for air carriers and 11 to 21 percent for general aviation if present user charge practices continue and FAA productivity increases.*' Intercity Rail Passenger Service In January 1979, the U.S. Secretary of Transporta- tion submitted his Final Report to Congress on the Amtrak Route System, which recommended a cut- TABLE 97. Forecast per capita growth in disposable income, by scenarlo, comparisons of 1985 and 2000 with 1975 Yearly Percentage Growth by Time Period and Scenario Low-Growth Medium-Growth High-Growth Scenario Scenario Scenario 1985 2000 1985 2000 1985 2000 1.22 1.32 se ae 1.94 1.47 2.58 SOURCE: NTPSC forecasts. back in Amtrak routes to take effect if Congress did not object in the period of time established by law. The Federal subsidy forecasts shown in the NTPSC government accounts are a linear extrapolation of the five year (1980 through 1984) trend forecast in that report, as shown in Table 98. (Rail freight financing is discussed in Chapter 10.) TABLE 98. Intercity rail passenger service subsidies, medium- growth scenario, 1980 to 2000 (millions 1975 $) Total Capital Operating 1980 si ses Stee en esa 563 154 409 TORN ie tare vicecsonerticesaueieancerees 612 194 418 VOB 2 eis etycance epee 608 206 402 VOB S rea ters tence enwseeesccceae 619 242 377 VOSA sete cat ecu 650 254 396 RRS [ake ig yeremec ero knmere s ayyiat Niel gk 677 C000 sy hices ounces ee heel eg 975 SOURCE: 1980 through 1984 statistics, U.S. Department of Transportation, Final Report to Congress on the Amtrak Route System, Washington, D.C.: January, 1979, p. 5-3. Statistics modified by the NTPSC to reflect constant 1975 dollars; six percent per annum inflation assumed from 1975 through 1979 and five percent assumed thereafter. THE RELATIVE PRICE OF TRANSPORTATION TO THE YEAR 2000 e 229 Intercity Marine The government accounts for domestic intercity water transportation show receipts to the newly established Inland Waterway Trust Fund for future years. This fund was described in Chapter 10 and Table 59 shows the expected revenues under each of three scenarios. Trust Fund receipts are expected to fall far short of covering the Federal expenditures attributable to domestic waterborne transportation. If current practices continue, including the statuto- rily scheduled tax-rate increases, the Inland Water- way Trust Fund revenues may constitute less than 9 percent of the Federal expenditures attributable to inland waterways in 1985 and less than 7 percent in 2000 (under the medium-growth scenario). Further, the Federal expenditures attributable to Domestic Ocean and Great Lakes marine transport would not be covered by Federal user change revenues. Urban Mass Transportation Using the NTPSC baseline assumption, government subsidies to Urban Mass Transportation increase rapidly. In 1975 government subsidies were about 48 percent of the transit bill. NTPSC forecasts show the government subsidy increasing to 60 percent of the bill by 2000. The baseline assumption held fares per trip at a constant 1975 dollar level. Federal, state, and local subsidies appear to be tracking reasonably well for initial stages of the 1975 to 1985 period with the NTPSC forecasts. However, the post-1985 period is of concern. Currently rail transit in less than a dozen cities consumes about two thirds of the Federal and a large part of the state and local subsidies for transit. Will additional exclu- sive guideway systems (e.g., light or heavy rail, downtown people movers) over and above those to which the U.S. DOT is already committed, be start- ed? The question is largely a political one. As of 1979, five cities (Los Angeles, St. Paul, Houston, Detroit and Miami) are in the preliminary engineering phases of developing downtown people movers. All of these systems could be operating by 1985 after capital investment totalling approximately $450 mil- lion. Five other cities (Baltimore, Indianapolis, Jack- sonville, Norfolk and St. Louis) are conducting feasibility studies for such systems at this time. Operating cost estimates for any of the ten cities would be highly preliminary at this stage, but tend to be low compared to less-automated systems. In current dollars, the five systems expected to be Operational by 1985 could have combined annual Operating costs of approximately $15 million.*? Be- cause no allocations of fare box revenues have been made at this time, these systems are not included in the overall transit accounts. With the exception of a light-rail system in San Diego, no new exclusive guideway systems are likely to be started without heavy Federal subsidy support. Such systems have high initial costs and farebox revenues almost inevi- tably fail to cover full costs, including a contribution to capital. The NTPSC assumed that the state-reported transit programs (1972 to 1980) and plans (1972 to 1990) for the 1974 National Transportation Report would be implemented as reported. A nationwide survey conducted in 1977 by the American Associa- tion of State Highway and Transportation Officials (AASHTO), of urbanized area transportation im- provement plans for the 1977 to 1987 period, indicated many changes. Chapter 10 compared the NTPSC, 1974 National Transportation Report and AASHTO estimates. The NTPSC’s assumptions for the period after 1990 create another concern. Lacking any survey of urban mass transportation intentions of urbanized areas for the time period, the NTPSC assumed each urbanized area would pursue a simple linear extrapo- lation of the program (1972 to 1980) and plan (1972 to 1990) reported for the 1974 National Transporta- tion Report. For many urbanized areas, particularly those that may complete their proposed rapid rail systems by 1990, this assumption may vastly overs- tate proposed urban mass transportation develop- ment. This in turn would mean that subsidies for the post-1990 period would also be overstated. This overstatement may be exacerbated further by the cut-backs in intended development some urbanized areas appear to have made according to the AASH- TO survey. Other aspects of NTPSC base-case assumptions are worth noting. The NTPSC assumed that fares per trip in constant dollars would remain constant (no fare increases). Average trip lengths were forecast to increase. Thus the average fare box yield per passenger mile decreases. The subsidy may be extremely sensitive to these assumptions. However, time and resources did not permit additional simula- tions to estimate this sensitivity. The only variation in inputs to the model used to simulate and forecast urban transportation across scenarios was the difference in population between the medium-growth scenario and the other two. Thus there was almost no variation in costs and subsidies across the three scenarios. Table 99 therefore shows only the values for the medium-growth scenario. MATCHING RATIOS The Federal-Aid Highway, Airport and Urban Mass Transportation programs all require that Federal funds be matched by recipients. Those matching 230 e FORECASTS TO THE YEAR 2000 TABLE 99. Forecast urban mass transportation government accounts, medium-growth scenario, 1975 and 2000 (millions of 1975 $) 1985 2000 Onmerating «GOSS niisicscsatoncentatosnes maser tv en-cane —5,730 —8,140 Fleet Replacement ...............:::ccccccssseseeeeeeereees —1,042 —1,544 Gost SuUDIOLAIA tects e cee tas treshanmcane rine —6,772 —9,685 Fare; REVENUC 6 eet ct ec cence cote nae +3,082 +3,420 Overall SUDSIOY chs cot cecatuacaeervipeonsvetiocornianeet —3,690 —6,265 Carita: SUBSIDY ic .siatvacticensceasans ue oabvnars’ —1,042 —1,544 Operating SUDSIDY 2.2.50. aos anssesecconoaectent pass —2,648 —4,721 Federal Share of Subsidy BOW: Operating. 5... eiies est cde sae —1,324 —2,361 SOW Carita ee ceeea sk Wwests utiles ot opep peed —834 —1,235 SOURCE: Unpublished TRANS G MODEL runs by Peat, Mar- wick, Mitchell & Co. for the NTPSC, 1978. aThis figure is less than shown in Table 82. The figures in this table were not increased to reflect trends in unit costs. funds are the price paid by state and local govern- ments for Federal categorical dollars. When, for example, the Federal share is set at 80 percent, a state may, in effect, secure four Federal dollars for one state dollar, provided the money is spent on a given category of project and the state’s allocation is not exceeded. In this case, a state wishing to optimize its funds might reasonably invest in projects in the particular category down to a benefit/cost ratio as low as 0.2 (discounting at the state’s minimum attractive rate- of-return). Thus, high Federal matching ratios may encourage excessive investment in one category at the expense of more worthy investment elsewhere. From the Federal perspective, assuming a fixed level of funds available, the greater the Federal matching share the less may be the breadth of Federal influence over state and local development and the less may be total spending in the category. If the Federal government contributed $1 billion on a 50%—-50% matching basis, the span of its influence might cover $2 billion in development. On an 80%— 20% basis its span of influence would be $1.25 billion. (Influence as used here means the ability to impose Federal requirements, such as equal-oppor- tunity hiring practices, proper bookkeeping, informa- tion reporting, meeting of development-quality stan- dards, or even enforcement of the 55-mph speed limit or environmental regulations.) Thus, as Federal matching shares increase, in many ways Federal power to influence specific projects funded may also increase as the Federal share of the cost rises, but overall influence decreases. Moreover, unless states fund additional projects without Federal support, total expenditures in a category may decline as a direct result of raising a matching ratio. These effects help explain why state and local governments have generally advocated greater Fed- eral matching shares. And the tendency in recent decades has been to increase Federal matching shares. For example, a law passed in 1978 increased the Federal share for Federal-aid rural primary and secondary roads from 70 percent to 75 percent.*° A decade ago the ratio was 50 percent.” It should be recognized that small changes in the percentage matching ratio result in very large shifts in the funding relationship. A shift from 50 percent to 75 percent triples the Federal dollars available per local match- ing dollar. Differing matching ratios may indicate the relative significance the Federal government attaches to different programs, but such varying ratios also tempt recipients to select programs on the basis of their own contributions rather than considering all costs. As matching ratios for Federal programs have increased, differences between programs have tend- ed to diminish. If economic analysis is encouraged as a basis for resource allocation, then such analyses must reflect total costs, not just local expenditures. Except where a specific national interest dictates otherwise, equal matching ratios appear most desir- able for Federal programs. One way to increase total funding for any or all program categories without further burdening the Federal government would be to reduce the Federal share. This would give state and local governments a greater financial stake in Federal-aid projects and could possibly minimize losses caused by inefficient distribution of funds through Federal-aid processes. IMPLICATIONS OF UNIT COST CHANGES Forecasting, particularly where complex processes are involved, is often an iterative process. Such was true of the forecasting work of the NTPSC. One iteration has been completed. Changes in the unit costs of transportation were estimated in this chap- ter. The relative changes in price between competing modes thus estimated should result in changed distributions of activity among the modes. Time and resources did not permit calculating such changes in transport activities resulting from price differences to the year 2000. However, a number of implications are worth noting. Air carrier and automobile unit costs are expected to decline. Competing intercity bus, rail passenger service and local transit costs are expected to increase. ; In the over-100 mile passenger market, both air and autos could both be expected to gain ridership at the expense of bus and rail service. This assess- THE RELATIVE PRICE OF TRANSPORTATION TO THE YEAR 2000 @ 231 ment may not hold if government subsidies to intercity bus and rail services are raised above current levels. In the under-100 mile passenger market, the decreased costs of auto use imply greater competi- tion for urban mass transportation. As transit is already heavily subsidized, this implies greater subsi- dy if ridership is to be maintained. In the over-100 mile freight market, both truck and rail unit costs in constant dollars are expected to increase by about the same percentage. Today, however, average truck costs per ton-mile tend to exceed rail costs for many commodities. Thus the. same percentage growth may result in a widening gap between truck and rail unit costs. If this hap- pens, rail freight service may become increasingly competitive with trucking. The constant dollar costs per unit of rail service are expected to increase relative to those of domes- tic waterborne traffic. This implies some shift to water carriers where the two modes are competitive. Finally, the constant dollar costs per unit of pipelines are expected to increase faster than truck, rail, or water prices. However, a large part of the cost increase appears to be explained by pipelines expected to be built in expensive locations (Such as Alaska) where competition from other modes may be minimal. OTHER COSTS Transportation involves costs other than those of a financial nature. These costs, if they are not reflected financially, should be considered and accounted for in another way. Just as the dollar payments summarized in this chapter are forecast to increase substantially in the future, so too are the expenditures of time. The ability to make detailed national scale travel time estimates is severely limited by the weaknesses in modal data on vehicle speeds, terminal delay times, and other elements. Thus comparisons of travel time changes over a period of years are more valuable for the relative changes they identify than their absolute time values. Using speeds broadly typical of the modes em- ployed in local and intercity travel (as summarized in Table 100), yields an estimate of 53 minutes per Capita per day expended in travel activity in 1975. Of this amount, 37 minutes is attributable to local and 16 minutes to intercity travel. By the year 2000, given the changes in population and levels of travel activity per capita forecast in Chapter 9 and assuming no change in typical travel speeds, average individual travel time would grow approximately 50 percent to 79 minutes per day, 57 minutes for local and 22 minutes for intercity travel. TABLE 100. Travel time expenditures, 1975 and 2000 Hours/ Minutes/ PMT2 Speed’ PHT° cap.4 cap. (Billions) (MPH) (Billions) (Annual) (Daily) 1975 Local Urban Auto.. 753 23 33 154 25 lransitic. 2a: 57 8 7 32 §:5 Urban 810 40 186 30.5 Subtotal............ Ruralia:eucn: 460 55 8.4 39 6.5 Totalaick 1,270 48.4 225 37 Intercity Alle 148 400 4 1.9 3 AUtOh care hes 55 20.4 95.3 15.6 Bus 223 25.4 55 fe ao 4 Raila rns 5.4 60 si Ae) 1 Totalie2-25: 1,301.8 21.4 100 16 ALL eeeeeeeas 2,571.8 69.8 325 53 2000" Local Urban Auto.. 1,470 23 63.9 246 40 Transit .......... 110 8 13.8 53 9 Urban 1,580 Ti 299 49 Subtotal............ Rural............. 700 55 12.8 48 8 Totalace sie 2,280 90.5 347 57 Intercity Alran3 322 472 400 12 4.5 is Autovaiee 1,830 55 Ba.3 127.9 21.0 BUS. ieee 31 isha) 6 2.1 3 Railizzt53 6 60 a 4 4 Totalec 2,339 S541 135 22 ALE eee. 4,619 125.7 482 79 aPassenger miles of travel from NTPSC forecasts, see Chapter 9. bSpeeds derived from TRANS Model Calculations and National Summary of Transportation Statistics, U.S. DOT. ¢Passenger hours of travel equals PMT divided by speed. dHours per capita per year equals PHT divided by total population (i.e., 214 million in 1975, 260 million in 2000) from Chapter 9. An entirely different but compatible data set could be generated by partitioning the population approximately (e.g., apply only urban population to urban travel, rural to rural travel). Such an approach would not change the estimates appreciably. ©1975 speeds. The ability to forecast future speeds is limited. In estimates of capital needs for the 1974 National Transportation Report, states predicted that typical speeds in urban areas would decline by 1990 despite the considerable investment anticipated in facilities. The capital investments estimated in this chapter are 232 e FORECASTS TO THE YEAR 2000 lower than the states’ and this implies a greater decline in speeds. The decline is corroborated by model estimates made for the year 2000 by the NTPSC. If correct, urban auto speeds will decline by more than 10 percent while transit speeds increase by over 3 percent. No estimates of changes in intercity speeds have been made, but an assumption of approximately constant speeds in each mode seems reasonable given forecasts of facility develop- ment, traffic growth and technological change. If one assumes constant speeds, travel times per capita in the year 2000 increase to 85 minutes per day, 63 minutes in local travel and the same 22 minutes in intercity travel. Recognizing again that absolute estimates of travel time are subject to substantial error, compari- son of the relative changes is still quite significant. Time spent in urban travel will grow by 65 percent from 1975 to 1990 due to more travel per capita and an additional 16 percent due to declining average speeds. Rural time in travel will increase 25 percent. Intercity time in travel is expected to increase 37 percent due to more travel per capita. No estimates of changes of time in travel in rural or intercity trips due to speed changes were made. If changes in the value of time between 1975 and 2000 are considered, in accord with the dollar- equivalent costs of disposable income, the time changes indicated become even more significant. NTPSC forecasts show an approximate doubling of disposable income per capita in the forecast period (medium-growth scenario). If the value of time to individuals is accepted as highly related to income, this implies a doubling also of the value of time. Thus the cost to the traveler of time spent in travel in the year 2000 would be more than three times that value in 1975. The next chapter summarizes the major issues emerging from the changes forecast to the year 2000 in Chapters 5 through 11, as an introduction to the policy recommendations and policy impact analyses of the NTPSC. NOTES AND REFERENCES 1. To forecast ton-mile cost changes the NTPSC used the Inforum model to the year 1985. These trends were then projected to the year 2000. Thus for the period 1985 to 2000, macroeconomic factors such as disposable income may not be fully reflected in the price determinations for potential markets. 2. See 46 CFR Section 522.2(a)(1), (1976). 3. National Commission for the Review of Antitrust Laws and Procedures, ‘‘Staff Paper on Ocean Shipping,’’ Washington, D.C.: October 6, 1978, p. 3. 4. Irwin M. Heine, The U.S. Merchant Marine, A National Asset, Washington, D.C.: National Maritime Council, 1976, p. 49. 5. U.S. Federal Maritime Commission, Federal Maritime Com- mission and How it Functions, foreword by Karl E. Bakke, Washington, D.C.: April 1977, p. 3. Shipping Act of 1916, 46 U.S.C. Section 814(1977). Ibid. See D. L. Gorman, ‘Innovations in the Maritime Industry,” in Case Studies in Maritime Innovations, prepared for the Transportation Research Board, Commission on Sociotech- nical Systems, Washington, D.C.: National Academy of Sciences, May 1978, pp. 108-109. 9. Ibid. 10. Data from U.S. Maritime Administration, Office of Maritime Manpower, 16 February 1977. 11. U.S. Maritime Administration, Public Port Financing in the United States, Washington, D.C.: June 1974, pp. 14-15. 12. U.S. Maritime Administration, Current Trends in Port Pricing, Washington, D.C.: August 1978, pp. i-ii, 1-27. 13. Airline Deregulation Act of 1978, 49 U.S.C. Section 1461(a)(1978), as amended. 14. U.S. Department of Transportation, Office of Transportation Regulation, International Air Fare Levels: An Evaluation After Three Decades of IATA Rate-Making, by Christopher C. Barnekov, Jr., Washington, D.C.: December 1978, pp. 1—3. 15. See, for example, /bid., pp. 1-2. 16. CAB order 78—6—78 (June 1978). 17. U.S. Federal Railroad Administration, A Prospectus for Change in the Freight Railroad Industry, Washington, D.C.: October 1978, pp. 65—78. och alee 18. For a thorough explanation of the FRA’s projected capital shortfall for the railroad industry, see /bid. p. 77. 19. U.S. Department of Transportation, Office of the Secretary, National Transportation Trends and Choices (to the Year 2000), Washington, D.C.: Government Printing Office, 1977, p. 274. (Hereafter cited as DOT, Trends and Choices.) 20. Ibid. 21. Inland Waterways Revenue Act of 1978, 26 U.S.C. Section 4042(1978). 22. U.S. Department of Transportation, Transportation Systems Center, Modal Traffic Impacts of Selected Waterway User Charges, Volume |, Cambridge, Massachusetts: 1977, p. 1. 23. American Shipper 21 (February 1979), p. 21. 24. Congressional Record 124 (6 April 1978) p. S4965. 25. DOT, Trends & Choices, p. 292. 26. U.S. Federal Aviation Administration, Financing the Airport and Airways System: Cost Allocation and Recovery, Wash- ington, D.C.: 1979, pp. 43, 46. (Hereafter cited as FAA, Financing; available through the National Technical Informa- tion Service.) 27. Transportation Association of America, Transportation Facts and Trends, 13th ed., Washington, D.C.: September 1977, p. 140. 28. See U.S. Department of Transportation, The Status of the Nation’s Highways: Conditions and Performance, Washing- ton, D.C.: September 1977. (Hereafter cited as DOT, Status of the Nation’s Highways.) 29. Motor Vehicle Manufacturers Association (MVMA), Motor Vehicle Facts and Figures ‘78, Detroit, Michigan: 1978, p. 62. 30. U.S. Department of Transportation, Final Report to Congress on the Amtrak Route System, Washington, D.C.: January 1979, pp. 4-4, 5-3. 31. U.S. Department of Labor, Bureau of Labor Statistics (BLS), Labstat Series Report, Washington, D.C.: 19 March 1979. (Hereafter cited as BLS, Labstat.) 32. Surface Transportation Assistance Act of 1978, 49 U.S.C. Section 1618(1978). 33. BLS, Labstat. 38. 39. THE RELATIVE PRICE OF TRANSPORTATION TO THE YEAR 2000 ¢ 233 However, a separate Inforum model run indicated that the unit costs of transit in constant dollars will increase 15 percent by 1985 and 22 percent by the year 2000. If this forecast is accurate, the potential transit subsidies projected by the NTPSC will be heavily understated. BLS, Labstat. National Transportation Policy Study Commission, Govern- ment Financial Involvement in Transportation, prepared by Mitre Corporation, Volume Il, Draft NTPSC Special Report No. 8, Washington, D.C.: April 1979, p. 37. U.S. Department of Transportation, The Impacts of the Federal Aid Highway Program on State and Local Expendi- tures, by Leonard R. Sherman, Washington, D.C.: 1975. DOT, Status of the Nation’s Highways, pp. 137-184. Michael Beesley, Kiran Bhatt, and Kevin Neels, An Analysis of Road Expenditures and Payments by Vehicle Class (1956-1975), Washington, D.C.: The Urban Institute, March OT7, Paix. 40. 41. 42. 43. 44. John Regers, Office of Aviation Policy, Federal Aviation Administration, Washington, D.C., telephone interview, Feb- ruary 1979. FAA, Financing, pp. 19, 46. Steven Barsony, Director, AGT Applications, Urban Mass Transportation Administration, Washington, D.C., telephone interview, February 1979. Surface Transportation Assistance Act of 1978, 23 U.S.C. Section 120(1978), as amended. U.S. Department of Transportation, Office of Intermocal Transportation, ‘Highway Matching Requirements and Funding Levels, A Model of State Response,” by Loren P. Rees in Effects of Federal Transportation Funding Policies and Structures, prepared by the Pennsylvania Transporta- tion Institute, Pennsylvania State University and Georgia Institute of Technology, Draft Report, Washington, D.C.: July 1978, p. 5. rs oN Issues and Policy Resolution aD) a Emerging Transportation Issues INTRODUCTION Early in its deliberations, NTPSC established a workplan with three major tasks: identifying present issues; projecting transport trends to the year 2000 to discover emerging issues; and developing policies to resolve the issues. The first NTPSC Special Report described 25 major issues that were _ identified through public hearings and expert opinion.' (These issues are listed in Appendix Table 62.) On the basis of forecasting and other research described in the preceding chapters, the initial list of 25 issues was sharpened to reflect anticipated changing trends and goals. As could be expected, some issues are likely to lose significance, others to gain, while new issues arise in the next 20 years. Although the issues included all modes and mar- kets, two dominant policy themes emerged. The first is the importance of pricing mechanisms to allocate scarce resources, in the context of competitive transportation markets, to determine the levels of transport service required by the U.S. economy. There appears to be no mechanism superior to market-determined prices to decide which modes should provide services and which services should be produced. Of course, prices should reflect envi- ronmental, safety, and similar external costs as well as the more immediate costs of resources used in Operating and providing transport service. The sec- ond theme is for governments to avoid distorting transport markets, and to maintain the role of private enterprise when transportation is made a tool for achieving non-transportation goals. The NTPSC’s investigations suggest that the use of transportation as a means to achieve public goals can produce unintended results, leading to inequitable treatment of transport modes and markets, and inefficient use of resources. Policy changes to meet emerging issues to the year 2000 should emphasize proper pricing mechanisms and the preservation of competi- tive transportation markets. The following ten issue categories describe the more important problems to be resolved by U.S. transportation policy through the year 2000. EMERGING ISSUES GOVERNMENT POLICY MECHANISMS U.S. policy has long emphasized the role of private transportation, assuming that private industry is efficient, well able to manage various productive inputs, and readily adaptable to changing circum- stances. However, since World War I, the trend has been toward extensive public involvement in trans- portation, including public ownership and operation. Proponents of government involvement argue that markets are imperfect and must be controlled in order to achieve good service and equity. Transportation is perceived as a lever of general social policy. Private transportation is being pressed harder to meet social requirements, and in the absence of effective reimbursement to support social services, private providers may leave unprofitable markets. Government ownership has come to be regarded as an assured means of achieving social ends. Primary issues to be resolved are ensuring that public purposes are met through the private. sector without causing it financial harm. This might be done most effectively by directly aiding individuals or groups that require support, rather than serving their needs indirectly by aiding carriers. Government policy rarely establishes specific, measurable objectives for its transportation involve- ment. Yet without objectives, it is impossible to determine whether resources are being applied effectively to meet goals. Programs cannot be evalu- ated. Government must be guided by quantifiable objectives whenever it is involved in a transportation market. As an example, government has not had as an objective the uniform treatment of competing trans- portation modes. The result is that one government action may create the need for another, as in the case of intercity bus companies, which recently lobbied for and were authorized a subsidy to offset the effects of Federal subsidization of railroad pas- senger service. Such a decision is often more 237 238 ¢ ISSUES AND POLICY RESOLUTION expedient than the alternative—to reduce subsidies and cut back services. Government in the U.S. has not been under the Same pressure as private enterprise to justify expen- ditures on the basis of profit. Thus government- provided or financed services may be priced below private market costs, while in actuality using more resources, even when beneficiaries could be expect- ed to pay the full price. In such instances, users may benefit, but taxpayers suffer to the extent that costs—including lost corporate taxes that might otherwise result if the service were left to private enterprise—must be made up from general tax revenues. Possible means to achieve efficient government involvement in transportation include limiting govern- ment to roles which are essential and cannot be performed by the private sector, and, if government involvement is necessary, choosing appropriate lev- els of government. Also important are proper selec- tion and use of tools employed by government, among which are: Publicity and ‘‘jaw-boning;”’ Planning assistance; Preferential treatment by government; The power of eminent domain; . Grants of service franchise; . Regulation; Financial assistance and taxation; and Publicly provided services or ownership. SS Mia Ne Government frequently applies these tools to competing transportation modes, in varying degrees and combinations, without apparent rationale. The issue is proper government policies that choose the least-intrusive government mechanism to achieve objectives. ENERGY AND TRANSPORTATION Threat of drastic curtailment of imported oil, on which the U.S transport system depends, the costs of conversion to domestic sources of Supply, rising prices, and the environmental impacts of alternatives are all energy-related issues which will continue to be of great importance in years to come. Crucial uncertainties in the next several decades concern the intensity and success of the nation’s efforts toward energy conservation and methods of developing alternate fuels, as well as the physical and financial capacity of the U.S. transportation system to accommodate changing distribution pat- terns of future energy traffic in a cost-effective manner. Major energy questions to be addressed include: 1. How can future transportation systems provide energy-efficient movement of people and freight in a balanced system at the least social and economic costs? 2. How can transportation demand be reduced to conserve energy without seriously impairing mo- bility? 3. What strategies may be employed to conserve existing transportation energy resources? 4. How may new transportation technologies or alternate sources of fuel be developed to maxi- mize efficiency of new systems and provide adequate fuel supplies? 5. What are or will be the most efficient methods of delivering energy materials? Federal policies are in effect that require motor vehicle fuel efficiency and regulate vehicle pollu- tants. Tradeoffs between efficiency and pollution are not fully Known and the results of greater consump- tion of diesel fuels are uncertain. Other issues involve U.S. and foreign policies that affect petroleum fuel prices, and the relationship of such price develop- ments to the further production of U.S. fossil fuels and the expansion of alternate energy sources. Will U.S. transport and energy policies be consistent? Other issues concern explicit or implicit govern- ment policies toward the comparative use of energy in the residential/commercial, industrial, and trans- portation sectors. What will be the impact of allocat- ing between sectors on traffic patterns, and the type of transportation required for the movement of energy? The collection of user fees from vehicles that consume gasoline and diesel fuels, but the exemp- tion from tax of alternate fuels, may spur energy conservation but reduces revenues. Because coal is expected to be crucial in provid- ing an energy balance, and coal traffic represents a major source of revenue for railroads and waterway operators, policy issues affecting production, mar- keting, and movement of coal are extremely impor- tant. Various governments impose costs and delays on the development of coal resources. States affect- ed by large-scale coal development, especially in the West, may be faced with additional costs. If states tax coal movements to recover their costs, this could add to the expense of coal mining and transport. The extent to which Federal policy can rely on free energy markets to provide the proper price signals to Stimulate coal production, while ensuring that exter- nalities are considered, is at issue. Will various transport modes, especially railroads, have the phys- ical and financial capacity to meet the requirements for hauling coal? The answers can significantly affect regional and national supply and demand for coal. Transport cost, it should be noted, is the largest portion of the delivered price of western coal. The NTPSC’s forecasts highlight the interrelation- ships of transportation and energy markets, as evidenced in issues about the provision of synthetic fuels, increased use of coal, constraints on develop- ment of nuclear power and the development of an energy-efficient auto. As part of resolving such issues, careful assessment of energy and transport options is required. Decisions must be reached on such matters as government financing priorities, research and development (R&D) incentives, grants, demonstration plants and projects, selected tax preferences, and environmental or safety regulation. GOVERNMENT REGULATION The Federal government and some state and local governments define transportation markets and reg- ulate entry, exit, prices, and traffic. Economic regula- tion lacks consistency. Federal regulation and its consequences vary between competing modes, and also between transportation in general and its alter- natives, such as the transmission of electricity or telecommunications. There is both variance and overlap in state and local regulation. Disparate forms of government control have greatly affected the size and nature of the present transportation system. Regulation has been blamed for some of the financial troubles of the railroads and for sustaining motor and air carrier prices at artificially high levels. The net cost of regulation to consumers is virtually impossible to estimate, but Federal economic regula- tion costs may amount to billions of dollars annually. At any rate, perceived costs have no doubt contrib- uted to recent pressures for the U.S. Congress and the regulatory agencies to institute regulatory re- forms. But will a reduction in Federal economic regula- tion simply be replaced by regulation at the state and local levels? The Federal role in reducing local regulations which conflict with national goals will be a major issue. Governments have used regulation increasingly to achieve broad goals. Today Federal standards dic- tate methods for packing, labeling, and handling hazardous materials. Other social goals, such as equal-opportunity employment, are often pursued by imposing regulatory requirements as conditions for eligibility to receive Federal funds. The Federal government also uses or endorses regulations and standards set by others, such as international groups or private bodies. Government is involved in safety education, vehicle design and manufacture, operat- ing rules, design and provision of rights-of-way, post- accident services, and accident investigation. Both private and commercial transportation come under its purview, because accidents are treated as social costs, affecting the community and society generally as well as the individual and the family. Issues about EMERGING TRANSPORTATION ISSUES e 239 safety regulation and promotion are expected to continue, concerning the degree and nature of government intrusion, and trade-offs must be consid- ered between increased public costs for enforce- ment and provision of facilities and services to enhance safety, versus increased transport opera- tions costs. Specifically, emerging safety issues are expected to emphasize the following categories: . Qualifications and fitness of transport operators; . Physical conditions of vehicles and rights-of-way; . Methods of enforcement; . Hazardous materials handling; and . Provision of safer rights-of-way for transport operations. OhwhD = Issues concerning air and water pollution, noise, and EIS procedures are expected to continue throughout the foreseeable future. The issues will become more important when, after about 1990, increased demand for transportation could offset environmental improvements, resulting in levels of pollution from transportation sources that level off, and then begin to rise. Air pollution issues center on emission standards for vehicles, a requirement which could preclude development of energy-efficient engines, and the high costs of implementing pollution reduction mea- sures. Solutions to unacceptable levels of pollution in many urban areas lie in the form of transportation control programs (including such measures as dedi- cated lanes, pricing, and park-and-ride facilities), which are either expensive or could result in govern- ment intrusion into what many citizens consider to be local or individual rights. Emerging issues concerning noise pollution center around the cost of compliance to standards (such as with aircraft) and possible safety trade-offs. Water pollution issues emphasize: containment of oil spills in ports and harbors; choosing suitable sites for spoils from the dredging of ports and waterways; the extent of liability of operators in the event of spills; and how port improvements are to be fi- nanced. Primary issues focus on the degree, means, and even-handedness of environmental regulation of transportation. Many believe that the statutory EIS process as presently applied has afforded too much leverage to those who wish to inhibit development. Added costs and project delays are cited. Opponents of detailed regulation to achieve social goals contend that it: necessitates costly administra- tion; generates bureaucratic ‘‘red tape’’; stifles inno- vation and competition; fails to recognize regional and other differences in costs and benefits; and therefore creates inefficiency. For example, a ‘‘maxi- mum permissible” standard for a vehicle may be- come a design criterion, while more cost-effective 240 © ISSUES AND POLICY RESOLUTION alternatives are overlooked. Advocates of more regulation say that it is necessary for the protection of labor, consumers, and the public, and that it promotes an efficiency which otherwise could not be achieved. GOVERNMENT FINANCE Public financing of transportation is claimed to discriminate between competing modes and to lack consistency. In most cases, no systematic account- ing of costs and benefits is required; thus, public investments may not always yield the maximum possible benefit. Government financial support of transportation takes many forms, including: 1. Ownership and operation of transport services or rights-of-way at a loss, or at costs below what the private sector might incur; . Direct financing of transportation owned by oth- ers; . Selective taxation or tax relief; . Loans and loan guarantees; Funding of research and development; Funding of planning; and Funding of professional education in transporta- tion-related areas. Ls) NONE The Federal government has no multimodal crite- ria for evaluating its financial policies and programs. Nor is there any consistent basis for the allocation of funds between regions. Significant instances of inconsistency in government policies are examined below. Federal aid to highways is supplied from user charges. User-charge revenues are placed in the Highway Trust Fund. That money is returned to the states according to a series of formulas, rather than on the basis of taxes actually paid into the trust fund by individual states. Federal aid does not reflect regional or nationwide benefits to be gained from expenditure. Thus, some states are subsidized at the expense of others, rural areas benefit at the expense of urban centers, and Federal funds may be spent inefficiently. Urban mass transportation, on the other hand, is funded out of general tax revenues. Support comes from the public at large as well as from actual users. Much Federal money has been spent on rapid transit rail systems in fewer than a dozen cities. As these large and expensive systems near completion, the per capita distribution of Federal mass transportation funds may tend to equalize among urban areas. Some cities and rural areas, which also require passenger services, were largely neglected until 1978 when Congress appropriated limited operating aid for transit in these areas. Although the Federal government requires urban areas to submit analyses of alternative mass transit systems in order to receive capital assistance, funds are not allocated on the basis of these analyses. Benefits are cited, but it is unknown what level of expenditures they may justify. The Federal government treats rail passenger and rail freight services differently. Commuter and inter- city passenger service are subsidized out of general tax revenues. Amtrak deficits are expected to in- crease, even if routes are restructured. NTPSC research revealed few if any economic, environmen- tal, energy conservation, or safety reasons for such subsidy—particularly when intercity buses must compete for passengers.? Federal aid to rail freight services is largely in the form of loan guarantees, loans, and preference shares, which may become grants in the event of default. The Federal govern- ment also funds rail research, development, and planning out of general tax revenues. Shippers and communities also benefit from Federal subsidies for the continued operation of uneconomic branch lines. The Federal government provides financial aid in different forms to domestic and international water carriers. Federal aid to domestic operators includes facilities and services subsidized by the taxpayer. The Coast Guard provides safety-related and naviga- tion services. The Army Corps of Engineers devel- ops, maintains, and operates most of the inland waterways. It also develops and maintains port and harbor channels used by both domestic and interna- tional marine traffic. Federal assistance allocated for these activities exceeds half a billion dollars annually. Subsidized domestic waterborne freight service com- petes with rail service, which is relatively less subsi- dized, and with pipelines, which are virtually unsubsi- dized, in the movement of some bulk liquids. The merchant marine is aided by shipbuilding and ship operating subsidies paid for out of general tax revenues and by various forms of tax concessions. The U.S. shipbuilding industry has suffered from overcapacity, an international problem for shipbuild- ing. The Maritime Administration funds marine re- search and development and operates merchant marine academies at public expense. The Federal government supports aviation through subsidies and assistance rendered to air- ports and airways, direct subsidy of local air carriers and service to small communities, and funding of aviation research. The Federal government owns and operates most of the country’s civil air traffic control, navigation, and flight information services. The Fed- eral Airport and Airways Trust Fund finances the cost of facilities and equipment purchased by the FAA. The fund is supported by user charges, but does not cover many other Federal expenses for aviation, including: maintenance and operation of FAA facili- ties and services; civil aviation research conducted by the National Aeronautics and Space Administra- tion; local airline service subsidized by the Civil Aeronautics Board; and weather service information provided by the National Oceanic and Atmospheric Administration. Some studies suggest that while user charges paid by commercial air carrier passengers and shippers approximate FAA service costs, gener- al aviation receives an indirect subsidy equivalent to several hundred million dollars annually. If Federal policy and practice are not altered, this indirect subsidy will continue to increase. Should government insure that industries such as those providing transportation have access to the capital needed for replacement and growth? If so, what means would be both effective and acceptable? In the private sector, capital requirements are met by reinvesting profits, selling equity, leasing, or debt financing. A firm’s access to capital is determined generally by its profitability. Government itself puts pressure on the market by offering investors tax-free bonds, loan guarantees, and other advantages. By taxing profits and regulating rates-of-return, govern- ment weakens the capacity of industry to compete for capital. Demand for public investment is increasing, but U.S. population growth has slowed, suggesting that the demand for housing, schools, hospitals, and other such facilities may lessen. There may be pressures for increased capital in new energy and environmental programs. Uncertainties make it haz- ardous to predicate policy recommendations on presumptions of a general shortage of capital. Nev- ertheless, fair and impartial competition for Capital resources is an issue. Private industry in some instances has contended that Federal safety and environmental regulations have imposed added capital requirements at the very time when inflation and massive government borrow- ing have made capital difficult to obtain. Carriers have called for assistance in obtaining the funds they believe are necessary. Higher profits, perhaps partially the result of recent regulatory reforms, have lessened concern for Capital needs of the airlines, several of which have recently signed contracts in excess of a billion dollars for new aircraft.? But the railroad situation is different. Much of the industry is in serious financial condition, and is likely to remain so for some time. Federal relief in the form of loans, loan guarantees, and the purchase of preference shares has helped some railroads on the verge of bankruptcy, but few railroads are strong enough to attract the Capital they need to maintain or improve service. EMERGING TRANSPORTATION ISSUES e 241 Growing capital requirements for U.S. transporta- tion, combined with increasing foreign willingness and ability to invest in U.S. industry, may result in the emergence of a new issue: increased foreign owner- ship of the transportation industry. HIGHWAY SYSTEM MANAGEMENT Which levels of government should be responsible for funding various portions of highway ‘‘needs’’? Traditionally the Federal government has limited itself to partial funding of Capital investment in a limited portion of the nation’s highways and roads. In constant 1975 dollar terms the share of Federal funding for highways has declined for more than a decade. Future issues concern the types and degree of funding for this purpose, and whether the Federal interest lies in achieving uniformity of conditions on all highways in the U.S., or only on a portion of the highway network, such as the Interstate System. What should determine the level of highway serv- ices? Each alternative shown in Table 101 results in different requisite expenditure levels, intergovern- mental responsibilities, distributions (among states and urbanized areas), and spending on functional Classes of road. Each has limitations, and each requires substantially greater public highway reve- nues than the NTPSC anticipates will be available, based on projected trends and a continuation of Current user-charge practices. As shown in Table 101, the difference in capital investment between the least and greatest investment is $170 billion (in 1975 dollars) for the 1976 to 1990 period; an even larger amount would be required for the 1976 to 2000 period. For example, the U.S. DOT “Basic” alterna- tive estimates the expenditures necessary to con- tinue today’s general level of highway conditions and performance at $469 billion through 1990 in 1975 dollars. All three alternatives and the NTPSC forecasts of highway travel are based on roughly the same 1975 to 1990 rate of growth in highway travel (equivalent to about a 2.5 percent annual growth in vehicle- miles). However, annual growth rates for the past decade, with few exceptions (notably the 1973 to 1974 oil embargo years), have exceeded 4 percent. INTERNATIONAL TRANSPORTATION Economic theory indicates that free, competitive world trade would benefit all nations. Many coun- tries, however, have seen fit to interfere with trade. Cargo-sharing arrangements between nations have become commonplace. Some countries (including the U.S.) subsidize shipbuilding and merchant ma- 242 e ISSUES AND POLICY RESOLUTION TABLE 101. Alternative notions of highway needs. 1976-1990 Capital Investments (Billion 1975 $) Comments U.S. DOT did not compute results for each state. Needs defined by DOT and states may not agree. Partial, but inconsistent use of economic analysis. DOT ‘‘Basic”’ $469 1974 National $512 + Reported by individual states, Transportation therefore probably not based on Report a consistent rationale from one state to another. Underlying Fed- eral rationale largely a projection of historical practice. Economic Anal- $322 Basic data reported by individual ysis states, U.S. DOT performed analysis using common rationale and economic methods. States may not agree with defined need. SOURCE: For local road and street estimates (all alternatives) see state-reported local needs from Catalogue of Tabulations, 1974 National Transportation Study, Washington, D.C.: U.S. Depart- ment of Transportation, 1975, File Table HO89. Costs for the Interstate System (all alternatives) from A Revised Estimate of the Cost of Completing The National System of Interstate and Defense Highways, Communication from the Secretary of Transportation Transmitting a Revised Estimate of the Cost of Completing The National System of Interstate and Defense Highways, Pursuant to The Provisions of Section 104(b)5, Title 23, United States Code, ist Sess., Committee on Public Works and Transportation, Committee Print 95-11, 95th Cong., 1st Sess., Washington, D.C.: Government Printing Office, 1977, p. 25. Arterials and collectors for the DOT ‘‘Basic”’ alternative, see The Status of the Nation’s Highways: Conditions and Performance, Report of the Secretary of Transportation to the United States Congress, Pursuant to Section 3, Public Law 89-139, Committee on Public Works and Transportation, Committee Print 95-29, 95th Cong., 1st Sess., Washington, D.C.: Government Printing Office, 1977, p. 167. Arterials and collectors for the ‘‘Economic Analysis’”’ from unpub- lished study performed by the U.S. DOT, as reported in 1972 National Transportation Report, Present Status—Future Alterna- tives, Washington, D.C.: Government Printing Office, 1972, pp. 225, 226. rines as a matter of national policy. Various countries restrict entry to their domestic markets and promote penetration of their own products into foreign mar- kets. Two questions arise. First, to what extent should the U.S. buy only domestically produced goods? The issue has been particularly sensitive when, despite unemployment, public funds have been used to purchase transportation equipment abroad. A second question concerns the extent to which U.S. trade should be required to move in U.S. ships. Today, many military and foreign-aid cargos are required to be moved in U.S.-flag vessels. Governments’ persistent interference with free trade, together with forecasts of increasing U.S. overseas trade, indicate that international trade-re- lated issues will grow and intensify. PUBLIC TRANSPORTATION Present urban mass transportation can be divided into bus and rail transit categories. In terms of ridership, both are almost totally government owned and operated. In the past decade, fares have not kept pace with costs of providing services, and Federal, state, and local subsidies have risen as a result. For example, Federal assistance for capital projects totaled about $2 billion in fiscal year 1978, and operating assistance constituted about 11 per- cent of the total transit operating bill of $4 billion in 1976. (Some 55 percent came from the farebox and the rest from state and local governments.) In- creased authorizations are expected to bring the Federal share up to 20 percent in 1978.4 In the future, this gap between user revenues and costs is expected to continue, and possibly widen. With further shortfalls, current issues will intensify, raising such questions as: 1. Who should pay for urban transportation, and what should be the basis of payment? 2. How should the revenues be collected, and what mechanisms should be used to distribute the funds? 3. Who should receive the benefits of transit serv- ices? 4. What level of public investment do transit benefits justify? 5. How should costs be apportioned among local, state, and Federal governments? 6. Should the Federal share be paid from general revenues, or from a type of trust fund? 7. Is it better to pay subsidies to service providers so that fares can be kept low, or should higher fares be charged with subsidies paid directly to users? Some observers believe the Federal government should increase its financial commitment to transit because improved service is believed to help solve energy, environmental, and other problems. Others contend that extensive Federal assistance is inap- propriate because mass transit should be a local, not a Federal matter. Some believe the funds are ineffi- ciently directed in their present form. Selectively channeling demand to those modes and activities deemed socially desirable is rapidly becoming an inherent, though not always explicit, element of many public programs. One direction of current demand modification programs is to attempt to move passengers away from the private auto to rail or bus transit modes, thus implying a socially desirable modal choice. Other programs inhibit use of automobiles by permitting, or even creating, congestion in order to divert demand. Opponents view such projects as those which close freeway lanes to autos, giving buses and car pools exclusive rights-of-way, as an infringment upon mobility rights. If government consciously constrains mobility as a by-product of channeling transportation into pre- selected modes, or fails to provide adequate facilities without analyzing the benefits and costs, the results could be dramatic changes. Mobility rights for special populations is emerging as a national issue. This is due to several coinciden- tal developments: growing recognition that a highly auto-oriented society is a disadvantage for those without access; increased public responsibility for transit services; more vocal and articulate user groups; and growing financial support of services for the transportation-disadvantaged. Mobility rights questions have focused specifically on needs of the elderly and handicapped. Section 16 of the Urban Mass Transportation Act and other Federal legislation state that these groups have the same rights as other persons to utilize publicly supported mass transportation. Finding cost-effec- tive ways to provide equivalent mobility to elderly and handicapped groups is a transportation issue with significant social overtones. Adequate mobility for these groups so that their daily needs and interests can be met (a transportation issue) has become a conflict over the right of access to existing and prospective transit, and thus a question of social values and civil rights. Some of the handicapped also contend that specially equipped vans for on-call, door-to-door service separates them from society, in a manner that suggests a separate-but-equal philosophy, even though vans may provide superior service. However, public costs to make present systems accessible to all handicapped groups, particularly by retrofitting existing systems, will far exceed the costs of special- ly designed but separate systems. The future of this issue will be affected by two factors. The first is'that the attitude of the general public is unclear at present. As costs become known, both in dollar terms and in terms of services fore- gone, the general public will have to decide whether the additional costs are warranted, and whether any Substantive mobility or social rights have been cur- tailed. The second factor is the size, location, and character of the service populations. Only varying and partial statistics have been available to identify the location and numbers of the handicapped. Infor- mation is needed on those who could use ‘‘accessi- ble” transit if provided, and who would use it as a EMERGING TRANSPORTATION ISSUES e 243 matter of personal choice. Limited data indicate that beneficiary populations are quite small. There are no data which identify those who, although qualified by virtue of age or infirmity, may prefer and be able to afford means of transport other than those which are publicly provided. Mobility needs of low-income persons, particularly the urban poor, have been the focus of government concern for some time. Part of the rationale for public support of transit is based on this concern. Mobility has been recognized as necessary for obtaining services such as education, health care, and employment opportunities, which are themselves perceived as rights. Whether the concept of a universal right of mobility will be accepted depends on future re- sources and social concerns. The public sense of responsibility for the needs of the disadvantaged appears strong. But, as society focuses on the transportation needs of those disadvantaged by age, infirmity, or income, public policy has begun to question the mobility rights of the total population. TRANSPORT TECHNOLOGY In light of increasing costs of R&D and the risks associated with the introduction of innovations (such as alternative auto engines, electric vehicles, and advanced turbofan engines), primary technological issues concern the Federal government’s proper role in traditionally private industries. These issues raise the following questions: 1. To what extent and for what purposes should R&D be publicly supported? 2. What is the proper balance of government sup- port for high-risk basic research and near-term applied R&D? 3. How can the government encourage more private R&D? 4. Should commercial feasibility be emphasized dur- ing all phases of government-sponsored R&D and used as a primary criterion for decisionmaking? 5. What are the allowable economic trade-offs (e.g., antitrust, technology transfer) for joint develop- ment efforts, both domestic and foreign-domes- tic? 6. For what purpose and by what means should the government aid market penetration of advanced technology (e.g., attractive export-import loans for overseas sales, guaranteed government pur- chases as with electric vehicles, ‘‘Buy American’”’ policies, and design standardization policies)? The 1973 oil embargo, as well as gasoline short- ages in mid-1979, dramatized the problem of energy supply, and caused fuel efficiency to become a strong motivation for technological change in trans- 244 e ISSUES AND POLICY RESOLUTION portation. Prime examples are: alternative auto en- gine R&D; electric vehicle R&D; and NASA’s Aircraft Energy Efficiency Program. Some efforts may have been directed without sufficient regard for future fuels or for obtaining maximum output for every dollar input. Rather than simply seeking vehicle fuel efficiency, should empha- sis be placed on treating vehicles, fuels, and refiner- ies aS a system which can be optimized for efficient use of fuels? If so, how can the government direct this effort? What current regulations need to be changed to achieve this goal? INTERGOVERNMENTAL RELATIONS The provision of transport services today is charac- terized by a profusion of agencies, programs, poli- cies, and regulations at all levels of government. The NTPSC identified 64 agencies with transportation responsibilities in the Federal government alone, and more than 1,000 policies and programs administered by these agencies. Results of this proliferation can include inefficient government due to a lack of clear objectives, a lack of coordinated pursuit of objectives, or an inability to measure progress toward objectives. Multiple agen- cies with various narrowly defined goals often create programs that work at cross-purposes, thus nullifying potential progress. Local and state priorities are often distorted by Federal funds available through a proliferation of categorical programs, which are often characterized by complex funding formulas and inflexible stan- dards. Distortions can result from conscious Federal intentions to redirect local priorities toward national objectives, but criteria seem lacking to assure that program differences are the products of consciously structured tradeoffs. At the Federal level, transportation goals frequent- ly receive less priority than goals for other sectors, which may have resulted in a diminution of transpor- tation efficiency and services. Failure to assess the impacts of non-transportation policies on transporta- tion, stemming from an inability to perceive transpor- tation’s crucial role in society, has negatively affect- ed national productivity and mobility. Increased Federal constraint on local actions has accompanied the dramatic shift in shares of local expenditures from 58 percent by local governments in 1913, to only 17 percent in 1975, and a corre- sponding doubling of the Federal and state shares.5 In particular, the large share of local expenditures attributable to Federal aid has shifted the relative government authorities and priorities. Without a reversal it can be expected that the issue of control will be characterized by greater Federal and state controls on expenditures in the name of fiscal responsibility, and by greater local demands for relief from constraints and red tape. Direct local-Federal relationships in certain pro- gram areas create ambiguity in the responsibility and authority of states. This issue is exacerbated when increased state funding support is expected by local areas, while little state influence over how such funds are spent is possible, given the extent of Federal rules. States often believe they are in a superior position to use Federal aid to the best advantage in improving the welfare of all their citizens. States may resent the intrusion of the Federal government in revenue collection and expenditure. ECONOMIC DEVELOPMENT AND LAND USE Transportation investment can result directly in im- proved productivity and expanded employment over the long run. Transportation can affect ways in which regions and communities develop, but there is uncer- tainty in the relationships. A principal concern is whether transportation will be able to support eco- nomic growth and employment in the future. Undesir- able patterns of development may result from the location of facilities and the placement of transporta- tion services, and transportation planners have been criticized for failing to anticipate these effects. There are questions as to the extent that transportation can promote desirable development. A more crucial issue may be whether transportation should be used as a lever to achieve development goals. The general availability of transportation dimin- ishes the relative impact of new transport investment on development. Other factors, such as water and sewer services, the weather, the availability of local amenities, public policies, and development already in place, are equally or more influential. Transporta- tion decisions can also become significant in a negative way; closing an airport, abandoning a rail line, or re-routing service may adversely affect the potential of a community or region. SUMMARY AND CONCLUSIONS Because issues are often symptoms of basic prob- lems in the transportation system, success in formu- lating responsive transportation policies will require understanding and consideration of the overall struc- ture of transport markets. Two key themes arising from the NTPSC’s research into the general condi- tions of the U.S. transport system are the importance of using proper pricing mechanisms in transportation and the necessity of preserving competitive transpor- tation markets. A responsive, future-oriented policy should recog- nize and respond to the fact that transport issues are dynamic, being influenced by: 1. Changing trends in system capacity and service; 2. Changing trends in the values used to judge the adequacy of transportation; and 3. Developing issues and opportunities. The NTPSC has reviewed changing trends, with the expectation of both resolving the issues and capitalizing on the opportunities presented by: EMERGING TRANSPORTATION ISSUES e 245 1. The value of mobility and trade in the economy; . Technological advances; and 3. Shifting institutional processes for comprehensive and responsive decisionmaking. NO An effective, future-oriented policy will not only resolve issues, but will also recognize opportunities and provide the environment in which policy can be implemented. The next chapter presents. the NTPSC’s policy recommendations. NOTES AND REFERENCES 1. National Transportation Policy Study Commission (NTPSC), Current Transportation Issues in the United States, Special Report No. NTPSC/SR-78/01, Washington, D.C.: 1978. 2. NTPSC, Amtrak: An Experiment in Rail Service, Special Report No. NTPSC/SR-—78/02, Washington, D.C.: 1978. 3. Richard G. O’Lone, ‘‘Boeing New Orders Surge with Lufthan- sa 737 Buy,” Aviation Week and Space Technology, 11 December 1978, p. 31. 4. American Public Transit Association, Transit Fact Book, 1976—1977, Washington, D.C.: 1977, p. 20. 5. U.S. Bureau of the Census, Government Finances in 1974 and 1975, GF 75, No. 5, Washington, D.C.: September 1976, Table 4. Policy Recommendations INTRODUCTION This chapter details the integrated set of national transportation passenger and freight policies devel- oped and recommended by the members of the National Transportation Policy Study Commission. These policies are predicated on the following themes identified by the NTPSC: 1. National transportation policy should be uniform; 2. There should be an overall reduction in Federal involvement; 3. Economic analysis of intended Federal actions should be performed; 4. When the transportation system is used to pursue non-transportation goals, do so in a cost-effective manner; 5. Federal involvement in (including financial assis- tance for) transportation safety and research is required; and 6. Users and those who benefit from Federal actions should pay. The policies are discussed in general terms under five functional categories. These categories, repre- senting instruments of policy, are: Regulation; Ownership and operations; Finance, pricing and taxation; Planning and information; and Government organization. “alc se che Sem Within each category, specific policies are listed. For example, policies are recommended to establish the DOT as the focal point for integrated national transportation policy; to encourage energy-efficient transportation; to use modal trust funds to finance capital needs of transportation systems; and to provide better balance among transportation mar- kets, modes, and regions. The NTPSC policies are designed to reduce impediments to vigorous competition by eliminating outmoded economic regulations, although restraints on anticompetitive and predatory behavior using the concepts of antitrust law enforcement within zones of reasonableness (where other economic regulation does not exist) will be needed in transportation, as in other sectors of the economy. Increased emphasis on uniform and effective enforcement of require- ments for safety and financial responsibility (includ- ing that required by insurance regulations), is recom- mended for all carriers through cooperative Federal, state, and local efforts. Modal trust funds are one means to account for revenues from proper user fees, while expenditures from those trust funds are to be carefully evaluated using proper economic analy- sis. Federal ownership or operation should be used only where the private sector or state and local governments cannot act to achieve specific national objectives. Even in these cases, Federal involvement must be as limited and temporary as is feasible. Regarding planning, the NTPSC recommends a new emphasis on multimodal cooperation and coor- dination, and optimum development of integrated transportation facilities. Cost-effective support of transportation research and development is also stressed. Finally, to permit more effective transportation policymaking, the NTPSC recommends a restructur- ing of government organization, including the DOT, the transportation regulatory commissions and cer- tain congressional committees. These policy recommendations, when taken to- gether, are proposed as necessary improvements to the existing U.S. transportation system, to cope with new challenges at least through the year 2000. Favorable impacts (as detailed in the next chapter) are expected in eleven goal areas, should the NTPSC policies be implemented. Although the policies do stress integration, coordi- nation and the need to consider the U.S. transporta- tion system as a whole, the policies also recognize the problems associated with individual transport markets (intercity, rural, urban and international), with passenger and freight transport, and with indi- vidual modes. MAJOR POLICY THEMES This section identifies several themes which have emerged from the work of the NTPSC. The common 247 248 © ISSUES AND POLICY RESOLUTION element of all the themes is that national transporta- tion policy must consider the U.S. transportation system as an integrated, multimodal network for the best employment of effective policies to guide the U.S. through the year 2000. Policies should not be developed in isolation, as is too often the case today. For example, policies developed to help rail passen- ger service, through Amtrak, may work to the detriment of the intercity bus industry. Other impor- tant themes include the need for placing major reliance upon the private sector, reduced govern- ment regulation, equal government treatment be- tween modes, more competition and improved effi- ciency and, where Federal involvement is chosen, for application of appropriate user charges and proper economic analyses. A. NATIONAL TRANSPORTATION POLICY SHOULD BE UNIFORM The NTPSC review of existing Federal transportation policies and programs revealed that there is no uniform set of policies to guide Federal actions, or to improve the performance of the private sector. Most policies or programs are individually directed at particular problems. Although most are well-mean- ing, both individually and collectively they have at times tended to frustrate the effective functioning of competitive markets. In particular the important question of intermodal transportation has received too little emphasis. This is not to say that the same policy must be applied to each issue. Uniformity is not desirable for its Own sake, because some special situations re- quire special policies. Some decentralization of Federal program administration, for example, may tend to encourage healthy diversity. Nonetheless, policies should not work at cross-purposes. B. THERE SHOULD BE AN OVERALL REDUCTION IN FEDERAL INVOLVEMENT Federal involvement often is required to facilitate the U.S. transportation network. The NTPSC recom- mends that where the Federal government is in- volved, it should use effective tools to accomplish its objectives. For example, Federal financing has led to the successful construction of the Interstate Highway System. Unfortunately, some sections of highway (and many bridges) are experiencing rapid deteriora- tion. Current revenues for the Federal Highway Trust Fund will not be sufficient to complete construction of the Interstate System, to build other needed Federal-aid highways, and to ensure that the states are able to prevent deterioration of the Federal-Aid System. Despite an important financial role for the Federal government, the NTPSC believes that in many in- stances Federal involvement can be reduced, so that private enterprise can function effectively, supple- mented with limited state and local government participation. The private transportation sector should be permitted and encouraged to meet chang- ing economic and other requirements without being unduly restrained by Federal laws and rules that do not apply to other business sectors. This is especially true in the recently deregulated airline industry where mergers of air carriers should be treated by the antitrust standards traditionally applied by the courts to unregulated industries. The new airline legislation is founded on the concept that it is in the public interest to allow actions of the airline industry, including decisions to merge, to be governed by forces of the marketplace. Consistent with that premise, mergers of air carriers should be governed by the same standards that are applied to mergers of other firms. At the same time, other conceptual constraints of Federal laws and rules from which the transportation service industry is now exempt should also apply to the transportation industry. It is recognized that, in most instances, competi- tion provides the most efficient results. However, responsible individuals differ as to those situations where free markets do not work well, both in theory and in practice. The NTPSC developed recommend- ed policies that give free markets ‘‘the benefit of the doubt.’’ Where exceptions are believed to exist that may require Federal involvement to correct distor- tions, those advocating involvement are asked to support their proposals with meaningful evidence. Where the Federal government is involved, it should evaluate its policies and programs frequently, to prevent outmoded regulations from unduly bur- dening the private sector and other levels of govern- ment. This new orientation of Federal policy is based on the perception that, for most transportation issues, public interest and private profit are consis- tent rather than opposed. In general the public interest is best served by decentralized private decisionmaking that adapts transportation services closely to customer demands. Generally, such a system is socially and economically more responsible than one involving centralized government decisions that respond largely to bureaucratic and political imperatives. C. ECONOMIC ANALYSIS OF INTENDED FEDERAL ACTIONS SHOULD BE USED In considering the inadequacies of major Federal policies, the NTPSC found that careful analysis of benefits and costs might often serve to focus Federal involvement on those issues where government could maximize its contribution. For example, alter- natives analysis is required of major transit projects funded by UMTA. Analysis and studies are not cure- alls. However, the results are often of great value to policymakers, and may help to produce greater public benefits per dollar spent. D. WHEN THE TRANSPORTATION SYSTEM IS USED TO PURSUE NON-TRANSPORTATION GOALS, DO SO IN A COST-EFFECTIVE MANNER In some cases transportation policies are established by the government to achieve other national goals, including safety, environmental protection, energy conservation, regional development, export expan- sion and national defense. NTPSC policy recommen- dations seek to pursue such non-transportation goals with minimum impediment to free transporta- tion markets. In pursuing these goals, care should be taken to retain as many market incentives for proper pricing, effective management, and improved labor and capital productivity as is practical. Departures from the most economically efficient alternative should be explicitly stated and quantified. E. FEDERAL INVOLVEMENT IN (INCLUDING FINANCIAL ASSISTANCE FOR) TRANSPORTATION SAFETY AND RESEARCH IS REQUIRED Federal involvement, including financial assistance, to insure safety in transportation seems to be among the few areas in which a Federal role, if carefully structured, can be beneficial. The Federal govern- ment can work with the private sector and state and local governments to gather and disseminate infor- mation, promote cost-effective safety measures, re- quire insurance and financial responsibility, and use performance measures (rather than arbitrary stan- dards) to preserve the greatest degree of personal freedom consistent with the rights of all persons not to be harmed by the illegal actions of others. Support for research of national importance is another area that can benefit from Federal involve- ment. Such involvement should utilize grants, con- tracts and cooperative agreements with private research organizations, universities, other govern- ment agencies and the private sector. F. USERS AND THOSE WHO BENEFIT FROM FEDERAL ACTIONS SHOULD PAY Free markets operate on the principle that those who benefit must pay for the costs. When government provides costly facilities, benefits, or services, it too should assess charges that recover costs against users and others who benefit. In some cases, such as urban and rural transit and air traffic control, where benefits are widespread, it may be appropriate to POLICY RECOMMENDATIONS @ 249 assess a general tax to recover federally-incurred costs. When the private sector is called upon to provide mandated services, the suppliers’ operating and capital costs should be recoverable from the agency or political subdivision mandating the ser- vice. POLICY RECOMMENDATIONS NTPSC policy recommendations are summarized in this section. The recommendations devolve from the themes listed above and are reported by the NTPSC’s five functional areas. A brief summary is given of status quo policy and of recommended policy alternatives. Some specific examples from intercity freight, intercity passenger, urban, rural and ‘international markets are shown in several tables that follow the functional-area discussions. REGULATION Status Quo Federal regulatory agencies now administer a host of complex regulations affecting entry, exit, prices, routes, and quality of service. Such economic regula- tions have evolved over the years to become more extensive, yet with more exemptions and special privileges. Congress has moved to ease regulations for railroads (e.g., the 4R Act of 1976), and for air carriers (by first phasing in freight deregulation in 1977, followed by air passenger deregulation begin- ning in 1978). In some cases, regulatory agencies themselves have moved to relax such controls (e.g., the CAB) while in other cases, they have interpreted congressional policy in such a way that regulations are not relaxed, and may even be tightened (e.g., the ICC’s response to the market dominance provisions of the 4R Act for railroads). An agency may simulta- neously tighten some recommendations while loos- ening others (e.g., the ICC’s Chairman proposed, in November of 1978, to reduce drastically many as- pects of motor-carrier economic regulation). Too often the consequences of Federal economic regulation appear to be more costly than, and out of proportion to, the abuses regulation is designed to prevent. Regulations reasonable at the time of their promulgation become inappropriate as the economy and competitive environment change. Many regula- tions are out of date, such as many of those still imposed on U.S. railroads and motor carriers. Non-transportation goals are often pursued through regulations and constraints imposed on transportation providers and users. For example, the 55 mile-per-hour speed limit was established as a measure to promote energy conservation. 250 e ISSUES AND POLICY RESOLUTION NTPSC Policies The NTPSC ‘strongly endorses regulatory reform. Over the long term, complete revision of existing Federal economic regulation of transportation should be accomplished. Revisions should be undertaken following careful but expeditious economic analysis of their consequences along with assurances that protect the public from possible adverse effects implicit in such revisions. Basically, such revisions should encourage efficiencies in operation and ener- gy consumption and provide wider latitude in entry, exit, route choice, price, and quality of service by permitting firms to make their own decisions subject to general laws and rules designed to protect the public interest, such as energy conservation legisla- tion, antitrust laws and insurance coverage. Trans- portation firms should be permitted to merge, how- ever, subject to the same antitrust policy concepts as other sectors of industry, as a minimum, once regulatory reform is implemented. In applying anti- trust policies, consideration is necessary for the interconnected, international, and interrelated nature of the transportation industry. The National Commission for the Review of Anti- trust Laws and Procedures has considered the effectiveness of U.S. antitrust policy in encouraging efficiency through competition for major sectors of the U.S. economy, including transportation. The Antitrust Commission’s report favors substantial re- form of the antitrust laws affecting U.S. transporta- tion (e.g., repeal of the Reed-Bulwinkle Act which permits antitrust exemptions for rate bureaus). If the antitrust policies cannot be corrected, and made applicable to transportation, the NTPSC supports a limited role for specialized Federal evaluation of transport competition. For example, a reconstituted residual transportation regulatory body may still need to consider effects of rail and air mergers by applying new criteria that emphasize the need for plant rationalization or coordination projects and the desir- able transportation benefits of such actions as end- to-end rail mergers and mergers between small trunk Carriers. The NTPSC believes that Federal licensing to assure the fitness of certificated carriers should be retained. Fitness should be the responsibility of a single residual U.S. transportation regulatory com- mission (which would replace existing Federal regu- latory commissions), considering all modes using fair and equitable rules, but applying firm enforcement. For example, in the case of motor carriers the right to operate (as distinguished from the present require- ment to obtain operating authority) would be condi- tioned upon demonstration of adequate insurance— covering public liability, property damage, cargo (for other than private Carriers) and environmental resto- ration—and demonstration of payment of the Feder- al heavy-vehicle highway-use tax to state vehicle registration agencies. Collection would be a cooper- ative Federal and state effort financed in part by sharing the proceeds of the heavy-vehicle highway- use tax. For certificated motor carriers, adequate insurance (or proof of financial responsibility equal to that required by insurance regulations) should be a minimum of $1 million for a single occurrence, or some other minimum amount, sufficient to require periodic ‘‘on site’ inspection by an insurance com- pany. The minimum should be updated regularly. Non-certificated motor carriers and other modes would be subject to similar requirements. Rules that are retained should be reviewed fre- quently and updated. Decisions of the residual commission should be accomplished quickly to avoid imposing costly delays on carriers and users. Consis- tent with the overall goal of regulatory reform, Congress should provide continuing oversight, as Federal fitness regulation relating to safety (as opposed to entry, exit, route and price regulation) is likely to be a continuing Federal responsibility. Duties of the residual U.S. transportation regulatory com- mission might include consideration of financial and Safety fitness, mergers, some elements of rate regu- lations, predatory practices, energy, environmental matters, intermodal coordination and other matters that clearly require continued regulatory administra- tion. Regarding rate regulation, carriers should possess the right to raise or lower specific rates within an expanding zone of reasonableness without approval. Congress should define the zone, and as the zone expands each year, complete pricing freedom even- tually will be achieved. Review of price changes within the zone should be made only when there is a complaint, and the burden of proof should be on the complainant. All rates within the zone would be subject to improved antitrust laws. Rates outside the zone would be subject to investigation and Suspen- sion as today. Tariffs should be effective on notice and without Suspension, although collective ratemaking would be exempt from antitrust laws only for carriers that can Participate in the traffic. Rate bureaus should be prohibited by statute from protesting independent actions. Rate bureau meetings should be open to the public and voting records subject to the scrutiny of the residual transportation regulatory commission. As an interim measure, special exemptions now granted to one regulated mode should be available to all. For example, railroads should immediately be granted the option of offering service to shippers of all bulk and agricultural commodities (not only fresh fruits and vegetables) under the same terms and conditions as can now be provided by water and motor carriers of bulk and exempt commodities. Contract authority for service and rates should be available to all transportation modes and carriers as it is to business generally. Contract rates of a bilateral nature should be encouraged which foster negotiated prices for specified time periods at agreed-upon levels of service. The |CC announced in November 1978 that it will permit rail contract rates. Yet, its actions to date have not provided contract rate making to railroads on terms equivalent to those permitted for other modes. ; In the case of motor carriers, economic regulation should be rationalized to provide much more free- dom for common and contract carriers to compete with private trucking by offering service and price options that are attractive to a variety of users. Where operating authority is required, the carrier should be limited to showing that it is fit, willing and able; demonstrating that the proposed service meets a public need (through shipper support); obtaining adequate insurance coverage (or self-insurance) to protect the public; and paying the Federal heavy- vehicle highway-use tax required of all motor carriers as noted earlier. Similarly, other restrictions that impose undue circuity or encourage empty back- hauls should be quickly eliminated. Where Federal safety regulations are required, more uniform en- forcement among carrier classes may contribute to efficiency. In all transport sectors, carriers should be allowed to abandon uneconomic services. If it is determined that the public benefit requires continued service, the carrier involved should be fully compen- sated for operating and capital costs. Where Federal policy provides reduced economic regulation of interstate carriers, state and local regulations should not be permitted to prevent the reforms from having their intended effects. In sum, the common carrier obligation that under- lies existing U.S. economic regulation of transporta- tion should be interpreted to stress that no carrier has the obligation to serve unless compensated for its costs; users should pay for benefits received; cross-subsidy should not be used; and competition will almost always produce more beneficial results at less cost to society than will detailed Federal regula- tion. Where deregulation imposes undue burdens on certain users, limited, temporary subsidies may be required (e.g., Congress acted in 1978 to provide a 10-year subsidy program for smaller communities that might otherwise lose air service). The NTPSC recognizes that transportation must accommodate other ends, and the transport sector must expect to adhere to certain non-transportation regulations, as does all industry. Where such regula- tions are imposed, however, renewed emphasis must be placed on producing the most effective result for the least cost; where it is determined that Federal POLICY RECOMMENDATIONS e 251 intervention is necessary, the steps taken must be in order of their cost-effectiveness. This is not always true today. The National Highway Traffic Safety Administration (NHTSA) publishes its estimates of the relative cost-effectiveness of some proposed highway-related safety improvements. In the case of Federal Motor Vehicle Safety Standard 121, which mandated costly computerized braking systems for trucks and buses, the Supreme Court ruled that NHTSA had not properly considered the costs of achieving the mandated standard. The Court over- turned the regulations. Although Federal involvement in air traffic control is a legitimate exercise of Federal power, many other safety functions can better be pursued with less direct Federal involvement. An example is allowing evidence of proof of insurance coverage rather than using regulations strictly prohibiting particular ac- tions. The Federal government should concentrate on improving the information available to carriers and users in transportation markets. Regarding energy conservation, it is believed that deregulated energy markets with prices reflecting costs (modified with taxes where external costs are not reflected in market prices), together with free transport markets, will be the most efficient way to encourage energy conservation and development. More market reliance will gradually reduce the need for Federal regulations designed to allocate petrole- um and to impose strict fuel efficiency standards, regardless of benefits and costs. In the international market, where the U.S. cannot expect unilaterally to impose its antitrust laws on the rest of the world, international negotiating forums should be used to seek cooperative answers to common problems. For example, worldwide imple- mentation of uniform standards for the transport of hazardous materials (such as those negotiated at the Inter-Governmental Maritime Consultative Organiza- tion) seems to be a much more effective mechanism to develop and promulgate such standards than would be a series of unilateral pronouncements or bilateral negotiations. Where bilateral negotiations are used, more reliance on the private market is favored (such as that reflected in a recent bilateral air agreement signed between the U.S. and West Germany). Table 102 compares status quo Federal transpor- tation regulatory policies with the new policies recommended by the NTPSC. OWNERSHIP AND OPERATIONS Status Quo The Federal government now directly owns or oper- ates several transportation facilities and services 252 e ISSUES AND POLICY RESOLUTION TABLE 102. Regulation Policies* ECONOMIC Overall STATUS QUO POLICIES . Recent actions by Congress have favored easing economic regulations (e.g., air passenger and freight deregulation and railroad regulatory reform in the 4—R Act). Regulatory agen- cies themselves have moved, to varying degrees, toward deregulation. Many inequities remain among modes, how- ever. (All) . By executive order, a new Federal multi-agency council for regulatory review considers costs versus benefits of certain regulations in a general fashion, but most regulations seek to achieve only narrow, agency-specific goals. (All) . Much transportation in the urban market is exempt from Federal economic regulation within zones defined by the ICC and CAB. The zones are not uniform. (UP, UF) NTPSC POLICIES 1. Regulatory reform should be continued, with emphasis on achieving such goals as efficiency, adequate service and safety in a cost-effective manner. Remaining economic reg- ulations should pertain to fitness of for-hire carriers. A re- sidual transportation commission should administer the fitness regulations, developing rules for financial fitness (in- cluding that required by insurance regulations) consistent with congressional objectives. DOT should be responsible for developing rules for safety and health, and for adminis- tering Federal funds to promote equitable state enforcement of Bureau of Motor Carrier Safety and other safety stan- dards. Emphasis on safety is necessary as safety regula- tions are not effectively enforced, and reduced economic regulation may remove some incentives to safe commercial operation. (All) . The residual transportation regulatory agency, as well as other government units, should analyze the costs and bene- fits of administering existing and proposed Federal transport regulations and estimate their direct and indirect impacts on the carriers, competing modes and users prior to is- suance. The analyses should be completed expeditiously and become part of a public record. (All) . In the short term, Federal regulation of local transportation should not be undertaken for any mode within a standard exemption zone. The standard zone could be defined as the SMSA or Standard Consolidated Statistical Area bound- ary, or more flexible boundaries could be assigned to par- ticular urban areas if required by market conditions. In the long run, exempt zones would not be needed, given the other NTPSC regulatory reforms. (UP, UF) Common Carrier Obligation . The common carrier obligation is generally defined to re- quire demonstration of a carrier’s fitness, willingness and ability to serve the public convenience and necessity. Cross-subsidy is often used so that service is available to all. (All.) 1. The common carrier obligation to serve must be retained to assure the transportation network serves the entire nation, but common carriers should be assured an adequate return on otherwise uneconomic service which users and govern- ment units will pay to continue. Service, safety and insur- ance obligations should continue. (All) Entry-Exit-Route Restrictions . The ICC regulates motor carrier entry by issuing certificates to serve particular routes and to haul particular classes of commodities. The burden of proof is on the applicant to demonstrate that granting of entry is in the public conve- nience and necessity, although the ICC is considering re- versing this policy. Agricultural commodities hauled by truck are exempt from ICC regulations under Section 203(b\6) of the Interstate Commerce Act (49 U.S.C. 10526(aX6)). Sec- tion 203(b\5) of the IC Act (49 U.S.C. 10526(aX5)) ex- empts agricultural coops from most ICC regulation. How- ever, in 1968 Congress limited the percentage of non-farm, non-member traffic carried by coops to 15 percent to pro- tect common carriers from unfair competition. The ICC act- ed in 1979 to deregulate rail movement of fresh fruits and vegetables, and through administrative action has acted to liberalize additional regulations affecting rail and motor car- riers. For example, in the Liberty Trucking Case and in Ex Parte MC-—55, Sub. No. 26, the ICC has acted to shift the 1. Greater entry/exit freedom for all for-hire carriers should be phased in. Entry decisions should be based on such posi- tive considerations as improved competition, innovation and energy efficiency, in addition to existence and continuation of adequate service and consideration of rates to be charged. A residual commission would grant certificates to for-hire carriers based on the above considerations and fitness (including adequate insurance or proof of financial responsibility equal to that required by insurance regula- tions), safety and proof of payment of Federal heavy-vehi- cle highway-use taxes. The new policy would increase the burden of proof placed upon the protestant. For example, automatic entry subject to fitness and safety, would be granted to any motor carrier applicant that wishes to serve an effectively abandoned market, or a market for which dormant rights exist. (IF, IP, RF, RP) Each policy is followed by a symbol that indicates its relevance to transportation in these markets: Intercity Freight (IF); Intercity Passenger (IP); Urban Freight (UF); Urban Passenger (UP); Rural Freight (RF); Rural Passenger (RP); International Freight (ILF); International Passenger (ILP); All Markets Freight (AllI-F); All Markets Passenger (AlI-P); and All Markets both Passengers and Freight (All). TABLE 102. Regulation Policies —Continued POLICY RECOMMENDATIONS e 253 ECONOMIC Entry-Exit-Route Restrictions STATUS QUO POLICIES burden of proof in entry proceedings, so that a protestant must be carrying the traffic in question to have automatic standing to protest. (IF, IP, RF, RP) 2. In contrast to rail abandonment, there are no direct exit restrictions for particular motor carrier routes, except possi- ble loss of overall authority. (IF, IP, RF, RP) 3. Regarding railroads, current policies result in lengthy aban- donment proceedings and, while adandonment is pending, decreased profit or increased deficits for the carrier. Fur- ther, until 1978, policies encouraged early requests for total abandonment of lines by making rail branchlines ineligible for subsidy until abandoned and approved as such by the ICC. Policies discouraged permanent use of such branch- lines, or potentially profitable segments of such lines, by offering only a temporary subsidy program (also changed in 1978 by Pub. L. 95-607, which reauthorized the branchline program, although retaining the 3-year time limit for Federal assistance to a particular branch). (IF, IP, RF, RP) . Regarding passenger transportation, the policy is to regu- late air (CAB) and intercity bus and water (ICC) carrier entry by awarding certificates of ‘‘public convenience and necessity’’ to carriers found ‘“‘fit, willing, and able’ to serve. The CAB will expire in 1985, and regulations will be re- laxed in the interim. Air passenger carriers may enter one new market per year (for three years) and can serve in areas where there is unused authority, on a lottery basis. Domestic air freight is deregulated. Certificated air carriers must obtain CAB approval to abandon routes until 1982. Intercity bus carriers do not need such approval from the ICC, although they may risk loss of overall operating au- thority. (IF, IP, RP) . U.S.-flag liners may participate in open conferences in ocean shipping. Some U.S. air carriers take part in the rate-setting functions of the International Air Transport As- sociation (IATA), although the CAB recently restricted the latter activity. International routes are approved by the CAB subject to Presidential veto. (ILF, ILP) . Shippers’ councils are prohibited by antitrust statutes. (ILF) . Jones Act provisions reserve all domestic and coast-wise trade for U.S.-flag maritime carriers. Similar legislation re- serves domestic air routes to U.S. carriers.(IF, IP) . Fill-up rights are negotiated in bilateral air negotiations and generally granted on a reciprocal basis. (ILP) NTPSC POLICIES 2. Allow freedom of exit for motor carriers. (IF, IP, RF, RP) 3. For entry and exit controls that are retained, the decision to preserve service (such as on a low-density rail line) should be based on an analysis of the operation of the facility under review, such as the branchline. Such analysis should be required of the parties to an abandonment case before the residual commission, using data and methods of analysis established and monitored by the commission. The Federal executive role should be one of coordination among the affected parties, exploration of the potential for substitute service, and limited, temporary financial assis- tance to certain branchlines serving a national interest. Rail carriers in cooperation with state and local governments and private shippers should be encouraged to continue to operate potentially economic rail branchlines that are ap- proved for abandonment by the residual commission. Limit- ed, temporary Federal subsidy should be provided for this purpose, as is now the case. (IF, IP, RF, RP) . Immediately, permit more route flexibility for intercity buses; retain existing and legislatively planned flexibility for air passenger services. As provided in Pub. L. 95-504, in the long run there should be entry and exit freedom for all air carriers so that adequate service will be provided by the more efficient carriers. This will be the case for the domes- tic air passenger mode beginning January 1, 1982, and has been true for domestic air freight since November 1978. The intercity bus industry should have similar flexibility. (IF, IP, RP) . After studying benefits and costs of alternative policies, leg- islation should be enacted to encourage rationalization of the international maritime market through multilateral negoti- ations. Additional U.S. measures might include closed con- ferences, cargo pooling, revenue sharing and limited rebat- ing. The result might be to reduce excess capacity which has hurt U.S.-flag carriers and the entire world market. The air mode, in which the U.S. enjoys a preeminent position in the world, does not need such protection at present. (ILF, ILP) . Allow shippers’ councils in order to offset the market pow- er held by conference participants. (ILF) . Keep the Jones Act intact in order to promote the viability of U.S. shipping for reasons of national defense. (IF, IP) . In the long term, multilateral negotiations are preferable; in the interim, bilateral negotiations should be continued with emphasis placed on the benefits of competition. (ILP) TABLE 102. 