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 1st real statutory attempts to
regulate railroad rates and service
Major Transportation Regulation:
Initiation Era
Date
Federal Act
1887
Act to Regulate Commerce
1903
Elkins Act
Nature of Act
Regulated railroads & established ICC;
rates must be reasonable; discrimination
prohibited
Prohibited 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 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