Framework for Guiding FHWA Policy Decisions Affecting Freight Transportation

DEPARTMENT OF TRANSPORTATION

Federal Highway Administration

[FHWA Docket No. 95-14]

Framework for Guiding FHWA Policy Decisions Affecting Freight

Transportation

AGENCY: Federal Highway Administration (FHWA), Department of

Transportation (DOT).

ACTION: Interim policy statement; request for comments.

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SUMMARY: This notice requests comments on a draft framework intended to

identify the principles which will guide FHWA policy decisions

affecting freight transportation systems. These principles do not

reflect a priority in their order--they move from the most generic

concepts through to more specific ones, and contain many common

elements. This framework focuses on the highway element of those

freight transport systems but recognizes the importance of intermodal

connectivity for a growing portion of U.S. freight transport. This

interim statement could serve as a building block for a broader

Departmental intermodal freight policy. In addition to a brief

discussion of each of the principles, several key current issues are

discussed that illustrate how the principles are reflected in questions

of Federal interest.

DATES: Comments should be received by October 27, 1995.

ADDRESSES: Submit written, signed statements to FHWA Docket No. 95-14,

FHWA, Room 4232, HCC-10, Office of the Chief Counsel, 400 Seventh

Street, SW., Washington, DC 20590. All statements received in Docket

No. 95-14 will be available for examination at the above address

between 8:30 a.m. and 3:30 p.m., e.t., Monday through Friday, except

Federal holidays. Those desiring notification of receipt of their

statements must include a self-addressed, stamped envelope or postcard.

FOR FURTHER INFORMATION CONTACT: Mr. Thomas Keane, Office of Policy

Development, Transportation Studies Division, at (202) 366-9242; or Mr.

Charles Medalen, Office of Chief Counsel, Motor Carrier Law Division,

at (202) 266-1354, FHWA, DOT, 400 Seventh Street, SW., Washington, DC

20590. Office hours are from 7:45 a.m. to 4:15 p.m., e.t., Monday

through Friday, except Federal holidays.

SUPPLEMENTARY INFORMATION:

Background

Efficient, effective, and safe highway systems play a critical role

in the U.S. economy; nearly all the essentials of modern life travel on

them, whether in the delivery of intermediate goods to production

plants or shipment of goods to final market. The highway system is an

especially important foundation of commerce as it provides access to

raw materials, labor, and markets. Maintaining and improving highways

and their connections to intermodal freight facilities, while producing

a safe environment for the traveling public, ensures shippers and

carriers the freedom to adapt quickly to changing markets and

environments with some measure of confidence that the spatial barriers

between markets can be overcome. Therefore, the FHWA has developed a

draft framework of principles by which to guide policy decisions having

an impact on freight transportation systems. The FHWA invites comments

on this draft framework, which is set forth below.

Draft Policy

Part I--The Principles

Highway and intermodal freight transport policy can be fashioned to

improve the Nation's long-term economic prospects and vitality. As in

all policy decisions considering the interests of the public at large,

a balance must be struck among many worthy goals. In defining the

public interest, Federal highway programs and freight-related policies

should advance the following principles:

1. Reflect the Importance of Freight Transportation to National and

Regional Economies

Transportation policy with regard to investment and regulatory

decisions must take into consideration the impacts that such policies

may have on the movement of both people and goods.

The relationship between transportation and economic development is

obvious. Highways and other modes of transportation enable individuals

to commute to their workplaces; transportation is also a critical part

of the production process. While the magnitude of the relationship has

been debated, it is well known that the quality of the transportation

system is closely tied to the industrial and employment base of

regions. Good, dependable transportation is an important factor in any

region's current economic well-being as well as its growth potential.

The U.S. economy as a whole is highly integrated and is becoming more

closely tied to the global economy. To retain and expand its economic

vitality and competitive position, the Nation must ensure that its

producers and carriers have quality access at the lowest reasonable

cost, and in turn, that its markets are accessible.

