Transportation Regulation & Transportation Regulation & Public PolicyPublic 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 BetweenCommon 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 1st 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 ActProhibited rebates and filed rate doctrine

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

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 Transportationand

Deputy Secretary

FederalHighway

Administration

NationalHighway

Traffic SafetyAdministration

Saint LawrenceSeaway

DevelopmentCorporation

Research andSpecial

ProgramsAdministration

FederalRailroad

Administration

FederalAviation

Administration

U.S.CoastGuard

FederalTransit

Administration

MaritimeAdministration

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