254 © ISSUES AND POLICY RESOLUTION Regulation Policies —Continued ECONOMIC Rates STATUS QUO POLICIES 1. For surface carriers, a rate is deemed just and reasonable by the ICC if it covers variable costs (by ICC definition). The two-year, +7 percent rate flexibility authorized for rail- roads by the 4—R Act was little used, but has been re- newed in a different form by Congress. Peak and seasonal rail rates are also permitted. Domestic air cargo rates are deregulated, and CAB regulation of passenger rates is be- ing phased out. Oil and gas pipeline rates are regulated to varying degrees by the Federal Energy Regulatory Commis- sion, while coal slurry pipelines remain under ICC jurisdic- tion. The ICC may reject proposed fare changes and set minimums, maximums and specific fares for intercity surface passenger carriers. Amtrak is exempt from such fare regu- lation. The CAB regulates air passenger fares; however, carriers are allowed 50 percent downward fare flexibility and may raise rates 5 percent per year without CAB ap- proval (so long as the carrier does not hold a monopoly in the market in question). Subsidized air carriers are allowed to raise fares within a 100 to 130 percent range of the standard fare. (IF, IP, RF, RP) . Although the FMC has no authority to suspend rates in the foreign commerce, it may reject, after hearing, rates which are so high or low as to be detrimental to the commerce of the United States. There are substantial time lags in concluding these hearings. Several countries have passed laws which make it illegal for their flag carriers to supply cost data to the FMC for these purposes. Congress acted in 1978 to impose special conditions on Soviet-controlled vessels, as obtaining cost information from this source has proved to be especially difficult. (ILF, ILP) . Water carriers of bulk commodities and motor carriers of exempt commodities are not regulated, but railroads that carry most such commodities are. (IF, RF) . Contract ratemaking is not available to all regulated modes on equal terms. (IF, RF) . 1CC-determined rental rates for rail freight cars have been aimed at generating enough revenue to cover historical costs of car ownership, not at promoting optimum invest- ment in freight cars or optimum allocation of existing cars. ICC car service rules regulate empty car movements. (IF, RF) . Air freight rates are deregulated and the CAB has ended waiting periods before applying a tariff. (IF) a 3. 4. NTPSC POLICIES Allow more flexibility for both upward and downward rate changes. All carriers should be permitted to raise or lower rates within expanding zones of reasonableness without suspension. These zones would be set by Congress. Rates that were predatory, preferential, or discriminatory due to market control or attempts to monopolize could be disap- proved after hearings by the residual regulatory commission and, within the zone, anticompetitive practices would be subject to appropriate antitrust concepts and remedies. Outside the zone, present suspension procedures would ap- ply. (IF, IP, RF, RP) . The FMC has been given the power to suspend rates of certain state-controlled carriers pending investigation and approval or denial of predatory or disruptive rates. If rele- vant data are not made available to the FMC, the agency should apply average cost figures in making its determina- tion. For example, if Soviet data are not forthcoming, costs should be estimated by the FMC using the experience of other carriers. (ILF, ILP) Immediately, exemptions should be eliminated or extended to all modes on equal terms. (IF, RF) Allow contracts for services and rates for all modes on equal terms. (IF, RF) . Eliminate ICC control of car service matters, such as: own- ership, allocation, movement, and settlement, car rental, rates, leasing, per diem, and demurrage, permitting industry standards to apply, and encourage pricing flexibility subject to antitrust prohibitions where economic regulations do not apply. (IF, RF) . Study the competitive impacts of air freight rate deregula- tion for application to other modes. (IF) Rate Bureaus . Rate bureaus or conferences, for the common carrier freight and passenger modes, establish rates under antitrust exemption, subject to approval of the ICC, CAB and FMC. The ICC has generally approved industry rate requests, al- though sometimes reducing their levels. Its entry, rate and contract carriage rules discourage rate flexibility by regulat- ed carriers. Recently, the ICC has been reluctant to ap- prove many rate increases filed by carriers through rate bureaus. The CAB has discouraged international tariff-filing activities of the International Air Transport Association. (All) ik Rate bureau procedures need to be made more responsive to shippers, carriers and the public. Only carriers that can participate in the traffic, or who represent carriers that can participate, should be permitted to vote. Rate bureaus should be prohibited by statute from protesting independent actions. Rate bureau meetings should be open to the pub- lic and voting records subject to the scrutiny of a residual transportation commission. (All) TABLE 102. Regulation Policies —Continued POLICY RECOMMENDATIONS e 255 ECONOMIC Quality of Service STATUS QUO POLICIES . Federal policy stresses provision of adequate service to users already enjoying service, but does not necessarily promote new service to all areas or persons. (All) NTPSC POLICIES 1. In general, quality of service should be the responsibility of users, providers and beneficiaries, rather than the Federal government. Federal transport service standards should not be established, except as they relate to safety or to achievement of a specific Federal objective (e.g., rights-of- way to military bases in rural areas). If such standards are used, the Federal government should pay for additional costs via line items in budgets of the Federal agencies responsible, so as to avoid hidden subsidies. (All) Intermodalism . Jurisdictional disputes between Federal regulatory agencies exist, as do disagreements over joint rates and differences in liability limits and requirements. There are also limits on intermodal Ownership. Specifically, railroads are subject to ICC restrictions with regard to ownership of other modes, while motor carriers, barges and pipelines are not. Regula- tions also inhibit intermodal service. However, the ICC and FMC recently signed an agreement promising closer coop- eration. (All) . Federal economic regulation may stifle innovation. For ex- ample, the ICC delayed the introduction of ‘Big John’’ hop- per cars and other rail innovations such as cost-based pricing of unit train services. (All) 1. Eliminate Federal impediments to common ownership and intermodal coordination and cooperation, and promote ef- fective joint rates and through service within and among modes. Some restraint on common ownership may be nec- essarily continued where the result is strongly anti-competi- tive. However, where such benefits as probable energy sav- ings resulting from common ownership are high, energy considerations should be weighed against any anticompeti- tive effects. A common definition of “through bill of lading’’ should be adopted by Federal agencies, and differences between ICC, CAB and FMC regulations affecting through rates should be eliminated. Cargo liability laws should be further standardized. The U.S. should seek to write into law through international treaty and other means simpler, more uniform international documentation and liability require- ments. These improved procedures might include pre-clear- ance (using satellites) which, if adopted on a multilateral basis, should improve service. (All) . Federal regulatory impediments to innovation should cease. The private market should be encouraged to adopt new technology where cost-effective (e.g., multimodal services like TOFC/COFC). New technological advances should be adequately tested before they are approved for implementa- tion. Remaining Federal regulations should be used actively to increase the cost-effectiveness of transportation through technological innovation (e.g. improved design of energy transmission, and maintenance of rights-of-way or vehicles). (All) Mergers—Bankruptcy—Financial . Mergers have been viewed by the ICC as a means to revive failing rail firms (i.e., ICC promotion of a ‘‘strong- road, weak-road’”’ combination). (IF, RF) . Both the ICC and the courts participate in reorganization and abandonment proceedings. (IF, RF) . Carriers allege that the ICC in the past has not acted on requests for mergers between carriers in a timely manner and discourages mergers between modes which might help transport efficiency. (IF, RF) 1. The benefits of a rationalized rail system should be careful- ly weighed against lost competition and possible costs to shippers or labor interests, using proper economic analysis. Rail mergers, just as those of other modes, should be de- regulated and made subject to improved antitrust laws, al- though in the interim the residual commission might apply merger criteria that stress plant rationalization. In the case of railroads, DOT should participate in the merger process to establish any important aspects of rationalizing present systems, including the encouragement of end-to-end merg- ers. (IF, RF) . No change until NTPSC exit provisions become effective. (IF, RF). . The Federal government should permit mergers, consolida- tions and transfers between carriers and among modes (in- cluding non-transportation firms), as long as they do not substantially lessen competition. They should be treated in a timely manner subject to antitrust laws. (IF, RF) 256 e ISSUES AND POLICY RESOLUTION TABLE 102. Regulation Policies —Continued ECONOMIC Mergers—Bankruptcy—Financial STATUS QUO POLICIES 4. The ICC regulates financing decisions of surface common carriers, while the CAB does the same for air carriers. (IF, IP; RF, RP, ILF, ILP) NTPSC POLICIES 4. Regulated carriers should be subject to the same financial regulations as those of other sectors, administered by the Securities and Exchange Commission, while for all sectors, the amount of duplicative paperwork should be reduced. The residual transportation commission should collect such financial data as are necessary to accomplish its role. (All) OTHER Truck Size and Weight 1. Truck and truck-tractor length limits vary from state to state. (There are no federally specified limits.) Weight limits (gross vehicle and axle) are also set by states. The Feder- al-Aid Highway Act of 1975 authorized states to increase maximum weight limits from earlier limits set in 1956, to 20,000 pounds on single axles, 34,000 pounds on tandem axles, and 80,000 pounds gross weight on the Interstate System. A grandfather clause was attached. Several states in the Mississippi Valley have kept their limits on the Inter- state System below the Federal maxima. Western and east- ern states typically have set limits at or above the Federal weight maxima on their own highways (non-interstate). (IF, RF) 1. States should retain their rights to set standards. The Fed- eral government should work with the states to study the economic and safety impact of varying state length and weight limits. If significant benefits in excess of costs are found from a more uniform Federal standard on the Inter- state System (or a segment of it), the Federal government should work with the states to accomplish such standards, accompanied by proper user fees for the highway system to recover maintenance and capital costs. (IF, RF) Labor and Management 1. Provisions of the Railway Labor Act attempt to minimize the likelihood of work interruption through government inter- vention in rail and air disputes. The IC Act requires that the ICC provide for labor protection when granting merger approval. The 3-R Act authorized lifetime protection for Conrail employees. (IF, IP, RF, RP) 1. Management and labor cooperation and flexibility should be encouraged to facilitate productivity gains. (All) Safety 1. Responsibility for promulgating and enforcing Federal safety standards and investigating accidents varies by mode and function, with, consequent duplication, some gaps, and une- qual treatment of modes. There are safety regulations for vehicles, for hazardous materials, for rights-of-way, and for vehicle operators. (All) 2. The provision of insurance has been and continues to be a function of the private sector. However, the inability to ob- tain insurance, or to obtain it at a reasonable price, is a growing problem for intercity buses, taxis, and specialized public systems in rural areas. Insurance problems inhibit mobility, delivery of social services, and transport innovation (e.g., para-transit alternatives). (IP, RP, UP) — 3. In some instances, motor carrier owner-operators have not had sufficient insurance or funds to cover the costs of accidents. ICC financial requirements only apply to regulat- ed carriers. Safety regulations pertaining to drivers’ hours 1. Needed are increased Federal preventive efforts, more equi- table and cost-effective safety standards, and penalties for not enforcing or complying (e.g., better rural road/bridge maintenance; better track, rail car and truck maintenance; and better training of police and firefighters on how to deal with hazardous materials when there is an accident). If Federal funding (including loans) is necessary to achieve safety standards in an expeditious manner, costs should be shared by all levels of government, the carriers, users and the public. Cost-effective standards and regulations should be applied for all modes and carriers. As an example, all certificated motor carriers operating upon the highways should be obligated to carry adequate insurance (or proof of financial responsibility equal to such insurance) to pro- tect the public. The insurance should cover public liability, property damage, cargo and environmental restoration—with a $1 million minimum for single occurrence, or another min- imum amount sufficient to require periodic ‘‘on site” inspec- tion by an insurance company, with the minimum to be updated regularly. Noncertificated motor carriers should be subject to similar standards. (All) 2. States and local governments and the private sector should be encouraged to work with the Federal government to solve insurance-related problems. (All) 3. The Federal government should require that safety regula- tion be cost-effective relative to other life-saving programs, and that objectives be clearly stated. Performance stan- dards and incentives should replace government attempts TABLE 102. Regulation Policies —Continued POLICY RECOMMENDATIONS e 257 OTHER Safety STATUS QUO POLICIES of service and truck condition are promulgated and en- forced by the DOT’s Bureau of Motor Carrier Safety. FRA sets standards and regulations for rail safety. FAA sets such standards for air freight and passenger aircraft and service. The Coast Guard sets standards for water carriers. DOT sets standards for hazardous materials transport in general, including pipelines. No Federal-aid highway project can be approved for states which allow highway speeds in excess of 55 mph. Passive restraints are required in autos beginning in 1981. The Federal government sets other auto performance and safety standards and requires recalls of defective autos and equipment (e.g., windshield defroster standards, and bumper standards). (All) 4. Recently, greater emphasis has been placed on Coast Guard vessel inspections. Foreign policy considerations have overriden the enforcement of standards on occasion. DOT may forbid entry of particular vessels into U.S. waters for reasons of safety prior to Coast Guard inspection (be- gun in 1978). (ILP, ILF) NTPSC POLICIES to mandate specific safety technologies. Non-quantifiable benefits and costs, such as the intrusion into personal lives by Federal regulation, should be considered. Strict and ef- fective enforcement should be used. Ail motor carriers should be required to carry adequate insurance (or proof of financial responsibility equal to the insurance require- ment). For certificated carriers, failure to maintain safety or insurance requirements should be grounds for forfeiting Federal interstate operating permits. DOT’s central role in safety regulation and enforcement should be retained. (All) 4. The U.S. should ratify standards such as IMCO standards regarding safety (vessels and containers) and pollution for carriers engaged in international trade. Measures should be enforced through Coast Guard boarding of vessels and testing of crews. Embargoes should be used to encourage cooperation. Existing Federal insurance funds to cover oil spills, financed via a per-barrel tax on oil, should be broad- ened by establishing a single Federal fund preempting a multiplicity of state funds. (ILP, ILF) Energy 1. Numerous Federal controls are imposed on all segments of the energy sector. For example, within congressional limits, NHTSA sets standards covering the average fuel economy of new car fleets for automobile manufacturers. (All) 1. Free energy markets should provide the proper incentives to producers and carriers to use fuel-efficient vehicles and practices. Retain fuel efficiency standards until such free energy markets can be achieved. (All) Environment 1. Federal environmental protection policies comprise a large, complex and growing body of law and regulation. For ex- ample, FAA sets noise emission standards for aircraft. EPA sets noise emission standards for rail, motorcycles, trucks and intercity buses. No noise standards are set for automo- biles at the Federal level. Air emission standards are set for new automobiles, trucks, buses and aircraft, but not yet for rail. State and local laws often cover the rail mode and can apply to other modes. Increasingly, environmental pro- tection seems to delay or eliminate transport projects. (All) 1. Where Federal environmental regulations are imposed, the free market should be allowed to work and prices (fares and rates) permitted the flexibility to recover the cost of meeting these regulations so that users of the system share with the general public the cost of averting degradation of the environment in proportion to benefits received. Regional differences should be considered in preventing and correct- ing environmental degradation. The Federal government should help provide the following: (a) Monitoring of environmental conditions; (b) Environmental information clearinghouse; (c) Mediation of interstate disputes over environmental regulations; and (d) Catastrophic response planning. Actions should be coordinated by designating a lead agen- cy, probably DOT. (All) (e.g., Corps of Engineers’ dredging, FAA’s air traffic control system, the Alaska Railroad, plus National and Dulles Airports) and indirectly controls others (such as the St. Lawrence Seaway Development Corporation and Amtrak). Federal funds also are used to permit other levels of government to own or operate transportation facilities or services (e.g., highways, urban transit, selected rail branchlines and airports). Federal funds have been provided to Conrail, a private, for-profit railroad corporation created by Congress to provide vital rail service in the Northeast, following the bankruptcy of several northeastern railroads. These Federal funds for Conrail are to be repaid, or the Federal government will be the ultimate owner of the Conrail properties. Federal policies also affect private ownership. The ICC has discouraged multimodal ownership and operations (such as rail and truck combinations), and often has delayed or prevented rail mergers by imposing restrictive conditions to protect other rail carriers and by ordering inclusion of other carriers in the merged company. 258 e ISSUES AND POLICY RESOLUTION NTPSC Policies The NTPSC recommends that national policy stress private ownership and operation of transportation, and that the Federal government become involved in ownership or operation only following careful consid- eration of alternatives. For example, Amtrak’s route system is too extensive to pose any opportunity for break-even rail service, nor does it, in its present form, contribute much toward the numerous non- transportation goals (employment, safety, energy conservation, environmental protection) for which it was created. Amtrak should be refocused to achieve more cost-effective performance. Amtrak should cut back substantially its long-haul routes to concen- trate, in the short run, on reducing its deficits by serving dense corridors, and in the long run on providing only that service which is determined to generate long-term benefits to society in excess of resource cost. Regarding Conrail, every effort should be made to insure that Conrail does become profit- able, and that Federal aid is, in fact, repaid. The regulatory reforms recommended by NTPSC should serve to increase the likelihood that Conrail will succeed. Table 103 shows status quo ownership and opera- tions policies in more detail, compared to NTPSC policy recommendations. FINANCE, PRICING AND TAXATION Status Quo The NTPSC staff found that substantially more than the $18 billion identified in the fiscal-1979 combined transportation account of the Federal Budget is TABLE 103. Ownership and Operations Policies? available for use for transportation-related purposes at the Federal level each year. The total amount available includes direct transportation grant pro- grams, loans and loan guarantees, as well as several programs used primarily. for non-transportation pur- poses (but with some portion expended for transpor- tation). Congress has provided capital grants for urban transit systems since 1964, and operating assistance since 1974. In 1978, Congress increased this assis- tance. For example, Congress acted to extend transit financial aid to small urban and rural areas, to increase the levels of funding, to authorize aid to intercity buses, and to add new transit allocation formulas so as to direct more aid to the largest transit systems. In the case of highways, a trust fund is used to account for collections of user taxes imposed on such items as fuel, lubricants, vehicles and parts. Numerous exemptions are given, the most recent (in 1978) to intercity buses and taxis. Revenues are allocated from the trust fund in several categories using various formulas. The money may be used by states for major rehabilitation-type work, in addition to new construction. Trust-fund receipts are used to fund scores of categorical highway-aid programs. A similar trust fund is used to account for grants for airport construction. Federal revenues sufficient to fund future U.S. highway requirements (those justified by proper economic analysis) will not be available unless Federal user fees are increased. Congress set up a new Inland Waterways Trust Fund in 1978 to account for the fuel-tax collections to be paid by users of the Federal waterways, to STATUS QUO POLICIES 1. There is no Federal ownership or operation of rail facili- ties or rights-of-way except the Northeast Corridor (owned by Amtrak), the Alaska Railroad, and certain defense in- stallations and rail cars. (IF, IP, RF, RP) 2. The FAA owns and operates two airports, and the air traffic control system, including 25 air traffic control cen- ters, control towers at 426 major airports, and 328 flight service stations that transmit weather and other informa- tion to pilots and traffic control data between ground con- trollers and pilots. (IF, IP, ILF, ILP) NTPSC POLICIES 1. Status quo policy should be maintained with regard to private ownership of rail rights-of-way and equipment. Amt- rak should be refocused to achieve more cost-effective performance. (IF, IP, RF, RP) 2. The NTPSC supports cost-effective FAA proposals to up- grade the air traffic control system, although this recom- mendation is not a specific endorsement of recent FAA proposals to expand the positive air control area. (IF, IP, ILF, ILP) aEach policy is followed by a symbol that indicates its relevance to transportation in these markets: Intercity Freight (IF); Intercity Passenger (IP); Urban Freight (UF); Urban Passenger (UP); Rural Freight (RF); Rural Passenger (RP); International Freight (ILF); and International Passenger (ILP); All Markets Freight (AlI-F); All Markets Passenger (All—P); and All Markets both Passengers and Freight (All). POLICY RECOMMENDATIONS e 259 TABLE 103. Ownership and Operations Policies —Continued EE ——————— STATUS QUO POLICIES NTPSC POLICIES 3. Corps of Engineers’ dredging activities, and locks and 3. The NTPSC supports studying the benefits compared to dams, serve ports and waterways. (IF, IP, RF, RP) the costs of users paying directly for Corps of Engineers services, including administrative costs of collections, as directed in Pub. L. 95-502. (IF, IP, RF, RP) 4. Federal motor pools are managed by GSA and DOD, and 4. More coordinated use of Federal vehicles and transporta- transportation facilities on Federal lands are managed by tion facilities on Federal lands, especially during times of USDA and DOI. (IF, IP, RF, RP, UF, UP) emergency, should be sought. (All) 5. Federal-aid highways and most other highways are publicly 5. Federal highway ownership should not be expanded, owned, although not by the Federal government. (All) unless benefits exceed the costs of doing so. Private al- ternatives to some existing Federal involvement should be considered. (All) 6. DOT and HEW funding encourages ownership and opera- 6. Federal regulations and funding should encourage private tion of transportation services by public and private non- ownership and operation of transportation by relying on profit organizations rather than contracts with private, for- the marketplace. If this fails, prior to initiating a new sys- profit operators. Problems related to program boundaries, tem the least intrusive Federal methods should be pur- eligible uses of funding, reporting requirements and insur- sued. Possibilities include: direct user subsidies; employing ance discourage private operation and coordination be- quasi-public corporations; and requiring state and local tween specialized transportation systems. (IP, RP, UP) governments and agencies to use private providers to the greatest extent possible. (IP, RP, UP) 7. DOT programs for the urban disadvantaged emphasize 7. The use of Federal funds for in-house provision of trans- carrier subsidies rather than user-side subsidies, and funds portation by any federally-assisted social service agency from HEW are frequently used to provide transportation by should be permitted only after due consideration of the social service agencies for clients, rather than to subsidize private sector’s ability to meet client needs [i.e., when no clients’ use of existing services. Such in-house provision adequate service is provided at competitive prices by pri- of transportation is generally not coordinated and is also vate (for-profit) suppliers]. DOT should be designated as financed by UMTA in its section I6(b)(2) program. (UP, the lead Federal agency to promote increased emphasis RP) on private-sector provision of services and to promote coordination of in-house services that remain. (UP,RP) 8. In the analysis of sites for new Federal facilities, employee 8. Once an area for a new Federal facility is chosen, exact and user transportation costs are not always considered. sites should be considered using methods that include (All) transportation costs (both for supporting the installation and for its employees), so that undue burdens are not placed on local transport systems. (All) 9. The Federal government operates a Merchant Marine 9. The Federal government should continue to operate the Academy. (IF, IP, ILF, ILP) Kings Point Academy to provide an educational standard. To insure the continued availability of high-quality Mer- chant Marine officers, Federal funds should continue to go to state- and privately-operated Merchant Marine Acade- mies. (IF, IP, ILF, ILP) 10. Regarding foreign ownership of U.S. modes— 10. Do not permit ownership restrictions to unduly inhibit for- Air: 75 percent of the voting interest of U.S. air carriers certificated by the CAB must be owned or controlled by U.S. citizens. Two-thirds of the directors must be U.S. citizens. Interstate Surface: No requirements for identification and no restrictions on foreign investments in common carriers exist. International Maritime: In order to be eligible for Title XI guarantees, 51 percent of the voting stock must be held by U.S. citizens and 3/5 (or 4/7 under certain conditions) of the Board of Directors must be U.S. citizens. In order to receive Operating Differential Subsidies, 75 percent of the voting stock of the corporation must be held by U.S. citizens and the above rules hold on the proportion of U.S. citizens on the Board of Directors. In both cases a quorum of the Board must consist of a majority of U.S. citizens. All U.S.-flag vessels must be crewed solely by U.S. citizens. (All) eign investment in U.S. transportation facilities. (All) a 260 e ISSUES AND POLICY RESOLUTION begin in 1980. The fuel tax will rise to 10 cents per gallon by 1985, when it is expected by NTPSC to recover less than 20 percent of waterway costs. The concepts of trust funds versus general-reve- nue finance, in general, and the use of a unified trust fund versus single-mode funds in particular, have been subjects of continuing discussion. Those favor- ing trust-fund financing argue that revenues from proper user fees must be earmarked for transporta- tion purposes to avoid the use of such revenues for projects that would not benefit those who paid. Those favoring single-mode funds point out that these funds guarantee that user fees will be spent for transportation purposes, provide some certainty as to the future availability of revenues, and still permit some flexibility among categories and among modes. In the international market, extensive Federal subsidies are available to aid U.S. shipbuilding firms and U.S.-flag maritime firms. Such subsidies are designed to preserve a U.S. shipbuilding capability and to ensure the viability of U.S.-flag carriers using U.S. crews. Subsidies are made to pursue such goals as labor protection, national defense and security, and balance in international payments. Another reason for such extensive maritime aid is that other countries are subsidizing their maritime sectors, so that it may be unreasonable to expect U.S. firms to compete against such subsidized carriers. NTPSC Policies Where Federal services are provided, the rule should be to assess taxes that reflect costs attributable to users. Thus, in special cases tolls for new and improved highway facilities, bridges and limited-use facilities could be applied. Such fees could be applied so as to permit a smoother flow of traffic during peak hours, or to permit longer and heavier trucks to operate where al/ incremental costs as well aS an appropriate share of common costs are recovered. For example, industrial highways or spe- cialized lanes could be built as toll facilities. The savings from being permitted to operate on these upgraded highways and bridges could out-weigh the expense of user fees. Another possible application of the ‘‘user-pays”’ principle should be waterway tolls. Congress has acted to impose a fuel tax on waterway users. Any such fees paid should recognize that costs and benefits of waterways are based on multiple uses, such as recreation and flood control, as well as commercial transportation. No existing waterway segment should be shut down if users pay at least an amount sufficient to cover its operation, while con- sidering matters such as regional economic develop- ment, export expansion, or other specific national objectives. In some instances such user charges would provide market tests to guide future invest- ments. In many cases, congestion has been used as an argument ‘for building new facilities. By using market forces, for example, more efficient use of existing facilities might reduce the need for extensive new investments. The user-pays principle should also apply to the rail mode. While reorganization of the northeastern railroads is still in its early stage, Conrail as a private for-profit corporation should ultimately reach its objective of being self-sufficient. To accomplish this, it is essential that burdensome regulation of pricing and services be eliminated. Likewise, Amtrak should be placed on a paying basis. Federal categorical spending to fulfill specific objectives should be based on careful economic analysis. Each Federal agency should analyze its own programs using common methods and assump- tions, while an independent Federal agency (such as the General Accounting Office) reviews the results. Federal and state governments should share with local governments the financial responsibilities of supporting urban transit. Flexibility and transferability among categorical programs should be encouraged. Aid should be directed at encouraging the develop- ment of a U.S. manufacturing industry for transit vehicles. Municipalities should be encouraged to establish consistent requirements and to purchase vehicles together in order to reduce costs, create jobs and otherwise support U.S. manufacturers. Regarding the types and quality of services pro- vided using Federal funds, as many private, state and local options as possible should be permitted, con- sistent with stated Federal objectives. For example, recipients of transit aid should be permitted flexibility in meeting the needs of elderly and handicapped citizens. Trust funds have been the focus of considerable attention. The important issues are proper collection of revenues via user fees and proper spending of funds following careful investment analysis. The political appeal of revenues dedicated to benefit those who pay is strong. While retaining trust funds, care must be taken to subject taxing and spending decisions to careful analysis. To help meet transportation infrastructure needs in the U.S. to the year 2000, given increasing demand and accelerating costs, together with differ- ing regional needs and energy shortages, it is clear that Congress must adjust certain Federal user fees, perhaps, for example, by indexing Federal highway fuel taxes to reflect the rate of inflation. In general, the new policies discussed in this section will result in more even-handed Federal taxing and spending among modes. The Federal government should also work to remove state and local impediments to free markets where they exist. Current Federal policy provides no direct financial aid to international aviation. This policy should continue, with even more emphasis on “‘open skies’’ policies that will enhance the ability of U.S.-flag carriers to compete. The maritime sector is, unfortu- nately, a different case. Federal maritime support which encourages a strong U.S. merchant marine and shipbuilding capac- ity for defense purposes should be retained. The support should seek the greatest benefits for the fewest Federal dollars, with the least intrusion in free markets. Specifically, the U.S. should seek to negoti- ate multilaterally a worldwide reduction in shipbuild- ing subsidies; impose dumping duties on foreign-flag carriers found to be selling below-cost transportation services in U.S. markets (with the revenues used to support U.S.-flag carriers); improve incentives for efficiency among recipients of Federal aid; and study cost-based user fees on all users of U.S. ports (or negotiate reciprocal agreements with other nations). As an alternative to continuing existing subsidies, the U.S. might consider instead using subsidies with built-in performance incentives in order to reduce subsidy levels. Another alternative is extending anti- trust exemptions to U.S. carriers so that participation in cartels is possible, perhaps including closed conferences, cargo pooling, or cargo sharing agree- ments among countries (such as the United Nations Conference on Trade and Development’s 40/40/20 proposal). Whichever specific methods are chosen, Federal support for the U.S.-maritime sector is required. Table 104 lists more detailed Federal status quo financial policies and compares these to the NTPSC recommendations. PLANNING AND INFORMATION Status Quo In general, categorical planning programs are used by the Federal government, with little effort to publicize or integrate the results. Hard issues are not faced directly through federally supported planning. Instead, numerous separate programs, each individ- ually influencing urban form, may be pursued (e.g., the Department of Housing and Urban Develop- ment’s housing programs; the Department of Health, Education and Welfare, the Community Services Administration, and Action’s social service programs; and the Department of Commerce’s economic devel- opment grants all have been used for transportation purposes with no common planning required other than A—95 review). POLICY RECOMMENDATIONS e 261 Moreover, Federal grants have often ignored or omitted cooperative state and local planning. Finally, planning by the Federal government for its own systems of interest has been limited. Although a national airport system plan is produced regularly, rail systems planning resulted only from the North- east crisis, and no Federal port planning occurs, despite the apparent difficulties of financing new port development and the low rates of return that charac- terize many U.S. ports. NTPSC Policies Planning often has been feared as antithetical to free markets and as the first step toward intensive Federal involvement. Surely costly requirements for detailed planning using federally mandated methods for Federal purposes are to be avoided. However, Federal encouragement of careful and knowledge- able planning by states, local governments and the private sector is desirable. Where the Federal gov- ernment believes there may be a need for its involvement, it too should plan how to accomplish its goals at the least cost and with the least disruption to the marketplace. Careful planning can provide an executive-branch management tool, yield information vital for congressional oversight, and enable prog- ress toward objectives to be monitored. Specifically, recipients of any Federal categorical transportation aid should be required to work with local groups to prepare short-term and long-term plans (using only general Federal guidelines as to what aspects should be considered, rather than detailed regulations on exactly how to plan) and to publish such plans. The Federal government should also encourage recipients of aid to perform multimo- dal planning at the state level. The Federal government can also be an effective clearinghouse for information. It should seek to remove Federal impediments to the free flow of information and to determine the more important information needs that are not being met by the private sector. Federal support for research and development is also required, not only because of the critical energy situation, but because major research may involve risks and economic considerations beyond the ability of the private sector. Federal impediments to innova- tion should be removed. For example, rather than forbidding joint research on emissions-control tech- nology among private U.S. auto manufacturers, the option of such joint research should be offered to the firms, subject to careful scrutiny. in assessing new technology for transportation, the NTPSC has recognized the need for more Passenger (IP); Urban Freight (UF); Urban Passen International Passenger (ILP); All Markets Frei (All). 262 e ISSUES AND POLICY RESOLUTION TABLE 104 Finance, Pricing and Taxation Policies* Overall STATUS QUO POLICIES 1. The U.S. DOT and other agencies fund transportation in- frastructure, systems and users at different levels and matching ratios. Funding includes loan guarantees, grants, tax credits and exemptions. Examples are: (a) Infrastructure: (i) Waterway construction and maintenance; (ii) Roads and bridges; (iii) Maintenance (3R—restoration, reconstruction and resurfacing) of the Interstate System; (iv) Selected rail lines; (v) Bicycle paths; (vi) Rail-highway crossings; and (vii) Airports. (b) Systems: (i) Operating assistance for specialized and public transit, intercity bus and rail carriers, and some trucks when there is rail abandonment; and (ii) Exemption from fuel and other Federal excise taxes for specialized systems, intercity buses, taxi and public transit. (c) Selected users: (i) Social service clients—no fare or reduced fares; and (ii) User subsidies in some DOT demonstrations and from HEW. (All) NTPSC POLICIES 1. (a) The Federal government should clearly identify its non- transportation and transportation objectives. (b) Users should be assessed charges that reflect the costs occasioned by their use, except where it is de- termined that federally-assisted transportation facilities serve non-transportation social and economic objec- tives. In some cases, non-users derive benefits or create costs and should be taxed to provide funds. (c) Economic analysis should be performed by the pro- gram agency(ies) prior to Federal financial assistance. It should be multimodal and reviewed by a separate Federal agency. Programs should provide minimal re- porting requirements and be evaluated regularly, per- haps every two years. Financial assistance should per- mit recipients to: (i) | Use incremental pricing where possible; (ii) Be free to manage with some accountability; (iii) Seek productivity increases; (iv) Use private-sector involvement to the greatest ex- tent possible. (d) Funding should be: (i) Flexible (i.e., carriers, users, infrastructure and maintenance (3R-type) should be eligible); (ii) Predictable (i.e., available for a multi-year period) and; (iii) Provided in the most cost-effective way. (All) Economic Analysis and Evaluation . Although economic analysis is sometimes used to evaluate Federal investments, no common methods or assumptions are employed, and policy and program changes are rarely subjected to effective analysis. (All) . Several competing goals are usually specified to justify individual pieces of Federal legislation. These are rarely useful for policy and program evaluation. Standards are often promulgated from these goals, and have gaps and conflicts as a result. (All) . Federal policies do not state objectives to be achieved, with few exceptions. One such exception is the Northeast rail corridor objective (to reduce travel time between Washington, D.C. and New York to 2 hours 40 minutes by 1981) that apparently will need more time and funds. (All) 1. Effective economic analysis should be required of all exist- ing and proposed major Federal policies, programs and regulations. The products should be reviewed by an inde- pendent agency, such as GAO. Care must be taken to apply the results of analysis in decision-making. The re- quirements should not be so complex as to add to paper- work burdens nor be used to delay worthwhile projects. (All) . For categorical Federal programs, evaluations should be made (by recipients) of proposed actions involving Feder- al-interest facilities. These evaluations should include: (a) Comparisons of quantifiable costs and benefits to the costs and benefits of alternatives (including ‘‘do noth- ing’); (b) Analysis of impacts on the marketplace; (c) Specification of actions necessary to lessen market- place disruptions; (d) Analysis of adverse impacts by goal; and (e) Specification of a timetable for subsequent reevalua- tions of the action and specification of sunset provi- sions. (All) . Federal transport programs should operate with specified objectives so that program achievement can be measured and future funding determined on a rational basis, and so that the need for any continued Federal involvement can be determined. One means of developing objectives would be for Congress to enact legislation stating goals and then requiring the Federal agency involved to report to Congress within a specified period of time the exact ob- jectives which can reasonably be achieved. To facilitate "Each policy is followed by a symbol that indicates its relevance to transportation in these markets: Intercity Freight (IF); Intercity ger (UP); Rural Freight (RF); Rural Passenger (RP); International Freight (ILF); and ght (AIl-F); All Markets Passenger (AlI-P); and All Markets both Passengers and Freight POLICY RECOMMENDATIONS ¢ 263 TABLE 104 Finance, Pricing and Taxation Policies —Continued en Overall STATUS QUO POLICIES NTPSC POLICIES the needed congressional review, legislative veto proce- dures could be established that would call for Congress to have a limited time in which to disapprove the stated objectives, before the objectives automatically become ef- fective. (All) Expenditures . Federal aids include highway, waterway, rail and airport 1. Granting of any future Federal aids to the private sector programs directed to other levels of government. Loans, must be conditioned on benefits (including non-financial) in guarantees and other forms of promotion are also types excess of costs, evaluated using proper procedures. When of aid. (All) determining a benefit/cost ratio, a common discount rate established by Congress should be used. (All) . Funds are provided to Amtrak to subsidize capital im- 2. Federal subsidies to Amtrak should be reduced. Amtrak provements and operating deficits. (IP) management should have complete freedom to determine levels of service, which system segments must be aban- doned each year, and which segments might be operated for profit when subsidy is eliminated. (IP) . Subsidies are provided to local service air carriers and 3. The air subsidy program (as provided in Pub. L. 95-504) commuter air carriers to provide essential intercity air pas- senger and some freight service to small communities. (IP, IF) . Beginning in 1978, subsidies are authorized to state and local public bodies to pay up to 50 percent of the cost of purchase-of-service agreements with private bus compa- nies for service to rural and small urban areas. (IP, RP, UP) . Federal financial assistance for transportation varies great- ly from program to program (e.g., 100-percent Federal share for pavement-marking projects; 75 percent for most Federal-aid highway projects; 90 percent for the Interstate System; 100-percent subsidy of Amtrak operating deficits; 75 percent for airport construction; 50 percent for airport terminal construction). Highway trust-fund-financed pro- grams are available for construction, reconstruction, safety and planning. Funds go to the states, or through the states to local units of government, using allocation formu- las based, for example, on population, as in the case of urban systems. Mass transit funds from general revenues go to states and to local authorities (e.g., UMTA Sec. 5), based on formulas often using population as one factor, or at the discretion of the Federal agency. (All) . Federal funds are not generally available for simple main- tenance, only for major improvements (e.g., resurfacing, restoration and reconstruction of Federal-aid highways). (All domestic) . Airport and Airways Development Aid Program funds are allocated by a formula based on enplanements (i.e., $6.00 for each of the first 50,000 enplaned, $4.00 for each of the next 50,000 enplaned, up to $0.50 for each enplane- ment over 500,000). Remaining funds go partially to com- muter airports and for other uses at the discretion of FAA. (IF, IP, RF, RP, ILF, ILP) . States may use highway funds for bikeways and pedestri- an walkways. The Surface Transportation Assistance Act of 1978 authorized $20 million a year for bikeway projects. OMB has not, however, requested an appropria- tion for this new program. (UP, RP) . Operating Differential Subsidies are available to U.S.-flag ocean carriers. Ships must operate on accepted trade routes and must be owned and operated by U.S. citizens. The amount of cost increase allowed is tied to an index of wages in other sectors of the economy. During 1977 the ODS amounted to $344 million. (ILF, ILP) should be phased-out so that a transportation system will develop to serve all areas based upon the consumer’s willingness to pay, supplemented with user subsidies if believed necessary by Congress. (IP, IF) . Subsidies should be temporary, to encourage the private sector to use marketing to promote ridership and to oper- ate efficiently to reduce costs, so that subsidies can even- tually be withdrawn as the service becomes profitable. (IP, RP, UP) . More flexibility and transferability among categories should be permitted. For Federal categorical aids, standardized investment analysis for all projects should be used so that funds flow to areas and purposes of greatest need. (All) . No change. (All domestic) . No change. (IF, IP, RF, RP, ILF, ILP) . States should be actively encouraged to include bikeways and pedestrian walkways in the design of highway facili- ties receiving Federal assistance, in the interest of energy conservation, safety, and development of a balanced multi- modal transportation system. (UP, RP) . Operating subsidy should be retained, but performance and the needs of national defense should be stressed. (ILF, ILP) 264 e ISSUES AND POLICY RESOLUTION TABLE 104 Finance, Pricing and Taxation Policies —Continued Expenditures STATUS QUO POLICIES 10. Federal loan guarantees are now available to airlines, in- cluding commuter carriers. Title Xl Mortgage Guarantees (Federal Ship Financing Guarantees) are available to U.S.- flag operators to obtain private capital to construct or reconstruct ships in U.S. shipyards. MarAd is empowered to guarantee up to $6.95 billion. (IF, IP, RF, RP, ILF, ILP) 11. Construction Differential Subsidies are available to U.S. citizens for U.S.-flag ships to be used in foreign trade. This subsidy equalizes the cost to the buyer of purchasing a ship from U.S. yards with that built in a foreign yard. However, the subsidy is limited to 50 percent of the costs of the ship. (ILF, ILP) NTPSC POLICIES 10. Some reduction in loan guarantees (as well as in other forms of aid) should be sought via multilateral negotia- tions. However, guarantees for items considered important for national defense should be retained, given the success of the program in accomplishing risk-sharing. (IF, IP, RF, RP, ILF, ILP) 11. Eligibility requirements for the Construction Differential Subsidy should be made more explicit so that vessels will contribute to national defense and security. (ILF, ILP) Trust Funds 1. Modal trust funds exist for highways, airports and inland waterways. (All) 2. Federal transportation assistance is largely categorical. Highway and airport funds are provided from trust funds, while public transit is aided via general revenues. Some transferability is permitted. Some direct general-purpose Federal revenue sharing is available to cities and states. (All) 1. Retain modal trust funds. (All) 2. Retain flexibility. The establishment of an urban transit trust fund should be studied. (All) User Fees and Taxation 1. Current user-charge mechanisms and levels do not stress efficiency, as they do not vary directly with use of particu- lar segments. For highways, the fuel tax is the major reve- nue-generating mechanism. Congress authorized another study, begun in 1978, to determine the extent to which various users now cover highway costs. Tolls are general- ly forbidden on federally-funded highways. Recently enact- ed legislation authorizes imposition of a fuel tax on inland waterways to reach a level of 10¢ per gallon by 1985. If waterway investment remained at current levels, not all waterway navigation costs would be recovered by this user charge. (All) 2. Some transportation rights-of-way are subject to state and local property taxes in some states, while publicly provid- ed rights-of-way are not. (All) 3. Federal transportation programs are funded with both gen- eral funds and user fees. (All) 4. Port user charges are not required by the Federal govern- ment, despite Corps of Engineers’ services and DOC/EDA grants available for use at ports. (IF, IP, RF, RP, ILF, ILP) 1. In addition to fuel taxes and other user fees, allow tolls in certain special cases (for new or upgraded federally-aided facilities) as a means of properly allocating demand and investment. (All) 2. Equalize the effects of taxation among modes by encour- aging states to eliminate discriminatory property taxation of rights-of-way. (All) 3. Federal assistance to transportation should be financed largely by users who pay the costs for the benefits they receive. Care must be exercised in determining actual Federal costs which are attributable solely to the commer- cial transportation objective (i.e., costs related to recrea- tional and safety aspects of transportation projects should be attributed to those users and beneficiaries). (All) 4. Benefits compared to costs of applying direct user fees should be studied. (IF, IP, RF, RP, ILF, ILP) -_-__————— government support for technology R&D to provide competitive, energy-saving innovations in transporta- tion. The declining trend for R&D support, both private and public, could have serious economic, trade and foreign competition consequences, espe- cially in light of the fact that foreign competitors may receive large and increasing amounts of government support. In particular, increased Federal funding is needed in areas where the risk is too great or uncertain, or development costs are too high for private industry to implement improvements needed to save energy or provide better service. Examples include a new commuter aircraft and adaptation of an airway system to accommodate these aircraft; energy-efficient automobiles, trucks and buses; and alternative fuel development. These improvements can be accomplished through more R&D support for new equipment such as gas turbine engines, loan guarantee programs to reduce manufacturers’ risk or encourage development, and policies designed to eliminate unfair foreign competition in U.S. transpor- tation markets. Table 105 gives more detail about status quo planning and information policies compared to those recommended by the NTPSC. GOVERNMENT ORGANIZATION Status Quo NTPSC staff found 64 Federal agencies (from the congressional, executive, independent regulatory and quasi-governmental sectors) administering over 1,000 policies and programs which involve transpor- tation. In addition, 30 congressional committees have legislative and oversight responsibilities directly af- fecting transportation. Many agencies are seeking to coordinate their transportation activities internally (e.g., USDA and HEW), and others are working together with other agencies to avoid conflicts (e.g., ICC and the FMC). Nonetheless, not only is there no unified national transportation policy, but there is a wasteful and duplicative institutional structure at the Federal level. These institutional problems are also evident at other levels of government. For example, Federal Title V regional commissions, regional coun- cils, and regional offices of DOT modal administra- tions exist. Some have very little responsibility. Federal regulations also mandate Metropolitan Plan- ning Organizations, and these may not be represen- tative of local interests, as no requirements exist that members of MPOs be elected or democratically represent the geographic situation of the metropoli- tan area. NTPSC Policies The Federal transportation structure must be stream- lined for managerial efficiency and to eliminate the costly burdens that redundant Federal agencies and rules impose on the private sector and on state and local governments. To facilitate a coordinated ap- proach to national transportation policy, some grouping of widely scattered transport functions is required. DOT should become the lead agency in all Federal actions primarily directed toward transportation ob- jectives. For the future, interrelationships between transportation, telecommunication and energy should be studied by the reconstituted DOT in cooperation with other agencies with the goal of encouraging coordinated policies, especially for ap- plications in which substitutability is possible. Impedi- ments to coordination at the Federal level should’ be eliminated. Transportation activities of non-transportation agencies should not all be transferred to DOT. However, DOT review of economic analyses justify- ing such transportation expenditures is called for, with special emphasis on non-capital-intensive coor- POLICY RECOMMENDATIONS e 265 dination, rather than new spending for duplicative equipment and services that compete with private providers. The Federal government should review its regulations and categorical funding programs now directed at non-transportation sectors, using the same policy themes as those expressed by NTPSC for the transportation sector. This should be done so that transportation markets are not adversely affect- ed by these non-transportation programs. As stated above, a residual U.S. transportation commission would replace existing separate Federal regulatory commissions. The congressional committee structure should be revised by each branch of Congress. That is, each branch of Congress might choose to have a commit- tee treating overall national transportation legisla- tion, with appropriate subcommittees which might be structured along modal lines. There may be some areas which do not quite fit into exclusive transporta- tion jurisdiction. One example is urban mass trans- portation, which in the Senate is presently within the jurisdiction of the Banking, Housing and Urban Affairs Committee, and in the House is within the Public Works and Transportation Committee. In recent committee reorganizations both houses dealt exhaustively with the proper jurisdiction for mass transportation. Each body came to separate solu- tions. The Senate felt strongly that mass transporta- tion was inextricably tied to urban affairs and voted to continue such jurisdiction, while the House opted to change its jurisdiction to the Public Works and Transportation Committee. Given the hybrid nature of transit in serving both transportation and non- transportation goals, the position of each chamber in its internal organization is fully supportable and should be respected. Table 106 shows Federal status quo government organization policies compared to the NTPSC policy recommendations. CONCLUSION The recommendations in this chapter are designed to improve what is already a reasonably effective U.S. transportation system, and to equip that system to meet the challenges with which it must cope through the year 2000. These policies require the Federal government to work with the private sector and state and local governments to meet these challenges. Compared to status quo policies, the NTPSC recom- mendations would encourage Federal actions that are more consistent, more flexible, and more cost- effective. The impacts of these NTPSC policies are dis- cussed in the next chapter, followed by a chapter which gives the details of implementing the policies. 266 e¢ ISSUES AND POLICY RESOLUTION TABLE 105. Planning and Information Policies? Planning STATUS QUO POLICIES 1. No effective Federal requirements exist for multimodal plan- ning. (All) 2. For Federal plans and projects, adherance to strict regula- tions and standards is frequently required in planning and design, regardless of whether it is in fact cost-beneficial. (All) 3. FAA develops a National Airport System Plan—a compila- tion of development needs of U.S. airports. Amtrak main- tains a five-year plan, updated annually. (IF, IP, ILF, ILP) 4. Many other Federal agencies have been involved in plan- ning transportation. The FHWA, FRA, Army Corps of Engi- neers, ARC, USDA and others have been involved in plan- ning waterways, scenic and forest roads and more recently rail service in rural areas. HEW, FHWA and UMTA have provided funds to plan specialized and public-transit sys- tems. (All) 5. MPOs rely heavily on Federal assistance for planning, data preparation and A-95 review activities. Federal assistance for planning includes a dedicated share of Highway Trust Fund expenditures and UMTA grants for special studies. (All) 6. Excess shipping capacity exists in the world. The U.S. maintains an open conference stance and has not taken part in efforts to control capacity through planning. (ILF, ILP) NTPSC POLICIES 1. State and local multimodal planning should be encouraged. In addition, Federal and federally sponsored single-mode planning should be coordinated. (All) . Planners and designers should take into account local con- ditions in specifying alternatives (uniformity should not be assumed always to be the efficient approach). Planning should consider the effects that aid to one mode will have on competing modes. (All) . While national systems planning should continue, planning related to capital improvements in local areas, particularly land-use planning, is a local responsibility. (All) . Federal objectives for passenger and freight transportation should be made known to states and relevant substate transportation agencies to be incorporated in their plans. Also, the U.S. DOT should provide guidelines and informa- tion (rather than line-by-line requirements) for states to: (a) Develop multimodal, statewide (and regional) transporta- tion plans; (b) Obtain input and coordination between private provid- ers, users, social agencies, and others; (c) Perform economic analysis; (d) Consider non-transportation problems (e.g., telecommu- nications); (e) Submit the plan to DOT for review prior to funding; and (f) Update the plan periodically. (All) . To encourage more effective planning, all dedicated plan- ning assistance from the Federal government should be eliminated, and any portion of capital or operating assis- tance, and other categorical or block grants, should be available for planning at state and local discretion. (All) . The U.S. should use the OECD or another international mechanism to discuss how to deal with surpluses of ship capacity (perhaps involving scrapping or mothballing). In addition, a continuing world productivity conference to bring rationality to the world market may be acceptable to most nations. The conference might publish rates and infor- mation about lines in a manner similar to IATA or ICAO for the air mode. (ILF, ILP) Information 1. Each Federal transportation and nontransportation agency and program usually establishes reporting requirements. Rarely are the programs based on objectives, and thus it is difficult to assess cost-effectiveness. (All) 2. The lack of a coordinated Federal data-gathering policy sometimes threatens the availability of needed information when an agency or a program is eliminated (e.g., CAB). (All) Each policy is followed by a symbol that indicates its relevance t Passenger (IP); Urban Freight (UF); Urban Passenger (UP); Rural 1. Any reporting requirements established by a Federal agency must be kept to a minimum, be directly related to a Feder- al objective, and be reviewed periodically. Every Federal program should have one or more quantified objectives so that it is possible to determine what information should be collected, at which intervals, to facilitate evaluation and sunset review. (All) . The concept of a national transportation data center should be explored, without preempting private state and local ef- forts, and without generating unneeded information. (All) oO transportation in these markets: Intercity Freight (IF); Intercity Freight (RF); Rural Passenger (RP); International Freight (ILF); International Passenger (ILP); All Markets Freight (All-F); All Markets Passenger (All—P); and All Markets both Passengers and Freight (All). POLICY RECOMMENDATIONS e 267 TABLE 105. Planning and Information Policies —Continued EEE eee. en Research STATUS QUO POLICIES 1. Many categorical programs require planning and support NTPSC POLICIES 4. More Federal dollars should be available to support re- research, with little Federal attempt at integration. Federal R&D is directed toward the air mode through NASA and FAA research. FRA maintains a rail test facility which can be utilized by the private sector. R&D for autos and buses is performed and financed by EPA, NHTSA and others, with primary emphasis on environment, safety and energy conservation. DOT operates a Transportation Systems Cen- ter. (All) search of national importance for which benefits are ex- pected to exceed costs. Where gaps in private R&D efforts occur, low-interest loans and grants for research and devel- opment and technical information should be available in order to encourage improvement in marginally profitable sectors and to encourage high-risk technological innovation which might not otherwise occur. The Federal government should provide R&D in areas that promise major technologi- cal advances. The critical energy issues, in light of all fore- casts contained in this report, must be the primary consid- eration in Federal research involvement. Federal R&D funds for transportation should be distributed equitably between modes. The private sector should be actively involved in such research (perhaps including sharing R&D costs) so that efforts are aimed toward practical innovations which show clear potential for assimilation into the transportation system. Federal agencies should be more sensitive to the marketability of research that they fund. Specifically, the Federal government should continue to encourage the pri- vate development of new transportation products through selective policies, and increase Federal R&D support for domestic entities for the following: (a) New or improved engines for aircraft, automobiles, buses, trucks and railroads; (b) New commuter aircraft systems; (c) A study of SST development; (d) New uses of telecommunications in transportation (e.g., satellite navigation); and (e) Alternative fuels. (All) ee eee or He ie ee SS ee 268 e ISSUES AND POLICY RESOLUTION TABLE 106. Government Organization? STATUS QUO POLICIES . At least 64 separate Federal agencies administer over 1,000 transportation policies and programs. (All) . Three separate independent transportation regulatory com- missions exist (CAB, FMC, ICC). The CAB is to expire after 1984 with its remaining functions to be allocated to existing agencies as directed by the Airline Deregulation Act of 1978 (Pub. L. 95—504). (All) . At least 30 congressional committees share jurisdiction over transportation. (All) . The problems of coordinating federally-funded passenger and freight transportation are well known. Coordination has been encouraged, not required. Recently there has been increased effort to improve coordination of transportation systems and resources, many of these involving the rural market. These efforts include: (a) The HEW Office of Human Development coordination demonstrations; (b) A DOT rural working group with HEW representation; (c) A transportation working group within HEW; (d) The White House Rural Task Force on Transportation Coordination; (e) Nine assistant secretaries led by USDA and charged with coordinating rural development programs; and a new Rural Transportation Task Force and USDA trans- portation office; (f) A working agreement between the ICC and FMC; and (g) An interagency committee on intermodal cargo. (All) . The State Department is the lead agency in international transportation negotiations. (ILF, ILP) NTPSC POLICIES . In general the Federal government should be organized to facilitate integration of policies for Federal regulations, funding, services and planning. (All) . A single residual Federal regulatory commission should be created. (All) . Each House of Congress should review its internal commit- tee structure to determine whether a single transportation authorizing committee would be the most appropriate and efficient means of developing and implementing a balanced Federal transportation policy, except in some areas which do not fit into exclusive transportation jurisdiction (e.g., mass transportation in the view of the Senate). (All) . Coordination efforts should continue. Having fewer Federal programs and agencies is likely to ease conflicts. The Fed- eral government should concentrate on removing impedi- ments to coordination. (All) . The State Department should continue to head negotiating teams in order to insure that foreign policy ramifications are fully considered, although improved coordination with other agencies is recommended. (ILF, ILP) Each policy is followed by a symbol that indicates its relevance to transportation in these markets: Intercity Freight (IF); Intercity Passenger (IP); Urban Freight (UF); Urban Passenger (UP); Rural Freight (RF); Rural Passenger (RP); International Freight (ILF); International Passenger (ILP); All Markets Freight (AllI-F); All Markets Passenger (AlI-P); and All Markets both Passengers and Freight (All). Impacts of the Policy Recommendations INTRODUCTION The projected impacts of policies proposed by the NTPSC in Chapter 13 are described in this chapter. As presented in earlier chapters, the NTPSC studied the existing U.S. transportation system, and ascer- tained the more important issues that confront policymakers today, and the issues that are antici- pated to emerge through the year 2000. In its investigations, the NTPSC used a system of forecast- ing models that, together with scenario development and technological surveys, provided baseline trans- portation projections. These projections assume that status quo policies will be retained, and forecast the consequences through time. The NTPSC’s recom- mended policies were developed in cognizance of the forecasts and are designed to resolve the emerging transportation issues. Thus, the important transportation variables modeled by the NTPSC in its baseline forecasts are expected to be ‘“‘improved”’ in net terms by implementing new policies. The NTPSC proposed its recommended policies on the basis of individual understandings of the consequences. This knowledge was derived from several sources. First, the Commissioners’ experi- ences as transportation professionals or as elected officials were considered in the policy deliberations. For example, many of the NTPSC’s transportation issues have been debated in corporate boardrooms or in trade association sessions. Congressional hear- ings and legislative debate on transportation policy also provided important experiences to influence the thinking of the Commissioners. In addition, informa- tion gathered from the NTPSC public hearings was considered. Research of the NTPSC staff was evalu- ated, both that presented in support of the overall NTPSC workplan, and that provided in response to specific questions of one or more Commissioners. Finally, in debate over the NTPSC policy proposals, the Commissioners shared and jointly evaluated their individual experiences. Having considered the possible consequences of various policy proposals, and having drafted an initial set of preferred policy recommendations, the NTPSC Commissioners and staff continued to evaluate the impacts of these policies. In some cases, the initial proposals were refined based on new evidence. Although it is impossible to reproduce in one chapter the complete body of evidence developed by the Commissioners and staff, some of the highlights are given. This chapter addresses such questions as: 1. Why are these policies recommended by the NTPSC rather than others? 2. What research methods were employed to evalu- ate potential impacts? 3. What evidence was considered in predicting the impacts of the policies? 4. How are improvements to be measured? 5. If these policies are implemented, what is the dollar value attached to the predicted net gains? 6. How will things be better for the users and providers of transportation in the U.S.? 7. Exactly who will gain, and who will lose, from these new policies? MEASURING AND FORECASTING IMPACTS OF POLICY ALTERNATIVES Analysis of Individual Policies and Groups of Policies Guided by a search of methods used in previous studies and of research methods employed at agen- cies, firms, and universities, the NTPSC has reported impacts of its policy alternatives using an eleven-goal format. The eleven goals are shown in Table 107. Reporting the consequences of proposed policy using a standard eleven-goal format appears tq be unique among the policy studies reviewed by the NTPSC.' To test its impact analysis, the NTPSC began (in July 1977) a number of investigations of existing policies and programs designed to provide evidence about suspected gaps and conflicts. Beginning in June 1978, participants in the NTPSC policy devel- opment process (described in Appendix V) also provided information on impacts for status quo and other policy alternatives. Finally, beginning in Janu- 269 270 e ISSUES AND POLICY RESOLUTION TABLE 107. Aspects of national transportation goals Goal Aspects Adequate, comfortable, convenient, fast, accessible to all, reliable. Reasonable fares, rates, and costs for rider, shipper, and providers of transportation. Maximize service for each transporta- tion dollar (inputs), increase adminis- trative effectiveness and intergovern- mental cooperation, promote competi- tion among modes. 4. Energy Conserva- Conservation and development of tion & Develop- transportation fuel, and movement of ment energy for other uses. 5. Environmental Pro- Aesthetics, noise, air, water protec- 1. Adequate Service 2. Appropriate Rates/Prices 3. Economic Effi- ciency tection & En- tion, historical site preservation. hancement 6. Safety Operators, passengers, and pedestri- ans safe from personal injury and crime, goods are safe from damage, appropriate vehicle design and insur- ance. Transportation employment opportuni- ties, job protection, access to all em- ployment opportunities, fair labor- management relations. 8. Industry Promotion Protection for each mode against un- & Protection....... fair competition, maximize private provider participation. Economic development, coordinated 7. Employment 9. Regional & Urban Development....... land use and transportation develop- ment. Os Equity eaecui ae oom: Impartial treatment of modes, users, and regions. 11. Defense ......:..... National and civil defense, interna- tional relations. ary and continuing through May 1979, NTPSC staff teams were organized to investigate the impacts of the draft NTPSC policy recommendations. In the 1977 test process, the 1978 policy develop- ment process and the 1979 impact analysis process, impacts were reported for all eleven goals, regard- less of the stated goal of a policy or program. For example, every new policy recommended by the NTPSC was examined for its impacts on transport safety, even if the expressed goal of the policy being examined was not safety. In some cases, no impact was discernible; often, no impact was expected. Sometimes, however, the results were unexpected. Within each goal area, different impact indicators were used, depending on the judgment of the researchers and the availability of published evi- dence. For example, it is well known that the use of average energy efficiency alone is a poor method to compare the energy-saving potential of various poli- cies. Instead, these averages should be used as a base from which adjustments are made such as for terrain, load factor, engine and other vehicle charac- teristics, and circuity.? Researchers were encouraged to make such necessary adjustments and to specify the assump- tions and techniques they used to generate impact results. Where quantitative results could not be obtained, qualitative judgment was used, but again researchers were asked to state explicitly their assumptions and analytic techniques. Some of the NTPSC impact analysis was as instructive for its required assumptions as for its conclusions.° Thus, the degree of certainty possible regarding the im- pacts of the NTPSC’s recommendations varies from policy to policy, even though a common goal struc- ture was used throughout. Analysis of Policies Using Models The NTPSC recognized its statutory mandate to consider systemwide impacts through the year 2000 and to explore national and regional consequences. It used/created a system of models that provided a means for determining impacts. These models and the baseline forecasting results have been described in detail in Chapter 5. The models aided in forecast- ing the impacts of continuing most current U.S. transportation policies, combined with new (deregu- lated) energy policies. This information is valuable to the NTPSC impact analysis process, in comparing proposed policies to the impacts of continuing present policies. STRUCTURE FOR REPORTING THE IMPACT ANALYSIS RESULTS Throughout the NTPSC report, several techniques have been used to structure the presentation. First, the analysis has dealt with markets, rather than modes, and distinguished between passenger and freight transportation. Second, five instruments of policy were used to order the discussion: regulation; ownership and operations; finance, pricing and taxa- tion; planning and information; and governmental organization. Third, transportation was considered through the year 2000. Finally, eleven goals were used as a common framework for impact analysis. To use all of these elements combined would require a very rigid format. Instead, the following sections reporting the results of the NTPSC impact analysis are organized primarily by the five policy instruments. Within each section, the NTPSC policy recommendations are summarized; then, only where there is important information available on markets, modes, passengers versus freight, changes through time, or any of the eleven goals, are these results given. REGULATION ECONOMIC REGULATION NTPSC Policy Recommendations The NTPSC economic regulation policies are broadly addressed to reducing and equalizing regulations among the modes and providing an improved com- petitive environment. Firms would compete within and between modes subject to equal fitness require- ments administered by an impartial residual transpor- tation commission and subject also to stringent safety rules and enforcement and to reformed anti- trust rules and enforcement applying to other sectors of the economy. Specific recommendations, pertain- ing to particular transport modes or markets, are indicated throughout this section. Overall Effects The greatest impacts of the NTPSC policy recom- mendations for changed economic regulation will be experienced by rail and motor carriers of freight and their users, and by intercity bus companies and their passengers. This is true because water carriers are now primarily unregulated, and air cargo carriers totally so, while air passenger service is being gradually deregulated. The expected impacts are discussed next, first giving overall estimates of the net benefits of reduced regulation, and next present- ing evidence for rail, truck, and intercity bus modes. Numerous studies reviewed by the NTPSC have estimated the costs and benefits of current economic regulation of transportation. Several of these studies are listed in Table 108. The general expectation is that deregulation of competitive transportation mar- kets as proposed by the NTPSC would yield large net benefits.* It is difficult to Compare studies conducted at different times using varying data and methods. Compared to earlier studies that concentrated on efficiency gains from deregulation, more recent research suggests that principal gains may be in the form of better service, with the freedom to offer various price-service combinations to the shipper or passenger. This trend is likely due to two factors; first, the proportion of the freight market that is regulated may be declining, so that eliminating remaining regulation would have reduced efficiency impacts. Second, recent studies may employ more sophisticated techniques and, by concentrating on commodity-specific data, may obtain more precise results. Although sound evidence exists that the benefits of a program of deregulation are substantial, all benefits cannot be predicted accurately. There are reasons, however, why disagreement over details of IMPACTS OF THE POLICY RECOMMENDATIONS e 271 the costs of particular regulatory practices should not be permitted to cloud the overall picture. In particular, the exact consequences of altering the role of motor carrier rate bureaus as forums for fixing prices may not yet have been fully determined. Rate bureaus have been reluctant to divulge needed information for determining if price-setting activities keep motor carrier rates above competitive levels, and to what extent, or whether there may be compensating benefits to shippers. To date, only partial answers have been available, such as those of researchers examining intrastate motor carrier rates in the unregulated environment of New Jersey. In that state, it was shown that unregulated rates are higher than expected by the researchers, perhaps due to the effect of regulated, rate-bureau-deter- mined rates.°® Additional evidence was provided to the ICC in its Ex Parte 297, Sub. No. 3, investigation of rate bureau practices by such agencies as the Department of Justice and the Federal Trade Commission’s Bureau of Competition. The ICC is empowered to alter approved rate bureau practices where necessary. The DOJ and FTC, among others, argue that the ICC should act to remove the rate bureaus’ antitrust immunity.® The results of an ongoing analysis sponsored by the Senate Judiciary Committee using data tapes from continuing traffic studies’ should be available during 1979 and should shed further light on the substantial costs to the shipper of motor-carrier rate bureau practices. This study uses data collected by rate bureaus themselves. Although the evidence does not totally agree as to the level of benefits from rate bureau reforms (such as those proposed by the NTPSC), the net effects have, nonetheless, been shown to be positive. The burden of proof should be on those who argue for retaining current regulations. The purported benefits of the existing regulated situation are certainly easier to quantify, if they exist, than the potential benefits of proposed deregulation. Moreover, there are measur- able administrative costs to the regulatory process. On the other hand, the benefits of price setting to the shipper under status quo policies have not been demonstrated by those advocating continued regula- tion. For this reason alone, the NTPSC would favor reform of the policies. The following are capsule descriptions of impacts of reduced economic regulation of transportation.® EFFICIENCY It is presumed that competition in most transport markets is sufficient to insure rates at or below cost plus a reasonable profit, thus providing protection for the shipper. Efficiency among modes cannot be secured, however, unless the NTPSC approach to 272 e ISSUES AND POLICY RESOLUTION TABLE 108. Summary of estimates of costs of regulation® Be i a a a a a eS Misallocation of traffic due to rate distortions: 1. Harbeson (1963): $3 billion/yr. (manufacturing) 2. Peck (1965): $0.203 to 0.407 billion 3. Friediaender (1969): $0.3 to 0.4 billion/yr. 4. Domencich & Woods (1971): $8 billion 5. Hilton (1973): near zero 6. Sparling (1974): $0.689 to 4.213 billion 7. Boyer (1975): $0.125 billion (for manufacturing) 8. Meyer (1975): $2 billion 9. Moore (1975): $0.2 to 2.9 billion 10. Levin & Peck (1976): near zero 11. Keeler (1976): $0.5 billion (upper bound figure) 12. Altonji (1976): near zero Loss from excess capacity: In railroads: 1. Friedlaender (1971): $2 billion/yr. 2. Borts (1960) & Griliches (1972): ‘‘quite low” 3. Moore (1975): $2 to 2.4 billion/yr. 4. Keeler (1976): $3.5 billion/yr. In trucks: Moore (1975) 1. Common Carrier Trucks: $1.4 to 1.89 billion 2. Private Trucks: $0.1 to 1.0 billion Overall Losses: 1. Nader and Green (1973): $4.0 to 8.7 billion for ICC Nader and Green (1973): 2.0 to 4.08 billion for CAB Nader and Green (1973): 2.0 to 3.5 billion for FMC . OMB (1975): $4.0 to 9.0 billion in surface OMB (1975): $2.0 to 4.0 billion in air . ICC (1976): $1.7 billion loss through $4.8 billion gain . GAO (1977): $1.4 to 1.8 billion in air . Allen and Hymson (1977) $1.4 to 2.9 billion in trucking ah w nN SOURCE: The following references are used in Table 108: Misallocation of traffic due to rate distortions: 1. Robert W. Harbeson, ‘‘Toward Better Resource Alloca- tion in Transport,” Journal of Law and Economics XI\\ (Oc- tober 1969), cited in Theodore E. Keeler, On the Econom- ic Impact of Railroad Freight, Working Paper No. SL— 7601, paper presented to the Econometric Society Meet- ings, September 1976, Berkeley, Calif.: University of Cali- fornia, Department of Economics, 7 September 1976, p.1. 2. Merton J. Peck, ‘“‘Competitive Policy for Transporta- tion?’ in A. Phillips, ed., Perspectives in Antitrust Policy, Princeton: Princeton University Press, 1965, pp. 244-72, cited in T. G. Moore, ‘‘Deregulation of Surface Freight Transportation,”’ in A. Phillips, ed., Promoting Competition in Regulated Markets, Washington, D.C.: ne Brookings Institution, 1975, pp.55—98. 3. Ann F. Friedlaender, The Dilemma of Freight Transport Regulation, Washington, D. C.: The Brookings Institution, 1969, cited in Keeler, p.1. 4. Thomas A. Domencich and Douglas W. Woods, ‘‘Com- petition in Intercity Freight Transportation,’’ in Proceedings of the Twelfth Annual Meeting of the Transportation Re- search Forum, held October 18-20, 1971, Philadelphia, Oxford, Indiana: Richard B. Cross Co., 1971, pp. 258, 274, cited in Joseph G. Altonji, ‘Estimating Misallocation of Traffic Between Rail and Truck Transport,” in Proceed- ings of the Seventeenth Annual Meeting of the Transporta- tion Research Forum, held October 28-30, 1976, Boston, Oxford, Indiana: Richard B. Cross Co., 1976, p. 378. 5. George W. Hilton, ‘‘The Costs to the Economy of the Interstate Commerce Commission,” in the U.S. Congress, Joint Economic Committee, Subcommittee on Priorities and Economy in Government, The Economics of Federal Subsi- dy Programs: Part 6—Transportation Studies, Washington, D.C.: Government Printing Office, 1973, cited in Keeler, ei 6. Lee |. Sparling, “Rate Regulation and Freight Traffic Allocation — A Review and Revision,”’ Social Science Working Paper Number 68, California Institute of Technolo- gy, 1974, pp. 19-24, cited in Altonji, p.378. 7. Kenneth D. Boyer, ‘‘Minimum Rate Regulation, Modal Split Sensitivities and the Railroad Problem,’’ Journal of Political Economy 85 (June 1977), pp. 493-511, cited in Keeler (1976), p.1. 8. Meyer, cited in Moore. 9. Moore, pp. 55-98, cited in George W. Hilton, ‘‘What Does the ICC Cost You and Me,” Trains, June 1978. 10. Richard C. Levin and Merton J. Peck, ‘‘Allocation in Surface Freight Transportation: Does Rate Regulation Re- ally Matter?,’’ Yale University Department of Economics Discussion Paper No. 31, August 1976, cited in Keeler (1976), p.1. See also, R. C. Levin, ‘‘Allocation in Surface Freight Transportation: Does Rate Regulation Matter?” Bell Journal of Economics, Spring 1978, pp. 18—45. 11. Keeler (1976), p.35. 12. Altonji, p.387. Loss from excess capacity: 1. Ann F. Friedlaender, ‘‘The Social Costs of Regulating the Railroads,’’ American Economic Review 61 (May, 1971), pp. 226-234. 2. Zvi Griliches, “‘Cost Allocation in Railroad Regulation,”’ The Bell Journal of Economics 3 (Spring 1972), pp. 26—41; and George G. Borts, ‘“‘The Estimation of Rail Cost Functions,’’ Econometrica 28 (January, 1960), pp. 108— 131, cited in Keeler, pp. 1-2. 3. Moore, cited in Hilton. 4. Keeler, cited in Hilton. Overall Losses: 1. Ralph Nader and Mark Green, ‘“‘Economic Regulation vs. Competition: Uncle Sam the Monopoly Man,” Yale Law Journal, April 1973, p.882, cited in Study on Federal Reg- ulation, p.66. 2. See U.S. General Accounting Office (GAO), ‘‘An Eco- nomic Evaluation of the OMB Paper on ‘The Cost of Reg- ulation and Restrictive Practice’’’ published as a staff pa- per by the Subcommittee on Oversight and Investigations, House Committee on Interstate and Foreign Commerce, September 1975; Appendix Ill is the OMB paper. Cited in Study on Federal Regulation, p.63. 3. Interstate Commerce Commission (ICC), Bureau of Eco- nomics, A Cost and Benefit Evaluation of Surface Trans- port Regulation, (Statement No. 76—1), undated (1976), cit- ed in Study on Federal Regulation, p.72. 4. General Accounting Office (GAO), Lower Airline Costs Per Passenger Are Possible in the United States and Could Result in Lower Fares, Report no. CED-—77-34, Washington, D.C.: 1977, cited in Study on Federal Regula- tion, p.33. 5. W. Bruce Allen and Edward B. Hymson, ‘“‘The Costs and Benefits of Surface Transportation; Another View,” in Paul W. MacAvoy and John W. Snow, Regulation of Entry and Pricing in Truck Transportation, Washington, D.C.: American Enterprise Institute, 1977, cited in U.S. Congress, Senate, Committee on Governmental Affairs, Study on Federal Regulation: Vol. VI — Framework for Regulation, 95th Cong., 2d Sess., Washington, D.C.: Gov- ernment Printing Office, 1978, p.33. aEstimates are nominal dollars for various years. government financing is also adopted so that market freedom is founded upon neutral public policies. The force of competition is expected to eliminate ineffi- cient carriers or cause them to reform their prac- tices. These benefits will not necessarily flow to communities or routes where traffic volume will support only one or several carriers. Nor is freedom to abandon likely to result in as large a reduction of rail mileage as efficiency criteria require. As major transport inputs are procured in markets character- ized by a measure of market power, the most efficient allocation of resources between transport and other sectors of the economy cannot be insured without appropriate antitrust-type enforcement. Results become speculative because regulation which the Congress removes can be reimposed; hence, the responses of large regulated carriers (especially railroads) and of the regulatory agencies are likely to be cautious. It seems that most railroads did not benefit from the pricing freedom which Congress believed it had granted in the 4R Act. Moreover, railroads and other carriers find a portion of their traffic tendered by large shippers who are equipped with strong bargaining power and wide alternatives. ADEQUATE SERVICE With regulations adjusted to permit carriers freedom to price within wide limits, various service-rate pack- ages presumably will be offered, affording shippers a wider choice. APPROPRIATE RATES AND PRICES The economic structure of transportation markets must be considered in predicting the effects of deregulation on rates and prices. Prices that reflect incremental costs should prevail in markets display- ing either constant or increasing costs as the scale of operations increases. Where the economic structure of the markets displays decreasing costs as the scale of operations increases, monopoly may tend to result. In all cases, enforcement of improved antitrust rules and regulations will be required, using the mechanisms that now apply to other sectors of the economy. ENERGY CONSERVATION Deregulation has been expected, by adjustment of pricing, to induce the shift of traffic to the more efficient modes. The combined impact of constrained capital inflow to the rail industry since 1906 and the massive public investment in the Interstate Highway System since 1956 has altered the cost relationships between these modes such that much more modest expectations are in order, absent a massive upgrad- ing of the rail plant. The premise that railroads are IMPACTS OF THE POLICY RECOMMENDATIONS @ 273 more fuel efficient in their present state than motor carriers for the kinds of hauls performed by motor Carriers is at issue. The premise that freedom from entry and route controls will greatly improve the round-trip loading of motor vehicles, hence their fuel efficiency, may not give adequate account to the imbalance of traffic flows and the degree of use of specialized vehicles dedicated to particular commodities having one-way flows. ENVIRONMENT The impact here is as uncertain as in the case of energy conservation. Sharp price competition, how- ever, might induce less adequate maintenance of vehicles with possible adverse energy, environmental and safety effects. For this reason, the NTPSC has recommended strict enforcement of upgraded safety standards for certificated carriers that will require on-site inspection by insurance firms. SAFETY The problem exists of enforcing safety regulation with a shifting population of carriers under severe competitive pressure. Enforcement of hours of ser- vice, vehicle standards, and other regulations now may be most effective among regulated carriers and large industrial proprietary operations.? The NTPSC proposal to retain a Federal certificate system ad- dresses the problems of safety and insurance, as well as of financial fitness. It conditions the right of motor carriers to operate (as distinguished from the present requirement to obtain operating authority) upon demonstration of adequate insurance (or proof of financial responsibility equal to that required by insurance regulations)—covering public liability, property damage, cargo (for other than private carriers) and environmental restoration—and dem- onstration of payment of the Federal heavy-vehicle highway-use tax. EMPLOYMENT Given the expected lack of major intermodal shifts, the impact of regulatory reform on employment is likely to be minimal in the operating forces. With certain activities of rate bureaus curtailed, and ratemaking decentralized to meet competition on the spot, carriers may require more staff for marketing, ratemaking, agency, and customer-contact pur- poses. The changed character of ratemaking may require different employee skills. (The Class B ICC practitioner will lose business, for example, but lawyers may find profit in increased litigation before the courts.) Shippers may find it necessary to enlarge traffic departments due to changing service patterns and rates, although it is also possible that rates 274 e ISSUES AND POLICY RESOLUTION would become simplified without today’s detailed regulatory apparatus. INDUSTRY PROMOTION The advantage, in the short run, is likely to go to flexible organizations which can readily adjust to change. In the longer run, less-than-truckload busi- ness and railroading should see concentration of volume in the hands of fewer carriers having broader territories (reflecting possible economies of scale), increased bargaining powers, and improved capital flow. URBAN AND REGIONAL DEVELOPMENT Rural and sparsely-populated areas may gain from better service (perhaps at higher rates more reflec- tive of costs) and high-density intercity markets may also gain from continued good service at reduced rates closer to costs. EQUITY if equity means equal access to service and to comparable rates by all shippers regardless of size and location, adverse results are anticipated. If equity means equal opportunity to compete for traffic, some carriers will lose due to failure or inability to adjust to changed circumstances, which is the responsibility of carrier management. However, the NTPSC proposals should improve equity in the sense of impartial treatment of modes, users, and regions. DEFENSE Increased price-service options should benefit the Department of Defense, as it does other shippers. GAINERS The large shippers stand clearly to gain. They obtain automatically the right to intercorporate hauling, the right to back-haul for hire without regulatory pro- ceedings, and mostly unhampered bargaining power in accord with the traffic volumes at their disposal. That shippers in general will benefit from improved service, availability of capacity in peak periods, and generally lower rates is also likely. Carriers with flexible managements should be able to capitalize on rate and route freedom to enlarge and balance traffic volume even though their margins may be reduced, with the possible exception of certain railroads that are tied to territories and route patterns by fixed infrastructures. LOSERS As the cross-subsidy inherent in present rate struc- tures disappears, high-cost shipments will bear high- er rates. Much opposition to branchline abandon- ment stems from the ability to retain subsidy to higher-cost traffic through existing regulations. The NTPSC proposals require that losses be supported for any carrier required to continue uneconomic service. Under reformed procedures, small carriers will require improved cargo clearinghouse support, perhaps using enlarged alliances to expand joint territorial contact. Carriers will tend to have more opportunity to utilize the economies of owner-opera- tors than in the past, which might result in a relative loss for organized labor, at least in the short run. The increase of carrier freedom may abridge the present rights of certain shippers who lack bargaining power. For this reason, the NTPSC proposes the application of reformed antitrust rules to prevent predatory behavior by carriers or shippers. Railroads RATES NTPSC Policy Recommendations The rate policies recommended by the NTPSC which would apply to railroads are: establishment of an expanding no-suspend zone of reasonableness, with rates outside the zone subject to review by a residual regulatory commission on grounds of alleged preda- tion or market power, and rates inside the zone subject to review by agencies enforcing U.S. anti- trust statutes; allowance of rail contract ratemaking on terms equivalent to those available to other modes; extension of certain motor and water carrier rate exemptions to railroads; elimination of ICC car service orders and car rental rates; and alteration of rate bureau practices. Below is listed evidence about impacts of three rail rate policies. Creation of a no-suspend zone of reasonableness Economic. Efficiency/Rates/Service. Permitting an increasing no-suspend zone enhances economic efficiency by allowing rates to respond to changing market conditions and to tend toward marginal cost in the long run, in markets not characterized by inordinate market power or externalities. (Potential negative efficiency consequences of allowing rate freedom might exist in cases of market power.) A recent DOT study indicated that rail rates are typically below variable cost on forest products, crushed and broken stone, miscellaneous mixed shipments, fresh vegetables, fruits and nuts, grain mill products, and gravel. According to this study, such rates range from 80 to 100 percent of system variable cost. To the extent that these rates also fall below marginal cost, permitting some upward rate freedom would enhance economic efficiency. The same study predicts that allowing some rate flexibility would result in increased earnings of $250 million to the railroad industry.'° The Association of American Railroads has calcu- lated an additional savings to the railroad industry that would result from rate freedom through avoid- ance of the delay inherent in any rate case before the ICC; the savings would have totaled $2.2 billion between 1967 and 1975.'' The DOT, in its recent 504/901 study, also cites reduction of regulatory lag as an important savings associated with a no-sus- pend zone." Raising rates on those commodities for which rates are currently below variable cost would, ac- cording to the DOT, both increase operating reve- nues for the railroads and result in either some diversion to other modes or a reduction in movement of the affected commodity.'* The question of identifying the scope of rail monopoly power is an important aspect of current rail deregulation proposals. The NTPSC has not attempted to address in any depth the market power issue in order to identify areas where some maximum rate regulation should remain in the long run. In a recent congressional symposium that did address this question, it was asserted that given shippers’ opportunities for transportation and product substi- tution, rail captive traffic is constantly changing and eroding. The symposium report cites growth in competition to rail for coal (e.g. mine-mouth genera- tion, other modes, other energy sources), grain, autos and pulp-board as examples of eroding rail market power.’* On the other hand, the NTPSC research described in Chapter 8 indicates that certain railroads may experience increased market power on certain lines as the volume of coal move- ment becomes much greater over the next 20 years. A question which must be posed with regard to any no-suspend zone is whether it is wide enough to permit efficient pricing in general, and at peak and off-peak times in particular. The 4R Act allowed more rate flexibility for demand-sensitive rates, but a requirement for 30-day notice of publication and subsequent court challenges by shippers prevented any truly demand-sensitive pricing. It has been estimated by the DOT that variation in demand for produce movements between California and Chicago for rail service is over 600 percent.'® Peak-off-peak variations in demand should be considered by Congress in determining the exact level of the no- suspend zone. , Another reasonable prediction as to the likely impacts of rate freedom on rates and service is as follows: Because of current excess capacity in the rail industry, rates in markets with excess capacity would first be driven below average cost and some excess capacity would be eliminated. Where more than one railroad competes in a market, discriminato- IMPACTS OF THB POLICY RECOMMENDATIONS e 275 ry rates would cease. Rates would tend to go down on high-valued goods and may rise on low-valued goods. To the extent that railroads maintain any market power, rates would tend to be higher, and more capacity would be shed than under a competi- tive environment."