Transportation Regulation Public Policy Intrastate vs Interstate Commerce

Transportation Regulation & Public Policy

Intrastate vs. Interstate Commerce • Intrastate Commerce – Business transactions (or transportation) that occur solely within a particular state’s borders. – Example: A Cleburne County rancher sells manure to a Calhoun County homeowner. • Interstate Commerce – Business transactions (or transportation) that occur between a seller located in one state and a buyer located in a different state. – Example: An Atlanta, Georgia manufacturer sells sink faucets to a Birmingham, Alabama building contractor.

Common Law vs. Civil (Statutory) Law • U. S. legal system is based on both. • Common law – Relies on judicial precedent. – Developed in England. – Early transportation regulation developed under common law. • Civil (Statutory) Law – Enacted by legislative bodies. – Based upon the Roman legal system. – Most currently regulatory laws in transportation are based on statutory laws.

Relationship Between Common and Statutory Law • Primary transportation regulation based on statutory laws. • However, many statutes, in effect, were copied from common laws. • Also, statutes tend to be general and in most cases must be interpreted by the courts. • Hence, common and statutory laws are highly interrelated in the U. S.

State Regulation of Transportation • Early regulation of transportation began at the state level. • Primary issue was whether business could even be regulated at all. • Concept of “business affected with the public interest” developed under common law at the state level. • Railroad development required a move to more statutory regulation. • Accomplished with “granger laws” – Grangers were organizations of farmers developed to function as political action groups for farmers. – Granger laws were the 1 st real statutory attempts to regulate railroad rates and service

Major Transportation Regulation: Initiation Era Date Federal Act Nature of Act 1887 Act to Regulate Commerce Regulated railroads & established ICC; rates must be reasonable; discrimination prohibited 1903 Elkins Act 1906 Hepburn Act Established maximum and joint rate controls 1910 Mann-Elkins Act Shipper given right to route shipment 1912 Panama Canal Act Prohibited railroads from owning water carriers Prohibited rebates and filed rate doctrine

Major Transportation Regulation: Positive Era Date Federal Act Nature of Act 1920 Transportation Act of 1920 Established rule of ratemaking; pooling and joint use of terminals permitted; began recapture clause 1933 Emergency Transportation Act Financial assistance to railroads

Major Transportation Regulation: Intermodal Era Date Federal Act Nature of Act 1935 Motor Carrier Act Federal regulation of trucking; similar to rail 1938 Civil Aeronautics Act Federal regulation of air carriers; established Civil Aeronautics Board (CAB) 1940 Transportation Act Federal regulation of water carriers; declaration of national transportation policy 1942 Freight Forwarder Act Federal regulation of surface freight forwarders 1948 Reed-Bulwinkle Act Antitrust immunity for joint rate making 1966 Department of Transportation Act Established U. S. Department of Transportation 1970 Rail Passenger Service Act Established Amtrak 1973 Regional Rail Reorganization Act Established Consolidated Rail Corporation (Conrail)

Major Transportation Regulation: Intermodal Era Date Federal Act Nature of Act 1976 Railroad Revitalization & Regulatory Reform Act Rate freedom; ICC could exempt rail operations; abandonment & merger controls began 1977 Airline Deregulation Act Deregulated air transportation; sunset CAB 1980 Motor Carrier Act Eased entry restrictions and permitted rate negotiation 1980 Rail Staggers Act Allowed railroads to negotiate contracts; allowed rate flexibility; defined max rates 1994 Trucking Industry Regulatory Reform Act Eliminated motor carrier filing of individual tariffs; ICC allowed to deregulate categories of traffic 1994 FAA Reauthorization Act Prohibits states from regulating (economic) intrastate trucking 1995 ICC Termination Act Abolished ICC; established STB; eliminated most economic trucking regulations

Agencies of the U. S. Department of Transportation (USDOT) Secretary of Transportation and Deputy Secretary Federal Highway Administration U. S. Coast Guard National Highway Traffic Safety Administration Federal Aviation Administration Saint Lawrence Seaway Development Corporation Federal Railroad Administration Research and Special Programs Administration Federal Transit Administration Maritime Administration

The U. S. DOT • Established in 1966 – Purpose is to coordinate administration of government transportation programs, and – Establish overall transportation policy that enables provision of fast, safe, efficient, and convenient transportation at the lowest cost. • DOT Secretary is principal advisor to the President on matters related to federal transportation issues.

United States Coast Guard • Operates as part of the Navy during times of war; otherwise is part of the DOT. • Responsible for – Search & rescue efforts – Maritime law enforcement (including suppression of smuggling & illicit drug trafficking). – Enforcement of maritime safety standards for commercial vessels and ports – Protection of the marine environment – Managing waterways – Aiding navigation – Operating icebreaking vessels – Implementing national boating safety programs for small craft • Required to maintain state of readiness for Naval service during times of war

Maritime Administration • Oversees programs designed to develop, promote, and operate the U. S. Merchant Marine. • Also organizes and directs emergency merchant ship operations. • MA maintains a national defense reserve fleet of government-owned ships that are to be operated in time of national defense emergency. • Also operates the U. S. Merchant Marine Academy • Administers maritime subsidy programs that – Provide U. S. flagships with an operating subsidy to offset the difference between costs of owning a U. S. flagship versus a foreign competitive flagship – Provide funds for the difference between the costs of constructing ships in U. S. shipyards and in foreign shipyards. – Provide financial guarantees for the construction or reconditioning of ships.