A basic characteristic of highway networks is that automobiles,

trucks, and buses share the common highway. The combination of large

freight vehicles with a smaller, lighter passenger car fleet causes

special safety risks. Large vehicles impose unique demands on their

drivers and those sharing the road with them. Their size and handling

characteristics must be taken into consideration in the design of

roadways. Increasingly, the environment in which the vehicle is

operated is congested and physically deteriorated. Infrastructure

planners, providers, and operators should adopt a customer orientation

for freight movement, recognizing that freight and passenger

transportation are distinctly different markets with fundamentally

different requirements.

2. Adopt a Long-Term Perspective for Freight Decisions

Since investments in highway infrastructure have such long usable

lives, decisions should be as future-oriented as possible, taking into

account the current and future demands of the freight market.

Transportation agencies should maintain, operate, and improve

highway systems commensurate with current and projected demand. One

element of that investment is the development of an

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understanding (qualitatively and quantitatively) of the demand for

goods movement and its incorporation into planning and forecasting.

Lack of effective transportation can lead to the demise of business and

jobs or be an impediment to growth in any area of the State. Agencies

should recognize that freight demand is dynamic: the mix of supply and

demand changes over time.

Although State Departments of Transportation and Metropolitan

Planning Organizations (MPO) have relatively sophisticated passenger

transportation planning procedures, most agencies have little

experience in developing forecasts of freight transportation movements

for statewide freight transportation plans. The transportation needs of

basic industries are important criteria in setting program priorities.

Economic considerations should be combined with other measures of

transportation need to develop plans for transportation systems and

networks. Life-cycle cost principles should be reflected at the

program, management system, and project level.

Increasingly all modes of freight transportation are using

computerized technologies to track cargo and improve the efficiency of

pickup, delivery, and terminal operations. Work underway in the

commercial vehicle operations element of the Intelligent Transportation

System (ITS) program holds great promise for augmenting private sector

programs by improving the efficiency and safety of motor carrier

operations, including intermodal operations. These kinds of forward-

looking considerations should be incorporated into a future-oriented

vision of freight demand.

3. Ensure that Priority Consideration for Safety is Affirmed

The DOT's strategic plans have clearly enunciated the importance of

safety. We are guided by a vision statement which leads with ``the

Nation's need for the safe . . . movement of people and goods . . .''

and a mission statement which follows with a pledge to ``[i]mprove all

aspects of surface transportation safety.'' The plan's safety goal is

to ``[i]mprove surface transportation safety through a coordinated

effort to reduce fatalities, injuries, property damage, and hazardous

material incidents.''

The rationale for Federal involvement in transportation safety has

been that the marketplace alone will not produce an acceptable level of

transportation safety and, therefore, it should be provided by the

public sector. Government policies are established to ensure that the

truck and bus industries operate safely. The ultimate goal of these

policies has been to prevent accidents and minimize the loss associated

with accidents. Whenever the government issues regulations or allocates

resources that affect motor carrier safety, it balances the public's

desire for efficiency and mobility in transport services with the

desire for improved safety.

While many truck safety policies are initiated at the Federal

level, responsibility for truck safety investment and oversight is

shared among all levels of government and the industry. The recognition

of this shared responsibility has led to major improvements in truck

safety over the last several years.

Improving truck safety will require increased attention to:

operator proficiency; improvements in vehicle design and performance;

improved data collection and more comprehensive information to target

resources at high risk carriers; better analysis and more focused

research on vehicle and driver performance, coupled with greater use of

technical innovations; a stronger link between Federal, State, local,

and private industry safety initiatives; and designing road systems to

accommodate large vehicles.

Technology, innovation, and research hold great potential to

improve the productivity and safety of freight transportation. Various

technologies being developed under the ITS program should substantially

improve motor carrier safety and productivity. On-board safety sensors

to automatically measure the safe condition of the vehicle can be a

reality in the near future. Existing vehicle technologies such as

antilock braking systems, B-trains and double drawbar dollies also are

available to improve the safety of multi-trailer combinations.

4. Promote Equity and Cost-Effectiveness

Decisions regarding allocating resources and imposing regulatory

controls should be equitable and cost-effective. They should recognize

the costs imposed across industry sectors, across transport modes,

across regions, and across classes of consumers. To the maximum extent

possible, each mode and class of user should pay the costs of public

facilities and services provided for their operations.