® Safety. The DOT predicts that there may be some short-run deterioration in rail safety, as rate flexibility will allow the railroads to lower some rates below average cost and begin a process of disinvestment in maintaining track.1”7 Once disinvestment is complete, improved economic conditions resulting from regula- tory reform should provide more resources for facili- ties and maintenance, and as a result safety may be improved. Energy. A recent article illustrated the potential conflict between goals of energy efficiency and economic efficiency, predicting that deregulation of rail and truck freight operations, while enhancing economic efficiency, may have the net effect of increasing energy use.'® With regard to rail rate freedom in particular, the author cites an example of the shipper who, faced with lower rail rates or improved service, would opt for better service in the form of more frequent smaller shipments. Thus, while the optimum shipment size would decrease, the energy required to fill the shipper’s transportation needs would increase.'? To put this possible effect in context, the author also has found that total logistics cost as well as energy consumption are probably close to being optimized now, and that for-hire transportation is not an area with great potential for fuel savings policies.”° Extending Exemptions to the Railroads Efficiency/ Rates /Service. The U.S. DOT, in its com- ments on the ICC’s proposal to exempt fresh fruits and vegetables from rail rate regulation, asserts that the development of monopoly rates (the only poten- tial negative consequence) would not be possible because the commodities in question would be subject to direct motor carrier competition. This lack of potential for rail monopoly pricing would apply not only to fresh fruits and vegetables, but to any commodity now exempt for motor carriers." With regard to the impact that extending the exemption to railroads would have on rates, the DOT predicts that if the exemption were extended, rail- roads would offer contract rates to shippers for those who prefer rate stability. Shippers not opting for contract rates would be subject to the prevailing rates reflecting market conditions at the time.** In either case, efficiency would be enhanced, and shippers would have access to additional price-ser- vice options. 276 @ ISSUES AND POLICY RESOLUTION Rall Contract Rates Efficiency/Rates/Service. According to the DOT 504/901 report, permitting railroads to offer contract rates would reduce shipper uncertainty over future rates, allowing service ‘‘tailored more nearly to the needs of particular shippers.’’ Further, DOT predicts that rail contract ratemaking would also help solve the problem of regulatory imbalance, as competing motor carriers and water carriers are currently able to negotiate long-term contracts.?% In a recent ICC proceeding on rail contract rates, the DOT predicted that implementation of this policy would lower the railroads’ cost of doing business, provide rate-service options more economical to shippers, and would thus be an anti-inflationary policy.*4 RAIL BRANCHLINE ABANDONMENTS NTPSC Policy Recommendations In addition to the several rate-related policies dis- cussed above, the NTPSC recommends policies that would alter the standard for abandonment approval and would expedite abandonment proceedings. The standard would be altered by requiring that carriers not be obliged to offer uneconomic service. In terms of rail branchlines, this would mean that uneconomic branchlines would either be abandoned, or operating losses and a return on investment would become the responsibility of various levels of government or shippers in the affected community, not the carrier. Further, the NTPSC policies specify that abandon- ment proceedings be expedited, and that a program of limited, temporary subsidy should compensate carriers for losses incurred pending a decision on the abandonment. Impacts Economic Efficiency. Easing rail abandonments would enhance direct economic efficiency. Railroads would be able to shed uneconomic branchlines, which would increase prospects for financial viability of the affected rail firms. The following are estimates of the cost savings to railroads which would result from abandonment of all uneconomic branchlines. There are four categories of cost savings relevant to this issue: revenue accruing from the sale of land and salvageable assets; savings in rehabilitation costs which would occur if uneconomic lines were retained; annual Savings in operating losses which would occur if the lines were retained; and savings in legal and adminis- trative costs associated with abandonment proceed- ings. The DOT 504/901 study estimates that legal and administrative costs to a carrier for each abandon- ment application ‘‘can exceed $50,000.’’25 By exped- iting the proceedings and altering the standard for approval, the cost per application should decrease, which may encourage railroads to pursue abandon- ment on nonviable lines. Another study on the potential benefits of large- scale branchline abandonments calculates cost sav- ings based on an estimate of 35,301 miles of nonviable branchlines. Abandonment of 35,301 miles would imply, according to the simulation, a savings of $1.5 billion from the sale of land and salvageable assets; a savings in foregone rehabilitation costs of $2 billion; and an annual savings in operating costs of between $138 and $303 million.2® Disinvestment of these lines implies an annual savings to the railroads of between $450 and $600 million. These savings would double the railroads’ net return on investment.?7 A different study predicts that if the rail network is rationalized, additional light-density lines will become nonviable, and that by the year 2000, a total of 75,000 miles of rail network will have been aban- doned, assuming no subsidy for continued opera- tions is provided.?® An abandonment program of this magnitude would imply a much larger cost savings than that estimated above. The FRA estimated that as of 1971, 21,000 miles of low-density lines were uneconomical, calcylating a savings of $105 million in salvage value and an annual savings of between $29 and $42 million in operating costs if the lines were abandoned.?9 A subsequent DOT study produced higher savings estimates for branchline abandonments. For an esti- mated 25,500 miles of light-density lines outside the Northeast region projected to be abandoned, the DOT estimated an annual savings in operating costs of $150 million. This savings amounts to 18 percent of the net income of railroads outside the Northeast. The value of the track and facilities of these lines was estimated at $640 million. In summary, the estimates of abandonment and the cost savings which would result, vary widely. The number of miles affected by a liberal abandonment policy ranges from 21,000, as estimated by FRA in 1971, to 75,000, the estimated nonviable miles to the year 2000, projected by John H. Williams. Estimates of annual operating cost savings range from $29 million to $303 million; salvage value estimates vary from $105 million to $1.5 billion; and savings in rehabilitation costs are estimated (only by Robert Harris) to be $2 billion. An additional impact on economic efficiency of the NTPSC rail abandonment policy depends on the question of subsidy of lines which are retained. One author raises the issue of cross-subsidy among levels of government: any external benefits from continued service on nonviable lines accrue largely to local areas while the bulk of subsidy for continued service is Federal. Subsidizing uneconomic lines only at the Federal level, rather than requiring users and direct beneficiaries to share financial responsibility (as is recommended by the NTPSC), thus would have a negative impact on equity.*" Rates. The impact of increased rail abandonments on rail rates is uncertain. If increased branchline abandonment results in consolidating traffic on fewer lines, such that economies of utilization are realized, rates may go down.*? On the other hand, if the rail abandonment policy is accompanied by upward rate flexibility, shippers may be willing to pay higher rates to retain rail service on low-density lines, and fewer abandonments may be necessary. What is relevant is not that rates would increase or decrease, but rather that railroads would no longer be forced to operate lines where rates are below cost. The question of whether some low-density lines have the potential to become economically viable depends on railroad cost characteristics and the elasticity of demand for transport of the affected commodities. If demand is relatively inelastic, raising rates might generate increased revenues for rail- roads; conversely, if demand is relatively elastic, raising rates would result in lower revenues. One author who raised the issue observed that it is mostly bulk commodities which originate on branchlines, while processed or finished goods originate on main lines. The service advantage of shipping by truck rather than rail is much less important to shippers of bulk commodities than to shippers of processed and finished goods. Therefore, the demand for rail ser- vice by shippers of bulk would tend to be lesslastic, i.e., bulk-commodity shippers would be less inclined to shift to motor carriage than shippers who valued the service advantages associated with motor car- riage. Therefore there is a possibility that increased rail rates on some low-density lines would generate sufficient revenues to continue service.* For shippers who do shift from rail to truck as a result of rail abandonment, an issue is whether they face higher or lower rates following the shift. It should be noted that motor carriage offers service advantages over rail. Even where truck rates are higher, it does not necessarily imply that shipper’s total logistics costs are higher as a result. Case studies of rail abandonments offer mixed evidence of rate impacts. A study of the impacts of Midwest abandonments following the 4R Act reveal- ed that in the majority of cases the truck rate substituting for abandoned rail service was lower than the rail rate at nearby grain elevators. Only two out of 40 elevators affected by the abandonments closed as a direct result of abandonment. An Associ- ation of American Railroads review of a number of retrospective abandonment studies also found that in many instances, shippers forced to switch to motor IMPACTS OF THE POLICY RECOMMENDATIONS e 277 carrier transportation discovered a resultant reduc- tion in shipping costs. A DOT abandonment study supports this finding. With regard to grain elevators in particular, this DOT study found that as a result of abandonments, large grain subterminals were con- structed near high-density rail lines; following aban- donment, grain was trucked to these subterminals and shipped in unit trains. The lower freight costs associated with unit trains more than paid the costs of constructing the new subterminals plus trucking to the subterminals.* This evidence does not imply that costs to all shippers will go down as a result of the NTPSC rail abandonment policies. Some shippers clearly will be faced with higher transportation costs which may result in firms going out of business. The evidence does suggest, however, that there is considerable potential for lower costs for perhaps the majority of affected shippers as a result of rail rationalization. Adequate Service. Where truck rates are so much higher than rail that the shipper cannot afford to use truck service and continue a profitable business, adequate service would be eliminated as a result of the abandonment policies. There is considerable recent evidence, however, as cited above, that instances of lower-cost truck service have resulted from rail abandonment, with resulting expansion of affected businesses. The DOT has made predictions as to which industries would be most affected by eased rail abandonment. Agriculture was considered the most affected. Lumber and wood products would be moderately affected, and affected to lesser degrees would be food and kindred products, chemical and allied products, and petroleum and petrochemical products.%” As to specific impacts on the cost of the affected commodities, the DOT estimates that costs to receivers of grain will increase, with the increase being passed along to consumers. The effect on the costs of agricultural limestone may become prohibi- tive for those who lose rail service. The impact of higher feed costs on livestock production would not exceed 0.5 percent of total costs.*® Employment. Recent evidence cites no significant impact on local employment as a result of low- density rail abandonments. In a review of a number of retrospective rail line abandonments, the Association of American Railroads found that the highway net- work in rural areas allows workers to commute substantial distances to new employment opportuni- ties, and that low-density abandonments have had no significant impact on employment.°*? NTPSC Special Report No. 1, on current transpor- tation issues in the U.S., cites the employment impacts of rail abandonments as not potentially 278 @ ISSUES AND POLICY RESOLUTION serious except in those communities with a concen- tration of rail employees, and even in those communi- ties decreases in rail employment are likely to be compensated by increases in trucking employment.” In a study of the economic effects of rail abandon- ments on selected communities, another author reported that, of the ten communities studied, only two perceived significant short-run impacts on em- ployment.*' A recent DOT study of employment impacts of eased rail abandonment policies likened the impact to that of deregulation generally. It calculated that 1,700 jobs would be affected, at a total payroll bill of $32 million. Those employees affected would be protected by labor protection provisions. These estimates of employees affected do not take into account any resulting increases in employment in trucking.*? Regional Development. The projected impacts of increased rail abandonments on employment have implications for community growth and economic development. The AAR’s review of recent abandon- ment studies indicated that abandonment of branch- lines has had little or no impact on economic development of the affected communities.** A survey of 71 abandonments in lowa revealed little effect on employment and business or community growth.“ In another survey of 10 abandoned communities, even in those instances where the price of products increased as a result, the residents continued to buy the products, at the higher prices, rather than purchasing in other rail-served communities. Al- though some firms changed their plans and did not locate in the affected communities, almost all of the communities surveyed added one or more firms after the termination of rail service.*5 Energy Conservation. A study done by the Public Interest Economics Center (PIE—C) found that con- sidering both the direct impact on fuel consumption by rail and motor carriers, and the indirect impact on demand for more or less energy-intensive transporta- tion equipment as a result of modal shifts, the impact of rail abandonments on energy consumption was insignificant.*® A survey of abandoned lines in lowa found mixed impacts on fuel consumption depending on whether truck service was substituted only for the branchline service or whether longer-haul truck service was used. Fuel consumption increased in those cases where grain was trucked further distances following abandonment. In those instances where the grain was shipped by truck to the same market as was used before rail abandonment, fuel consumption decreased significantly.*” Truck transportation is often more efficient than rail for short-haul movements, such as branchline operations would involve. Other things being equal, trucks are more fuel efficient for shipments of less than 132 tons and distances less than 15 miles.* Environmental Protection. The impact of eased rail branchline abandonment derives in part from the impact on energy consumption. There are three main potential sources of environmental degradation as- sociated with rail abandonments: air emissions from rail and trucks; noise pollution from rail and trucks; and increased need for highway maintenance and construction. The Public Interest Economic Center found any impact on fuel consumption to be insignifi- cant, and concluded that any impact on air emissions must also be insignificant.4° With regard to noise pollution, PIE—C found that neither trucks nor rail noise present a health hazard. Further, the noise levels emitted by both modes are similar, and there- fore, any shift from rail to truck as a result of rail abandonments would have no significant impact on noise pollution.6° PIE—C’s findings suggest that the impact on the environment of increased highway maintenance and construction would also be insignif- icant; usually truck traffic changes are not expected to be great enough to warrant increased highway maintenance or construction.™ Trucks NTPSC Policy Recommendations The NTPSC’s policies for motor-carrier regulation would allow eased entry into certificated motor common and contract carriage and provide regulat- ed carriers with pricing freedom within an expanding zone of reasonableness to be established by Congress. On the one hand, these policies open the highways to new truckers and other common carri- ers, thereby increasing the risk of accidents and, accordingly, the incidence of personal injury and property damage. On the other hand, the new rate freedom is likely to intensify price competition—a goal of deregulation—but it is also likely that some carriers, if pressed financially, will be tempted to ‘‘cut corners”’ in the area of safety. Additional safeguards to life and property on the highways of the nation may be needed. IMPACTS The impacts of trucking deregulation are highly controversial. Nonetheless, the NTPSC evaluation of the evidence suggests that regulatory reform will be largely beneficial to trucking interests (improved productivity) and to users (more price-service op- tions) while not being detrimental to competing modes (if these modes, especially railroads, are simultaneously deregulated and if the NTPSC financ- ing, pricing, and taxation reforms are also enacted). EFFICIENCY The American Trucking Associations (ATA) argue that deregulation would increase the number of truckers handling the same amount of freight, creat- ing excess capacity and using more fuel.S? However, evidence indicates both that new freight will be generated and shifts of freight among trucking types will occur as prices adjust.*? Efficiency gains from regulatory reforms include the increased ability of truckers to fill backhauls. Studies show that regulated trucking firms do travel while empty, but the extent of empty backhauls may be less than commonly believed. AAR data reveal that for long-haul truck movement, both regulated and unregulated trucking is usually filled (e.g. about 90 percent of the time).°° As 100-percent loaded movements would be impractical, these figures sup- port the view that deregulation might not yield great and immediate efficiency gains to all truckers through filling empty backhauls. The AAR data may permit studies of commodity flows by direction, so that analyses could show the potential for using fewer vehicles to handle the traffic in particular corridors. Data from the continuing traffic studies of rate bureaus may also facilitate such analyses.* RATES AND PRICES A Department of Agriculture study has shown that following the exemption of particular agricultural commodities, rates declined (e.g., frozen fruits and vegetables by 19 percent, fresh poultry by 33 percent, and frozen poultry by 36 percent) with reduced stop-off charges as well.8’ In addition, evidence from Canada shows higher rates in prov- inces with stricter regulation.*® An examination of the rates of return of various types of trucking may show where future competition might bring rate decreases as a result of the zone of reasonableness concept. The average return on equity for carriers of general commodities in 1977 was 16.36 percent. A rate reduction of 0.4 percent could reduce this to the new ICC standard of a 14 percent rate of return on equity. Long-haul carriers with very large revenues (over $10 million/year) showed returns of 21.14 percent on equity in 1977, which includes the nationwide carriers of LTL freight. Rate reductions of 1 1/2 percent would have been required in 1977 to reduce this return on equity to 14 percent. Higher returns are evident in certain regions (e.g. Southern, Midwestern, Southwestern, and Rocky Mountain ICC regions). Regulatory reform IMPACTS OF THE POLICY RECOMMENDATIONS e 279 may provide refatively greater rate reductions in these regions.°*° A study conducted using data from New Jersey (a state with unregulated intrastate motor carrier ser- vice) found that large shipping firms received dis- counts of between 9.7 and 15.2 percent of the applicable interstate tariffs when they dealt with non- ICC regulated intrastate carriers, and smaller ship- pers received discounts of between 8.5 and 11.4 percent. Still, the regulated tariffs may serve as a floor even for non-regulated firms, as 70 percent of regulated carriers and 45 percent of non-regulated carriers used the Middle Atlantic Tariff or used it as a base for negotiations.© Nonetheless, the New Jersey intrastate firms had better operating ratios (88.11) than the ICC certifi- cated sector (95.92). The unregulated firms were smaller, and more non-union, than the ICC regulated firms.®' New ratemaking freedom should result in rates based more on costs associated with distance, weight, volume and direction, versus the present structure that perpetuates rate-setting by commodi- ty-type. Separate charges for pick-up, delivery, and line haul would be expected, and easily damaged goods would experience increased rate differentials. SAFETY In an effort to come to grips with an existing national transportation problem and mitigate any possible effects of the new regulation policies pro- posed, NTPSC’s policies would condition the right of motor carriers to operate (as distinguished from the present requirement to obtain operating authority) upon demonstration of adequate insurance (or proof of financial responsibility equal to that required by insurance regulations}—covering public liability, property damage, cargo (for other than private carriers), and environmental restoration—and dem- onstration of payment of the Federal heavy vehicle use-tax to state registration agencies. Collection would be a cooperative Federal and state effort financed in part by sharing the proceeds of that tax. For certificated motor carriers, adequate insurance (or proof of financial responsibility equal to that required by insurance regulations) should be a minimum of $1 million for a single occurrence, or some other minimum amount sufficient to require periodic ‘‘on site’ inspection by an insurance com- pany. The minimum should be updated regularly. Non-certificated motor carriers and other modes would be subject to similar requirements. At the Federal level, motor carrier safety regula- tion and its enforcement is the duty of DOT.® Unfortunately, there is evidence that the Bureau of Motor Carrier Safety does not have personnel or 280 e ISSUES AND POLICY RESOLUTION funds to enable it effectively to enforce these regula- tions. For example, at one of the largest unannounced roadside inspections conducted by DOT on Inter- state 80 near Berwick, Pennsylvania, on August 7-11, 1978, it was found upon the inspection of 676 vehicles, that 352 (52 percent) had to be placed ‘“‘out-of-service’”’ for one or more violations. The principal defect was brakes. In addition, 271 driver “hours of service’ violations were detected and 25 drivers placed out-of-service; 63 percent of all exempt and 55 percent of all authorized for-hire vehicles and drivers were declared out-of-service.® A year earlier the GAO reported to Congress that: In view of the limited accident data being obtained, the continuing infrequence of safety inspections, and the high ratios of trucks taken out of service after inspection, little assurance exists that most motor carriers are operating in compliance with Federal safety regulations.™ The GAO report noted the ratio of commercial vehicles to Federal safety inspectors was about 32,000 to 1, and the ratio of the number of carrier firms to investigators was about 1,300 to 1. Not only were the number of vehicles and carriers inspected only a fraction of the total, but the method of selecting carri- ers for inspection was not directed to ‘‘known- high-risk-elements of the industry.’’"® The drivers themselves affirm that Federal safety standards are not being enforced and that exempt carriers lead the industry in violations. In a survey of about 10,500 of the nation’s truck drivers, one researcher found that nearly half of the exempt carriers who violate the BMCS hours of service rules do so by using multiple log books (32.74 percent), by regularly misrepresenting logs (44.94 percent), and by regularly driving beyond the 10-hour limit (45.98 percent). At the other end of the scale, correspond- ing figures for company-employed common carrier drivers were 1.87 percent, 4.27 percent and 2.48 percent, respectively.© ENERGY Fuel savings from less regulation of trucking have been estimated as 22 million barrels per year, with most gains accruing to private carriers and regulated less-than-truckload (LTL) carriers that are most likely to travel fewer empty miles under deregulation. Relatively little fuel gain would be experienced by regulated truck-load (TL) carriers that are more fully loaded in today’s regulated environment.® ADEQUATE SERVICE Within New Jersey, 97 percent of shippers reported that intrastate (unregulated) service was as good or better than regulated interstate service.® Service to small communities may improve with deregulation.© Following the implementation of the NTPSC policies, entry into the interstate LTL business may occur by such small intrastate firms, by newly expanded freight forwarders, and by expansion and merger of existing LTL interstate firms, resulting in less interlin- ing. Regarding stability of the industry, the New Jersey study found the average age of unregulated intrastate firms to be 18.43 years.”° A study of the exempt (agricultural) trucking sector found no more frequent exit from that industry than for similar industries.”' Another study found the average age of exempt livestock trucking firms to be 18 years.”2 Thus, fears of excessive turnover in a deregulated environment should not be realized. On the other hand, monopoly should not occur either, as most studies have shown constant returns to scale, although economies may exist for the LTL sector for short hauls.’ EMPLOYMENT Average compensation for regulated trucking firms (often using union drivers) is substantially above that for non-regulated firms, as shown in a 1975 study.”4 Non- % Regulated Regulated Difference Old Class | ($1-5 million per year annual revenues) $11,099 $8,504 30.5 Old Class II ($300,000— $1 million) 10,033 7,566 32.6 At least one study documents that Teamsters Union members have gained from existing regulatory policies.’5 INDUSTRY PROMOTION Regulated trucking firms own certificates that have scarcity value. The ATA estimates their value may approximate 15 to 20 percent of the annual revenues of the firms that own them.’° In 1972, operating rights of carriers with over $1 million in annual revenues were carried on their books at values of over $300 million, which may underestimate the market value.” Household goods certificates were estimated to be worth $60.8 million in 1977.78 The value of these certificates can be expected to decline as new entry is permitted. Intercity Bus STATUS QUO POLICIES The Interstate Commerce Commission (ICC) was given authority to regulate the intercity bus industry by the Motor Carrier Act of 1935 and currently regulates bus entry, operations and route changes, exit, and fares. In 1948, the Reed-Bulwinkle Act made joint fare-setting by rate bureaus legal and not subject to antitrust restriction. These acts provided the basis for most current regulation of intercity buses. It should be recognized that intercity bus firms often derive substantial revenues from package-ex- press and charter operations, in addition to common- carrier passenger service. Problems in the industry which suggest reformed policies are listed below: 1. Very little intra-industry service competition ex- ists; 2. The industry appears unable to achieve past rates of return under existing regulation;’ 3. Cross-subsidy has been widely used by bus companies to continue to provide service that loses money in one area while making a profit on overall operations; 4. Intra-industry rate competition has been discour- aged by tariff-filing requirements and certain rate bureau practices; 5. More than 1,750 communities have lost bus service over the past 10 years.®° Federal legislation in 1978 sought to aid the industry by authorizing (but not yet appropriating) funds for rural intercity bus service and terminal development, repealing the excise tax on buses and bus parts, and providing an exemption from the 4¢ per gallon Federal fuel tax.®" NTPSC Policy Recommendations In the long term, the NTPSC recommends complete reform of regulation of intercity bus rates and rate bureau practices, entry (subject to compliance with safety, insurance and financial standards), and exit. In the interim, these policies have been advocated by the NTPSC for intercity bus regulation: 1. Increased rate flexibility including an expanding no-suspend zone of reasonableness to be estab- lished by Congress; 2. Easier entry of new carriers, or carriers offering new service on existing routes, with an increased burden of proof on protestants; and 3. Federal, state, and local cooperation to subsidize shortfalls for certain uneconomic routes where benefits exceed costs. These interim policies are designed to give estab- lished carriers the opportunity to adjust their opera- tions to become fully competitive, and to permit new entrants where they are financially fit and can demonstrate adherence to safety and insurance rules. Impacts There have been no large-scale studies to date of anticipated impacts from intercity bus deregulation. Prior to the 1970s, few bus companies, their compet- IMPACTS OF “THE POLICY RECOMMENDATIONS e 281 itors, or their riders challenged the ICC’s authority to regulate rates, routes, entry, and exit. Inflation, Amtrak, and a general decline in the intercity bus industry have changed that situation, and several studies have recently been completed or commis- sioned.® Adequate Service. Regulatory reform of the intercity bus industry will probably improve service character- istics through more intra-industry competition. Whether service will become more accessible to all is debatable, especially in the rural market. The intercity bus industry is dominated by two carriers, Greyhound and Trailways, each with coast- to-coast networks. Together they operate approxi- mately 65 percent of all U.S. intercity bus passenger- miles and more than 80 percent of those operated by Class | carriers.8° Most of their rural intercity routes feed into the cross-country network. Two schools of thought exist regarding the impact of deregulation on service. Concern has been voiced that when the large carriers drop most unprofitable, low-density routes (as they almost certainly will when given the chance), some affected communities may be left with no public transportation. It has also been argued that carriers will seek to serve only the densest passen- ger routes, or to provide only charter and package express service (which may yield higher returns than common carrier passenger service under existing regulations). Other observers contend that profit in the bus industry is not dependent on economies of scale, and smaller carriers, providing specialized service over a limited route, may well be profitable.” In this latter case, deregulation would allow easier entry of these small carriers, with no loss (and perhaps an increase) of service as large Carriers leave the markets. A series of small networks might well provide better regional service than the existing networks geared to long-distance travel. Both the smaller and larger carriers, if given increased free- dom to offer a variety of price and service options, can become more responsive to consumer demand. The NTPSC policy recommending limited subsidi- zation of service (on terms similar to those now aiding rail branchlines or essential, small community air service) will prevent mass abandonment of un- profitable routes in the interim, while removing the need for private carriers (or other passengers through cross-subsidy) to bear the losses. Economic Efficiency. Economic efficiency should improve under regulatory reform. The proposed interim policy to provide subsidy on certain routes will prevent large carriers from abandoning uneconomic low-density routes, while relaxed entry and rate regulations should encourage entry of other firms that can provide profitable service. There is 282 e ISSUES AND POLICY RESOLUTION some concern by private intercity bus firms that federally subsidized rail, air, and bus carriers now may be competing unfairly. It should be noted that intercity bus firms are now eligible for Federal funding (at state and local option) under Section 18 of the UMT Act.8> The NTPSC policies would seek to limit subsidies for all modes to those cases in which benefits of subsidy exceed costs, as determined using proper economic analysis. Energy Conservation and Safety. Buses are, on the average, from two to seven times as fuel efficient as alternative modes (although comparisons based only on averages may be misleading).®* To the extent that the proposed NTPSC regulatory reform policies encourage bus use at improved load factors, energy conservation will be favored. Similarly, bus safety records have been very impressive.®’ But recent projections have demonstrated that demand elastici- ty for intercity bus service has been very low on most routes (i.e. those with no direct competition),& and if such relationships hold, little impact on energy conservation or safety is expected through diversion from modes which are less energy efficient or less safe. Regional Development. Of the 15,000 communities served by common carriers of passengers (air, bus, rail), some 14,000 are served only by bus.®° A 1978 congressional report, Intercity Bus Service in Small Communities, offers a tentative conclusion, based on financial records of bus firms and consideration of the types of markets they serve, that service to rural communities does not appear to be less profitable than to large cities.%° Thus, the NTPSC policy recom- mending simplified procedures for entering and leaving intercity bus markets should result in stable or increased service to rural regions not served by other modes. Equity. Although intercity buses have been responsi- ble for only about 2 percent of total intercity passen- ger-miles since 1970, figures show that up to 1976, they carried over 50 percent of total intercity passen- gers carried by public carriers.%' Analysis by income and age reveals concentrations of student, retired, and low-income ridership not encountered in other modes (whose limited routes or high fares make them inaccessible to these groups). The NTPSC policies are designed to strengthen the bus industry, allowing it to continue to offer a service not provided by other public transport modes. Environmental Protection. Buses compare very fa- vorably with railroads’? and other passenger modes in terms of environmental disruption. Where electri- fied rail is being compared to diesel-powered buses, different pollutants may be involved.% Air Carriers The deregulation of air cargo and passenger ser- vices occurred too recently to determine longer term consequences.” Earlier predictions included expect- ed effects ranging from a loss of $660 million per year to a gain of $1,189 million per year in trunk air carrier profits.%° Deregulation’s effects on the number of flights is unclear, because low and flexible fares generate more passengers, but higher load factors.® Further predictions include an erosion of union power and the improved health of smaller short-haul air carriers relative to long-haul carriers in densely traveled markets.%” Regarding loss of service to small communities, the DOT (1976) and the CAB (1975) predicted little change, while the Air Transport Association predict- ed substantial reductions in service (1975).% Mergers RAILROAD (NEAR-TERM) Status Quo Policy Under Section 5(2) of the Interstate Commerce Act as amended in 1940, mergers between railroads must have ICC approval. The ICC must consider several factors in its decisions: 1. Effect of the merger on adequate transportation service; 2. Effect on the public interest of the inclusion or exclusion of other railroads in the territory of the proposed merger; 3. Total fixed charges resulting from the proposed merger; and 4. Effect on labor. The ICC has discretion to weigh the relative impor- tance of these considerations, and to consider other matters such as antitrust.% It has been argued that the ICC interpretation of Section 5 of the Interstate Commerce Act has hindered railroad restructuring.'© In its attempts to maintain adequate service, the ICC has often im- posed protective conditions on mergers to minimize effects on other parties.'°' These protective condi- tions dilute the potential benefits of a merger and make restructuring less attractive. For example, during the 1950 merger proceeding Detroit Toledo and Ironton RR Co., et al., Control, etc., 275 ICC 455, several railroads alleged the merger would deprive them of traffic and jeopardize their financial position and ability to serve the public. The ICC imposed six conditions on the merger, limiting the merged roads’ ability to alter pre-merger traffic patterns. These, known as ‘‘Detroit, Toledo and Ironton Conditions” or ‘Standard Routing and Gateway Conditions,” have been imposed on most mergers since 1950.'” It has also been argued that the ICC’s failure to reach merger decisions in a reasonable length of time hinders needed rail restructuring. Between 1955 and 1972, the total time from initial filing with the ICC for merger, acquisition or control of two or more Class | railroads to final authorization ranged from 6 to 108 months.'° Title IV of the 4R Act added new rail merger procedures.’ A key objective of the 4R Act is to expedite the merger process to encourage voluntary, privately initiated railroad restructuring. Differences in the 4R Act’s merger procedure are: 1. The Secretary of Transportation conducts an initial analysis of the impact of the proposed merger on shippers, consumers, labor and geo- graphical regions; 2. Public interest is the standard for ICC approval as opposed to the IC Act standards described above; 3. Once an application which has been reviewed by the Secretary is presented to the ICC, the Com- mission is directed to make a decision based on the public interest tests without concerning itself with inclusion applications;'® and 4. Strict time limits have been specified for both the IC Act Merger Procedures (31 months total) and the 4R Act Expedited Railroad Merger Proce- dures (24 months after ICC’s receipt of the Secretary’s recommendations). NTPSC Policy Recommendations In accord with the 4R Act goal of encouraging voluntary, privately initiated railroad restructuring, the NTPSC believes there is a need to strengthen existing rail merger policy guidelines so that potential efficiency gains will not be jeopardized by uneco- nomic conditions placed on merger agreements. Specifically, the NTPSC recommends that proper economic analysis be used to carefully weigh the benefits of rationalization against possible costs to shippers and labor, and that mergers should be subject to reformed antitrust policies applicable to other sectors of the U.S. economy. Impacts Economic Efficiency. Corporations may consider merger in order to improve financial strength and profitability through changes in operations, to gain access to capital, and to expand service. In many cases a carrier can achieve gains only through IMPACTS OF THE POLICY RECOMMENDATIONS e 283 investment. Such investment may upgrade or estab- lish links between merged properties or redesign yards to accommodate traffic changes. If mergers are not burdened by involuntary inclusion of uneco- nomic assets and restrictions, and if the process can be concluded in reasonable time, a merger is more likely to achieve the potential economies inherent in the consolidation process.’ Service. There are several potential impacts on service. On the positive side, mergers that could improve service to the public are more likely to be initiated if there is reasonable assurance that few involuntary inclusions or uneconomic conditions will be imposed by the ICC.1° On the other hand, if merger is used as a tool for resolving the marginal railroad problem, services of marginal carriers may be jeopardized by the merger.'° U Equity. A potential difficulty in compressing the merger decision time period from 31 months is that proceedings can become greatly complicated through the filing of inconsistent applications and petitions for inclusion. If the ICC is required to dispose of petitions and applications within a shorter time limit, affected parties may be deprived of full opportunity to present their positions.’ MOTOR CARRIERS (NEAR-TERM) Status Quo Policy The ICC has exhibited an affinity towards approving trucking mergers.'° Section 5(2) of the Interstate Commerce Act authorizes motor carriers to consoli- date or merge, with ICC approval, if the proposed action is found to be just, reasonable, and in the public interest. Two basic criteria are used by the ICC to determine if consolidation is in the public interest: (1) the anticipated public benefits available from unification; and (2) the effect on competing carriers. The impact which a merger will have on competing truckers is controversial. In order to comply with the congressional mandate of controlled entry, the ICC has taken the position that the service to be performed after the merger should be no greater than each carrier could have performed separately by means of interchange agreements. If the overall route authorization is greater than the prior combined route structures, a new competitive service has been created. For a new service, the ICC must decide if the benefits to the shipping public are greater than adverse impacts on protesting truckers before merger approval is grant- ed.111 New service does not automatically mean a merg- er will be denied, but this position has caused 284 e ISSUES AND POLICY RESOLUTION restrictions to be placed on some motor carrier mergers which lessen service and profit potential.'’? NTPSC Policy Recommendations The NTPSC position is that in the near-term, the ICC (or its successor residual transportation regulatory agency) should strive to eliminate restrictions which lessen the service and profit potential of motor carrier mergers. There are at least two methods of achieving this goal while meeting the existing con- gressional mandate of entry control: 1. Require strict burden of proof for protesting carriers who claim restrictions are required to protect their ability to meet common carrier obligations.""$ 2. Where there is conclusive proof of extensive damage to competing carriers, require merger applicants to make short-term indemnity pay- ments to protestants, permitting a reasonable amount of time to adjust to the new competitive situation." Impacts Service. The primary advantage of trucking consoli- dation (particularly end-to-end) is the reduction in the amount of interlining required, improving custom- er service as a result of: reduced handling, less chance for damage and theft, faster service, im- proved scheduling, and faster tracing.‘ With fewer restrictions on merger agreements, the potential for service improvement increases. Employment. Because the motor carrier industry is still growing, mergers do not adversely affect overall employment opportunities. One transportation labor leader said, ‘‘In the long run, mergers create jobs.’’''6 LONG-RUN MERGER POLICIES NTPSC Policy Recommendations The NTPSC recommends that in the long-run, trans- portation mergers for all modes be subject to re- formed antitrust laws that seek to increase the efficiency of the transportation sector and of the entire U.S. economy. Such antitrust policy should consider, to the extent they are measurable, gains in technical efficiency resulting from a merger. These gains would be weighed against any losses in allocative efficiency associated with potential mono- polization of a market, such that mergers would be unlawful only where the costs exceeded the benefits. It should be noted, however, that current antitrust law does not weigh benefits against costs in assess- ing mergers. This NTPSC policy requires antitrust law, with respect to mergers, to be reformed at the same time that transportation mergers are brought under its jurisdiction. The statute affecting the legality of corporate mergers, Section 7 of the Clayton Act, condemns mergers whose effect ‘‘may be substantially to lessen competition or tend to create a monopoly.’’'’” The category of mergers most relevant to the transporta- tion industry is that of horizontal mergers; that is, those affecting one market. Section 7 has been interpreted by the courts to strike down horizontal mergers creating market shares of as little as 5 percent.1'8 A recent review of antitrust action, which generally supports more vigorous enforcement, cites the coun- terproductive impacts of Federal antitrust action with respect to mergers. The author suggests that Feder- al antitrust resources would be more productively spent on monopolization or trade-practice cases rather than on mergers."'9 Subjecting transportation mergers to DOJ rather than ICC authority would mean that mergers would no longer need prior approval. To subject transporta- tion mergers to market share standards may not be appropriate as an indicator of potential market dominance in the freight transportation industry, as discussed in a recent PIE—C paper on the benefits of rail deregulation.'2° End-to-end mergers, which do not reduce compe- tition in a particular market, may permit potential gains in technical efficiency to the affected carriers, with little potential for increased market power.'*' For this reason, an efficient antitrust policy with respect to transportation would presume most predominantly end-to-end mergers to be legal. The efficiency impact of predominantly parallel mergers (as contrasted to end-to-end mergers) ap- pears mixed.'?? Parallel mergers may result in cost savings to carriers, but may increase market power through reducing the number of carriers in the affected market. A key aspect of any DOJ actions with respect to transportation mergers would be definition of the relevant market. Intermodal and intramodal competition, geographical competition and potential for product substitutability, are but some of the factors which should be addressed in any determination of potential market power gains to result from a merger. An efficient antitrust policy would then weigh any efficiency losses (i.e., restric- tions in output which may result from a merger) against potential efficiency gains. This is particularly relevant for railroad mergers, where a parallel merg- er of two carriers may leave only one rail carrier ina particular market, though no lessening of competi- tion would result (when considering competition from other modes), and cost savings may result. The future of trucking mergers hinges in part on motor-carrier regulatory policy. Past mergers have provided trucking companies with access to markets otherwise blocked by ICC entry restrictions. As entry is freed, motor carriers may prefer internal growth as a more cost-effective means for expansion. In the LTL sector of the trucking industry there is potential for both economies of scale and for monopolization if artificial barriers to entry persist. It is important that antitrust policy not preclude important service ad- vantages associated with large terminal networks which may result from trucking mergers. At the same time, incumbent LTL carriers should not be permitted to monopolize markets through merger while new entrants are artificially barred from the market through regulatory restrictions. Intermodalism STATUS QUO POLICIES There are numerous Federal regulations passed by Congress during the past 70 years which affect intermodal ownership and operations. The list in- cludes: 1. Interstate Commerce Act (restricts rail ownership of other modes); 2. Panama Canal Act of 1912 (restricts rail-con- trolled water operations);'2° 3. Motor Carrier Act of 1935 (limits intermodal acquisitions of motor carriers);'* 4. Transportation Act of 1940 (modifies Motor Carri- er Act provisions to apply only to rail carrier acquisitions of motor carriers. Also restricts rail and pipeline participation in water carriage);'* and 5. Federal Aviation Act of 1958 (restricts surface carriers from engaging in direct air carriage).'?6 Each intermodal restriction resulted from an at- tempt by Congress to protect a particular mode from domination by more established modes of transpor- tation. In most instances congressional directives provided agencies with a wide latitude for action. On a number of occasions, without success, the regula- tory agencies have asked Congress for specific clarifying legislation.'” As a result, some Federal agencies have recently taken initiative to further the concept of intermodal cooperation and coordination within the context of existing regulation. In early 1978, the ICC approved a single-rate barge/rail tariff arrived at by a railroad and a barge firm in lowa. Unlike previously hostile encounters between modes, these two firms joined together voluntarily and designed an innovative tariff to save lowa shippers 2 or 3 cents per bushel in transporting grain to New Orleans.'78 Also in 1978, a ‘‘Memorandum of Staff Agree- ment” was signed by the managing directors of the ICC and the Federal Maritime Commission (FMC) «to establish cooperative internal procedures... in intermodal matters in which each agency has an interest.’’129 IMPACTS OF THE POLICY RECOMMENDATIONS e 285 In early 1979 the ICC released proposals concern- ing deregulation of intermodal services, requesting shipper and carrier comments before a legislative package is presented to Congress. The proposals encompass: 1. Repeal of the section of the Interstate Commerce Act that ‘‘prohibits common control or ownership of railroads and water carriers operating through the Panama Canal’’;1%° 2. Ending of regulations over barge and intercoastal tariffs so that such carriers ‘“‘could establish through routes and joint rates with regulated carriers of other modes ... and could provide substituted service for other surface carriers.” Note that in this proposal deregulation of rate and tariff filing is tied to deregulation of carriers concerned with intermodal operations. This would not be necessary. Simply deregulating rates and tariffs would result in added efficiency with no added costs, and yield quantifiable economic data on the effects of single-filed tariffs in inter- modal movements.'*" The ICC hopes that such proposalsewill encourage the participation of carriers in joint intermodal ser- vices, in a way that current regulation has failed to do. Probably the most progressive intermodal owner- ship policy of any agency is that adopted by the CAB in cases involving surface carrier participation in air freight forwarding. The Board’s policy has been evolutionary, but with the expressed goal of protect- ing competition, not competitors. This evolution has been possible because, unlike the Interstate Com- merce Act, the Civil Aeronautics Act does not contain specific provisions which demand congres- sional approval for modification.'* INTERMODAL EXAMPLE: RAIL PIGGYBACK SERVICE Piggyback service, which involves trailer-on-flat car or container-on-flat car (TOFC or COFC) move- ments, is the most widely used form of intermodal domestic freight transportation. Although loaded trailers were moved on rail flatcars as early as 1926, modern piggyback service did not begin until the late 1950s. Between 1970 and 1978, piggyback traffic (as a percent of total rail carloadings) rose from 5.3 percent to 7.9 percent,'** though in 1974 such traffic constituted only about one percent of total intercity freight volume.’ In recent proceedings the ICC has settled on these basic conditions for rail control of motor-carrier service: 1. Trucking service may be performed to and from but not between specified ‘‘key points’ or major traffic centers; 2. Operations must be limited to service at stations on the rail line; 286 e ISSUES AND POLICY RESOLUTION 3. Truck traffic must be connected with a prior or subsequent rail haul; and 4. Traffic must move on rail rates and rail billing.1* Although designed to ensure that any rail-con- tracted truck operation will be substituted service, and traffic will not be taken from competing trucking companies, the first two of these conditions inhibit TOFC service by limiting the potential of all-railroad- supplied TOFC to only those areas surrounding established railroad stations and by requiring a ramp at every ‘‘key point,’’ despite economic dictates. NTPSC Recommended Policies The NTPSC recommends regulatory reform to elimi- nate Federal impediments to intermodalism in gener- al, while promoting effective joint rates and through service within and among modes. The following specific policies have been proposed to further the general goal of enhanced intermodalism: 1. Federal impediments to common ownership and intermodal coordination and cooperation should be eliminated (although some restraints on com- mon ownership may be necessary to preserve competition); 2. A common definition of ‘through bill of lading‘ should be adopted by Federal agencies; 3. Differences between CAB, ICC, and FMC publica- tions of regulations affecting through rates should be eliminated; and 4. Cargo liability laws should undergo further stan- dardization. IMPACTS Adequate Service Service is likely to improve under the proposed NTPSC policies encouraging more extensive trans- portation integration. In the event of poor TOFC service by intermodally-controlled firms, independent truckers offering superior service could enter the affected market. With fuller cooperation between modes, options available to shippers would be increased, thus improving their ability to ‘‘customize”’ various shipments according to current need at prices reflective of costs. Appropriate Rates/Prices It is probable that extensive transportation integra- tion would lower consumer transportation prices. An example is the 2 to 3 cents per bushel savings experienced by lowa shippers using rail and barge under a single-rate tariff (mentioned above). The NTPSC policy recommending a common definition of “through bill of lading’’ for Federal agencies should significantly improve the opportunities for additional intermodal cooperation with similar reductions in rates. Economic Efficiency In a 1975 study by Reebie Associates for the FRA it was estimatéd that a national intermodal network could save consumers up to $163 million in transpor- tation charges by 1985. These savings are heavily dependent on the effect of increased intermodalism on existing modes, equipment needs and utilization, and pricing policies.‘%° Three factors have been noted which might limit the efficiency of increased intermodal traffic (especially TOFC): 1. Overcapacity related to an imbalance of traffic flows; 2. Unclear impact on existing carload rail traffic and resulting rail revenues; 3. Need for intermodal equipment and other car types has not been established.197 Equity To the extent that encouragement of intermodalism would reduce modal discrimination in existing U.S. statutes, the recommended NTPSC policies would result in greater equity among modes. Three exam- ples of modal discrimination in existing regulation are: 1. Section 5(2)(b) of the Interstate Commerce Act applies only to rail carriers seeking to integrate with existing motor carriers; 2. Sections 5(14) to (16) apply only to rail carriers and pipelines seeking to engage in water car- riage; and 3. Section 408 of the Civil Aeronautics Act applies only to surface carriers attempting to engage in direct air carriage. '%® Industry Promotion and Protection Protection of newer industries from competition has been a key to interpretation of regulations limiting intermodal ownership, but recently there has been active concern with protection of competition, even if that means losses for individual firms. For example, trucking has traditionally opposed regulatory change that would permit rail entry into motor carriage on the grounds that railroads might combine pricing with service changes to eventually weaken the trucking industry. Present experience with two western railroads and their trucking subsidi- aries would tend to disprove this theory. Santa Fe Industries and Southern Pacific Transportation Com- pany, both rail-holding companies, are significant factors in western trucking operations. In the 40 years that they have been in operation, there has been no evidence that railroad involvement in motor carriage had damaging repercussions on the truck- ing industry.199 On the other hand, without the artificial protective shield currently provided by Federal legislation, there is little doubt that several smaller, less-profitable firms would be eliminated or relegated to rather limited types of carriage where their service has been shown to be inferior to that of the larger integrated companies. '*° Employment Intermodal cooperation, especially piggybacking, has been consistently opposed by affected labor unions. Increased use of containerization tends to lead to reduced employment as capital expenditures (in the form of containers or trailers and the special equipment needed to move them) are substituted for labor. The Maritime Administration (MarAd) has exam- ined the relationship between the extent of contain- erization and unemployment at U.S. ports. The most severe drop in longshore employment between 1960 and 1976 was at the Port of New York, the world’s largest container port. Overall, since the introduction of the container to the shipping industry in the late 1950s, there has been a steady increase in labor productivity (50 percent between 1967 and 1975) but a decrease in longshore employment (23 percent between 1960 and 1976).'*" Energy, Environment, and Safety The NTPSC’s proposed policies would be a prelimi- nary step to formation of a national intermodal network. Studies of energy savings from such a system were made by Reebie Associates. Annual savings of 75 million gallons of fuel (0.4 percent of predicted total consumption for intercity freight transportation) were forecast due to diversion of traffic to more fuel-efficient TOFC operations. '4? The specific policy of easing piggyback restrictions, if reduced intercity trucking operations resulted, would improve levels of pollution and congestion, and safety performance.'*? Innovation STATUS QUO POLICY Innovative transportation changes are affected by a variety of factors including market structure, de- mand, capital availability, labor pressures, and gov- ernment regulation. It has been argued that innova- tion is not as rapid as it should be, due in part to the impact of economic regulation. Although there has been no complete analysis of the relationship be- tween regulation and innovation'’* examples can be cited which suggest that regulation can have an adverse impact on the implementation of new tech- niques and technology, especially for railroads, and to a lesser extent for pipeline and air.'*° 4 IMPACTS OF THE POLICY RECOMMENDATIONS e 287 Rall External control of rate changes is believed to be an impediment to innovation. The ICC frequently as- sesses the “‘justness and reasonableness’”’ of rate changes based on historical average costs which may not reflect cost savings available through inno- vation. By prohibiting a carrier from adopting lower rates which could generate the traffic increase necessary to provide justification for an innovation, the ICC may have prevented some _ innovative changes. ‘46 One example of how economic regulation distorts investment decisions is the introduction of 100-ton- capacity rail freight cars. The larger capacity car permitted an indirect means of reducing rates to large shippers on a per-ton basis, even though the traffic could be handled almost as efficiently with existing standard-size cars.'47 Carriers wished to use these cars and reduce rates to large shippers of dense materials, reflecting the economies of bulk handling, but feared ICC action against rate reduc- tions. The case of the “Big John” cars is a striking example of how regulation can delay introduction of an innovative technology. In 1961 Southern Railway published tariffs for new “Big John’’ grain cars which were 60 percent below previous rates. Complaints from competing shippers delayed approval until 1962. The decision was subsequently reviewed and reversed by the ICC, initiating a series of court battles. Four years after the initial petition, rate reductions for ‘‘Big John” grain traffic were ap- proved.'48 Aside from deterring one specific innova- tion, time delays such as this entail frustrations and costs which may discourage management from at- tempting to introduce new technology. Some investigators believe that the introduction of unit trains in the East was delayed by at least five years by the regulatory process.'4° Cost analysis of unit trainload shipments of coal, grain and iron ore indicated that substantial savings were possible. To introduce the service, lower rates were needed to induce shippers to maintain larger inventories and loading facilities required by unit loads. On the basis of prior regulatory policy, carriers assumed that if lower rates were offered for this service in one area, similar rate reductions would be required by the ICC in other areas, conceivably resulting in net revenue loss. Thus, there was no incentive to introduce unit train rates until demand increased to the point that the service was profitable regardless of uniform rate restrictions.'°° Rate regulation is but one factor which inhibits innovation. Railroads are restricted in their ability to own other transportation modes while pipelines, water, and motor carriers are not.’®' The ICC has the power to approve or reject railroad ownership of é 288 e ISSUES AND POLICY RESOLUTION truck lines. This policy may have slowed the develop- ment of domestic piggyback service compared to the large-scale introduction of this service in Canada which is unhampered by such restrictions.'** The same policy may inhibit the widescale use of two promising future innovations, specialized intermodal rolling stock and automated intermodal terminals, which were identified by the NTPSC in Chapter 6 as key technologies. The long history of economic regulation may have shaped the philosophy of rail management about innovation. Some argue that regulation, by transfer- ring competition from market place to courtroom, has fostered a management concerned more with legal aspects than innovative changes in equipment or procedures. Employees also have a stake in technological improvements that may affect their jobs.*5$ Pipelines Pipeline rate changes were assessed by the ICC on the basis of an established return on invested capital. To determine the rate base, the ICC emphasized the cost of reproducing invested capital, a policy which may have encouraged extended use of older equip- ment or discouraged the use of new capital which incorporates new technology.'™ On the other hand, there are indications that pipeline innovation has been spurred by regulation of the railroads. The development of product pipelines was probably hastened by the shippers’ desire to circumvent high rail rates. The Cadiz-Cleveland coal slurry pipeline was similarly motivated.'5° Alr In general, past CAB policies encouraged service competition as a substitute for price competition. Thus, some new aircraft purchase decisions may have been biased in favor of passenger amenity characteristics rather than operating cost consider- ations.'5© Recent relaxation of economic regulations will revive price competition and foster innovations to enhance economic efficiency. Motor Carriers There is little indication that innovation in motor Carriage is adversely affected by economic regula- tion. However, a publication of the Senate Commit- tee on Governmental Affairs states that relaxation of entry restrictions would permit carriers with access to new technology to enter the market. 19” NTPSC Policy Recommendations The NTPSC recognizes that economic regulation can have deleterious effects on innovation. A case can be made that almost any regulation impacts techno- logical change, by impeding or forcing innovations, or channeling the course of change. It is important that impacts on innovation are well understood. The manner in which Federal economic regulatory policy inhibits or promotes the development and utilization of innovative technology in the transporta- tion sector should be assessed for existing regula- tions and prior to establishing future regulatory policy. Regulatory impediments to innovation should be minimized. IMPACTS Adequate Service Relaxation of economic constraints on innovation can have a positive effect on the pace of technologi- cal change and consequently on the variety of services available. Carriers able to reflect the costs of new technology in their rates have a greater incentive to discover and meet the demand for new services.'5® As an example, expansion of intermodal services such as TOFC/COFC is possible. Economic Efficiency and Appropriate Rates/Prices With greater freedom and more incentive to innovate, carriers are likely to choose methods that permit cost reduction. Thus a positive impact on economic efficiency is expected, assuring that future innova- tions are in society’s economic interest.'*° With improved efficiency, positive impacts can be expect- ed on fares, rates and costs for users and providers of transportation. Industry Promotion Railroads may have the most to gain from the NTPSC policy because available evidence indicates that they are most stifled by regulation. Innovation in the rail sector could lead to technological thrusts in compet- ing modes, another spur to efficiency and service improvement for the entire freight transport system. Employment Greater automation of rail yard operations, and monitoring and control processes, as discussed in Chapter 6 of this report, can be expected to reduce the labor force now required for those tasks. On the other hand, deregulation may create new employ- ment opportunities. OTHER REGULATION Safety STATUS QUO POLICIES Transportation safety has long been a concern of the Federal government. As in all situations involving socially unacceptable risks, government regulation of transport safety has taken three basic forms (after designating an agency to oversee the specific risk or accident cost reduction):'© 1. The agency can produce and disseminate safety information. This has rarely been used exclusively in transportation, but has often been a comple- mentary measure to mandatory standards (e.g., seat belts); 2. The agency can impose penalties, fees, insurance requirements, or quotas to deter unsafe condi- tions and the manufacture of unsafe products (the FAA’s establishment of quotas at peaks to control the concentration of air carriers over busy air- ports is one example); and 3. The agency can set mandatory standards. This has been the primary approach of the agencies designated to solve transportation safety prob- lems from rail car brakes, seat belts, and commer- cial air carrier instrumentation. NTPSC Policy Recommendations The NTPSC’s concern, in the long-term, is that regulatory policies involving transportation safety be cost-effective relative to other life-saving programs, with objectives that are clearly stated and enforce- ment that is strict, effective and applied equally for all modes and carriers. In a nutshell: _.. It is by no means clear that we should always be increasing our spending exponen- tially to shave the last few percentage points off the risks we happen to care most about at the moment.'® Specific NTPSC recommendations that will lead to these goals are listed below. 1. Retain DOT’s central role in safety regulation and enforcement; 2. Provide Federal matching funds to states for enforcement with penalties for ineffective en- forcement; 3. Share costs among all levels of government, the carriers, users, and others who benefit; 4. Increase penalties for carriers that do not meet standards, such as for rail cars, trucks, and tracks. (For example, Federal prosecutors in Wisconsin have begun to levy misdemeanor charges on executives of trucking firms for al- leged safety violations, with possible felony charges for false statements);'© 5. Tie certification of regulated carriers to verifica- tion of safety regulation compliance; 6. Require all certificated motor carriers to obtain insurance (or to maintain self-insurance of equal IMPACTS OF THE POLICY RECOMMENDATIONS e 289 value) at levels sufficient to require on-site in- spections by insurance firms; 7. Emphasize better maintenance of roads and bridges; and 8. Encourage training of local police and firefighters to deal with transportation accidents involving hazardous materials. IMPACTS There have been very few studies, government or private, which have dealt with the balance of costs and benefits of existing or proposed transportation safety regulations. A documented analysis of the cost-effectiveness of 37 highway safety counter- measures was prepared by the U.S. Department of Transportation in 1976.1 This report, The National Highway Safety Needs Report, ranked the counter- measures by cost of implementation, fatalities fore- stalled, and cost effectiveness over ten years. Be- cause of the methodology developed in this report, motor vehicle safety regulations have been scrutin- ized more than those of other modes. Three other recent DOT studies include some mention of the costs and/or benefits of safety regulation.’"™ The FRA notes that since May 1978, the DOT has been conducting a zero-based review of its safety regulations, and that in December 1978, the Depart- ment proposed a full-scale revision of its freight-car safety standards.'® The most troublesome problem in rail safety, deferment of track maintenance, has yet to be approached in a cost-benefit study, although the FRA reports a $4.15 billion accumulation of deferred maintenance over the past ten years.'© Recent FAA proposals to broaden controls on air traffic'®? and DOT proposals to revise regulations governing truck drivers’ hours-of-service'® have been met by cost-benefit arguments by industry spokespersons. '® A GAO estimate of the costs of vehicle safety regulations administered by NHTSA shows costs of $40 per auto in 1966, rising to $246 per auto in 1973, and $386 per auto in 1974 (the 1974 figure includes $122 per auto for the seat belt-ignition interlock system). Cumulative costs between 1966 and 1973 were $13.4 billion ($2.9 billion for 1973 alone). The GAO concluded that for the earlier years these costs were well spent as measured in lives saved.'”° Later estimates include that of a 1976 NHTSA survey, which showed auto manufacturers claimed an average $368 of added cost per vehicle resulting from current safety standards.'”' The Joint Economic Committee of Congress found costs of $666 per auto in 1978, or $7 billion total for safety and environmen- tal features.172 The NHTSA claims costs of only $250 per auto for safety equipment, or 5 percent of the overall price.'”% 290¢ ISSUES AND POLICY RESOLUTION Adequate Service The recommended NTPSC safety regulation policies would have a mixed impact on service. Enforcement of track, road, bridge and vehicle maintenance standards should improve service reliability and speed, but may discourage carriers from continuing to serve less-used routes (e.g., to small communities) because of the increased cost of meeting the standards. Appropriate Rates/Fares Generally it has been assumed that increased safety is directly related to increased expenditures, which eventually affect rates and fares. On the other hand, a DOT proposal to revise locomotive, track, and signal standards is expected to provide both a reduction in regulatory burden and an improvement in rail safety.'’4 Industry Promotion and Protection Proposed NTPSC policies will probably have a mixed impact in this goal area. The trucking industry has estimated that DOT’s plan to limit duty tours of single drivers to 12 hours would cost 73 private fleets $74,000,000, including increases in labor costs and equipment.'7> But studies of the auto industry’s response to the additional standards required since 1967 show that the ratio of net profit to net worth for the three major auto manufacturers has not declined (GM averaged over 15 percent per year), indicating economic strength of the companies during this period of auto regulation.'”© Energy Conservation The relationship between NTPSC’s recommended safety policies and energy conservation is unclear in most cases. An exception is the policy supporting strict and effective enforcement which, if applied to the 55 mph national speed limit, may have a direct positive impact on fuel conservation in saving 1 to 2 percent of the gasoline used.'”” Nonetheless, the cost-effectiveness of the national speed limit has been repeatedly challenged.'”® Equity The recommended NTPSC safety policy requires that cost-effective standards and regulations be applied equally to all modes and carriers. Energy NTPSC Policy Recommendations Energy is both an input to the transportation system and a commodity transported by that system. The NTPSC has proposed a basic energy policy (simply stated: deregulation) that will have great impact on the transportation system. The NTPSC has also proposed transportation policies that will have meas- urable impacts on energy demand, supply, and prices. These latter impacts are reported in each section describing the particular transportation poli- cies. STATUS QUO POLICIES Existing energy policy is complex. Regulations affect energy supply, demand, price, movement, and distri- bution. Adding to the complexity is the fact that foreign policy considerations play a major role in energy policy. For example, in response to feared petroleum shortages during turmoil in Iran, President Carter proposed in 1979 a contingency plan that, if approved by Congress, would permit rationing of fuels using resalable coupons.'’? DOE intervention in 1978 in proposed contracts involving purchase by U.S. firms of Mexican natural gas is another example.1& Current Federal energy policy, although hard to define exactly, relies on extensive regulations. Prices at which “‘old’’ or ‘‘new’’ domestic crude may be sold are specified.** A system involving entitlements equalizes costs to refineries to compensate for the varying controlled prices of domestic and foreign petroleum.'® Prices of gasoline, kerosene-based jet fuel, and aviation gasoline have been controlled (although jet fuels are now deregulated), and price controls for other fuels are due to expire.’ President Carter announced that the remaining controls will be phased out beginning July 1, 1979. The prices that may be charged for transporting fuels, as is true for most other commodities, will remain subject to regulation by the ICC, FERC, and state regulatory bodies.'™ IMPACTS The models used by the NTPSC to provide its baseline transportation forecasts assumed a largely unconstrained energy market. However, the respon- siveness of transport supply and demand to energy price changes was also assumed to be quite small in the NTPSC models. The NTPSC has recommended that, with the exception of the short-term retention of Federal fuel efficiency standards, most Federal eco- nomic regulations controlling energy markets should be ended. Thus, the NTPSC projections using the National Energy Model (NEM) do show, in great detail, the partial impacts of altering U.S. energy policy while retaining existing transportation policies. These models were not used, however, to show the combined effects of deregulation in the transporta- tion and energy markets. By way of comparison with the impact predictions derived from the NTPSC’s NEM, these additional predictions were examined: 1. The end of the petroleum refining entitlements program would discourage consumption of im- ported oil.18 2. Ending ceiling prices on crude oil would permit additional U.S. production of about 1.1 million barrels per day by 1985 as producers respond to price incentives. '% 3. The elimination of price controls would inhibit producers from withholding products from the market solely to await the possible future end of price controls. '8” 4. Gains from ending too much consumption of petroleum at regulated (low) prices are estimated at $1.5 billion.18 5. Decontrolled gasoline prices might rise 3.7¢ per gallon: higher by 1980 than if gasoline controls were maintained.'®° 6. Deregulated gasoline prices might lead to in- creases of about 0.2 percent in CO and HC emissions.'% 7. Deregulated gasoline prices that increase in the free market would reduce demand by 21,000 barrels per day for each _ cent-per-gallon increase.'% 8. The annual cost of energy regulation that could be saved if regulation were eliminated equaled $50 million in 1977.19 The transportation sector is the largest consumer of petroleum (using about 50 percent of total petrole- um but only about 25 percent of total energy consumed in the U.S. in a year), and the auto consumes about 80 percent of the petroleum used by transportation. Thus, it is important to consider the extent to which deregulation of energy markets will produce price responses that in turn affect automo- bile use and ownership. Such responses, or price elasticities, are important because if consumers’ responses are elastic with respect to price, overall price changes will elicit large changes in driving behavior; if consumers’ responses are inelastic, when fuel prices rise, consumption of motor fuels will not fall even with large price increases. The NTPSC’s model capabilities (models that showed anticipated auto ownership and use in relation to varying energy prices) were supplemented by a projection technique that attached greater importance to relationships between personal income trends and automobile ownership and operation.'% Other analyses of energy price versus auto owner- ship and use were investigated. One example is a Charles River Associates report’ which showed ranges of price elasticities for gasoline, jet fuel, and diesel fuel, at short-run and long-run intervals, and at 1972 and 1975 price levels, and for auto, truck, jet air, and rail modes. The figures were virtually all inelastic, more so in the short run. Demands for truck and rail diesel fuel were especially inelastic, being close to zero in most cases. In the long run, jet fuel purchases were shown to be slightly elastic at 1975 prices. IMPACTS OF THE POLICY RECOMMENDATIONS e 291 Another study reports a gasoline price elasticity of —0.2054 (higher than CRA short-run figures but lower than its long-run estimates) and predicts that a new 5¢ per gallon Federal fuel tax imposed in 1979, and increased at 5¢ increments each year to reach 50¢ by 1988, would save 1 million gallons of fuel per day by 1988, or 14 percent of what would otherwise have been consumed. The author’s sensitivity analysis showed that if gasoline prices fell due to voluntary conservation or unemployment, the effect of in- creased prices on fuel use would be diminished.'® The National Highway Traffic Safety Administra- tion reports annual estimates of the impacts of its fuel economy standards.’ In at least one case, proposed standards were too stringent to be met by the vehicle producers according to the NHTSA timetable, so the standards were relaxed.'%” Another standard, the 55 mile per hour speed limit, was enacted to encourage fuel conservation. This measure may have generated significant savings in lives as well, although research is not entirely conclusive. '% In the U.S., 13 billion gallons of diesel fuel were sold in 1978, up 10 percent from 1977, while 115 billion gallons of gasoline were sold, up 3.4 percent from 1977. Of the 170,000 filling stations in the U.S., it is estimated that 12,000 truck stops and 8,000 other stations now offer diesel fuel.‘ One impact of NTPSC’s proposed deregulated energy policy is likely to be an increase in the retail outlets offering diesel fuel. Table 109 shows the projected growth in U.S. demand for transportation fuels, including die- sel. Production of energy involves safety risks. Esti- mates of these risks have proved to be very contro- versial. When considering the risks inherent in pro- ducing energy by various sources, as well as in TABLE 109. Growth In the demand for transportation fuels, 1947 to 1975 versus 1975 to 2000 Average Annual Growth (Percent) Historical Projected Fuel Type 1947 to 1975 1975 to 2000 a Gasoline. eo oasveenins coer 4.1 —1.5 Dieselyee eres eh mee cues: 7.4 5.0 Jet Fuel see tits eee ies ie a5.2 3:7 Bunker Marine.............-...-+- —0.2 3.4 iY SOURCE: U.S. Department of Energy, Energy Information Ad- ministration, Annual Report to Congress 1977: Statistics and Trends of Energy Supply, Demand, and Prices, Washington, D.C.: Government Printing Office, 1978, p. 33; and American Petroleum Institute, Basic Petroleum Data Book, Washington, D.C.: 1978, Section Vil, Tables 11, 11a, and 13. aThe historic period is 1965 to 1975. 292 e ISSUES AND POLICY RESOLUTION transporting the energy, wide variations in predicted impacts are possible. One recent study reported the risk of wind-generated energy to be several times greater than that of nuclear power. The wind figure was high because the machinery must be fabricated and installed, and back-up generating capacity pro- vided. Another estimate of energy risk is that of the Rasmussen Report,2°' giving the chance of a nuclear power station disaster at one in a thousand million. Obviously, recent problems at the Three Mile Island nuclear facility will call these estimates into question. The NTPSC policies are designed to favor the private development of U.S. energy resources. Given relatively free energy markets, but transportation markets constrained by existing regulatory struc- tures, the NTPSC projected great development of U.S. coal resources, rapid dieselization, and intro- duction of synthetic petroleum plants in the Northern Great Plains during the 1990s. The projected im- pacts of this policy involve substantial movement of coal by rail, with consequent bottlenecks and new investment needs, as well as impacts on the commu- nities through which the traffic will pass. For exam- ple, it was suggested in Chapter 8 that for coal projected to be moved from the Powder River Valley region of Wyoming, certain rail carriers would need greatly expanded capacity by the year 2000. In the same chapter, future bottlenecks on the U.S. inland waterway system were identified, in many cases as the result of increased movement of energy re- sources. Most other studies of future coal movement have adopted a much shorter time horizon (in no cases beyond 1990).2° The NTPSC. energy policies will stimulate new patterns of future energy movement in the U.S., largely through private market responses to price signals; its transportation policies should increase the likelihood that these new movements can be accommodated by private transportation systems. The NTPSC has proposed that for-hire carriers have entry and pricing freedom that should contribute to the profitability of these private enterprises, and enhance the likelihood that capital can be obtained from internal and non-government external sources. The NTPSC has proposed that users of all modes should be assessed fees that cover the costs of their use, including external costs. Thus, any community disruption associated with coal movement by rail would be assessed to shippers whose payments would compensate these communities. Proper user fees that vary with peak demand would also capital- ize on existing systems and mitigate the need for new investment. The NTPSC recommendations for multi- modal planning, involving state and local govern- ments and the private sector, would also serve to reduce undesirable impacts associated with energy movement through facilitating private bargaining to reduce conflicts. Adequate Service Transportation is uniquely dependent upon petrole- um-based fuels; other sectors of the economy have greater choice among fuel types for meeting their energy needs. Consequently, if higher petroleum prices cause other sectors to use less energy or switch to other fuels (for example, if electrical generation relies on coal and nuclear fuel rather than oil-based residual fuel), more petroleum will be available for the transportation sector. The reliance by other sectors on coal for energy will impose the burden of moving massive amounts of coal on the transportation network, especially the railroads. It is predicted that a large fraction of this coal will come from mines in the West, involving great distances. To ensure the continued adequacy of service to non-coal shippers, increased capacity and capital expenditures will be required on certain lines. This issue was examined in detail by the NTPSC and is one of the prime consequences for the nation’s shift away from natural petroleum to other energy sources, including synthetic petroleum. It is forecast that the growth in ton-miles of coal moved will increase at twice the average rate for intercity goods over the forecast period. Equity According to the work done by the NTPSC, the effects on low-income persons who rely on automo- biles in a situation of rising fuel prices are complex. The Office of Technology Assessment has asserted that adverse impacts from deregulation could occur.2 Appropriate Rates Based on fuel price forecasts supplied by the NEM model, estimates were made of transportation cost increases due to fuel price increases. The results are summarized in Table 110. Energy prices were taken into account in several ways by the models used to forecast transportation activity by mode and market. The aggregate levels of transportation activity forecast by the NTPSC are not dependent on fuel prices. However, modal splits are responsive to operating costs, and accelerating fuel costs were taken into account, although it is difficult to quantify precisely the impacts of higher fuel prices. It appears that for intercity freight and passenger movement the cost of fuel will have a small effect on operating costs and hence on modal shifts. In the urban passenger market, gasoline prices have helped determine the split between travel by automo- bile and public transit. This split is dependent on an equation that considers both trip time and cost. Gasoline prices are fairly significant in determining the resulting shares. TABLE 110. Forecast real fuel price Increases In comparison with 1975 fuel costs as a percent of revenues, by mode, 1985 and 2000. Medium growth scenario Mode 1985 2000 Intercity Truck..... up 1% up 3% Peale 62 as tes 2 up 5% up 4% Domestic Water... up 1.3% up 4% Commercial Air.... up 2.8% up 6.4% General Aviation... Fuel costs per hour Fuel costs per hour of flight increase of flight increase 11 percent. 16 percent. Fuel costs decrease Fuel costs decrease 5 percent as a 12 percent as a fraction of the per- fraction of the per- sonal vehicle bill. sonal vehicle bill. Automobiles........ SOURCE: NTPSC forecasts discussed in Chapter 11. NOTE: These projections assume a decontrolled energy market and report the growth of fuel prices compared to revenues in constant 1975 dollars. Recently, fuel prices have been accelerat- ing rapidly. Economic Efficiency Deregulating energy prices causes fuel prices to reflect true economic values more accurately than occurs under regulation. To the extent that accurate fuel prices result, the transportation modes would more accurately reflect their true costs, and energy policy would not act to subsidize less energy-effi- cient modes, as probably occurs at the present time. Energy Conservation and Development Higher fuel prices should result in less fuel being consumed, other things being equal. The NEM model forecasts a higher rate of diesel engine utilization in the automobile market because changed fuel prices and other costs have made these engines preferable to those powered by gasoline. Additionally, it is anticipated by the Department of Energy that less driving will occur. DOE expects that for each 1 cent rise in gasoline prices, demand will decrease by 21,000 barrels per day.?% Air travel will become more energy efficient partly as a result of technological developments spurred by higher energy prices. Higher petroleum prices will cause other sec- tors—residential/commercial and industrial plus electrical generation—to switch to coal and nuclear fuels to meet part of their needs. The effect is to free additional petroleum fuels for transportation, which will be dependent on liquid fuels for the remainder of this century. Higher petroleum prices will be an incentive for the development of syncrudes from coal and shale oil. These two sources of oil are forecast by the NTPSC to provide a significant fraction of the nation’s energy supply by the year 2000, although the conversion of coal to crude oil involves serious energy losses. IMPACTS OF THE POLICY RECOMMENDATIONS e 293 Environmental Impacts Environmental impacts are difficult to assess be- cause of countervailing forces. On the one hand, higher prices should cause less travel, resulting in reduced aggregate emissions. On the other, higher fuel prices may increase pressure for relaxing envi- ronmental standards (or for not tightening them further) and may encourage misfueling of cars de- signed for non-leaded gasoline—if deregulation en- larges the gap between leaded and unleaded gaso- line prices. Increased oil extraction efforts will have environ- mental consequences. Greater amounts of drilling and exploration in frontier areas may occur if prices are allowed to reach market levels. The amount of oil production forecast for Alaska will require enlarging the pipeline across Alaska, with attendant environ- mental damage. Also, a shift to coal appears to have serious environmental effects. The extraction, transport, and utilization of coal pose environmental problems. To the extent that the use of coal is encouraged because of petroleum price increases, the resulting problems need to be considered as part of the environmental costs of allowing petroleum prices to rise. Safety Higher fuel prices, to the extent that they reduce travel, may reduce fatalities.2° Also, fuel conserva- tion measures—such as the 55 mph speed limit— may have collateral safety value.2°° However, it is possible that some efforts to reduce fuel consump- tion—such as reducing automobile weight or allow- ing larger truck sizes and weights—may adversely affect safety. Also, expanded coal consumption will pose safety problems. More grade-crossing acci- dents would be expected as a consequence of increased unit-train movements of coal. This problem may be acute in the West, where many tracks go through towns and the amount of rail traffic could radically increase. Environment NTPSC Policy Recommendations The NTPSC recommends that where environmental regulations are imposed, the free market should be allowed to operate so that prices may adjust to help recover the costs of meeting these regulations from those who create the costs or reap the benefits. Regional differences should be considered. The Federal role should include monitoring environmental conditions, mediating disputes, providing informa- tion, and facilitating planning. The DOT should coordinate such policies as far as they affect trans- portation. However, the NTPSC has not proposed that existing environmental regulations should be 294 e ISSUES AND POLICY RESOLUTION repealed. The NTPSC has attempted to determine the impacts of these existing regulations so that in the future more cost-effective regulations can be chosen. IMPACTS OF AIR POLLUTION REGULATION On a national basis, levels of pollution generated by urban passenger vehicles are projected by the NTPSC to decline until 1990, and then increase slightly due to increasing travel:?°” Year Urban Air Pollution 1975 142,600 metric tons daily 1980 120,500 metric tons daily 1990 59,000 metric tons daily 2000 62,500 metric tons daily These estimates include all CO, HC, and NO, emissions from urban passenger vehicles. Emissions for the other markets are, for the most part, unmeas- ured and are assumed insignificant in comparison to the urban passenger market. The benefits of air pollution regulations that have influenced reduced emission levels are not fully calculated, but some indications exist of their costs, as Summarized in Chapter 7. IMPACTS OF NOISE POLLUTION REGULATIONS The FAA uses benefit-cost analysis plus consider- ations of safety and technology to test the desirabili- ty of its proposed aircraft noise regulations. To determine the effect of its regulations requiring all civil subsonic aircraft to comply with FAR Part 36, the FAA weighed capital and operating costs against monetary measures of the benefits of reduced noise pollution as they accrue through the duration of the century.2°§ The FAA concluded that the benefits of its aircraft noise compliance regulations greatly exceed the costs. To regulate surface transportation vehicles, the EPA relies on an analysis of cost-effectiveness, rather than benefit-cost analysis.2°° The EPA as- sesses the benefits of its regulations in terms of reduced population exposure but does not provide a monetary measure of the benefits of reduced noise that can be weighed against the costs.2!° The EPA has summarized (Table 111) the economic costs of its existing and proposed regulations for each mode so they can be compared with one another. Costs presented should be regarded as ‘‘worst case esti- mates’’ as they do not take into consideration the reductions in fuel consumption likely to result from many of the EPA’s proposals. Also, the benefits of improved health and welfare resulting from reduced noise must be considered. Air According to the FAA, as of 1976 the U.S. fleet consisted of some 2,100 large jet aircraft, of which 1,600 (about 3/4) did not comply with FAR Part 36 noise standards. Based upon a number of estimates, the FAA beiieves that possibly some 50 percent of these non-complying aircraft would be in service by 1990, if there were no Federal action.2"' The FAA estimated that the discounted present value of capital investment needed between 1975 and 1995 to bring all civil subsonic aircraft up to FAR Part 36 standards ranges from $176 million to $2.12 billion, depending upon whether the costs are estimated before or after taxes, whether aircraft are modified or replaced, and the assumed prices and discount rate used.?'? It should be noted that the FAA analysis was done before the deregulation of the airline industry and the recent surge in airplane orders, so the results should be interpreted with caution. See Table 112 for other costs. Impact on aircraft manufacturers. The FAA estimates domestic aircraft purchases would range from $6 to $8 billion (1975 dollars) during the years 1975 to 1995. Compliance solely by modification would result in sales by aircraft manufacturers with a net present value of $295 million, whereas compliance involving replacement and modification would result in sales having a net present value of $1.49 to $1.7 billion.2'9 The FAA analyzed the impacts of its compliance program on employment in the aerospace industry from 1977 to 1986. A program involving only modifi- cations of non-complying aircraft would generate 1,900 employee-years of new work. Combination replacement and modification programs would gen- erate new employment in excess of 106,000 employ- ee-years.?"4 Impact on air carriers. Airline operating costs are influenced by modifications or replacement of exist- ing aircraft. The FAA states that the high-bypass turbofan technology now being placed in use has demonstrated 12 to 15 percent reductions in fuel consumption, with improved noise levels, compared to older aircraft. New technology involving improved materials and aerodynamic efficiency is predicted to lead to a further reduction of 10 to 15 percent.2'5 If aircraft were modified in order to comply with the FAA noise standards, airlines would experience negative net benefits and an approximate 1 percent increase in out-of-pocket operating costs due toa 15 percent fuel penalty from added weight. However, if airlines opt to replace aircraft, positive net benefits will accrue due to increased fuel efficiency and likely reductions in crew and maintenance expenses.?'® Impact on air travelers. One bill passed by the House of Representatives in the 95th Congress (H.R. 8729) in order to finance replacement or retrofit of aircraft placed a 2 percent surcharge on domestic TABLE 111. Medium & Heavy Trucks Motor Carriers IMPACTS OF THE POLICY RECOMMENDATIONS e 295 Transport Mode or Product Rail- roads Buses¢ Economic impacts of EPA’s existing and Proposed surface transportation noise regulations, by mode or product Motor- cycles ee a I a te es Be Number of units produced in 1976 Total sales of manufacturers in 1976 Number of manufacturers in 1976 Annualized costs: After market costs Capital costs Operating & maintenance costs Total costs Total annualized cost as a percent of sales Employment impact Price increase (percent) Units of lost sales (percent) Standard and year of effectiveness Firms experiencing difficulty 325,000 $7.016 B projected 11 2.9% 2.0% 83dBA 78 80dBA 82 Capital shortage may affect small firms 1 M in use in interstate commerce N/A N/A 1—time cost of $9.5 M N/A Negligible N/A Negligible By 10-15-75 88dBA runup 86dBA 35mph 90dBA 35mph Negligible 1,020 locos> $510 M for locos 2 $0.86—1.03 M $3.73 M $4.6-4.8 M 0.9-0.94% Negligible 0.8-0.9% Negligible LOCOS:by‘77 maintenance: 73dBA idle 93dBA stat. 96dBA mov. new: 70dBA idle 87dBA stat. 90dBA mov. RAIL CARS:by‘77 88dBA 45mph 93dBA 45mph 7 bankrupt absorb 22% cost; 11 marginal absorb 6% cost 37,733 Estimated $1 B value 18 $13-16 M $49-53 M $62-69 M 6.2-6.9% —600 persons 2.4-2.4% 1.2-1.2% EXTERNAL: 83dBA79 83dBA79 80dBA83 80dBA83 77dBA85 78dBA85 INTERNAL: 86dBA79 86dBA79 83dBA83 84dBA83 80dBA85 80dBA85 2 school bus firms: Gillig and Crown Estimated 1,017,000 Estimated $1.32 B 40 $22-22 M $75-143 M $35-61 M $132-226 M 10-17% —2,530 to —5,400 persons? 2.8-8.8% 3.8-10.9% STANDARD & SMALL: 83dBA79 83dBA79 80dBA81 80dBA81 78dBA84 LARGE: 86dBA79 86dBA79 82dBA82 Harley to close down. CAN AM & all European (except possible BMW) out of U.S. market, 67% of manufacturers to close. ee SOURCE: U.S. Environmental Protection Agency, Office of Noise Abatement an tion to National Transportation Policy Study Commission, 21 June 1978. @For motor carriers, these data are the number of units in use in interstate commerce in 1973. >These data are from the Association of American Railroads and are lower than the original estimate (1.089) used by EPA. °For buses, these data show a decrease in demand for bus service. “Does not include the 3,300 employees of Harle level. NOTE: For those products that did not have notice of final rulemakin data for the first-choice and second-choice regulatory levels is presented. d Control, Surface Transportation Branch, Communica- y Davidson, because it is uncertain whether they can meet the first-choice regulatory g published in the Federal Register before July 1977, a range of 296 e ISSUES AND POLICY RESOLUTION TABLE 112. Possible ways of complying with FAR 36 and estimated costs, by aircraft type (millions of 1975 $) Capital Costs Other Costs Percent Increase Percent Annual in Direct Increase Operating Aircraft FAA DOT Lost Time Operating in Fuel Cost Type Est. Est. Cost Costs Consumption _ per Seat a a a aD CR SD asec en Seat oon uae RR e nC NS EASE SENS ASRS SLES REPLACEMENT se glatueiae’ Crashes iets 20.0 —_ —_ _ — 0184 New Technology ......... ee oe me ne ae me 26.0 — —_— _— —_ 0184 Tee acc eher yc bs ee UU ad etal eee cer aaa ay pam 10.0 — —_ —— — .0002 Ais Mi a al pages Len aA CW else oh antene Salk 27.0 —_ _ — — .0205 SAMa2 BOF ea era is ads de ce on ee >$1.200 $1.200 $0.094 0.5 0.2 .0262 D8 eA chactan.s A pak Und pareeeameahiene ae 64.200 $1.020 0.102 0.6 0.2 .0262 BAT 27 aioe eee ek edaten enone eee 0.225 0.225 0.0 0.1 0.0 — = Ely 6 7 Aisne a em ROE ae ap Re aml a be 0.270 0.264 0.0 0.2 0.0 — DG Ogre aa, aN EON AE ae 0.270 0.231 0.0 0.1 0.0 a B74 Te Te ar cack ca ead et on arson uaees 0.250 — — — —— — REFAN (includes SAM) BTA Tee as CE Ue ~ $2.250 $0.078 2.35 2.5 — OY EF ME AE URNA US ANCHE PD SUN — 1,920 0.020 2.58 an — DG ee ee cE ieee ics A gel eh od ae o— 1.270 0.028 2.02 0.5 —_ SOURCE: National Academy of Sciences, National Research Council, Noise Abatement: Policy Alternatives for Transportation, Washington, D.C.: 1977, p. 166; and U.S. Federal Aviation Administration, Final Environmental Impact Statement, FAR Part 36 Compliance Regulation, Washington, D.C.: November 1976, pp. D-39 and D—40. aSAM = Sound absorption material applied to engine nacelles. 