St. Lawrence Seaway Development Corporation (SLSDC) • Responsible for the development, maintenance, and operation of the U. S. portion of the St. Lawrence Seaway • Charges tolls to ship operators using the seaway • Tolls are negotiated with the St. Lawrence Seaway Authority of Canada • U. S. and Canadian seaway agencies coordinate activities involving – – – Seaway operations Traffic control Navigation aids Safety Length of shipping season

Federal Aviation Administration (FAA) • Responsible for – Regulating air safety – Promoting development of air commerce – Controlling navigable airspace in the interest of safety and efficiency • Most noted for its air safety regulations regarding the manufacture, operation, and maintenance of aircraft; the certification of pilots & navigators; the operation of its air traffic control facilities • Conducts R&D on air safety, air control, and air navigation • Maintains registration & records of aircraft, air engines, propellers, and parts. • Enforces hazardous materials safety regulations.

Federal Highway Administration (FHWA) • Concerned with the overall operation and environment of the nation’s highway systems. • Coordinates R&D aimed at improving highway quality & durability. • Administers the federal-aid highway program – Interstate system financed on the basis of 90% federal funds, 10% state funds. – Other highway improvements financed on the basis of 75% federal funds, 25% state. • Other major responsibility is motor carrier safety. • Enforces federal safety regulations covering – – Driver qualification and hours of service Equipment Employee safety and health Hazardous materials • Establishes requirements for a single, national commercial vehicle driver’s license that is issued by the states.

Federal Railroad Administration (FRA) • Promulgates and enforces railroad safety regulations. • Regulations cover – – Maintenance Inspection Equipment standards Operating practices • Administers safety improvement R&D programs • Administers federal assistance for rail service providers • Administers programs designed to improve rail transportation in the northeast corridor of the US

National Highway Traffic Safety Administration (NHTSA) • Responsible for motor vehicle safety • Issues prescribed safety features and safety-related performance standards for vehicles and motor vehicle equipment. • Reports to Congress & public the – – Damage susceptibility Crashworthiness Ease of repair Theft prevention of motor vehicles • Charged with reducing the number of deaths, injuries, and economic losses resulting from traffic accidents. • Establishes fuel economy standards for automobiles and light trucks

Federal Transit Administration (FTA) • Charged with improving mass transportation – Facilities – Equipment – Techniques • Also encourages planning/establishment of urban mass transit systems • Aids in funding state and local operation of mass transit systems

Research & Special Programs Administration (RSPA) • Responsible for a number of programs involving – Safety regulation – Emergency preparedness – Research and development • Office of Hazardous Materials Transportation develops & issues hazardous material transportation safety regulations for all carrier modes. • Office of Pipeline Safety establishes and enforces safety standards for the movement of gas and hazardous liquids by pipelines. • Office of Emergency Transportation administers the transportation civil emergency preparedness programs

Current Federal Transportation Regulation • Air carrier industry – deregulated – Cargo & passenger rates not controlled – Domestic air carriers permitted to serve any locale as long as they meet safety regulations and landing slots are available. • Pipelines – Most economic regulation transferred to the Federal Energy Regulatory Commission • Water – Most water carrier operations are exempt from economic regulation • Rail & Motor (see STB – next slide)

Surface Transportation Board (STB) • Effective 1/1/96, ICC Termination Act of 1995 abolished the Interstate Commerce Commission (ICC). • Remaining ICC functions transferred to the STB – 3 -person board within the DOT – Members appointed by President; approved by Congress

STB Railroad Regulations • STB has jurisdiction over rates, classifications, rules, practices, routes, services, facilities, acquisitions, and abandonments • Railroads subject to common carrier obligations (to serve, not discriminate, charge reasonable rates, and deliver) • Rail tariff filing eliminated; must provide 20 days notice before changing rates • Rail contract filing eliminated except for agricultural contracts

STB Motor Carrier Regulations • All tariff filing & rate regulation eliminated except for household goods and noncontiguous trade (I. e. , between continental US and Hawaii) • Carriers required to provide tariffs to shippers upon request • Carriers held responsible for damage according to conditions of the Carmack Act (full value of product at destination) • Undercharge/overcharge claims must be filed within 180 days from receipt of freight bill • Carriers must disclose to person paying freight bill whether and to whom discounts or allowances are given • Distinction between common & contract carriers eliminated • Regulated carriers are to provide safe & adequate service, equipment & facilities upon reasonable request.

STB Freight Forwarders & Brokers Regulations • Both required to register with STB • Freight forward is regulated as carrier and is thus liable for freight damage. • Broker is not regulated as carrier • STB can impose insurance requirements for both