Direct or indirect subsidies may affect competition among the

freight modes. Such subsidies result when user fees and other policies

result in the various modes not paying the full costs of their

operations. To the extent compatible with other goals, government

subsidies that affect competition among the modes should be minimized.

Since governmental agencies are allocating scarce public resources,

investment options should be evaluated against the opportunity cost in

the private market. Threshold criteria should require benefits to

exceed the cost. The benefits and costs which accrue directly to

freight carriers and indirectly to their customers should be explicitly

included in evaluations of system improvements and/or regulations. The

assessment of infrastructure investment and regulatory controls should

include measurement of the full range of impacts, appropriately

discounted over their entire life cycle. For example, this means that

the impacts of delay and vehicle operating costs, rehabilitation and

maintenance activities in work zones should be taken into

consideration. Another example relates to incorporating economic

benefits derived from system efficiencies which accrue to communities

and shippers, often referred to as economic development benefits.

5. Encourage an Integrated, Intermodal Systems Approach

The difficulties that result from different modes and carriers

working together should not be aggravated by unnecessary governmental

barriers or inadequate connections due to poor system design.

The productivity of trucking firms and their customers depend on

highways and their connections with truck terminals, ports, railroads,

and airports. Moving freight by a combination of two or more modes in

an integrated manner is an option that allows the superior attributes

of each mode to be utilized. This does not mean that multi-modal

movements are inherently better than single-mode movements. It does

mean that, given the latitude to choose the best mode(s) for the move,

carriers will be able to provide the most efficient transport with the

potential for the lowest cost. Developments in U.S. manufacturing

practice contribute to the growing trend toward intermodal shipments.

It is critical that State and MPO plans, programs, and management

systems address intermodal access and connections.

The National Highway System (NHS) will facilitate U.S.

international trade and growing domestic productivity through improved

efficiencies in the movement of goods produced for and by U.S.

businesses. Improving the quality of connections among transportation

modes, aiming toward smooth and seamless interchange, along with

improving the highway links

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themselves, are two examples of the benefits that will accrue from

designation of the NHS.

6. Be Sensitive to Externalities Caused by Transportation of Goods

Take appropriate action to reduce or mitigate externalities.

Many costs of highway freight transportation are not accounted for

in the marketplace and thus are not recognized directly by motor

carrier operators. These costs include environmental impacts (such as

exhaust emissions, noise, and community impacts) and safety. Some of

these external costs can be mitigated by regulatory actions (e.g.,

requiring cleaner or quieter vehicles), or programmatic means (e.g.,

improved traffic safety inspection programs). Market pricing approaches

such as emissions or congestion pricing have also been proposed.

It is important to estimate the incidence and magnitude of external

costs associated with highway freight transportation before regulatory

or pricing solutions are implemented. It also is important to estimate

the impacts of such solutions on motor carriers, including impacts on

their competitive position versus other modes. A further consideration

is the extent to which external costs are associated with operations of

those competing modes.

The importance of these estimates is reflected in Intermodal

Surface Transportation Efficiency Act of 1991 (ISTEA) planning reforms,

which require consideration of factors such as social, economic,

energy, environmental, and land use/development effects of

transportation decisions. Quantification should be encouraged as a

means to bring these issues into the policy equation, with a common

measure of value. The estimates and their use should reflect the

limitations of such analysis. Methodologies and techniques for

capturing these impacts should be pursued vigorously.

7. Provide an Environment That Will Enable the Transportation Industry

To Be Strong and Internationally Competitive

Recognize that a strong and internationally competitive

transportation industry requires a sound and effective regulatory

framework that reserves economic regulation only for the most obvious

instances of transportation market failure. Within that framework,

market-based approaches to regulation can provide carriers with the

flexibility needed to comply with regulations while maintaining an

incentive to offer cost-effective, competitive service. In this spirit,

the U.S. Department of Transportation has stated in its report to

Congress on the functions of the Interstate Commerce Commission that a

new regulatory approach has emerged in recent years, one which is

``recognizing competition as the best regulator of transportation * *

*.'' The Department therefore, has recommended removing various archaic

Federal laws which are no longer applicable because of structural

changes in the market for freight transportation.