6$1.2 million per aircraft if 270 aircraft modified; $2.6 million per aircraft if 100 aircraft are modified. passenger air fares and freight way bills, a $2 surcharge per international departure from the U.S. where fares are less than $100, and a $10.00 surcharge for international departures where fares are $100 or greater.?'” In other bills considered, the ticket surcharge used to finance airport development included the amount that ticket prices need be raised to pay for aircraft noise control.2‘® Some argue that given the airlines’ profitability, there may be no need for special financing to retrofit or replace noisy aircraft.2'? Regardless of how the quieter aircraft are financed, noise regulation is likely to increase direct air travel costs in the short run. However, long run operating savings from the use of quieter, more fuel- efficient aircraft may reduce costs to users of air transport. It should be noted that in the long-term airlines would tend to purchase quieter aircraft, regardless of Federal noise regulations, because of their lower operating costs. Impact on non-users of the system. Reduced popu- lation exposure to noise due to compliance with FAR Part 36 will result in benefits of reduced annoyance and reduced hearing loss. The monetary value of these benefits can be inferred from the expected reduction in damage awards from lawsuits and increase in property values near airports. The FAA estimates that compliance with its noise standards would result in benefits of reduced damage claims during the years from 1979 to 2000 worth from $3.5 to $12.8 billion (with discounted present value rang- ing from $1.2 to $3.4 billion) depending upon the noise reduction strategy. The range of the total increase in the value of property near airports is estimated to be from $92.6 million to $1.14 billion.2 Estimated net benefits. Comparing the airline capital and operating costs of noise control to the benefits of noise reduction, measured in terms of reduced lawsuits and increased property values, the FAA concluded that even in the least effective case of achieving noise reduction by only modifying aircraft, the benefits are three times the costs. The present (1975) value of costs to achieve compliance was $440 million compared to the present value of $1.2 billion in benefits from reduced noise.2?' If airlines were to replace rather than modify their JT—-3D powered aircraft, operating savings would offset capital costs in the long run; there would be a $350 million benefit.22 These net savings, when added to the benefits of reduced population exposure (with a present value of $3.6 billion), amount to $3.95 billion in net present value.?25 Although the FAA’s analysis indicates there are net benefits to comply with its regulations, there is uncertainty concerning future aviation noise levels; will air carriers opt for replacement of the aircraft, or for modification? What will be the growth in aviation and population? Trucks, Railroads, Buses, and Motorcycles The Noise Control Act of 1972 requires any regula- tions the EPA sets for surface transportation vehicles to reflect the degree of noise reduction achievable through application of the best available technology, taking into account the cost of compliance.2** By cost of compliance, the EPA interprets Congress to mean the cost of identifying what action must be taken to meet the specified levels, the cost of taking that action, and any additional cost of operation and maintenance incurred. The costs of future replace- ment parts may also be considered.?*5 For example, EPA promulgated two sets of regulations to control noise from medium and heavy trucks. The first includes standards that manufacturers must satisfy before the trucks are sold to motor carrier operators. The second applies to motor vehicles already in use. Table 111 summarized the EPA analyses of impacts. Autos and Light Trucks The EPA has not identified automobiles or light trucks aS noise sources for regulatory purposes. (The EPA is required by law to publish noise control regulations within 2 years of identifying a noise source. )?76 The EPA has become concerned that automobile and light truck noise is an increasingly dominant source of noise as other modes are regulated and there is a shift to diesel and four-cylinder autos. Diesel and four-cylinder engines are approximately 5 to 6 dB(A) noisier than standard-size eight-cylinder autos.??7 The EPA has studies in progress to determine the major sources of noise from autos and light trucks. Too, EPA is developing baseline data for 1977 vehicles and is attempting to develop a means of quantifying vehicle operation in an urban environ-* ment to refine light vehicle noise measurement procedures. The Agency is reviewing the results of an impact analysis based on 1977 vehicle data. The outcome of this and other analysis is to be forwarded to the EPA administrator for a decision on whether to identify light vehicles as a major source of noise. If a regulation were issued, it would come early in 1981 and become effective with 1983 model-year vehicles.?28 IMPACTS OF THE POLICY RECOMMENDATIONS e 297 Some understanding of the costs of auto and light truck noise regulations in comparison to other modes can be gained by examining Table 113. Costs rise rapidly as regulatory levels become more stringent. Due to the far greater number of autos and light trucks nationwide, costs to control noise for these modes generally exceed by a large amount the costs to control other modes, although exact relationships vary depending upon the particular emission stan- dards involved. OWNERSHIP AND OPERATIONS STATUS QUO POLICIES The Federal government owns substantial amounts of equipment and facilities to serve civil and defense transportation needs. Examples include forest and park roads, locks and dams, motor pools, air traffic control centers and flight service stations, all military and two commercial airports, a merchant marine academy, and the Alaskan railroad. Substantial con- trol of other facilities or services also exists (e.g., Amtrak).22° Through Federal grants, state and local governments are encouraged to acquire transporta- tion equipment and facilities and to provide transpor- tation services.?%° If the recommended NTPSC policies are applied, most aspects of Federal ownership and operation should remain the same, except that more effective user fees should be imposed. Nonetheless, in most cases, Federal ownership or operations should be viewed as a last resort, after all other alternatives have been explored and have been determined to be less cost-effective. In the view of the NTPSC, Federal nationalization of rail rights-of-way, for example, should not be pursued.?*" The FRA has projected that between 1979 and 1985, private railroads (excluding Conrail) will fall $13 billion to $16 billion short of funds, and Conrail will require $2.6 billion in Federal funds in addition to the $3.3 billion already authorized.?°* Similarly, the existing Amtrak system of 27,500 route-miles would require $1.3 billion per year by 1984.25 The DOT believes that with restructuring (not nationalization), a great reduction in these shortfalls can be achieved. For example, of the 198,000 rail route-miles in the U.S. (100,000 mainline miles), 40,000 route miles carry 67 percent of the freight by weight. For Amtrak, the proposed 43 percent reduction in route-miles should reduce ridership by only 9 percent, according to the DOT, and reduce the need for subsidy by $1.4 billion over the next 5 years. Restructuring, in combination with productivity improvements (such as the gains realized in the St. Louis terminal project) is favored by the NTPSC.?*4 298 e ISSUES AND POLICY RESOLUTION TABLE 113. Estimated annual cost of noise reduction for compliance with regulatory levels 83 dBA, 80 dBA, and 75 dBA for buses and motorcycles, and 70 dBA, 67 dBA, and 65 dBA for autos and light trucks Annual Production Operating Total Costs/ Costs/ Costs Vehicle Regulatory Total Annual Vehicle Vehicle (1975 Type Level dBA Population Production (1975 $) (1975 $)_ million $) Infercity Bus csstonicss cdotwen oe teat Lak a) ya eeeene nae 83 dBA 23,000 2,500 237 39 0.7 SCHOO Buses) Koay et cath yee ea eres Cet eee 83 dBA 310,000 33,500 23 9 11 Motorcycle’ 0=100ce wii edo Su tientes aknua cum onananenes 83 dBA —_ 172,000 2 _ 0.3 Motorcycle: 100-200Ce ss ieee ee aiee saan woes 83 dBA _ 282,000 10 _ 2.8 Motorcycle: t > 200CG xt er acne nian gn neler) arate 83 dBA = 543,000 21 — 11.4 Automobiles: 22a: Ae eae a ees ao anaes 70 dBA — 10,949,000 1 1 10.9 Cight Trucksis tisk. errata ae gaecs 70 dBA — 1,999,000 3 1 6.0 intercity Bueiis eros oo er ea eee a ann 80 dBA 23,000 2,500 393 97 1.2 Schoal: Bis eee ee es oh a 80 dBA 310,000 33,500 120 20 4.7 Motorcycle 0-10066 5 a eee aoa e ane nye tee 80 dBA —_ 172,000 4 —_ 0.7 Motorcycle; 1 00-—200c0 ss ae ee ate eet eet 80 dBA — 282,000 22 — 6.2 Motorcycle. > 20066 os. sca Se maa ves coca 80 dBA — 543,000 39 _ ate AUtOMODIES 23s eee SUGAR ites tae rere ec 67 dBA — 10,949,000 15 —_— 164.2 Light, Trucks: sec wtese. ot ann et a aes doa c aca as en 67 dBA — 1,999,000 25 — 50.0 intercity) Busc. ce es en ee el eA 75 dBA 23,000 2,000 is, 909 276 3.0 School: Bus.)e0 ci ces seas ee Dee ae i eC eae 75 dBA 310,000 33,500 443 101 16.9 Motorcycle: 0—100G0 aa ren ioe eae ea 75 dBA —_ 172,000 8 _ 1.4 Motorcycle 1t00=20066 2 ira eee er a 75 dBA — 282,000 30 — 8.5 Motorcycle: > 200062 cS eae canaeta yes eee 75 dBA _— 543,000 60 —_ 32.6 AUtOMODIeSs:.’2.) Sizes Siac Chana h Ne ee oe ge eee yee 65 dBA — 10,949,000 30 — 328.5 Wight Tucks: ic iagee okies ely ee he ae ee 65 dBA — 1,999,000 50 _— 100.0 sss SOURCE: National Research Council, Noise Abatement: Policy Alternatives for Transportation, Analytical Studies for the U.S. Environmental Protection Agency, Vol. Vill, Washington, D.C.: National Academy of Sciences, 1977, pp. 177-179. The NTPSC policies also require improved coordi- nation of transportation services provided by recipi- ents of Federal grants. Cost-effective procedures and increased reliance on the private sector are recommended. Regarding the NTPSC recommendation that own- ership restrictions should not unduly inhibit foreign investment in U.S. transportation facilities, it should be noted that restrictions are much more detailed for the ocean shipping and aviation sectors than for the other modes. According to a GAO study, however, enforcement of these restrictions for at least one major program has been lax.235 AMTRAK NTPSC Policy Recommendations The NTPSC recommends that Amtrak management be given complete freedom to make adjustments to the route structure using the criteria set forth by Congress. Allowing Amtrak such flexibility would make it unnecessary for Congress to engage in drastic restructuring of the sort currently recom- mended by the DOT at Congress’ request. The route structure should be re-focused to achieve more cost- effective performance. Amtrak should cut back sub- stantially its long haul routes and concentrate in the short run on reducing its deficits by serving dense corridors, and in the long run on providing only that service which is determined to generate long-term benefits to society in excess of resource cost. Impacts ADEQUATE SERVICE Termination of most Amtrak routes would not have a significant effect on intercity passenger service. A study conducted for the DOT found that, with one exception, alternate transportation is available to ail tities served by Amtrak. The exception occurs on the Empire Builder route between Chicago and Seattle where air and bus transportation is infrequent and routings are often indirect. The study found that 40 percent of the passengers who rode the Empire Builder during 1978 (80,000 people) would have had no other reasonable public transportation available to them if the train had not operated.25° The ambience of rail common carrier service, including such char- acteristics as greater space per passenger and the room to walk around, is often cited as an advantage Amtrak holds over bus service. However, this advan- tage is not a benefit which can justify subsidies and, in fact, has a deleterious effect on fuel consumption and pollution. Regarding more measurable aspects of service efficiency, Amtrak does not perform any better than its competitors and therefore, termination of certain Amtrak service will not significantly affect the level of service available to most intercity travelers. Air and bus perform at least as well as Amtrak in terms of on- time performance.**’ The auto and bus modes are “trip time competitive with rail in all but the longest distance routes.’’?5> Also, air and bus offer the traveler more choice in departure times than Amtrak in every market outside the Northeast Corridor (NEC).25° Concentrating resources on corridor routes will significantly upgrade the quantity and quality of service to many Amtrak customers. APPROPRIATE RATES/PRICES At present, Amtrak fares rarely cover average cost. For the foreseeable future, fares subsidized in ex- cess of external benefits (non-transportation benefits such as decreased energy consumption and _in- creased safety generated by rail passenger service) appear to be necessary in order to operate most routes outside the NEC. Subsidization of Amtrak fares raises the question of whether these fares represent unfair competition with the bus industry. Amtrak fares and services have diverted passen- gers from intercity buses, but diversion estimates differ from market to market. The GAO estimates the following range of passenger diversion to bus in the event of curtailed Amtrak services: Metroliner (in the Northeast corridor) 6.0 to 12.0 percent; conventional 16.7 to 33.3 percent; and outside the NEC, 16.7 percent to 33.3 percent.24° The NTPSC estimates that if Amtrak service is terminated on short-haul routes, 10 percent of users will divert to bus and on long- haul routes, 25 percent would switch.*41 The GAO estimates that bus ridership would have been 5.5 percent to 10.9 percent greater if Amtrak had not been operating in 1976. By market, the range of increase would be 14.8 to 29.5 percent in the NEC and 4.6 to 9.1 percent in the rest of the U.S. The GAO estimates that a partial cutback (for example, one-quarter of all service outside the NEC) would: add from 1.1 to 2.1 percent to the revenue passen- ger-miles (on regular routes) of Class | bus carriers.242 In addition to diverting passengers to bus, the elimination of some Amtrak service will probably affect bus fares. At present, in markets where bus and rail compete, bus companies have often chosen to establish fares lower than their standard fares specifically to meet Amtrak competition.*43 Terminat- ing Amtrak service in the long-distance, interregional IMPACTS OF THE POLICY RECOMMENDATIONS e 299 market where it is the sole public surface competitor of the two major bus companies might lead to higher bus fares. Amtrak has been an aggressive competi- tor with bus in short-haul corridor markets, particu- larly in the NEC where Amtrak competition has eliminated the traditional fare differential favoring buses,?*4 but Amtrak service is probably not crucial to the maintenance of competitive behavior in long-haul markets. If free bus entry were allowed, as recom- mended by the NTPSC, competitive conditions would be retained. As the GAO points out, ‘’. . . bus service is inherently very competitive in that the start-up expenses are very modest, and it is very easy to expand or contract service to meet market demand.’’245 The GAO concludes that Amtrak has put a damper on bus net operating income, an effect likely to intensify if Amtrak increases fares in accord with the Consumer Price Index rather than actual cost in- creases—an option not open to the unsubsidized bus companies.*4* The GAO concludes that net bus operating revenues would increase and profit would increase, particularly in the NEC, if Amtrak service were curtailed.*4’ If Amtrak fares were raised to reduce subsidy requirements and restore the fare differential, bus Company revenues would also in- crease either through higher fares or increased ridership at the same fare. The bus industry has experienced declining ridership and profits (of which Amtrak competition is a partial, but probably not a principal, cause), although results for the first quarter of 1979 have shown increased bus ridership and profits, perhaps as a result of automobile fuel shortages. Amtrak also reports increases in reserva- tions for travel during the summer of 1979. Eventually, appropriate fares for Amtrak must mean that the subsidy costs per trip will not exceed the marginal benefits. At present, only the NEC and perhaps a few other corridors seem destined to generate fare revenues plus external benefits equal to costs. ECONOMIC EFFICIENCY Cutting back long distance routes, which have little chance of ever breaking even, will bring Amtrak closer to efficient operation. Cutting back also means that Amtrak will have fewer incentive agree- ments to negotiate with railroads. However, labor protection payments would increase. In general, the development of upgraded corridor service will raise efficiency as Amtrak achieves greater market identifi- cation and service density in these areas and tests its true potential. At present, routes may be continued largely to preserve the notion that the U.S. should have a national, interconnected rail passenger sys- tem regardless of costs. 300 e ISSUES AND POLICY RESOLUTION ENERGY lf it is assumed that all rail passengers would divert to the auto, and in addition, that energy use in the year 2000 will be less intense in automobiles and will remain the same on trains, the following predictions can be made. The change in energy use if all former Amtrak passengers on discontinued routes divert to auto with implementation of the DOT’s recommended system would be 2,424,000 gallons (303 billion Btus) more in 1980 and a reduction of 3,614,400 gallons (451.8 billion Btus) in 2000. With implementation of a corridors-only system, the increase will be 8,357,600 gallons (1,044.7 billion Btus) in 1980 and a reduction of 19,879,200 gallons (2,484.9 billion Btus) in 2000. If all Amtrak service were eliminated, 12,401,600 gal- lons (1,550.2 billion Btus) more would be consumed in 1980, but 30,722,400 gallons (3,840.3 billion Btus) less would be consumed in 2000. The 1980 figure represents the maximum impact Amtrak cutbacks could have on energy use and yet it entails only a five hundredths of one percent annual increase in U.S. energy consumption.*** The estimates above show that by the year 2000, energy-efficient automobiles might yield energy savings compared to travel by Amtrak. Amtrak should not be considered a significant factor in energy conservation. It is unlikely that so severe an energy shortage could occur that rail would be absolutely essential to intercity passenger service. If a severe shortage did occur, Amtrak does not have the capacity to handle the extra passen- gers. Cutbacks in automobile travel for non-essential uses could ensure the availability of fuel for buses, airplanes, and cars. On any rail routes where passen- ger service is curtailed, the rights-of-way could be maintained for rail freight use so that service could be restored if the need arose and equipment were available. Equipment could be stockpiled for that eventuality. Of course, rail passenger service can cushion the effect of an energy shortage of the sort that occurred in 1974. However, the benefits of having rail service available when energy is tempo- rarily in short supply do not appear to justify the large costs of retaining a national rail passenger network with extensive long-distance, interconnecting routes. Service should be retained only for the heavily travelled corridors and electrified routes where Am- trak’s positive impact on energy consumption is greatest. ENVIRONMENT Reduction of Amtrak routes will increase the amount of pollutants emitted by intercity passenger travel. To quantify the increase in emissions of the four major pollutants (carbon monoxide, sulphur dioxide, nitro- gen oxides, and hydrocarbons), it was assumed that all rail passengers divert to the auto mode where, like rail, pollutants are emitted in a stream throughout the trip. The increase in emissions with implementation of the DOT’s recommended system would be 32.22 million pounds in 1980 and 0.114 million in 2000; with the corridors-only system, 110.98 million pounds in 1980 and 12.738 million in 2000; and, if all routes were eliminated, 164.8 million pounds in 1980 and 0.969 million pounds in 2000. The figures are based on average pounds of pollution emitted by rail and auto on long distance routes, where rail performance is poorest and auto performance is best. These data are valid for analyzing the impact of moving to the recommended corridors-only system because most routes cut by this restructuring would be long distance lines. (A complicating factor is that many passengers use long-distance Amtrak rates for short trips between cities.) Assuming that all Amtrak riders were on the less-polluting, short-distance routes and were diverted to the most-polluting, short-distance auto mode, the increase in emissions would be 273.01 million pounds in 1980 and 9.154 million in 2000. Compared with pollutants from other sources, as shown in Chapter 7, these are relatively small totals. The benefits of any quantity of pollution forestalled do depend on where and when the savings occur in relation to sensitive receptors. Pollution abatement cannot represent the sole, or even a Significant, justification for the large subsidies to Amtrak.?49 SAFETY Eliminating Amtrak routes will have a negative impact on the safety of intercity passenger travel. If all rail passengers diverted to auto—the worst possible alternative in terms of safety—it is assumed that intercity passenger fatalities would increase directly with the number of passenger-miles, although in- creases would be smaller in the year 2000 due to improved auto safety. Using 1975 fatality rates, the increase in fatalities if all rail passengers diverted to auto with the implementation of the new DOT-recom- mended system would be 12 each year; with the corridors-only system, 41; and with all service elimi- nated, 61. Future savings of lives would be propor- tional to vehicle-miles traveled by various modes.?° For the purposes of measuring the relative benefits and costs of Amtrak, each fatality could be assigned a 1975 dollar value of $400,000.75! Even when this benefit is totaled, the safety impact of Amtrak remains slight when considered in terms of the overall safety of intercity common carrier passenger travel. If the present Amtrak system were totally eliminated and all passengers diverted to bus, there would be a net savings of three lives per year at 1975 rates.2°2 While safety should be considered when evaluating the benefits of Amtrak, it is not a benefit significant enough to justify retaining all rail passen- ger service. EMPLOYMENT Labor protection agreements in the railroad industry require that payments be made to employees dis- placed by route cutbacks for up to six years follow- ing the cutbacks. These payments should be consid- ered in determining the costs of eliminating service. The DOT’s recommended budget groups labor pro- tection payments under the capital appropriations category (which totals $171 million for FY 1980). In DOT's preliminary route restructuring report, labor protection payments were expected to range from $155 million to $640 million for its corridors-only system *53 Despite the high initial labor protection costs of such cutbacks, cutting back to corridors- only service will be more economical and efficient in the long run. INDUSTRY PROMOTION AND PROTECTION Since creation of Amtrak in 1971, the Federal government has promoted and protected national intercity rail passenger service through extensive subsidy, enabling Amtrak to engage in capital im- provements necessary to its survival. However, in the view of the NTPSC, at some point in the next few years, Amtrak must become financially independent of Federal support. Federal support should be limited to the amount that can be justified on the basis of public returns over and above those reflected in the revenue fares. This should be done even if it requires extensive service cutbacks. REGIONAL AND URBAN DEVELOPMENT Reduced Amtrak service will have little impact on regional or urban development. Conceivably, reduc- tions might necessitate more highway development, but a study of the NEC high-speed rail system found that highway congestion is primarily an urban com- muter problem little related to the intercity service Amtrak provides. In any case, Amtrak’s ridership is in most instances too small, relative to the large number of auto users, to forestall highway expansion projects.254 Similarly, Amtrak’s ridership is too small and scheduling too infrequent for it to affect airport congestion significantly or necessitate airport expan- sion.?55 EQUITY Costs to develop accessible terminals can be quite large.2° Users of present Amtrak service are more often in higher income classes than are users of intercity buses, so reductions of Amtrak service need not be regressive.?°” IMPACTS OF THE POLICY RECOMMENDATIONS e 301 COORDINATION Federally Owned Vehicles and Services NTPSC Policy Recommendations NTPSC policies seek to establish more coordinated use of Federal vehicles, facilities, and services, especially during times of emergency. The NTPSC supports efforts already underway to facilitate coor- dination. IMPACTS Generally, emergencies are classified into two categories: defense (war or threat of war) and civil (disasters such as floods and fires). Virtually every department and agency in the Federal government has responsibilities upon Presidential declaration of a national emergency.*°§ The three agencies primarily responsible for coordinating transportation are the Departments of Transportation (through the Office of Emergency Operations), Defense, and the new Fed- eral Emergency Management Administration (FEMA). By combining a number of emergency agencies, including the Federal Preparedness Agen- cy of the General Services Administration, the De- fense Civil Preparedness Agency, and the Federal Disaster Assistance Administration into FEMA, the President’s reorganization plan should significantly improve emergency coordination.?°9 Also to improve coordination, the Department of Defense recently updated and expanded its policy on requirements, allocations, priorities, and permits for DOD use of domestic civil transportation during emergency situations.2© Continued improvements of this type to each agency’s emergency plan are essential to coordinated utilization of vehicles and facilities. The NTPSC-recommended policy should have a favorable impact on national defense. Secondary impacts should be in the areas of adequate service, economic efficiency, and industry promotion. These would be attributable to more efficient use of military vehicles during non-emergency times by the private sector. For example, the Defense Freight Railways Interchange Fleet (DFRIF) Program makes DOD- owned railcars available through leasing to commer- cial railroads.?®' The effectiveness of this program would be enhanced through improved coordination. Ensuring that the DFRIF program remains self-sup- porting, however, may require a revision of present rate agreements. If accomplished, the net result could be improved service and profit by the leasing railroad and reduced Federal spending. DOD has a similar program called Facility Sharing, which permits leasing unused military land _ to _ private organizations.” 302 e ISSUES AND POLICY RESOLUTION Reorganization of GSA has produced a division called Transportation and Public Utilities Service (TPUS) which manages nearly 90,000 Federal vehi- cles in over 100 Federal motor pools.7&* Requests for these vehicles from DOD and DOT in times of emergency will now be submitted to FEMA which will issue permits and allocate vehicles. The total number of Federal vehicles (owned and leased) is reaching gigantic proportions. GSA rec- ords reveal the government fleet to be more than 430,000 vehicles.24 Total operating cost for fiscal year 1977 for Federal vehicles was nearly $700 million, and they consumed gasoline equivalent to 17,500,000 barrels of oil.2° The NTPSC recommen- dation to seek better coordination should result in reducing this fleet. DEPARTMENT OF DEFENSE*® The National Defense mission is vitally dependent on strong transportation systems capable of efficiently moving military material and personnel during both peacetime and war. The DOD is a large and unique shipper and currently spends approximately $5 bil- lion a year for transportation services.?6’ These services are provided worldwide to over 2,000 U.S. installations and defense contractors. The NTPSC policies that provide regulatory reform, proper user fees, and multimodal planning should be of impor- tance to DOD. The DOD transportation interests include: 1. HIGHWAY—Recent DOD assessments of strate- gic highway needs have identified 60,000 miles of Defense Strategic Highway Network (STRAH- NET).2& This includes 18,000 miles of highway corridors in addition to the Interstate System. Half of these requirements have been included in Federal-aid or state highway programs. This revised STRAHNET represents defense highway needs to the year 2000, but does not consider the possible contributions of other modes. 2. RA/L—In 1976 the DOD identified a 30,000-mile rail network strategically important to national defense.?® In addition, DOD has identified some 243 installations for which rail service is essential. 3. WATERWAY—Analysis by the DOD has identi- fied some 4,000 miles of the U.S. inland waterway system as important to the national defense.?”° The major importance of the inland waterways rests in the ability of the entire system to move quantities of bulk materials essential to the na- tion’s industrial base. Defense requirements have been provided to the U.S. Army Corps of Engi- neers for its future use. 4. AIRLIFT—The Civil Reserve Air Fleet (CRAF)*” program exists to help meet DOD emergency airlift requirements. The program provides stages of increasing mobilization. The CRAF program is a voluntary civil-military partnership in which the civil air carrier industry commits aircraft and crews to DOD in time of emergency. In peace- time, the carriers earn revenue through defense airlift contracts. After a national emergency is declared, 300 aircraft can be committed (about 20 percent of U.S. capacity). 5. SEALIFT?’2—The sealift necessary for the DOD upon mobilization (strategic sealift forces) would include ships of the U.S. Merchant Marine, the Military Sealift Command (MSC), the National Defense Reserve Fleet (NDRF), Effective U.S. Control (EUSC) fleet, and specifically committed NATO ships. There are approximately 290 dry-cargo ships and 240 tankers in the active, privately owned, U.S.-flag merchant fleet today. Another 26 dry- cargo ships and 22 tankers are in the inactive, privately owned, U.S.-flag merchant fleet. Five hundred and thirty-two of these ships can be used in support of military forces. There are 101 ships in the fleet controlled by MSC—65 in its nucleus fleet and 36 chartered from the U.S.-flag merchant fleet. Approximately 50 are suitable for strategic sealift. The NDRF consists of inactive merchant and ex-Navy ships maintained by the Maritime Admin- istration. Included are 130 Victory ships, 9 SEA- TRAIN ships, and 5 C—3 type ships which have been identified for reactivation and use in a strategic role. These ships can be activated within 10 to 45 days. The U.S. has plans for the utilization of foreign- flag ships of the EUSC fleet. These are U.S.- owned or U.S.-controlled ships of foreign registry of 1,000 gross tons or more, which are under contract to MarAd and these can reasonably be expected to be made available for U.S. use in emergency. Although there are approximately 472 ships in this category, only 7 dry cargo ships and 156 tankers are desirable for military use. In FY 1977, approximately 72 percent of DOD export cargo (excluding ammunition and aircraft) was containerized.?’3 All of this cargo was loaded at commercial port facilities because the DOD owns no general cargo container facilities. At all port locations thoughout the U.S., in FY 1978, the DOD shipped 7 million tons of cargo.?4 Since 1972, DOD has worked closely with MarAd to assure that sufficient port facilities are available for use during national emergencies for military resupply requirements. The DOD defines the port requirements and MarAd assigns the pre-desig- nated berth.?2”5 Historically, the commercial sector has provided transport services for sustained conflicts. If these assets were not available and responsive to the DOD, the alternative would be to create a duplicate military system. This could be accomplished only at an enormous cost and would be vastly underutilized during peacetime. The transport equipment owned by the DOD generally serves one of four objectives: (1) it is necessary for training military personnel; (2) it is equipment not available commercially; (3) it is re- quired for use by tactical units; or (4) it is necessary to provide transportation services in the early stages of contingencies prior to mobilizing the commercial system. The DOD policy is that the Armed Services “... shall maintain and operate in peacetime suffi- cient DOD-owned transportation resource to meet emergency and wartime requirements with due re- gard for available commercial transportation.’’276 Table 114 quantifies, by type, the DOD-owned assets utilized for intercity and international freight and passenger movements.?’’ Not included are tactical trucks, aircraft, and ships that support the combat operation itself. Virtually no DOD intercity movements are made using government-owned motor vehicles. The DOD- owned water and air terminals are kept to the minimum required to meet contingencies that cannot be readily met by the commercial sector. Water terminal facilities are designed to handle non-con- tainerized cargo, autos owned by military personnel, and ammunition. The DOD owns and operates six general cargo ocean terminals to meet its specific needs and three ammunition outloading facilities. The bulk of cargo handling activities at the facilities is accomplished by commercial stevedoring compa- nies. In addition to government-owned facilities, DOD maintains contract administration staffs at various contractor-operated locations which also process non-containerized cargo. TABLE 114. Department of Defense vehicles, by type, 1978 IMPACTS OF THE POLICY RECOMMENDATIONS e 303 Federally Funded Vehicles and Services NTPSC Policy Recommendations The NTPSC recommends that the U.S. DOT and other Federal agencies should: 1. Encourage individuals to use public or private transportation services already available; 2. Encourage state and local governments to assist individuals to provide their own service, and improve systems coordination; 3. Share responsibility with state and local agencies to encourage coordination and use of the private sector, or, when necessary, user-side subsidies, brokerage, and purchase of service agreements. If capital and operating assistance is available, private operators should be eligible to compete for it; and 4. Amend administrative guidelines and reporting requirements that hinder coordination and private participation, especially in the rural and urban markets. IMPACTS Currently, Federal funding from the DOT and other agencies enables recipient agencies to take over private systems or establish specialized systems that may subsequently compete with private operators. For example, the number of privately owned urban transit systems decreased from 935 in 1970 to 614 in 1975, although the availability of Federal funds may not entirely explain this phenomenon.2”8 Low fares or even free service by public and private non-profit systems are possible because of Federal assistance (e.g., UMTA’s Sections 3, 5, 16(b)2, and 18279 and CETA funding for drivers and dispatchers?®°). Despite minimal legal barriers to coordinating transportation services and the existence of laws and Ships Strategic Aircraft Rail Cars Type No. Type No. Type No. EMM GRE OO Sastry deat cy Sakdn eterat tos Gi Ceacaie Valees uve cian ener ee es rae coe 70 General Purpose Tank Cars....... 1,451 POKGIS Acres hc lees bake eee bons s Pe A Pere cates oe eae wna pela oe aaa e 234 Special Purpose Tank Cars ....... 310 Owned, but Chartered Tankers... 9 Special Air Mission Aircraft ........ erect rae CPS oh sy ce rmune nies palg 310 Scientific, Fleet ec cise ep Btls C16 So, RR LA se BOO ONC A RR sous he ee aah 165 BROT ESUDD ON Reto hacen ysis s 22 CADOOSES HE, eels pecik Go, cae vues 6 CAUGTO! SOONG triers: cele hove deunes cote 5 a REE RT ge OPT SIH 65 PObalaece sath tins cane cucaies o2ao 933 (Co ¢: | RIP SIR, | 8 aA ag? 2,867 SOURCE: Department of Defense communication to NTPSC, February 1979. 304 e ISSUES AND POLICY RESOLUTION agreements that seek to promote coordination, coor- dination has not been achieved.78' One way to promote coordination might be a uniform billing and accounting system for grant recipients.° Another is subsidies to users, which might encourage use of private shared autos and privately-owned systems where these are least-cost alternatives. The TRIP program in West Virginia found that 79 percent of client coupons were used for taxis (a 10 to 15 percent increase in taxi trips), 21 percent for public transit, and less than 1 percent on intercity bus, Amtrak, Community Services Administration vehicles, and health vehicles.28° A user-side subsidy demon- stration in Danville, Illinois, resulted in a 50 percent increase in taxi trips.2 The administrative and operating costs for the Section 147 rural highway public transportation demonstration program’s buses, vans, and taxi sys- tems ranged from $0.21 to $0.37 per passenger-mile, from $0.63 to $0.76 per vehicle-mile, and from $9.19 to $12.49 per vehicle hour.?6 Using private automo- biles at 20 cents per vehicle-mile could result in substantial savings. Even user-side subsidy programs currently do not allow reimbursement to friends who provide trans- portation in personal autos or for maintenance or purchase of an auto; however, they do promote private operation, user choice, and efficiency. Brokerage services, matching demand and sup- ply, encourage cost-effectiveness by utilizing a mix of carpools, privately owned systems (e.g., school buses, taxis, intercity buses), and specialized transit systems. Two successful demonstrations have oc- curred in Knoxville, Tennessee, and Pittsburgh, Pennsylvania.?& Better coordination of funds for different transpor- tation providers is intended to improve service or decrease costs, and the results of various demon- strations suggest it may be successful. For example, lowa has increased transit ridership by 30 percent and decreased cost by 10 percent over a 2-year period. It established multi-county service areas and a single agency in each area to receive and allocate all Federal and state funds for passenger transporta- tion.?8” FINANCE, PRICING, AND TAXATION INTRODUCTION The NTPSC has recommended: the increased use of proper economic analysis to guide Federal spending and regulating; full user fees to be collected from those who generate costs; and the retention of modal trust funds. The shortages of revenues to meet the needs projected by the NTPSC are addressed in this section. In many cases, it is suggested that fee levels must be raised to offset the revenue shortfalls and to avoid reduced levels of service. PROPER INVESTMENT ANALYSIS NTPSC Policy Recommendations The NTPSC has recommended that effective eco- nomic analysis be required for all major Federal transportation policies, programs, regulations, and projects. Analysis should be based on a standardized format and established criteria and values deter- mined by a review agency not directly responsible for implementing the subject of the analysis (such as GAO) or by a council of agencies at the Federal level. The analysis of overall policies, programs, regula- tions, and projects in which there is a significant national interest should be conducted by the Federal agency primarily responsible for their implementa- tion. The analysis of projects of a state or local nature for which Federal funds are to be applied should be conducted by the recipient agency of the Federal funding. The agency or council of agencies responsible for establishing the guidelines for com- mon analytical procedures and criteria should review all Federal analyses and a sample of analyses performed at the state, local, and regional level. The review agency or council is to establish the types of economic analyses which are appropriate for differ- ent situations, taking into consideration the objective of the analysis and the ability to quantify major variables. Transportation projects of a state or local nature, whether or not Federal funding is involved, should be prioritized using economic analysis. Where there are significant difficulties in quantifying benefits or costs, these should be clearly stated along with the select- ed economic indicators. Priority listings should be combined for a multimodal approach. For state and local transport projects, such analysis could provide the necessary information for evaluating Federal funding needs and allocation formulas and for guid- ing future revisions. The analysis could also be used to determine the use of Federal discretionary funds. Impacts Economic analysis encompasses numerous tools which can be applied in varying ways to meet different needs or answer different questions. To evaluate investments, it is necessary to isolate a specific application, design an appropriate program and then assess the potential impacts on selected transportation goals. Economic analysis of government programs and projects initially began in the 1930s to evaluate water resource projects.7® Its application spread to trans- portation and defense and today covers a variety of both physical and social investments. The standard indices or methods of appraisal have changed, and they now include net present value, internal rate of return, benefit-cost ratio, cost-effectiveness meas- ures, plus variations of the above.?89 Analysis can be applied for purposes such as: 1. Determining if a given regulation, program, or project is feasible from an economic perspective; 2. Determining which alternative among several is the more efficient in meeting a selected goal; and 3. Prioritizing the implementation of a series of feasible programs or projects, given overall re- source limitations. Many Federal regulations and programs are sub- jected to economic appraisals conducted by agen- cies such as the Government Accounting Office (GAO), the Congressional Budget Office (CBO), and the Office of Management and Budget (OMB). Other agencies more directly involved in the implementa- tion of programs may also conduct appraisals. These analyses are often conducted at a very general level because of the lack of substantive project data.2% Federal investment in specific capital projects has also undergone economic analysis. The Federal Water Resources Council, composed of all agencies with duties related to water resource projects, pre- scribes the principles, standards and procedures to be used in economic appraisals of water and related land resource projects.2*' The U.S. Army Corps of Engineers, a member of the Water Resource Council, has conducted benefit-cost analyses of proposed navigation projects. DOT has required cost-effective- ness analyses in comparing alternative urban mass transportation projects, and recently proposed rules that would require a similar ‘‘alternatives’’ analysis for ‘‘... all prospective major urban transportation investments, whether they be highway or public transportation projects.’’*9? It should be noted though, that the act which established DOT in 1966 restricted the Secretary of Transportation from adopting ‘‘any investment standards or criteria’ without prior congressional action.?% Economic analysis apparently has not been used to prioritize capital investments at the Federal level. There have been, however, priority listings of alterna- tive programs for meeting a specific objective. For example, the 1976 National Highway Safety Needs Report? ranks countermeasures for reducing high- IMPACTS OF THE POLICY RECOMMENDATIONS e 305 way accident fatalities based on each program's cost-effectiveness. Before defining the type of analysis which is to be implemented, it is important to assess the ways in which current policy and program development pro- cedures are deficient and how economic methods can resolve such deficiencies. If Federal policies have resulted in inefficient use of resources, what type of economic analysis would improve the situation without significantly distorting other Federal objectives? The most comprehensive study to test the projected gross level of investment in highways, using economic criteria, was the High- way User Investment Study. This study applied benefit-cost analysis to the highway needs reported by states for the 1972 National Highway Classifica- tion and Needs Study.2% The results showed that while highway investments in urbanized and small urban areas have benefit-cost ratios of 4.0 and 1.9 respectively, rural projects have ratios of 0.4 and would fail standard feasibility tests.2% Further research by the NTPSC found that of the $329 billion (in 1975 dollars) needed for arterial and collector roads from 1975-1990 as reported by the States, only 42 percent (or $139 billion) could be justified using economic efficiency criteria. In urban- ized areas, 86 percent of the state-reported needs would be built under an efficiency criterion and in rural and small urban areas only 7 percent of state- reported needs would be built. The difference is representative of the savings which would accrue by applying proper economic analysis to highway in- vestment. Similar evidence of inefficiency would probably be found if this type of analysis were applied to investments for other modes. From an economic perspective the investment model which would maximize the use of every dollar would be one in which each mode was subject to the same feasibility test and multimodal funding priorities were based on the return of each project’s invest- ment as it relates to total investment opportunities. This approach has not been adopted in traditional Federal, state, and local transportation budget plan- ning. A different set of policy objectives has devel- oped for each mode, explicitly or implicitly, resulting in the varied legislative and fiscal treatment of each mode that exists today. Transportation regulatory programs do involve significant expense. One estimate is that transporta- tion regulations cost the economy $183 million in administrative costs and $3,748 million in compliance costs in 1976. These transportation regulations ac- counted for 74 percent of all regulatory compliance costs to the economy.?9” There have been encouraging developments re- cently in the application of economic analysis to 306 e ISSUES AND POLICY RESOLUTION setting government regulations. A Notice of Pro- posed Rule Making which appeared in the December 7, 1978 Federal Register provides for analysis of alternatives with regard to local and national goals and objectives in the social, economic, environmen- tal, and energy fields. These are a continuation of joint planning regulations which FHWA and UMTA issued in September 1975.2% When projects are to be administered by FHWA it will be necessary to describe the: 1. Range of alternatives; . Evaluation methodology; . Estimation of costs and effects; . Travel forecasting procedures; . Citizen participation mechanisms; and . Level of detail of the analysis. Oo & W PY When UMTA has administrative responsibility the following principles are to be followed: Long-range planning; The policies of incremental development; Evaluation of alternatives; Transportation Systems Management; and Public involvement in the planning process. al ac The inflationary impact of government regulations is often cited. Not all costly regulations are inflation- ary, however. The reason for quantifying costs of government regulations is not to exclude them because they are costly, but to try to compare these costs with their benefits. If the benefits are greater than the costs, then even if benefits are not reflected in monetized GNP, the welfare of the U.S. economy has been improved. The result is desirable even if inflation has been ‘‘caused”’ in the commonly used price indices. The explanatory OMB Circular A—107, issued on January 28, 1975, required an Inflationary Impact Statement (IIS) on any regulation exceeding $100 million in cost to the economy.?%? In December 1976, President Ford issued Executive Order 11949 extending the program and changing the name of the required document to an Economic Impact State- ment.9 As of March 1979, 105 Economic Impact State- ments had been filed. Some agencies (notably the EPA and the DOT) devoted substantial resources to their efforts, while others did not.**' Analysts suggest that reasonably good estimates of costs were ob- tained in these statements, but estimates of benefits were weak and alternatives were often ignored. Design of less costly countermeasures or ways of achieving the same purpose are often the major results of systematic analysis. The analysts, who surveyed Inflationary Impact Statements at the Coun- cil on Wage and Price Stability, concluded that a major effect of the program was to strengthen the hand of economists and policy analysts in the agencies.3° In March 1978, President Carter issued Executive Order 12044 to improve government regulations, requiring: 1. Asemi-annual agenda of regulations; 2. An opportunity for public participation in the process; and 3. Regulatory analysis. As with previous executive orders, it applied to agencies of the executive branch only. The NTPSC recommends that all Federal agencies be required to perform such analyses. EXPENDITURES, USER FEES, AND TRUST FUNDS Airports and Airways NTPSC Policy Recommendations The NTPSC has proposed that the Airport and Airway Trust Fund be maintained as established in the Airport and Airway Development Act of 1970 (Pub. L. 91-258) and subsequent amendments. All current distribution formulas, matching grant formu- las, eligibility criteria, revenue sources, and tax rates would remain unchanged. The level of appropriations for eligible projects may vary based on the needs of those types of projects. (Throughout this section, the term ‘‘Trust Fund”’ is used to refer to the revenue collection and expenditure associated with Federal airport and airways programs, as well as the ac- counting device of the trust fund itself.) EXISTING PROGRAM The Trust Fund was established by the Airport and Airway Development Act of 1970 to provide the necessary funding for a ‘‘.. . substantial expansion and improvement of the airport and airway system to meet the demands of interstate commerce, the postal service, and the national defense.’’> IMPACTS Adequate Service The principal stated objective of the Airport and Airway Development Act of 1970 was to provide an airport and airway system which will be adequate ‘“.. to meet the current and projected growth in aviation.’’°°5 Based on the Trust Fund revenue and expenditure projections presented in earlier chap- ters, maintaining the Trust Fund should ensure adequate capital for future growth. Appropriate Rates/Prices By maintaining the Airport and Airway Trust Fund without altering taxation rates or the prohibition against applying user tax revenues to most FAA O&M expenditures, users are paying a subsidized rate for airport and airway facilities. About 70 percent of all Federal aviation expenditures, includ- ing expenditures for operating and maintaining the airway system, are supported from general revenues. If trust funds were used for Federal airways O&M costs, current tax rates would not supply sufficient revenues if all capital needs were met. User taxes would have to more than double to generate the over $2 billion (in constant 1975 dollars) annually required for O&M by 1985. Among the various airport user categories, the level of subsidy varies such that some users are paying more of their share of the costs than others. In its original cost allocation study (1973), the DOT found that both air carrier and general aviation operators paid less than their full share of aviation costs, with general aviation paying a smaller propor- tion of allocated costs than air carriers.9° In an update of the study,°°’ the DOT generally came to the same conclusion. The latest study allocates costs by user category in two ways. The first method simply allocates all airport and airway costs to users. The second method holds users responsible only for ‘‘the cost of the minimum service they require.’ This latter method is in response to general aviation operators’ criticisms of the 1973 study that the quality and sophistication of the FAA services ‘‘are frequently oriented toward the performance requirements of air carrier and military aircraft’’ and ‘‘may exceed the requirements of general aviation alone.’’5°9 Thus, the second method attempts to determine the actual costs imposed by each user type. Using the latter method results in the distribution of all Federal airport and airway system costs shown in Table 115.31° The DOT study, however, reveals that while air carrier operators will pay an increasing share of their costs, general aviation users will pay a declining share of their costs. As of FY 1978, while air carrier operators contributed 88 percent of allocated costs, general aviation users contributed only 25 percent. By 1987, the percent of costs recovered from air Carriers will rise to 103 percent, while revenues from general aviation will only recover 21 percent of allocated costs.5"' In future years, then, air carrier revenues will be cross-subsidizing general aviation. TABLE 115. Distribution of Federal airport and airway system costs, FY 1978 and FY 1987 FY 1978 FY 1987 General eh fos A eases 9 ean 13% 14% ee OAS gp 3 ey PR hei il eee RE 50% 48% Military and Government Aviation. Aen bene 10% 9% Public and Other..........ccccccscces See 27% «29% vi-ak oa i Pelle Gyles eae 100% 100% IMPACTS OF THE POLICY RECOMMENDATIONS e 307 The disparity in cost recovery is due to two factors. First, general aviation activity is expected to grow at a faster rate than air carrier activity. FAA projections suggest that air carrier operations are expected to increase by 2.1 percent annually from 1975 to 1990, while general aviation operations are to increase by 3.7 percent annually. Thus, where costs are related to aviation activity levels, general aviation costs should rise faster than air carrier costs. With respect to certain types of airway activities, a general aviation flight operation is more costly than a typical air carrier operation. Costs of enroute air traffic control requirements are related inversely to the average speed for a class of aircraft. The slower the aircraft, the more costly will be the enroute air traffic control due to the longer time spent in a control region. One concern has been that such a relationship ignores the “‘intensity”’ of control, which is greater for faster aircraft due to the speed with which they close in on one another.3"2 The second factor in the disparity is that general aviation user taxes are flat fees and not ad valorem taxes. The main user fee receipts from general aviation are the fuel tax (7¢ a gallon) and the aircraft registration fee ($25 per aircraft). Registration tax receipts cannot keep up with projected inflation and will decline in real terms. The aviation fuel tax receipts (in constant dollars) should grow at an annual rate of 3.4 percent, according to NTPSC forecasts, which just matches the increase in general aviation activity without raising its share of cost recovery. According to NTPSC revenue and expenditure forecasts, by 1985 Trust Fund revenues could cover 67 percent of air carrier and general aviation costs, requiring $700 million (in constant 1975 dollars) from general funds. By the year 2000, revenues could cover 89 percent of allocated air carrier and general aviation costs, with $350 million (in constant 1975 dollars) required from general funds. The increase in the proportion covered by Trust Fund revenues is due to tax receipts growing while capital investment needs remain constant. Also, it is assumed that Trust Fund revenues can be used for airway O&M costs. If not, the amount of general revenues needed would be much greater. No studies have been made of the costs imposed by international air carrier passenger and freight traffic. It is evident, however, that Trust Fund re- ceipts in constant dollars from the enplanement tax will only keep pace with inflation so that while international travel increases in the future, tax re- ceipts (which in 1975 totalled $55 million) will not be more than $59 million in the year 2000 (in 1975 constant dollars). Further, international air cargo does not contribute revenues directly to the Trust Fund. 308 e ISSUES AND POLICY RESOLUTION Economic Efficiency In assessing the effect of the Trust Fund on the allocation of resources, it is helpful to begin with the potential theoretical effects and then observe some of the actual results since the Fund was established in 1970. The most direct method for the proper allocation of resources is a pricing scheme through which users pay for the costs they impose on the system. This also carries with it the assumption that the revenues will be directed towards the allocated costs. Under a situation of no congestion, the price will ‘consist only of direct costs, i.e., of the value of the resources directly consumed as a result of the provision of the good or service in question.’’ Where congestion is significant, an additional charge or ‘rent’? would be included in the price which will lead to the proper allocation of limited capacity.*"* Airport and airway pricing practices have continu- ously been criticized for not applying standards of efficient pricing.*’* Much of the criticism has centered on the lack of proper landing fees which would better allocate aircraft operations among peak and off- peak hours and which could lessen the need for additional physical capacity. The fees that comprise the bulk of Trust Fund revenue sources are related to the level of aviation use: passenger ticket tax receipts rise with increases in passenger-miles traveled, waybill tax receipts rise with increases in ton-miles traveled, and returns from the general aviation fuel tax rise with the hours flown. Although overall aviation activity may affect the level of these charges, they do not qualify as ‘‘efficient” user prices because they are not related to specific cost components of the airport and airway system which are financed through the Trust Fund and, thus, do not help to properly allocate demand. The 1978 DOT study on cost allocation provides the following example of the effect of current user taxes in terms of economic efficiency: While fuel taxes are indirectly linked to the use and unit cost of service, this relationship does not, however, necessarily promote efficient resource allocation. Fuel taxes do not provide an automatic procedure by which FAA re- sources are channeled into providing aviation services which are considered a fair value by general aviation.°"® There are, however, practical obstacles to the implementation of more direct facility taxes. For example, imposing specific terminal charges at air- ports with FAA towers could cause significant diver- sion of traffic to nontowered airports, which might increase general aviation accidents. Imposing specif- ic enroute service charges could reduce safety by diverting flights from IFR to VFR service.3"6 For these reasons, objectives other than economic efficiency also must be considered in setting user taxes. The manner in which funds are allocated also affects the efficiency of the airport and airway system. Large hub air carrier airports receive 33 percent of air carrier entitlement funds and contrib- ute more than that portion to the Trust Fund. However, their ‘‘needs’’, according to the NASP, represent 20 percent of air carrier airport needs. Air carrier airports receive 86 percent of total funds (and contribute a similar proportion), while general avia- tion airports receive 14 percent. However, the NASP estimates ‘‘needs’’ to be split 60 percent for air carrier and 40 percent for general aviation facilities.*"7 In the end what occurs is not only a subsidy from general revenues to airport users but also a cross-subsidy from one type of user to another, from one region to another region, and possibly from one type of airport to another. The tax rates do not reflect the needs of each type of user and the allocation formulas reflect neither the contri- butions nor the needs of each type of user. The last Trust Fund element which affects eco- nomic efficiency is the prohibition against applying user receipts to pay for most Federal airway O&M costs. Thus there is a constant guaranteed source for capital expenditures, but operating expenditures must rely on yearly appropriations. Theoretically all of the above could distort the allocation of resources for aviation by: 1. Stimulating capital investments where no needs exist just because the funding is available; 2. Stimulating capital-intensive solutions to capacity problems because funding restrictions impede development of less costly operational or pricing solutions; 3. Stimulating general aviation operations due to the underpricing of general aviation facilities. It is difficult to evaluate these three types of distortions because the program is relatively new, considering that major changes were made in fund- ing, eligibility criteria, and matching ratios in 1976. Some tendencies, however, are apparent. Analyses show that the Trust Fund has not stimulated unneed- ed capital investment in new airports. The number of publicly-owned airports grew from 1967-1970 by 4 percent annually. From 1971-1975 the rate was 1 percent per year.3'® However, no estimate has been made of the rate of improvements to existing facilities before and after 1970, which might more clearly reflect the effects of ADAP funding. Another evaluation is to compare the distribution of funding between regions and types of facilities in the event a more direct ‘needs’ approach or economic analysis was instituted rather than the present formulas. In highway funding such a compar- ison by the NTPSC revealed significant differences suggesting that distribution formulas typically lead to the funding of projects which under economic crite- ria would be considered an inefficient use of re- sources. Despite the lack of economic analyses, many factors have controlled or inhibited airport invest- ment, minimizing the potential misallocation of re- sources. The FAA’s National Airport System Plan limits the number of eligible facilities, and the FAA reviews projects prior to funding. Other reasons for the limited use of ADAP funding are: 1. Prior to 1976, the Federal share of project costs was lower (at 50 percent), making local matching fund requirements more difficult. Currently non- terminal-related projects receive a 75 to 80 percent Federal share which may stimulate more investment; 2. Prior to 1976, with Federal standards and require- ments being higher than those of most states, some general aviation sponsors found that air- ports could be constructed privately ‘‘faster and at lower costs than the Federal program’”’ without “an appreciable difference in quality." The 1976 amendments attempted to correct this situa- tion; and 3. Externalities may be inhibiting airport develop- ment due to environmental challenges and the scarcity of suitable land. It is possible the Trust Fund encourages capital- intensive solutions to problems which could be solved by less costly operational and pricing proce- dures. For example, it is likely that landing fees, if applied properly in the peak hours, would result in diverting a portion of general aviation operations to off-peak hours. The result would relieve some cong- estion and lower the capital requirements for addi- tional capacity.S2° The Port of New York Authority found that in 1968, by raising the minimum landing and takeoff fee for small aircraft from $5 to $25 in the peak hours, general aviation activity declined by 30 percent during those hours in August and September as compared with activity levels in July when fees were not applied.*?' By offering capital for airport improvements at generous terms, the Trust Fund is removing an incentive which might lead to more use of peak-period pricing by airport operators and is thus promoting capital-intensive solutions. Similarly, because Trust Fund revenues are to be utilized primarily for airway capital facilities rather than O&M, the FAA is encouraged to implement capital-intensive rather than labor-intensive operat- ing policies. The FAA budget projections assume increasing labor productivity through the use of more sophisticated traffic control technology.%*? In theory this could be economically more efficient than cur- rent practice if such productivity gains are achieved. One study, however, found that the current mix of IMPACTS OF THE POLICY RECOMMENDATIONS e 309 capital and labor at enroute and terminal air traffic control centers is ‘‘biased strongly in favor of capital’ and that a more efficient mixture would tend to be more labor-intensive.23 As for stimulating more aviation activity than would otherwise occur under efficient pricing, the heavily subsidized price for general aviation users has apparently not resulted in much more activity than would occur under prices that would recover a higher proportion of costs. The DOT in Trends and Choices estimated the growth rates which would result under various higher-price schemes and pre- dicted that from 1975 to 1990 a large increase in general aviation activity would still materialize.524 In summary, it is evident that the tax structure and distribution policy of the Airport and Airway Trust Fund do not promote economic efficiency. Although no significant impacts have been identified so far, changes in the 1976 amendments could lead to improper investments in future years, encouraging capital application rather than less costly operational and pricing solutions to capacity problems. Environmental Protection and Enhancement Because aviation activity is not expected to vary at different levels of cost recovery, no significant im- pact on the environment should result from maintain- ing the Trust Fund. The Trust Fund can have a positive effect on environmental planning. In the FAA’s Aviation Noise Abatement Policy (November 1976), for example, project sponsors must take action to ensure that land use in the vicinity of the airport is compatible with aircraft operations before a project is approved.%?5 Safety Accident and fatality rates in all aviation user catego- ries had declined steadily prior to the establishment of the Trust Fund,%“6 so it is impossible to ascertain the exact contribution to that decline which can be attributed to the Trust Fund. The reduction in fatality and accident rates has been considered the result of improved air traffic control, pilot training, navigational and landing aids, and a gradual shift to more reliable aircraft. Thus, even while aviation activity has increased, safety levels have been maintained or improved.*?? Where the Trust Fund has directed funding to facilities and equipment, it has enhanced safety. Another way in which the present Trust Fund promotes safety is through its user tax structure. Because taxes are not directly related to the use of safety facilities and equipment, aircraft operators have an incentive to use these facilities. The FAA has rejected the idea of imposing enroute service fees and terminal charges at airports with FAA towers because fees could divert general aviation from using services, thereby increasing accidents.%?° 310 ee ISSUES AND POLICY RESOLUTION Regional and Urban Development The impact of airports on regional development will depend on the interaction of several factors which will vary from place to place and by type of facility. The Airport Planning Grant Program (PGP), which provides Trust Fund revenues for airport master planning and system planning, promotes the integra- tion of airport development with the overall develop- ment needs of states, regions, and metropolitan areas.°?9 Equity The user tax structure of the Trust Fund is inequita- ble in that general aviation users are subsidized relative to other aviation users. This disparity will widen in the future due to the flat fees that general aviation users pay. Inequity of the system is not confined to the unequal treatment of the users but also affects the general population. Subsidies are being provided from the general fund to aviation users who are generally ‘‘higher income’ as com- pared with the income distribution of the population at large. Table 116 illustrates this point, showing income distributions for general aviation aircraft owners from three surveys taken in the 1960s. Also it has been found that almost three-fourths of general aviation flying is for business purposes.**° The subsi- dies thus represent a regressive form of income redistribution. Urban Transit Trust Fund Study NTPSC Policy Recommendations The NTPSC recommends that a Federal urban transit trust fund be studied. A fixed contribution from general revenues, apportioned by the appropriate formulas, might be considered. The above policy statement calls for study of an urban transit trust fund. For this reason, the following discussion will focus less on the impacts of imple- menting a trust fund and more on the questions which surround its implementation. Implicit in the concept of an urban transit trust fund is the assump- tion that other modal trust funds will continue in their present states; if these were discontinued, other approaches to financing transit, such as multimodal block grants, provide state and local governments with greater planning flexibility and administrative efficiency. RATIONALE Urban mass transportation relies heavily on public funds. Taxpayers who live in rural areas not served by mass transit, and those who have transit available but prefer to use other means of transportation may complain that they should not have to subsidize mass transit users. Over the past two decades, providing TABLE 116. Percent distribution of aircraft owners by Income class, three surveys, 1963, 1967, and 1968; and total and disposable family income, 1966 U.S. Family Survey# Income Aircraft Owners and Pilots Total Dispos- Associ- Money able Income Class TIME Cessna ation Income Income (dollars) (1963) (1967) (1968) (1966) (1966) per year (1) (2) (3) (4) (5) Less than 10,000 .. 15 14 19 70 80 10,000-14,999...... 15 24 23 21 14 15,000-—24,999...... 29 31 29 8 25,000—-49,999...... 23 23 20 6 50,000 and over... 18 8 9 1 Totalcneat a: 100 100 100 100 100 SOURCE: From Jeremy J. Warford, Public Policy Toward Gen- eral Aviation, Washington, D.C.: The Brookings Institution, 1971, p. 101. aRespondents who did not answer the question on family income are prorated among the income classes. mass transit service has become increasingly expen- sive while fares have remained relatively low. Fares rarely cover system maintenance and operation costs; capital improvements and acquisition of new equipment are often financed from public treasuries. The concept of a transit trust fund is favored by many proponents of urban mass transportation as providing a continuous source of funding, and allow- ing state and local governments to anticipate and fund long-range capital projects. Besides paying for capital improvements and equipment, a transit trust fund might also be used to help defray maintenance and operation costs. Unlike the airport and highway trust funds, and even the newly established waterways trust fund, the urban transit fund would be financed at least partially with money collected from taxes other than user fees. The reasons for this have been detailed else- where by the NTPSC.**' Because they believe transit is providing social and environmental benefits, public transit operators, who today are frequently local governments, are willing to charge less than the actual cost of operating such a system. Briefly, these benefits include the reduction of air pollution and traffic congestion in urbanized areas, and the provi- sion of transportation to members of society who would otherwise lack mobility.932 Because of these general benefits, the argument goes, mass transit should be subsidized by non-users as well. Oppo- nents reject that notion, arguing that such subsidies do not provide incentives for efficient operation, and therefore do not provide service as beneficial as could be the case with more efficient use of scarce resources. Transit fares have not kept pace with the costs of providing services. One source indicates that: While total operating costs increased by 165 percent from 1967 to 1977, operating revenues increased by only 47 percent. The slower growth of revenues, one-fourth the rate of increasing costs, resulted from a combination of net declines of 13.3 percent in patronage since 1967 and only modest increases in average fares.°°3 This source concludes that not only have fares “not kept pace with inflation,’ but in 1972 constant dollars, they actually declined by 12 percent.*“ Table 117 shows recent shortfalls between operating costs and revenues. - Table 117 shows that since 1970 revenues have not covered operating expenses. In recent years the gap has widened. If the trend continues, there will be a significant shortfall of funds by the year 2000. NTPSC forecasts presented in Chapters 10 and 11 support this belief. An urban transit trust fund would have to cover a portion of the costs of capital improvements, estimat- ed by the NTPSC to total $161.6 billion (in 1975 dollars) to the year 2000, as well as a share of the operating and maintenance expenditures for such a system, which could be as high as $120 billion to the year 2000. FUNDING OPTIONS A study of an urban transit trust fund must consider alternative funding sources to determine whether or not a modal trust fund is the best way to meet transit needs. It should include alternative pricing schemes for users as well as alternative taxing schemes TABLE 117. Urban transit operating revenues and expenses, 1970 to 1977 (millions of current $) Year Revenues Expenses Deficit O70 Bawah tin oferta Meee $ 1,707 $ 1,996 $ 189 IY DES Sieg aa 1,741 2,152 411 TD A OE ARS hy. Die ee ene 1,729 2,242 §13 lL Die rein: be anni 1,798 2,536 738 WETS Cinres Hib eee: fe). 1,940 3,239 1,299 1 SRR a BER se oO 2,002 3,706 1,704 ght ¥ gs }sgsverane Be pe apeerina eet 2,161 4,021 1,860 4 I deere SALE pene ay 2,280 4,305 2,025 SOURCE: American Public Transit Association, APTA Transit Face Book 1978, Washington, D.C.: 1978, pp. 20—21. IMPACTS OF THE POLICY RECOMMENDATIONS e 311 whereby money can be collected to finance the trust fund. Congress has considered the establishment of an urban transportation trust fund.***Former Secretary of Transportation John Volpe proposed a “‘Single Urban Fund’”’ to be financed through a $1 billion per year contribution from the Highway Trust fund for “investment in local projects.’’ His proposal included yearly increases in such a fund and an allocation scheme based on the population in the SMSAs.%% This differed somewhat from the common notion of an urban transit trust fund by including money for both highways and transit to be spent according to the individual needs of localities. In 1977, Represent- ative James Howard proposed that a transportation trust fund to include urban transit be financed from a Federal corporate profits tax. In 1979, both Secre- tary of Transportation Adams and President Carter proposed variations of urban transit trust funds.%9” In light of present funding problems, both for long- range capital and short-term operation costs, there is justification for again considering an urban transit trust fund. According to one source: The Congressional Budget Act of 1974 has had a significant impact on UMTA funding. First, new Interstate transfers must go through the appropriations process, thus closing a previous back door. Second, multi-year funding such as UMTA has received in the past is now more difficult to obtain, although not impossible. Specifically, new legislation granting contract authority comparable to UMTA’s past funding is no longer effective without an accompanying appropriation (Section 401 of the Budget Act).3%8 An urban transit trust fund financed from some specific tax rather than general revenues could provide a way around this dilemma, but it has pitfalls of its own. Specifically, long-term assurance of a steady funding source, such as is offered by the trust fund concept, can lead to almost uncontrollable spending in future years.°°° Thus, while this form of funding may give ‘‘the greatest assurance to states and localities of funds for each mode,’’*° it gives Congress less control, it makes multimodal policy- making more difficult, and it could lock modes into particular funding sources." Highway Finance NTPSC Policy Recommendations The NTPSC recommends a continuation of categori- cal programs of Federal aid for highways, with greater flexibility within and between categories. These programs would be partially financed by the Federal government through proper user fees, ac- counted for in the Highway Trust Fund, and spent following proper investment analysis. However, Fea- 312 e ISSUES AND POLICY RESOLUTION eral aid for highways also would continue to be financed from sources other than user charges feeding the Highway Trust Fund. Certain Federal expenditures for which the direct beneficiaries can- not be identified and taxed could be financed from general tax revenues. In special cases, tolls for new and improved highway facilities, bridges, and limited use facilities should be applied as a financing mechanism and to permit a smoother flow of traffic. Highway mainte- nance would remain the responsibility of state and local governments. Impact Evaluation Assumptions In order to estimate the impacts of the foregoing policies, the NTPSC made the following additional assumptions: 1. Federal user charges will be held at the same rates as at present. 2. Federal highway receipts from other than user charge imposts will increase in accord with projections of the 1965 through 1976 constant dollar trend. 3. All other revenues will be raised by state and local governments. Table 118 assumes state and local governments increase revenues at the same general rate they have for the past decade. As an alternative, Table 120 shows the additional amounts state and local governments would have to raise to conform to the recommended Federal policies while maintaining the present highway conditions and performance levels. 4. The Federal government will allow state and local governments to collect tolls on Federal-aid high- ways meeting the aforementioned ‘‘special condi- tions.” TABLE 118. Forecast highway revenues by level of govern- ment, medium-growth scenario, 1975 to 2000 (billions of 1975 $) Federal State and Local Total User Non-User User Impost? Sources’ Imposte Othere SSS 1975:. 2. Ws 2.0 12.7 7.6 28.0 1985... 5.0 3.2 13.4 8.1 29.7 2000 S03 4.5 13.4 10.5 i DO d Senn ae a SOURCE: NTPSC forecasts. aSee Table 42. *Linear projection of 1965 through 1976 trend based on data in FHWA’s Highway Statistics Summary to 1975. ‘Residual amount necessary to achieve the total revenue forecast. Table 119 shows the NTPSC forecast Federal-aid revenues assumed in both constant 1975 and current dollars (assuming 5 percent annual inflation under the medium-growth scenario). In constant dollars, the year-2000 level of Federal disbursements would be about $60 million more than in 1975 (an increase of less than 1 percent). In the same period traffic is expected to grow 86 percent and by the year 2000 more than 57 percent of Federal highway revenues are expected to derive from sources other than highway user charges compared to 26 percent in 1975. From Table 119 it can be seen that Federal highway revenues (from both users and other sources) are expected to increase in current dollar terms through the year 2000. This growth provides an opportunity for improved allocation of resources, that is, resources devoted to projects having higher benefit-to-cost ratios. Federal funds for rural primary and secondary roads could be maintained at current levels of funding, and each state could be given its historical level of funds for these roads. Concurrent- ly, the growth in current dollar revenues could be allocated to provide increased capacity in urbanized areas or on congested rural interstate links. Table 120 contains figures illustrating the implica- tions of the NTPSC’s recommended policy, assuming a future level of nationwide disbursements adequate to maintain 1975 highway condition and performance levels. State and local government disbursements would have to more than triple compared to 1975 levels. The Federal contribution to nationwide annual highway expenditures would decrease from the 1975 level of 27 percent to 16 percent by 1985 and 10 percent in the year 2000. The Federal government might encourage the States to increase their contributions by decreasing the statutory Federal matching share to increase the leverage of the decreasing Federal funds. IMPACTS The impacts of the policies depend heavily on what state and local governments would do given the Federal policy. They can either increase funding to maintain reasonable levels of highway condition and performance within their jurisdiction, or they can fail to do so, letting highway conditions and performance levels decline as traffic grows. Adequate Service If no action is taken at the Federal level to increase Federal aid to highways, then the burden of maintain- ing or improving highways will increasingly become the responsibility of state and local governments. A continued decline in service levels could mean increasing traffic congestion with the related ills of air pollution, energy waste, increased travel times, and lower productivity for business and commercial TABLE 119. Forecast of Federal highway revenues, medium- growth scenario, 1975 to 2000 (billions of $) Constant 1975 $2 Current $° Non- Non- User User _ Total User User __ Total OTD fay retor es 5.7 2.0 ray f 57 2.0 TH : clo oer aa aee 5.0 a2 8.2 9.1 83 12.4 09 se ee 3.3 4.5 78 11.2 15.2 26.4 SOURCE: NTPSC forecasts. aSee Table 118. >Computed assuming 5 percent inflation per year. transportation. If congestion became severe, it might Cause changes in the amount of travel and traffic patterns. The U.S. Department of Transportation has esti- mated that the condition of arterial and collector highways declined and that travel per lane-mile increased between 1970 and 1975.2 During the period, average national disbursements per VMT decreased (from all levels of government). These Statistics tend to indicate that, other things being equal, the level of disbursements may have been less than adequate to maintain the nation’s highway condition and service levels. The U.S. Department of Transportation estimated the costs to maintain the same general level of condition and performance on arterial and collector highways through the year 1990. These estimates are shown, along with several alternatives, in Figure 33. The figure gives additional evidence that the 1975 level of disbursement per VMT may be inade- quate to maintain the current highway condition and performance into the future with increasing traffic. Figure 33 also illustrates the NTPSC forecasts of highway revenues if present Federal practices and the historical trends in state and local funding are continued. As shown, the forecast revenues increas- ingly fall short of being able to finance total expendi- tures. The lowest level expenditure shown is the TABLE 120. Disbursements by governments in accord with NTPSC policy, maintaining current highway con- dition and performance levels, medium-growth scenario, 1975, 1985 and 2000 (millions of 1975 $) ATES. 1975 1985 2000 Required Disbursements................. 28,153 50,250 70,980 Federal Disbursements .................. 7,741 8,200 7,800 Remainder for State and Local Gov- 20,412 42,050 63,180 GEMMIBOIS DEPe as oid OT: SORE Sok ret IMPACTS OF THE POLICY RECOMMENDATIONS e 313 constant disbursement per VMT curve. This level of expenditure represents a continuing decline of high- way conditions and performance through the year 2000. The NTPSC forecasts based on the highest level of highway investment (top curve, Figure 33) indicate positive benefits exceeding costs at that level of investment. Thus, failure to invest in ade- quate highways would mean a greater cost to the public than the investment dollars saved. These costs would be in the form of increased operating costs, delays, air pollution, and energy consumption. The congestion will be concentrated in larger urbanized areas, which have the greatest present congestion on arterial and collector highways, as well as the greatest forecast growth in travel. In 1977, the U.S. DOT forecast that 53 percent of the Interstate mileage in urban areas will have traffic exceeding its design capacity by 1990 (see Figure 34). In addition to widespread congestion in urbanized areas, selected Interstate Highway segments in rural areas are likely to become increasingly congested. These segments are concentrated largely in a few of the more densely populated and industrialized states. Increasing congestion on some of these segments might increase the costs or decrease the perfor- mance of interstate trucking as well as passenger travel.**5 In 1977, the DOT forecast that by 1990, 28 percent of the rural Interstate mileage will experience traffic demand exceeding its design volume. (See Figure 35). If the states and localities with increasing conges- tion act swiftly to alleviate it, much of the above loss might be averted. However, even at the highest level of highway development shown in Figure 33, and with a very high level of investment in urban mass transportation as well, the NTPSC simulations indi- cate most urbanized areas are likely to experience decreased travel speeds on arterial and collector highways.*“4 Appropriate Rates and Prices If the Federal contribution to highways in constant dollar terms declines as a result of continuing current practices, the significance of state donor-recipient conditions resulting from allocations of the Federal Highway Trust Fund should diminish. Too, individual state and local governments may increasingly tailor their highway revenue and disbursement patterns to local conditions. Both the above changes appear to promote more appropriate pricing of highways.*5 Maritime Aids NTPSC Policy Recommendations The NTPSC recommenas that existing Federal finan- cial aids to the maritime sector be continued, but with modifications that stress the efficient utilization 314 @ ISSUES AND POLICY RESOLUTION FIGURE 33. Comparison of forecast revenues and alternative levels of highway disbursements. 100 : y b 1974 National Transportation Report _— 90 et | _ er ad 80 ‘= a . ae Total Disbursements NTPSC° Ze 70 » ae poe pe 2 ues sa 1972 Economic 8 — ie Analysis of Needs = 60 ae a - als Te} _ —_— I a ae per ve 4 pace Tae ais ‘ = 50 Za - = a oe To) we Pe _ a oO ei = = as —oal te Se ay a Cam sere es Pt aie “4 ™ i _ — o 40 L eae ar bee Constant Disbursement per VMT = Lhe SE _— — ae ++ yytt Ww oO ++ Actual Orsbursements Se SY SE a en nn ee QO ee Peete rary me tap | We eee 10 0 1965 1970 1975 1980 1985 1990 1995 2000 Calendar Year SOURCE: U.S. Department of Transportation, Federal Highway Administration, Highway Statistics, Summary to 1975, Washington, D.C..: 1977. The NTPSC converted the current dollar values reported to constant 1975 dollars using Federal Highway Administration price indices (Same source). The difference between the non-capital and total disbursements is Capital investment. *See Chapter 10, particularly Table 40 for capital investment levels. ‘See Chapter 10, Table 39 for capital investment summary. °See Chapter 10, Figure 31 and Table 42 for greater detail. *Computed using 1975 disbursement per VMT and NTPSC forecasts of total VMT. 'Non-capital disbursements computed using state estimates for the 1974 National Transportation Report. Interest payments estimated by NTPSC and were added to the state figures. of the existing fleet and the needs of national defense. In addition, the U.S. should pursue, through multilateral negotiations, reduction in such aids as loan guarantees, loans and grants, so that the free market can operate. IMPACTS OF RETAINING EXISTING POLICIES The U.S. maritime capability consists of the U.S. subsidized fleet, U.S. non-subsidized flag vessels, the “effective U.S. control’ fleet and other U.S.- owned foreign-flag ships. Within the U.S.-flag cate- gories, two sectors of the industry operate in differ- ent economic environments: the liner (or common carrier) segment; and the bulk (dry or liquid) seg- ment. Liner-type vessels, including break-bulk and container ships, make up about 53 percent of the U.S.-flag fleet, and are the primary contributors to U.S. national defense requirements. They consist of a few combination passenger and cargo ships, freighters, and full container ships.346 Most U.S.-flag liner vessels in international trade are subsidized, justified by national defense require- ments. These requirements, which are determined by the military services, represent shipping needs for direct support of U.S. forces in time of war or national emergency. National security, the capability to import critical raw materials during a national emergency, is also a maritime goal. The military requirement for liners is established by the DOD and other agencies. In 1977, over 70 percent of DOD cargo was containerized.*’ In the event of mobilization, the DOD estimates that virtual- ly the entire active U.S. merchant marine liner fleet will be needed, and that the combination of all shipping resources available is sufficient to meet requirements in the early months of war.348 The DOD further states that key defense features must be added to liners to make them more useful for national defense. These include structural changes to ships | ueul sso Gal 0c-3 Ov—-12é 09-Lt 08-19 001-18 }UIDIIg - . ‘ ‘ ig se: "O'q ‘uoyBuiysen (OO0Z 488A 2} 0}) SaDI0YD puke spuas, :uONeOdSUBI, JeUONeENY ‘UOIyYeyOdsUeI] JO He ae oe a Goan *(ewNjoA UBjsap Hujpesoxe 94jj81) JO yUsDIEd) OGG} Ul OHeajjw a}e;s19}uj UequN peyseHuo0y ‘pe FYNYIS 5 - 3 | ueul ssaq eg 02-9 Ov—-LZ 09-LP 08-19 0OL—L8 }UIadIaq (azemejag pue ‘OE “ysen ul abeall je4ny ON) ‘O'0 “ysemMc ‘evt 'd ‘2261 Auenuer ‘uojepodsues, jeuoieN ‘uoleyodsuel, jo juewHedeg ‘SM ‘JOHNOS “O'G ‘uoyBulusemM (O00Z 488A 84} O}) SeDIOYD Puke spuall *(awINjOA UBjsep Hujpssoxe 31jje23 JO jUGdI0d) OGG} Ul SHeajjwi ajeyssajzu jesna payseHuoD “se 3HNDI 316 themselves and system improvements such as on- board or shore-side cranes to make loading and unloading easier and faster. The need for a U.S. dry-bulk fleet for national defense and security objectives is another matter. An analysis by MarAd,*° confirmed by the DOD, states that dry-bulk carriers cannot be used for military cargo without extensive conversion; hence, there is no military requirement for this type of vessel. Regarding national security, in addition to the NATO shipping that would be available to augment the current domestic (Jones Act)*' dry-bulk fleet, EUSC ships which are subject to requisition under Section 902 of the Merchant Marine Act would also be available. According to MarAd statistics, as of June 1977, 469 vessels were so registered; 339 were tankers and 102 were dry-bulk or other non-liner type carriers while the remaining 28 vessels were liners. Despite the above, U.S. policy as expressed by MarAd is to promote aggressively the construction and operation of bulk ships. Since 1970, when these ships became eligible for construction differential subsidy (CDS), 48 bulk vessels have been subsidized.*5* Most of these were tankers. In 1978 the first dry-bulk vessels were approved for CDS.%°° Under current policies and programs, and expect- ed growth as defined in the medium-growth scenario, the U.S.-flag fleet as projected by the NTPSC is shown in Table 121, by category of ship. The funds, in 1976 dollars, needed to build the fleet are also shown in Table 121, cumulated by 5-year intervals. Since 1969, the average CDS as a percent of vessel price has been 44.49 percent for liners, 40.5 percent for bulk carriers, and 21.31 percent for LNG ships.** When these averages are applied to the capital costs, the expected CDS payments for LNG, bulk, and liner are as shown in Table 121. Under this scenario and assumptions, CDS payments to U.S. shipyards during the 25-year period 1976 to 2000 could total over $8 billion: $5 billion for liners, $844 million for dry-bulk carriers, $729 million for liquid- bulk carriers, and $1,451 million for LNG ships. Cost categories of wages, maintenance and repair (M&R), and protection and indemnity insurance (P&l) have been identified as those which have traditionally been subsidized for liner-type vessels. Comparable data are not available for dry-bulk vessels. Prelimi- nary ODS estimates by MarAd, however, indicate the following cost differentials for bulk vessels.%°° Wages: 80 percent M&R: 25 percent P&l: 25 percent Typical annual costs were obtained for a 170,000- ton dry-bulk vessel.*5* The daily operating costs for this representative vessel, with a 41-person crew, IMPACTS OF THE POLICY RECOMMENDATIONS e 317 were $6,425 (in 1976 dollars). Of this total, about $5,060 was for wages and subsistence, $801 for maintenance, rehabilitation, and equipment, $479 for insurance, and $85 for other expenses. Using the cost differential percentages for the categories shown above, the daily ODS would be $4,368. The annual cost per vessel would be over $1.5 million, or (as shown in Table 121) when applied to the projected dry-bulk fleet a total of almost $1 billion through the year 2000, in constant 1976 dollars. For purposes of impact analysis, it was assumed that, although crew size may fall, other costs will increase so that total subsidized costs per vessel should remain constant in real terms. IMPACTS OF NTPSC POLICIES It has been established by the DOD that military requirements for shipping, in the early months of a national emergency, can be met by the current U.S.- flag liner fleet.°°” As projections of this fleet show it remaining almost constant through the year 2000 in terms of number of ships, it would appear that strong arguments can be made to continue U.S. government support for this segment. Although the potential CDS required to construct this fleet is $5 billion through the year 2000, the actual amount provided will probably be less, because U.S. liners are quite competitive and more operators may choose to operate without subsidy.*°* This is because as capital costs increase in proportion to operating costs, ODS becomes less important. Firms not requiring ODS may turn to the world market to produce ships, as the price may be lower than the CDS-aided vessel costs. This is illustrated by the fact that of the 208 liner vessels constructed under Title V of the Merchant Marine Act, only 20 have been subsidized since Wier Although there is no military need for dry-bulk or LNG vessels, MarAd claims that additional tankers and bulk ships are necessary for national security purposes (i.e., movement of critical raw materials).3© A question arises as to whether these vessels need to be U.S.-flag, as opposed to “Effective U.S. Control” vessels. Even under current subsidy pro- grams it is highly unlikely that these ships will be registered as U.S.-flag vessels. The subsidy program would have to be significantly expanded to make this an attractive option for U.S. operators. The NTPSC proposes to tighten the eligibility requirements of ODS and CDS to stress ships that meet an established national defense need. Under this policy and expected conditions (of the medium- growth scenario), liners would receive CDS and ODS in the same amount as would occur under a ‘‘no change”’ policy. The cost of these vessels would be about $11 billion, of which a maximum CDS would be about $5 billion through 2000. 318 e ISSUES AND POLICY RESOLUTION TABLE 121. Costs and subsidies for the U.S.-flag merchant fleet In foreign trade, medium-growth scenario, 1980 to 2000 (5-year totals In millions of 1975 $) Year Total 1976 to 1981 to 1986 to 1991 to 1996 to 1976 to Vessel Category 1975 1980 1985 1990 1995 2000 2000 LINER Fleet inventory at end of period..................eeeeee eee 207 184 203 198 224 220 . Capital. Coste id. sic. dnkky ei se hedatneet ot eae iar onal $1430 $1353 $1587 $2494 $4259 $11,114 CDSE bo icca vai'e aut tlndcuis 2alaoeie Bact ae oman eee ar seyret grata ges $ 643 $ 609 $ 714 $1122 $1916 $5,004 BULK Fleet inventory at end of period Total incc0.. iis dseae och oe re Reet eid tok Rate eee sea 43 56 71 83 104 142 Dry Bulki).cesiees in Beal ok ae eues Man he ene ea means 6 19 28 41 55 Other Bulle ooo is0ds coh RO eae a ees 40 50 52 55 63 62 Dry Bulk Capital Coste si ccn inh even las a nehoece cs peat on emmnn $120 520 360 520 560 $2,080 CDS eis pik verb nenad ita amar onides Gombe cau nat aan $49 211 146 211 227 $844 ODS ei icavcsad cceiby back Bear Le enna ae pan anemaue $37 104 185 278 385 $989 Other Bulk Capital’ Goste c0). Pel Te es ee pace eon cent $500 200 300 800 —_ $1,800 ODS 3S ia a es re $203 81 122 324 _ $729 ODDS a sisiciicy caiktatusdiccae irae Sab Ca tee re Wake he eel tiaras via e $392 433 459 510 535 $2,329 LNG Fleet inventory at end of period..................... 000. 6 23 31 39 44 Capital Costs ei. s Ld ee a eae $649 2,181 1,043 1 the 1,176 $6,821 GCDS3:,. sasaa ss eae ici wees niaee cen ew a ae ete Inna $138 464 222 377 250 $1,451 SOURCE: NTPSC forecasts. NOTE: Totals may not add due to rounding. aConstruction differential subsidy. ‘Includes tankers, neobulk, and combination carriers. (Neobulk refers to a vessel service with attributes of both liner and tramp- shipping services. Frequencies are similar to liners; rates approach those offered by tramps; shipments are longer than those on liners.) cOperating differential subsidy. U.S.-flag dry-bulk vessels would, however, be significantly reduced from projected levels. Under current policy, the projected dry-bulk fleet would receive the following subsidy through the year 2000, in 1976 constant dollars: CDS (1976 to 2000): $, 844 million ODS (1980 to 2000): $, 989 million Total Subsidy $1,833 million In addition, much of the required capital in excess of the CDS would be obtained using Federal loan guarantees. When considering inflation, even a low average annual increase during this period would raise the government subsidy required to two or three times the above amount in current dollars. Under the proposed policy change none of this subsidy would be provided. The only effect of this change, because there is no private demand for unsubsidized vessels, would be in the loss of new jobs that would have been created to expand shipbuilding facilities and to crew additional ships. If the entire number of U.S.-flag dry-bulk vessels projected for 2000 (55 ships) was not built or operated, the NTPSC estimates less than 2,000 new jobs would be foregone. In the LNG category it is estimated that about half of the projected LNGs would receive CDS, and that none would apply for ODS. Thus, the potential savings to the U.S. government is estimated to be one-half of the maximum CDS available (half of $1,451 million), or $725.5 million. As was the case with the dry-bulk vessels, the jobs lost would be primarily those that were not created in the ship- yards. In summary, implementation of this policy change would have the following impacts: 1. Not affect quantity or quality of service to ship- pers; Not affect costs to shippers; Not affect safety; Save the Federal government almost $2 billion in constant 1976 dollars through 2000; Forego at most about 2,000 jobs; A I ead 6. Conserve energy from the construction and oper- ation of ships; and 7. Not affect national defense, except perhaps for critical materials movement. Another possible policy modification would be to require subsidies for incremental national defense features (special items added to U.S.-constructed ships such as wider hatches sufficient to handle military equipment) to be carried as a line item in the DOD budget, and to limit such subsidies to ships which fulfill a defense need. The average incremental national defense cost per ship constructed since 1974 was only about $83,000, while the price per ship averaged over $56 million.%®" If this relationship (0.15 percent) is applied to required capital costs for liners (see Table 121), national defense costs are as follows: Avg. Annual Years Costs Costs 1976 to 1980 $2,145,000 $ 429,000 1981 to 1985 $2,029,500 $ 405,900 1986 to 1990 $2,380,500 $ 476,100 1991 to 1995 $3,741,000 $ 748,200 1996 to 2000 $6,388,500 $1,277,700 These costs are so small compared to the annual DOD budget that they will have no adverse impacts on allocation of funds. Implementation of this policy would put the program under the DOD control, which might allow better use of the funds plus the consider- ation of other key defense requirements that are not now met (e.g., addition of portable cranes). Injand Waterway Aids NTPSC Policy Recommendations The NTPSC recommends that the Inland Waterways Trust Fund be maintained through the year 2000. All tax rates, funding eligibility limitations, and user exemptions are to remain as currently prescribed in the legislation.5®© The Inland Waterways Revenue Act of 1978 established a tax on fuel used in commercial trans- portation on inland and intracoastal waterways, the revenues from which are to be deposited in the Inland Waterways Trust Fund. Trust Fund revenues can then be applied to ‘‘construction and rehabilita- tion expenditures for navigation on the inland and intracoastal waterways. ’’°& The tax is a flat rate with no variation by geo- graphic region or waterway which is gradually in- creased from 4 cents per gallon in 1980 to 10 cents per gallon in 1985. Table 122 sets out the expected contribution of these revenues to Federal water expenditures for barge-line transportation. IMPACTS OF THE POLICY RECOMMENDATIONS e 319 TABLE 122. Expected contribution of fuel tax to Federal ex- penditures, 1985, 1990 and 2000 (percent) Tax Revenues as Tax Revenues as Tax Revenues as Percentage of Percentage of Percentage of New Year OM&R2 Construction Total Outlays 1985.. 15.6% 17.2% 8.2% 1990.. 15.9% 20.0% 8.9% 2000.. 10.9% 17.4% 6.7% SOURCE: NTPSC forecasts. 2OM&R includes Corps estimates and Coast Guard aids to navigation. Chapter 11 gives estimates of Federal expendi- tures and receipts for inland waterway activities. The waterway fuel tax covers less than 16 percent of waterway expenditures and by the year 2000 will cover only about 11 percent. In terms of total outlays the fuel tax will cover less than 9 percent of all costs, down to about 7 percent by the year 2000. It should be noted, though, that Trust Fund revenues will only be expended on new construction and rehabilitation. It was not possible to calculate these costs. FUEL TAX AND WATERWAY TRAFFIC FORECASTS Before describing the potential impacts of the NTPSC policy on national goals, it is necessary to estimate the effect of the fuel tax on waterway traffic, to indicate the magnitude of the impact on the various goals. The NTPSC projections in Chapter 9 were made prior to the passage of Pub. L. 95—502 and do not take into account any diversion which the fuel tax might cause. To gain an idea of what level of diversion could occur, several studies have analyzed the effect of fuel taxes on barge rates and the probable responses of shippers of different commod- ities. A CACI study in 1976 assessed the effect of setting a systemwide fuel tax at a rate equivalent to 50 percent recovery of OM&R and navigation aids costs. On the lower Mississippi River, towing costs would have increased from 2.4 to 2.7 mills per ton- mile and on the Missouri River from 3.1 to 3.5 mills. This increase, traced through the system, would result in a 5.5 percent drop in ton-miles.3& The legislated fuel tax, as discussed above, is significant- ly less than that required by a criterion of 50 percent recovery. The data in the study, however, are from 1972. Since that time fuel prices have more than tripled for waterway users, which could affect the results in either direction. A Transportation Systems Center (TSC) study in 1977 further substantiates the conclusion that the actual legislated fuel tax should not significantly alter 320 e ISSUES AND POLICY RESOLUTION projected traffic flows. It found that a fuel tax set at 100 percent OM&R recovery would result in barge rate increases ranging from 6 to 15 percent, with delivered commodity price increases of never more than 1 to 2 percent and usually less than 1 percent.°© The impact would vary dramatically by commodity: coal would experience little or no diversion, mainly because only 10 percent of water-served electric utilities have adequate rail facilities, but corn move- ments would experience 20 percent diversion in ton- miles.°66 Again, the legislated fuel tax is much less than would be a tax based on the 100 percent cost- recovery assumed by TSC, and the impacts, similarly, are much less. In addition to the above, preliminary estimates from the Mid-America Ports Study are that a 12 cent per gallon fuel tax would divert 3 percent of project- ed traffic volumes on the Mississippi River system.°® A recent study focussing on the Tennessee area, however, indicates that in some regions shippers are sensitive to relatively small increases in barge rates. In a sample of 32 shippers, 5 would ‘‘abandon entirely’ their waterway carriers if barge rates in- creased by 10 percent.%® Questions directed at possible gradual erosion of waterway usage revealed even more dramatic diversions. Unfortunately the sample size is small and the effect on actual ton- miles is not treated. One interesting finding, contrary to the TSC results, is that over 90 percent of the sample firms had viable rail access as an alternative to waterways.%®& After reviewing the above studies it is apparent that a 10 cent per gallon fuel tax should not significantly affect the NTPSC forecast. IMPACTS Adequate Service The policy is basically to maintain the status quo which leaves funding levels up to annual appropria- tions and new construction up to project-by-project review. The effect of the fuel tax will depend on whether the revenue will replace a portion of normal Federal outlays or whether it will be additive. In terms of overall expenditures, though, the proportion repre- sented by the fuel tax is small and should have little positive or negative effect on service. Appropriate Rates/Prices In terms of the policy’s direct impact on prices, the impact is negligible. The fuel tax will not reach 10 cents per gallon until 1985. Assuming that fuel prices in general will rise, the tax could mean an increase of 20 percent over the base price. If fuel is 16 percent of towing costs (as suggested in Chapter 11) the towing price rise would amount to 3 percent. Going one step further, the increase as a proportion of the delivered price of a commodity would be insignifi- cant. The problem remains, however, as to whether the resultant barge rates and other waterway users’ costs are ‘‘appropriate.”’ Since it is evident from the estimate of tax revenues and Federal expenditures that waterway users and other beneficiaries are receiving a significant subsidy (over 90 percent of Federal outlays for inland waterways), it can be concluded that the rates are below actual resource costs. Prior legislation provides no clearly specified justification or rationale for such a subsidy in terms of national benefits. The problem becomes even more serious in future years as Federal outlays, and thus subsidies, must be used to meet increasing needs. Also, it must be determined whether the present fuel tax properly distributes costs among the various waterway users so that they are paying for the costs which they impose. A systemwide fuel tax assumes that Federal expenditures per ton-mile are equal across the various river segments. Obviously this is not the case, as is demonstrated in Table 123. The Federal cost per ton-mile varies so widely between river segments that 3 percent of the ton-miles account for 48 percent of Federal O&M costs.°”° The fuel tax, then, leads to a cross-subsidy from users of low cost segments to users of higher cost segments. Another important issue is the amount of cross- subsidy between types of waterway users. The fuel tax applies only to commercial vessels and does not cover recreational boating which represents a high proportion of lockages on certain river segments. Although pleasure boats pay a net 2 cents per gallon fuel tax, the revenues are placed in the Land and Water Conservation Fund in the Department of the Interior.°” In August 1975, 31 percent of the lockages at 8 locks on the Illinois River were due to recreational vessels. During that same month almost all users on the upper locks of the Allegheny River were recrea- tional users.°” A cost allocation study for waterways, . Similar to that which was done by the Federal Aviation Administration, should be undertaken. The user charge study mandated in the Inland Waterways Revenue Act of 197872 should address this issue. Although the instrument of a flat systemwide fuel tax may result in inappropriate prices, the currently legislated fuel tax represents such a small proportion of delivered commodity prices that its discriminatory or cross-subsidy effects are insignificant. Economic Efficiency Subsidization of inland waterway facilities and ser- vices should, theoretically, result in excess demand by users who, if charged fully allocated costs, would alter product prices, reduce shipments, select a different mode or simply not make the shipment. TABLE 123. Segment ton-mile taxes required to recover operation and maintenance expenditures undertaken by the Army Corps of Engineers IMPACTS OF THE POLICY RECOMMENDATIONS e 321 for shallow draft projects Average — re Annual O&M Commercial i: Expenditures O&M Cost Cost per Mile is FY 1970-74 Actual per Ton-Mile to Move Loaded ak (thousands of Ton-Miles (Tax Required) 1500-Ton Barge siege Waterway Segment dollars) CY 1972 (dollars) (dollars) eee ee ee ee TT AEC eet RC id atieh ang caus su kisne aks gia’ a ees 4 pe siete” “geen” & wiPoeney, wee at ie: Be @ : Pie gh Ge) ae. 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(homme BOR | | b ‘ 0 47 Ney ¢ ep ae, hate! « Peart. or . rie heh head ; La i“? id ann — aeanaty a ian | 4.1%} ie ome ig fa za, yO ea ae i ave sd et ea i all ef “7 An . i] t 27 bir Sy , us dy ae a Pouahiot Bote ii | om 7 i me thy ep > ae we mie Pte kad tr, " N . Ladyhys Aneta samedi ales if _ eieenatons hh oyrmet Tiieat eaters roe i aaa a vail di Weed i, a ; he ower chides in iP Wy oy Jee hy weaie hong ay CH 4 the! lind fred! sors ; ight it ye eee ie... 0, tee . ' ! - lend. ah, ne _ thee aif x ‘a | ot eq ete: 6a Tes. i | Staging Policy Changes THE IMPORTANCE OF FORMAL AND INFORMAL IMPLEMENTATION MECHANISMS The legislation establishing the National Transporta- tion Policy Study Commission stated the aspects of transportation and energy to be studied and when the final report was to be submitted to Congress and the President. It explicitly required the cooperation of Federal agencies in performing research and prepar- ing the report.’ However, the legislation was silent on what should occur after submission of the report. The NTPSC is authorized to continue operations only for up to six months after producing its final report. In the simplest sense the transportation policy recommendations of the NTPSC can be implemented through the usual formal mechanisms of legislation or actions by the executive branch or the independent regulatory commissions. The NTPSC itself was not created to be a policy-implementing organization. Yet, it is not accurate to state that the NTPSC final report must stand or fall by itself. In fact, the NTPSC process of studying transport policy may have served to create constituencies for implementation of some of the policy recommendations. This is true for several reasons. First, the NTPSC held public hearings. The infor- mation presented became available for others to consider, as well as being used by the NTPSC to further its policy investigations. Second, the NTPSC sponsored research by its staff and by consultants as part of its workplan. The results of this research are documented in a series of special reports and staff working papers and were used to produce the NTPSC final report. Third, the process of producing these NTPSC reports stimulated further research and policy debate by those involved. For example, during 1978, NTPSC staff worked with over 50 nationally Known transportation researchers to devise policy alternatives and to investigate their impacts. Al- though many of the alternatives were not recom- mended by the NTPSC, the policy development sessions were productive for those involved, and many of the ideas developed by these teams un- doubtedly will be explored in further research over the years. Fourth, the NTPSC’s published special reports themselves have received public attention, and comments about these NTPSC reports may, in turn, stimulate additional research and more in- formed debate. One result of the NTPSC policy research has been to document the finding that policy is set at many levels by many participants, and is constantly chang- ing. Therefore, to understand policy, one must look beyond formal statements in legislation or executive rulemaking, to the proposals for policy and the debate that occurs behind the scenes. Consideration of these less formal policy mechanisms provides a clearer picture of policy as it is in practice, rather than policy as it appears, or as it is supposed to be. Thus, implementation of the NTPSC policy recom- mendations can proceed not only through enactment of legislation, but also through the development of legislative proposals and hearings on these propos- als. Implementation will proceed not only through Executive Orders by the President, the formal rule- making of executive agencies, or formal findings following ex parte proceedings by regulatory com- missions, but also through informal statements of policymakers, subsequent research to refute or support NTPSC findings, and actions by the private sector to bring NTPSC findings to the attention of policymakers. In order to bring NTPSC policy proposals to the stage of formal implementation through congression- al or executive action, constituencies for change must develop. The NTPSC research process, its report, and its commissioners and staff are all part of a constituency-building process. Policy changes that affect U.S. transportation can result from the process of constituency building, even if formal policy decla- rations are not immediately adopted by Congress or the President. Important policy changes can occur gradually and almost invisibly, with a cumulative effect that is substantial. EXAMPLES OF COALITIONS FOR CHANGE When Congress acted in 1978 to deregulate domes- tic air passenger service,* a widespread coalition of forces worked for change. Among the members of the Ad Hoc Committee for Airline Regulatory Reform were several trunk and commuter airlines, as well as representatives of passengers and government 345 346 e ISSUES AND POLICY RESOLUTION agencies. Relatively few air carriers exist, and the regulation-induced service competition that had eroded profits and resulted in half-empty airplanes was highly visible.* In Congress, Senators Cannon and Kennedy cooperated to sponsor a deregulatory bill that addressed both air transportation and anti- trust matters, thereby jointly considering the measure in their respective subcommittees of the Commerce and Judiciary Committees. For rail regulatory reform, again a broad-based coalition has emerged. The ‘“‘strong’’ western and southern railroads support the concept, as does Conrail. In fact, Conrail and the bankrupt and financially troubled railroads of the East and Midwest are quite visible symbols of the need for reform. Conrail officers argue that their firm cannot meet congressional goals of ultimate profitability without substantially increased pricing and route freedom.‘ Shippers and government officials join in arguing for pricing flexibility that would permit railroads to retain market shares of bulk commodities facing competi- tion from water, pipeline or trucking modes. In the case of regulatory reform for trucking, there is no such broad coalition for reform. Virtually no common carrier trucking firms support substantive deregulation.® Further, the National Industrial Traffic League, a major shipper organization, has opposed drastic changes to antitrust immunity for motor carrier rate bureaus.® Within Congress there is con- flict. Senators Cannon and Kennedy both sought to win jurisdiction over reform legislation that would end antitrust immunity for motor carrier and freight for- warder rate bureau activities.’ In addition, there are thousands of separate trucking firms. The ICC does not even maintain records as to which regulated carriers serve which markets. Exact details of carrier costs are unknown except to the carriers and their rate bureaus. Major trucking firm bankruptcies are few; trucking service is generally rated good by those who use it.® Thus, the costs of trucking regulation are not directly visible, being manifest only indirectly through re- duced railroad earnings or excess trucking capacity, despite instances of monopoly trucking returns. The benefits of deregulation are equally dispersed (but real, according to NTPSC research, especially with attention paid to ensure safety). Therefore, to implement the NTPSC recommenda- tions for significant reform of motor-carrier economic regulation, much work remains to be done to deter- mine the amounts and incidence of benefits and costs. The results must then be disseminated as part of the process of forming broad-based coalitions to work for implementation. The rest of this chapter further develops concepts of formal and informal policy implementation. The specific NTPSC recommendations are listed below, together with.one of the many alternatives for staging their implementation. The reasons for proposing this implementation strategy are developed in subse- quent sections. For example, a review of earlier national studies is given, to highlight some of the factors that contributed to significant policy recom- mendations. For successful implementation of trans- portation policy, a constituency must be established to work for adoption of the policy through formal or informal channels. Sometimes skillful compromises must be determined. An important component of successful implementation is the continuing evalu- ation and adjustment of the policies, to be certain that policy impacts are in reality as they were predicted to be. These processes of building constit- uencies, winning adoption of policies through com- promise, and continuing to monitor progress are described in subsequent sections. In the bibliography, several references are provid- ed for those interested in reading more about theories of implementing policies and programs in the context of multi-level government bureaucracies, from the points of view of social scientists. There are no simple ways to guarantee the successful implementation of meaningful transport policy recommendations. This chapter stresses the need to combine the “‘art’’ of implementation, based on forging coalitions of support within shifting politi- Cal alliances, with the ‘‘science’”’ of sound research, based on rational methods and reliable data. STAGING THE NTPSC POLICY RECOMMENDATIONS Table 128 shows each of the NTPSC policy recom- mendations with an indication of one action that might be undertaken to accomplish implementation of that policy. In many cases, more than one method could be pursued to implement the policy (and other methods were considered by the NTPSC). Nonethe- less, only one implementation example is given for each policy, to restrict the table to manageable proportions. Table 129 contains a chronological presentation of the actions required to implement the NTPSC policy recommendations, shown in the context of status quo policies and programs that are now scheduled for implementation. The two tables illus- trate the principle that not all of the NTPSC recom- mendations should be implemented immediately by Congress, the executive branch, or independent regulatory commissions. In many cases, as existing programs come due for renewal, Congress can act to implement the new NTPSC proposals so as to TABLE 128. NTPSC policy implementation actions NTPSC POLICY RECOMMENDATION STAGING POLICY CHANGES e 347 POSSIBLE ACTIONS REQUIRED REGULATION |. ECONOMIC Continue regulatory reform. A residual regulatory agency should administer fitness regulations. Agencies should deter- mine the costs and benefits of existing and proposed regula- tions before implementation. A. Common Carrier Obligation Carrier obligation should be retained but carriers should be assured an adequate return on uneconomic obligated routes. Fitness, safety, and insurance rules should be continued and strengthened. B. Entry-Exit-Route Restrictions A new residual transportation regulatory commission would grant certificates to for-hire carriers based on fitness (includ- ing that required by insurance regulations) and safety. For motor carriers, adequate insurance (or proof of financial re- sponsibility equal to that required by insurance regulations) should be a minimum of $1 million for single occurrence, or an amount sufficient to require periodic ‘‘on site’’ inspection, updated regularly. Phase in entry-exit freedom for all for-hire carriers including automatic entry for an abandoned market or where dormant rights exist. Allow exit in cases of inadequate return and expedite abandonment proceedings. The DOT role should be one of coordination and provision of temporary sub- sidy. If carriers are required to operate at a loss, they should be compensated. Multilateral negotiations to rationalize the in- ternational maritime market should be conducted. C. Rates Congress should establish expanding no-suspension rate zones, eventually achieving complete rate flexibility. A residual regulatory commission could suspend rates outside the zone that were found to be predatory, preferential, or discriminato- ry, while antitrust laws would apply to prices within the zone. D. Rate Bureaus Rate bureau procedures need to be made more responsive to shippers, carriers and the public. Administrative actions to implement major transportation regu- latory changes should be guided by an overall plan such as proposed in Section 4(aX2) of S. 445 (96th Cong., 1st sess.). A policy such as Section 4(aX2) should be implemented imme- diately by Executive Order, changing the completion date to December 1979. This plan should be continually updated and integrated with legislative activity involving major regulatory change. Congress should enact a coordinated set of regula- tory reform measures in 1980, to phase in all of the reforms by 1985. Benefit/cost analyses should be executed, first for all new regulations by the promulgating agency starting in 1979. Agencies should next initiate similar analyses for existing regulations and should regularly synthesize and report their findings. The recommended language should be incorporated into the current statement of national transportation policy (49 U.S.C. Section 10101) as part of the 1980 legislation to create the residual regulatory commission. The recommended certification criteria should be initiated with the phasing out by 1985 of entry, exit, and route restrictions under legislation introduced in 1980 to create the residual regulatory commission. Automatic entry to serve an effectively abandoned market should be initiated through ex parte proceedings in 1979 by the ICC and incorporated into the legislation creating the re- sidual regulatory commission. Preliminary guidelines for analysis of entry and exit should be developed by the ICC by October 1979. Similar analytical guidelines should be incorporated into OMB Circular A-95 so that the effects of local regulatory actions can be considered. Temporary subsidies should come from existing programs, such as the local rail service subsidy continuation begun un- der Section 803 of the 4R Act (Pub. L. 94—210). Congress, in 1980, should establish its intent to pursue multi- lateral negotiations to rationalize the international market and to reduce competitive subsidies. The State Department should head the U.S. negotiation team. Changes in rate regulation should be a major focus of the legislation creating the residual regulatory commission. The legislation might allow the expanding zone of reasonableness to result in complete decontrol by 1985. Voting procedures and greater public access should be imple- mented as soon as possible through ex parte proceedings by the regulatory commissions. Federal regulatory powers over rate bureaus in the future should be made explicit in the legislation creating the residual regulatory commission. 348 e ISSUES AND POLICY RESOLUTION TABLE 128. NTPSC policy implementation actions—Continued NTPSC POLICY RECOMMENDATION POSSIBLE ACTIONS REQUIRED REGULATION E. Quality of Service The responsibility of ensuring quality service should fall on those involved—e.g., users, beneficiaries, state and local gov- ernments—rather than on the Federal government. The Feder- al government should not apply service standards unless it is necessary to achieve the national interest. Additional costs incurred should be paid by the appropriate Federal agency. F. Intermodalism Eliminate Federal regulatory impediments to common owner- ship and intermodal coordination and cooperation. Promote effective joint rates and through service within and among modes. Encourage the private sector to adopt new technology and innovative approaches to intermodalism. G. Mergers-Bankruptcy-Financial The Federal government should permit mergers, consolidations, and transfers between carriers and among modes in an effort to increase transportation efficiency. Mergers should be sub- ject to antitrust concepts. Subject regulated carriers to the same financial regulations as those of other sectors. ll. OTHER REGULATION A. Truck Size and Weight States should retain their rights to set standards, but DOT should investigate benefits and costs of uniformity versus vary- ing weight and length limits. B. Labor and Management DOT and DOL should encourage improved labor and manage- ment relations and productivity. Existing transportation regulatory commissions should initiate ex parte proceedings immediately to identify and reduce all quality-of-service regulations where costs exceed benefits. The legislation which creates the residual regulatory commission should explicitly preclude it from regulating quality of service unless necessary to achieve the national. interest, and should transfer the ICC’s Office of Rail Public Counsel (49 U.S.C. Sections 10381 to 10388) and similar organizations to the Federal Trade Commission, the Department of Justice, or simi- lar executive agency. The legislation should also preclude the Federal government from placing any quality-of-service require- ment on a private or non-Federal public carrier unless health, safety, Constitutional rights, or the transport of Federal per- sonnel or property are involved, and then only if added costs are made explicit, financed as a separate line item, and the carriers involved are compensated. Congress should act to remove Federal regulatory impediments to common ownership and intermodal coordination as part of its action to create a residual transportation commission. The residual commission should promote and encourage joint rates and through service. DOT’s Research and Special Administra- tion, as part of its annual report to Congress, should indicate progress made in promoting new technology. Legislation creating the residual regulatory commission should transfer functions of the Interstate Commerce Commission un- der 49 U.S.C. Sections 11301 to 11367 to the Federal Trade Commission, the Department of Justice, and/or the Securities and Exchange Commission, retaining only those powers neces- sary to determine financial fitness. Parallel provisions for avia- tion and maritime transport should be included. Such a study is required by Section 161 of Pub. L. 95-599, and is due from the Secretary of Transportation in January 1981. As an example, the successful St. Louis demonstration project, which included labor unions, rail associations, individual rail- roads, and the Federal Railroad Administration, should be re- peated elsewhere and for other modes. (This project improved labor-management relations while increasing productivity.) TABLE 128. NTPSC POLICY RECOMMENDATION NTPSC policy implementation actions— Continued STAGING POLICY CHANGES e 349 POSSIBLE ACTIONS REQUIRED REGULATION C. Safety Increased cost-effective Federal preventive measures such as better standards, enforcement of those standards, incentives, and increased penalties are needed. If Federal aids are neces- sary to achieve a better level of safety, users, carriers, state and local governments, and others must share the expense. Additional coordination between these groups will be needed to solve insurance problems relating to safety. DOT should be responsible for all aspects of transportation safety and enforcement, although for-hire motor carriers must certify they are meeting new standards (including insurance) to the residual regulatory commission. Safety standards should be strictly enforced by the Coast Guard. D. Energy Free energy markets should provide proper incentives to carri- ers and users to use fuel-efficient vehicles and practices. Re- tain fuel efficiency standards until such free energy markets can be achieved. E. Environment When environmental requirements are necessary, permit prices to recover the increased cost. The Federal government should coordinate all its environmental regulations, facilitate informa- tion exchange, act as mediator during interstate disputes, and plan for catastrophes. The Federal Emergency Management Agency and DOT’s Ma- terials Transport Bureau should work with the transport indus- try to establish joint guidelines in 1979 for local preparedness in the event of a transportation-related emergency (e.g., a tank car derailment invoiving toxic gases). The agencies should also jointly prepare a program to start in FY 1981 for local planning, training, and coordination of organizations to deal with such localized disasters. The Office of the Secretary of Transportation should be identi- fied by Executive Order in 1979 as the lead agency for coor- dinating transportation-related safety regulations and proce- dures promulgated by DOT's administrations, the Departments of Commerce and Defense, the Federal Emergency Manage- ment Agency, the Consumer Product Safety Commission, and the Occupational Health and Safety Administration. This func- tion should be reinforced with a congressional mandate in 1980, which would also require the National Transportation Safety Board to continually evaluate and annually report on the state of programs coordinated by OST, on the effective- ness of OST’s coordination, and on recommended changes in safety regulation involving transportation. Recommendations should emphasize the most cost-effective strategies for improv- ing safety. Legislation creating the residual regulatory commission should transfer any remaining safety regulations by the ICC, CAB, and FMC to appropriate branches of DOT. U.S. Coast Guard rulemaking to implement pollution standards should continue. Also congressional resolutions should encourage multilateral negotiations leading to new treaties to reduce pollution. Petroleum price controls should be removed according to the schedule established by the current executive and congres- sional policy. Legislation in 1980 should phase out certain economic regulatory powers of the Federal Energy Regulatory Commission, except those which involve health or safety, by 1985. The Council on Environmental Quality should be empowered by Executive Order in 1979 to assume an environmental clear- inghouse function, particularly to inventory all environmental data collection and dissemination activities, and annually report on gaps, conflicts, and redundancies to the President and the Congress. DOT should then report such transportation-related information to CEQ. The Council on Environmental Quality, the Environmental Protection Agency, the Department of the Interi- or, the U.S. Army Corps of Engineers, and other such agen- cies would be required by Executive Order to inform the Sec- retary of Transportation of any proposed regulation which might affect transportation directly or indirectly. 350 e ISSUES AND POLICY RESOLUTION TABLE 128. NTPSC policy implementation actions—Continued NTPSC POLICY RECOMMENDATION POSSIBLE ACTIONS REQUIRED OWNERSHIP AND OPERATIONS Federal funding and regulation should encourage continued private ownership of transportation services and facilities to the greatest extent possible. All alternative measures to Feder- al ownership should be explored before choosing greater Fed- eral involvement. When Federal assistance is necessary it should often be a user subsidy. However, most existing cases of Federal ownership should be continued. Locate Federal fa- cilities along existing common carrier routes where feasible. In the case of Amtrak, allow Amtrak management more freedom to manage effectively according to cost-effective policies. FINANCE, PRICING AND TAXATION A. Overall The Federal government needs clearly to identify its transpor- tation and non-transportation objectives to be used as criteria for providing assistance. Federal assistance should be justified by economic analysis. Any assistance should be flexible, pre- dictable, and cost-effective. User charges should reflect the cost of use and the benefits derived. The Secretary of Transportation and the ICC’s Rail Services Planning Office should initiate studies of additional methods, including further route restructuring, to make Amtrak more cost-effective. Preliminary reports should be completed by Jan- uary 1980. The Comptroller General should also obtain com- ments and rebuttals by the agencies and Amtrak, and publish its final report by April 1980, when Congress should consider reduced, but longer-term authorizations for intercity rail pas- senger service. The President should require the GSA and Federal Emergency Management Agency to publish, by June 1980, a report pre- pared in cooperation with DOT, the Department of Defense, and the U.S. Postal Service, containing: (1) A summary of all vehicles and transportation facilities owned or used by the Federal government; (2) The potential uses of those vehicles and facilities dur- ing and after each possible natural or other disaster; (3) The existing and future readiness for and impediments to such uses; (4) Alternative approaches to improving readiness and re- moving impediments; (5) Costs and benefits of each alternative; and (6) Recommendations for Executive Orders and specific legislation. The implementing legislation should be introduced after Sep- tember 1980. The Office of the Secretary of Transportation should initiate a study on the effects of UMTA and HEW policies and pro- grams on local passenger service provided by the private sec- tor, and develop and evaluate alternative executive and legis- lative actions for increasing private sector participation when cost-effective. Findings and recommendations should be sub- mitted to the President and the Congress by June 1980. The Office of Management and Budget should amend its Cir- cular A-95 in 1979 to include consideration of the private sector’s ability to meet the transportation needs of social ser- vice agencies’ clients. The Secretary of Transportation should be able to grant exemptions to this rule for flexibility. Once an area for a new Federal facility is chosen, the Gener- al Services Administration should be required immediately by Executive Order to locate Federal facilities and services on common carrier passenger and freight routes which have fre- quent enough service to give adequate access for users and employees, and to provide necessary logistics support. This rule should be relaxed only for environmental, defense, safety, or other overriding considerations, following an analysis of cost-effectiveness. Legislation should be introduced in 1979 to amend the DOT Act (Pub. L. 89-670) to add the requirement that the Secre- tary of Transportation should submit to Congress every two years reports on the performance of the U.S. transportation system, and on policies required to meet the needs of the system in a cost-effective manner. TABLE 128. NTPSC policy implementation actions—Continued NTPSC POLICY RECOMMENDATION STAGING POLICY CHANGES e 351 POSSIBLE ACTIONS REQUIRED "SSS Sass sstelseesseeeseessesenes FINANCE, PRICING AND TAXATION B. Economic Analysis and Evaluation Each Federal agency should specify objectives for congres- sional approval. Economic analysis should be required for all major Federal policies, programs and regulations. For all alter- natives, including ‘“‘do-nothing,” determine the costs, benefits, impacts on other goals and markets, and appropriate sunset requirements. C. Expenditures Federal subsidies should be conditioned on discounted bene- fits exceeding costs. Amtrak subsidies should be reduced and the air subsidy program phased out. The use of investment analysis, and the transferability of funds should be encour- aged. Subsidies should be temporary, yet predictable. ODS and CDS eligibility requirements should be more explicit. Subsidies should be provided largely for ships that fulfill a defense need, and made subject to performance standards. D. Trust Funds Retain current modal trust funds and study an urban transpor- tation trust fund. E. User Fees and Taxation User fees should recover costs. Allow user charges (tolls) on certain new or upgraded Federal-aid facilities. Eventually, Con- rail should be on a pay-as-you-go basis. Encourage states or local governments to equalize taxation of rights-of-way so as not to favor any one mode. All transportation projects should encourage user fees as a means of recovering costs. The legislation which creates the residual regulatory commis- sion and which amends the DOT Act should add the follow- ing: “Users of public transportation facilities and services should be assessed charges that reflect the costs occasioned by their use, while considering the benefits derived by non- users.”’ The legislation which amends the DOT Act should also require that all future Federal legislation which establishes transporta- tion or transportation-related policies and programs should in- clude objectives, and should be subject to proper economic analysis. Legislation in 1979 and 1980 is needed. The FY 1980 Amtrak authorization bill should cover at least 4 years and reflect decreased subsidy levels. The Secretary of Transportation should monitor and evaluate the effects of the phasing out of air subsidies under Pub. L. 95-504 in 1985-86, and recommend any actions to Congress deemed necessary to maintain service to small communities before that time. The President should require the development of performance standards for ODS and CDS, stressing national defense. The Assistant Secretary of Commerce for Maritime Affairs should submit this statement by December 1979, in cooperation with DOT, to facilitate early congressional consideration. The next Federal-Aid Highway Act (c. 1980) should amend the Internal Revenue Code of 1954 by striking out ‘1984’ in each place it appears as listed in the Highway Revenue Act of 1978 (Title V of Pub. L. 95-599), and inserting in lieu thereof “until repealed.’’ Similar action should be taken for the Airport and Airway Trust Fund (Pub. L. 91-258) in 1980. In order to initiate appropriate study and debate, the President should propose the creation of an urban transit trust fund in his State of the Union address in January 1980, and send draft legislation to Congress shortly thereafter, to be considered together with the other trust fund measures. The next Federal-Aid Highway Act (c. 1980) should repeal 23 U.S.C. Section 301 (prohibition on tolls). An organization such as the Advisory Commission on Intergo- vernmental Relations should be commissioned to undertake a study to determine the equity among modes of property taxa- tion on transportation rights-of-way, and report its findings to Congress and the President by December 1980. The Secretary of Transportation should undertake a study to determine the feasibility, consequences, and appropriateness of applying direct user fees to all forms of transportation, and report its findings by December 1980. The Advisory Commis- sion on Intergovernmental Relations, the General Accounting Office, and the Transportation Research Board should under- take independent reviews and validation of any findings and recommendations, and the combined reports and rebuttals should be published by June 1981. 352 e ISSUES AND POLICY RESOLUTION TABLE 128. NTPSC policy implementation actions—Continued NTPSC POLICY RECOMMENDATION POSSIBLE ACTIONS REQUIRED PLANNING AND INFORMATION A. Planning State and local multimodal planning should be encouraged with appropriate consideration of local conditions, the private sector, and non-transportation objectives. The Federal govern- ment should make its transportation objectives clear and the DOT should present guidelines rather than strict requirements. Recipients should be free to use any portion of Federal grants for planning. The U.S. should use multilateral mechanisms to help resolve the issue of excess ship capacity. B. Information Reporting requirements should be minimized and be directly related to program objectives. The concept of a national transportation data center should be explored. C. Research Increased Federal funding for research is recommended, where benefits may exceed costs. The private sector should be ac- tively involved. GOVERNMENT ORGANIZATION The Federal government should be reorganized so that the transportation policies and programs of each agency are coor- dinated. A single residual regulatory agency should replace the CAB, ICC, and FMC. Each House of Congress should study its committee structure. The legislation which amends the DOT Act in 1979 should require the Secretary of Transportation to implement these requirements. Constraints on planning grants should be removed in the next Federal-Aid Highway Act (c. 1980) by amending 23 U.S.C. Section 307(c) as follows: — In subsection (1), “Not to exceed 1 1/2’ should be replaced by ‘‘Any.” — Subsection (2) should be repealed and subsequent sec- tions renumbered. Legislation amending the DOT Act in 1981 should include a new section creating a National Center for Transportation Data to gather and disseminate both statistical and biblio- graphic information. The legislation creating the Center should also give the General Accounting Office the same authority it has in the energy field (under 42 U.S.C. Sections 6381 to 6384) to validate transportation data and evaluate information systems. This authority should apply to all information required by transportation and transportation-related agencies of the Federal government. Legislation should be introduced in 1981 to transform the cur- rent Census of Transportation under 13 U.S.C. Section 131 from a series of limited surveys to a census which would provide comprehensive data. DOT’s Research and Special Programs Administration should be designated in 1979 by Executive Order as the coordinator of all federally funded transportation research and develop- ment programs. The Administrator should report all conflicts and redundancies in transportation research throughout the Federal government to the Secretary of Transportation, and should annually report to Congress and the President on the current progress, prospects, and problems of that research. Legislation in 1980 should increase funds available for re- search. The Research and Special Programs Administrator should es- tablish by regulation a minimum set of evaluation questions and methods to be applied to all transportation service dem- onstration projects and experiments, to take effect in FY 1980. Improved agency coordination will be achieved in part by the legislation introduced in 1979 to amend the DOT Acct, in part by the legislation introduced in 1980 to create the residual regulatory commission from the CAB, FMC, and the ICC, and in part by the executive designation of the Office of the Sec- retary of Transportation as the lead agency for transportation matters, including safety regulation. a eee ee ee STAGING POLICY CHANGES e 353 TABLE 129. Schedule for implementation of existing and NTPSC-proposed policy recommendations Calendar Years Policies 1979 STATUS QUO 1980 Mandatory average fuel economy standard estab- lished by Congress for passenger automobiles in 1979 model year is 19.0 mpg (Pub. L. 94-163). Implementation or veto of Amtrak restructuring pro- posal (Pub. L. 95—421). White House task group on maritime policy to sub- mit recommendations to the President. Seat belt study completed by DOT and NAS (Pub. L. 95-599). NTPSC Amend DOT Act (Pub. L. 89-670) to require DOT to submit to Congress every two years reports on the performance of the U.S. transportation system, and on policies required to meet the needs of the system in a cost-effective manner. The use of user fees and of proper economic analysis should be encouraged. New planning guidelines would be initi- ated. By executive order require an executive regulatory reform plan, to be implemented by legislation in the following year (similar to section 4(aX2) of S.495 of the 96th Congress, 1st session). By ex parte proceedings the ICC should establish the policy to permit automatic entry in any effec- tively abandoned market. Also, regulatory agencies should reform rate bureau practices. Regulations that are not cost-effective should be ended. Amend OMB Circular A—95 to stress consideration of state and local regulatory impacts on federally- funded projects, and to enhance the role of the private sector. Legislation to eliminate Federal regulatory impedi- ments to common ownership and intermodal coordi- nation and cooperation should be enacted. Implement the findings of the St. Louis rail produc- tivity demonstration as widely as is cost-beneficial, and begin new demonstrations where needed. By executive order, require DOT to establish cost- effective health and safety-related transportation regulations. Phase out energy controls according to the sched- ule established by Congress and the President, while retaining fuel efficiency standards through 1986. DOT should report to Congress on its efforts to improve the use of the private sector in its pro- grams. Establish DOT’s Research and Special Programs Administration as the coordinating agency for Fed- eral transportation-related research and develop- ment. STATUS QUO Airport Trust Fund expires (Pub. L. 91—258). Fuel tax for commercial transportation on inland waterways is begun at 4¢ per gallon (Pub. L. 95— 502). Calendar Years Policies 1980 STATUS QUO Mandatory average fuel economy standard estab- lished by Congress for passenger automobiles in 1981 model year is 20.0 mpg (Pub. L. 94-163). Census of Population and Housing including jour- ney-to-work questions (13 U.S.C. Section 4 ef seq.). DOT to submit recommendations to Congress for payment of debt service in order to make toll roads incorporated in interstate system free to public travel (Pub. L. 95-599). End of taxicab exemption from certain fuel taxes (Pub. L. 95-599). Urban blight study submitted by DOT (Pub. L. 95— 599). National Alcohol Fuels Commission submits final re- port (Pub. L. 95-599). Gas guzzler tax begins ($200 on autos achieving under 12.5 mpg) (Pub. L. 95-618). Revenue Sharing Program expires (31 U.S.C. Sec- tions 1221-1263). NTPSC Amend IC Act at 49 U.S.C. Section 10101 et seg. to: Redefine common carrier obligation. Establish expanding rate zones of reasonableness to re- sult in pricing freedom by 1985. Condition the right of motor carriers to operate upon demon- stration of adequate insurance (or proof of fi- nancial responsibility equal that required by in- surance regulations}—covering public liability, property damage, cargo (for other than private Carriers), and environmental restoration—and demonstration of payment of the Federal heavy vehicle use tax. For certificated motor carriers, a minimum of $1 million of insurance, or an amount sufficient to require periodic on site in- spection, updated regularly, is needed. Reform rate bureau policies. Transfer certain fi- nancial and antitrust regulatory responsibilities to other agencies (e.g. FTC, DOJ, or SEC). En- courage the use of user fees and proper eco- nomic analysis. Enact new legislation to create a residual regulato- ry agency (to combine certain functions of the CAB, ICC, and FMC). Transfer quality-of-service provisions to FTC, DOT, or similar agencies. Congress should pass a resolution stating its desire to pursue multilateral treaties to rationalize shipping capacity, to reduce competitive subsidization, and to enact strict anti-pollution standards relying on free market incentives to the greatest extent possi- ble. Amend the DOT Act (Pub. L. 89-670) to reinforce DOT as the lead agency in transportation matters, specifically including the promulgation and enforce- ment of health and safety regulations. 354 e ISSUES AND POLICY RESOLUTION TABLE 129. Schedule for Implementation of existing and NTPSC-proposed policy recommendations —Continued Calendar Years Policies ED 1980 NTPSC Congress should consider a DOT study on cost-ef- fective ways to improve Amtrak performance (in addition to route restructuring), and should act to provide long-term financing to Amtrak that provides management flexibility with strict accountability to performance standards and to reduced subsidy lev- els. GSA and FEMA should report to Congress on fed- erally owned vehicles and facilities. Legislation should follow to improve coordination after the de- velopment of performance standards by MarAd, in cooperation with DOT. Legislation is needed to im- plement the performance measures required of ODS and CDS recipients. Enact a Federal-Aid Highway Act of 1980 to repeal the prohibition on tolls (at 23 U.S.C. Section 301) and to remove constraints of planning grants (at 23 U.S.C. Section 307(c)) and amend the Internal Rev- enue Act of 1954 to permanently authorize the Highway Trust Fund. Similar legislation should be enacted for the Airport and Airways Trust Fund. The creation of an urban transportation trust fund should be considered by Congress at this time. Report by an agency such as the Advisory Com- mission on Intergovernmental Relations on the equi- ty of state and local property taxation among modes is due. DOT studies on the equity and efficiency of user fees for all modes, using the findings of ongoing studies such as that for the inland waterway mode, would be completed by the end of the year. Public comments would follow for a year after which leg- islation would be expected. 1981 STATUS QUO Original Conrail funding expires (Pub. L. 94—210). DOT to submit to Congress a study on vehicle size and weight limits (Pub. L. 95-599). Northeast Corridor Project to be completed (Pub. L. 94-210). Fuel tax for commercial transportation on inland waterways is 6¢ per gallon (Pub. L. 95-502). Mandatory average fuel economy standard estab- lished by DOT for passenger automobiles in 1981 model year is 22 mpg (Pub. L. 94—163). Completion of restricted access demonstration project by DOT (Pub. L. 95-599). DOT/DOC inland waterways user charges study completed (Pub. L. 95-502). Maximum light-duty vehicle emissions for 1981 and beyond—.41 grams/mile hydrocarbons, 3.4 grams/mile carbon monoxide, and 1.0 grams/mile nitrogen oxides (Pub. L. 95—95). NTPSC Apply results of truck size and weight study to the issue of whether or not uniform state standards are needed (Pub. L. 95-599, Section 161). Calendar Years Policies 1981 NTPSC Amend the DOT Act (Pub. L. 89-670) to create a new National Center for Transportation Data under the auspices of DOT. Also, legislation should revise Census Bureau procedures to encourage compre- hensive data collection (13 U.S.C. Section 131). 1982 STATUS QUO Supplemental $1.2 billion Conrail authorization ex- pires (Pub. L. 95-565). Authority of the CAB over interstate and overseas route certification terminates. Authority for overseas routes transferred to DOT (Pub. L. 95-504). Passive restraints required in automobiles but use of Federal funds to implement the rule is banned (Pub. L. 95-355). Mandatory average fuel economy standard estab- lished by DOT for passenger automobiles in 1982 model year is 24 mpg (Pub. L. 94-163). Census of Transportation (13 U.S.C. Section 131). Ambient air quality standards must be met by most regions. Five year extensions granted only to re- gions which have established effective planning processes (42 U.S.C. Section 1857 et seq.). Truck noise standard of 80 dB(A) at low-speed, wide-open throttle for vehicles built after January 1 (40 C.F.R. 202). Final reports due from DOT on highway cost allo- cation and highway trust fund excise tax structures (Pub. L. 95-599). 1983 STATUS QUO Highway and urban transit authorizations expire (Pub. L. 95-599). (NTPSC recommends permanent highway authorization in 1980 and continuing transit authorizations.) Fuel tax for commercial transportation on inland waterways becomes 8¢ per gallon (Pub. L. 95— 502). CAB authority over passenger air carrier rates ter- minates (Pub. L. 95-502). Mandatory average fuel economy standard estab- lished by DOT for passenger automobiles in 1983 model year is 26 mpg (Pub. L. 94-163). Final year to make changes in planned Interstate Highway segments (Pub. L. 95-599). Aircraft Loan Guarantee Program expires (Pub. L. 95-504). States in which more than 30% of the drivers ex- ceed the 55 mph speed limit lose up to 10% of allocated Federal highway funds (23 U.S.C. Section 154). Strict construction, crew training, and naviga- tion/communication aids standards, including segre- gated ballast and gas inerting systems, must be met by all tankers of 20,000 tons or more in U.S. waters (Pub. L. 95-474). 1984 STATUS QUO Highway Trust Fund expires (Pub. L. 95-599). (NTPSC recommends permanent authorization in 1980.) STAGING POLICY CHANGES e 355 TABLE 129. Schedule for implementation of existing and NTPSC-proposed policy recommendations —Continued Calendar Years Policies SL 1984 STATUS QUO Mandatory average fuel economy standard estab- lished by DOT for passenger automobiles in 1984 model year is 27 mpg (Pub. L. 95—1 63). STATUS QUO Price controls on new natural gas lifted (Pub. L. 95-621). CAB expires (Pub. L. 95—504). Fuel tax for commercial transportation on inland waterways becomes 10¢ per gallon (Pub. L. 95— 502). Mandatory average fuel economy standard estab- lished by Congress for 1985 model year is 27.5 mpg (Pub. L. 94—163). Original goal of Federal Water Pollution Control Act is to eliminate discharge of pollutants into naviga- ble waters (Pub. L. 92-500). All subsonic jet airplanes with maximum gross take- off weights in excess of 75,000 pounds which do not meet Federal Aviation Regulation 36 noise Standards must be retired from the fleet (F.A.R. 36). 1985 NTPSC Regulatory reforms established by earlier legislation have taken effect. 1986 STATUS QUO All routes and projects not under contract on the Interstate Highway System are dropped from the system (Pub. L. 95-599). Calendar Years Policies a EVRA ING 1 See 1 NA 1986 STATUS QUO New cars having fuel economy of less than 12.5 mpg are taxed at a rate of $3,850 per vehicle (Pub. L. 95-618). All air subsidies for mail service ended (Pub. L. 95-504). STATUS QUO Census of Transportation (13 U.S.C. Section 131). Ambient air quality standards must be met by all regions (42 U.S.C. Section 1857 et seq.). STATUS QUO Essential Service Small Community Air Subsidy ends (Pub. L. 95-504). 1987 1988 1989 1990 STATUS QUO Completion of the Interstate system (Pub. L. 95— 599). Census of Population and Housing, including jour- ney-to-work questions (13 U.S.C. Section 4 et seq.). STATUS QUO Census of Population and Housing, including jour- ney-to-work questions (13 U.S.C. Section 4 et seq.). Panama Canal turned over to the Panamanian Gov- ernment (Congress must act). 2000 —— eee accomplish a smooth transition. For example, transit programs would be reauthorized by Congress, with the modifications proposed by the NTPSC, as the existing authorizations expire. On the other hand, many of the NTPSC proposals do involve major new policy directions. Often, these should be implemented immediately as an integrated set (not piecemeal), so as to establish the proper atmosphere for the detailed policy changes that would be made in the future. For example, actions to deregulate transportation might not yield beneficial results unless the policy of establishing proper user fees is also adopted. That is, immediate commitment in principle to the implementation of the NTPSC policy recommendations is highly desirable, even though formal actions on some of the individual policies can only be accomplished gradually. Although desirable, expecting such immediate and total commitment to the NTPSC policy proposals is unrealistic. This is because the process of gradual implementation of the recommendations will itself serve to create constituencies that will support further changes. Another reason to support gradual implementation of the NTPSC recommendations is that the NTPSC forecasts are not infallible. Expectations of future trends may turn out to be unrealistic. Thus, certain of the NTPSC policy proposals may require modifica- tion based on future events. A carefully staged process of implementation can permit such adjust- ments to occur as they are needed. To summarize, Tables 128 and 129 illustrate only one of several possible sequences of implementation of the NTPSC policy recommendations. Other se- quences might be almost as productive. Despite listing individual policy recommendations together with individual methods of implementation, the NTPSC emphasis is on implementing its entire set of recommendations in a carefully staged manner. Basically, the tables show that two major sets of legislation are required. One, to be enacted as soon as possible (1979), would amend the DOT Act (Pub. L. 89-670) to establish clearly that agency as the lead transportation promotional agency within the Federal government. The second, to be enacted in 1980, would amend the Interstate Commerce Act (49 356 e ISSUES AND POLICY RESOLUTION U.S.C. Section 10101 (1978)) to establish revisions to the national transportation policy, and would amend and enact other provisions to implement the NTPSC regulatory policy recommendations. Addi- tional legislation, executive orders, and agency ac- tions of lesser importance are also specified in the tables. REVIEW OF THE IMPLEMENTATION OF POLICY RECOMMENDATIONS MADE BY OTHER STUDY COMMISSIONS EARLY STUDIES To help produce the implementation sequence shown above, the NTPSC reviewed the factors contributing to the successful implementation of policy recommendations made by earlier study groups, including commissions. The NTPSC found no single guide to success. In fact, because the pur- poses of study commission reports on transportation policy vary greatly, the extent to which the purposes are achieved (i.e., successes) will have different implications for different study groups. Some earlier study reports were meant to be interpretive, the principal purpose being to explain particular issues, policies or programs.° In these cases, ultimate suc- cess depended on the clarity and insightfulness of the presentation, and the receptivity of the audience. Other reports were designed to go beyond inter- pretation, to offer an evaluation of issues, policies or programs, together with recommendations for im- provement.'° Defining and measuring success in these cases is more complex as such reports not only serve to interpret important issues, but also propose remedies that must in turn be implemented. The scope of the study commission reports also varies greatly. In most cases previous studies consid- ered only one mode, one market, one issue, or one time period, in contrast to NTPSC’s simultaneous emphasis on all modes, all markets, a wide range of key issues, and future developments through the year 2000.7 A study with a narrow scope can, nonetheless, both achieve its purpose (be success- ful) and perhaps more important, contribute to the effective resolution of the problems being studied (be Significant).'? The NTPSC identified several previous studies that were significant for the following rea- sons: 1. Recommendations were generally implemented— Cullom Report,’ Interregional Highways Report,"4 and Doyle Report;'5 2. Innovative topics or methods contributed to future Studies and policies—Sharfman Report,’® and Windom Report.1” For example, the Sharfman study of the Interstate Commerce Commission (published from 1931 to 1936) is well known because it was the first in-depth examination of a Federal transportation agency. The Windom Report is significant for its innovative topic, being the first major congressional study of transpor- tation companies, and for the role it ascribed to reliance on competition for the attainment of low freight rates. Of all of the criteria for measuring significance reviewed by the NTPSC, the acid test for a policy study, such as that of the NTPSC, is the degree to which the recommendations are implemented. A classic example is the Cullom Report of 1886, which recommended the regulation of railroads one year before the Interstate Commerce Commission was established by Congress to do just that. The U.S. National Interregional Highway Committee (1944) was similarly significant, although its proposed inter- state expressway system was not implemented by Congress for 12 years. In most cases, implemented recommendations have been proposed prior to the significant study. For example, one of the Doyle Report’s recommendations was to create a central- ized promotional agency (the DOT). The Doyle Report documented over two dozen previous recom- mendations since 1874 to create such an agency.’® DOT was created five years and at least two presidential policy recommendations later,'? although it still does not contain all of the important transpor- tation agencies (e.g., MarAd). Other recommenda- tions of the Doyle Report, such as consolidating all congressional committees on transportation, have yet to be implemented. Many of the transportation problems of 1961 documented in the Doyle Report have become crises and have been treated, at least temporarily, by policies and programs, some of which were suggested in the Doyle Report itself. These earlier problems have been supplanted by uncertain- ties about energy and the environment, which may become tomorrow’s crises. For the NTPSC’s report to be significant, its recommendations must be implemented and must treat emerging issues as well as those that are crises today and that remain unsolved from the past. RECENT STUDIES In addition to a review of the earlier studies dis- cussed above, the NTPSC considered the lessons of more recent study groups. In 1975 the General Accounting Office published an evaluation of why the recommendations of study commissions often have not been implemented.” Case studies of several commissions were made. In some instances, the mandate of a commission was structured to require an executive-level evaluation of the recommenda- tions. For example, the legislation creating both the Commission on Federal Paperwork (Pub. L. 93-556) and the National Water Commission (Pub. L. 90-515) required submission of executive-branch views and legislative recommendations to the Congress after the final commission reports were transmitted. Such a requirement does not always lead to successful implementation of recommendations. The GAO re- ports that, despite the legislative requirement, in the case of the National Water Commission no views or legislative recommendations were submitted by the executive branch. (For the Commission. on Federal Paperwork, the provisions of the enabling legislation are cited by GAO, but GAO’s report was completed before the Paperwork Commission was due to submit its recommendations. )*' Fog the National Water Commission, specific im- plementation requirements in the enabling legislation proved no panacea. On the other hand, sometimes a study commission’s report will have detailed execu- tive and congressional scrutiny, even though its statutory authorization had no such specific require- ments. The GAO gives the example of the Commis- sion on Government Procurement (Pub. L. 91-129), for whose recommendations a detailed and effective implementation process evolved.** The lead agency in this process was the Office of Management and Budget (OMB), which established a two-phased program. First, individual agencies were assigned specific recommendations or groups of recommen- dations under the overall coordination of the General Services Administration. The agencies were to devel- op specific policies for each recommendation and to devise actions to implement the policies, including draft legislation where Congress had not already acted. This phase ultimately involved 14 lead agen- cies and 74 task groups. The second phase involved the GAO itself, which was given a special monitoring role by Congress after the report was submitted. GAO issued periodic reports to Congress on execu- tive-level progress toward implementing the recom- mendations. In the case of this commission report, oversight committees were especially active in each House of Congress.?° In describing this example of successful imple- mentation of a study commission’s recommenda- tions, the GAO notes that the effectiveness of the followup system may be attributable to the fact that neither OMB, GSA, or the other executive agencies, nor GAO as an arm of Congress, nor the congres- sional oversight committees, had a vested interest in maintaining the status quo. Here, they were able to work together.*4 In contrast to the special provisions for implemen- tation discussed above, the Federal Advisory Com- mittee Act of October 6, 1972 (Pub. L. 92-463) provides a general mechanism for detailed executive involvement in the review and implementation of presidential study commission reports, even where the enabling legislation does not. Section 6(b) of the Act requires that within one year after a public report STAGING POLICY CHANGES e 357 is submitted to the President, he or his delegate must report to Congress, stating either proposals for action or reasons for inaction on the recommenda- tions contained in the report. The OMB, pursuant to Executive Order 11769 of February 21, 1974, admin- isters the Act. These provisions apply to the NTPSC report. However, the provisions of the Act and the Executive Order do not guarantee that a meaningful executive review will occur. The GAO describes the case of the National Commission on Materials Policy (Pub. L. 91-512) that issued its final report to the President and Congress in June 1973.2 As required by the Federal Advisory Committee Act, the OMB designat- ed a department as the lead agency to develop an executive branch response. The response was sub- mitted to the OMB in November 1974, and cleared and forwarded to both Houses of Congress on April 21, 1975. For each policy recommendation of that Commission, an indication of executive branch posi- tions of ‘‘concurrence,”’ ‘‘concurrence in principle,” “disapproval,” or ‘‘seek more information’’ was given, together with descriptions of actions under- way or planned to implement the recommendations. In this case, however, the executive response was reported by the GAO as too general to be useful in insuring implementation. For example, such terms as “efforts are underway’”’ cannot convey much of use to congressional committees interested in charting the progress of the executive branch.26 GAO also faults the study itself, however, stating that it would have been more useful if it had contained more specific recommended actions to deal with particular problems.?” BUILDING CONSTITUENCIES FOR CHANGE Despite the importance of objective data and reason- ing in determining workable policies, great attention must be paid in implementing most policies to political considerations. As the Wall Street Journal put it in an editorial about policies involving the Census Bureau, ‘‘Every piece of information affects someone's political agenda, and every intellectual ambiguity becomes a political contest.’’28 EXAMPLES OF IMPLEMENTATION COMPROMISE TECHNIQUES General Principles As the NTPSC discovered during its own delibera- tions, in general it is easier to generate widespread support for broad principles than for: more precise policy expressions. The concept of intermodalism is a Case in point. The idea that each mode should be used to its greatest advantage in combination with other modes is one with wide support. Yet, certain of 358 e ISSUES AND POLICY RESOLUTION the NTPSC policy recommendations designed to improve the efficiency of all modes in general, and the joint use of transport facilities and services in particular, are certainly controversial. For example, the NTPSC considered whether the Maritime Admin- istration should be shifted to the DOT so as to foster within DOT a truly all-mode outlook. Such a move by itself, without substantive changes in policies or programs, may be merely symbolic. Yet, opposition to the symbolism and the threat of subsequent policy revisions has generated heated opposition to this specific transfer when proposed by previous study groups,?2 even though there is support for the general concept of a DOT with an all-mode focus. The NTPSC did not recommend such a transfer. Holding Harmless Congress has, in previous actions implementing important new transport policies and programs, used several compromise techniques to build support. To allay fears for the short run that a particular interest group will lose under a new policy or program, Congress has often acted to ‘‘hold harm- less’’ particular groups. For example, when Congress acted in 1978 to support transit operating deficits in the largest cities, it did not alter its previous alloca- tion formula to favor the largest cities at the expense of smaller ones. Rather, it created several new ‘tiers’ for the program, each with its own formula, while retaining the previous formulas as well.°° So long as increased appropriations are available to support the hold harmless provisions, the retention of a group’s absolute amount often outweighs its concern with a deteriorating relative share. The device of holding harmless all groups is a frequent concomitant of congressional actions. In fact, rarely does any group suffer a reduced absolute amount of aid in nominal terms—as opposed to the reduction in real terms that occurs as price increases erode the purchasing power of an appropriation of a given nomimal amount. Broadening Eligibility Closely related to the hold harmless concept is the broadening of categories of aid to include more and more recipients. Congress acted in 1974 to provide transit operating assistance for urbanized areas (basically cities of 50,000 or above).3' In 1978, it made smaller cities and even rural areas eligible for such assistance.°? Unfortunately, the NTPSC’s recommendations cannot all be facilitated by keeping everyone at least as well off in absolute terms while improving the relative lot of other groups. This is true for a number of reasons. First, it is clear that the willingness, if not the ability, of U.S. taxpayers to absorb continued demands on their resources to support Federal spending programs is declining. Second, U.S. citi- zens are increasingly objecting to Federal intrusion in their affairs.*° Finally, many NTPSC recommenda- tions point to ending unfair advantages enjoyed by certain groups. With scarce resources, fairness is not enhanced by spreading such advantages to other groups. Rather, for efficiency reasons as well as for equity, NTPSC policies often require removing the unfair advantages of certain groups, so that the general taxpayer can gain. For the sake of smooth implementation of policies it is unfortunate that resources are so limited. Interest groups that now enjoy Federal largesse have much at stake. It is worthwhile for them to fight hard to retain the advantages. On the other hand, taxpayers may often be uninformed about the real extent of the costs they must bear to support favored groups. Or, citizens may doubt that they would share in the gains that would result from a policy change. Thus, the combination of concentrated benefits from the status quo with dispersed and uncertain benefits from change yields powerful inertia favoring the continua- tion of current policies. Temporary Measures and Demonstrations Another compromise measure employed by Congress is that of proposing that a program or policy be temporary, or be part of a demonstration. Congress chose to permit taxi operators to file for refunds of the 4 cents per gallon Federal fuel tax for a 2-year period (FY 1979 and 1980). Before the end of that time, the taxi industry and the Treasury Department must report to the tax-writing congres- sional committees on the consequences. Congress has established both a rail-highway grade crossing program for segments both on and off the Federal- aid highway system, authorizing $190 million annually for 4 years at a matching ratio of 90 percent, anda rail-highway grade crossing demonstration program, for which $350 million is authorized to be available over a 4-year period at a matching ratio of 95 percent.** Special Studies Congress may also act to authorize funds but at the same time require a formal study of the effectiveness of the use of these funds. For example, Congress acted in 1978 to authorize $600 million for Amtrak operating expenses and $130 million for capital outlays for FY 1979, but also required that DOT study Amtrak route restructuring.°° Two other de- vices to secure implementation are evident in the Amtrak Improvement Act of 1978. First, the route restructuring proposed by DOT will automatically go into effect unless either the House or the Senate acts within 90 working days to reject any change. As Amtrak routing is a politically sensitive issue, this form of congressional ratification places the burden on those who favor the present, more extensive route structure to act to retain it. Second, the proposed route changes cannot be implemented until October 1, 1979, but must be accomplished within six months thereafter. Thus, a grace period is provided between the deadline for congressional action and the actual implementation of the new routing policies, presum- ably to provide Congress, Amtrak management, and the affected communities time to adjust to the proposed change. Nonetheless, Amtrak is not to be permitted to delay implementation of the restructur- ing for too long after this short grace period. Phasing In Waterway user fees provide another example of a congressional compromise. Congress acted in 1978 to impose a fuel tax on vessels using the inland waterways, with the proceeds to be accounted for in a trust fund.°’ The taxes will begin at 4 cents per gallon in 1980 and rise to 10 cents per gallon by 1985, at which time revenues are expected by the NTPSC to generate less than 20 percent of the navigation-related capital and operating costs. Pro- ponents of proper user fees likely regard the new act as a first step toward eventually recovering 100 percent of waterway navigation costs from users through segment tolls, once the principle of user payment is firmly established.*® On the other hand, waterway interests may prefer a fuel tax to a segment charge. Too, the act that began the fuel tax also authorized $430 million for the construction of controversial Locks and Dam 26 at Alton, Illinois. Therefore, there was much in this act to please contestants on both sides of the waterways issue. The NTPSC supports this gradual implementation of waterway user fees. Categorical Flexibility Congress may enact a categorical program, but provide discretionary powers to state or local gov- ernments to shift funds among categories. Thus, for example, within various categories of Federal-aid highway programs Congress permits a recipient to shift up to 50 percent of the allocation from one category to another.°9 Intergovernmental Relations Congress may provide aid directly to constituent groups in cases where these groups have not had great success with their own state legislatures. Nonetheless, Congress remains aware of state inter- STAGING POLICY CHANGES ¢ 359 ests. Therefore, Congress may enact the type of program that is evidenced by the 1974 amendments to the Urban Mass Transportation Act.*° For a program of operating assistance for transit begun in 1974, cities of 200,000 population or above received their formula grants directly from the Federal govern- ment while for cities between 50,000 and 200,000 population, grants went to governors for allocation within each state. In 1978, Congress provided funds for small cities and rural areas of less than 50,000 population, again allocating such aid to the states for subsequent distribution.*’ Thus, cities were aided, but state governors retained some involvement. Substitution of Projects Controversy has existed about whether trust funds such as that for highways should be ‘‘busted’’ to provide funds benefitting other modes. In response to pressures to provide more flexibility in the use of previously earmarked highway funds, Congress did provide that some funds for Interstate Highway segments could be diverted to certain transit uses. However, when such a transfer occurs, the highway funds revert to the Highway Trust Fund and an equivalent grant for transit purposes is provided from general revenues.*? Thus in this case, the Highway Trust Fund technically retains revenues earmarked for highway purposes while state and local govern- ments are permitted the flexibility to alter spending among modes.*? Packaging In some cases, legislative packages are proposed that contain widely supported measures together with more controversial actions. An example is the treatment of air passenger deregulation in 1978 (Pub. L. 95-504). Here, Congress created a sched- ule for phasing out CAB regulation of entry, rates, and mergers, for ending CAB local service and mail subsidies, and for ending the CAB itself. Included in the package, however, were such sweeteners as labor protection and a new 10-year subsidy program for maintaining essential air service to certain com- munities faced with total loss of air service. Although the exact details of such legislative packages must be determined by individuals who have up-to-the-minute knowledge of the political forces at work in Congress, the NTPSC policy recommendations do lend themselves easily to such packaging. This is because the NTPSC impact analysis has sought to identify groups and regions that will gain and lose from each proposal, so that negotiations for compensation and trade-offs may proceed more smoothly than if such information were not available. 360 e ISSUES AND POLICY RESOLUTION Quid Pro Quo Another way of describing the process of packaging legislation is to consider the exacting of a quid pro quo for a desired change. The NTPSC has proposed that increased levels of enforcement of stronger safety regulations should be applied to all certificat- ed carriers, and, in the case of for-hire motor carriers, that the right to operate be conditioned upon demonstration of adequate insurance coverage and payment of the Federal heavy-vehicle use tax. It is expected that the costs to certain carriers of complying will be balanced against the gains to those carriers of increased freedom to compete in markets subject to less Federal economic regulation, which is also proposed by the NTPSC, thereby providing a quid pro quo. Another example of the possible application of this compromise device involves the collection and dis- semination of information about transportation oper- ations of private carriers. Deregulatory proposals are designed to remove complex Federal requirements from the day-to-day affairs of transport carriers, thus providing more freedom to compete without burden- some red tape. Nonetheless, part of the burden of existing regulation is the requirement to supply information about certain aspects of the business. This information is of great importance to transporta- tion planners. For example, the ICC now directs the railroad industry to conduct a one percent freight waybill sample for the Federal Railroad Administra- tion. This sample is very useful to government and private researchers concerned with modeling freight movements. Such data are not available for the trucking industry. A possible quid pro quo for regulatory reform of the railroad and trucking indus- try might be the retention of certain data-filing requirements for railroads and the imposition of such requirements for the trucking industry. When Congress acted to reform the air cargo and passen- ger industries, continued filing of certain economic Statistics was not required (a matter which may need to be addressed in subsequent legislation). At a future date, it may be more difficult to convince air carriers that data-submission is in their best inter- ests, as the implementing legislation may not offer direct benefits to carriers as large as those that were offered in the preceding deregulatory statutes. COOPERATION WITHIN AND BETWEEN BRANCHES OF GOVERNMENT IS NEEDED TO FACILITATE IMPLEMENTATION Congress The Surface Transportation Act of 1978 (Pub. L. 95— 599) seems to reflect an interim step in congressional movement toward a multimodal approach to imple- menting transportation programs. The Act had sever- al sections, including one for highway programs, one for urban transit, and one for highway safety. In the House, only two committees were involved, with one set of conferees appointed to meet with the Senate. On the Senate side, four committees and five sets of conferees were involved.** This involvement of many separate congressional committees illustrates the complex nature of the compromises that must be engineered to secure passage of major transporta- tion legislation. The examples above are meant to show that in previous actions Congress has been able to reach effective compromises. Compromise often means going slowly, one step at a time toward a new target or toward targets that themselves change gradually over time. There can be real costs to delay, however, so that compromises need not be “free.” Alfred Kahn has described how his mind was changed (while serving as CAB chairman) to favor immediate, complete action to achieve deregulation of the air mode, as being more efficient as well as fairer than gradualism.*5 Congress, in deregulating domestic air cargo in 1977, provided that existing, certificated, all-cargo carriers Or passenger carriers operating all-cargo flights should first enjoy unlimited entry.4® Approxi- mately one year later all carriers were free to enter (November 1978). Carriers serving domestic markets at the time of the legislation therefore enjoyed an advantage over potential competitors who were denied automatic entry for a year. Although protec- tion of existing market participants is often set by Congress,*’ the granting of such protection is not costless and the timing of reform is not a matter of indifference to market participants. The Senate Committee on Governmental Affairs has concluded a two-year study of Federal regula- tion, pursuant to Senate Resolution 71 of the 95th Congress. In the letter of transmittal of the sixth and final volume of the study, Senator Abraham Ribicoff, Chairman of the Committee, expressed the hope that the report would make a significant contribution to the understanding of the problems of Federal regula- tion, and that it would provide a basis for congres- sional action in the 96th Congress.*8 Senator Ribicoff and Senator Percy jointly intro- duced legislation early in the 96th Congress to implement some of the Committee’s recom- mendations.*? For example, economic impact state- ments are not now required of independent regulato- ry commissions, although these agencies may choose to comply voluntarily.5°° The Ribicoff-Percy legislation would implement a more stringent and clearly defined process to consider benefits and costs of existing and proposed Federal regulations. These proposals provide a good example of the precise language that might be necessary to imple- ment the NTPSC policy proposals that call for such economic analyses. Also, this is an example of committed members of a study group seeking to implement the findings of that group. However, several other bills were submitted early in the 96th Congress that seek to accomplish quite similar goals using related, but not identical, implementation measures. For example, Senator Bentsen submitted a series of bills to improve regulatory procedures and to reduce duplicative and conflicting Federal rules and regulations.*' A key to successful implementation of the recommendations of a study group then, is to have its advocates combine forces to work for passage of reform measures, even though passage may sometimes require joint referral to congressional committees and the needed cooperation might mute the public’s association of an important new policy with the name of a particular legislator. During late 1977 and early 1978, Senator Edward Kennedy’s Antitrust and Monopoly Subcommittee conducted hearings throughout the U.S. concerning freight-rate competition in the motor carrier industry. In January 1979, Senator Kennedy announced a bill to repeal the antitrust exemption granted to motor carrier and freight forwarder rate bureaus available since 1948 under terms of the Reed-Bulwinkle Act.° Senator Cannon, as Chairman of the Senate Commit- tee on Commerce, Science, and Transportation argued that such a bill should be referred to his committee for action, as it deals with surface trans- port matters, while Senator Kennedy, stressing the antitrust aspects of the bill, argued for joint referral to include his Judiciary Committee. In March 1979 Senator Kennedy did agree with Senator Cannon that referral should be made to the Commerce Committee, and that hearings would begin on the bill. The Judiciary Committee would then have a period of time after the Commerce Committee had acted to consider these actions (but not to amend the bill). A similar agreement was reached between Senator Ribicoff and Senator Kennedy regarding the consid- eration of President Carter’s proposals to reform regulatory procedures. The point is that, even though the Judiciary Committee may not play a direct role in the imple- mentation of its findings, the information compiled during the hearing process is available to develop informed opinion that may eventually effect change. For example, during the Kennedy hearings it became evident that little was known about the details of the motor carrier rate-determination process, and about the impacts of this process on particular shippers, communities, and carriers. As a result, Committee staff contracted with certain rate bureaus to obtain access to data that would permit such analyses. The results may be available during 1979. Also, the ICC has sought access to these data, and may begin to work with them in the near future to assist in the ICC’s study of reforming its own motor carrier STAGING POLICY CHANGES e 361 regulatory procedures. Again, although the exact recommendations of the Subcommittee might not be immediately implemented in the sense of being formally enacted into law by Congress, the questions asked and the partial answers given have stimulated further research that may serve to forge a stronger impetus for change. Some of the NTPSC recommendations are likely to be promptly introduced as formal legislation. Other recommendations should stimulate congressional committees to hold further hearings, and independ- ent researchers to perform further analyses. Informal processes are also necessary to accomplish needed change, although perhaps less certain and more time consuming than more direct policy channels. Executive and Independent Regulatory Agencies Administrative action alone has been enough to implement some policy reforms. The CAB, beginning with former Chairman Robson, and continuing under Chairman Kahn and Chairman Cohen, has acted quickly and extensively to ease air cargo, forwarder and passenger regulations. Congress has ratified many of these changes through legislation. At the ICC, Chairman O’Neal has begun to propose wide- spread reforms, and Commission decisions have been forthcoming that serve to ease regulations substantially.°° Certain key members of Congress have ex- changed letters with Chairman O’Neal, cautioning him not to usurp the responsibilities of Congress.% Also, opponents of the ICC reforms have sought judicial remedies.*’ Therefore, although agencies themselves can often do much on their own to alter previous agency practices, the likelihood is relatively small that such actions can, in the future, treat such major policy reforms as trucking deregulation without supportive congressional action. Even legislation does not guarantee that reforms can be quickly accomplished. For example, the 1976 4R Act provid- ed that the ICC should permit seasonal and peak charges by railroads.°° ICC rules were established to implement the policy, yet the first such rail rate approved was challenged by shippers in Federal court and has not yet been implemented.°? Similarly, railroad interests allege that the ICC effectively prevented the implementation of much of the rail pricing flexibility enacted by Congress, by defining market dominance too. restrictively.© Congress, also in the 4R Act, provided that the ICC would be powerless to suspend a rail rate as being unjust or unreasonably high unless market domi- nance was found. The definition of market domi- nance was left to the ICC. The ICC has responded that its definition of market dominance is adequate, and that rail rate flexibility has not been used 362 e ISSUES AND POLICY RESOLUTION because of railroad reluctance to alter experimental- ly general rate levels, and for other reasons.®' The ICC market dominance rules were upheld in U.S. Court of Appeals for the District of Columbia in 1978. Also in 1978, Congress renewed a program of rail assistance which retained the concept of market dominance.® This example is meant to highlight the interplay between Congress, the executive branch, the inde- pendent regulatory agencies, the judicial system, and the private sector, in implementing a policy. At any given time, all of these and more may be involved in enacting, interpreting, adjudicating, revising, and responding, all of which are part of the implementa- tion process. State and Local Governments In some cases objective policy solutions based on hard evidence are not forthcoming. An example of an issue for which a technically ‘‘correct”’ policy has not emerged due to lack of data is the issue of what maximum size and weight motor vehicles should be permitted on Federal-aid highways.™ Current policy sets maximum weight limits on the Interstate Highway System, but permits the states to choose lower limits, or to retain higher limits if they existed before 1956. Similar Federal weight restrictions are not imposed on other Federal-aid highways (only on the Inter- state). The result is a great variety of limits which seems to please no one entirely, imposed by the states on their own highways and on various compo- nents of the Federal-aid highway system. Some truckers argue that “barrier states’ impose econom- ic losses by choosing relatively low limits, while some drivers complain of adverse safety consequences of relatively high limits. Congress and the executive branch have responded with a series of studies, none proving to be conclusive.® Despite lacking data to provide a policy recom- mendation on this particular issue affecting state governments, in this report and several of its Special Reports, the NTPSC is deeply concerned with the transportation policies and programs of state and local governments, and their interactions with those of the Federal government.® This concern is espe- cially warranted when discussing the implementation of the NTPSC policy recommendations. The lack of a clear Federal policy may permit interest groups to work through state and local policy channels to obtain what is not forthcoming at the Federal level. In the case of state size and weight limits for highway vehicles, it is alleged (but not proved) that, as an implementation device, those who favor higher limits have been able to ‘‘whipsaw” state legislatures.*? The process works as follows: Supporters of eased restrictions work to accomplish an increase in one dimension (e.g., length, width, height, axle weight, gross weight, multiple combina- tions) in one state. Neighboring states are then urged to increase their limits to match those of contiguous states to avoid becoming a “‘barrier’’ to trade. Similarly, within a state, having increased one limit, legislators are urged to raise the limits imposed on other dimensions to take full advantage of the economies available (e.g., there will be some truck- ers who will ‘‘cube-out’’—fill the available volume— before exceeding weight limits, thereby arguing for more lenient size limits; while other truckers will exceed weight limits before using the available space, so that increased weight limits would be to their advantage). Given the allegation that interest groups may sometimes win at the state and local level what they could not accomplish at the Federal level, it seems even more important to ascertain, through experi- mental research, the data required to determine and implement a consistent Federal policy on truck sizes and weights. In addition to cases in which states might adopt policies that would not be forthcoming at the Federal level, in some cases state regulatory bodies might act to undo at the state level what Federal policy sought to accomplish for interstate transportation. An example is the action of the California state air regulatory body (California Public Utility Commis- sion) which has sometimes required fares for flights totally within California to remain below those fares for the California portion of interstate flights that are subject to CAB jurisdiction.® Previously, the ability of intrastate carriers such as Pacific Southwest Airlines to earn profits while charging fares lower than interstate carriers operating route segments in Cali- fornia has been regarded as an argument for deregu- lation of interstate fares.° When Congress deregulat- ed interstate air passenger service in 1978, it also acted to preempt state regulatory powers over much of intrastate air travel. California and the CAB have been disputing this preemption policy. The CAB issued a formal policy statement specifying its new broad powers over intrastate air travel on February 7, 1979. Also on February 7, 1979, the CAB an- nounced a policy to permit intrastate fares to rise gradually over the next two years to the generally higher interstate level. The California PUC an- nounced that it will refuse to sanction the proposed increase. Earlier, in January 1979, the CAB sought Federal court action in San Francisco to force the California PUC to stop trying to hold down air fares in the state. The CAB joined eight airlines in this action. The Court ruled in March 1979 against the California PUC, and in a related action, in June 1979 the same judge struck down the entire set of California laws regulating airline rates, routes, and services as being unconstitutional.”° | The ability of a state to frustrate the intent of Congress was addressed in an option paper on surface regulatory reform presented to President Carter in December 1978.”' The proposals suggest that Congress should pass such a preemption clause as part of any rail regulatory reform measure. Presently, the ability of the ICC to intervene in state regulatory affairs is limited. The ICC may overrule state regulation in the case of discriminatory rail rates, for example, and it has authority to rule on any rail abandonment, even if the segment lies totally within one state.’”* The ICC does not possess these powers for motor carriers. Many cities and states strictly regulate urban bus and taxi service, an area that is exempted from Federal regulations. UMTA’s regulations that govern the use of Federal funds for those modes must recognize that the regulatory environments vary greatly, and such local regulations are not subject to Federal preemption. Sometimes states and cities seek Federal financial aid for transportation but object to the maze of regulations that can accompany such aid. Pressures to balance the Federal budget may suggest cut- backs in programs aiding states and local govern- ments, and it may be the more flexible programs that suffer the first restrictions.”* Some states threaten to voluntarily refuse certain Federal funds to escape paperwork requirements.” These examples show that the implementation of NTPSC recommendations must involve state and local governments, as well as the private sector. CONTINUING OVERSIGHT The continuing commitment of one or more legisla- tors can be essential to the success of a new policy or program. The needs to monitor progress, correct initial problems through technical amendments, ap- point sympathetic administrators, protect the pro- gram from encroachment by other interests, and refocus the program when events alter conditions, are collectively referred to as ‘‘fixing the game” or sometimes as ‘‘serving as a referee.’ The need to kill policies or programs that have outlived their usefulness is also apparent, but rarely accomplished, as policy euthanasia has its political costs, given the particular interests that come to rely on preservation of the status quo.”® Important new programs are enacted because they generate coalitions of support. Once enacted, the coalitions may dissolve and the program may not achieve its intended objectives. There are several reasons: first, different parties may have different goals for the same program. When a program is being developed, each party may support it for different reasons. Upon enactment these differences STAGING POLICY CHANGES e 363 surface. An example of such a misunderstanding that occurred after the enactment of a program is provid- ed in the protracted negotiations between World Airways and the Economic Development Administra- tion regarding the building of a subsidized terminal.’’ Both parties wanted the air terminal, one to assist its business operations and the other to enhance its economic development goals. However, when EDA imposed minority employment objectives that World Airways believed would cause it to bear unexpected costs, a lengthy bargaining process ensued. In addition to delays resulting from lack of com- mon goals or misunderstood intentions, a program may fail for lack of adequate appropriations. Al- though Congress authorized new aid for the intercity bus industry in 1978, it did not appropriate funds.”® Many observers believe that bureaucracies are basically defensive, so that new programs may be met with cautious efforts designed to protect previ- ous policies.”? These might not be appropriate for the new program, causing it to “‘fail’’ in some sense. Complex programs also have a great capacity to bog down and self-destruct. Implementation may depend on a chain of events, each one of whose links might cause only a small delay, but when accumulated may constitute a considerable delay.®° The point is that even programs enacted with great promise of substantial benefits may, through delays in the implementation process, fail to achieve that promise. INTEREST GROUP REACTIONS In developing policies that, if implemented, would solve important transportation issues, it is often as important to Know why a particular policy is favored by an interest group as to know who is supporting the policy, or even how strongly the policy is favored. This is because the reasons for the enduring trans- portation issues almost always go well beyond simple politics. To be finally resolved, these issues demand technical solutions that often require a great deal of data and careful objective reasoning. The details of interest group policy statements can often provide such data or reasoned arguments. On the other hand, when it is time to discuss implementation strategies, those who favor a policy may have more to say about its adoption than the technical perfec- tion of its construction. Ir; issues such as the proper truck size and weight limits discussed above, for which key facts to permit an objective policy determination are missing, it is tempting to survey the public positions of important interest groups, and pick a position supported by those groups that seem to have the correct views on other issues, or to whom support should be given to balance that given to rivals on other issues, so that 364 e ISSUES AND POLICY RESOLUTION total opposition of any group can be avoided. However tempting such a balancing process might have been to help smooth the implementation of NTPSC’s proposals, it was not employed by the Commissioners in their formulation of policy recom- mendations. In the case of the truck size and weight issue, no direct policy solution based on objective evidence could be developed, so that the NTPSC policy recommendation suggests that the DOT study (due to be submitted to Congress in 1981 under the mandate of Pub. L. 95-599) should be examined for evidence necessary to make an informed judgement, instead of proposing an immediate change in the status quo. As an indicator of the carriers, users, government organizations, and other groups (such as labor unions or environmental protection advocates) that are likely to support or oppose the specific NTPSC transportation policy recommendations, the NTPSC evaluated published and less formal policy presenta- tions of such groups, and considered the possible reaction of the groups to NTPSC proposals. Accom- plishing firm coalitions of support must involve care- ful work directly with each group. The NTPSC study indicated that, for certain NTPSC policy proposals, broad support already may be forthcoming. These include, for example, the proposal that increased rate flexibility be allowed certificated carriers within zones of reasonableness, and the increased empha- sis on enforcement of safety regulations. On the other hand, certain of the NTPSC recommendations apparently do not yet enjoy widespread support, and will require further constituency building activities to be implemented. CONCLUSIONS This chapter has described a policy implementation process that is as complex as the policy development process, and has pointed out that the two are intimately linked. It is hoped that the care taken by the NTPSC in its policy development, and the extensive data base and analyses prepared in sup- port of the policy recommendations, will facilitate the tortuous implementation process that will follow. It is likely that some of the NTPSC proposals will be met with yawns. No groups will perceive immedi- ate gains or losses from some of the NTPSC’s proposals. In these cases, a few highly committed Commissioners may themselves be able to accom- plish the needed implementation measures, be they legislative or administrative changes. Other proposals may be too little understood or too expensive to implement without an extensive education process, even if no groups offer immediate opposition. Perhaps no firm coalitions for or against the proposals have yet been forged, so that the NTPSC report and the ensuing activities may serve to raise consciousness to a level sufficient to precipi- tate support (or perhaps opposition). Following other major research or legislative reports, special semi- nars have occurred to permit discussion and evalu- ation of the proposals under the sponsorship of organizations not directly involved in the original studies. For example, the Transportation Research Board, Transportation Research Forum, Brookings Institution, and American Enterprise Institute have all served as forums to evaluate and disseminate the findings of research studies.®' As part of the implementation process, Commis- sioners and key staff may be expected to give speeches, grant interviews, write articles, and pub- lish books explaining the NTPSC process and recom- mendations.®? Interested outsiders may also publish evaluations of the NTPSC reports.® Finally, in some cases NTPSC recommendations and supporting evidence will find ready-made propo- nents and opponents. The cases of motor carrier regulatory reform, waterway user fees, and preserva- tion of modal trust funds are notable examples. In fact, on such issues the battlelines are often so firmly drawn that any new evidence produced by NTPSC might not change the minds of most participants in the policy wars. Rather than being part of an educational process, the NTPSC report sometimes could be used as a weapon, with little objective regard for its content. Because controversial deci- sions have been made by the NTPSC, it seems impossible totally to avoid such use of the report. It is hoped that the report, considered as a whole, is broad enough in scope and deep enough in content to withstand charges levied by particular interest groups that might wish to discredit the entire report for positions it takes on a few controversial matters. The following chapter summarizes the NTPSC research findings, policy proposals, and impact analyses. NOTES AND REFERENCES 1. The Federal-Aid Highway Act of 1976, Section 154, Pub. L. 94-280, 90 Stat. 448 (1976). 2. Airline Deregulation Act of 1978, Pub. L. 95-504, 92 Stat. 1705, amending 49 U.S.C. Section 1301 (1979). Domestic air Cargo was deregulated in 1977. See Pub. L. 95-163, 91 Stat. 1278, amending 49 U.S.C. Section 1301 et seq. (1979). 3. See: James C. Miller Ill, ““A Perspective on Airline Regulatory Reform,” Journal of Air Law and Commerce 41 (Autumn 1979), pp. 679-701; John W. Snow, ‘‘Aviation Regulation: A Time for Change,” Journal of Air Law and Commerce 41 (Autumn 1975), pp. 637-664; and Theodore E. Keeler; “Domestic Trunk Airline Regulation: An Economic Evalu- 10. vt. 2: 13. 14. 15. 16. 17. ation,” in U.S. Congress, Senate, Government Affairs Com- mittee, Study of Federal Regulation, Appendix to Volume VI: Framework for Regulation, Washington, D.C.: December 1978, pp. 75-163. Edward Jordan, Chairman and Chief Executive Officer of Conrail, presentation to the NTPSC, Washington, D.C., December 12, 1978. The American Trucking Associations have proposed draft legislation that would provide a modicum of regulatory reform. Also, some private carriers and representatives of independent owner-operators and agricultural cooperative trucking ventures do support substantial deregulation. See ‘‘With Rank and File in Charge, NITL Shapes Regulatory Policy,” Traffic World, 7 May 1979, pp. 35—36. Strong interest continues on the part of Senator Kennedy to effectively deregulate the trucking industry, as evidenced by the proposed ‘‘Trucking Competition and Regulatory Reform Act of 1979”’ (unpublished working draft, May 1979). U.S. Congress, Senate, Committee on Commerce, Science, and Transportation, The Impact on Small Communities of Motor Carriage Regulatory Revision, Washington, D.C.: Government Printing Office, June 1978. Although not the work of a study commission, the following reference provides an excellent presentation of choices without recommending specific policies: U.S. Department of Transportation, Office of the Secretary, National Transporta- tion Trends and Choices (to the Year 2000), Washington, D.C.: Government Printing Office, 1977. See for example: U.S. Congress, Senate, Committee on Interstate and Foreign Commerce, Special Studies Group on Transportation Policies in the United States, National Trans- portation Policy, Report No. 445, 80th Cong., 1st sess., Washington, D.C.: Government Printing Office, 1961. (Here- after cited as Doyle Report.) An exception is the 1942 report of the National Resources Planning Board, which was a large-scale, forward-looking report reflecting the expanding goals of the ‘‘New Deal.” U.S. National Resources Planning Board, Transportation and National Policy, Washington, D.C.: Government Printing Office, 1942. A full set of recommendations for regulatory reform, of decided interest to today’s reform movement, is to be found in the reports of the Board of Investigation and Research. For a synopsis, see Federal Regulatory Restrictions Upon Motor and Water Carriers, \etter from the Board of Investiga- tion and Research transmitting a summary of a report, H. Doc. No. 637, 78th Cong., 2d sess., Washington, D.C.: Government Printing Office, 1944. U.S. Congress, Senate, Select Committee on Interstate Commerce, Report of the Select Committee on Interstate Commerce, Senate Report No. 46, 49th Cong., ist sess., Washington, D.C.: Government Printing Office, 1886. (Here- after cited as Cullom Report.) U.S. Congress, House, Committee on Roads, /nterregional Highways: Message from the President of the United States Transmitting a Report of the U.S. National Interregional Highway Committee Outlining and Recommending a Nation- al System of Interregional Highways, H. Doc. No. 379, 78th Cong., 2d sess., Washington, D.C.: Government Printing Office, 1944. Doyle Report. |. L. Sharfman, The Interstate Commerce Commission, A Study in Administrative Law and Procedure, Vols. 1 and 2, New York: Commonwealth Fund, 1931, Vols. 3 and 4, London: Oxford University Press, 1935, 1936. U.S. Congress, Senate, Select Committee on Transporta- tion—Routes to the Seaboard, Report of the Select Commit- tee on Transportation—Routes to the Seaboard, 43rd Cong., 1st sess., Washington, D.C.: Government Printing Office, 1974. (Hereafter cited as Windom Report.) 18. 19. 20. 32. 33. 34. 35. 36. 37. 38. STAGING POLICY CHANGES @ 365 Doyle Report, pp. 97-98. U.S. President, John F. Kennedy, ‘‘Special Message to Congress on Transportation, April 5, 1962,’’ Public Papers of the President, Volume 2: January 1-December 31, 1962, Washington, D.C.: Government Printing Office, 1963, pp. 292-306; and U.S. President, Lyndon B. Johnson, ‘‘Special Message to the Congress on Transportation, March 2, 1966,"’ Weekly Compilation of Presidential Documents: Vol- ume 2: January 10—July 4, 1966, Washington, D.C.: Govern- ment Printing Office, 1966, pp. 250—263. U.S. General Accounting Office, Better Followup Systems Needed to Deal with Recommendations by Study Commis- sions in the Federal Government, Report No. RED—76—33, Washington, D.C.: 4 December 1975. Ibid., p. 23. Ibid., p. 18. Ibid. Ibid., p. 22. Ibid., p. 16. Ibid., p. 17. Ibid. Wall Street Journal, 8 February 1979, p. 18. See, for example, the Doyle Report. Federal Public Transportation Act of 1978, Pub. L. 95-599, Title Ill, 92 Stat. 2689, amending 49 U.S.C. Section 1601 (1978). National Mass Transportation Assistance Act of 1974, Pub. L. 93-503, 88 Stat. 1565, amending 49 U.S.C. Section 1604 (1976). Federal Public Transportation Act of 1978, Pub. L. 95-599, Section 313, 92 Stat. 2689, amending 49 U.S.C. Section 1614 (1979). Several western states have considered increases in their speed limits beyond the maximum 55 miles per hour required by Federal law as a condition of receipt of certain Federal highway aids. For example, in Wyoming, Senate Bill 117 would have increased the state speed limit to 65 mph although the state legislature acted to defeat such a proposal. States risk loss of portions of their Federal-aid highway allocations if they do act officially to rescind their 55 mph speed limits. In the first session of the 96th Congress, Senator Hayakawa introduced a bill (S—323) that would repeal the Federal 55 mph requirement. Highway Revenue Act of 1978, Pub. L. 95-599, Title V, 92 Stat. 2756 (1978). In this act, Congress also exempted intercity buses from payment of the Federal highway fuel tax, but did not make this exclusion temporary as it did for taxicabs. Highway Safety Act of 1978, 23 U.S.C. Section 130 (1978), Pub. L. 95—599, Section 203, 92 Stat. 2728. Amtrak Improvement Act of 1978, Pub. L. 95-421, 92 Stat. 923 (1978). The study was submitted to Congress in January 1979. Inland Waterways Revenue Act of 1978, Pub. L. 95-502, Sections 201-206, 92 Stat. 1696, amending 33 U.S.C. Section 1801 et seq. (1979). Waterway user fees to recover 100 percent of all Federal outlays have been proposed in several studies, including: U.S. Department of Commerce, Transportation Study Group, Report on Federal Transportation Policy and Program, Washington, D.C.: Government Printing Office, March 1960 (also known as the Mueller Report); Doyle Report; and National Water Commission, National Water Commission Report (to Congress and the President pursuant to Pub. L. 90-515), Washington, D.C.: Government Printing Office, June 1973. These and other proposals are discussed in Marvin J. Barloon, Water Transportation: Productivity and Policy, prepared for the National Environmental Develop- ment Association, Washington, D.C.: June 1978. It should be noted that Pub. L. 95-502 does not itself state that 100 366 e ISSUES AND POLICY RESOLUTION 39. 40. 41. 42. 43. 44. 45. 46. 47. 48. 55. 56. 58. 59. 60. percent cost recovery is beneficial or expected to occur in the future. Federal-Aid Highway Act of 1978, Pub. L. 95-599, Title |, 92 Stat. 2689, amending 23 U.S.C. Section 101 et seg. (1979). The categories are: primary, secondary, and urban. National Mass Transportation Assistance Act of 1974, Pub. L. 93-503, 88 Stat. 1565, amending 49 U.S.C. Section 1604 (1976). Federal Public Transportation Act of 1978, Pub. L. 95-599, Section 313, 92 Stat. 2689, amending 49 U.S.C. Section 1614 (1979). 23 U.S.C. Section 103 et seg. (1978). This provision will expire in 1983. Federal-Aid Highway Act of 1978, Pub. L. 95-599, 92 Stat. 2689, amending 23 U.S.C. Section 103 (1979). Congress has permitted directly diverting other categorical highway funds to transit uses, however, as provided in Federal-Aid Highway Act, 23 U.S.C. Section 103 et seq., as amended (1978). See Congressional Record, 14 October 1978, p. H 12933. Alfred E. Kahn, ‘Applying Economics to an Imperfect World,’”’ Richard T. Ely Lecture, reprinted in American Economic Review 69 (May 1979), pp. 1-3. Pub. L. 95-163, 91 Stat. 1278, amending 49 U.S.C. Section 1301 et seq. (1979). In 1935, Congress passed the Motor Carrier Act which became Part Il of the Interstate Commerce Act. The Act provided that motor carriers should be certificated by the ICC, but approximately 35,000 carriers operating at the time received “grandfather rights.”’ U.S. Congress, Senate, Committee on Governmental Affairs, Study on Federal Regulation, Volume VI: Framework for Regulation, Washington, D.C.: Government Printing Office, 1978, p. Ill. S—445, 96th Cong., 1st sess. (1979). Executive Order 11590 requires the analyses be performed by executive agencies. S—51, 52, 53, 54, 96th Cong., 1st sess. (1979). The Kennedy bill was formally introduced in March 1979 as S-—710; 96th Cong, 1st sess. (1979). The Reed-Bulwinkle Act is 49 U.S.C. Section 10706(b) (1978). S-775, 96th Cong, 1st sess. (1979). Air cargo: Pub. L. 95-163, 91 Stat. 1278, amending 49 U.S.C. Section 1301 et seg. (1979); Air passengers: Airline Deregulation Act of 1978, Pub. L. 95-504, 92 Stat. 1705, amending 49 U.S.C. Section 1301 (1979). See for example Ex Parte No. MC—121 (6 November 1978), which would establish a policy of regulatory reform; Liberty Trucking Co.—Ext. Gen. Com., 130 MCC 243 (6 October 1978), which eases motor carrier entry restrictions; and Ex Parte No. 359, Water Carrier Regulation (18 December 1978), which proposes a virtual end to all ICC regulation of water carriage. Railway Age, 29 January 1979, p. 12. See for example: Mercury Motor Express, Inc. and American Trucking Associations, Inc. v. United States and Interstate Commerce Commission, Civil No. 79-1052 (5th Cir., filed 8 January 1979) in which the ICC’s policy decision to permit private carriers to perform for-hire carriage is being chal- lenged. Also, the ATA is seeking to stay, pending judicial review, the ICC’s decision in Ex Parte 55, Sub. No. 26 Protest Standards in Motor Carrier Application Proceedings (reported in Traffic World, 5 March 1979, p. 113). Railroad Revitalization and Regulatory Reform Act of 1976, Section 202(d), Pub. L. 94-210, 90 Stat. 38, amending 49 U.S.C. Section 10727 (1978). Ex Parte No. 324, Seasonal, Peak & Regional Rail Rates. 4R Act, Section 202(b), 49 U.S.C. Section 10709; Ex Parte No. 320, Special Procedures for Making Findings of Market Dominance as Required by the 4R Act, and Local Rail 61. 62. 65. 66. 67. 76. ils 78. 79. 80. 81. Service Assistance Act of 1978, Pub. L. 95-607, 92 Stat. 3059 (1978), which renewed the market dominance concept. Railway Age, 29 January 1979, p. 12. Acheson, Topeka & Santa Fe AR. Co. v. ICC, et al., 580 F. 2d 623 (D.C. Cir., 1978). Local Rail Service Assistance Act of 1978, Pub. L. 95-607, 92 Stat. 3059. For a further discussion of this issue, refer to NTPSC Special Report 1, Current Transportation Issues in the United States, Volume |, Report No. NTPSC/SR-79/01—A, Washington, D.C.: September 1978, pp. 14—15, and Volume II, Report No. NTPSC/SR-79/01-—B, Washington, D.C.: September 1978, pp. 89-97. The most recent study was required by the Surface Trans- portation Act of 1978 (Pub. L. 95-599, 92 Stat. 2689 (1978)) together with a study of the closely related issue of whether various classes of highway users contribute their share of the costs of highways. The chapter and report of most direct relevance are: Chapter 3; and NTPSC Special Report No.4, State and Local Transportation Policies and Programs, Report No. NTPSC/SR-79/04, Washington, D.C.: April 1979. See Wisconsin Department of Transportation, Division of Planning, ‘‘Evaluation of 65-Foot Trucks and Twin-Trailers in Wisconsin,’’ unpublished research memorandum, Madison, Wisconsin: April 1977. Wall Street Journal, 7 February 1979, p. 4. The remainder of the discussion of the CAB interstate fare policy is also taken from this source. Keeler, ‘‘Domestic Trunk Airline,’’ pp. 75—163. Wall Street Journal, 13 March 1979, p. 16 and 4 June 1979, p. 16. U.S. Department of Transportation, ‘‘Rail Regulatory Reform Options,”’ transmitted to the President by memorandum from Secretary Brock Adams, Washington, D.C.: 15 December 1978, p. 40. Interstate Commerce Act, Section 3 (4), 49 U.S.C. Section 10741 (1978). Dennis Farney and James C. Hyatt, ‘‘A Good Way to Get a Fat Lip,’’ Wall Street Journal, 27 February 1979, p. 24. American Association of State Highway and Transportation Officials presentations to NTPSC, 31 August 1978 and 5 October 1978. See Eugene Bardach, The Implementation Game: What Happens After A Bill Becomes Law, Cambridge, Mass.: MIT Press, 1977, pp. 268 ff. and W. Henry Lambright, Shooting Down the Nuclear Plane, \Indianapolis and New York: Inter- University Case Program and Bobbs-Merrill, 1967. As discussed in Chapter 2 above, and in NTPSC Special Report No. 6, A Compendium of Federal Transportation Policies and Programs, Report No. NTPSC/SR-79/06, Washington, D.C.: March 1979, new policies are often superimposed on existing policies without formally repealing those with which the new policies conflict. This is obvious if one remembers that policies, as defined by the NTPSC, are not all formally enacted into statutes or rules, but include many less formal expressions of guides for choice. This example is documented in: Jeffrey L. Pressman and Aaron Wildavsky, /mplementation, Berkeley: University of California Press, 1973. Federal Public Transportation Act of 1978, Pub. L. 95—599, Section 323, 92 Stat. 2735, amending 49 U.S.C. Section 1618 (1979). See for example, Anthony Downs, Inside Bureaucracy, Boston: Little Brown & Co., 1967. This process is described in Bardach, The Implementation Game. The NTPSC did present a progress report to the Transporta- tion Research Board membership on 19 January 1979, during its 58th Annual Meeting, Shoreham Americana Hotel, 82. Washington, D.C. A similar presentation on the completed report is planned for the Transportation Research Forum's 1979 annual meeting to be held in Chicago, Illinois, 29-31 October 1979. One of several examples is the book published by staff of the Hoover Commission enlarging on its findings. See Charles L. Dearing and Wilfred Owen, National Transportation Policy, Washington, D.C.: The Brookings Institute, 1949. The rele- vant formal report of the Commission itself is: U.S. Commis- 83. STAGING POLICY CHANGES e 367 sion on the Organization of the Executive Branch of Government, Regtilatory Commissions: A Report to the Congress, Washington, D.C. Government Printing Office, March 1949. See Paul McAvoy and John Snow, Regulation of Entry and Pricing in Truck Transportation, Ford Administration Papers on Regulatory Reform, Washington, D.C.: American Enter- prise Institute for Public Policy Research, 1977. & pot A wr rere pegedip iy’ sh 0M al rr bee ret ane ’ vé gpesew “ x gn sri tans a diem ey. yi ‘ \~ PIE pa 5 : if. a Los ol are ie ely ee “3 volo 8 yp ed ‘ bats ott qi get e ’ Nat “ote vie serie ee ae 7. i. Cl OF ek ee és ite -) bey oi? ore. a oy ep reucalane 2) 3 +b! ae y 2 ety mein, Spiny aan a \< Uipetetl wees! Nod, Site eetie iam - Aug Pry ae, D Moe aan >< Antares te of "nerepmpetalelry, ioe oN Nore Vtohe eee Tyee we werd) wen rer t\ yh an Rik ' (e-uce (HG we OW j a wae ‘- Ao one 1 we tice, “7iat eae iy ‘ote Paarl 7 ee a Wee rie er ead val ‘x am Si) Ss A JS me ya “«s Good ay vu i 22 vor ery SOR Aa hh ud Sule Mle ey tel Vreve é Adega 9 Nos nee rahe rast Pa) _ ‘erg ” i ‘tte Iwobiaia gel 4% ray Yes Lae, Gi ote ipo ; . b aw y. Pela er ayy aim ww cageta pee Niergs “atts ts ( Sect iad 0h ' 4 PA Wie, 4rd MINEG 4 he ‘t, Say mh Of aes ' ie: iy me, Sete, Ne Sal rer” Thin Gee Cle ee bw P yf spNte e248 eel ew : _ ba aw pwn pa A ree et Tha ‘ i we, et ty We : meaty HOO Cseilep (ve ffed, ud J 6 fe~saces oi oneal Oe avons ime ht is Odes” a ayy 1.4: den 4 ei! Ay ee a vendlty, 7 Le eviplion Act Bo oth, Boi oN se Wie 7 < » ao Summary Valo Mm Ore) seq i0 kyle) aha INTRODUCTION The work of the NTPSC and its policy recommenda- tions are reviewed in this chapter. Moreover, the chapter shows, point-by-point, how the research of the NTPSC was related to answering the mandate of the Commission’s enabling legislation (Pub. L. 94— 280, Section 154). The NTPSC believes that facilitating public under- standing of the reasons for its policy recommenda- tions, and knowledge of the expected impacts of these recommendations, is an important responsibili- ty. Despite careful concern for organization and method, this report contains a tremendous volume of material, much of it new. Confronted with such an accumulation of information, it is easy to lose track of the purpose of the NTPSC analyses, and of the themes which run throughout its work. Thus, this chapter retraces the arguments that have been made in the report, giving primary concern to the common threads among its chapters and the NTPSC’s special reports that tie them to the policy recommendations. REVIEW OF THE STUDY TRANSPORTATION ACTIVITY AND INSTITUTIONS The first several chapters in this report describe existing U.S. transportation institutions, provide data about current levels of service, highlight transport policies and programs of Federal, state, and local governments, and compare certain foreign transpor- tation experiences to those of the U.S. These chapters are designed to describe the existing situation in the U.S. in some detail, to indicate important transportation issues that are in need of resolution through new national policies, and to set the stage for NTPSC policy recommendations through an objective presentation of evidence. De- spite concentration on the existing situation, this group of chapters contains much information that is new, and does highlight the NTPSC’s unique study plan. For example, for new NTPSC policies to be successfully implemented, they must treat the real concerns of the transportation community, and they must work through the formal and informal channels of the political system of the U.S. Chapter 1 aa- dresses these functions, institutions, and activities. For Congress, the President, and the citizens of the United States to understand the transportation issues, to evaluate alternative policy solutions (in- cluding those proposed by the NTPSC) and to seek corrective action where warranted, all should share a common knowledge of how the transportation sys- tem works, what levels of service are provided at what costs, and what volumes of passengers and freight move in particular markets and regions by the various modes. All levels of government influence the U.S. trans- portation system through policies and programs. Guides for action (policies) together with the actions themselves (programs) work through formal and informal channels, and often may have unexpected repercussions. Chapter 2 discusses the Federal system of transportation policymaking, highlights the body of policies and programs that exists, and indicates the gaps and conflicts (issues) in present policies that are candidates for resolution through new NTPSC policies. Although there may exist compilations of Federal programs (usually only for one mode or one market), the NTPSC’s presentation of policies and programs for all markets, is totally new. Appendix | provides a discussion of policy relationships, including definitions of important terms. Chapter 3 describes state, local, and regional government policies and programs that interact with those of the Federal government to comprise nation- al policy. Again, in addition to an informative presen- tation of how policies and programs interact, empha- sis is on the issues that arise from partnership problems. Recognition by the NTPSC that levels of government other than the Federal shape national policy, and must help to define the issues and share in the implementation of policies to resolve issues, appears to be unique. Chapter 4 presents information about transport policy from other developed countries. The U.S. can learn from its differences with these countries, just as 369 370 e ISSUES AND POLICY RESOLUTION it can learn from those cases in which similarities exist and comparable policies might apply. Identi- fying the European experiences can provide a sensi- tivity test for possible U.S. changes, to help deter- mine whether policies that are effective today will remain so under changed conditions. The compara- tive information in this chapter also serves to identify issues, and to introduce alternative candidate poli- cies for resolving the issues. Together, Chapters 1 to 4 seek to define the status quo in common terms with a consistent, unifying market structure. They define issues. Through objective discussions of which policies and programs have worked well and which have not (at various levels of government and in several coun- tries), the chapters set the stage for the NTPSC policy recommendations. FORECASTS TO THE YEAR 2000 The second group of chapters builds on the institu- tions and policies presented in the first group. This second set treats the NTPSC’s expectations for the future, given the forces set in motion by these existing U.S. institutions and policies. The NTPSC forecasts are not of what it would like to see happen, but rather, show the expected consequences of continuing to operate according to present policies. To develop these forecasts, the NTPSC applied an ambitious set of models. Some of the models are variations of those which have been used before, while others are new; their use as an integrated set is unique. The NTPSC is concerned with describing the strengths and weaknesses of its modeling process as well as with presenting the results. This is because any effort to foresee events 20 years into the future will find unexpected occurrences altering the values of important causal factors. The predicted outcomes will never compare exactly to the actual events. Too, the underlying causal relationships might change. Models are most useful, therefore, for the logic of their predictions (to aid understanding) and for testing the sensitivity of possible outcomes to changes in the proposed policies. For the predictions of models to be most useful, the models themselves should be thoroughly understood. Chapter 5 introduces the models and describes part of the NTPSC’s effort to determine possible values for important parameters. Large-scale models usually rely on extrapolations of past relationships among variables in order to predict future events. If major changes are expected to occur in these structural relationships, naive (or even sophisticated) extrapolations based on previous relationships will not be very accurate (unless by accident). One way to cope with uncertain future events that can alter past trends is to develop scenarios that may hypoth- esize new combinations of parameter values and even new structural relationships not based totally on past trends. Scenario development also serves to highlight issues that might emerge in the future and that may not be evident today. Scenarios can be worked through to final conclusions about transpor- tation matters of interest in a manner independent of models. This can be done as a check on the sensitivity of models to major institutional changes. Another use of scenarios is to apply them in combi- nation with models, to determine alternative parame- ter values which then are worked through the models to arrive at the predicted transportation outcomes. Both approaches were used by the NTPSC. Three different scenarios were developed reflecting realis- tic and internally consistent combinations of eco- nomic and social variables. The three scenarios bound what the NTPSC believes to be the expected range of values for these variables, under a variety of possible future events. One of the scenarios is most like a continuation of present trends. Lacking any knowledge of what will actually happen in the future, this scenario seems to be the most comfortable for many persons. Nonetheless, if events do change, the projections made using the other two scenarios can indicate what consequences can occur. One factor in determining new transportation policies is, then, to test their robustness in treating the issues expected to emerge under all three scenarios. Other recent studies of the future have also relied on scenario development as a tool. The NTPSC treatment may be different, as it integrates its scenarios with its battery of models. Chapter 5 presents data about expected levels of such variables ag GNP, income, employment, labor force participation, and population (19 major vari- ables in all). Appendix Il compares the NTPSC’s figures with those of other modeling efforts. Chapter 6 contains information on technological developments that may alter expected future trans- portation relationships. Based on mail surveys, per- sonal interviews, and literature searches, the NTPSC evaluated the expected feasibility of commercial introduction of important new ‘‘hard”’ and ‘‘soft” technologies. In the past, where seemingly insur- mountable obstacles have threatened the U.S., the emergence of new technologies has often provided a means to overcome these obstacles. The NTPSC evaluation reveals that new technologies do have much to contribute in the next two decades, but that they will not offer any magic solutions to transporta- tion problems. Although further development of the diesel engine for automobiles and engine improve- ments for airplanes offer opportunities for better performance, reduced operating costs, and fuel economy, these are not startling and totally new breakthroughs. They represent an evolution of tech- nical methods and products. And, although they offer an opportunity to treat transportation problems, they are not without their own difficulties. Chapter 6 thus serves to describe emerging technologies, to highlight issues, to evaluate alterna- tive candidate policies to resolve the issues, to forecast rates of introduction of certain combinations of new technologies, and to define parameter values for use in the NTPSC’s models. Chapter 7 describes some of the non-economic, or less quantifiable, aspects of the existing and future U.S. transportation system Current environ- mental and safety goals, policies, and programs are discussed. The chapter develops parameter values for use in the NTPSC forecasting models. It defines emerging issues and discusses candidate policies. The widespread use of the diesel engine may offer great opportunity for conservation of energy, and may simultaneously permit automobile manufacturers to meet certain air pollution standards. Yet, diesel exhaust may not meet other EPA emission rules and may have adverse effects on human health in ways that are not now covered by Federal standards. Clearly, neither unqualified support or opposition for dieselization is possible. Material in Chapter 7 is meant to form a base from which a detailed, realistic recommendation on such matters can be deter- mined. Chapter 8 focuses on energy matters. Congress directed the NTPSC to investigate energy require- ments and availability to meet anticipated transporta- tion needs. Energy is one of the largest components of the operating cost of most transportation modes, while energy movements through the U.S. are also of vital importance. To illustrate the variety of concerns discussed in Chapter 8, it was found that auto fuel efficiency has the potential for marked improve- ment—and as the auto is the chief consumer of petroleum, such conservation offers opportunity for great savings. Railroads are indispensable for haul- ing coal that can, through direct burning for electric- ity or indirect use (via production of synthetic crude oil or gas), permit the U.S. to have ‘‘enough”’ energy during the next 20 years, although not totally ending the U.S. dependence on foreign petroleum. The mutual importance of U.S. energy and transport development is also apparent in the opportunities for water carriage of coal (thereby greatly expanding inland waterway employment after 1985, for exam- ple, and reversing the current trend to less use of Great Lakes shipping). Similarly, existing pipelines that might otherwise operate at reduced levels as domestic petroleum production falls, may be used instead to link refineries of synthetic crude oil with customers. While increased transport required by the devel- opment of new energy sources will mean better SUMMARY AND CONCLUSIONS e 371 utilization of surplus transport capacity in the existing transportation system, major new investments are also needed. Alaskan energy reserves will increase substantially in importance, requiring expansion of pipeline facilities and threatening regional disloca- tions unless new policies are introduced. For exam- ple, one way to ease the glut of oil in California is to permit swaps with Japan of Alaskan crude for crude from other sources. Delivery of the substitute crude to energy deficient U.S. regions might occur at less expense. Such swaps are not now permitted by Congress. Thus, Chapter 8 describes existing and proposed energy policies and programs together with transport policies and programs for conserving and for moving energy. Emerging issues are defined. Alternative parameter values for the NTPSC’s set of models are given. Forecasts are made of energy availability and of transportation capabilities in the event of new energy policies with baseline transportation policies. Reasons are given as to why the U.S. will place greater reliance on energy from domestic energy supplies. Alternative policies for resolving the issues and improving the forecast results are evaluated. Special information about the expected movement of U.S. coal and about the development of alternative energy sources is to be found in Appendix Ill. Compared to the other chapters, Chapter 8 fulfills a more complex set of purposes. The detailed model- ing of energy and transportation matters as a unified set is a unique approach of the NTPSC. Chapter 9 gives the results of the NTPSC trans- port activity forecasts. The data reveal what will result, for each scenario, if the U.S. continues its existing transportation (and related) policies. The forecasts yield a baseline from which impacts of proposed policy changes can be measured. Unlike the forecasts of other transportation study groups, those of the NTPSC are structured according to markets, to give a picture of the interactions of various components of the U.S. transportation sys- tem. Data for individual modes, for cities of various sizes, and for regions, are given at five-year intervals for three scenarios. The results of the transport forecasts are compared to those of other major modeling efforts in Appendix II. One difference is that the NTPSC paints a generally more sanguine picture for U.S. railroads than do other studies, while the NTPSC sees the modal share of the U.S. trucking industry declining if existing policies are continued. One reason for the difference is the NTPSC premise that large increases will take place in coal produc- tion, and that great amounts of coal will be transport- ed by rail and other modes, especially from the Northern Great Plains region. In addition to giving the forecast results, the chapter raises emerging issues, and provides data 372 @ ISSUES AND POLICY RESOLUTION necessary to evaluate potential new transportation policies to solve the problems foreseen in a continua- tion of existing policies. Chapter 10 contains data on the capital (and other) resources that must be forthcoming if project- ed activity levels are to be realized. Existing institu- tional mechanisms for raising capital for various modes are described. Issues that emerge from the accumulation of capital, land, and labor resources to provide transportation services are discussed. In the chapter it is shown that the railroad industry has had relative success in financing rolling stock (as op- posed to maintenance and upgrading of rights-of- way) because of the nature of the security and the availability of trust certificate financing. Yet, the existence of such security for rolling stock has made more difficult the restructuring of bankrupt railroads because of these prior claims on rail assets. Chapter 11 sums up the forecast results by discussing the implications for carrier revenues com- pared to costs, using the concept of a “‘transporta- tion bill.’’ This hypothetical bill is the sum of revenues of for-hire carriers, private capital and operating costs, and net government subsidies. The forecasts discussed in Chapter 11 show the expected levels of net subsidy to the various modes under a continua- tion of current policies. These data permit the analysis of whether the benefits derived from such subsidies appear to be worth their costs. The presentation of market and regional detail facilitates such analysis. Appendix IV further describes the computation of the government accounts. The second set of chapters is in some ways similar to the first. Both describe current institutions and policies, highlight issues, and evaluate candidate policies to improve the situation. The second set of chapters goes beyond the first, however, by building a forecasting process, and by using the process, plus information from other research and studies, to describe the expected future consequences of con- tinuing present policies. Issues that will emerge in the future are, thus, added to those evident from an examination of the past and present. ISSUES AND POLICY RESOLUTION The final set of chapters first sums up the issues that were presented in earlier sections, and then uses the institutional descriptions, forecasting models, and results to prescribe solutions to these issues. Clearly, no group of policy recommendations would please everyone. But recommendations can be evaluated when both the adverse consequences and the bene- fits that are believed to outweigh such costs are presented. The NTPSC’s policy recommendations vary from broad and thematic, to narrow and de- tailed, so as better to treat the range of issues. The issues themselves vary from vague concerns to precise problems. However, in all cases an attempt was made’ to explain the anticipated impacts of putting the new policies into place. The NTPSC has shown concern for structuring its recommendations as a set that can serve as a national transportation policy, rather than as a loose collection of proposed Federal actions to treat separately each individual issue. In addition to using a consistent structure to present its recommenda- tions, the NTPSC has suggested which agencies should act, and when, to implement the policies. Chapter 12 summarizes the issues that were indicated in the preceding chapters. The issues are shown to be related to the nation’s overall goals (e.g., energy conservation and development, envi- ronmental protection) as well as to goals for the transportation system (e.g., adequate service). In addition to issues pertaining to goals, some are related to the means by which the goals are pursued (e.g., public versus private financing). Two themes that run throughout the issues indicate the direction successful new policies must take: 1. The importance of pricing mechanisms to allocate scarce resources efficiently; and 2. The need for governments to maintain the role of private enterprise as providers of transportation, with all levels of government cooperating to ensure equitable taxation and regulation. Chapter 13 gives the NTPSC policy recommenda- tions. The relative location of this chapter within the final report is significant. NTPSC has chosen to build a solid foundation for its recommendations through identification of existing institutions and policies, determination of current and emerging issues, and formulation of a complete set of forecasting models, before presenting its policy recommendations. The recommendations are meant to build upon the status quo, rather than totally replacing existing institutions and policies. The NTPSC concern for structure is also shown by its presentation of policy recommen- dations according to the instruments of policy imple- mentation that were used throughout the report (e.g., regulation—both economic and non-economic; own- ership and operations; finance, pricing, and taxation; planning and information; and government organiza- tion). Where necessary, special policies are indicat- ed that pertain to particular markets, modes, regions, or to passengers or freight. For each new policy, its current counterpart is shown (labeled ‘‘status quo’’) to permit a comparison with present practices. The thrust of the policies can be summarized by listing the NTPSC policy themes: 1. There should be a uniform national transportation policy; 2. Thee should be a reduction in Federal involve- ment; 3. Economic analyses of intended Federal actions should be performed; 4. When the transportation system is used to pursue non-transportation goals, do so in a cost-effective manner; 5. Federal involvement in transportation safety and research is often required; and 6. Users and those who benefit from Federal actions should pay. The recommendations are ambitious in proposing strong efforts to deregulate transportation and in requiring careful economic evaluation of the benefits and costs of Federal actions before, during, and after programs are implemented. In addressing the U.S. maritime transportation sector, a continuation of many existing protective measures is recommended on grounds of national defense and security, but modifications are proposed to improve the cost- effectiveness of these Federal programs. Regarding financing U.S. transportation, given the projected revenue shortfalls and the desirability on efficiency and equity grounds of policies that require the user to pay, the NTPSC has shown that increased or restructured fees for certain modes will be necessary in order to maintain existing levels of service. The continued use of modal trust funds and of financing of certain other modes from the general fund are also recommended. The policy recommendations in Chapter 13 are meant to be the logical conclusions from the exercise of informed judgement by the Commissioners given the data and methods of the earlier chapters. Appendix V describes, in more detail, the policy development process employed by the NTPSC. Chapter 14 contains the projected consequences of the new policies, compared to what would occur if existing policies were retained. The structure used to analyze the impacts of the new policies is that of eleven transportation goals. These goals are often cited by policymakers as justifications for particular transportation policies or programs. Thus, for each NTPSC policy recommendation, the expected im- pacts are reported for as many of these eleven goals as possible: Adequate service; Appropriate rates and prices; Economic efficiency; Energy conservation and development; Environmental protection and enhancement; Safety; . Employment; . Industry promotion and protection; . Regional and urban development; . Equity; and . Defense. = S©PNAMSONo ak ak SUMMARY AND CONCLUSIONS e 373 Throughout the chapters of the report the as- sumptions necessary to justify particular predictions, and the details of the methods chosen for analysis, are given. Where statements are controversial, or require supportive judgement, these facts are indi- cated. Comparisons were made with the results of other studies which used alternative methods and sometimes obtained different results. The NTPSC recognizes that predicting the consequences over 20 years of new policies that may or may not be implemented over the period is more complex than predicting the consequences of existing policies. The policy recommendations were made based on the opportunities they offered as a set to resolve the transportation issues facing the United States through the year 2000, as well as based on the quantitative predictions described in Chapter 14. Chapter 15 discusses implementation of the NTPSC policy recommendations. The experience of earlier study groups is examined, and the alternative formal and informal methods that might be used to accomplish the NTPSC recommendations are pre- sented. The numerous individual policies recom- mended by the NTPSC cannot all be implemented immediately, or through only a few channels. Rather, the policies must be addressed in sets, carefully staged through time and via the proper policymaking bodies to maximize their effectiveness. One desirable combination of timing and implementing organiza- tions is given in the chapter. For example, Congress is asked to reauthorize the Airport and Airways Development Trust Fund before it expires in 1980 and make it permanent. Further, until the concept of an urban transit trust fund is studied, transit authori- zations should be reviewed periodically. Decisions on policies to promote new pipelines to serve synthetic crude oil production plants, and whether such plants should be consolidated or decentralized, must be made soon. This is the case even though such pipelines and the plants they serve might not come into operation until the 1990s. These decisions will involve all branches of government and the private sector. RESEARCH METHODS AND SPECIAL STUDIES The NTPSC has been concerned with proper study methods and documentation as well as recommend- ing and publicizing new transportation policies. The Commission was created by Congress in mid-1976. Congress specified several items for the new Com- mission to address, and required the cooperation of Federal agencies, as well as specifying a reporting deadline (July 1, 1979) and appropriating funds (totalling $5 million). However, the NTPSC was given wide latitude as to exactly how it should structure its study. Commissioners and staff gave great attention 374 e ISSUES AND POLICY RESOLUTION to the workplan that has produced this report. Basically, this workplan proposed: 1. Considering the methods and findings of previ- ous transportation studies; 2. Devising a unified plan to guide Commission activities; 3. Using a market matrix to organize the study (intercity, urban, rural, and international—pas- senger and freight); 4. Involving the public in issue determination and policy development; 5. Describing the existing U.S. transportation insti- tutions and the use of existing services; 6. Defining and inventorying existing Federal trans- portation policies and programs; 7. Producing a unified set of forecasting models; 8. Choosing parameter values for the models by scenario development and surveys of technolo- gies; 9. Reporting baseline forecasts by market, mode, region, and time period, with special concern for energy; 10. Determining resource needs to meet the activity forecasts; 11. Reporting revenue shortfalls and subsidy levels; 12. Developing new policies to resolve emerging issues; 13. Analyzing impacts of these new policies com- pared to the status quo; 14. Recommending ways to implement the policies through specific institutional channels during particular time periods; and 15. Responding to the congressional mandate. Each of these activities required careful attention to proper methods. Although the chapters and appendixes describe such methods, NTPSC has compiled thousands of additional pages of support- ing materials through the efforts of its staff and contractors. Table 130 shows for each chapter those supporting studies of direct relevance. Table 131 lists the workplan activities together with the chap- ters, appendixes, and reports that describe the activities. For example, the NTPSC reviewed hun- dreds of earlier reports to help define issues. These issues are developed in several chapters and in NTPSC Special Report No. 1, Volumes | and Il. For the activity listed in Table 131 as ‘Defining and inventorying existing Federal transportation poli- cies and programs,’ the NTPSC researched and defined the often misunderstood concepts of goals, objectives, policies, and programs. The definitions are discussed in Appendix |, while the policies are described primarily in Chapter 2 and NTPSC Special Report No. 6. For the activity of ““‘Developing new TABLE 130. NTPSC chapters, appendixes and supporting special reports Chapters Related Appendixes and Special Reports SS senses 1. Transportation Functions, Institutions, and Activity in the U.S. 2. Federal Transportation Policies and Programs 3. State and Local Transportation Policies and Programs 4. Comparative Transportation Policies in Other Countries 5. General Social and Economic Forecasts to the Year 2000 6. Technological Trends in Transportation and Communica- tions . Transportation and Externalities . Transportation and Energy 7 8 9. Forecasts of Future Transportation Activity 0. Capital Requirements for the Transportation Forecasts 1. The Relative Price of Transportation to the Year 2000 12. Emerging Transportation Issues 13. Policy Recommendations 14. Impacts of the Policy Recommendations 15. Staging Policy Changes 16. Summary and Conclusions S.R. 7: Intercity Bus Transportation S.R. 6: A Compendium of Federal Transportation Policies and Programs; and Appendix |: Policy Definitions S.R. 4: State and Local Transportation Policies and Programs S.R. 5: Papers on Selected Transport Policies of Developed Countries Appendix Il: Comparative Social, Economic and Transportation Forecasts S.R. 3: The Impact of Telecommunications on Transportation Demand Through the Year 2000; and S.R. 9: Technological Trends in Transportation Appendix Ill: Alternative Energy Sources and Coal Movement Projections : Appendix Il: Comparative Social, Economic and Transportation Forecasts S.R. 8: Federal Investment in Transportation: A Statistical Com- parison; and Appendix IV: Government Accounts Computations S.R. 1: Current Transportation Issues in the U.S. Appendix V: Mechanisms for Policy Development and Accep- tance S.R. 2: Amtrak: An Experiment in Rail Service —— ee re ee ee ere ee. ee en eee mere TABLE 131. NTPSC chapters and supporting workplan activi- NTPSC Chapters and Workplan Activities Appendixes EEE 1. Considering the methods and find- ALL ings of previous transportation stud- ies; 2. Devising a Gnified workplan to guide ALL Commission activities; 3. Using the market matrix to organize ALL the study (intercity, urban, rural, and international—passenger and freight); 4. Involving the public in issue determi- 12, 13 nation and policy development; 5. Describing the existing U.S. trans- 1 portation institutions and the use of existing services; 6. Defining and inventorying existing 2, 3, Appendix | Federal transportation policies and programs; 7. Producing a unified set of forecast- 5, 8, 9, Appendix II ing models; 8. Choosing parameter values for the 5, 6, Appendix II models by scenario development and surveys of technologies; 9. Reporting baseline forecasts by mar- 5 to 11, Appendixes ket, mode, region, and time period, Ill and IV with special concern for energy; 10. Determining resource needs to meet 10 the activity forecasts; 11. Reporting revenue shortfalls and subsidy levels; 12. Developing new policies to resolve emerging issues; 13. Analyzing impacts of these new poli- 14 cies compared to the status quo; 14. Recommending ways to implement 15 the policies through specific institu- tional channels during particular time periods; and 15. Responding to the congressional 16 mandate. 11, Appendix IV 12, 13, Appendix V policies to resolve emerging issues,’’ Appendix V describes the process used to bring alternatives to the attention of the Commissioners. CONCLUSIONS NTPSC RESPONSE TO THE CONGRESSIONAL MANDATE OF PUB. L. 94-280 As shown in Table 132, the NTPSC report is orga- nized into chapters that support its six-part legisla- tive mandate. (1) The Nation’s Transportation Needs, Both National and Regional, Through the Year 2000 The NTPSC determined transportation needs in three ways, using: SUMMARY AND CONCLUSIONS e 375 TABLE 132. NTPSC chapters and reports related to the Pub. L. 94—280, Section 154 mandate The Federal-Aid Highway Act of 1976 (Pub. L. 94—280) NTPSC Section 154, Requires NTPSC Final NTPSC Findings and Recommendations Report Special with Respect to: Chapters Reports A. The nation’s transportation Gian onto mo R.) pies; needs, both national and re- 12 72.9 gional, through the year 2000; B. The ability of our current OD CORAL ss R heal 5, Chass transportation systems to meet Tees) the projected needs; C. The proper mix of highway, Chas, 142, SRS; 2:93; rail, waterway, pipeline, and air 7h transportation systems to meet anticipated needs; D. The energy requirements and availability of energy to meet anticipated needs; E. The existing policies and pro- Ch. 2, 3, 7, S.R. 4, 6, 8 grams of the Federal govern- 8 ment which affect the develop- ment of our national transpor- tation systems; and F. The new policies required to develop balanced national transportation systems which meet projected needs. Ch. 8, 9, 10, S.R. 1, 2; 9 11, 14 Ch. 2310, 4,1.9,R, 11078 13, 14, 15 1. Issue investigations; 2. Examinations of earlier needs studies; and 3. Forecasting. Needs which are unmet may precipitate issues. Issues were identified by the NTPSC through a literature search, a survey of transportation profes- sionals and interest groups, and a series of public hearings held throughout the U.S. The results are summarized primarily in Chapter 12 and in Special Report No. 1. Earlier needs studies, especially the U.S. DOT’s 1974 National Transportation Report (as modified with unpublished data from the partial 1976 update and other sources), were used by the NTPSC to examine the plans of state and local governments and the private sector to provide investments to meet needs for transportation facilities and services. These results are described primarily in Chapter 10. Finally, the NTPSC developed and used models to forecast needs through the year 2000 on a regional and national basis. The process and the results are described in Chapters 5 to 11. Needs depend in part on the prices and availability of resources and cannot be regarded as simply an unconstrained ‘‘wish list.’’ Although most persons would prefer that all needs are met (i.e., all transpor- tation issues are resolved), both the scarcity of 376 e ISSUES AND POLICY RESOLUTION resources and the existence of competing needs makes such an eventuality impossible. Several of the NTPSC Special Reports (primarily numbers 1, 2, 3, 7, and 9) provide supplemental information about needs and resource constraints. (2) The Ability of our Current Transportation Systems to Meet the Projected Needs The NTPSC’s scenario development and forecasting models provided estimates of the ability of the transportation systems to meet the projected needs, using baseline policies. Chapters 5 to 11 describe the scenarios, forecast models, and results. Chap- ters 1 to 4 and 7 describe the baseline transportation policies. Chapter 8 details the NTPSC energy policy assumptions used in its modeling. Together these chapters show how well the U.S. would fare using its existing policies under various possible future scen- arios. Those issues that remain unresolved, or new problems that are seen to emerge, are summarized in Chapter 12. Several of the NTPSC Special Reports (numbers 1, 2, 3, 7, and 9) provide supplemental information. (3) The Proper Mix of Highway, Rail, Waterway, Pipeline, and Air Transportation Systems to Meet Anticipated Needs The approach used by the NTPSC was to forecast the future mix (e.g., as between modes, passengers, and freight, regions, and public versus private owner- ship and operation) under baseline policies, and to examine those issue areas that signalled continuing or emerging problems in the future. The NTPSC policy recommendations of Chapter 13 then sought to resolve the issues with the least possible intrusion into private markets. The consequences of the new policies were discussed in Chapter 14, with an indication of the impacts on the mix of transportation, as well as on many other aspects of transportation. Thus, the “proper mix” is defined by the NTPSC to be as close as is practical to the mix that would be provided by private markets operating in a competi- tive atmosphere. Several NTPSC Special Reports (numbers 1, 2, 3, and 7) provide additional information about what might be the proper transportation mix under various conditions. (4) The Energy Requirements and Availability of Energy to Meet Anticipated Needs Energy was singled out by Congress as of particular importance to transportation, because energy is both used and carried by transportation. Forecasts of energy requirements, availability, and prices are given primarily in Chapter 8, although Chapters 9, 10, 11, and 14 provide additional information. In particular, Chapter 14 suggests what might happen to change these energy requirements, availability, and prices if the NTPSC policy recom- mendations are implemented. NTPSC Special Re- ports Nos. 1, 2, and 9 contain additional details about the relationships between transportation and energy. (5) The Existing Policies and Programs of the Federal Government which Affect the Development of our National Transportation Systems Federal institutions are discussed in Chapter 1 together with the private institutions that influence the operations of U.S. transportation systems. Chap- ter 2 discusses the complete array of Federal policies and programs seen to exist today, reflecting the original research of NTPSC Special Report No. 6. Chapter 3 adds a discussion of the interactions between levels of government that influence the effectiveness of Federal policies and programs. Environmental and energy policies are discussed in more detail in Chapters 7 and 8, while NTPSC Special Reports Nos. 4, 6, and 8 give details of Federal policies and programs. (6) The New Policies Required to Develop Balanced National Transportation Systems which Meet Projected Needs Chapter 13 provides the NTPSC policy recommenda- tions, while Chapter 14 projects impacts of the new policies and Chapter 15 discusses their implementa- tion. Why these policies are required depends on the data and analyses developed in all other chapters and NTPSC special reports. The NTPSC policy recommendations also propose that many of the existing national transportation policies and pro- grams discussed in Chapters 2 and 3 should be retained. CONCLUDING COMMENTS The NTPSC has identified major problems involving current national transportation policy. Economic regulation has been too restrictive. Transportation and energy demands for capital may not be met under existing rates of return and levels of user fees. Solutions to the first problem are straightforward, although not easy, and implementation of the correc- tive policy contributes to solving the second prob- lem. Thus, much less economic regulation of trans- portation is needed. For severe shortfalls of capital facing the railroad industry, relaxation of regulation can go a long way toward permitting the rail industry to develop its own capital sources. Coal movements spurred by effective U.S. energy policy choices can also contribute to the solutions. Under present policies, the automobile costs of ownership and operation will continue to fall in relative terms (including government highway expen- ditures). Even though urban transit fares may like- wise continue to decline in real terms, capital and Operating costs (and hence deficits) are seen as continuing to accelerate. Highways will also experi- ence capital shortfalls and declining service under current policies. User fees to reflect fully the costs of automobile and motor carrier use of highways would be unlikely to precipitate much change in aggregate motor vehicle use. On the other hand, urban transit fares sufficient to cover costs would reduce ridership drastically. Policies to finance accelerating urban transit and highway shortfalls must be tempered with procedures to increase productivity, through better SUMMARY AND CONCLUSIONS e 377 management and labor practices and through appli- cation of proper economic analysis. Given growing transportation demand, increased congestion, and capital shortfalls, attention should be paid to interconnections among modes. Each mode must be used to its greatest advantage, but, compared to present U.S. policy, much more must be done to promote the efficient use of these modes as interconnected systems of transportation. The research reported above, and the material in the appendixes that follow, together with the NTPSC policy recommendations, are meant to facilitate the continuing evolution of national transportation policy. Additional Views of Commissioners COMMISSIONER GILBERT E. CARMICHAEL and COMMISSIONER GLENN M. ANDERSON BACKGROUND As part of its mandate, the National Transportation Policy Study Commission has analyzed the existing policies affecting transportation as it presently func- tions. These policies are evident in every segment of government. Social, urban, agricultural, and educa- tional programs, among others, depend on some form of transportation policy. Many of the policies originate from laws and regulations which affect various government agencies and their programs, and are developed outside of the U.S. Department of Transportation. The nation’s goals can be loosely described today as mobility, growth, employment, and improved quali- ty of life. Often, these goals have been supported through ‘unwritten’ policies that had unexpected results. Prior to October 1973, the nation’s goals were to a great extent achieved through the con- sumption of what was presumed to be an unlimited supply of cheap fuel and the movement of cheap raw materials to the industrial, financial, and population centers of the nation (and for that matter of the western world.) One national transportation policy of the United States was to build highways to accommodate millions of big, relatively inexpensive, fuel-wasteful cars, which resulted in the movement of the popula- tion to the suburbs. Rather than connecting major cities, the Interstate system, with its beltways, cir- Cumvented them. Development consequently took place in the rural countryside at the exits. In fact, shopping centers which grew up at those exits are advanced versions of the old cross-roads store. They led to the development of new suburban towns around an old hub city. This eventually killed the center city. Another aspect of our unwritten national transpor- tation policy was to move energy (coal, oil, gas, and electricity) to the people regardless of the Btu costs. At present, raw materials are moved the same way. For example, a Mississippi bale of cotton may travel 1,000 to 5,000 miles before it is put on the spindle and turned into cloth, which is then shipped back to clothing manufacturing plants in Mississippi. The amount of fuel required to accomplish this has been ignored in the past because it was perceived to be in the best interest of the country to use the fuel. Very little thought has been given to the most efficient use of energy. The nation’s unwritten policy was to keep energy products such as gasoline and diesel as cheap as possible. The highway funds and state road building programs were based on a cents/gallon tax, thus making it necessary to in- crease consumption to produce more revenues to support or expand the road network. Oil refining also was not based on the most efficient use of the Btu’s in a barrel of oil, but rather on the most dollars in that barrel, based on artificial prices. Another example of Btu inefficiency is the fact that to make unleaded gas requires a greater percent of the energy in the barrel than to make the regular product. Data show that as much as 17 percent of the energy (Btu’s) in a barrel is consumed in the refining process." About the kindest thing we can say about the pre- October 1973 era was that it was a gaudy, conspicu- Ous, Consumptive, wasteful, and polluting time. The nation had built a highly mobile society based on the unwritten laws of 1) cheap fuel, 2) consumption, and 3) waste. In these days of huge deficits (of dollars) a new value is coming into focus. A nation may spend extra dollars by printing more, but it cannot replenish its energy supply. Thus the need to budget energy becomes very real and critical. A new term similar to “cost/benefit ratio” in the world of money is easily restated as ‘“‘Btu/efficiency ratio’ in the world of energy. The question is: How does a nation budget its supply of Btus to produce the Btu/efficiency ratio desired? Once a country realizes it has a finite supply of energy, then the logical step is to use each Btu available to its optimum value. Once this is under- stood, a nation will think twice about the very energy expensive method of moving raw fuel or goods long distances to conversion or consumption points. We now find our nation in a transition time from the ‘“‘cheap energy” era prior to October 1973, to a new “‘expensive energy” era. This may help explain why existing policies do not seem to be working, and why our economy seems to be so irrational. Much of the inflation is not inflation at all, but simply the 'Many oil suppliers in the 1950’s were so sure that cheap nuclear power was on the way that they anxiously looked for long term contracts to use up their supplies of gas and oil before the new power came on line. 379 380 @ ADDITIONAL VIEWS OF COMMISSIONERS repricing of the world’s energy and the resulting repricing of products that require the use of energy in their production. Attempts to preserve the old era are frought with danger. The challenge to the nation is how to build a dynamic economy based on the new implied laws of 1) higher priced energy, 2) conservation, and 3) recycling. Relevant new transportation policies must reflect this new consciousness. BACKGROUND OBSERVATIONS The Commission’s final report meets its statutory mandate. It provides, in essence, a set of short-range policies to the year 2000, based on the needs of the present transportation system with its present infra- structure. We feel, however, that it is necessary to consider additional policies, along with the above supporting philosophy, which address the long-range transportation needs of this nation. These policies are important in that they support a transportation system that will produce economic growth, employ- ment, and quality of life, but will protect environmen- tal and social values, provide safety, and most important, promote energy conservation through Btu efficiency into the next century. In view of the changing nature of public policy-making in transpor- tation (resource constraints, limitations on environ- mental degradation, etc.) decisions for the future are more complex than ever. Many of the decisions may involve greater levels of government control upon American freedom of mobility because of the need to reshape the transportation system as quickly as possible in order to conserve fuel and to keep a healthy economy. The following premises represent the underpin- nings for new transportation policies for the new era. Each has a distinct influence on the type and form of the future tranportation system of the United States. First, there is a limited supply of fuel. Present transportation policy acknowledges this premise while ignoring the tough decisions implicitly man- dated by such acknowledgement. Transportation, which is fundamental to the economy of the nation, must increasingly compete with other users and justify its need for its share of this limited supply. Secondly, the country consists of fairly homoge- neous geographic regions that have serious trans- portation problems peculiar to themselves. Present transportation policy ignores this fact and attempts to impose uniform guidelines upon a diverse nation. This approach has failed by not allowing each region to develop in the most appropriate and efficient manner to meet the needs of its population and industry. Third, there is a need to take into account the changes that are possible in the type and form of transportation system available to the country. Pre- sent policy assumes that rail, highway, air, water, and pipeline transportation will continue to grow at current rates. It does not acknowledge changes that may result from research and development, nor does it consider innovations that are already beginning to have an impact, such as telecommunications for the transportation of information. THE EMERGING TRANSPORTATION SYSTEM AND POLICIES The policies which follow are designed for a better transportation system that must emerge in response to the above premises. This system differs from the present one. It is an “ethical system’ in that it provides for growth and is Btu efficient. Energy would be ‘‘budgeted’’ on the basis of the most efficient use; waste would be reduced. Manufactur- ing and processing plants would be encouraged to move to the energy sites so that only semifinished and finished products would be shipped, cutting down appreciably on the net energy costs.? The U.S. DOT and the emerging transportation system would be regionally oriented with the primary Federal role being to provide the resources to meet interregional needs consistent with national goals. For example, an independent National Resources Planning Board could be created to recommend equitable resource allocation and development poli- cies to the Congress. The following policies are essential for the devel- opment of the emerging transportation system dis- cussed above. (1) Restructure the Department of Transportation (DOT), for the new (high cost) energy era, so that it encompasses all modes in the four transportation universes:° a) TRANSPORTATION OF PEOPLE for business and pleasure by highway, air, water, and rail. b) TRANSPORTATION OF GOODS by highway, air, water, and rail. c) TRANSPORTATION OF ENERGY by pipeline, rail, powerline, highway, and water. d) TRANSPORTATION OF INFORMATION by ca- ble (wire and glass fiber), microwave, and satellite. For definition and explication of the term ‘‘net energy” see: “Energy-Costly Energy is Wasting Resources, Some Analysts Worry,” The Wall Street Journal, May 3, 1979, p. 1. 3The NTPSC Subcommittee on Advanced Technology put forth the idea that transportation of information and energy may represent two further fundamental groupings. This restructured DOT would disperse funds to the regions and promulgate rules on 1) safety, 2) envi- ronmental protection, 3) resource efficiency among the modes, and 4) research and development to improve the modes as well as to stimulate and develop alternative technologies to improve or sub- stitute inefficient systems. The DOT would develop or implement policies which are primarily concerned with meeting interregional transportation needs, con- sistent with other national goals. For example, na- tional transportation policy should be compatible with national urban policy so that decisions about the growth and direction of cities can be supported by the transportation system. The same is true of rural development policies. A National Resources Plan- ning Board, not within DOT, might be responsible for such coordination. (2) Create a strong, regional transportation system to solve the peculiar problems of the individual regions. Strong regional transportation offices of the restructured U.S. DOT, headed by Deputy Secretar- ies, would represent the Secretary of Transportation below the national level. (3) Economic deregulation and intermodal owner- ship should be strongly encouraged to produce within the regional context the most fuel efficient and appropriate transportation systems. The government should allow intermodal ownership to take its course and should only intervene when the results are Clearly contrary to the interest of the public. (4) Individual modal trust funds‘ are contrary to the new concepts of intermodal ownership and regional decision-making. A national transportation trust fund should be created and allocated on a regional basis. A national trust fund would allow for innovative transportation development. Some localities might, for example, desire to build combination air-bus terminals to connect rural people with the new passenger transportation system. Some _ regions could find that the development of all-freight high- ways would best meet their transportation needs. Money from the trust fund would be provided through revenue sharing-type grants for work programs de- veloped by the states and approved at the regional level. (5) Petroleum fuels are so essential to the daily functioning of transportation operations that where practical, petroluem supplies for transportation should be given first priority. This does not relieve the ‘Modal trust funds were established during the cheap energy era and were based on consumption. Trust funds for the year 2000 must reward conservation and efficiency to produce the best use of Btus available for a balanced system. ADDITIONAL VIEWS OF COMMISSIONERS @ 381 transportation sector of its responsibility to reduce wasteful consumption of petroluem fuels. In this regard, the Congress may have to levy additional energy taxes. In addition, domestic energy develop- ment should be accelerated. Extensive research and development efforts should be undertaken to pro- duce alternative fuels. Fuel should be allocated on a regional basis, based on a Btu-efficient energy allocation formula. This country should continue to buy foreign fuel and to hold a large percentage of newly discovered U.S. fuel in defense reserve. (6) Levy a variable fuel tax’ in support of the transportation trust fund. In order to do this, it would be necessary to remove all present forms of tax on fuel. Such a tax should be sufficient to cover the costs of promoting research and development, pro- viding for maintenance and upgrading of existing transportation systems, and promoting conservation and allocation of the national fuel supply on a Btu- efficient basis. (7) Research and development should be directed toward the rapid development and reshaping of a “balanced” transportation system in the following manner: a) Use the domestic energy supply as cautiously as possible to achieve maximum efficiency in mak- ing the energy supply last as long as possible; b) Stimulate research for alternative fuels and super fuel efficient engines and vehicles; c) Stimulate substitution of modes or systems that cannot be made fuel efficient. For example, high- speed FAX® mail could replace much of the existing Post Office system. d) Telecommunications should be stimulated to replace as much paper and people transport as possible. (8) International transportation policy is different from domestic policy for both passengers and freight, and should reflect world rules and conditions so as to allow U.S. transportation systems, manufac- turers, and suppliers to compete for world trade and travel on an equal basis. 5One example of such a tax is the case of Washington State. Washington's variable fuel tax may vary between 9 and 12 cents per gallon. The tax is, in effect, a percentage tax in average retail sales which is set every 6 months. A national variable fuel tax would not necessarily be structured the same way but might employ similar concepts. SFacsimile is the transmission of graphic material (such as a letter) electrically (wire or radio) and its reproduction. At present, a page can be sent anywhere in the U.S. (or many places overseas) in three seconds to six minutes, depending on the method and equipment used. 382 e ADDITIONAL VIEWS OF COMMISSIONERS SENATOR JOHH H. CHAFEE | would like to take this opportunity to congratulate our Chairman, Congressman Bud Shuster, for a job well done. His patience, cooperation, dedication and leadership have been valuable to the Commission. My Colleagues on the Commission should be com- mended for dedicating their time and effort to this study. Also, | would like to extend my appreciation to the staff members whose hard work was indispens- able to the completion of this review of national transportation policies. One of the high points of my experience on the National Transportation Policy Study Commission was to plan and chair a New England Regional hearing in Providence, Rhode Island on November 17, 1977. Congressman Bud Shuster, Commissioners Gilbert Carmichael and James McConnon, Public Members of the Commission also attended. These hearings allowed me to gain a better understanding of the transportation problems of the ‘real world’. The problems of accessibility for handi- capped persons were brought to light; the need for an upgraded rail system in the Northeast with more access for commuters was suggested; and Mr. Charles Butler, President of Air New England, in- formed us of the problems that the smaller commuter airlines have in meeting the demands for safe, frequent and dependable feeder-type air transporta- tion linking its smaller cities with the hub cities of Boston and New York. One of my concerns for the future of transporta- tion in the United States is the issue of energy as it relates to transportation. | would like to focus on the key results of the Commission’s findings as reported in the forecast chapters—especially the energy chapter—that, in my opinion, have not been brought forward into the policy chapters. Because of the crucial interdependence between transportation and energy and because of the critical role that both play in the nation’s health, well-being and even survival, it is important to draw these out. In doing so, let me commend the effort that developed these regional energy-transportation forecasts. As | understand, this is the first forecast with this level of detail. As is true of some other areas of the country, New England is not blessed with abundant petroleum resources. Therefore, we in New England must seek to share interregionally those scarce resources while at the same time promote appropriate regional energy development with an environmental concern. For regions with fewer fossil resources like coal or oil, conservation should play a vital role. The fore- casts demonstrate that New England will lead the nation in achieving fuel savings in transportation and other sectors. Because of its size, geography and pockets of high-density population, New England can become a show place for intercity mass transit through car pools, vans, buses and trains. It is my hope that this study’s recommendations will prove useful, and that its thought-provoking ideas will contribute to continued serious discussion of transportation policy matters in the crucial dec- ades ahead. COMMISSIONER R. L. “DICK” HERMAN The Commission has recommended an integrated set of national transportation passenger and freight policies which are predicated on a number of major policy themes (Chapter 13, Policy Recommenda- tions). | have endorsed and strongly support both these policies and the underlying themes that sup- port them. The Commission failed, however, to recommend establishment of a Railway Trust Fund, or at least to recommend that the Trust Fund be given further study. In this instance, the Commission has been inconsistent. | consider this omission of sufficient significance to merit these supplemental remarks. Two major policy themes underlying national transportation policies were identified by the Com- mission. They are (1) ‘‘national transportation policy should be uniform’ and (2) ‘“‘users and those who benefit from Federal action should pay’. While uniformity is not desirable for its own sake, policies should be even-handed. A Railway Trust Fund would go a long way toward eliminating present policies that work at cross-purposes. In the*case of highways, the Commission ap- proved the Highway Trust Fund which accounts for collections of user taxes imposed on such items as fuel, lubricants, vehicles and parts. The Surface Transportation Assistance Act of 1978 (Pub. L. 95— 599) requires the Secretary of Transportation to conduct a Highway Cost Allocation Study to deter- mine, among other things, the costs of the use of Federal-aid highways by different vehicle classes. Similarly, the Airport and Airway Development and Revenue Act of 1970 (Pub. L. 91-258) established taxes for users of the airways and directed a cost allocation study which was transmitted to the Congress in September of 1973. Last year, Congress enacted the Inland Waterways Revenue Act of 1978 (Pub. L. 95-502). It established a new Inland Water- ways Trust Fund to account for fuel tax collections to be paid by users of the Federal waterways, beginning in 1980. Again, Congress required a cost allocation study to determine the costs and benefits attributable to the various beneficiaries of Federal expenditures on the country’s inland waterway system. The policy theme was consistent—users and those who benefit from Federal action should pay their fair share of costs or value of benefits. In the case of trucks and airlines, Congress directed stud- ies to determine if fair shares are now being paid. Charges to waterway users would be started gradu- ally. In my view, developed river segments that have the ability to pay (full year operation, adequate river capacity and adequate traffic) should be guideposts for full cost recovery. Undeveloped segments could pay for proportional recovery; a fuel tax credit should be applied to prevent cross-subsidies. The important fact is that Congress has enacted legislation to recover Federal expenditures for all modes of transportation except railroads. Further- more, it has required studies to determine the amount of recovery for each class of user. The question then becomes, why are users of railroads exempt? Establishment of a rail trust fund to identify Federal benefits and provide a method for assess- ment and collection of rail user charges would go a long way toward correcting this inequity. In all probability, this could become more important with the passage of time as Conrail or railroads in similar circumstances need additional Federal assistance. At the Commission’s meeting on April 25, 1979, the question of a Railway Trust Fund was discussed. Commissioner/Congressman Gene Snyder (Rep., Ky.) read into the record a statement pointing out that railroads receive many kinds of Federal aid. Specifically mentioned Federal payments were: con- tributions to the Railroad Retirement Fund deficit; direct grants to trustees of bankrupt railroads to permit continued rail service, for rehabilitation, and to pay creditors; purchase of Conrail perferred stock and debentures; payments to eliminate railroad-high- way grade crossing; and payments for properties of bankrupt railroads taken over by Conrail. The State- ment also reported, ‘‘All told, Federal capital assis- tance over the last 20 years totals approximately $8 billion, of which there is little prospect of recovery for some $5 billion.” The Commission was not unmindful of the problem | address here. The Final Report contains this statement: ‘‘The ‘user-pays’ principle,should also apply to the rail mode.’’ (Chapter 13, Policy Recom- mendations). For myself, | would go further, and recommend establishment of a Railway Trust Fund ADDITIONAL VIEWS OF COMMISSIONERS e 383 similar to the other modes, or at least recommend that the Congress direct a study of the situation. Finally, while | differ from the majority of my fellow Commissioners on this particular issue, it would be inappropriate of me to close without reference to the support of other Commissioners on a number of matters that | consider to be of great importance, which were adopted as policy recommendations. | will limit these remarks to just two: first, the recom- mendation for establishing a zone of reasonableness, subject to antitrust laws, which provides needed pricing freedom to all for-hire carriers; second, the recommendation that would require motor carriers, as a condition of the right to operate, to demonstrate to proper authority that adequate insurance (or proof of equal financial responsibility) has been provided to protect the public, and that the Federal heavy vehicle highway use tax has been paid. Policies recommended by the Commission for motor carrier regulation would result in some prob- lems. They would ease entry into certificated com- mon and contract carriage, and provide regulated carriers with pricing freedom within an expanding zone of reasonableness to be established by the Congress. These policies open the highways to additional truckers, thereby increasing the risk of accidents, and accordingly, the incidence of person- al injury and property damage. In addition, the new rate freedom is likely to intensify price competition, a goal of deregulation. It is also likely that some Carriers, if pressed financially, will be tempted to cut corners in the area of safety. Thus, the impact of either or both of these policies may have serious consequences for the public. Additional safeguards to life and property on the highways are clearly needed. The recommendations of the Commission forth- rightly address this problem. To register their vehi- cles and obtain license plates in one or more states, all carriers must pay the Federal highway use tax (a portion may be retained by the states to cover the cost of collection). But more important, all motor carriers must show they have existing insurance (or equivalent financial responsibility—covering public liability, property damage, cargo (for other than private carriage), and environmental restoration. Certificated carriers must show they have minimum coverage of $1 million, single occurrence, or some other minimum amount sufficient to require periodic “on site” inspection by an insurance company. All in all, the recommendations of the Commission have covered what | believe to be the major con- cerns of the transportation industry to the year 2000, and | am pleased to support the final report in this regard. 384 © ADDITIONAL VIEWS OF COMMISSIONERS CONGRESSMAN JAMES L. HOWARD May 11, 1979 The Honorable Bud Shuster Chairman, National Transportation Policy Study Commission 2000 M Street, N.W. Washington, D.C. 20036 Dear Mr. Chairman: The National Transportation Policy Study Commission is at the point of fulfilling its Congressional mandate. | am pleased to observe that as Chairman of the Commission your leadership has been well-organized, resourceful, dynamic and inspirational, eliciting the best of the Commissioners’ talents. Mr. Chairman, | commend you and my fellow Commissioners on the intensity of your labor, and theirs, and on the quality of the Commission’s final report. Accordingly, | respectfully request that the record include my affirmative vote in approval of the issuance of the Commission’s final report. My approval of the report, however, should not be construed as approval of all of its ‘specific recommendations. As Chairman of the Subcommittee on Surface Transportation of the Public Works and Transportation Committee, | will have to chair its Members’ consideration of many of the very issues considered by the Commis- sion. For example, the Subcommittee on Surface Transportation will oversee and consider legislative proposals regarding the whole gamut of economic motor carrier regulation, the relationship of transportation to energy resources (and this of necessity will include the whole question of financial support, including taxes, of all modes of transportation within our jurisdiction), and other vital transportation issues confronting our nation. | fear the genuineness of my objectivity may be open to question if at this time | endorsed specific recommendations on matters yet to be considered by the Subcommittee. Therefore, | ask that my approval of the report’s issuance not be considered an endorsement of all of its recommendations and | respectfully request that this letter be included in the report. It cannot be denied, however, that the quality of the Commission and of its report is such that all its recommendations must bear substantial weight in all the Subcommittee’s delibera- tions and recommendations and in the deliberations of all legislative and policy- making bodies. Every best wish. Sincerely, /s/ James J. Howard James J. Howard Chairman, Subcommittee on Surface Transportation ADDITIONAL VIEWS OF COMMISSIONERS e 385 SENATOR RUSSELL B. LONG INTRODUCTION | wish to commend the Commission and the staff on a job well done. In the interest of completeness, | would like to add the following views. NEED FOR LONG-TERM LOOK AT TRANSPOR- TATION AND ENERGY | feel the key findings of this report in the “‘forecast’”’ chapters have not been included in the policy chapters. Because of the crucial role of transportation and energy to our nation’s health and safety, | feel it is extremely important to spell out the concerns and impacts on our future policy decisions. This is important because transportation and energy play a vital role in our economy. Also, decisions to improve them require large sums of money, and perhaps as long as 20 to 25 years. This is not an extreme period of time by transportation and energy standards. As pointed out in the forecast chapters, transpor- tation and energy play a dual role. Transportation provides the facilities to move needed energy quanti- ties—both old and new. Similarly, energy, as a fuel, is the lifeblood by which transportation makes possi- ble a great degree of our economic strength. Policy decisions in transportation that do not recognize the adequacy of fuel for transportation are not rooted on firm ground. IMPLICATIONS OF FORECAST | understand the development of an integrated transportation and energy forecast capability is a first stage of a regional system needed for future policy decisions. | strongly suggest this effort con- tinue so the public can benefit. Two overriding themes emerge from the forecast. First, our transportation system structure must be upgraded and maintained to enable it to move the domestic energy required to meet our future energy needs. This will require substantial funding. Second, we must strongly develop domestic fuels for trans- portation, which are vital for economic survival. This means increased domestic production of crude oil, rigorous development of alternative ‘‘petroleum- based”’ sources (coal and shale oil) and renewable liquid fuels (alcohols from biomass, solid waste and coal). In transportation, there must be rigorous development of fuel-efficient (and safe) vehicles. Since the forecasts indicate the growing reliance for passenger movement on the auto and the airplane, which use most of the transportation fuels, they must be as fuel-efficient as possible. While observing these vital needs, we still must take into consideration the nation’s concerns over the environment. SPECIFIC RECOMMENDATIONS @ Continue development of the ability to forecast future transportation and energy needs. @ Provide needed domestic liquid fuels for transpor- tation needs from many sources to reduce foreign imports. @ expanded domestic petroleum, especially Alas- ka and lower 48 traditional areas @ develop synthetic crude from coal and oil shale @® develop synthetic alcohols from biomass, solid waste, and coal (e.g., gasohol) @ develop alternate fuels, such as synthetic gas (from coal), geo-pressurized methane, and so- lar that will free up petroleum-based fuels for transportation purposes (from forecast chapter 8). @ Develop and maintain needed transportation ca- pacity to handle new expanded domestic fuel movements—especially for movement of coal (for power and industrial use) and for synthetics developed from alternate feedstocks—especially the removal of potential regional bottlenecks in the waterways transportation network occurring post 1985 (from forecast chapters 8 and 9). @ Develop and rigorously promote the commerciali- zation and usage of fuel-efficient autos, trucks, and aircraft (promote energy-efficient technology) (from forecast chapter 6). ® Streamline regulatory bottlenecks for: ® coal development, movement, and usage @ synthetic fuel development ® domestic refinery siting requirement so that anticipated transportation demand can be met with domestic energy (e.g., multi-permitting process for site selection for alternate fuel develop- ment) (from forecast chapters 7, 8, and 9). @ Development of fisca/ incentives to generate the large amounts of money projected to be need- ed—both public and private—to develop needed transportation and fuel development (from fore- cast chapters 8 and 9). @ Development and scrupulous evaluation of risk assessments of environmental, health and safety factors associated with alternate fuel develop- ments, movements of fuels, utilization of fuels, and disposal of fuel wastes (from forecast chapters 7 and 8). 386 e ADDITIONAL VIEWS OF COMMISSIONERS SENATOR LARRY PRESSLER At the outset, | wish to commend Chairman Bud Shuster, my fellow commissioners, and the entire commission staff, for the excellent job they have done in developing and publishing this very timely document. My only regret is that my appointment to the Commission earlier this year, came too late to allow me to make a more meaningful contribution to the body of this report. It is primarily for that reason that | have sought this forum to state the views of an elected official from a predominantly rural, agricultur- al and sparsely-populated state. In the ideal marketplace envisioned not too long ago by Adam Smith, transportation, like other ser- vices, would be provided to the extent that they are profitable to the transport owner. However, as every reader of this report knows, we do not have an entirely free economic marketplace in the United States. In fact, we haven’t had anything close to such an ideal for over 50 years, nor are we likely to have it in the near future. Therefore, we must act prudently when recommending transportation policies through the year 2000, since it is simply impractical for us to act otherwise. There are several very significant events (which only in retrospect, may loosely be characterized as acts of ‘transportation policy’’) that have largely shaped the transportation infrastructure in existence today. 1. Nearly 100 years ago, the Federal government began to regulate rail transportation, which was then the predominant mode of transport. 2. Over 60 years ago, the Federal government began to assist the states in developing a farm-to- market road system, to help the nation’s farmers get out-of-the-mud. 3. About 50 years ago, the Federal government acted to support a fledgling aviation industry, and to protect an emerging motor carrier industry from possible takeover by the then, still dominant, railroad industry. 4. While these new major modes of transport (air and motor carrier) were being protected and nurtured towards their eventual maturity, the Federal government continued to maintain, im- prove, and expand a modern inland waterways system. 5. Since the end of World War Il, the states, both on their own and in conjunction with a massive Federal-aid highway program, have developed the most extensive and modern nationwide road network ever built. In retrospect, these major transportation events were probably more influenced by the political realities of the day than by the economics of the marketplace. In fact, the sheer magnitude of some of these transport programs has contributed largely to many diseconomies in. the transportation market- place. Examples of such diseconomies include the following situations: a. Prior to the Great Depression, nearly all public transit was privately financed and operated. By the early 1960’s, new urban highways contributed significantly to the depopulation of our central cities and competed directly with public transit. These new highways literally forced every major transit system from profitable, private ownership to subsi- dized, public management. b. Federal development of the national airspace system both stimulated and generated commercial air travel to such a degree where this mode virtually supplanted all business and much leisure intercity travel that had, heretofore, been almost entirely served by our pervasive, national rail network. c. The (near) completion of the Federal-aid interstate highway system, supplemented by many state turnpike roads built in the 1950’s, significanily contributed to the diversion of high-value (and profitable) freight traffic from rail to motor carriage. We now have a transportation market where: 1. Air transport relies solely on Federal assistance for safety and control systems, not to mention aviation research and development largely initiat- ed by the U.S. Air Force and/or NASA. 2. Motor carriage is totally dependent on the Feder- al-aid highway, and local street and road systems. 3. Public transit is heavily subsidized at all govern- ment levels for operations, while its capital pro- grams receive massive Federal grants. 4. Inland water users (until only recently) paid nothing to ply a system totally maintained and improved with Federal funds. 5. Intercity rail passenger service is operated by a federally-created corporation. Passenger contri- butions for operating costs average only 37 percent, while all capital costs are assumed by the Federal government. 6. The rate of return for the entire railroad freight industry is so low that the Federal government has become the lender of last resort for many rail Carriers today. Given the historical transportation events cited earlier, and given the litany of heavy Federal involve- ment in virtually every mode of transportation as shown above, it should be clear to even the casual reader that today’s marketplace is nowhere near the ideal marketplace that many of us on the Commission would like to see. Therefore, we must deal with the realities of today when presenting recommendations for transportation policy through the year 2000. The facts that we must recognize today are: a. Our nation is no longer self-sufficient in trans- port energy, whose requirements exceed half of our petroleum consumption. b. The above lack of energy self-sufficiency is the principal factor in the hemorraging of our national wealth to foreign countries, many of whom are unfriendly to us. c. The critical export item that helps to alleviate our current, intolerable imbalance of trade comes from rural, sparsely-populated states who are among the most efficient food-growing areas in the world. d. It is certainly not in the best interest of this nation to encourage further depopulation of our rural areas towards crowded urban areas, which already contain so many people who require exten- sive public support for every facet of life (i.e., food, health, and housing assistance). In the light of the facts cited above, it is simply inconceiveable that any transportation policy be recommended which in any way inhibits the produc- tion of valuable, exportable agricultural commodities. The number of agricultural workers, as a percent- age of agricultural consumers, is continually de- creasing primarily because of increasing efficiency in the agriculture industry. As a consequence, | find it unacceptable to expect today’s agricultural produc- ers to pay still more for the transport of their greatly needed products. Therefore, | take great exception ADDITIONAL VIEWS OF COMMISSIONERS e 387 to the extent that this report suggests that the agricultural producers of sparsely-populated grain states increase their transport costs to move agricul- tural products, whether by rail or truck, when it is precisely the sale of these products abroad which so greatly improves our national balance of trade. The citizens of all farm states currently support multi-billion dollar public transit programs, which hardly serve farmer-citizens. They support an equally costly national airspace system, which at best, serves rural areas infrequently. My own state has never even been served by Amtrak! While | certainly encourage the thrust of the Commission’s approach to the recommending poli- cies that would return us to the marketplace and let the economic forces therein largely determine our nation’s transportation actions, | must dissent from any recommendations that place additional transport cost burdens on a relatively small, but highly produc- tive segment of our people. | am confident that many of my fellow Commission- ers would support my position. Since my tenure on the Commission, which was created in 1976, has only been three months, the press of senatorial business has prevented me from actively seeking their support for my position. This | regret. Finally, | am grateful to my respected Congres- sional colleague, Bud Shuster of Pennsylvania, for extending to me the courtesy of incorporating my additional comments to this very important report. | commend him on his successful leadership and direction in recommending approaches to one of our nation’s most vexing issues: national transportation policy. CONGRESSMAN GENE SNYDER Over the last two years our committee has studied and debated the various aspects of making certain Our country has an adequate transportation network serving our nation in the year 2000 to meet the distribution needs of our citizens. This effort has been one of extreme complexity but, hopefully, we have shed some light on the subject that will be of benefit to those involved in the transportation of products. | believe my fellow mem- bers in Congress will find it useful in oversight hearings when studying the problems of moving people and goods from one place to another. The most vital theme of our work, | believe, was to promote competition. Not destructive competition, but healthy competition between and within modes to assure a choice to shippers and consumers. Compe- tition should allow the transportation mode which can do the best job at the most reasonable price to participate in the traffic. Inherent advantages of a particular mode should prevail if our citizens are to enjoy the blessings of an efficient distribution net- work which presently sets us aside from most of the other countries of the world. The advantages of steel rail, a concrete roadbed, a flowing pipeline, an improved waterway, or three- dimensional airspace, all have their places and inherent superior benefits. The advantage may be over the entire movement of a product or may be for just a segment of it. Hopefully, a government policy will promote the use of the most efficient carrier over a given segment, and will assist in intermodal coop- eration and coordination rather than a confrontation policy which only leads to destructive practices to the detriment of our overall transportation system. In promoting competition, our Commission sup- ported a policy of lessening government regulatory 388 e ADDITIONAL VIEWS OF COMMISSIONERS intervention into the affairs of the various modes; however, we believe the concepts of present anti- trust policy should prevail, including their treble damage deterrents, when any phasing out of eco- nomic regulation occurs. In order to serve the transportation needs of all the distant regions of our country, we cannot recommend policies which would repeat the history of monopoly power which caused our lawmakers to set up burdensome regulatory bodies in the first place. As long as human nature is involved, | believe there will always be a need for an oversight review of the practices of our various transportation entities. We must continue to oppose non-competitive practices, whichever mode may engage in them, such as using the power of a monopolistic route to subsidize a non-profitable route in order to eliminate a competitor by engaging in some type of predatory rate cutting. Our debate recognized this problem and | only emphasize our concern. When the Commission was set up, | was disap- pointed that there was not a broader spectrum of public members. Though | believe the congressional members were well balanced to reflect all the varying concerns we addressed, | feel certain segments of our economy did not have an advocate to reflect the views we needed for a balanced final product. For instance, sadly lacking was shipper represen- tation. Throughout our NTPSC deliberations, we continually talked about the health of carriers, but rarely did | hear about the shipper’s point of view. Many industrial plants throughout the nation have located where they presently are situated because there was a known transportation policy which would provide them with rates to move their products at a reasonable cost, and there was an assurance they would receive the necessary service to move these products. It disturbs me to think that many of our nation’s farmers, and many of our factories located off the beaten path, will no longer receive service, or only receive it at an exorbitant rate, if we radically change our transportation policy. We have evolved, rightly or wrongly, a transporta- tion policy over many years. Now, in the name of correcting certain misapplications of law, regula- tions, or policy decisions, which have caused a deterioration of the railroads in some areas, airline competition in others, and certain built-in deficien- cies for every mode, we may find ourselves back ina different commission debating on a three year study of correcting the farm policy, or the steel policy, or the widget policy, due to transportation problems that we may cause by our decisions. Also, though we had a Commissioner in the early part of our deliberations who was from the aviation sector, he resigned and the airline industry was not represented in the final critical review stages of our report. There was never a public representative of the maritime industry, neither from the deep sea, Great Lakes, or rivers, who would have had a vital stake in our deliberations. Though the pipeline had a representative through ownership by a railroad company Commissioner, | believe his main concern was the railroad industry’s position rather than the pipeline’s point of view. Additionally, there was no one from labor or any one person representing the views of the consumer, except those of us from the public sector serving our constituents. It is unfortunate that, though we took public testimony throughout the country, we did not have on the Commission itself public members whose knowl- edge would have given us insight and answers to questions we had regarding the interface of the differing modes. Hopefully, any deficiencies to which we may not have given proper attention will surface from those knowledgeable in their field when we enter into any deliberations within the congressional committees debating the transportation policy and they can be addressed in depth at that time. Transportation is a service industry and has been given privileges over the many years while it was required to perform a common carrier service for the public. We must be sure that the privileges are recognized as also entailing responsibilities to the public to provide an adequate, reasonable, but also profitable service in return. | hope the policies our Commission has outlined will do this and | shall be monitoring the results during my tenure in Congress. SENATOR JOHN TOWER As the Commission’s report makes clear, the study of national transportation policy is hardly a new en- deavor. For centuries, Federal officials and other interested parties have frequently investigated the Federal government’s role in transportation and the effects of transportation on other national policies. By necessity, in defining policy, one must consider broad objectives and goals. The focus is wide rather than narrow because we are dealing with very large issues rather than specifics which are aimed at carrying out these objectives. One of the major policies in the report about which | am particularly concerned is that there should be an overall reduction in Federal involvement in transpor- tation programs. The report concedes that the Federal government has an important financial role in transportation, but | fervently believe that in many instances Federal involvement can and should be reduced so that private enterprises can function effectively. | subscribe to the principle that the private transportation sector should be permitted and encouraged to meet changing economic and other requirements without being unduly restrained by Federal laws and rules that do not apply to other business sectors. For most transportation issues, public interest and private profit are consistent rather than at odds. Generally speaking, the public interest is best served by decentralized private decision- making, and not one involving centralized govern- ment decisions that respond largely to bureaucratic and political imperatives. It is incumbent upon members of Congress to pursue transportation poilicies that are consistent with economic reality. While the Commission’s report is long on generalities and short on specifics, | would like to cite one illustrative example of existing legislation which impedes the accomplishment of the policy objective of reduced Federal intervention in transportation matters. It is my privilege to sponsor legislation now pending before the Senate Committee on Banking, Housing, and Urban Affairs, that would carry out the NTPSC recommendation for reduced Federal in- volvement by repealing the Davis-Bacon Act as that Act applies to federally assisted public transportation programs. As a member of the Committee on Bank- ing, Housing, and Urban Affairs, | have great concern about the wasteful effect which the Davis-Bacon Act has upon Federal spending in public transportation programs, and | believe that its repeal is essential if we are to control Federal spending in this area. The Davis-Bacon Act, which as enacted during the 1930’s, requires construction contractors en- gaged in federally assisted projects costing over $2,000 to pay their workers at wage rates deter- mined by the Secretary of Labor. The Secretary’s determination is supposed to reflect the wage rates prevailing for similar types of workers in the commu- nity where the project is located. The purpose of this Act was to prevent contractors from using so-called “itinerant” workers from outside the local community to work on federally assisted projects at lower wage rates than prevail in the community. The concern is that this would undercut the wage rates of local ADDITIONAL VIEWS OF COMMISSIONERS e 389 construction workefs. The problem is that this inflat- ed the wage rates which contractors must pay their workers on federally assisted projects. As a result, the American taxpayer has had to foot the bill for the higher costs of federally assisted construction. More- over, the Davis-Bacon Act is disruptive to the private wage scales of many contractors and has discour- aged many of those contractors from bidding on Federal projects. The Davis-Bacon Act applies to federally assisted public transportation projects by virtue of Section 13 (a) and (b) of the Urban Mass Transportation Act, as amended. Because of the substantial costs neces- sarily involved in any significant construction project involving public transportation, it is obvious that the effect of the Davis-Bacon Act provision is substantial. The Davis-Bacon Act is an Act whose time has gone. Even if the Act were administered in accor- dance with the original congressional intent, it would have no place in our present economy. But the problems engendered by the Act as it is actually applied by the Department of Labor lead to an outrageous misuse of Federal resources. Clearly, this legislation violates both the letter and spirit of the NTPSC report. | continue to be an advocate of meaningful Federal support for public transportation, and | believe that public transportation programs can play a vital role in addressing a number of urban problems including congestion, energy consumption, and the environment. However, it is critical that Federal expenditures in this area not be wasted, and elimina- tion of the artificial barriers of the Davis-Bacon Act is essential if we are to serve the interests of the tax paying public. If we are really serious about dealing with inflation while remaining true to our commitment under the policy recommendations in the NTPSC report, there is not a better place to begin than by repealing the Davis-Bacon Act, as it applies to federally assisted public transportation programs. | intend to pursue this matter vigorously during the 96th Congress and look forward to its prompt and favorable consider- ation in the near future. By offering this specific step, it is my purpose to fulfill the policy objectives set forth in the NTPSC report so that our nation can benefit from an efficient transportation system based on free market principles unhampered by the heavy hand of counterproductive legislation and other Federal intervention. COMMISSIONER WILLIAM H. TUCKER This Report of the National Transportation Policy Study Commission makes many very substantial contributions to the ongoing process of developing effective, rational, and coherent policies to meet the 390 e ADDITIONAL VIEWS OF COMMISSIONERS transportation needs of this nation. | believe that it provides a most useful analytical framework for weighing competing objectives and interests, and for reaching informed policy decisions. | hope that it will also serve as a Catalyst for achieving needed im- provements both in the operation of the transporta- tion system itself and in the statutory framework under which it operates. In particular, the findings in critical sociological, technological, environmental, and energy problem areas—discussed throughout the report—will be of considerable use to the Executive and Legislative branches in the years ahead. Moreover, a substantial volume of supplemental papers in a wide range of subject areas was developed by the Commission’s expert and highly dedicated staff. These should also prove to be especially useful. In my judgement, however, our Report is notice- ably deficient in articulating lucid policy objectives in several areas of central importance to the Commis- sion’s.overall mission. By failing to come fully to grips with difficult and often contentious policy issues in transportation regulation and modal coordination, and by failing to relate recommendations in the report to broader societal forces which can be expected to dictate future transportation needs, the document runs the risk of being construed more as a defense of the status quo than as a blueprint for genuine reform. Such a defense was hardly the import of the Commission’s initial deliberations. The limited, scattered new policy proposals which our Report does offer, and the mere suggestion that change is in order, do not, in my view, fulfill the Commission’s statutory mandate to ‘‘. . .recommend those policies which are most likely to insure that adequate transportation systems are in place which will meet the needs for safe and efficient movement of goods and peoples.”’ Concern over these and related issues, and the forces which produced them, prompts this separate expression. Its purpose is to direct attention to issues which the Report glosses over in disturbing ways. This Report, the product of 2-1/2 years of hard work by the Commission and its staff, appears against the backdrop of what is undoubtedly the broadest public debate on issues of surface trans- portation regulation since the controversy which preceeded the beginning of motor carrier regulation in 1935. Indeed, the establishment of the Commission itself, in 1976, is at least partially reflective of Congress’ intention to provide an independent, im- partial forum in which these very issues, not then deemed fully ripe for legislative consideration, could be studied, debated and evaluated. Our failure to confront these issues—and in particular, to measure their relative importance for the nation as a whole— does not do justice to the Commission’s mandate. The approach which a Federal study commission must take in attempting to identify where the public interest may lie in a given set of issues is functionally distinct from the way in which that interest may be said to emerge in legislative enactments or even in the decisions of independent regulatory agencies. This is intentional. The mechanism of a study com- mission is expressly designed to afford maximum intellectual freedom to weigh and to judge the full scope of the public interest. It cannot be, exclusively, a forum for the clash of competing economic inter- ests, nor serve as a megaphone for particular groups who may feel threatened by the potential direction of Federal policies. A national transportation policy study commission must, instead, serve as a vehicle for the development and transmission of ideas whose impact will be felt long after the particular interests of individual partici- pants have ceased to be of great importance. In a technologically evolving society such as ours, new visions are bound to render irrelevant a number of the assumptions of which we are so protective today. It is the responsibility of a study commission such as this one to anticipate these developments and to assess their import for current policy decisions and for future policy directions. In this regard | endorse the fundamental concerns so ably expressed by my colleagues, Commissioners Carmichael and Ander- son. The dominant characteristic of the present contro- versy is the solemn determination of various interests in many segments of regulated transportation indus- tries to preserve a system of regulation by, in effect, government-sponsored cartels. Such sentiment is noticeably prominent in the trucking industry. Indeed, it has historically been the case that the more susceptible a particular transportation mode is to competition from new or existing business entities, the more vocal its demands for governmental con- trols which afford welcome insulation from natural market forces. All of these demands—for limits on market entry, for minimum rate controls, and for collective action in ratemaking—are made in the name of the public interest. However, the validity of these concerns depends on the market economics of the particular industry areas. If it is highly competi- tive, as research on motor carriage suggests, con- trols to limit competition are not in the public interest. At a minimum, an independent Federal study com- mission should be expected to determine whether and how regulatory protection from genuine and fair competition continues to be justified. The Commission has done little, however, in this regard. We have wholly failed to integrate the thoughtful and highly significant forecasts into the ongoing policy debates. We have sought, instead, to travel well-worn paths, to relitigate issues moving toward resolution in other forums, and to provide additional fodder for one or another side of these debates. We have done precious little, in my judge- ment, to provide unique insights into considerations not fully explored by others, or to advance reasoned analyses of controversial issues. When | assumed my duties as a member of this Commission, in May of 1978, | had been given to understand that the Commission had already evinced an institutional commitment toward reliance on com- petitive market forces in transportation industries as a means of effectuating needed reallocations of modal resources. Regulation, most Commissioners had come to believe, was warranted only to rectify particular abuses in the marketplace that were readily demonstrable and clearly understood. In- deed, it was thought that many of the enforcement mechanisms already available in the antitrust laws could accomplish these ends. The value of the Commission’s work would ultimately be judged by how well it charted these newer waters—not by how faithfully it parroted the current debate. In this regard, too, we have failed rather seriously. | do not view overall commitments to less govern- mental involvement in some areas as being inconsis- tent with the development of new policies in other areas to preserve essential services, or to assess to users those charges directly attributable to them. Yet, our preoccupation with modal regulatory issues restricted our ability to address fully particular prob- lems in these other areas and to develop long-range programs to remedy them. For example, the Report’s attitude that responsiblity for the problem of Amtrak and Conrail lies elsewhere only delays serious con- sideration of the long-range issues affecting these entities. Failure to critically reexamine the entire Amtrak system only exacerbates uncertainty over its usefulness in the context of overall energy policy and national defense. Failure to take a hard look at Conrail’s present structure and operations leaves unanswered equally troubling questions about future governmental policies in rail freight transportation. There are other gaps in the report of a similar nature. For example, the burgeoning problem of access to and usage of major air terminals in the country must be addressed now if we are to meet the visible and increasing problems in this area which even now are reaching crisis proportions. It is tempting to engage in extended debate on particular policy or program challenges in these and other situations, but to do so would obscure the more fundamental failings of the report as a whole. Its basic deficiency in articulating any comprehen- sive long-range policies, as outlined above, can be observed in four major areas: @ Failure to resolve modal development priorities; ADDITIONAL VIEWS OF COMMISSIONERS e 391 @ Failure to examine the major structural dissimilari- ties between modes, and to gear policy recom- mendations to them; @ Failure to assess the differing long-range impacts of deregulation on the different modes; and @ Failure to articulate clear resolution of user fees allocations. 1) MODAL DEVELOPMENT PRIORITIES The inherent advantages of particular transportation modes cannot be assessed in isolation. A broader framework, one containing supravening economic and social policy objectives, is necessary for such evaluations to have any real validity. The tentative and superficial nature of the Commission’s recom- mendations in this area can be directly traced—as Commissioners Carmichael and Anderson point out—to the absence of any such framework. The starting point in any analysis of modal advan- tage or effectiveness must be: What are the most efficient and cost-effective means for moving people and freight? In contrast to other studies, the Commis- sion recognized this at the outset as well as the acccompanying challenge to establish related poli- cies that would contribute to the best possible transportation system—a system within the frame- work of foreseeable energy and environmental re- quirements. This approach was not adhered to. However, it is the Commission’s task to keep its gaze upon the horizon, and not to let the pull of special interests obscure its vision. The transportation policies recommended by the Commission are not rooted in any firm consensus on their implications for broader concerns, such as energy and environmental policy. As a result, the focus of the Commission’s report is largely the question of how best to protect existing modal gains. Such considerations, although important, should not have been allowed to predominate. 2) REGULATORY POLICIES As with modal development priorities, the regulatory policies for differing transportation modes should be determined by reference to a framework of broader societal goals. Lacking any such framework, regula- tory policies tend naturally to focus on protecting existing modes. For the last sixty years, the transpor- tation field—beginning with the Act of 1920—has been characterized by almost total reliance on regulation by government, rather than by market forces, to insure appropriate resource allocations and to achieve desired policy goals. These assump- tions are today being called into question in a wide range of fields—and transportation is no exception. 392 e ADDITIONAL VIEWS OF COMMISSIONERS The question we must ask is not how best to regulate, but rather: Why regulate? What benefits will it achieve, and how are they to be measured? The answer, | suggest, is to be found not in rough rigid adherence to a particular economic ideology, but by analyzing the widely-varying structural characteris- tics of the different transportation modes. | regret that our Report often fails to make such distinctions in its analysis and recommendations. For example, railroads are significantly different from trucking firms in capital structure, plant require- ments, ownership and maintenance of rights-of-way, and labor characteristics. These differences cause wide variations in operating behavior between the two modes. Regulation of each mode must not merely take these differences into account—indeed, it must be based upon them. It is not sufficient for the Commission to express a general preference for competition. Because competition levels already vary from mode to mode, regulatory relaxation will affect each of them in a different way. The Commis- sion should spell out how specific regulatory changes are likely to alter operational behavior. (A) TRUCKING Nowhere can the distinction be more clearly drawn than in the case of the trucking industry. Only 40 percent of the industry is regulated, and much of the available data indicate that the regulated share is actually declining relative to the unregulated seg- ment. There are few industries as naturally competi- tive as trucking. Entry costs are unusually low, and rates could vary considerably depending on individu- al carriers’ route structures and their operating characteristics. The report looks for the lifting of restrictions on entry to occur sometime in the future. It suggests no reason why the policy shift should not begin now— as, indeed, it is already. There is no credible evidence that free market entry in trucking will result in any deterioration in service. Indeed, several stud- ies indicate it may well improve. Any continued certification of motor freight carriers need only be subject to strict requirements for safety and financial fitness—both of which could be administered by an appropriate entity within the Department of Trans- portation.' Even more important is the need to bring trucking companies within the ambit of the antitrust laws. 'The Report expresses a strong bias toward regulation based on specified insurance and financial fitness factors. Aside from my Substantive apprehension that unwarranted emphasis on this proposal may lead to the creation of a new test for market entry, | am also concerned that recommendations of such specificity may be inappropriate for a report of this nature. Amounts of insurance coverage or tax payments are regulations which are more sensibly delegated to an appropriate governmental board for formulation and implementation consistent with basic policies annunciated by the legislature. Legalized price-fixing serves no defensible regulato- ry purpose, and is one of the most serious abuses of the current system. Joint rates and through routes can be established through arms-length negotiations between individual firms. There is no public policy reason for continuation of a system which fosters uniform, fixed rates to be charged by natural compet- itors on given routes. (B) RAIL Regulation of railroads serves a significantly different purpose from trucking regulation, and must be separately addressed. The primary reason for the extension of Federal controls to cover the various modes of interstate transportation in this country was to protect the traffic and revenues of railroads. While it has become increasingly clear that competition can more effectively insure reasonable rates in most transportation industries, it is not clear that the same is true for railroads. Whether the result of its long history of regulation or not, the fact is that railroading today is neither structurally nor operationally a fully competitve industry. Indeed, railroads may be said to operate more in the vein of public utilities, where economic realities dictate that only one or a handful of firms can operate efficiently in a particular market. In such situations, regulation is necessary to protect the public from unreasonably high rates. It is a necessary substitute for competitive forces absent from the marketplace. This is not to suggest that railroad regulation cannot be improved in significant ways. Federal policy should continue to promote pricing flexibility, and should utilize the inherent competitive advan- tages of the various transportation modes. It must also continue, however, to protect shippers—espe- cially those without realistic alternatives—from un- reasonably high rates which may result from the absence of controls in oligopolistic market situations. It is unlikely that the elimination of regulatory controls over railroads will foster competitive condi- tions which will obviate the need for some degree of continued subsidy. The problems of railroads are the result of a convergence of many economic and social factors. There is no quick cure. There are, however, a number of immediate steps which could be taken to alleviate the financial difficulties many railroads currently face. Restrictions on multi-modal ownership should be eliminated, to allow railroads the freedom to become full freight transportation companies.* Regarding marginal freight lines, pro- The railroad industry's continuing inability to generate suffi- cient capital to make repairs and improvements necessary to maintain a viable system is discussed in Chapter 11. Multi-modal ownership can facilitate the goal of modal integration by making the development of intermodal facilities more attractive to private transportation companies. Intermodal facilities augment the most efficient utilization of each mode towards a more effective unified system. posals for sale or lease of trackage must also be considered, as should the possibility of public owner- ship of certain rail rights-of-way.? Federal policy should be directed more toward achieving rationali- zation of existing rail structures than toward whole- sale lifting of regulatory controls. These would include sensible merger policies, as well as substan- tial restructuring of Conrail. Rail deregulation, as a long-term policy goal, may well be warranted. It should be implemented, how- ever, consistent with its demonstrable benefits to the public, not as an ad hoc response to the revenue problems of certain corporations, nor to the unique difficulties of Conrail. 3) DIFFERING EFFECTS OF REGULATORY RE- FORM It is important that a study recommending policy changes project, to the degree possible, the antici- pated impact of these policies. The Report’s assess- ment of the impact of lessened governmental regula- tion on transportation industries is inhibited by the lack of consensus, as indicated above, on the policy changes that are needed. As a result, the assess- ments which are offered often lack real substance. For example, | question the recommendations concerning maintenance of the common carrier obligation. These blithely assume a degree of com- parability in the validity and vitality of that obligation among the various transportation modes which, in my view, simply does not exist. Common carriage in the rail situation, character- ized by unavoidable dependence on a high-volume, relatively low-cost mode in which capital and plant limitations effectively circumscribe the service that may efficiently be provided, is quite different from common carriage in the motor or water spheres. In these modes, the actual or potential presence of a number of firms—operating over rights-of-way main- tained at public expense—may well provide a level of minimally assured service which renders the obliga- tion irrelevant. The discussion in Chapter 14 of “gainers and losers’”’ provides another example. The analysis of the effects of rate deregulation on existing cross- subsidy patterns blurs important truck/rail distinc- tions. Chief among these is the assumption that cross-subsidy is present in the rate structures of both modes. Most studies indicate that cross subsidiza- tion—while evident in railroad rates for a variety of historical reasons—is largely absent from trucking. If 3 Anticipated transportation changes must also be taken into account. For example, a dramatic increase in the movement of coal by 2000 is forecast. There will be a corresponding increase in the need for spur and branch lines, many of which are now being considered for abandonment. Further, the impact of additional coal traffic is likely to present outstanding safety and environmen- tal problems. ADDITIONAL VIEWS OF COMMISSIONERS e 393 this is so, it is most unwise to raise the specter of markedly realigned truck rates without firm evidence that cross-subsidy is present to any significant degree in the current structure. 4) USER CHARGES The Commission’s report exhibits neither clarity nor consistency in its recommendations in the area of user fees. It is not enough to assert that payments should reflect the level of usage of publicly main- tained rights-of-way by particular modes. For such a recommendation to be effective, it is necessary to explain why and how they are not sufficient at present. Understandably, there are few instances where user fee levels can fully equal total costs. However, reasonable user charges should be assessed in consideration of the taxpayers’ burden and the user’s direct benefit from funded services and facili- ties. The most glaring deficiency in this regard is the use of public waterways by private carriers, and this should be clearly articulated in the Commission’s Report. User taxes presently designed to cover operation, maintenance, and rehabilitation costs of public waterways presently cover only 16 percent of those expenses. By the year 2000, the proportion will be approximately 11 percent. These minimal percent- ages of payment by water freight carriers—who continue to benefit from enormous governmental outlays—do not approach a reasonable sharing of the financial burden involved in the development and maintenance of public waterways. CONCLUDING OBSERVATIONS For the reasons discussed above, | am less than satisfied with the product of the Commission’s la- bors. To my mind, it fails to meet fully the policy requisites of our statutory mandate. | do want to re- emphasize, however, my initial statement that the report makes many excellent contributions in areas | have not touched upon in these remarks. Indeed, even the policy sections | have criticized do reflect a strong effort to be as clear and as decisive as Commission consensus would permit. Having stated where and how | find the report to be deficient, it remains to say why. The failings of the Report are a product not of any lack of ability or commitment on the part of Commission members or staff. Rather, they are the direct result of the Commission’s structure. The mix of Congressional and private sector members, many of whom are closely identified with particular modal concerns or interests, limited what might have been accom- plished. While this type of study commission has worked well in some instance—for example, in 394 @ ADDITIONAL VIEWS OF COMMISSIONERS recent studies of bankruptcy and antitrust statutes— it has not proved adequate to resolve the full range of complex transportation policies which could dra- matically affect powerful modal components. The report devotes considerable space to the importance of recognizing the varying impact of Commission recommendations on various interests, and the necessity of developing constituencies to implement needed policy changes. It is ironic that many of these same constituencies were influential in shaping a number of particular recommendations. The Commission was unable to resolve certain policy issues because, as an institution, it mirrored the alignment of transportation interests struggling over these same issues elsewhere. The Commission lacked the emotional freedom to chart new courses, and for two primary reasons: 1) Some Congressional members necessarily felt constrained, in certain instances, to adhere to posi- tions they had previously taken on particular issues. They could not—nor should they be expected to— deviate too significantly from the particular interests of their constituencies. Moreover, most were reluc- tant to commit themselves decisively on issues on which they had not already taken positions, knowing that these would eventually come before Congress enmeshed in a multitude of other considerations which could affect their view. 2) A primary concern of most Commissioners from the private sectors was the potential impact of recommended Commission policies on their particu- lar constituencies. Early in the Commission’s deliber- ations, several members expressed confusion over their dual roles as advocates for particular consti- tuencies as well as judges of the overall national interest. (See Transcript, NTPSC Meeting, Nov. 19, 1978). Clearly, expertise derived from specialized experience should inform one’s judgement on overall policy issues. Indeed, that is one of the strengths of a Commission such as this. It is equally clear, however, that one cannot always know where informed judge- ment leaves off and sectional interest begins. | do not believe the line was drawn with any degree of finality. These structural limitations of the Commission were evident to all who followed the progress of its work. As they largely account for the apparent confusion and inconsistency in some of the panel’s recommendations, | believe they should be affirma- tively recognized in this Report. In so stating, | intend no disparagement of the contributions of any Com- mission member, each of whom worked with consid- erable dedication and diligence. | simply believe that the situation rendered effective long-range policy planning impossible. The work of the National Transportation Policy Study Commission must be viewed, | believe, as an important starting point on the road to reform. While it may not adequately chart the course ahead, it provides a useful glimpse of the ultimate destination. And unintentionally, but perhaps more importantly, it demonstrates the obstacles which must be _ sur- mounted in the course of the journey. SENATOR HARRISON A. WILLIAMS, JR. In the course of its study, the Commission has covered a broad array of transportation issues and contributed a great amount of forward-looking think- ing to an important national debate that has long engaged the Congress, and the Country. As this debate continues, | believe the findings and conclu- sions contained in this final report will be an essential resource, not because of the specific conclusions and recommendations which the Commission has drawn, but because of the comprehensive nature of the Commission’s research and its approach to transportation issues. As a Member of the Senate, with a demonstrated interest in particular aspects of our national transpor- tation policies and programs, | find myself unable to concur in all of the Commission’s findings and conclusions. | have voted on specific legislation in ways that would contradict the Commission’s conclu- sions. And there is no doubt that, as transportation issues are considered by the Congress in the future, | will vote and make decisions based upon the prevail- ing facts, the views and requirements of my constitu- ents, and my own judgment. There are several reasons why | feel compelled to qualify my support for the Commission’s findings and recommendations. The first reason is one that | have been concerned about from the outset—the lack of more effective representation of consumer, labor and environmental interests on the Commission. The transportation constituency includes these groups and | believe they could have provided useful insights and balance to the Commission’s discussions and decision-making. Although Chairman Shuster ex- pressed his willingness to remedy this problem by creating formal advisory boards, the Office of Man- agement and Budget would not approve any adviso- ry committee charters. The Administration did not respond to my direct request for the appointment of labor representatives to serve on the Commission. As a result, the exclusion of these points of view and perspectives from direct participation diminishes the value of the final report. The second reason for my concern is the general premise of the Commission’s final report that free markets and private profits are necessarily consis- tent with the public interest. This is a recurring theme. As a general guidepost, reliance on market forces as an alternative to direct regulation may have great appeal. However, the Commission has not taken great care to test the general premise in specific contexts. For example, although the Com- mission amassed a great treasury of data, much information was not compiled objectively or applied impartially. Too often, facts on labor were provided by industry and trade associations which lacked objectivity and sometimes accuracy. In the case of environmental impacts, even where objective data generally were provided, frequently it was not ade- quately evaluated and mostly ignored in the Commis- sion’s recommendations. Accordingly, | cannot en- dorse the across-the-board reliance, implicit and explicit, of the Commission in substituting the disci- pline of the marketplace for some degree of regula- tion to achieve national transportation objectives. The major criticism and my principal disappoint- ment is that the Commission failed to stress the positive role of mass transportation, particularly in light of some of its other findings. While the report fully recognizes the need to save fuel and reduce ADDITIONAL VIEWS OF COMMISSIONERS e 395 congestion, it does not adequately address our massive energy problems, and does not follow through with a recommendation that national trans- portation policy should encourage increased rider- ship and capacity in mass transit as an alternative to unnecessary automobile use. Time and again the report stresses a ‘‘user pays”’ policy for most modes of transportation; but it fails to adequately discuss the potential energy and environ- mental benefits that efficient transit systems can have for all members of society—both users and non-users of transit. In part this is because the report places its main priorities and emphasis on economic considerations and analyses. The report seems to imply that our other national goals—social, energy, and environmental, for example—are somehow less important or less legitimate than purely transporta- tion or economic goals. Indeed, they may be less readily quantifiable, but their effect on our social fabric and economic well-being should not be dis- missed lightly, as | believe they have been. In summary, | believe the Commission’s market- oriented economics approach has been insufficiently sensitive to the value good public transit can have for this country for the balance of this century and beyond. 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Avil a bee (i): eer hae, Doakyie | PE i bch N Tha, ae, hpi) i) oe are: rriy Gree Appendix Figures and Tables ‘SZ6L-O'q ‘uoyBulysem oS ‘6Z/8Z61 JENUEW JUEWLIEADDH sa}e}S Pe}!UN ‘Ja\sIBay [e1ePe4 OY} JO SdIYO ‘UONBSIUIUPY SEdIAIAgG JUBWUJEACD “Sf :3OHNOS *weyd uojezjueBi0 UORepodsues) jo jUQWpeda|g ‘Sh ———_, 39 “b 3YNDIs XIGNAddV ill a _ 398 e APPENDIX FIGURES APPENDIX FIGURE 2. U.S. population living in urban areas as a percentage of total resident popula- tion in the combined south and west census regions, 1950 to 2005.* High-Growth Scenario 80 Medium-Growth Scenario DR ene < at ~~ aes Dae ty Oe eee Low-Growth Scenario 70 Percent 60 0 1950 1960 1970 1980 1990 Year SOURCE OF HISTORICAL DATA: U.S. Bureau of the Census, Historical Statistics of the United States, Colonial Times to 1970, Bicentennial Edition, Part 1 (Washington, D.C.: U.S. Government Printing Office, 1975) Series A172 and 178, p. 22. aUsing the 1970 definition of urban areas. 2000 APPENDIX FIGURE 3. U.S. population living in urban areas as a percentage of total resident popula- tion in the combined northeast and north central regions, 1950 to 2005.2 High-Growth Scenario _~ 80 Low-Growth Scenario 70 Percent 60 0 1950 1960 1970 1980 Year SOURCE OF HISTORICAL DATA: U.S. Bureau of the Census, Historical Statistics of the United States, Colonial Times to 1970, Bicentennial Edition, Part 1 (Washington, D.C.: U.S. Government Printing Office, 1975) Series A172 and 178, p. 22. aUsing the 1970 definition of urban areas. 1990 2000 APPENDIX FIGURE 4. U.S. population in combined south and west census regions as a percentage of total resident population, 1950 to 2005. 58 High-Growth Scenario / ¢ 56 y: 4 Medium-Growth W4 54 Scenario >, yi y ae he 52 rs a Low-Growth Z Scenario 50 Percent 48 46 44 0 1950 1960 1970 1980 1990 2000 Year SOURCE OF HISTORICAL DATA: U.S. Bureau of the Census, Current Population Reports, Series P—25, No. 304 (April 8, 1965), No. 460 (June 7, 1970), No. 520 (July 1974), No. 615 (November 1975), and No. 646 (February 1977). APPENDIX FIGURE 5. Arterial highway miles. Surface Arterials oO ff aA BD wN eh fe) ey Set Arterial Highway Miles (thousands) Freeways 1975 1980 1990 Year SOURCE: Based on Appendix Table 29. aFrom U.S. Department of Transportation, 1974 National Transportation Report, Urban Data Supplement, Washington, D.C.: Government Printing Office, 1976. The same for all scenar- ios. 2000 APPENDIX FIGURES e 399 APPENDIX FIGURE 6. City group? comparison of 1975 and year 2000, percent of arterial mileage which is freeway. 1975 % 2000 7 4 ; ; Projected Projected ; Decrease Increase f 22 oye ee. | 5 , 21 peri ast a : 1 i \ ) ow re — — 1 1 \ ae ae \ ' | 7 1 ! ' { iP ! | | ; 19 ; l ! l ! ! - | i} 1 ! 1 1 ; ‘ 1 | ' \ 1 I q 18 | I 1 ! 1 | | ' ' } ! | ! ! : y y \ ; 17 ye, | | ! i y ; | ! | 1 ! 1 1 ( : ! 16 | | | 1 | ] ' \ ; j \ | ! y ' i \ | \ | ' J i 15k | { ; | y y ! | 1 ; — I | { | ! ! 1 { | | : c 1 | : ' ' | ! ' 1 3 14 | | | ' | ! y ' 1 ! ‘ 4 ms | | | | \ ! ; Oo 1 ! | 1 1 1 { a 1 j | ' | | 1 ' | 1 I @ 13 ! \ I ! j | ‘ a 1 | oO 1 ! ! 4 a 2 | 4 : . = > i) ' | j = Z| ! by 2 7 w | 3 B fg 4 < ; 3) m 28 4 ke é 7, ‘ 6 & 5 SOURCE: Based on Appendix Table 30. « 1 City Group: 1 2 3 4 5 opulation Range: 50,000- 100,000- 250,000- 500.000- Over 100,000 250,000 500,000 1,000,000 1,000,000 aCity groups defined in terms of population expected in 1990. 400 e APPENDIX FIGURES APPENDIX FIGURE 7. Urban arterial capacity miles. 600 oa fo) o APPENDIX FIGURE 8. City group* comparison of 1975 and year 2000, medium-growth scenario V forecasts, peak period’ highway speeds on urban arterials. 1975 os iz 2000 i] i] i] 2000 1975 w [=] oO Projected Projected Decrease Increase 40 Hourly Arterial Highway Yehicle Miles of Capacity (millions) ° o 0 1975 1980 1990 Year SOURCE: NTPSC estimates. 30 20 Peak Period Average Arterial Highway Speed (m.p.h.) 10 0 Bee City Group: 1 2 3 4 5 6 Population Range: 50,000- 100,000- 250,000- 500.000- Over “Big 4” 100,000 250,000 500,000 1,000,000 1,000,000 Rail SOURCE: Based on Appendix Table 32. aCity groups based on expected population in 1990. ‘Virtually identical results for all scenarios. APPENDIX FIGURE 9. Projections of operation costs? of trucks In urban goods movement, by scenario, 1975 to 2000. 130 120 110 100 Operating Costs (billions) foe) o o o ~S oO -= - = =~ Low-Growth Scenario 60 50 40 30 1975 1980 1985 1990 1995 2000 Year SOURCE: Based on Appendix Table 35. aMedium-growth scenario based on A.T. Kearney, Inc., Urban Goods Movement Demonstration Project Design Phase IV, Chica- go, Illinois: March 1976. Other scenarios based on adjustments according to GNP. APPENDIX FIGURES e 401 402 Appendix Tables APPENDIX TABLE 1. Transportation union membership (1977 statistics) Total Member- 4,350 24,230 16,000 9,500 105,000 40,000 1,000 105,000 20,000 40,000 638,500 60,000 6,900 11,000 22,000 9,500 15,000 35,000 6,540 4,000 1,000 775 32,200 6,000 3,000 118,000 134,000 300 6,946,694 1,804,255 American Fed. of Government Emps...... AFGE AFL-CIO 255,000 Air Line Dispatchers Association............. ALDA i Dissolved Air Line Pilots Association...................... ALPA ‘ 49,730 ALPA — Assoc. of Flight Attendants ...... AFA ‘ ALPA — Air Line Employees Assoc. ....... ALEA i Amalgamated Transit Union............0.... ATU 2 105,000 Int. Bro. Boilermakers & Blacksmiths ..... BBF nf 123,000 Brotherhood of Loocomotive Engineers. BLE IND. 37,600 Bro. of Maintenance of Way Emps. ....... BMWE AFL-CIO 71,000 Bro. of Railway Carmen of America....... BRCA nt 56,000 Bro. Railway & Airline Clerks........0000.0.. BRAC 160,000 Bro. of Railroad Signalmen...................... BRS ‘g 10,000 Communications Workers’ of America.... CWA ra 476,000 Flight Engineers’ Intl. Assoc. ................5 FEIA % 1,800 Great Lakes Licensed Officers Assoc.... GLLO IND. 60 Hotel & Rest. & Bartenders Int'l. Union. HRRE&B AFL-—CIA 421,000 Int’l. Assoc. Machinists & Aerospace ..... IAM Hs 757,564 Int’l Bro. Electrical Workers.................2... IBEW ny 856,000 Int’l. Bro. Firemen & Oilers..................... IBFIO 3 40,000 Int'l Bro. of Teamsters .............ceeeeeeeeeees IBT IND. 2,300,000 Int’! Longshoremens ASSOC. ...............000... ILA AFL-CIO 66,900 ILA — Masters, Mates & Pilots................ MMP 2 Int'l. Longshoremen & Warehousemens.. ILWU IND. 58,000 Indust. Un. Marine & Shipbuilding........... IUMSW AFL-CIO 22,000 Marine Engineers Beneficial Assoc......... MEBA 4 24,500 MEBA — Prof. Air Traffic Controllers...... PATCO at Nat’l. Maritime Union of America............ NMU i 35,000 Ameri Railway & Airline Supervisors....... ARSA is 6,540 Railroad Yardmasters of America........... RYA u 4,000 Bro. Sleeping Car Porters..............0...... BSCP io: 1,000 Service Employees Int'l Union................. SEIU 480,000 Seafarers’ Int'l Un. of No. Amer. ............ SIU id 80,000 Sheet Metal Workers Int'l. Assoc............ SMWIA ‘a 120,000 American Train Dispatchers Assoc. ........ ATDA s 3,000 Transport Workers’ Union of Amer......... TWU ie 118,000 United Transportation Union........0...000... UTU és 134,000 Office & Professional Emps. Intl. ............ OPEIU Mf 74,000 Totaly ca aie ace liga meee — — Percentages: Percentage of total union’s individual membership Percentage of total transportation union membership Af: 2: 3. Percentage of total modal union membership 4 Percentage of total transportation union membership aPilots only >Subsidiary of ALPA cAffiliate of ILA ¢See PATCO membership below eAn Affiliate of MEBA, above *Due to rounding Source: D.C. Associates, Inc., ‘‘A Report to the National Transportation Policy Study Commission on Identification of Labor | Constituencies,’’ Washington, D.C.: 1977, Section 3.0. Total Transportation Members % (1) % (2) Members % (3) 215,070 Fee G a w L111 I1Gl Liston! | APPENDIX TABLES e 403 Intracity Transit Truck Intercity Bus/Auto Maritime Railroad Bus/Taxi Intra & Intercity (Members % (3) % (4) Members % (3) % (4) Members % (3) % (4) Members % (3) % (4) Members % (3) % (4) ae ae 4000. 1:66 0.2 350 0.1 0.0 aso eet be pigs ke p — ae —— — — — — a mnenesi a om — — — — ) ' gt Ay ae Sk tA sail cachiag hn eli cal Farr. eee mms0,000 996 — 2 oe nan mas NODE HOOT GmatA San axsurepaN eee ee BB 000K E141. 19° 5,000. OS 0.3 ee an ere a a SE eam 8 fees Pe ga ee at 37.6000 2 0 2.0 NE eM 9 (al ata es Mh ge a baad § atl Sen ete 741000 1) 18.0 3.9 Sra one ee ay ca peta ee | Re eae oral ae ee 56-000 105 3.1 Bin ds Apa an ea ™ 200. 03 00 fn (ike =) 149,000, 27.3 ITT RMS 800 01 00 = ae ee a 10.0008 8 6 0.5 eke a nes ae eS | = ea 60 00 00 ou ea as ais ch a weak A 5 ge | ae epee Pee page are 500 ~—O.1 0.0 en ee ee ee ) eae ae UE seed on. 4.250004 4.6 1.4 maki ly pp x; a: a a Pl al Np ea ies Se ee OO.000:. 4.3.7 11 pind Td gE elie ea gah ee anos Sethe ere 28,0000 11,3) 115 12000 92 0.7 ea eh, Re ae : ees 000 20 03.4. 1,500 . 03 0.1 5000 55 0.3 622,000 999 34.3 i = Se BiCU.CO0Awcdoen 3c ee mn os mee rem ae ange Sep semegios ose el eee 66 o00n) 25.5 04 100 0.0 0 oS ed eet = ee 611 000) i 44vn 0.6 6 = oe mad) ae eke ae Pe = a e229. 0008 8.0.4 12 ste = = es ee eee 2 y/ (iS ae ke +— #49000, 36. 05 100 0.0 0.0 poised” Bear of) Wrdkt sel) geen Nae Be ee Rs 45,0001 614-100 0 a me ” See har kB ean i yee eh eal Paes SOO. ire 422 0.4 ay yea ye Der adda Bee eke ta epee eis ae 4 OOO Aieh 0:7 0.2 Cele gaa ae i pre a i eee 4000-6. 08 0.0 Ray Ae oes alin dots, ea rae aR gee cme — om Fo SRT ON RIDE ay a remegrrensy ae) b— 4B9.000) 12.9 1.8 200 +00 0.0 eigen ibe, Pte SAM tes ral s eo) eee A = 6 000 Mr atti 0.3 DD olan = Ba sD Ce te Ee ite: x hee ee ee 000 an0.5 0.2 ea AN aly HE Ps Sir elle Gach = os Ee ee 0.7 50,000 553 28 a 7k ce aeh ey eae Sse ees | VERO CLS 4 SEU ERS 7. Osi ANNES: SSON OS Serer a Seth ees) Me = iS eat S00 eGo ws 0.0 fed Ih 80,300 100 4.4 247,960 99.9* 13.6 546,600 100.3* 30.2 90,475 100 50 622,800 100 343 404 e APPENDIX TABLES APPENDIX TABLE 2. Class | and class Il federally regulated motor carriers by commodity class and type of carriage* (000) No. of Type of Tons Miles Commodity Class Carriers Carriage 1977 1977 Allrccsis. ee pr 1,962 Total 705,867 16,047,222 Common 650,157 14,966,176 Contract 55,711 1,081,046 General Freight ............ 732 Total 231,194 7,434,353 Common 227,367 7,344,280 Contract 3,828 90,073 Household Goods......... 103 Total 2,890 606,954 Common 2,889 606,908 Contract 0 46 Heavy Machinery.......... 56 Total 10,376 431,740 Common 10,212 429,960 Contract 164 1,781 Liquid Petroleum .......... 142 Total 182516 dSooore Common 177,500 1,308,187 Contract 4,618 27,383 Refrigerated Products.. 102 Total 21,189. eilets, rer Common 19,116 1,011,404 Contract 2,073 102,322 Agricultural Commodi- NOS ee een area 71 Total 12,884 339,542 Common 9,614 294,535 Contract 3,269 45,006 Motor Vehicles ............. 37 Total 27,091 843,068 Common 19,985 589,283 Contract 7,106 253,786 Building Materials......... 91 Total 32,742 §13,513 Common 27,218 442,213 Contract 5,524 71,299 All Other Commodities. 628 Total 185,383 3,428,754 Common 156,255 2,939,406 Contract 29,128 489,348 APPENDIX TABLE 3. Intercity passenger-miles by common carriers (billions of passenger-miles) Air Bus Rail@ Total Year Amount %>° Amount, %> Amount %° Amount % SOURCE: American Trucking Association, Motor Carrier Statis- tical Summary, Washington, D.C. 1977. aExcludes carriers whose reports were incorrect or incomplete; properly reported data represents 80 to 90 percent of federally- regulated tonnage carried. Class | refers to motor carriers whose annual revenues exceed $3,000,000. Class II motor carriers’ annual revenues are $500,000 to $3,000,000. >Figures may not add due to rounding. 1939 BS 9.5 3.1 23.7) Ti 34.0 11.0 1940 ek er 10.24.33 24.8 7.5 36.2 11.0 1941 5 fellas =, 13.5 3.6 30.6 8.3 45.8 12.4 1942 ay ee 21.3 6.6 55.1 17.1 78.1 24.2 1943 2:0 ree 25.9 8.8 89.9 30.66 117.8 40.1 1944 2.9) 9 27.3 88 97.7 31.6 127.9 41.4 1945 43 1.2 27.4 7.9 93.5 27.1 125.6 36.2 1946 doe ee, 26.9 6.3 66.3 15.6 100.4 23.6 1947 cp Saas Bas 24.8 5.8 46.8 11.0 78.7 18.4 1948 6.8 1.5 24.6 5.6 41.9 9.5 73.3 16.7 1949 7.0.) 16 24.0 5.0 36.0 7.5 67.8 14.2 1950 93 18 22.7 45 32.5 6.5 64.5 12.8 1951 20 see. 23.6 4.1 35.3 6.2 70.9 12.4 1952 13:3 2.2 24.7 4.0 34.7 5.7 72.7 11.9 1953 16.2 °°2.5 24.4 3.8 32.3 5.0 72.9 11.2 1954 TO a aah, 22.0 3.3 29.5 4.4 69.7 10.4 1955 21.3 3.0 21.9 3.1 28.7 4.0 71.9 10.1 1956 23.9 3.2 eh ey grey" 28.6 3.8 74.2 10.0 1957 26.3 3.5 21.5 29 26.3 3.5 74.1 9.9 1958 26.4 3.5 20.8 2.7 23.6 3.1 70.8 9.3 1959 30.5 4.0 20.4 2.7 22.4 2.9 73.3 9.6 1960 31.7 4.1 19:3 2.5 21.6 2.8 72.6 9.3 1961 32.3 4.1 20.3 2.6 20.5 2.6 13.1 93 1962 34.8 4.3 aie = POAT f 20,2°° 2:9 76.8 9.4 1963 39.4 4.6 2200) 20 18.6 22.2 80.5 9.5 1964 45.5 5.1 23.3 2.6 18.4 2.1 87.2 9.8 1965 53.9 5.9 23.8 2.6 1.0 /-1.9 95.1 10.4 1966 63.7 6.6 24.6 2.5 17.3 1.8 105.6 10.9 1967 80.2 7.9 24.9 2.4 15.3 1.5 1204 17:6 1968 93.0 8.6 24.5 2.3 13.3 °1.2 130.8 12:2 1969 nf bia ee Re 24.9 2.2 12.3 1.1 148.3 13.1 1970 109.5 9.3 25.3 2.1 10.9 9 145.7 12.3 1971 110.7° 9.0 25.5 2.1 6.92". 145 ie 1972 123.0 9.5 25.6 1.9 Bul SE Ota casees 1973 132.4 9.8 26.4 2.0 9.3 7 | 16S 128 1974 135.4 10.7 7 ih yh ys 10.4 8 173.5 13.8 1975 136.9 10.5 25.4 1.9 40.1 -".8 (172.4 152 1976 152.3 11.0 231.6 10.4 8 187.8 13.5 1977 164.2 11.3 25.9 1.8 10.4 -.% ~ 200.5 43.9 1978 191.6 12.5 20570 ao 10.3. .7 227.0 14.8 SOURCE: Transportation Association of America, Transporta- tion Facts and Trends 1978, Washington, D.C.: 1978, p. 18. aincludes commutation. >percentage of total intercity passenger-miles. APPENDIX TABLE 4. Selected statistics on trip purpose and travel mode Part A Percent Distribution of Person-Trips All Modes Se A PAPO Dalle tte Trip Purpose 1977 1972 | LE eaeacn URN Tua atieseramieemmeremeeseeeeeereeer Visit Friends & Relatives .......0.0.00000000.00...... 37.0 38.4 } DES EL Ca a AS a 26.0 25.7 [> | =. eA nica ihe ye gia aa eo 19.5 20.2 oS SESS NaN tei ihe ao ee ras 1 587, 100 100 Part B Travel Mode (Percent of Household Trips) Auto Auto Trip Purpose Bus (1)8 (2) Train Air Total eee es Visit Friends & Relatives.............. S50 5990910. 16.705 36,1 (20-0 32.2 Other Pleasure ....... 4123 4-22.85 69,6 42:5. 129 23.3 Business .................. 8:5 2357 6.9, “39:4 54.8 27.7 Cr Se ee 20.6 16:4" 10.8 420° 10.3 16.8 SR cae Rds AD aa abt UCT debra abe : 100. —————————————eeeseseseSsésésé SOURCE: U.S. Census of Transportation, 1977. @Auto 1 = Auto or Truck. >Auto 2 = Auto or Truck with camping equipment. APPENDIX TABLE 5. Principal commodities transported, by mode, various years Share of Share of Commodity Tons Revenue ———————————— eee Principal Commodities Transported on Inland Waterways, 1977 (Excludes Great Lakes) 1. Bitum Coal & Lignite ...0..0.......cccccccccsccese 21% Peresaual Filed Ol occ cosescccd conc, 13% 3. Sand, Gravel, & Crushed Rock............ 9% UE OTS ae feet SRS ae Pia 9% 5. Grain, Grain Products & Soy ............... 8% 6. Distillate Fuel Oll...........cccccccccccocccceccceec., 7% ESS: Oa On ne 6% SRM LOOM reo ts ee CG 3% Bmeasia” Chemicale .ii..00< cad, cocid sock ecccocsccc, 2% BEMATING (SIONS 2. o.5.ccseciccentccsoovesensiececlg ce 2% APPENDIX TABLES e 405 Principal Commodities Transported on Class | Railroads, 1977 MP OO) eM see ees esl Sine eat eens Coe 30% 14% 2. Non-Metallic Minerals............................. 10% 4% So Farm Products: icy Se ee 9% 8% 4. Chemicals & Allied Products ................ 7% 11% 5. Lumber & Wood Products.................... 7% 7% 6. Food & Kindred Products..................... 7% 11% TA MOtAING TOS oiianimen ie ete. 6% 2% 8. Stone, Clay, & Glass Products............. 4% 4% 9. Primary Metal Products.............0ccccc000.. 4% 5% 10. Coal & Petroleum Products ................ 3% 4% 87% 70% Principal Commodities Transported by Motor Carrier, 1973 (ICC Regulated) 1. Coal & Petroleum Products.................. 27% 4% 2. Chemicals & Allied Products ................ 12% 7% 3. Food & Kindred Products..................... 9% 7% 4. Transportation Equipment...................... 9% 7% 5. Primary Metal Products ............cccccccccscs. 8% 4% 6. Stone, Clay & Glass Products.............. 6% 2% FV FAN PIOGUCIS Jad sctkyoes eee ee 3% 2% 8. Non Metallic Minerals, except Fuels.... 2% —% 9. Fabricated Metal Products.................... 2% 2% 10. Machinery except electrical .................. 2% 3% 80% 38% Principal Commodities Transported by Motor Carriers, 1972 (Non-ICC Regulated) Fe General: Freight. 20 shee. cae pean: 22% er oana7& Graven ere esis eines 17% 3. Agricultural & Exempt Commodities....... 16% 4. Trash & Garbage Collection................... 13% 3g MOUSENOID Goode 5 ok a. eee 10% Gamal: CONTACTS ca cscsee sss ois ashen 3% Tea TUNDOl ae ata eee vere aol ee 3% 8. Package & Parcel Delivery...........0......... 2% 86% Principal Commodities Carried in U.S. Great Lakes Waterborne Commerce, 1976 1. fron Ore & Concentrates.........cccccccccese: 49% SE LIMASIONE Sct nse elec eee 20% So Coal & ignite nis oben ack ne cie 16% 4. Sand, Gravel & Crushed Stone............ 3% 57 Building Cements: 3008) 05 0 vob os 2% G. Distillate Fuel Oll.;..cclicccccscccssaccscecsecstces 1% TABSSUSOUNIO A cece. Wet eee alk oor aes 1% a2 Hesidual Fuel. Ore 2% 9. Non-Metallic Minerals.....0...0.0cccccccccceceee 1% WOR WHEE ects. Atle oaks coche ice wSooinn 1% 96% SOURCES: U.S. Army Corps of Engineers, Waterborne Com- merce Statistical Data; ICC, Freight Commodity Statistics; and U.S. Department of Commerce, Office of Domestic Shipping, Domestic Waterborne Trade of the United States, 1972-1 976, p. 51: 406 e APPENDIX TABLES APPENDIX TABLE 6. Tourist arrivals, by transport mode, 1977 Air Land Water (percentage distribution) Tourist Arrivals Source (no. of persons) 12,083,386 20 77 2,029,745 18 81 2 4,496,663 93 5 2 18,609,794 38 60 2 SOURCE: Summary and Analysis of International Travel to the U.S., U.S.T.S., Department of Commerce. APPENDIX TABLE 7. Charter travelers, by citizenship and use of U.S.- or foreign-flag carrier, 1977 Foreign- U.S.- Flag Flag Total Citizenship (millions of travelers) a aA a eS A A rl hd U Sis CltiZzernteeus, cacti cr eaeeeest 1.4 0.5 1.9 Non ‘US: Citizen cuziitee-eeeaaes 0.3 0.3 0.6 Pull eee ein Basel see aun eke 0.8 25 SOURCE: USS. International Air Travel Statistics, U.S. Depart- ment of Transportation, 1977. APPENDIX TABLE 8. Scheduled travelers, by citizenship and use of U.S.- or foreign-flag carrier, 1977 Foreign- U.S.-Flag Flag Total Citizenship (millions of travelers) a US 6 CIIZOM iskccesecesseccetarscontcsares 35 2.9 6.4 Non: US Citizen ie. tvccssesseseess 2.4 3.5 5.9 1 | Ra rr ree roe aan eres 5.9 6.4 12.3 SOURCE: US. International Air Travel Statistics, U.S. Depart- ment of Transportation, 1977. APPENDIX TABLE 9. Air cargo by volume by world markets, 19778 Imports Exports Weight Value Weight Value (Millions (Millions (Millions (Millions of Ibs.) of $) of Ibs.) of $) Continent All US. All US. All US. All US. eT North America... 180 70 894 364 388 146 2,104 993 South America... 127 32 556 183 273 95 1,640 505 Europe....... 541 196 5,710 2,114 689 193 9,554 2,569 ASla oes 445 228 4,853 2,231 338 117 5,135 1,675 Australia .... 11 5 81 34 40 15 568 234 Africas. Gir vet 477 28 54 14 659 212 All cnc 1,311 532 12,573 4,955 1,796 585 20,253 6,532 a UTE UNIS SOURCE: U.S. Airborne Foreign Trade Exports and General Imports; U.S. Bureau of Census, Annual 1977, FT986, May 1978. aTotals may not add due to rounding. APPENDIX TABLES e 407 APPENDIX TABLE 10. NTPSC population assumptions. Scenario Assumption Low-Growth Medium-Growth High-Growth PONUUTY HIELO torre etre, Bureau of Census Series Ill:° Bureau of Census Series II:¢ Bureau of Census Series fertility rate = 1,700 fertility rate = 2,100 lll:¢ fertility rate = 1,700 MM OMAM ON iry- 2. teuahes eee ase, Immigration remains constant at 400,000 persons per year EG? EXDOCLANCY ec tt” Gradual increase in life expectancies: for males, from 69.1 in 1976 to 70.1 years in 2005 and . for females, from 77 years in 1976 to 78.5 years in 2005 4 EMEUT atG eet er oe te Declining birth rate Constant birth rate Declining birth rate BRBCIBLI ACH Bets idiot georges Increasing median age from 29 Increasing median age from 29 Increasing median age from 29 in 1976 to 39 in 2005e in 1976 to 36.3 in 2005¢ in 1976 to 39 in 2005¢ Dependency Ratio.............00...... Decline in dependency ratio Transportation Implications........ Population changes will have small near-term effects on transportation activity. Potential 1990 drivers have already been born, and the relationship of freight movement to total population growth is unclear. Yet with population age redistribution, there will be a major increase in high- travel-propensity age groups. A decline in the number of young drivers is expected to improve Safety. eee aThese assumptions cover the total U.S. population, including armed forces abroad, and were used to forecast to the year 2000 froma 1975 base. Fertility rates are expressed as the average number of lifetime births per thousand women. The replacement level is believed to be 2100. ‘The Bureau of the Census developed three projections of the fertility rate with Series | and III representing the high and low estimates, respectively, and Series Il being regarded as the most likely estimate. For further discussion, see: George Sternlieb and James Hughes, Current Population Trends in the United States, New Brunswick, New Jersey: The Center for Urban Policy Research, pp. 14-15, 80. “Bureau of the Census, Statistical Abstract of the United States 1978, Washington, D.C.: Government Printing Office, 1978, p. 69. *Bureau of the Census, Population Estimates and Projections, Series P-25, No. 541, Washington, D.C.: Government Printing Office, February 1975, p. 8. APPENDIX TABLE 11. NTPSC urban population distribution assumptions, trends and implications—south and west central regions Scenario Low-Growth Medium-Growth High-Growth eee PLT 1 [a [oe OO aR ee Smaller rural flows to urban Smaller rural flows to urban Larger rural flows to urban centers: 0.2% through 2000, centers: about 0.3% through centers: about 0.5% through compared to 1.7% from 2000. 2000. 1950-60 & 0.9% from 1960-70, due to retention of rural workers. BROMUS rca cack Ses esackinccccas tee, Absolute & relative growth in Absolute & relative growth in Absolute & relative growth in rural & small urban population rural & small urban population. urban population. (much greater than in the North & East). Declining central city populations. Suburbanization of jobs. Continued suburbanization on Standard Metropolitan Statistical Area fringes. Transportation Implications........ Increased trip lengths, with potential for decline according to pattern of employment suburbani- zation. Increase in auto efficiency potential and decrease in transit potential, with arterial highway expansion. Readjustment of rural and urban freight flow patterns. —__—_—_—_——————————————————————————————— eee @Source of 1950-1970 data is Bureau of the Census, Historical Statistics of the United States, Colonial Times to 1970, Bicentennial Edition, Part I, Washington, D.C.: Government Printing Office, 1975, Series A172 and 178, p. 22. 408 e APPENDIX TABLES APPENDIX TABLE 12. NTPSC urban population distribution assumptions, trends and implications—northeast and north central regions Low-Growth Scenario Medium-Growth High-Growth a ———— ASSUMPTIONS ne. c..csceccecd het eetas tse Transportation Implications........ Restrained rural flows to urban centers: 0.05% annually through 2000, compared to 0.4% from 1950-1960 & 0.2% from 1960-19702 due to lag- ging economic growth & de- pressed urban conditions. Absolute and relative growth in rural & small urban population (though much less than in South & West). Smaller rural flows to urban centers: about 0.05% through 2000, because of some suc- cess in rehabilitating urban centers. Absolute and relative growth in rural and small urban popula- tion. Declining central city populations. Suburbanization of jobs. Increased rural flows to urban centers: about 0.25% through 2000, comparable to historical experience. ¢ Continued urban growth, albeit at slower rates of growth. Continued suburbanization of Standard Metropolitan Statistical Area fringes. Increased trip lengths, but potential for decline according to the pattern of employment subur- banization. Increase in auto efficiency potential and decrease in transit potential. Readjustment of rural and urban freight-flow patterns. ee aSource of 1950-1970 data is Bureau of the Census, Historical Statistics of the United States, Colonial Times to 1970, Bicentennial Edition, Part I, Washington, D.C.: Government Printing Office, 1975, Series A172 and 178, p. 22. APPENDIX TABLE 13. U.S. population redistribution assumptions, trends and implications, by scenario Scenario Low-Growth Medium-Growth High-Growth ASSUMPTIONS ooiese.seecssee tetera eneee ee Smallest population shifts to the South & West, with lag- ging economic growth discour- aging geographic dispersion: about 4% per annum, compa- rable to the 1950-1970 period. Median population shifts (albeit largest numerical increase in the regional population totals due to largest national popula- tion total): about 5% annually. Largest population shifts to South & West, with increased resource production stimulating rapid economic development: about 6% annually, compared to 8% in the 1970-1976 peri- od.4 Interregional migration flows out of the East and Midwest, to the South and West. e Employment shifts parallel population shifts. Readjustment of intercity freight flow patterns, particularly of consumer goods and travel pat- terns in proportion to the scale of population and employment shifts. Population change will tax the facilities left behind as well as those in the growth areas. Decline of transport access a major factor in determining industrial location. Changes in intercity business travel patterns. Requires building of passenger and freight transportation infrastructure in growth areas not presently served by adequate facilities. aGeorge Sternlieb and James Hughes, Current Population Trends in the United States, New Brunswick, New Jersey: The Center for Urban Policy Research, 1978, Exhibit 33, p. 65. APPENDIX TABLES e 409 APPENDIX TABLE 14. U.S. disposable personal income per capita assumptions, trends and implications, by scenario Low-Growth Scenario Medium-Growth High-Growth ————————— eee PASSUINOLONS teeter corral eres save d.cse- ace ROTTS Peer tae ee Se chet ccd bos kce vedo Based on regression relation- ship to low GNP growth, with an annual growth rate of less than 1%, compared to an his- toric rate of about 2.5% since 1950.4 Low growth in disposable in- come per individual will decline with real earned income per capita, as economic growth fails to keep up with popula- tion growth. Based on regression relation- ship to moderate GNP growth, with an annual growth rate comparable to historic experi- ence at about 2.5% annually.@ Disposable income per individ- ual grows comparably to his- torical experience and slightly faster than real earned in- come. Based on regression relation- ship to high GNP growth, with an annual growth rate of more than 4%. Disposable income per individ- ual grows slightly faster than real earned income, with gov- ernment taxation of earnings held steady. —_—_———————————————————————————————— eee Source of historic rate is Bureau of Economic Analysis, Business Statistics, 1975, Washington, D.C.: Government Printing Office, May 1976, p. 8; Survey of Current Business, Vol. 57, No. 8, August 1977, p. S—1. APPENDIX TABLE 15. U.S. investment assumptions, trends and implications, by scenario Scenario Low-Growth Medium-Growth High-Growth SSS ss SSS SSS SSS SSS PSESUNTIDUONIS tects ces A eeeaee 2. sk saeae igri ve Ri. CRN ile 2. a eel Transportation Implications Low annual rate of growth in business investment, averaging 1.5% comparable to the low achieved during the 1970—76 period? due to low expecta- tions of a substantial return. Moderate annual rate of growth in business investment, averaging 3.6%, comparable to the overall historical experi- ence since 1950.4 High annual rate of growth in business investment, averaging 5.2%, comparable to the high achieved during the 1960— 1970 period, with increased pressures for growth and de- velopment. Focuses on the long-term trend averaged over the 28-year period, rather than cyclical fluctua- tions. A low rate of business invest- ment will impede productivity growth, restrict employment, and jeopardize U.S. competi- tiveness in world markets. Less capital available for build- ing new transportation infra- structure. Incentive to repair and rehabi- litate old facilities before build- ing new ones with scarcity of new Capital. Difficulty of expanding trans- portation supply expected to induce deterioration and cong- estion of present facilities and possibly to restrict transporta- tion demand. A steady rate of business in- vestment will stabilize techno- logical development, and labor productivity and employment growth, at least in the short- term. Sufficient available capital for building new transportation in- frastructure. Slight incentives to favor new transportation facilities and equipment with requirements for pollution control devices and techniques. Allegiance to more efficient re- source allocation and conser- vation policies, supported by controlled investment, expected to decrease auto efficiency potential and increase transit potential. A high rate of business invest- ment will enhance technologi- cal development and labor productivity growth, provide employment and maintain U.S. competitiveness in world mar- kets. Much capital available for building new transportation in- frastructure. Incentive to build new trans- portation facilities and retire old ones with establishment of accelerated depreciation allow- ances. Ample availability of capital ex- pected to induce increased R&D into new transportation modes and equipment, operat- ing procedures, etc. Ease of expanding transporta- tion supply expected to induce increased transportation de- mand. Selective business and government investment may favor one or more of the modes, for either passenger or freight. aCouncil of Economic Advisors, The Economic Report of the President, January 1977, Table B—2, p. 188. sids jeyuepiooe LL. WMO LILe-S6 “Td 100/Vda3 pue Bulueejo-ebjiq soueuSjUeW WO. UO!N||Od |1O Quewdojenep Aenuayem uO jUIeI}SUOD Zl, WMO Lke-S6 “Td Vd3/30V Jeyjoue) sjuewesinbes Buibpaiq :uoynyiOd Je}eM Kenueyen syoefoid sofew 410} uoIyeweR|oe1 pur] “isoNpul 69, Wd5N 061-16 “Td 1OG/Wda Ywo6 e se uoNoONsjsuod Suljedid soley ‘es puey Ajddns seyem oyu! 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Safety regulations affecting transportation Type of Safety Regulation Regulatory Agencies Affected Modes Predominant Markets i 1. Qualification and Fitness of Operators a. training b. supervision c. alertness d. accident reports 2. Physical Condition of Designated “Ways’’, Vehicles and Crafts . deterioration . deferred maintenance . inspection programs . accident reports . establish standards oeoQadop 3. Sources and Methods of Enforcement a. inspection programs b. Federal capital grant funds c. contingency funds d. driver education e. emergency medical services f. state use of police powers g. special agent enforcement h. special station inspections (i.e. h. truck scale stations) i. accident reporting 4. Hazardous Materials Handling Accidents a. vehicle collisions b. vehicle derailments c. properties of substance 1. flammable 2. explosive 3. toxic 4. radioactive d. technical handling knowledge e. vehicle design specifications f. accident reports 5. Provision of Safe ‘‘Ways”’ for Trans- port Operations . removing obstructions . betterment of existing ways . traffic service operations way design specifications . traffic engineering weather information ~O2Q90 Tm DOT-—BMCS, NHTSA DOT—FRA ABS, CG—OCVS, MARAD—OMMS NFPA, DOI, DOE, DOT DOT—FAA DOT—FHWA, NHTSA DOT—FRA ABS, CG—OCVS, MARAD—-OMMS NFPA, DOI, DOE, DOT DOT-FAA DOT-FHWA ° DOT-FRA CG-OCVS, MARAD-OMMS, ABS NTSB NFPA, DOI, DOE, DOT DOT-FAA NFPA, DOT-FHWA NFPA, DOT-FRA DOT ABS, CG-OCVS, MARAD- |OMHO-OST OMMS NFPA, DOI, DOE, DOT DOT-FAA DOT—FHWA, NHTSA DOT—FRA CG—Aid to Navigation Program NFPA, pipeline operators and state regu- lators DOT—FAA Highway Rail Waterway Pipeline Aviation Highway Rail Waterway Pipeline Aviation Highway Rail Waterway Pipeline Aviation Highway Rail Waterway Pipeline Aviation Highway Rail Waterway Pipeline Aviation Urban, Rural, Intercity Intercity, International Urban, Rural, Intercity Intercity, International Urban, Rural, Intercity Intercity, International Urban, Rural, Intercity Intercity, International Urban, Rural, Intercity Intercity, International SOURCE: Compiled in the course of NTPSC research. KEY: ABS = American Bureau of Shipping BMCS = Bureau of Motor Carrier Safety CG = U.S. Coast Guard DOE = Department of Energy DO! = Department of Interior DOT = Department of Transportation FAA = Federal Aviation Administration FHWA = Federal Highway Administration FRA = Federal Railroad Administration MARAD = Maritime Administration NFPA = National Fire Protection Association NHTSA = National Highway Traffic Safety Administration NTSB OCVS OHMO OHMS National Transportatin Safety Board (independent agency) Office of Commercial Vessel Safety Office of Hazardous Material Operation Office of Merchant Marine Safety APPENDIX TABLE 18. Estimated nationwide air pollutant emission trends, 1940-1976 (millions of tons per year for continental U.S.A.) Year co HC NO, LL Le SS eSisnsesssessasuntnssenssenaniesmsssce I edi, eee ods ails dese. Dhak foucdoTotals may not add due to rounding. APPENDIX TABLE 22. Prices of leading primary energy prod- ucts, 1975 to 2000, medium-growth scenario, marginal prices® of principal primary energy resources, (mid-1975 dollars per million Btu) Resource 1975 1980 1985 1990 1995 2000 Domestic Crude Oil... 2.07 2.54 285 2.98 3.04 3.29 Crude Imports? ............ 2.20) 2.20 2:98 12:96 3:27 3:43 High-Sulfur Coal.......... .50 .63 .70 aa 273 .70 Low-Sulfur Coal........... .63 .80 .85 .84 81 73 Domestic Natural Gas 2.04 234 2.78 286 2.93 3.06 Imported LNG.............. — | 2.40) S28) CAGE Oli 13:93 Domestic LPG............. 2.64 2.7 ( MSi2bun siel 3:40 703.66 Imported LPG.............. 21082707 S28 BAG. 2G 43:93 Nuclear Fuelc............... .44 48 49 49 50 10) SOURCE: NTPSC forecasts. @Wellhead and minemouth prices assuming no energy price regulation. ‘Including petroleum products. °Based on uranium (LL3Os) prices. APPENDIX TABLE 23. Forecast primary energy production for the U.S., 1975 to 2000, medium-growth scenario, production of primary energy resources (quadrillion Btu per year) Resource 1975 1980 1985 1990 1995 2000 Solafieccsccscce — 0.11 #040 0.79 1.24 #&41.70 Biomass............... —_ — 001 O23 054 «0.98 Hydro and Geo- thermal ................ D298. 540 937 i OC. Lae LL SOL Nuclear Fuel....... 1:69. 3.81 7.01 t2207 1O.1Gei2oiee High-Sulfur Coal. 7.05 680 690 7.72 9.71 14.20 Low-Sulfur Coal.. 7.55 14.10 18.98 23.55 29.50 38.68 Raw Shale Oil.... — — 004 014 0.21 £2.46 Domestic Crude.. 18.60 15.97 15.47 16.63 19.82 18.80 Crude Imports?... 11.73 19.30 20.68 20.42 17.42 14.10 Gas Imports?....... MOC 25740 2,94 AT i. 4 ann Domestic LPG.... 1.87 2.08 225 2.03 1.86 1.69 Domestic Natural Gases 18.72 18.44 17.75 1698 1666 14.92 VOISO tees 71.57 86.83 96.44 107.89 122.32 138.33 SOURCE: NTPSC forecasts. alncluding petroleum products and small quantities of imported methanol. ‘Includes LPG, LNG and Canadian Gas. ‘Totals may not add due to data rounding. APPENDIX TABLE 24. Forecast consumption of energy prod- ucts In the transportation sector, 1975 to 2000, medium-growth scenario (qua- drillion Btu per year) Product 1975 1980 1 985 1990 1995 2000 Gasoline .............. 12.733 14.688 12.615 10.459 9.388 8.776 Diesel Auto and Local Trucks....... — 0.066 0.906 1.601 2.022 2.341 Diesel, Non-autoc 2.218 2.880 3.424 4.010 4.605 5.206 Jet Fuel............... 2.008 2.484 2.985 3.595 4.229 4.965 Marine Bunker... 0.388 0.478 0.568 0.672 0.776 0.890 Methanol ............. — 0.013 0.181 0.330 0.428 0.504 Electricity ........... — — — 0.020 0.049 0.080 TOTAL Ziadie lau 17.347 20.609 20.679 20.687 21.497 22.762 SOURCE: NTPSC forecasts. aFor electric cars. >bExcludes marine diesel. Intercity truck, bus, rail, and marine diesel. APPENDIX TABLE 25. Constraining locks on the Inland water- way system Lock U.S. Dept. of Trans- Mid America portationa Manalytics’ Ports Study Waterway (By 1990) (By 1976) (By 2000) ————— eee Mississippi River L&D 26 L&D 26 L&D 26 Gulf Intracoastal Inner Harbor Industrial Inner Harbor Waterway Vermillion Vermillion Vermillion Port Allen — Port Allen — Bayou Sorrel — Kanawha River Winfield LS. Winfield LS — Ohio River Gallipolis a Gallipolis Monongahela L.3 153 — River L.4 — — 7 — —— L.8 — oo Illinois River La Grange — Peoria Starved Rock — Marseilles Dresden Island — Dresden Island Brandon = Brandon Lockport — Lockport Tennessee River — — Kentucky —_e—_—_—_——————————————— 8U.S. Department of Transportation, National Transportation Trends and Choices, 1977, p. 257. ’Manalytics, Inc., Coal Transportation Capability 1985 and Beyond, 1976, p. 57. ¢Preliminary findings, of Mid-America Ports Study prepared for U.S. Department of Commerce by Tippetts-Abbett-McCarthy- Stratton, 1978. APPENDIX TABLES e 415 APPENDIX TABLE 26. Characteristics of constraining locks on the mid-America inland waterway system Tons (Millions) Esti- Year mated Capacity : Annual 1976 Is Waterway Lock and Dam Capacity Demand Reached ——— lUINOIS. i.... threats Marseilles 32 25.8 1983 Starved Rock 36 Zhe 1985 Brandon Road 32 23.1 1989 Dresden Island 35 25.4 1989 Lockport 33 22.5 1992 Peoria 57 33.2 1994 LaGrange 59 30.7 1998 Tennessee ............ Kentucky 31 21.8 1991 ONO aintcuede Gallipolis 347 33.8 1996 Mississippi ............ L&D 26> °73 54.5 1984 Gulf Intercoastal.. Inner Harbor? 30 30.4 Current Port Allen 30 20.2 1993 Vermilione 45 40.3 1996 ————————————— SOURCE: Preliminary findings of the Mid-America Ports Study prepared for the U.S. Department of Commerce by Tippets- Abbett-McCarthy-Stratton, 1978. aPractical capacity estimate prepared by Corps of Engineers. >New Locks and Dam 26 are authorized. ‘Practical capacity estimate prepared by Corps of Engineers, assumes use of switch boats. ¢New Lock and channel authorized as part of the Mississippi River Gulf Outlet project which connects the outlet with the Mississippi River and could affect traffic volumes through Inner Harbor Lock. *Replacement lock for Vermilion Lock is authorized. 1975 figure. 416 e APPENDIX TABLES APPENDIX TABLE 27. Forecasts of urban person-trips for three scenarios (millions) Low-Growth Medium-Growth —High-Growth Year Scenario Scenario Scenario gL kee pie 359.4 359.4 359.4 TOGO aiaies 376.3 379.9 378.3 TOGO Risse: 399.2 424.4 419.0 2000s. 422.6 462.7 448.0 SOURCE: NTPSC forecasts. APPENDIX TABLE 28. City group comparisons of 1975 and year 2000, medium-growth scenario (percent dally trips by transit) City Group 1975 2000 ce adeeiee ee cckSa eho dd dac ete as ee DRE RE aes ie 1.2 Pp Poe en iste seers ae P anh! Seen rata EEN AN AES SACL Ft gh 1.6 1.6 i, ee eee Pee i, me ieab aia NE inne id 510 aT el i Bp 2.1 2.0 BN eg heats ae RE ae See ee ee eS! 2.8 Biss bree each ip ee a A AG i ea AE 6.4 9.3 cli ardi Moana Bea esate ee i eeeses ee in Cae ee 19.4 16.9 SOURCE: NTPSC forecasts. APPENDIX TABLE 29. Arterial highway miles (thousands) Facility Type 1975 1980 1990 2000 ErG@Way sncpecuts ertisce arenas tees 12.9 15.0 20.7 26.5 Surface Arterial ....................... 92.0 93.7 99.0 104.5 Otal concen eer nee eae 104:9) <1 08:70 19st SiO SOURCE: NTPSC forecasts. APPENDIX TABLE 30. City group comparisons of 1975 and year 2000, percent of arterial mileage which Is freeway City Group. °1975 2000 T SopreicibsscisDapnissvciencrsCligd asd vkcaronte ees Shisha asa ete 10.5 Tie 2S Bibiaccstt sens s sea ceakuntardecocees CERN ee aavactiee coe Eee eek 19.7 B cacececeea vans coteaee na ctapuee Gysndasey Lise ataia hee eos ice Ate rian Mee aes 12.6 21.0 EN deed Suaceckeal ile ile rake eases Ul ent aa ene 12.9 20.6 B ay heckrndauacpnentdtenieun tere vdela she esse Tita apace een TARE 19.6 CBee tia C ciecctne te sre pater Ia Ny te IE nae a 3 alae 13.1 21.9 SOURCE: NTPSC forecasts. APPENDIX TABLE 31. Average daily urban transit seat-miles (millions) Mode 1975 1980 1990 2000 BUG coccecss sorcerer arnt ee 232.6 3038 3529 433.9 PRaail ef fivdscieesnsstene potas scene eames 172.7 "212.9" ~ 323.1." 4374 SOURCE: NTPSC forecasts. APPENDIX TABLE 32. City group? comparison of 1975 and year 2000, medium-growth scenario, peak and off-peak period> highway speed on urban arterials Peak Period Off-Peak Pe- riod City Group 1975 2000 1975 2000 fae eR Ria AA RE Ee ee her 32.0 33.9 32.5 36.2 Mpa cE tard) SAE 20 ie ee Mt 31.0 31.1 31.8 36.1 KERR Sy ota n lotsa ge 32.5 29.4 So.h 36.1 Yi Aral Bet i en plenty ete RO Noe BS 29.8 30.5 32.2 37.1 5 SA aa, Ne See coe 2527. 19.3 33.1 36.7 6) Stns AeaiGke ae eee 29.2 30.5 31.1 38.8 SOURCE: NTPSC forecasts. aCity groups based on expected population in 1990. >Virtually identical results for all scenarios. APPENDIX TABLE 33. Forecasts for three scenarios over time: private urban personal passenger vehi- cle fleet (millions) Scenario 1975 1980 1990 2000 —— BRIA OWED so ctsiancccecescféccoscsevetsscs 53.8 61.3 [be 91.3 Medium-Growth...............cccccccc00ee 53.8 61.8 80.4 100.1 Gree Orowthy tories. ieee Seeks... 53.8 61.6 79.5 96.9 i SOURCE: NTPSC forecasts. APPENDIX TABLE 34. Projections of truck-miles in urban goods movement, by scenario, 1975 to 2000 (hundred millions) Scenario 1975 1980 1990 2000 pA i ac a eA i lil AAC etd et eases ERM BEPWEMATOWUN oo oo oscsleeecsicecseastene pec, 30.7 35.8 41.5 45.9 Medium-Growth.................cccceeeeee 30.7 36.7 oe TATE ERNIE OWN cs osccacrecresoctecelosbecer 30.7 37.2 57.2 90.6 SS es LS 2 SCL A RIE OG li Ta al Ra SOURCE: NTPSC forecasts. APPENDIX TABLE 35. Projections of operation costs? of trucks In urban goods movement, by scenario, 1975 to 2000 (billions of $) Scenario 1975 1985 2000 Bc a A at A a ac ST cea PtAOWI jock ace aha ASI Ae 48.1 61.2 71.8 Medium-Growth..............ccccccccccsccscesseeeceee 48.1 68.3 111.1 MEM APOWLUN ars cetictin te ea vine acess 48.1 (iO a ooet —_—_——— SOURCE: Medium-growth Scenario based on A.T. Kearney, Inc., Urban Goods Movement Demonstration Project Design Phase IV, Chicago, Illinois: March, 1976. Other scenarios based on adjustments according to GNP. APPENDIX TABLES e 417 APPENDIX TABLE 36. Forecast movements of Intercity goods, by scenario, 1975 to 2000 (billions of tons) Scenario 1975 1985 2000 eee COWeCITOWE Te oer tue Pee eo tase 3.90 4.70 5.05 Medium-Growth...............cccccccccccsecccsseceeees 3.90 5.39 8.09 Bigh-Growthy:c ccons. ere le oh ee cries 3.90 5:99 10.43 a SOURCE: NTPSC forecasts. APPENDIX TABLE 37. Forecast movements of Intercity goods by mode,* 1975 to 2000 (billions of ton- miles)? 1975 1985 2000 ———$— Low-Growth Scenario AW veces etae cris Nee et 673 973 1,153. Motor: Carrier 2cfe trons ee eG re 293 454 542 Private Trico de ct pres 8) 195 281 332 Water i ee ee ee 428 678 967 CILPIDSINO te hc ee ee 437 459 679 Gaa Pipeline suc edd) ot 312 252 300 AICSFrQlgnti i. as hc ati gad rd) he 4 5 62 TOA jen Peis alesis ne 3 Uke 2,342 3,102 3,978 Medium-Growth Scenario 30:1) Me aeen so, i ee oe aie SE A Re fe 673 1,146 1,983 MOtOr Canter tinier 5 ak he 293 516 841 RIVALS SEN iCke ac Ad ete fe 195 316 525 WANK arene Aus sata rose 428 764 1,433 OR PIDBHOS oi eer ee 4 ee 437 497 1,062 Gast Pipelines.) deo te ae oe 312 235 356 AI PEOIGNES tree eae ee gt ye ag Wee 4 6 10 Oba oe een Ba ts Cae hy ee | 2,342 3,480 6,209 High-Growth Scenario Frelh ety cectt eShaviecece teh eee aes ee 673 1,312 2,651 MOlOC Garnier ior 2. teeta ee eX 293 524 1,020 PIVELO TUCK tea es ae te 195 341 638 Welet a eee meee 428 810 1,629 OW Pipelinis:.2 5) .cteme i a 437 566 1,264 GaSe PINGING ttct eres Bans 312 242 402 PIPE TOIGIE N2 coc aneeaeene vars) a 2 tee 4 7 13 TOMS etic Sree eka 2,342 3,801 7,616 eee SOURCE: NTPSC forecasts. aSee footnote 6, Chapter 9. >Figures may not add due to rounding. 418 e APPENDIX TABLES APPENDIX TABLE 38. Forecast shares of Intercity freight ton- miles by mode, 1975 to 2000° 1975 1985 2000 EE EnnEa nnn aE Low-Growth Scenario Rall a. hs acaceeeteeoss acca petaceaninagt aceet coveterseresuncs 287 314 290 Ail c) qe re pace Ste Pare es emt 208 .237 220 Wai aos scdaaheg tes hop ae need snc ty tase coos 183 .218 .243 Ol Pipeline ............---ecessesscsenccesrasersenenees 186 148 171 Gas Pipeline ...........0.......s:ssccrerseseesseseuans 133 .081 .075 Piette cere: Mame, Marnsesetas weave tiapngeoeee: 002 .002 .002 BRE eee eet sects tersea ces ccotiorern ceensscteseaaencs 287 329 319 TUCK cic <5 tek peer ck Oe canesowats cxcdosetunremeese 208 .239 220 WE gece cos bbessantonct can tdeny stusena satataeetaneaetaind MES ct219 231 CHT PID@UING okies ost. baw ehenesdaenacn eee furer: .186 143 171 Gas: PIDelIMe 0203. .cscck- cxestsesooscogencesontoadnne 133 .067 .057 VALE ooo vas esa keavepcccat eee tncmssie seas heen fie tanuastons 002 .002 002 rad Beaseccasesccceacenctetatconnt ee stataasdoestescpcen @urune 287 345 348 TOOK os caet Gebsen, bees tute ten eaneelaies perder .208 .228 218 Waters oie tacress ceayere me btataecsnuaaeenes 183 213 214 OOH PUDONG is oc ceed seewcn rape peta neat an .186 .149 .166 Gas) Pipeline sik: aovcictscerticoreernepiereal 133 .064 .053 ] \ | gee Went ort aT ae tet re tei aN aS 002 .002 002 SOURCE: NTPSC forecasts. aGoods movement includes the 19 commodity classes covered in the 1972 data base of the Transportation System Center of DOT. Intercity flows are those of sufficient length to cross Bureau of Economic Analysis region boundaries. Except for coal move- ment, which is covered in Chapter 8, shorter truck movements are covered in this chapter in the Urban Goods and Rural Goods sections. Shorter movements by pipeline, rail and water are not included. In 1975, these short movements accounted for about 12% of total ton-miles. APPENDIX TABLE 39. Forecast local rural passenger travel, 1975 to 2000 (billions of vehicie-miles) Scenario 1975 1980 1990 2000 LOW=GOWUTS oe ccscgiicetuleteesaa ck ess 209.0 230.7 318.0 367.4 Medium-Growth....................008 209.0 = 225.4") 2585 4. 278: High-Growth ............sscccssssesesee 209.0 . 228.6 281.6" (317.9 SOURCE: NTPSC forecasts. APPENDIX TABLE 40. Forecast of truck-miles In rural goods movement, 1975 to 2000 (billions) Scenario 1975 1980 1990 2000 Low-Growthiiecscce eee esaces 98.1 118:2°°9135:8)9150:8 Medium-Growth................c..008 98.1 122:20 = 161. Onna cooe High=Growthys ia iecssens saseessesesees- 98.1 124.6 188.0 301.9 SOURCE: NTPSC forecasts. APPENDIX TABLES e 419 APPENDIX TABLE 41. Forecast international aviation passenger-miles, by market, by scenario, 1975 to 2000 (billions) Ratio Market 1975 1980 1985 1990 1995 2000 2000/1975 Trans-Atlantic SCT Ta See oR SS amt eae RP oa 42.637 59.801 71.541 74.491 84.794 89.252 2.09% BRMRENI TOW ita Pc Re Rae ini) 42.637 63.376 86.100 110.517 135.954 162.115 3.80% OT OES RLS IPs a ke a 42.637 65.903 96.833 135.813 182.694 236.510 555% Latin America RR RAROWADD ile gh stl, eee ie ny 16.732 23.577 29.046 33.007 36.016 38.154 2.28% EMIS OW ccd ince rates eg ate 16.732 24.928 34.979 46.854 59.999 74.591 4.46% BERERAP OW ious ead ecstasy obsess SAR 16.732 25.886 39.031 57.244 80.626 108.713 6.50% Trans-Pacific PRPOROWE ies oc ie UA ue Lae es. 18.585 28.062 35.900 42.948 48.426 53.152 2.86% RUIMAALOWEY Sete een RG Ve coed Mh fk 18.585 30.068 43.975 60.448 78.853 99.637 5.36% DUD W en pho CaN ei aed 18.585 31.985 51.559 78.245 111.862 152.829 8.22% U.S. Total Ce TRS Le PRONE PLA ES rae Ee ain? ST 3) 77.954 111.440 136.487 155.446 1 69.236 180.558 2.32% BEM CALOWEN «co th ict Tae LNT tts 77.954 118.672 165.054 217.819 274.806 337.343 4.32% 1s" Les Pe 71] VES E, eg ans ro ae nas OP ana 77.954 123.774 187.693 271.302 375.1 82 498.061 6.39% SOURCE: NTPSC forecasts. @Passengers entering or departing U.S. on U.S.- or foreign-flag carriers. 420 e APPENDIX TABLES APPENDIX TABLE 42. Forecasts of international cargo tons handled at U.S. airports, by market, by scenario, 1975 to 2000 and annual percent change.* Ratio 1975 1980 1985 1990 1995 2000 Percent EXPORTS Tran-Atlantic LOW=-GrOWIITy concen eco econ cree detetets ce cceust es 394,951 565,423 709,691 830,745 925,784 1,013,153 Prey f Meditim-Growthie.ycee ese tera nanan 394,951 601,377 885,562 1,284,166 1,810,386 2,490,884 6.31 Pligh=Growth 2402.05 «-.<2.92-ordeceencessac. ote 394,951 628,175 1,020,449 1,683,418 2,745,845 4,306,847 10.90 Latin America LE OW=GIOWIIN it eters scartakcsticetesseeeccees 219,761 312,863 396,268 466,338 527,876 576,843 2.62 Medium-Growtn...............:cscccceeeeeeeeeeeees 219,761 329,851 484,012 700,818 994,934 1,386,990 6.23 High=Growth Waa ivceceses coeete tec aiese-te 219,761 342,495 544,855 883,493 1,396,555 2,199,515 10.01 Trans-Pacific Vow-Growthse cto kk cenccs teers Steeaeezess 163,873 265,964 368,347 480,958 590,240 685,247 4.18 Medium-Growith.3 asccuereae ree 163,873 287,468 474,866 759,846 1,154,709 1,673,989 10.22 PHI Qh Growth tenses tecetesetee erase ceca hs 163,873 308,800 578,576 1,068,821 1,871,049 3,062,976 18.69 U.S. Total EOW-Growtli sess ecaleo cce ted enatbapestavenes 778,585 1,144,250 1,474,306 1,778,041 2,043,900 2,275,243 2.92 Meditim-Growtitae cect isso wceteovees saves 778,585 1,218,696 1,844,440 2,744,830 3,960,029 5,551,863 7.13 Migh-Growth.:ccietesscsssaeecsomacte eres 778,585 1,279,470 2,143,880 3,635,732 6,013,449 9,569,338 12.29 IMPORTS Trans-Atlantic Low=Growth 5 eer ee ont ecesteees antes 218,718 351,767 435,229 481,235 509,802 528,421 2.42 Medium-Growth................cccscsceccssssceees 218,718 381,390 548,299 695,910 836,553 951,109 4.35 FUIQH- Growth ice steseyatecvcavescoatenaseessceves 218,718 402,439 634,693 876,547 T41-276 1,369,284 6.26 Latin America EOW= GOWNS ee ates. thea see cess eck, 88,472 148,076 188,178 218,468 242,154 258,309 2.92 MeGgiom=Growltl serene eeeceee eee 88,472 160,812 237,134 333,163 445,847 569,026 6.43 High-Growthv.s.crte cee ee eee 88,472 169,599 271,407 423,372 633,093 884,632 10.00 Trans-Pacific LOW=GIOWUN se eee ee ecch etter eee eae 116,335 206,123 269,650 330,126 384,754 428,142 3.68 Medium-Growthi scot nace ees. 116,335 217,623 343,052 490,964 672,663 879,144 7.56 PIQGh=Growthie ree ea sear ee 116,335 246,245 414,377 646,392 986,369 1,408,830 vn U.S. Total LOW=GOWUT ts roreeere ees eects eters 423,525 705,966 893,057 1,029,829 1,136,710 1,214,872 2.87 Medium-Growthiiceiccs- 5. os ho ener: 423,525 759,825 1,128,485 1,520,037 1,955,063 2,399,279 5.67 Pligh=Growthis ices essai ecsee ee eee ee 423,525 818,283 1,320,477 1,946,311 2,760,737 3,662,746 8.65 U.S. GRAND TOTAL EOQW=GIOWUN acres sek tccacsrtoruefeeteernee, 1,201,110 1,850,216 2,367,363 2,807,870 3,180,610 3,491,115 2.91 Mecdium-Growthive ech tac: 1,201,110 1,978,521 2,972,925 4,264,867 5,915,092 7,951,142 6.62 TUIGFICOWI eee eee, ey ne mee eee 1,201,110 2,097,753 3,464,357 5,582,043 8,774,186 13,232,084 11.02 nnn n nnn nnn nnn SSS SSS SOURCE: NTPSC forecasts. Freight entering or departing U.S. on U.S.- or foreign-flag carriers. Re EE Re ee awe APPENDIX TABLES e 421 APPENDIX TABLE 43. All cargo aircraft operations at U.S. airports, by market, 1975 to 2000* ie 4 bes 26,241 Por cee +i 58,938 84'582 (144, 1189 6,947 SOURCE: NTPSC forecasts. 4Freight entering or departing U.S. on U.S.- or foreign-flag carriers. 422 @ APPENDIX TABLES APPENDIX TABLE 44. Alternative 1976 to 1990 highway capi- tal needs by state*(millions of 1975 $) National Transportation: Trends and Economic Choices Analysis Capital Needs Capital Needs 1976—1990> 1976—1990¢ Alabama fc 9e eee ieee -tchocescencds 5,623 5,054 PlASK ater eeck ss tees veenn cer eeccan ene 5,244 395 PTIZOMA Bede ee ys cree ccee kt oe coe eee 9,245 3,912 ASKANSas Sst. cada se eeeeelae 3,561 3,239 Californiat:c See ee. 18,422 22,236 COlOtAdO eisai sae iscaaveeoMlactieee 4,637 2,318 Gonnecticltecse:) 10.3242 1970 424.85 87.81 21 67.10 11.58 7.72 19.30 29 1975 659.40 136.70 21 84.59 13.77 9.18 22.95 27 SOURCE: U.S. Coast Guard. APPENDIX TABLE 53. Ownership of U.S. port facilities Number of Percent of a; Terminals U.S. Total Type of Ownership (Estimate) (Estimate) SSS SSsnSSSpSScsennsnnsssennnnensnstns Private (profitmaking organizations)... 1,488 62.00 Private (non-profitmaking organiza- 6 .25 TOMS), 7.u. aaccsuten ee ee Local government agencies ................... 576 24.00 State government agencies.................... 288 12.00 U.S. government agencies ..................... 43 1.75 TOtal i ccscctctt ats een eee 2,401 100.00 SOURCE: Estimates are extrapolated from data contained in Joint Economic Committee, U.S. Maritime Administration, State and Local Facility Needs and Financing, Volume |, prepared for U.S. Congress, Joint Economic Committee, Washington, D.C.: 1966, I-332. iain : APPENDIX TABLE 54. Projections of domestic and interna- tional marine transport shipboard em- ployment, 1975 to 2000 1975 1985 2000 Deep Sea:@ PICGNSOG oe nccccee cee ee 11,315 AITHIGGNSOG en. s ochvesecsceesk tees 43,255 Great Lakes: PICENSOC 20... oc. ee 1,618 1,690 RO IGONSOG ochre rs ecstoct eee 5,154 5,370 Inland Towing: SINGONS octet Bier haces scectoes 21,000 35,870 60,100 (Cee A Sea, ana eee 49,000 83,700 140,200 hota lites eb tee anc tdees 131,342 126,630 200,300 SS SOURCE: 1975 data from MarAd Office of Maritime Manpower. Projections by NTPSC. aU.S.-flag, International and Domestic Ocean. APPENDIX TABLE 55. _ U.S. international definitions Water Freight: U.S. carriers’ freight receipts for U.S. imports and exports. Foreign carriers’ revenues from U.S. imports are treated as an import. Ten percent of the foreign freight charges paid to U.S.-flag carriers involved in trade between foreign countries is also included. Air Freight: All international and territorial freight on U.S. airlines, including freight, express, excess baggage, adjusted mail and chartered freight. Payments accruing to foreign-flag carriers for purchases of services by U.S. citizens are excluded. Air Passenger: Includes all passenger services of U.S. airlines to or from foreign countries and U.S. territories and between two foreign locations, plus purchases of foreign transport services by U.S. residents. Water Passenger: Purchases by U.S. citizens of international passenger services originating in or destined for the U.S. regar- dless of flag of vessel. APPENDIX TABLES e 425 APPENDIX TABLE 56. _ Intercity transportation definitions Regulated Motor Carriage: Freight trucked beyond the local area and subject to economic regulation by the states or by the ICC. Private Motor Carriage: Freight activities of private trucks that go beyond the local area. Includes labor costs only for driving and maintenance. Rail Freight: Includes freight, express, baggage and farm com- modities moving between cities by rail. Domestic Ocean: Includes the intercoastal waterways, ship routes that use the ocean between U.S. ports (plus trips between coasts through the Panama Canal), and travel by water to Hawaii, Alaska, Puerto Rico, the Virgin Islands, Guam and Samoa. Great Lakes: Includes all U.S. shipping on the Great Lakes and that portion of the St. Lawrence Seaway belonging to the U.S. Inland Waterway: Normally refers to rivers, canals, and intra- coastal waterways which service shallow-draft vessels (e.g., those of nine-foot draft). Oil Pipeline: All intercity and local freight activities of crude oil and petroleum product pipelines. Gas Pipeline: Pipelines that derive their revenue from the transmission and distribution of gas. Air Freight: Freight carried on U.S. airlines within and between the 50 states. Includes freight, express, excess baggage, adjusted mail and chartered freight. Automobiles: Figures are based on the sum of expenditures for ownership and operation of private vehicles. ‘‘Autos’’ include small trucks and vans used as personal vehicles. Air Carrier: All domestic (those within and between the 50 states) passenger operations of U.S. airlines. This includes certificated route and supplemental air carriers and air taxis. General Aviation: Not-for-hire business-owned aircraft used for passengers and/or freight shipments (includes civil government aircraft). Personal Aircraft. Use of personal aircraft for transportation. Other General Aviation Aircraft. Aircraft in the categories of aerial application, instructional, industrial/special, and other uses. Rail Passenger: Railroads, Passenger. Fares, car charges, bag- gage and other passenger receipts. Intercity Bus: Intercity and rural highway passenger transporta- tion. Water Passenger: Domestic Water, Passenger. Inland and coastal waterways, principally ferries, river cruise ships and coastal trips by international steamers. 426 e APPENDIX TABLES APPENDIX TABLE 57. Operating cost of inland towing trans- port, by cost item, twelve months end- ing June 30, 1978 % of Cost Item Cost Total Cost PSone eee ee a a ee a ae oT eee | Towboat Crew Wages and Fringes................. 40,457,115 13.78 INSUFANCE 3s ee ee 8,413,275 2.86 Depreciation—B.B. Charter? .............. 8,166,845 2.78 Maintenance... 2 caiswo 2. tonite 14,341,924 4.88 PUGH, Ais ack. ets oceaates vs scacp snes bcizcucreeeene 47,060,314 16.03 [ia 2 oromaey Maree. Eon eupe AW He eRcicit acs tS 2,013,141 0.69 OUT Wire Sarceestttretiahareanertire sy ee 11,851,053 4.04 Outside TOWinig Fas...cokcscsctieessstuote 40,312,385 13.73 Barge INISUTFANCO Acari eeeeieee a ose eee eed oe 6,048,514 2.06 Depreciation—Charter .............c000eee 24,005,869 8.17 Maintenanced..fit te ee 13,478,711 4.59 US 11) ai Neier weap OME Se) SOR IR coed dee 2,976,960 1.01 Port Shifting—Fleeting—Other ............0..0000.. 37,015,940 12.60 Cargo Cleaning—Cargo INS. ............ccccccceeeeeee 9,119,422 3.10 General and Administrative GOSS err ir, se ee rca te Un anes Att 28,415,736 9.68 TORE Seda is rence x ceo oe ee 293,677,204 100.00 LS tne SOURCE: ICC Suspension Board Case No. 68652 dated No- vember 3, 1978. *Based on seven firms’ operations. >“B.B.”’ means ‘‘Bare Boat.”’ APPENDIX TABLE 58. Highway cost responsibility based on 1975 disbursement patterns* and 1975 user-charge percentages,» medium- growth scenario (millions of 1975 $) 1975 1985 2000 eee Federal Disbursements................ -7,741 -—13,814 ~-19,519 Federal User Charge Revenues + 5,699 +10,170 +14,370 Net: (Subsidy) 2c ety a. —2,042 -3,644 -5 149 State & Local Disbursements .... —20,412 -36436 -51,461 State & Local User Charge R@VENUCS Rtas wut eae +12,925 +23,071 +32,585 Net (Subsidy)..:......... 2 Fa ww «30.0 25.0 APPENDIX FIGURE II-9. Comparison of projected number of automobiles in U.S. fleet, 1975 to 20.0 2025. 220.0 15.0 210.0 1970 1980 1990 2000 2010 2020 2030 Year 200.0 aNTPSC forecast includes only non-military, non-government, domestic transportation. 190.0 180.0 — 7 2517010 2 € 160.0 2 Medium-Growth Scenario 2 150.0 5 i ow-Growth Scenario e 140.0 fn High-Growth Scenario 130.0 Ay. ™ WHARTON 120.0 a NFA —M 110.0 100 Dae a ee tae a Ore 90.0 1970 1980 1990 2000 2010 2020 2030 Year aNTPSC includes small trucks and vans for personal travel. 442 @ APPENDIX II APPENDIX FIGURE !I-10. Comparison of projected vehicle- Miles (trillions) miles of automobile travel, 1975 to 2025. 3.5 / FA Sas / / oe af x/ O/ 2.9 Psy / / 237 / / / 25 / % / / / & 253 Low-Growth Scenario rf wi Medium-Growth Scenario and High-Growth Scenario 0.9 1970 2020 1990 2000 2010 2030 Year 1980 @NTPSC includes small trucks and vans for personal travel. APPENDIX FIGURE II-11. Energy (quadrillion Btu) Comparison of projected automo- bile energy demand,? 1975 to 2025. 20.0 18.0 i 16.0 (i @ aus ONS 14.0 S, 1S . 4G if ms ff ARAN gon pa BAG ee. s LMS: Low-Growth a Wi; 2 ae? Z as wer 12.0 F Scenario <") Lt HS and ; ape eo oe High-Growth cO%.- ete Scenario fe . 10.0 Pes oe} Facil 8.0 Medium-Growthy. Scenario a See Ps 6.0 4.0 1970 2000 Year aNTPSC projections did not include small trucks and vans. 1980 1990 2010 2020 2030 APPENDIX Il e 443 APPENDIX FIGURE IIl-12. Comparison of projected rail ton- miles, 1975 to 2025. 3000.0 2800.0 / 2600.0 High-Growth Scenario / ’ 2400.0 / py. 2200.0 ' Medium-Growth / , Scenario 2000.0 1800.0 1600.0 Ton-Miles (billions) 1400.0 1200.0 APPENDIX FIGURE II-13. Comparison of projected truck ton- miles, 1975 to 2025. 7000.0 600.0 1970 1980 1990 2000 2010 2020 2030 nea" 6000.0 5000.0 4000.0 3000.0 Miles (billions) 2000.0 0.0 1970 1980 1990 2000 2010 2020 2030 Year \ nile Meg tne yoo | sulle hes uM Bs ye ag errs } ped’ tity i 5," cn | Be. asa men i Appendix Ill Alternative Energy Sources and Coal Movement Projections This appendix contains supplementary material to Chapter 8 regarding the development of alternative energy sources, including illustrations of the poten- tial movements of energy. PRODUCTION OF ALTERNATIVE ENERGIES In order to change the U.S. economy from reliance on petroleum fuels to other energies, several barriers must be overcome. Chief among these are: the establishment of energy supply technologies in large- scale production; obtaining significant amounts of capital; and overcoming long lead times. Appendix Figure III-1 diagrams the possible pro- cesses and flows to bring the raw materials’ energy value to the end user. Appendix Figure IIl—2 indicates the lead times involved for various alternative energy technologies. The following data suggest the investments need- ed for the year 2000 (in 1975 dollars) for the forecast of synthetic liquids used in Chapter 8. $75 to $85 billion $ 4 to $ 6 billion $18 to $21 billion Synthoil from coal: Oil from shale: Synthetic gas: This massive capital investment will not be the sole determinant of the cost of these fuels (and hence their competitiveness); the price of coal will also be a determinant. If coal prices rise as rapidly or faster than oil, this will restrain development. Conversion costs could well be higher than estimated, which will make development less attractive. Coal conversion cost estimates have varied by a factor of 200 percent during the past few years.' POTENTIAL USE OF ALTERNATIVE FUELS BY TRANSPORTATION Synthetic fuels from coal or oil shale appear to be preferable to straight alcohol as an alternative trans- portation fuel. Synfuels are advantageous because they are chemically similar to petroleum fuels and thus compatible with both the existing distribution system and current vehicle types. Straight alcohol, on the other hand, may require either a new distribu- tion system or extensive modifications in the present network, as well as substantial vehicle modifications or alternative engines.? Alcohols (derived from both biomass and coal) and synthetic fuels raise concerns with respect to environmental effects. At the present stage of alco- hol fuel research, the main environmental concern is with aldehyde emissions—photochemically reactive compounds which are not yet regulated.* Similarly, the high aromatic content expected in synthetic fuels raises the specter of high poly-nuclear-aromatic (PNA) emissions. Like aldehydes, PNAs are unregu- lated. In both cases the scope of any environmental problems and potential remedies have not been defined. In addition to environmental questions, the high aromaticity of synfuels presents a toxicity problem. Benzene, one very toxic aromatic compound, has been implicated in certain cases of leukemia and is believed to harm blood-forming organs after pro- longed exposure.® At present, the EPA is developing proposed regulations covering benzene emissions. Synfuels are a likely target for these regulations. Potential environmental, health, and safety im- pacts from various energy technologies have been investigated by the NTPSC. It is believed that a shift from conventional sources of oil to coal liquefaction and gasification, oil shale retorting, and electricity generation from coal, even under controlled technol- ogies, could involve a significant increase in potential adverse impacts to health, safety, and the environ- ment. Less harmful effects appear to be associated with coal liquefaction, surface oil-shale retorting and high-Btu coal-gasification systems compared with the generation of electricity from coal or with in-situ shale retorting. 445 446 @ APPENDIX III APPENDIX FIGURE III-1. Energy production technologies’ fuel cycles. Industrial Solvent Int. Low and Direct Combined Cycle Electric OOOO Gas Industry Residential/Commercial Transportation Industry Residential/Commercial Transportation Refining e : Combustion Light Rail aie. Pipeline Industrial Heavy Rail Industrial Industrial Residential/Commercial Transportation Electric Vehicles Btu Gas Product Ammonia Production Feedstocks Highway Vehicles: Otto Cycle Engines (blends) Gas Turbine Engine Stirling Engine Feedstocks Transportation Indirect Liquefaction Processes (first Transportation (highway, air) OOS such process was Fischer - Tropsch) Liquid Feedstocks Organics (straight chain Highway i.e., Vehicles: Otto Cycle Engine Gas Turbine Engine Stirling Engine Propeller Aircraft Direct Liquefaction aliphatics) Processes (first such process was Bergius) Industrial Jet Aircraft Highway Vehicles: Gas Turbine Engine Stirling Engine Predominantly Ring Structure Transportation Surface Retorting D = c = ® jo Transportation Synthetic Underground Crude, Predom- ! Heavy Rail Retorting inantly Ring Diesel Transportation Highway Vehicles: (in situ) Structure (i.e., Fuels Industrial Diesel Engines aromatic) Marine: Diesel Engines Pipeline Industrial Residential/Commercial Transportation Marine: Steam Engine Diesel Engine Gas Turbine Feedstocks Biomass Transportation Conversion Biomass Processing High Industrial Btu Residential/Commercial Gas Transportation Highway Vehicles: Otto Cycle Engine Gas Turbine Engine Stirling Engine Geo- Pressured Methane Advanced Extraction Technologies Industrial Residential/Commercial Transportation Residential/Commercial Pipeline Various Technologies Residential/Commercial ENDED SOURCE: NTPSC forecasts. APPENDIX II!| @ 447 APPENDIX FIGURE IlI-2. Energy supply lead times. Years to Commercial Production A (range covers typical experience) Time of Access to Acreage or Decision to Build Oil & Gas U.S. Lower 48 Onshore . ea Discovered Mid-East Be U.S. Gulf Coast Offshore A | North Sea Offshore discovered Mid-East Frontier Areas BfehoreUS.Afica a Far East. Latin America Synthetics Dery Heavy Oil _ . . .... » # Shale Oil/Coal Liquids Coal Gas aA ie 2 Nuclear Bi ese Japen _ | Es 0 2 4 6 8 10 12 Year SOURCE: Exxon Corporation Public Affairs Department, World Energy Outlook, New York: |976, p. 17. APPENDIX TABLE Ilil-1. Sources of liquid fuels, medium- growth scenario (quadriilion Btu per year) Resource 1975. 1980 1985 1990 1995 2000 Domestic Crude......... 18.60 15.97 15.47 16.63 19.82 18.80 Crude Imports? .......... 11.73 19.28 20.51 20.10 17.04 13.76 Coal Liquids? ............. — — 01 .01 1.62 6.34 Shale Syncrude......... — am .04 14 19° h 222 Methanol Imports....... os 01 18 .32 38 34 alncluding petroleum products. ‘Including syncrude, methanol and residual from coal. 448 @ APPENDIX III APPENDIX TABLE III-2. Liquid fuel energy: production to consumption, medium-growth scenario, 1975 (quadrillion Btus per year) Other End Uses for Trans End Use Primary Products Refinery Products Transportation Fuels Petroleum Products By Mode LL Domestic Crude 18.60 Gasoline 15.254 Gasoline 12.733 Naptha-type 2.509 Personal Vehicle Feedstock Gasoline 10.79 Diesel Methanol Electricity Syncrude Shale Oil Distillate 8.207 Distillates (R/C Distillate, Truck Diesel: Auto & Rural 2.906 Gasoline 1.91 Local Truck Distillate) Diesel Toot Industrial Dis- Methanol Jet Fuel 2.008 tillate .413 Other Diesel 2.218 Electricity .339 Imported Crude 11.73 Aircraft Jet Fuel 2.01 Lubes, Waxes, Rail Asphalts .682 Diesel .50 Bus Diesel .03 Residual from Coal— Residual from R/C Residual .226 Oil Pipeline refineries 4.894 Industrial Diesel ele Residual in- Marine Bunker .388 Residual 1.533 cluding supplies Electricity 2.381 directly from coal Non-Petroleum Fuels Marine Bunker .39 Methanol Electricity ——————— SOURCE: NTPSC forecasts. APPENDIX TABLE III-3. Liquid fuel energy: production to consumption, medium-growth scenario, 1985 (quadrillion Btus per year) Other End Uses for Trans End Use Primary Products Refinery Products Transportation Fuels Petroleum Products By Mode $$$ Domestic 15.473 Gasoline 17.116 Gasoline 12.616 Naptha-type 4.499 Personal Vehicle Crude Feedstock Gasoline 10.09 Diesel 72 Methanol 14 Electricity Syncrude Shale Oil .038 Distillate 11.953 _ Distillates R/C Distillate 1.965 Truck Diesel: Auto & Rural Distillate .861 Gasoline 2.52 Local Truck .904 Industrial Dis- Diesel 2.64 Jet Fuel 2.984 tillate 1.319 Methanol .03 Other Diesel 3.426 —_ Electricity .108 Imported Crude 20.508 Aircraft Jet Fuel 2.98 Lubes, Waxes, Rail Asphalts .855 Diesel .90 Bus Diesel .04 Residual from Coal 0 Residual from R/C Residual .420 Oil Pipeline Refineries 4.778 Industrial Diesel we Residual including Marine Bunker -569 Residual 1.641 supplies directly Electricity 1.621 from coal 4.778 Non-Petroleum fuels Marine Bunker ASY A Methanol 181 Electricity a ee Seon oy an SOURCE: NTPSC forecasts. APPENDIX Ill © 449 APPENDIX TABLE Ill-4. Liquid fuel energy: production to consumption, medium-growth scenario, 2000 (quadriliion Btus per year) Other End Uses for Trans End Use Primary Products Refinery Products Transportation Fuels Petroleum Products By Mode Domestic 18.801 Gasoline 16.620 Gasoline 8.775 Naptha-type 7.841 Personal Vehicle Crude Feedstock Gasoline 6.49 Diesel 1.73 Methanol .37 Electricity .08 Syncrude mele Shale Oil 2.214 Distillate 17.704 Distillates Diesel: R/C Distillate 1.826 Truck Auto & Local Rural Distillate .702 Gasoline 2.28 Truck 2.339 industrial Dis- Diesel 4.36 Jet Fuel 4.966 tillate 1.962 Methanol au} Other Diesel 5.208 Electricity .221 Imported Crude 13.759 Aircraft Jet Fuel 4.97 Lubes, Waxes, Rail Asphalts 1.079 Diesel 1.20 Bus Diesel .05 Residual from .919 Residual from R/C Residual .373 Oil Pipeline Coal Refineries 3.697 Diesel on Residual including Industrial supplies directly Marine Bunker .891 Residual 1.382 from coal 4.616 Electricity 1.378 Non-Petroleum Fuels Marine Bunker .89 Methanol .504 Electricity .079 SOURCE: NTPSC forecasts. ENERGY MOVEMENTS NOTES AND REFERENCES Because the potential movements of coal and other 1. University of Oklahoma, Science and Public Policy Program, +h : Energy Alternatives: A Comparative Analysis, prepared for energy commodities could have substantial effects Council on Environmental Quality, Washington, D.C.: Govern- on the U.S. transport system to the year 2000, the ment Printing Office, 1975. following maps are provided. 2. U.S. Department of Energy, Utilization of Potential Alternative Transportation Automotive Fuel Composition 1985-2000, Re port No. DOE HCP/W3864—01 /1 Washington, D.C.: 1978. Ibid. Ibid. Ibid. OP "SJSE99IOJ OSdLN -JOYNOS uleyunO-W OLIN DH98@d =Vd JB4}U3D YINOS IsaM OSM [242U8D YON ISAM ONM Jeazuad YyiNos sey OS3F [24JUaD YON ise3 ON 9UeNW YINOS WS SRUENY PI VW puejbuZ Man AN :suoiBay puewaq | “st AY90H =O sulejq 38a dD eiyoejeddy ddV :suoibay adunosay 50 "(489K 19d suo) POYs UO}I|]W) 0007 PUB ‘S86L ‘S261 ‘OjseUEDS YO6-WN|peU ‘|e09 ANjjNs MO} JO WodsueR jeUojBel-19}U) “f-111 BUNDI4 XIGN3SddV¥V + "SJSBIBIOJ OSdIN ‘JOYWNOS ip |e4JU9D YyINOS IsaM OSM TF |e4.UaD YON 1S9M ONM jesJuag YyINOS Ise _OSF je4JUaQ YON Ise ONZ onueliWy YyInog WS onUeY PIN VW pue|buZ MaN JN soualuy 1NI elyoejeddy dd :suoiBay adunosay :suoibay puewag "Ueek 18d suo} WOYs UOIII1W) 0007 PU ‘SEL ‘S61 ‘OeUEDS YWoB-WUN|pew ‘je209 ANjINs YB}Y jo WodsueN jeuo;Ge-s9;U] “p11 3YNDId XIGNAddV 452 e APPENDIX III APPENDIX FIGURE III-5. Eastern road identification map. o i ¢ Milwaukee ) eo > Syracuse Zilo Buffalo “7 cr Schenectady, Albany =| lee ?. Boston R cA s\\|= Plymouth Co a . a On Rockford Chicago S| 7 ASL pringfie' Ashtabula oO v Ey New York Galesburg Oy Newark Bound Brook 1<) Nw arg sos NC) Philadelphia (o} & Cumb 2) Hagerstown 85 Clarksburg Cherry Run Cy Baltimore = . S CO Charleston >. o> Washington 3) . co 2 Clifton Waynesboro 2 LE. Charlottesville CO agen Paducah Brookneal Peters, Newport News Ur; Vp—@ Norfolk ~“ (9) o (2) Y Harriman Jc. Raleigh Nashville i geste POD Salisbury Memphis Zou Charlotte Spartanburg Ry Qe, Columbia O Decatur Se s Lauren Ry Birmingham Oo 2 Charleston > SS i h Montgomery TENE Meridian Jacksonville Mobile a) oO (z Coleman Onande S ay o| Xe a Tampa Miami SOURCE: NTPSC forecasts. APPENDIX III APPENDIX FIGURE III-6. Projection of eastern coal by rail, 1985 tie d Milwaukee se oe & a 3 Pp & & v hy 10.2 Ss be) Plymouth 6.3 Sey. 7A F () Detroit ‘rh Rockford Chicago = \) A y, 1.2 4 © Ashtabula o 6- a3 % Cleveland eo! New York Galesburg Newark ~ > Bound Brook 3.9 Massillion \ NE Columbus Mattoon eS s wo Charlottesville 23.3 Richmond Paducah Pete Newport News Sbu,, 9 *.0 Norfolk es Winston- a my Salem x ; Nashville 43° = ie 84 Raleigh ao Meportice a) O39 Salisbury “\e Memphis «wo 2) \ Charlotte cae 35 =X Spartanburg Decatur a S Laurens” 2 15 Columbia Atlanta a arr 0.6 s “P Birmingham : Charleston 2 M Savannah Meridian lontgomery / Jacksonville ae Mobile way Nas Coleman Orlando Ss v 2.2 Tampa Miami AL = Access Link: coal tonnage varies greatly on these links, depending on locations of mines. Numerals indicate annual coal tonnage (in millions of tons) on each rail segment. e 453 454 e APPENDIX III APPENDIX FIGURE III-7. Projection of eastern coal by rail, 2000. Rochester a LYONS | syracuse “Alba Milwaukee Buffalo 20% aI Schenectady iy 8B 1.9 oston | geste: Ie eA o % “« ; ave 3. ~ %v we Springfield Plymouth . 1 Detroit Erie % = Rockford Chicago Ashtabula o 92 Scranton a 22 © Jersey Shore Jc\™, * New York oa & a Newark we 9 Galesburg c Ks sd ‘ Bound Brook 2 yy 3 = ” € o aN s o Philadelphia Mattoon Terre | Haute ie Hagerstown % | 4 | ee Baltimore | Clarksburg e Washington a shland 3 At Charleston Clifton 825 Forge Charlottesville Richmond 26.1 Newport News Petersburg Paducah a) a 19.9 Norfolk & Raleigh Harriman Jc. Nashville Salisbury 4 A Memphis Charlotte Spartanburg . ? Decatur Laurens Columbia > 2.5 ) 2 - Atlanta Augusta si ae 7, So o5 miming Charleston Macon t q °° Savannah M me / Meridian Lee sera x / ? : s 3 Jacksonville Mobile nN i] rr) e< Coleman Orlando Tampa Miami AL = Access Link: coal tonnage varies greatly on these links, depending on locations of mines. 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Tables \V—1 through IV—10 list the line items included in the 1975 accounts. The references listed in the right- ‘hand column are described in the section which follows the tables. The notes immediately follow each table. New government programs and hence new line items may have come into being since 1975. Thus the APPENDIX TABLE IV—1. government account tables in the text may contain line items not reported here. In similar fashion, some programs may have already ceased or be scheduled to cease. Too, the tables in the text may differ to the extent that line items for which government revenues and disbursements are expected to be roughly equal in the future have not been included in the tables in the text. Line items in government accounts, detalled alr data, 1975 receipts (thousands of $) noc On Level of Gov't Program Total Federal ............... Airport & Airway Trust Fund Passenger Ticket Tax 778,766 Waybill Tax 53,999 Fuel Tax (General Aviation) 54,442 international Passenger Tax 55,273 Aircraft Use Tax 20,369 Tire & Tube Tax 880 Interest & Refunds 94,588 Washington Capital Airports (Est.) 20,000 Total Federal receipts 1,178,317 RED cosas sey i cre teae Landing Fees & Misc. Charges 98,000 Total State Receipts 98,000 Le oF | feprake Aare ieee Landing Fees & Misc. Charges 920,000 Total Local Receipts 920,000 Total Government Receipts 2,096,317 1,657,327 Market Passenger Freight Intercity Internat’! _— Intercity _Internat’l| Notes References 778,766 R-1; p. 569 53,999 R-1; p. 569 54,442 R-1; p. 569 55,273 R-1; p. 569 16,932 1,310 1,199 928 a,b,c,d R-1; p. 569 597 108 99 76 a,b,c,d R-1; p. 569 83,498 5,564 5,427 gg9 e R-1; p. 569 17,556 452 1,846 146 f R-1; p. 569 951,791 62,707 62,570 1,249 67,920 11,381 10,642 8,057 g R-3; p. 18 67,920 11,381 10,642 8,057 637,616 106,844 99,895 75,645 g R-3; p. 18 637,616 106,844 99,895 75,645 180,932 173,107 84,951 ee SOURCE: MITRE Corporation, Government Financial Involvement on Transportation, prepared for the National Transportation Policy Study Commission, McLean, Va.: October 1973. aTotal amount allocated first between general and commercial aviation based on percentage distributions in R—2, p. 45. b’Commerical amount allocated between, passenger and freight based on revenue ton-miles in R—4; p. 1. cGeneral aviation is assumed to be entirely passenger. dIntercity and international allocation based on revenue ton-miles in R-4, pp. 1, 4. eAllocation based on distribution of all other fund receipts. ‘Total amount allocated between passenger and freight based on weight of passengers and freight enplaned at Washington National and Dulles Airports as found in R—5, p. 51—one passenger equals 200 pounds. General aviation passenger receipts were estimated from the number of general aviation and air taxi landings at Dulles and National as found in R-24, and an estimated weighted average landing fee of $2.17. The landing fee is extrapolated from data in R-23, pp. 2-17 using a 6 percent inflation rate. Commercial passenger receipts are simply the difference between total intercity passenger receipts and general aviation receipts. sThe total amount is first distributed across general aviation, intercity commercial and international commercial, based on landing fees and other revenues obtained from the CAB. General aviation landing fees were estimated from total landings as obtained from R—24, and a weighted average landing fee of $2.17 extrapolated revenues were allocated to general aviation and commercial based on the percentage distribution found in the national airspace 10 year plan, R-10—37.4 percent general aviation and 62.6 percent commercial. 465 466 e APPENDIX IV APPENDIX TABLE IV-2. Line Items in government accounts, detalled alr data, 1975 expenditures (thousands of $) Market Passenger Freight Level of Gov't Program Total Intercity Internat'l Intercity Internat’! Notes References Federal ............... Civil Aeronautics Board Regulation 17,437 11,500 1,701 3,031 1,205 a,b R-1; p. 701 Subsidy 63,581 58,151 5,430 c R-1; p. 701 National Mediation Board 669 381 100 110 78 de R-1; p. 756 National Trans. Safety Board 7,248 4,302 1,061 1,134 751 f,g,b R-1; p. 759 Appalachia Regional Devel. Prog. 2,700 2,581 119 R-1; p. 73 DOC—NOAA 16,403 10,819 1,600 2,851 1,133 b,h R-1; p. 211 DOS-—ICAO 4,873 2,853 2,020 b R-1; p. 537 Bilateral Agreements (Est.) 2,000 1,171 829 b ; DOT—Office of the Secretary 12,954 7,380 2,125 1,945 1,504 i,b R-1; p. 551 FAA 1,640,751 1,376,558 34,665 204,985 24,543 j,k R-1; p. 563 Capital Airports 20,532 18,023 464 1,895 150 R-1; p. 563 NASA—Aeor. Research & Tech. 312,892 178,234 51,338 46,975 36,345 b R-1; p. 661 Total Federal Expenditures 2,102,040 1,667,929 97,078 268,475 68,558 State Gin cies Sees Airport Programs 284,000 238,922 5,915 34,976 4,187 I,m,k R-3; p. 20 Total State Expenditures 284,000 238,922 5,915 34,976 4,187 Localic2hiats ats Airport Programs 873,130 734,542 18,185 107,529 12,874 n,m,k R-3; p. 20 Total Local Expenditures 873,130 734,542 18,185 107,529 12,874 Total Government Expenditures 3,259,170 2,641,393 121,178 410,980 85,619 SOURCE: MITRE Corporation, Government Financial Involvement on Transportation, prepared for the National Transportation Policy Study Commission, McLean, Va.: October 1973. alntercity and international allocation based on aircraft revenue miles of certificated route carriers as shown in R—4, pp. 1 and 4, i.e., total—2,368,137,000 (p. 1 scheduled service + non-scheduled service); domestic—1,973,503,000 (p. 4, scheduled service + non- scheduled service); international—394,634,000. >Passenger and freight allocations based on domestic and international revenue ton-miles from R—4; pp. 1 and 4, as summmarized below. AIR REVENUE TON-MILES (Thousands of $) Geographic Market Passenger Freight Total INTOI CIty 5. neta teense doa ota cee ee eed et mes he See ee cea 13,181,216 3,473,986 16,655,202 international ric.:acceiinlueccebee eee ean datas Meee oe ee ee tee oko 3,796,629 2,687,956 6,484,585 Otel aetvecd cst scsespcese hott sean ee een en ee 16,977,845 6,161,942 23,139,787 °Passenger and Freight allocation based on revenue ton-miles of total local-service certificated-route air carriers, as tabulated in R—4, p. 7, i.€., passenger—t1,060,390,000 (92 percent); freight—99,011,000 (8 percent); total local service—1,159,399,000 (100 percent). *Expenses not directly assigned are equally distributed between rail and air, and factored by 0.998 for the actual outlay. That is, from a total of $3,125,000, $1,788,000 is directly assigned to rail. Air then gets 50 percent or $669,000 of the remaining $1,337,000. ¢Total amount allocated according to revenue ton-miles as shown in note b, above. ‘Of obligations, $5,587,000 is directly allocated to aviation, $1,063,000 to surface, and $2,404,000 is administrative. Allocating the administrative amount yields air—$7,607,000, and surface—$1,447,000. Surface then is arbitrarily divided equally between rail and highway, $724,000 each. The obligated amounts are reduced by 0.953 to get outlays. sDomestic and international allocation based on distribution of U.S. Air accidents in R-7, p. 16, International—7 accidents (25 percent) and Domestic—21 accidents (75 percent). "Expenditures for mapping, charting and surveying, plus administrative allocation totaled $34,137,000. Dividing equally between air and water yields $17,069,000. These amounts are reduced by a factor of 0.961 to get outlays. APPENDIX IV @ 467 iExpenses not directed to a specific mode are equally divided among modes. See below. DOT GENERAL AND ADMINISTRATIVE EXPENSES (Thousands of $) Program Total Air High Pipe Rail Water SITIO POO Gorter near actate toes teccccucs oncesereetedticachs 40,094 6,059 6,059 6,059 *15,858 6,059 Trans Plan RE Dies cies eck Rice ees 34,160 6,832 6,832 6,832 6,832 6,832 Grants, Gas Pipe Safety..............0......08 1,167 — —_ 1,167 —_ —- ALANS ARES: OVOISCAS 2.22 cece sees cestscnacvessesess 215 43 43 43 43 43 75,636 12,934 12,934 14,101 22,733 12,934 *Includes direct allocation to Regional Rail Reorganization (3,806) and Federal Railroad Administration (5,362). The $12,934 in air expenditures is then allocated across submodes and markets using the distribution of FAA expenditures as developed in note j, below. iThe total amount includes the various expenditures shown in the table below, and excludes the amount allocated to public and military service. FAA EXPENDITURES (Thousands of $) Type of Public and Commercial General Expenditure Total Military Air Aviation ENON ARON ee ee aaa nt hoes eavasascnn feds casaneanpnendsvtos $1,394,715 $308,412 $ 620,030 $466,273 Gee BING Ge DOV acces. cass ssn bbeseckstacSinns trap tansaeecemens 8,648 8,648 a co PA DOCH E OReAT CUI acces cones cb aniew novolac Coneae nn coravoaume daanwatnmetnes 291,870 — 251,797 40,073 Be Ne Niece an ty eeecitedyoasanctnssasovenesavpvaceuinevatoase 223,351 28,096 122,701 72,554 PROS TI He DOV ack tered cb ac nd corsbaniuaaiassosnestecgaesndansood 63,612 8,226 39,849 15:537 Bee Tie PAPO ee Bisctee net 0 as eas cane das ee coeds nacn wondaenusae ase ovey 14,527 2,590 7,581 4,356 $1,996,723 $355,972 $1,041,958 $598,793 Public and military and submodal allocations were based on the estimates contained in the 1977 Airport and Airways Cost Allocation Study (R—-9, p. A-22). Intercity and international, and passenger and freight allocations were performed as shown in the following table. ALLOCATED FAA EXPENDITURES (Thousands of $) Total Passenger Freight Bree ThE CCI CAL eee ee ee aces coc races choc voce sPhes.cocen sitactuncascovndecnscenarSvsrephunstaseatseeesetens 1,640,751 ETA Vi en noc, De scn cevidees eoucetoncurcvabbess soeenere Sosstneneimenanan sc eheasssa 598,793 598,793 Tel! (ee Te ee ee A ne eee rere EO erate 1,041,958 BCH TRS TIC ee a oases svase pair cams ebbiahonne xoecnatnsisnbsdonstmentedinaess wexetses™e~anee 982,750 777,765 207,985 Epa eo cca lang cacssng snetdenassssenynanarnerws ran Kaebenseipask on cene aceaee 59,208 34,665 24,543 *See note j above. **See note b above. kThe total commercial amount is allocated between intercity (domestic) and international based on number of departures found in R—5, pp. 3 and 4—4,534,870,000 (94.317 percent) domestic, and 273,214,000 (5.682 percent) international. Domesitc and intercity are then allocated across passenger and freight based on revenue ton-miles as shown in note b. 'State expenditures reflect a deduction of $82,000,000 in intergovernmental transfer payments as shown R-3, p. 20. ™The total amount is first allocated across submodes (general aviation and commercial) based on the NASP Ten-Year Plan, R-10, due to lack of better data equaling 62.6 percent commercial and 37.4 percent general aviation. "Local expenditures reflect a deduction of $291,870,000 in Federal transfer payments (grants) from the Airport and Airway Trust Fund as shown in note j. 468 e APPENDIX IV APPENDIX TABLE IV-3. Line items in government accounts, detailed highway data, 1975 receipts (thousands of $) Market Passenger Freight Level of Gov't Program Total Rural Urban Intercity Rural Urban Intercity Notes References | Federal... Highway Trust Fund a R-6; p.V-6 Motor Fuel Tax 4,442,000 Truck, Bux, Trailer Tax 231,000 Tire, Tube, Tread Tax 625,000 Truck Pts. & Acces’ry 122,000 Tax Lubricating Oil Tax 59,000 Some Vehicle User 220,000 Taxes Interest 603,000 Total Federal Receipts 6,302,000 520,811 1,607,018 1,511,576 952,311 301,239 1,409,045 b,c State....... Bond Proceeds 1,412,000 R-6; p.V-6 Investment & Other 538,000 R-6; p.V-6 Tolls 1,052,000 R-6; p.V-6 Other Taxes & Fees 220,000 R-6; p.V-6 Subtotal 3,222,000 265,102 807,849 761,978 496,104 156,930 734,037 f,g Motor Fuel & Vehicle 11,335,005 1,155,974 3,547,946 3,341,160 1,176,682 372,218 1,741,025 d,e R-—6; p.V-6 Taxes Total State Receipts 14,557,006 1,421,076 4,355,795 4,103,138 1,672,786 529,148 2,475,062 kocal Bond Proceeds 781,000 R-6; p.V-6 investment & Other 423,000 R-6; p.V-6 Tolls 211,000 R-6; p.V-6 Motor Fuel & Vehicle 207,000 R-6; p.V-6 Taxes Parking Fees 120,000 R-6; p.V-6 Other Taxes & Fees 167,000 R-6; p.V-6 Total Local Receipts 1,909,000 157,070 478,642 451,464 293,936 92,979 434,909 h,i Total Gov't Receipts 22,768,000 2,098,957 6,441,455 6,066,178 2,919,033 923,366 4,319,016 SOURCE: MITRE Corporation, Government Financial Involvement on Transportation, prepared for National Transportation Policy Study Commission, McLean, Va.: October 1973. aAllocation of total amount is based on percentage distribution of FY 76 net revenues to the different items that comprise the Federal Highway Trust Fund as found in Tables FE—201 and HF—10 or R-6, pp. IV-8 and V-6 respectively, and as shown in the following table. TRUST FUND RECEIPTS (Millions of $) Estimated 1975 EYauro Percent Distribution Excise Taxes: Motor Fuel co iiitccsccsevccccoelaseces ett ee ee ee ee ee ee 4,219 77.9 4,442 TLin@S si: Bi Ae, APIS seh ees see Moke (ESP as bc eek YN ee ee Ye 546 10.1 loys; Innertubes tc. Mess Rees sd, see aoe ee eee 25 ie 26 TreadSRubbetissen cs decree ee eee 23 4 24 ‘Trucks!* Buses, a trailers. csccotecn castro ence eae oe cae ee 219 4.0 231 FederalsUse:..): Anche See ea te eos, eo hae ee ee 209 3.9 220 LUDFiCating Oil eetirriaaece ass sscth eters meter seetearenee teens 56 1.0 59 Parts? & “ACC@SSOMOS es tes eee tne ee eee ee ee 116 Zit 122 Subtotal Berea ese sere eeee eerste ee eee eee 5,413 100.0 5,699 INt@R OSU eck sce ce ees rere ore eee ee ae ee 587 603 APPENDIX IV e 469 >Passenger and freight allocation based on revenue percentage distribution for automobiles and buses (passenger), and single-unit trucks and combination trucks (freight) as contained in R-17, p. 14. Allocation of total trust fund receipts of $6,302 million as shown in the following table. PASSENGER AND FREIGHT ALLOCATION OF TRUST FUND RECEIPTS (Millions of $) Service Type Vehicle Type Percent Amount BASSOON COU Ere ear are Rech oo seg oss wcdsauntexcusa eeu e eee tack Autos 56.85 3,582,687 Buses 0.90 56,718 Range a reer rae ete oon vo ndccec sccidnsevin-enuahderuhavnondaethacostnutttuenet ven Trucks 42.25 2,662,595 CMR SMR oag eave Pay 0es taki adc ak. v2. wus apa ees ves sh escauds cnsie soeeee ioc aeene 100.00 6,302,000 ‘The allocations by vehicle type shown in note b were further allocated to geographical markets based on total vehicle-miles by vehicle type obtained from Table VM—1 in R-—6, p. IliI-2, and a distribution of truck vehicle-miles and passenger vehicle-miles made by the NTPSC. The resulting vehicle-mile distribution is shown in the following table. DISTRIBUTION OF HIGHWAY VEHICLE-MILES (Millions of Miles) Vehicle Type Urban Rural Intercity Total UN Oe teh too Se ee ee eS See Pe 31,051 98,162 145,241 274,454 PAT Ce ace hs ed i SB pe AR AR 6s Se a BO av OP AC 461,594 152,706 436,172 1,050,472 SOND TM ESS a i aPe ca ase eke 22 ais tnlsvaa Ventanas innate ashok etiven toad *1,529 chk hy s8) 2,649 *Obtained from R—11, p. 36. **Derived. Results of applying the preceding distribution to trust fund receipts are shown in the following table. GEOGRAPHICAL MARKET ALLOCATION OF TRUST FUND RECEIPTS (Thousands of $) Geographical Market Vehicle Type Urban Rural Intercity Total A See eee Soe trate va ntuce steak foe \Wa chs vecivl ideassatelicrsesadbiwont 1,574,289 520,811 1,487,487 3,582,587 Me a i eh 26s Ri dh gad pis aceantisaantiase’ Aaanastandochaatescoteet 301,239 952,311 1,409,045 2,662,595 COMIMINMNE SUNS eects rat ela kan davis ti pviies das aave ag janaiienaseass 32,729 23,989 56,718 ¢Allocation of motor fuel and vehicle revenues between passenger and freight is based on the distribution of gallons of fuel consumed. Buses, motorcycles and passenger vehicles are considered passenger while primary trucks are considered freight. See Table VM—1 in R-6, p. Ill—2. *Total state motor fuel and vehicle revenues of $11,335 million are allocated between automobile, bus, truck in urban, rural, and intercity markets based on the distribution of vehicle miles (note c). Results are shown in the following table. e STATE FUEL AND VEHICLE TAXES (Millions of $) Vehicle Type Urban Rural Intercity Total TINIE: 8 ich Bote SEER ee STE CoE Se tee ER 3,494,232 1,115,974 3,301,789 7,911,995 EXOT ENG Ay MEU sath ee a Ed ere ei a ee ERE Es Oe 53,714 39,371 93,085 STUIG Keser etre eet corns Settee ithes hiccts cwoctecvssessneseeusabedhee seat 372,213 1,176,682 1,741,025 3,289,920 ‘Allocation of motor-vehicle, motor-carrier (other taxes) revenues is based on distribution as contained in Table MV—2 of R—6. DISTRIBUTION OF MOTOR VEHICLE TAX RECEIPTS (Millions of $) Motor Vehicles Amount Percent Alstos Gabs.2& Motorcycles is. 20% A o..<. cs SS Se MOM cee wee eedtidaeesensca canbe acunee 2,093,960 BIUSOS creer reer chet Rn, en hte ae ee eee tec gt rate nate ees? ean et auns Congas ciaey encarta 12,863 SCO teal era, Be dae conic PSA Na cocoa co zasu.cussadesueasendesveucsssdepavesosPeteerte 2,106,823 56.95 Trucks, Trailers, Tractors ..........---..ssscsccssccssessnsessssessnscessccnccncnccssanscccssercecessnsecenscecsevenssens 1,592,506 43.05 3,699,329 100.00 9Urban, rural and intercity allocation is based on the vehicle miles distribution (note c). Results are shown below. ALLOCATION OF ALL OTHER STATE RECEIPTS (Millions of $) Urban Rural Intercity Total EIT CE MMP ea ch sets $a gat doen ioe do nay scan teint Acharabasev iss taeen 801,342 1,265,102 757,208 2,823,652 EUs eect ct eee trad nase nave ooeesnseacearamma ct sec cscs sansbacnecse 6,507 4,770 aheey ere SWIC Keperra scat cs ev caneretc sacs sagas sesecacasausaecasncuussbeastaconrepsatacerceesss 156,930 496,104 734,037 1,387,071 nPassenger and freight allocation is based on vehicle type distribution as contained in note f. ‘Urban, rural, and intercity markets allocation is based on vehicle miles (note c). Results are shown below. LOCAL TAX RECEIPTS OTHER THAN PROPERTY TAXES (Millions of $) Urban Rural Intercity Total PUTO ere tose nocnn ce eesatuny tocsecencsdnaae vey svorsian ston esopeevoceptacoests 474,786 157,070 448,638 1,080,494 ESUG See ee td tase tra Uahcntecese neva es ney calves teasoand eaeevensipeaeeas 3,856 2,826 6,682 NRC eae icc oan na racks arenes po ae Raree No oad Cadac cs sion Oka kannnn ead 92,979 293,936 434,909 821,824 470 e APPENDIX IV APPENDIX TABLE IV-4. Line items in government accounts, detalled highway data, 1975 expenditures (thousands of $) Market Passenger Freight Level of Gov't Program Total Rural Urban Intercity Rural Urban Intercity Notes References sneer Lisesnensesneone empleo shonin sesso respira ic pena encase iene ae ss ee Federal... Interstate Commerce 23,074 1,296 21,778 bic R-1; p. 748 Comm. National Trans. Safety 690 39 651d,c R-1; p. 759 Board $ DOT—Office of the Secre- 12,954 7,837 5,117 e,c R-6; p. 551 tary Highway Construction? 7,288,000 736,317 2,237,907 2,112,071 787,468 249,095 1,165,142 f R-6; p. V-6 Total Federal Expenditures 7,324,718 736,317 2,237,907 2,121,243 787,468 249,095 1,192,688 State....... Const, Oper, Maint, Other 15,133,000 1,528,909 4,646,851 4,385,561 1,635,120 517,228 2,419,331 f R-6; p. V-6 Total State Expenditures 15,133,000 1,528,909 4,646,851 4,385,561 1,635,120 517,228 2,419,331 Local....... Const, Oper, Maint, Other 5,732,000 579,112 1,760,110 1,661,141 619,342 195,913 916,382 f R-6; p. V-6 Total Local Expenditures 5,732,000 579,112 1,760,110 1,661,141 619,342 195,913 916,382 Total Gov't Expenditures 28,189,718 2,844,338 8,644,868 8,167,945 3,041,930 962,236 4,528,401 senna SOURCE: MITRE Corporation, Government Financial Involvement on Transportation, prepared for National Transportation Policy Study Commission, McLean, Va.: October 1973. aincludes Highway Trust Fund Monies tranferred to FHWA by other agencies and expended by FHWA, and funds expended by other agencies as shown in R-6; p. VI-4. Total outlay of $46,146,000 is equally divided between rail and highway in accordance with GAO allocation in R—1 2, Appendix Il, p. 78. ‘Passenger and freight allocation is based on cost percentage distribution for automobiles ard buses (Passenger), and single unit trucks and combination trucks (Freight) as specified in R-17, p. 14—1,259 (5.616 percent) passenger and 21,156 (94.384 percent) freight. “BTSB directly allocates $1,063,000 to surface-accident and safety investigation as contained in R—1, p. 59. When administrative cost is included it becomes $1,447,000. This amount is equally divided between rail and highway modes ($724,000 each) and factored by 0.953 to obtain outlays. *The total amount is derived according to note i under Appendix Table IV—2. Allocation is proportional to the FHWA allocation across submodes and markets. ‘The total amounts for Federal, state and, local expenditures consist of the amounts shown in the following table. GOVERNMENTAL HIGHWAY EXPENDITURES (Millions of $) Maintenance, Level of Gov't Construction Admin., Other Total Federal... Serer ceo eee 6,987 301 7,288 Statetien. cscs. sees Meh Mess teerncs. tae: ek one ee 7,954 7,179 15,133 LOCA ies os cancec cet carte cnds cies betes ite t ee eee 680 6,412 7,092 | Ko) ¢ | vee cnn # a ORE oe OM eae Sey ay) Co 29,513 APPENDIX IV e 471 Maintenance and other expenditures were obtained directly from Table HF—10 in R—6, p. V—6, while construction expenditures were derived from the same source by accounting for intergovernmental transfers as shown in the following table. INTERGOVERNMENTAL HIGHWAY EXPENDITURE TRANSFERS (Millions of $) Local Type of Expenditure Federal State Total County Municipal Direct Construction Expenditure...................... 332 11,011 2,918 PEIRCE N EAI TRC ON Shi5s vs scncs oa perebadcna AM nadanmanssees 5,623 (5,616) (7) (3) (4) 1,032 (271) (761) (454) (307) 2,814 (2,814) (1,752) (1,062) 219 (219) (126) (93) (101) 101 192 (91) (102) 102 (2) 104 Total—tndirect Construction Expenditures.... 6,987 7,954 (680) The total (construction plus maintenance and other) expenditures are allocated across geographical and use markets and across submodes based on procedures and data developed in the 1965 and 1969 Highway Cost Allocation studies and on miles traveled by various vehicle types in 1975. The first step in this allocation process is to obtain the direct construction expenditures in terms of road class from Table HF—221 in R—16, p. 143, as shown in the table below. DIRECT CONSTRUCTION EXPENDITURES BY ROAD CLASS (Millions of $) Level of Government Road Class Federal State Local TPRRQSU ECC rre ete ee encase RPE Les cracks coda sea Rt Pe thawhsssceasaphasenavemensnuattrencecnaaze’ — 3,733 — CEA Ce ree essen I EE PAE voi saspnechaonsnnenvpsnntnnaenerees — 5,795 525 ER ea teat eres ee concoct eas accu SOM tate te ats es enaneonsbasrsspmenenecéan eases 5557 a 1,149 a OSE Neen COCA AO ACAS ot ce cans a Se ccna caf came oy can evasp schon cnaeesppmasadenua sda trecece = 332 294 2,393 FOtal ieee eee ee ees a cet i caper. HEE. Rees. ea *332 10,971 2,918 *This amount is from R—-6, p. V-6. It differs by $18 million from the $314 million shown in R-16, p. 143. The difference is negligible in the final results. The above expenditures are then allocated among “common” expenditures due to all three highway submodes and trucks and buses using percentage estimates derived from R-18, p. 40. Results are shown in the following table. DIRECT CONSTRUCTION EXPENDITURES BY ROAD & WEIGHT CLASS (Thousands of $) Level of Government Federal State Local % of Exp. —————_ that Are Trucks Trucks Trucks Road Class Common Common & Buses Common & Buses Common 4& Buses Interstate sn sess econ eee 74.4 — — 2,807,112 965,888 — — Other ABCHnses...:-2 75.0 — — 4,346,250 1,448,750 393,750 131,250 Other*State.i.caces..- 75.0 — — 861,750 287,250 — — Other Local. Gees 80.4 266,928 65,072 236,376 57,624 1,923,972 469,028 LOtalS tees Arce 266,928 65,072 8,251,488 2,759,512 2,317,722 600,278 The common expenditures in the table titled “Direct Construction Expenditures by Road & Weight Class” and the maintenance and other expenditures from the first table were then split among automo- biles, trucks and buses, and the truck and bus expenditures were split into their separate categories using vehicle-miles as obtained from Table VM—1 in R-6, p. Ill-2, and shown in the table below. VEHICLE MILES TRAVELED (in Millions) Vehicle Submode Miles Percent Percent TNS PE CMIOUIG .< ccascdenasieciaote Rassacapurn atic SVipandaduereabematy ened eh db nities CekxrickGoeaas 1,050,472 79.1271 ee eee ee ey ira Ae J uten cantidoh ephesianteita era i cel rae fh nlaan tebe cy bhanctnr nat aLaeasraBeaas 2,648 00.1995 00.9556 ETE he rr arc eras dna eae aa ec caee abet nelone dol ade ner aurea seersete nuke ane sramecolnscetesabe 274,454 20.6734 99.0444 TD Oobea aaah oink cbeon sce aebipecacs scence depwaddanasuprasnnnssansonessenedssooseubadasnnanavumestannas¥d 1,327,574 100.0000 100.0000 472 e APPENDIX IV Results of applying these distributions to the preceding expenditures are shown in the table below. SUBMODAL HIGHWAY EXPENDITURES AFTER TRANSFER PAYMENTS (Thousands of $) Type of Level of Gov’t Expenditure Total Automobile Bus Truck Federal................ GommonGonst.e eee 266,928 211,212 533 SOS ruck GaBus- Const: 65,072 622 64,450 Maint. &? Other 22 ec 301,000 238,181 602 62,217 State wis... .caee GommonrConst.-- atte eee 8,251,488 6,529,171 16,458 1,705,859 ruck: && Busi Constiweseee eee 2,759,512 26,370 2,733,142 Maint: &# Other. nee tee ae 7,179,000 5,680,743 14,358 1,483,899 Local S22 Gommon?Gonst.-22 eee 2,317,722 1,833,949 4,622 479,151 truck & «Bus Gonst=.2ee ce 600,278 5,736 594,542 Maint, &? Otherasct.0.cn ee 6,412,000 5,073,816 12,824 1,325,360 otala- ee 28,153,000 19,567,072 82,125 8,503,803 Percent ....... 100.000 69.503 00.292 30.205 The bottom line from the preceding table was then used to distribute Federal, state and local total expenditures across submodes. Results are shown in the table below. SUBMODAL HIGHWAY EXPENDITURES BEFORE TRANSFER PAYMENTS (Thousands of $) Total Level of Gov’t Amount Automobile Bus Truck Federal cc: ticcB stcccy cheese cee re ae a 7,288,000 5,065,160 21,135 2,201,705 State !iicah Hess a ee ee Neal ail ae ora 15,133,000 10,517,435 43,886 4,571,679 LOC Al 2s ius. oeeas cities oe eee ee 5,732,000 3,983,740 16,623 1,731,637 The automobile and bus amounts are distributed over the geographical segments on the passenger market, and the truck amount is distributed over the segments of the freight market based on a distribution of vehicle miles developed by the NTPSC and shown below. GEOGRAPHICAL DISTRIBUTION OF VEHICLE-MILES (Millions of $) Type of Vehicle Units Urban Rural Intercity Total Automobiles see ee Mil@S fat .csts5.cte eet hea ee ee ee 461,594 152,706 436,172 1,050,472 Percent 22... eee ee 43.942 14.537 41.521 100.000 BUSS rere ieee eet ere eee MileS 3 -sc2:.e en on eee 1,528 1,120 2,648 Percent eo en, eee 57.704 42.296 100.000 SUCK areceseacc cette ccc ere ee MilGS fetes Serpe ert ee 31,051 98,162 145,241 274,454 Percent... eee leo. 35.766 52.200 100.000 APPENDIX IV e 473 APPENDIX TABLE IV-5 Line Items in government accounts, detailed pipeline data, 1975 (thousands of $) Intercity Level of Freight Gov't Program Total Market Notes References TS Uo UGS eneneS CA AnD nN non seek Receipts Federal .................. Nil BlAle series. on kiesccen cd Nil OCA iieigecaiiscinsunae Nil Expenditures Federal .................. Federal Power Commission (GAS) 11,839 11,839 a R-1; p. 735 DOI—Geological Survey: Alaska Pipeline Investigation 251 251 b R-1; p. 462 DOT—Office of the Secretary, etc 14,121 14,121 c R-1; p. 551 Total Federal Expenditures 26,211 26,211 BStAIO as esi sics shines Nil BOCalieaorceaiceisc: Nil Total Government Expenditures 26,211 26,211 ee ————————————————————————— — ————=S— SOURCE: MITRE Corporation, Government Financial Involvement on Transportation, prepared for National Transportation Policy Study Commission, McLean, Va.: October 1973. aTotal amount includes total gas pipeline regulation cost ($10,535,000) plus proportionate share of administrative cost ($816,000), i.e., ($10,535,000) x $2,498,000) ($34,731 ,000—-$2,498,000) then factored by 1 .043 to get outlay. bAuthorized amount ($346,000) is factored by 0.726 to get to outlay ($251,000). eSee note i under Appendix Table IV—2. APPENDIX TABLE IV-6. Line items in government accounts, detalled rail data, 1975 receipts (thousands of $) Intercity Level of Freight Gov't Program Total Market Notes References ss Sc Ilr i ac ER tc a aL An re SOO DT Federal’!.:3...06505.006 Alaska Railroad 42,286 42,286 a R-1; p. 591 Total Federal Receipts 42,286 42,286 SEC See ee ear: Nil SEO AE asic pace es wack caeeck< Nil Total Government Receipts 42,286 42,286 —————— SOURCE: MITRE Corporation, Government Financial Involvement on Transportation, prepared for National Transportation Policy Study Commission, McLean, Va.: October 1973. aAmount entirely allocated to freight. Passenger revenue only accounts for 2 percent of total. 474 @ APPENDIX IV APPENDIX TABLE IV-7. Line items in government accounts, detailed rall data, 1975 expenditures (thousands of $) Market Passenger Freight Level of ; } Gov't Program Total Urban Intercity Intercity Notes References LLL LLL LL LL LL LL LL LL tee Federal ................. Interstate Commerce Commission 23,074 947 ee ler wib.c R-1; p. 748 National Mediation Board piers), Soy" 101 2,351 dc R-1; p. 756 National Trans. Safety Board 690 28 662 ec R-1; p. 759 U.S. Railway Association 22,700 22,700 R-1; p. 805 DOS—Pan Amer. Congress Assoc. 15 BE cee R-1; p. 537 DOT-—Office of the Secretary 22,753 933 21,620 >. gic R-1; p. 551 Fed. Rail. Administration General, Safety, R&D 63,859 2,620 61,239 c R-1; p. 586 Rail Service Assistance 169,004 169,004 R-1; p. 586 Amtrak 299,000 299,000 R-1; p. 586 Alaska Railroad 43,684 43,684 R-1; p. 586 Disaster Relief 2,046 2,046 R-1; p. 586 Total Federal Expenditures 649,277 303,629 345,648 g State ce3 ke Payments to Amtrak (Section 403B) 3,700 3,700 Total State Expenditures 3,700 3,700 KOCae rsa rake Nil Total Government Expenditures 652,977 307,329 345,648 rs SOURCE: MITRE Corporation, Government Financial Involvement on Transportation, prepared for National Transportation Policy Study Commission, McLean, Va.: October 1973. alncludes aid to Penn Central Railroad. ICC's total outlay of $46,148,000 is equally divided between rail and highway based on GAO allocation in R—1 PESO TASS cPassenger and freight allocation is based on percentage distribution of ICC Regulated Carriers revenues in domestic operations in R-13, p. 6—$16,573,000,000 (95.897 percent) freight and $709,000,000 (4.103 percent) passenger. *National Mediation Board directly assigned $1,788,000 to rail. Another $1,337,000 is equally shared between rail and air. When factored by 0.998, rail’s outlay becomes $2,452,000. *Rail’s share of direct allocation to surface, including administration, is $724,000. When factored by 0.953, it becomes the outlay. ‘Due to lack of information on international operation the amount is entirely allocated to intercity freight. sTotal amount includes direct allocation to Regional Rail Reorganization ($3,806,000) and Federal Railroad Administration ($5,362,000) by DOT, Office of the Secretary in R—1, p. 551. The sum of $9,168,000 is factored by 1.0678 to obtain outlays. To that product is added an equal share of the outlays remaining in the Office of the Secretary and outlays for Transportation Planning, Research, and Development, and for Transportation Research Activities Overseas. See note i under Appendix Table IV—2. "Amount based on data by Mr. Julius Ganoza of the Rail Passenger Program Division of the FRA. APPENDIX IV e 475 APPENDIX TABLE IV-8. Line items in government accounts, detalled water data, 1975 receipts (thousands of $) Market Passenger Freight Level of ie mk oT ihe Gov't Program Total Intercity Internat’! Intercity iInternat'l Notes References eee ee — Federal ..............--- Panama Canal User Charges 169,266 5,078 164,188 a R-1; p.318 Other 84,495 2,535 81,960 a R-1; p.318 Saint Lawrence Seaway 6,252 188 6,064 b R—1; p.596 Total Federal Receipts 260,013 7,801 252,212 ORs i fleseveces Alaska Ferry System 13,088 6,544 6,544 c R-19; p. 7 Ports & Terminals 131,000 891 419 72,959 56,731 d,e R-3; p. 18 Total State Receipts 144,088 7,435 419 79,503 56,731 | ae ea Ports & Terminals 325,000 2,209 1,041 181,007 140,743 de R-3; p. 18 Total Local Receipts 325,000 2,209 1,041 181,007 140,743 Total Government Receipts 729,101 9,644 1,460 268,311 449,686 BN SS A ee RO RN LE Sena SOURCE: MITRE Corporation, Government Financial Involvement on Transportation, prepared for National Transportation Policy Study Commission, McLean, Va.: October 1973. aAll receipts are allocated to international except for 3 percent that is based on tonnage hauled as contained in R—20, p. 111. bAll receipts are allocated to international except for 2 percent that is based on tonnage domestically hauled as contained in R—20, p. SA Pue cReceipts are equally allocated between intercity passenger and intercity freight in the absence of better information. dPassenger and freight allocation is based on revenue data found in R—7, p. 27:99 percent freight and 1 percent passenger. eDomestic and international allocation based on percentage distribution of millions of tons of freight hauled—foreign 7,641 (43.74 percent) and domestic 9.827 percent) in 1974 as contained in R-22. 476 @ APPENDIX IV APPENDIX TABLE IV-9. Line items in government accounts, detalled water data, 1975 expenditures (thousands of $) Market Passenger Freight Level of Gov't Program Total Intercity Internat’! Intercity Internat’! Notes References teenie esneshesneere=nisesinsssensensesipisensircsassgense senses ster aroicestnisiniemnsvoesesnsieeas a cease cimiesatsaaiteecuaiotnem ee Federale jun. Federal Maritime Commission 7,250 4,079 SO triica R-1; p.733 TVA-—Navigational Channel 12,070 12,070 R-1; p.796 DOC-NOAA 9,290 4,477 2,707 2,106 b,a,c R-1; p.211- MARAD-Ship Construction 240,828 240,828 R-1; p.222 Operating Subid. 243,152 243,152 R-1; p.223 Other 59,392 33,414 25,978 d,a R-1; p.224 DOD-Corps of Engineers 687,203 7,719 536,478 143,006 ef R-1; p.300 Panama Canal 261,252 7,838 253,414 g R-1; p.318 DOS-Intergov. Mar. Org. Ra 152 R-1; p.537 Bilateral Negotiations 2,000 2,000 R-1; p.537 DOT-—Office of the Secretary 12,954 7,288 5,666 h,a R-1; p.551 Coast Guard ; 523,330 252,195 152,541 118,594 ib,a R-1; p.555 Saint Lawrence Seaway 4,874 97 4,777 j R-1; p.595 Total Federal Expenditures 2,063,747 264,391 756,512 1,042,844 Statetir 2 Sara Alaska Ferry System 28,766 14,383 14,383 k R-19; p.38 Ports & Terminals 212,000 1,441 679 118,078 91,802 I,m R-3; p.21 Total State Expenditures 240,766 15,824 679 132,461 91,802 Local area Ports & Terminals 529,973 3,603 1,697 295,196 229,504 Im R-3; p.21 Total Local Expenditures 529,973 3,603 1,697 295,196 229,504 Total Government Expenditures 2,834,486 283,818 2,376 1,184,142 1,364,150 serene SOURCE: MITRE Corporation, Government Financial Involvement on Transportation, prepared for National Transportation Policy Study Commission, McLean, Va.: October 1973. The international and intercity allocation is based on the distribution of tons hauled, 43.74 percent international (foreign) and 56.26 percent intercity (domestic) occurring in 1974 and found in R-22. Total is derived from mapping, charting and surveying expenditures of $32,386,000 for operations, plus $62,000 in capital outlays, plus $1,689,000 in administrative expensives (a proportionate share of the $21,991,000 listed). This amounts to $34,137,000 which is then equally divided between air and water and factored by 0.961 to obtain the NOAA outlay. Total resulting amount is further reduced by $7,113,000—the amount allocated to the military based on the military use percentage of 43.365 percent obtained from R—15, p. 69. ‘Passenger and freight allocation was based on the Coast Guard cost allocation of 48.19 percent passenger (recreational) and 51.81 percent freight (commercial) shown in R—15, p. 69. ‘The total amount includes $26,109,000 in R&D expenditures plus $33,283,000 in operating expenditures. Operating expenditures are derived from the $43,771,000, shown in R-8, p. 224, less $7,009,000 for national security support capability ($4,738,000 + administrative cost of $2,269,000). The result os $36,764,000. When factored by 0.905 to obtain the outlay estimate, the result is $33,283,000. APPENDIX IV e 477 eThe total amount is derived as shown in the following table. CORPS OF ENGINEERS EXPENDITURES (Thousands of $) Gonst> Gen. (Navi. Related) 6.<.ccgce ccs on cescpaterasiorietes svn ccsonnpcons $ 66,407 141,981 8,144 40 STL teal eee ee rere ate ee amt a ere teteeereensceoaensceere $216,572 Common Portion PRG 2 ETI LOSI oot exes esceceecedsnotopsvasoavonastdeucnesastenssssbotanens $ 22,055 Var. Mult. Purp. Power (LOCKS) .............cssscccccesserrreeeees 62,355 Employee Comp. ..........::ccsccccsscecsssesseeesseseesseessssesneeenerens 1,870 PRON FOC ecco caretnrcts esc onax cone ac upvaundsvadncncVeraogrornasivvcenens 14,717 ST AE YECOR EA ares he re tier sta es ce saat hir enrol umes waaivennihicersiogt $100,997 ) x 0.23532 AN OGCATECIELOT INAV Beate noth rtete sc and particulates. Status quo objective: Implicit or explicit statement of an objec- tive in existing policies and programs. Stirling engine: An external-combustion piston engine, that is characterized by a continuous combustion process in which the heat from the ignited air-fuel mixture is transfered to a separate 502 e GLOSSARY closed system containing a non-condensable working fluid such as helium, which is alternately cooled during compression and heated during expansion, producing motive power. Stratified charge spark-ignition engine (Otto engine): A spark- ignition cycle engine in which the air/fuel ratio in the comnbus- tion chamber is much richer near the spark plug than elsewhere. Subsidy: An annual government expenditure minus annual user charge receipts. Federal, state and local governments may subsidize. As used here, it does not include external disecono- mies, or preferential treatment accorded by governments in the form of operating rights or constraints, cargo preference, help in international matters, etc., which may have similar effects. Supercritical wing design: NASA designation for an_ airfoil design which is specially shaped to diminish the strength of the drag-inducing shock wave that occurs between regions of supersonic and subsonic airflow. A similar design is the ‘‘tran- sonic”’ wing. Synthetic liquid fuel: Produced from coal or oil shale which has been chemically processed to duplicate petroleum crude oil and then refined into traditional liquid fuels such as gasoline, middle distillates, or residual fuel. TAA: Transportation Associations of America. TCP: Transportation Control Plan. Teleconferencing: Any form of conference where parties are remote from each other, for example, one in which the partici- pants communicate by telephone (or speaker phone), sometimes accompanied by a televised broadcast of the participants. “3C” planning requirements: Cities with more than 50,000 population must maintain a continuing, comprehensive, and cooperative transportation planning process as described in 23 U.S.C. 134. “13c”’ requirements: Section 13(c) of the UMTA Act provides that as a condition of any financial assistance granted under the Act, fair and equitable arrangements are made, as determined by the Secretary of Labor, to protect the interests of employees affected by such assistance, including preservation of rights under existing agreements, continuation of collective bargaining rights, protection of individual employees against a worsening of their employment positions, employment assurances to employ- ees of acquired systems, reemployment rights, and paid training or retraining programs. TIP: Transportation Improvement Program: A federally required listing of all public transportation projects proposed for imple- mentation within the next five years within an urbanized or metropolitan area. Ton-miles: A commonly used measure of freight movement activity; equivalent to moving a ton of freight, by any means, one mile. TRANS: Transportation Resource Allocation Study: A series of computer programs developed under FHWA sponsorship to simulate highway and transit use in urban areas at different levels of investment. Transbus: A new bus which meets Federal design specifications for low floor height and higher ramps or lifts for wheelchairs. Transportation: In general the movement of people and goods. However, a number of exceptions may be implied. Possible example exceptions include: water by pipe, or natural or manmade watersheds; sewage transport in sewers, etc. Transportation bill: This measure shows what the nation paid, or an estimate of what it would pay, in its market for transportation. For commercial transportation, it is the sum of revenues of the operators. For private transportation, it is the sum of costs associated with ownership and operation. It includes govern- ment expenditures not recovered through user charges. It does not include external costs. TRB: Transportation Research Board: Is an agency of the National Research Council, which serves the National Academy of Sciences and The National Academy of Engineering. The Board’s purpose is to stimulate research concerning the nature and performance of transportation systems, to disseminate information that the research produces, and to encourage the application of appropriate research findings. TSM: Transportation Systems Management. Turbofan: A fan in a jet engine that is driven by a turbine and is used to supply air for cooling, ventilation, or combustion. UMTA: Urban Mass Transportation Administration (DOT). UMT Act: Urban Mass Transportation Act of 1964: 49 U.S.C. Section 1601, et seq. (1976), Pub. L. 88-365, 78 Stat. 302. UNCTAD: United Nations Conference on Trade and Develop- ment. This conference of vessel operators developed a draft “Code of Conduct’’ for international marine liner conferences. Uniform charge spark ignition engine (Otto engine): A spark ignition internal and intermittent combustion engine which burns a uniform mixture of air and fuel, usually provided by a carburetor. The engine is characterized by reciprocating pistons with four cycles: intake, compression, ignition, and exhaust. Unit train: A dedicated set of rail vehicles (a train) loaded at one origin, unloaded at one destination each trip, and moving in both directions on a predetermined schedule. Urban and rural areas: According to the 1970 census definition, the urban population comprises all persons in (a) places of 2,500 inhabitants or more incorporated as cities, villages, boroughs (except Alaska), and towns (except in New England, New York, and Wisconsin); (b) unincorporated places of 2,500 inhabitants included in urbanized areas (statistics of the Federal Highway Administration of the U.S. Department of Transportation use 5,000). The population not classified as urban constitutes the rural population. Changes in the size of the urban population from one census to another are affected by two components: (a) growth in areas classified as urban at the beginning of the decade; and (b) reclassification of rural territory as urban and urban territory as rural. Between censuses, it is possible only to obtain measures of the first component from the Current Population Survey. Measures of the second are too costly. About 60 percent of the urban population growth between 1950 and 1960 was attribut- able to expansion of urban territory. Urban market: Transportation within places of at least 2,500 population, including daily commutation from surrounding areas. Urban transportation: Not rigorously defined. In general, trans- portation within an urban area. In some cases, portions of intercity transportation which take place in urban, urbanized, or SMSA areas may be netted out to prevent double counting. Urbanized area: An urbanized area is a central city over 50,000 in population plus the contiguous portion of its suburban fringe. The key element in this definition of “urbanized” is that the population density is above 1,000 persons per square mile, i.e., the circumferential boundary extends outward to the perimeter beyond which the population density falls below 1,000 persons per square mile. Thus, the boundary is statistically determined and does not correspond to political boundaries. The boundaries are redefined after data are available from each decennial census. This differs from SMSAs. SMSA boundaries lie along county lines. In general, SMSAs encompass more land area than the corresponding urbanized area. The urbanized area statistics from the 1974 National Transporta- tion Report used by the National Transportation Policy Study Commission in its modeling and forecasting differ from the above definition in several ways. For the 1974 National Transportation Report the boundaries of the 1970 urbanized areas were adjusted by 1990. All data for the period relate to the 1990 boundaries. This adjustment in some states causes the coales- cence of closely located areas into a single large area, in those instances where the merged 1970 urbanized areas coincided closely with what the state or local planning agency considered to be a logical planning unit. Examples of merged areas are New York, Los Angeles, and San Francisco. Additional exceptions were made in three states—Alaska, Vermont, and Wyoming— which had no urbanized area in 1970. These states were asked to designate their largest city for urbanized area reporting i.e., Anchorage, Burlington, and Cheyenne, respectively. Thus the 1974 NTR includes reports from 241 urbanized areas in contrast to the 248 listed in the 1970 census. USCG: U.S. Coast Guard (DOT). USCM: U.S. Conference of Mayors. User charge: A charge made upon direct beneficiaries (users) of a transportation activity, designed to recover part or all of the governmentai cost (or social cost) of the project. GLOSSARY e 503 U.S.-flag carrier: One of a class of air carriers holding a certificate of public convenience and necessity issued by the CAB, approved by the President, authorizing scheduled opera- tions over specified routes between the United States (and/or its territories) and one or more foreign countries. 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STATUTES AND REGULATIONS Airline Deregulation Act of 1978. Pub. L. 95-504. 92 Stat. 1705. Airport and Airways Development Act of 1970. Pub. L. 91-258. 84 Stat. 236. Airport and Airway Development Act Amendments of 1976. Pub. L. 94-353. 90 Stat. 871. Clean Air Act Amendments of 1977. Pub. L. 95—95. 91 Stat. 685. Department of Energy Act of 1978. Pub. L. 95-238. 92 Stat. 47. Department of Transportation Act of 1966. Pub. L. 89-670. 80 Stat. 931. Electric and Hybrid Vehicle Research Development, and Demon- stration Act of 1976. Pub. L. 94—413. 90 Stat. 1260. Energy Policy and Conservation Act. Pub. L. 94-163. 89 Stat. 871. Energy Tax Act of 1978. Pub. L. 95-618. Federal-Aid Highway Act of 1956. Pub. L. 84-627. 92 Stat. 3174. Federal-Aid Highway Act of 1962. Pub. L. 87-866. 76 Stat. 1145. Federal-Aid Highway Act of 1970. Pub. L. 91-605. 84 Stat. 1713. (1978). Federal-Aid Highway Act of 1973. Pub. L. 93-87. 87 Stat. 250. Federal-Aid Highway Act of 1976. Pub. L. 94-280. 90 Stat. 425. Federal-Aid Road Act of 1916. 39 Stat. 355. Pub. L. 64—155. Federal Aviation Act of 1958. Pub. L. 85-726. 72 Stat. 731. Federal Aviation Act of 1958—Insurance Risks. Pub. L. 95—163. 91 Stat. 1278. Federal Railroad Safety Act. Pub. L. 91-458. 84 Stat. 971. Inland Waterways Revenue Act of 1978. Pub. L. 95-502. 92 Stat. 1693. Local Rail Service Assistance Act of 1978. Pub. L. 95-607. 91 Stat. 3059. Merchant Marine Act of 1936. Pub. L. 74—835. 49 Stat. 1985. Motor Carrier Act of 1935. Pub. L. 74—255. 79 Stat. 543. National Environmental Policy Act of 1969. (1978). Pub. L. 93-87. 87 Stat. 250. National Housing Act of 1954. Pub. L. 83-560. 68 Stat. 590, 640. National Mass Transportation Assistance Act of 1974. Pub. L. 93— 503. 88 Stat. 1565. Older Americans Act of 1965. Pub. L. 89—73. 79 Stat. 218. Panama Canal Act of 1912. 37 Stat. 560. 49 Stat. 543. Power Plant and Industrial Fuel Use Act of 1978. Pub. L. 95-620. 92 Stat. 3289. Rail Passenger Service Act of 1970. Pub. L. 91-518. 84 Stat. 1328. Railroad Revitalization and Regulatory Reform Act of 1976. Pub. L. 94-210. 90 Stat. 33. Regional Rail Reorganization Act of 1973. Pub. L. 93-236, 87 Stat. 985. Rehabilitation Act of 1973. Pub. L. 93-112. 87 Stat. 355. Shipping Act of 1916. Pub. L. 64—260. 39 Stat. 728. Surface Transportation Assistance Act of 1978. Pub. L. 95-599. Transportation Act of 1940. Pub. L. 785. 54 Stat. 899. United States Railway Association Amendments Act of 1978. Pub. L. 95-565. 92 Stat. 2397. ae Mass Transportation Act of 1964. Pub. L. 88-365. 78 Stat. Pd INTERVIEWS AND CORRESPONDENCE Air Transport Association of America. The U.S. Airline Industry from 1977 to 2000. Statement to the National Transportation Policy Study Commission. Washington, D.C.: 1977. Altshuler, David. Manager, Transportation Systems Division. Multi- systems, Inc. Cambridge, Mass. Telephone interview. 9 March 1979. Anderson, Howard. President, Yankee Group, Washington, D.C. Interview. 21 February 1978. Barsony, Steven. Director, AGT Applications, Urban Mass Trans- portation Administration, Washington, D.C. Telephone interview. February 1979. DeLeon, Cesar. Acting Director, Office of Pipeline Safety, Materi- als Transportation Bureau, U.S. Department of Transportation. Telephone interview. 23 November 1977. Elkins, Clifford. Assistant Deputy Director, American Association of State Highway and Transportation Officials (AASHTO). Wash- ington, D.C. Interview. 18 July 1978. Grant, Albert. Director of Transportation Planning, Metropolitan Washington Council of Governments, Washington, D.C. Inter- view. 16 June 1978. Gray, W. O. Exxon Corporation. New York, New York. Corres- pondence. 24 May 1978. Jenkins, Rodney E. Director of the Public Transportation Division, West Virginia Department of Finance and Administration. Inter- view. 5 February 1979. Hanson, Royce. Chairman, Montgomery County Planning Board of the Maryland National Capital Park and Planning Commission. Silver Spring, Maryland. Interview. 12 June, 1978. King, Mary. Deputy Director, Action, Washington, D.C. Interview. 23 January 1978. Lloyd, Jean. Acting Director, National Association of State Aviation Officials, Washington, D.C. Interview. 31 July 1978. Nammack, John. Director, Office of Community and Congressional Relations, U.S. Civil Aeronautics Board, Washington, D.C. Interview. 3 August 1978. Overand, W J. Chief Engineer, Programs and Performance, Delta Airlines, Atlanta, Ga. Correspondence. 15 March 1978. Rodenbaugh, W. L. Strategic Planning, Aircraft Engine Group. General Electric Co. Lynn, Massachusetts. Correspondence. 4 January 1978. Rodgers, John. Office of Aviation Policy, Federal Aviation Admin- istration, Washington, D.C. Telephone interview. February 1979. Ross, Robert W. Counsel for Southern Pacific Communications Company, Washington, D.C. Interview. March 1978. Roy, L. Andre. Senior Planner, Rural Transit, Transportation Division, West Virginia Department of Finance and Administra- tion, Charleston, West Virginia. Telephone Interview. 10 October 1978. Sonneborn, W. G. D. Manager, Engineering Laboratories and BIBLIOGRAPHY e 519 Research, Bell Helicopter Textron. Fort Worth, Texas. Corre- spondence. 2 February 1978. Tiffany, Curran. Executive Assistant Attorney, American Tele- phone and Telegraph Company, Washington, D.C. Telephone interview. June 1978. Vogel, Norman Dr. Director of Systems, Communications Technol- ogy Corporation, Raleigh, North Carolina. Interview. 24 May 1978. Weurch, George. Manager of Sales, North West Alaskan Pipeline Company. Washington, D.C. Communication. 4 March 1979. A A-95 review: 261; agency, 53; process, 63 Action, 27, 49 Active controls technology, 100 Ad Hoc Committee for Airline Regulatory Reform, 345 Advisory Commission on Intergovernmental Relations, 50 Aerospace Industries Association of America, 4 Air carriers: capital needs, 241; capital needs (forecast), 190; classifications, 12; costs forecasts, 230; fares in other countries, 72; mergers, 248; regulation, 30, 31, 39; regulation in other coun- tries, 71; regulatory reform, 41, 345; subsidy, 14, 31, 39, 42 Air carriers, cargo: deregulation, 215; in international trade, 21; rates, 32; regulation, 31; regulatory reform, 360 Air carriers, international: fares, 212; NTPSC projections, 165; subsidy, 213; subsidy forecast, 222; transportation bill, 212 Air carriers, intrastate: 12; Federal pre- emption, 362 Air carriers, passenger: costs, 216; fares, 32; regulation, 41; regulatory reform, 215, 282, 359; service levels, 14; subsidy, 33, 240 Air pollution, 113, 239; rail passenger service, 300; regulation, 293 Air quality standards, 113; non-attainment areas, 113 Air traffic control: labor productivity, 227; technology, 100, 104; towers, 13; system, 251, 257 Air transport: fuel costs, 216; fuel use, 139; fuel efficiency, 99; noise, 119; technology, 99, 104 Aircraft Energy Efficiency Program, 99 Aircraft Owners and Pilots Association, 4 Airport Development Aid Program, 55, 61, 22, Airport and Aircraft Noise Reduction Act, 119 Airport and Airway Development Act of 1970, 50, 119, 306 Airport and Airway Trust Fund: revenue forecasts, 187 Airport and Airways Trust Fund, 42, 61, 240, 306-310; forecast, 227 Airports, 64; capacity, 15, 100; capital needs (forecasts), 185; congestion, 187; Federal expenditures, 55; operations and maintenance forecast, 227; other coun- tries, 71; ownership, 55; regulation, 55; state and local expenditures, 55 Alaskan Highway, 40 Alaskan Railroad, 11, 34, 257 Allocation formulas, 61, 224 Ambient air quality standards, 117, 118 American Association of Port Authorities (AAPA), 194 index American Association of State Highway and Transportation Officials (AASHTO), 6, 32, 63, 229 American Automobile Association, 4 American Telephone and Telegraph Company (AT&T), 106 American Trucking Associations, Inc. (ATA), 4, 278 Amtrak: 13, 31, 34, 54, 58; capital needs (NTPSC forecasts), 182; deficits, 240; fares, 32; route structure, 298-301, 358; service levels, 257; subsidy, 14. See also Rail passenger service Amtrak Improvement Act of 1978, 358 Antitrust: enforcement, 273; law, 247; and mergers, 284; policy, 250; rules, 271 Appalachian Regional Commission (ARC), 6,40, 222 Army Corps of Engineers, 120, 214, 222, 240, 257 Association of American Railroads (AAR), 122, 147, 275 Atchison, Topeka and Santa Fe Railway Company, et al. v. Howard H. Calloway, et al., 29 Auto fleet process, 86 Auto-free zones, 72 Automated Guideway Transit (AGT), 99, 104 Automobile: 4, 6; capital needs (NTPSC forecast), 174; costs forecast, 216, 230; other countries, 71, 77; pollution, 118; subsidy, 218; technology, 94-96, 104; transportation bill, 216; travel forecast, 155, 218 B Balance of payments, 22 Barber Associates, 145 Barrier states, 362 Bentsen, Senator, 360 “Bermuda II” International Aviation Agreement, 329 Bicycling, 36, 54 Bilateral negotiations, 251 Biomass, 137 Bridge Inspection and Replacement Program, 39 Bridges, 64; construction, 58; repair, 61; replacement, 39 Brokerage services, 304 Bureau of Economic Analysis (BEA) zone, 86 Bureau of Labor Statistics (BLS), 218 Bureau of Motor Carrier Safety (BMCS), Sa,2h5 Bus technology, 96 Buy American, 36, 42 C California Public Utility Commission, 362 Cannon, Senator, 346, 361 Capital Construction Fund (CCF), 42, 196 Capital requirements, 241 Captive shippers, 73 Car pools, 61 Carbon monoxide, 113 Cargo preference, 42, 149 Carter, President, 61, 122, 306, 361; and energy regulation, 290; and urban policy, 37 Catalogue of Domestic Federal Assistance, 27 Census Bureau, 38, 40 Census of housing and population, 38 Census of transportation, 38 Certificate of ‘‘public convenience and necessity,’’ 30 Chemical Transportation Emergency Center, 125 Chicago Transit Authority (CTA), 35 Chrysler Corporation, 96 Circuity: motor carrier, 31 Civil Aeronautics Board (CAB), 12, 29-39, 241; administrative reforms, 361; and intermodalism, 285; and international air carriers, 41, 212; phasing out regulation, 359 Civil Reserve Air Fleet (CRAF), 302 Clayton Act, 284 Clean Air Act of 1970, 62, 113; amendments of 1977,95, 114, 117 Clean Water Act of 1977, 120 Coal, 118, 131; conversion, 137; prices, 238; production, 142 Coal slurry pipeline, 12, 63, 102, 141, 145, 151 Coal transportation, 58, 102, 207, 214, 238; highways, 150; railroads, 150; water- ways, 147, 151; transportation forecasts, 141-149, 292 Coast Guard, 240; and oil spills, 120 Coastal Zone Management Act, 43 Coaxial cable, 104 Cohen, Chairman (CAB), 361 Commercial fishing boats, 219 Commission on Federal Paperwork, 356 Commission on Government Procurement, 357 Common Market (EEC), 71, 74, 78 Common carrier, 251 Communications satellites, 104 Community Services Administration (CSA), 27, 37,40, 261 Commuter air carrier, 39 Commuter rail service, 36, 58 Competition, 271 Composite materials, 100 Comprehensive Employment and Training Act (CETA), 303 Computer technology, 106 Concorde, 119 Congressional Budget Office (CBO), 28 Congressional committees, 327, 360; structure, 265; and transportation policy, 28 521 522 e INDEX Congressional oversight, 363 Consolidated Rail Corporation (Conrail), 11, 58, 257, 346; Federal financial aid, 181 Constituency-building process, 345, 363 Construction Differential Subsidy (CDS), 42, 197, 220 Construction Reserve Fund (CRF), 42, 196 Consumer Price Index (CPI), 219 Consumer Product Safety Commission, 36 Container-on-flat-car (COFC), 285 Containerization, 59, 98; and labor (MarAd study), 286 Continental Trailways, 12, 32 Corps of Engineers. See Army Corps of Engineers Council of State Governments, 6 Council on Environmental Quality (CEQ), 122 Councils of government (COGs), 53 Cullom Report, 356 D Data center for transportation, 325 Data communications, 105 Deep Water Port Act of 1974, 43 Deepwater oil ports, 101, 104, 149, 183, 199 Defense Freight Railways Interchange Fleet (DFRIF), 33, 301 Defense Strategic Highway Network (STRAHNET), 302 Deferred maintenance, 289 Demographic trends, and travel demand, 14 Department of Agriculture, 39 Department of Commerce, 38, 261 Department of Defense (DOD), 32, 38, 42 Department of Energy (DOE), 33, 34,96 Department of Health, Education and Welfare (HEW), 27, 37, 40, 49, 261 Department of Housing and Urban Develop- ment (HUD), 37, 261 Department of Justice (DOJ), 29, 32, 34, 39; and regulatory agencies, 33 Department of Labor, 41 Department of State, 329 Department of Transportation (DOT), 28, 34; coordinating role, 265; creation of, 50, 356; 504/901 study, 274, 276; hazardous materials, 120; safety, 288 Detroit Toledo and Ironton RR Co., et al., Control, etc., 282 Dial-a-ride, 61 Diesel engine, 95, 104, 138; environmental concerns, 114; marine, 101 Diesel fuel, 238, 291; consumption fore- cast, 139 i Disposable personal income: forecasts, 88; and transportation bill, 207; relationship to transport activity, 91 Downtown People Mover Demonstration Project, 99, 326 Downtown areas, 76 Doyle Report, 356 Dredge disposal, 121, 239 Dulles International Airport, 42, 257 E ENIAC, 104 Economic analysis: for Federal spending, 260; Federal funding programs, 248; Federal transportation programs, 304- 306; Federal regulation, 360; and rail mergers, 283 Economic Analysis Needs (NTPSC estimates of highway needs), 225 Economic Commission for Europe, 78 Economic development, 243 Economic Development Administration, 37, 42, 363 Economic Impact Statement, 306, 360 Effective U.S. Control Fleet (EUSC), 302 Elderly and handicapped transportation, 35, 39, 40, 50, 59, 243, 260 Electric and Hybrid Vehicle Research, Development, and Demonstration Act of 1976, 96 Electric vehicles, 96, 104 Electronic funds transfer systems (EFTS), 106; and Federal government, 107 Electronic mail, 105 Emergency transportation, 301 Emissions standards, 95, 114, 301, 328; aircraft, 118 Employment and regulation, 274. See also Labor Energy Efficient Engine, 100, 104 Energy Policy and Conservation Act (EPCA) of 1975, 94, 138 Energy commodities: consumption fore- casts, 131, 137, 165; price (CRA esti- mates), 291; price forecasts, 133; pro- duction and environmental impacts, 293; production forecasts, 132; regula- tion, 251, 290; transportation, 18, 150, 238, 213, 290; supply, 131, 136 Environmental impact statements, 62, 121, 239; costs, 122; protection, 35; regulation, 293 Environmental Protection Agency (EPA), 53; and hazardous materials, 120; noise pollution, 119; pollution control pro- grams, 114; regulation, 35 Equity, 274 European Conference of Ministers of Transport, 69 Exempt commodities, 15, 39 Expenditures for transportation: all government (NTPSC forecasts), 312; Federal, 27, 258; state and local govern- ment, 240; freight, 3; passenger, 3 Export-Import Bank, 42 Externalities, 113 F Facsimile terminal, 104, 106 Federal Advisory Committee Act of 1972, 357 Federal Aviation Act of 1958, 119, 285 Federal Aviation Administration (FAA), 13, 28, 34, 39,41, 216, 241; costs, 227; expenditures forecast, 190; and noise pollution, 119 Federal Aviation Regulation (FAR), 36; regulations, 119 Federal Communication Commission (FCC), 29 Federal Emergency Management Administra- tion (FEMA), 301 Federal Energy Regulatory Commission (FERC), 14; 29, 31, 32 Federal Highway Administration, 28, 32, 36, 222; 1973 Truck Survey, 10 Federal Maritime Commission (FMC), 12, 19, 29, 52, 212; and intermodalism, 285; regulation of freight forwarding, 12 Federal Maritime Commission v. Pacific Maritime Association, 29 Federal Motor Vehicle Safety Standard, 29, 121, 251 Federal Railroad Administration (FRA), 34, 260; ownership of railroads, 40; safety, 33, 124 Federal Railroad Safety Act, 54 Federal Ship Financing Guarantee Program, 42 Federal Ship Financing Program, 196 Federal Shipping Act, 29 ' Federal Water Pollution Control Act of 1972, 120 Federal expenditures, forecasts, 90 Federal facilities, 37 Federal funding requirements, 239; costs of compliance, 327 Federal involvement in transportation, 5, 11, 33, 38, 50, 247; agencies involved, 27; coordination, 326; economic analysis, 248; emergency transportation coordina- tion, 301; environmental protection, 122; funding, 141, 240, 358; ownership, 37, 40, 42, 251, 297; planning and informa- tion, 261; role, 63; summary, 44; NTPSC recommendations, 248 Federal-Aid Highway Act: of 1956, 50,97; of 1962, 37, 50; of 1970, 50, 58, 119; of 1973, 38, 53, 59 Federal-Aid Highway System, 33, 39; fund- ing, 224; functional categories de- fined, 7; primary system, 33; urban system (FAUS), 36. See a/so Inter- state Highway System Final Report to Congress on the Amtrak Route System, 228 First City National Bank of New York, 179 “Fit, willing, and able,” 30 504/901 study, 274, 276 Flywheel storage, 99, 104 Ford Motor Company, 96; PROCO engine, 95 Ford, President, 306 Foreign ownership of U.S. transportation, 241 Forest Service, 40 For-hire carriers: regulation, 31 4R Act. See Railroad Revitalization and Regulatory Reform Act Freight forwarders, 12, 219, 346; regu- lation, 30 Freight movement, urban: (NTPSC forecasts), 156; congestion, 158 Freight traffic bureaus. See Rate bureaus Freight transport, intercity, 17-18; modal shares, 18; modal shares (NTPSC fore- casts), 159; other countries, 71, 78 Freight transport, international, 21 Freight transport, local, 10, 218; costs, 11; revenues (TAA estimates), 10 Freight transport, rural: NTPSC fore- casts, 163 Fuel economy, 95, 114 Fuel efficiency, 119, 243; air transport, 99; standards, 238, 251 Fuel prices, 138, 208, 215; and trans- portation costs, 292; and regulation, 280; forecasts, 133, 213 Fuel taxes, 224, 260, 319. See also User charges G Gas turbine engine, 95, 104; marine 101 Gasoline: leaded, improper use, 116 General Accounting Office (GAO), 27, 38, 260, 356 General Motors Corporation, 95 General Services Administration, 357 (GSA), 357 General aviation, 12, 13, 216, 227; capital needs (forecast), 192; fuel consump- tion, 216; subsidy, 241; technology, 100; user charges, 307 Goals, 237, 270; non-transportation, 247, 249 Government Printing Office, (GPO), 38 Government expenditures for transporta- tion, 49, 208, 243, 265; capital requirements, 241; financing, 208, 240; other countries, 75; overlapping jurisdiction, 44; ownership, 70; planning, 324; regulation, 239; tech- nological innovation, 94; tools, 238 Government organization, 247, 265, 360, 357; Congress, 327; other countries, 75 Government spending, forecasts, 90 Government transportation accounts: defi- nition, 219; forecasts, 219-232 Grant-in-aid programs, 49 Grant types: block grants, 37, 40, 63; categorical, 359; formula, 36 Great River Road, 40 Greyhoud, 12, 32 Gross National Product (GNP): forecasts, 88; relationship to energy demand, 133; relationship to transport activity, 91; transportation as percentage, 13; and transportation bill, 207 H Hazardous materials transportation, 120 Highway congestion, 7, 15, 312 Highway needs, 225 Highway Revenue Act of 1956, 50 Highway travel: growth rates, 241; sub- sidy, 218 Highway Trust Fund, 36, 59, 224, 240, 248, 258, 359 Highways, 64; capital needs, 241, 305; capital needs (NTPSC forecast), 171; construction, 55; Federal expenditures, 222; financing (NTPSC forecasts), 312; functional categories defined, 7; funding, 240; maintenance, 55, 172; mileage, 7, 18; needs, 222; repair, 61; revenues (NTPSC forecast), 171; speeds, 155; state and local expendi- tures, 58, 222; transportation bill, 218 Holding harmless, 358 Honda CVCC engine, 95 Household formation rate, 87 Housing survey (HUD), 38 Hybrid vehicles, 96, 104 Hydrocarbon, 113 © INTELSAT, 104 Inforum model, 85 Inland waterways. See water transport, inland Inland Waterways Revenue Act of 1978, 319 Inland Waterways Trust Fund, 229, 258, 319; forecast revenues, 192 Innovation and regulation, 287 Insurance, 289 Inter-Governmental Maritime Consultative Organization (IMCO), 20, 41, 251 Inter-Industry Task Force on Rail Trans- portation of Hazardous Materials, 125 Intercity bus, 12, 13, 280, 363; capital needs (NTPSC forecast), 178; competi- tion with rail, 299; costs forecast, 230; fares, 32; regulatory reform, 281; regulation in other countries, 71; service levels, 281; service in small communities, 282; subsidy, 14, 33, 39, 218, 237; transportation bill, 218 Intercity market, definition, 30 Interest groups, 363 Intergovernmental relations, 49, 243, 359; coal extraction and transportation, 141; discord about funding, 61; Federal influence, 230; in other countries, 77; planning, 325; regulation, 251; safety, 124; water quality, 121 Intermodal: connections for passengers, 16; terminals, 98, 104 Intermodalism, 285-287, 357; and regula- tory reform, 286 International Air Transport Association (IATA), 20, 41, 212 International Civil Aviation Organization (ICAO), 20, 43 International Longshoreman Association (ILA), 212 International Telecommunications Satellite Organization, 104 International Trade Commission, 41 International air process, 86 International maritime process, 86 INDEX e 523 International market: definition, 40 International negotiations, 329 International trade issues, 241 Interregional Highways Report, 356 Interstate Commerce Act: and inter- modalism, 285; and rail mergers, 282 Interstate Commerce Commission, regula- tion of: water transport, 27 Interstate Commerce Commission (ICC), 11, 16, 28, 29, 32, 38; creation, 49 356; administrative reforms, 361; and motor carrier mergers, 283; and multi- modal transportation, 257; and new carriers, 30; regulation of freight forwarding, 12; and railroad mergers, 282; and state regulation, 363; study of reforming regulatory procedures, 361 Interstate commerce, impact on states, 29 Interstate Highway System, 7, 13, 33, 50, 97, 241, 248; funding, 224 Interstate transfer, 36, 359 4 Jones Act, 42, 149 Journey-to-work trips: forecasts, 91 K Kahn, Chairman (CAB), 360-361 Kansas Turnpike Authority, 51 Kennedy, Senator, 346, 361 L Labor, 5; government employees in trans- portation, 5; and intermodalism, 286; maritime, 29; motor carriers, 280; productivity forecasts, 89; and regu- latory reform, 274; railroads, 182; rail passenger service, 301; union membership, 5; water transport, 199 Labor force: forecasts, 88 Land use, 243; other countries, 76 Lindenwold Speed Line, 35 Local government involvement in transporta- tion, 6; counties, 53; cities, 53; role, 63 Local regulatory agencies, 62 Locks and Dam, 26, 29, 33, 121, 215 Louisiana Offshore Oil Port (LOOP), 101, 183 M Macroeconomic models, 85 Maintenance-of-effort, 37 Manalytics, Inc., 145 Manufacturing Chemists Association, 125 Maritime Administration (MarAd), 41, 212, 357; survey, 121 Market dominance, 361 Market power, 273, 274 524 e INDEX Mass transit. See urban mass transportation Massachusetts Port Authority (Massport), 54 Matching ratios, 61, 63; comparison, 33, 44, 229; airports, 42; highways, 224; Interstate transfers, 36; rail capital projects, 58; urban mass transporta- tion, 59 Merchant Marine Act of 1936, 12 Merchant marine, 240 Metropolitan planning organizations (MPOs), 38, 53, 62 Mid-American Ports Study, 147 Military Sealift Command (MSC), 302 Military aviation, 12 Mobile source pollutants, 113, 114 Modal split policy, 78, 242 Montgomery County, Maryland, DOT, 53 Morgantown, West Virginia, 99 Motor Carrier Act of 1935, 280, 285 Motor carrier classifications, 11, 30; agricultural cooperatives, 38; inde- pendent truck operators, 39; private, 31 Motor carriers: capital requirements (NTPSC forecast), 175; costs forecast, 231; empty backhaul (AAR estimates), 279; fleet, 17; insurance, 250; merger, 283; other countries, 78; rates, 12, 31; rates (DOA study), 279 regulation, 30, 38, 45; regulation in other countries, 71; regulatory reform, 213, 250, 251, 278-280, 346, 360; subsidy, 213; transportation bill, 213 Motor Vehicle Manufacturers Association, 4 Motor vehicle size and weight, 62, 78, 97, 104, 363; Federal policy, 362 Motorcycles: emission standards, 114 Multimodal: cooperation, 247; ownership, 257; planning, 64 Multistate regional organizations (MROs), 6, 54 N NASA, 213 NEPA: costs, 122 NHTSA: safety, 124 NTPSC: commissioners, 269; conclusions, 374; congressional mandate, 374; eleven goals, 270; forecasts, 269; impacts analysis process, 270; implementation, 346; issue identification, 237, 269; policy recom- mendations, 247-265; policy research, 345; public hearings, 63, 345; research summary, 369-374; survey of state DOTs, 51 National Aeronautics and Space Admini- stration, 100, 241 National air quality standards, 62 National Airport: 257; System Plan, 55 National Association of Counties, 6 National Association of Regional Councils (NARC), 63 National Association of Regulatory Utility Commissioners, 6 National Association of State Aviation Officials, 6 National Association of State Secretaries of Transportation, 6 National Commission for the Review of Antitrust Laws and Procedures, 250 National Commission on Materials Policy, 357 National Conference of State Railway Officials, 6 National Conference of State Legislatures (NCSL), 6, 63 National Cooperative Highway Research Pro- gram, 40 National Defense: 41, 301; requirement for ships, 314 National Defense Reserve Fleet (NDRF), 302 National Energy Model (NEM), 85, 131, 290 National Environmental Policy Act of 1969, 53, 121 National Fire Protection Association, 122 National Governors’ Association (NGA), 6, 63 National Highway Classification and Needs Study of 1972, 305 National Highway Inventory and Performance Study, 225 National Highway Needs Report, 225 National Highway Safety Needs Report, 289, 305 National Highway Traffic Safety Administra- tion (NHTSA), 28, 251 National Housing Act of 1954, 50 53 National Industrial Traffic League, 4, 346 National Labor Relations Act, 5 National League of Cities (NLC), 6, 63 National Mass Transportation Assistance Act of 1974, 39, 59 National Oceanic and Atmospheric Ad- ministration, 213, 241 National Park Service, 33 National Railroad Passenger Corporation Amtrak), 11 National Scenic and Recreational Highway, See Great River Road ‘National Security, 42 National Technical Information Service, 38 National Transportation Planning model (NTP), 86 National transportation policy, 247 National Transportation Report (NTR; 1974), 153, 225, 229 National Transportation Reports of 1972 and 1974, 50 National Transportation: Trends and Choices, 225 National Water Commission, 356 Natural gas: transportation, 140 Natural Resources Defense Council, 121 Nitrogen oxides, 113 Noise Control Act of 1972, 119, 297 Noise emission standards, 35 Noise pollution: 118, 239; aviation, 294; highway vehicles, 297; regulation, impacts, 293-297; regulatons: costs of compliance, 294 Non-attainment areas, 118 North Carolina Railroad, 58 Nuclear energy, 132 Nuclear engine, 101 Nuclear fuel, 292 Nuclear Regulatory Commission (NRC) 34; hazardous materials, 120 O O'Neal, Chairman (ICC), 361 Objectives, 237 Office of Management and Budget (OMB): 27, 357; Circular A-95, 53 Office of Technology Assessment, 99 Oil embargo of 1973, 243 Oil Pollution Prevention Act of 1961, 120 Oil spills, 239; clean-up, 120 Oil transportation. See Petroleum transportation Older Americans Act, 39 One percent freight waybill sample, 360 Open conferences, 41 Operating differential subsidy (ODS), 197, 220 Optical fibers, 104 Organization for Economic Cooperation and Development (OECD), 69 Organization of Petroleum Exporting Countries (OPEC), 133 P PUCs/PSCs, 51, 62 Pace Company of Houston, 215 Pacific Southwest Airlines, 362 Panama Canal: 33; Act of 1912, 285 Paratransit, 61; regulation, 62 . Particulate pollutants, 113 Passenger bureaus, See rate bureaus Passenger travel, intercity: 13-17, 72; energy consumption, 159; in other countries, 71, 76, 79; service levels, 14; travel time, 232; modal shares, 13; modal shares (TAA estimates), 14; NTPSC forecasts, 158; international, 20; international: modal shares, 20; international revenues, 20 Passenger travel, local: in other countries, 76; urban (NTPSC forecasts), 153; modal shares, 6; travel time, 232; rural (NTPSC forecasts), 161 Percy, Senator, 360 Personal Rapid Transit, 99 Petroleum: 131; allocation, 251; con- sumption: 4; by automobiles, 4; forecasts, 134, 138; fuel prices, 238; imports, 136; price forecasts, 133; production: fore- casts, 136; refining, 183; transportation, 18, 101, 120, 140, 149, 214; transporta- tion costs, 215 Petroleum-based feedstocks, 136, 140 Petroleum, dependence of transportation sector, 291 Picturephone Meeting Service, 106 Piggyback service, 285 Pipeline divestiture, 149 Pipeline, gas (capital needs forecasts), 184 Pipelines: 22, 101, 222; abandonment, 31; cost forecast, 231; costs (Pace Company estimates), 215; oil (capital needs fore- cast), 183; rates, 12, 32; regulation, 62; technology, 102, 288; types, 12 Planning: airports, 55; agencies involved, 38; at state level, 50; Federal, 34, 324; in other countries, 75; intermodal, 40; local, 54; multimodal, 54; railroad, 40, 54; state rail plans, 58; state, 54; urban mass transportation, 59 Policy (definition), 27 Policy mechanisms, 345 Policymaking: Congress, 28; Federal agencies, 28; role of courts, 29 Pollution control programs: certification, 114; inspection/maintenance, 117; other programs, 116; recalls, 116; Selective Enforcement Audits, 115; state and local, 116; warranties, 116 Population: 87; and transportation bill, 207; migration, 88; relationship to trans- port activity, 91 Port Authority of New York and New Jersey, 54 Port: authorities, 54; development, 64; other countries, 78 Ports, 42, 58; capital needs (forecasts), 194, 199; costs, 212; foreign com- merce, 22; planning, 261; subsidy, 240; subsidy in other countries, 73 Ports and Waterways Safety Act of 1972, 120 Powerplant and Industrial Fuel Use Act of 1978, 180 Predatory prices: definition, 32 President: and international! air carriers, 212; and international aviation, 41; role in Amtrak, 27 Private domestic investment, relationship to transport activity, 91 Private sector: burdens or regulation, 248; ownership, 257; planning, 261; recovery of costs, 249 Prospectus for Change in the Freight Rail- road Industry, 289 Public Interest Economics Center (PIE-C), 276 Public Works and Economic Development Act of 1965, 6 R Rail abandonment: 31, 39; impacts, 276-278 Rail passenger service: 298-301; capitol needs (NTPSC forecasts), 182; costs fore- cast, 231; energy use, 300; fares, in other countries, 73; forecasts, 228; other countries, 78; regulation in other countries, 71; state and local assistance, 58; subsidy, 33, 218, 237, 240; transpor- tation bill, 218 Rail passenger travel, 13 Rail rehabilitation, 39 Rail Services Planning Office (RSPO), 54 Rail-highway grade crossing program, 358 Railroads: 64; and coal, 179; and coal movement, 275; and coal transportation, 6, 142; capital needs (forecasts), 141, 179, 241; containerization, 98; contract rates, 276; costs forecast, 231; deferred maintenance, 213; electrification, 98, 104; Federal financial aid, 181; fleet, 17; forecast revenues, 213; fuel con- sumption, 98; government involvement, 11; mergers, 257, 282; nationalization, 78, 297; nationalization in other coun- tries, 70; noise, 119; other countries, 70, 78; planning, 261; rates, 32, 274; rates in other countries, 73; regulation, 30; regulation in other countries, 78; regulatory reform, 250, 346; regulatory reform in Canada, 74; restructuring, 297; revenues, 70; rights-of-way mileage, 18; state and local property taxes, 322-324; subsidy, 54, 58, 240; subsidy in other countries, 78; technology, 98-99, 104, 287; transportation bill, 213 Railroad Passenger Service Act, 54 Railroad Revitalization and Regulatory Reform Act of 1976 (4R Act): 39, 40, 50; and Conrail, 181; and ICC, 361; and ICC regulation, 32; and rail merger, 283 Railroad services: car supply, 180; unit train, 147 Railway Labor Act, 5 Railway Safety Act of 1970, 35 Railway Supply Institute, 4 Rate bureaus: 32, 250; antitrust exemption, 361; antitrust immunity, 346; intercity bus, 12, 280; railroads and motor car- riers, 11; reforms, 271, 274 Ratemaking, 32 Rationalization of accounts’ system, 78 Red tape, 37, 61, 64, 239, 360 Reed-Bulwinkle Act, 250, 280, 361 Regional planning commissions or agencies (RPCs or RPAs), 53 Regional Rail Reorganization Act of 1973 (3R Act): 40, 50, 58; planning, 54 Regionalization process, 86 Regulated transportation, 11 Regulation, economic: 35, 38, 44; certifi- cate restriction, 31; consequences, 239; costs, 239, 249, 271; definition, 30; economic analysis, 360; entry, 30; exit, 31, 251; impacts of NTPSC recommenda- tions, 271; rates, 31; regulatory reform, 248; telecommunications Regulation: hazardous materials, 149 Regulation, other, 32, 35, 38, 39, 41, 55, 107, 239; economic analysis, 306; effect on capital requirements, 241; motor vehicle size and weight, 62 Regulatory agencies, Federal, 265 Rehabilitation Act of 1973, 35, 59, 97 Research and development: 243, 247, 249; Federal assistance, 261; Federal role, 325; private sector, 261 Research and Special Programs Administra- tion, 38 Residual Federal transportation regulatory commission, 250, 265, 271, 284, 327 INDEX e 525 Resource Conservation and Recovery Act of 1976, 120 Revenue sharing, 37, 40, 224 Ribicoff, Senator, 360 River basin commissions, 6 Robson, Chairman (CAB), 361 Rural market: definition, 38, 40 Rural public transit: capital needs (fore- casts), 201 Rural public transportation, 36, 39, 40, 59, 304 Rural Transportation Advisory Task Force, 40 Rutland Railroad, 58 S Safety: 17, 32, 288; automobile, 95; aviation, 119; bicycle, 36; costs, 251; costs (GAO) and NHTSA estimates), 289; DOT, FHWA, 124; energy production, 291; energy transportation, 150; enforcement, 124; Federal role, 249; fitness of opera- tors, 124; hazardous materials, 34, 36, 120, 125; LNG carriers, 101; motor carriers, 124, 125, 273, 360; motor carriers, in other countries, 78; motor-carrier regulatory reform, 279; physical plant, 124; pipelines, 102; programs, 122; rail passenger service, 300; railroads, 122, 124, 275; regulations, 122, 239; state regulation, 62; trucks, 97; unit trains, 293; urban mass transportation, 35 Saint Lawrence Seaway, 33 Scenarios, 85 School buses, 10 Secretary of Transportation: and Amtrak, 218 Section 13(c) (Urban Mass Transportation Act of 1964), 35, 59 Section 16(b)(1), 59 Section 16(b)(2) program, 39 Section 22 (Interstate Commerce Act), 31 Section 403(b) (1970 Rail Passenger Service Act), 58 Section 504 of the 1973 Rehabilitation Act, 61 Segment tolls, 319 Sharfman Report, 356 Ship types: LNG carriers, 101, 104; bulk carriers, 100, 314; liners, 212, 314; roll-on/roll-off, 100; supertankers, 101 Shipping Act of 1916, 19, 212 Shuttle-Loop Transit, 99 Singapore road-pricing experiment, 69, 74 Social policy: and transportation, 237 Socio-economic factors affecting trans- portation: activity, 85; forecasts, 88-90 Special Bridge Replacement Program, 58 Special districts, 54 SRI, Inc., 85 SSTs, 119 St. Lawrence Seaway, 214, 257 526 « INDEX Standard Metropolitan Statistical Areas (SMSAs), 30, 54, 88, 91 State DOTs: 50; and ports, 59 State Implementation Plans (SIP, 62, 117, 118 State departments of transportation: 6; NTPSC survey, 51 State involvement in transportation; 5, 362; ownership, 58; role, 63 State regulatory agencies, 51, 62, 362 Steamship conference, 19 Stirling engine, 95, 104 Stratified-Charge, Spark-Ignition Engine, 95, 104 Study commissions: implementation of recommendations, 361; review of recommendations, 356 Study of Federal regulation, 360 Subsidy: 220; modal comparison, 322; temporary, 252 Substitute natural gas (SNG), 136 Suburbanization, 91 Supercritical wing design, 99 Surface Transportation Assistance Act of 1978: 14, 28, 58, 59, 360; and intercity bus, 218 Suspension Board (Interstate Commerce Commission), 31 Synthetic fuel: 118, 133, 136, 292; gas: transportation, 140; gases, 136; liquids, 136; syncrude, 136; transpor- tation, 137, 150 T TOFC (trailer-on-flat-car): terminals, 18 TRANS, 86 TRIP program, See West Virginia TRIP program Taxis: fares forecast, 219; fuel tax refund, 358 Teamsters Union, 280 Telecommunications: applications for transportation, 105; impact on trans- portation, 107; regulation, 107; tech- nology, 104-106 Teleconferencing, 105, 106 Tennessee Valley Authority, 214 Terrorism, 91 Texas Deepwater Port Authority, 183 “3C": planning process, 37; require- ments, 50 3R Act. See Regional Rail Reorgani- zation Act of 1973 Through bill of lading, 286 Title V Commissions, 6 Tolls. See User charges Tourism, 72, 76 Toxic Substances Control Act of 1976, 120 Trailer-on-flat car (TOFC), 285 Trans-Alaskan pipeline, 149 Transbus, 96, 104 Transit. See urban mass transportation Transportation Act of 1940, 285 Transportation Association of America (TAA), 4, 10 Transportation Control Plans (TCPs); 62,, ViZ Transportation Improvement Plans (TIPs), 38, 55 Transportation Research Board, 38, 40 Transportation Systems Management (TSM), 38, 55, 77 Transportation and Public Utilities Service (TPUS), 301 Transportation bill: definition, 207; forecast, 208; forecast, intercity, 212; fore- cast, international, 208 Transportation demand: NTPSC forecast, 164 Transportation disadvantaged, 243. See also, Elderly and handicapped trans- portation Transportation equipment industry: capital needs, 202 Transportation policy: other countries, 69 Transportation system management (TSM), 117 Travel time: forecast, 232 Treasury Department, 37, 40 Trip-leasing, 39 Trust funds: 258, 260, 359; modal, 247; urban mass transportation, 310 U U.S. Army Corps of Engineers, 29, 34, 40, 42, 212 U.S. Coast Guard, 28, 41, 42, 212, 214 U.S. Conference of Mayors (USCM), 6, 63 U.S. DOT: restructuring, 63 U.S. Merchant Marine, 42 U.S. Supreme Court, 29 U.S.-flag vessels: 12; share of commerce (Bureau of Census estimates), 21 Uniform charge spark-ignited engines, 104 Unit trains, 287 United Nations Conference on Trade and Development, 261 United Nationa, 41 Uranium, 29 Urban impact statements, 37 Urban Institute, 227 Urban League, 6 Urban market: definitions, 34 Urban Mass Transportation, 28 Urban Mass Transportation Act of 1964 (UMT Act), 50, 59 Urban Mass Transportation Act: 1974 amend- ments, 359 Urban Mass Transportation Administration (UMTA), 35; and local regulations, 363; and safety, 35; demonstration pro- jects, 38; funding requirements, 36; grant programs, 39 Urban mass transportation: 7, 59, 64, 260; and land use, 37; capital assistance, 36; capital needs (forecast), 199; costs, 242; cost forecast, 231; fares, 32, 219; fares in other countries, 74, 77; Federal aid, 258, 358; Federal Urban mass transportation—continued involvement, 242; forecasts, 229; funding, 240, 310; operating assistance, 36; other countries, 76; privately owned systems, 303; public ownership, 37, 53, rail transit costs forecast, 229; regulation, 35; ridership (NTPSC fore- casts), 154; service forecast, 219; small cities, 36, 39, 59, 258, 358; subsidy, 219; subsidy forecast, 229; subsidy in other countries, 74; tech- nology, 97, 99, 104; transit vehicle manufacture, 260 Urban sprawl, 37, 77 Urban Transportation Control System (UTCS), 97 Urban transit trust fund study, 310 Urban transportation: regulation in other countries, 72 Urbanization, 91 User charges: 208, 229, 247, 249, 360; air carriers, 216; air transport, 306; airport, 61; aviation, 241; general aviation, 187, 216, 306; highways, 171, 222, 227, 240; highways, in other countries, 72, 73, 78; motor carriers, 250, 319, 360; ports, 59; toll facili- ties, 260; waterways, 33, 192, 215, 260, 359 User fees: 33, 238; ports, 261 User-side subsidy programs, 303 Utah Department of Transportation, 51 V ‘value of service” rate structures, 212 vandalism, 91 Vanpools, 36, 61 Vermont Agency of Transportation, 51 Voice/video communications, 105, 106 W Walking: 54; in other countries, 71 Washington Metropolitan Area Transportation Authority (WMATA), 37 Washington’s Metro System, 61 Water pollution, 239 Water quality: regulation, 121 Water transport Great Lakes and intra- coastal: shipping season, 101 Water transport, Great Lakes and domestic ocean: 12, 214; capital needs (forecast), 194; Federal assistance, 195; subsidy, 240 Water transport, inland: 12; and coal transport, 144-147, 151, 238; cost forecast, 231; costs of system, 215; Federal expenditures, 192; fleet, 17; passengers, 218; regulation, 12, 215; return on investment, 215; subsidy, 240; technology, 101; waterway system, 40; waterway system capital needs (fore- cast), 194; waterway traffic forecasts, 319 Water transport, international: 12, 21, 261; antitrust exemptions, 261; capital requirements (forecast), 198; con- ferences, 41, 212; fleet, 21, 42, 317; fleet (projections), 197; labor pro- ductivity (MarAd estimates), 212; NTPSC forecasts, 166; rates, 19, 41, 212; regulation, 12; subsidy, 41, 42, Water transport, international—continued 240, 260, 313-319; subsidy forecast, 222; technology, 100, 101; transpor- tation bill, 208 Welland Canal, 214 West Virginia TRIP, 50 Windom Report, 356 Wisconsin Highway Patrol, 51 INDEX e 527 World Airways, 363 World Bank, 70 Z Zone of reasonableness: 247, 250, 274; intercity bus, 281 % U.S. GOVERNMENT PRINTING OFFICE: 1979 O—293-620 ’ ar 7 a Tre “NC 2 007220392