Also, the Department encourages innovation through public-private

financing partnerships to achieve greater efficiencies in both the

private and public sectors. Cost-sharing and public-private partnership

concepts provide new opportunities for the States to increase

investment in needed transportation facilities and to work with the

private sector to promote innovative solutions to transportation

problems. The North American Free Trade Agreement (NAFTA) provides an

example where the public and private sectors can work together to

eliminate unnecessary cross-border barriers to trade.

Part II--Contemporary Issues

The above principles represent those values that we feel should be

reflected in a freight policy. The remainder of this document discusses

a series of topical issues in a manner which illustrates how many of

the functional areas which the Department must address should be

approached in the context of a comprehensive freight policy. They

reflect a perspective that embraces highway system stewardship from

both a facilities management and motor carrier operational perspective.

The above principles are a starting point for the questions of

governmental interest, generally, and the Federal interest, in

particular.

1. Infrastructure--System Design and Investment

One of the strengths of the highway motor carrier transport mode is

its inherent flexibility advantage and thus high service quality. New

economic processes and arrangements place high value in the

characteristics of reliability and security in addition to speed. The

environment in which large vehicles operate is key to improving truck

safety. Road design significantly affects truck accident rates. For

example, the rate of fatal combination truck accidents on non-

Interstate roads is significantly higher than the rate on Interstate

roads. The interface between roadway geometry and truck safety requires

scrutiny when road design alternatives are considered or highway

improvements are made.

A revolution in freight transportation is occurring as our domestic

highway programs face a major crossroads. The completion of the

Interstate System and designation of the NHS signal a new stage in our

highway network. Due to demographic and economic changes throughout the

United States, the Interstate System alone cannot adequately serve the

needs of modern goods movement. The NHS is intended to concentrate

Federal resources on those elements of the principal arterial system

which are crucial to interstate and international commerce.

Much of the Nation's industrial capacity has moved from its

northeastern urban origins to rural areas of the country. International

manufacturing arrangements are growing in importance. With

implementation of the NAFTA, the need for fast, reliable transportation

connecting Mexico, the United States, and Canada will become even more

vital. The NHS will be focused on and provide for the current and

future national highway transportation needs such as those resulting

from changing trade and traffic flows.

Improving the capacity, safety, and structural life of the NHS will

facilitate U.S. international trade and growing domestic productivity

through improved efficiencies in the movement of goods produced for and

by U.S. businesses. With Federal input, State transportation plans and

specific projects must ensure that the objectives of States and

localities contribute to the NHS's goal of improved economic

competitiveness through improved mobility.

Although the NHS will enhance the economic competitiveness of U.S.

businesses by improving highway transportation, these gains will not be

maximized unless the quality of connections among transportation modes

is improved. The National Transportation System planning framework will

help in the development of a smooth and seamless interchange among the

transportation modes by highlighting for planners the important

intermodal connections nationwide and identifying any impediments to

the efficient movement of goods through these connections. This, in

turn, will enhance the efficiency of freight carriers and the general

economic performance nationally as transport costs decrease.

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3. Intermodal Freight Planning

An important step in freight planning is to see the system as a

whole--to understand freight movements as a system of supply chains and

distribution networks. Since an important Departmental goal is to

contribute to the Nation's economic performance, this implies the

desire to select the most important movements to address, not just the

best way to address them. This requires the identification of the needs

of shippers with respect to infrastructure and/or freight operations.

As our concerns have matured to the perspective of total system

management, six specific management systems (pavement, bridges, safety,

traffic congestion, public transportation, and intermodal

transportation facilities) and the traffic monitoring system have been

identified that will provide information concerning both the condition

and the performance of the existing and future transportation system.

Although no ``freight management system'' is specifically

identified in the aforementioned list, freight transportation should be

an important consideration within each of the management systems. The

freight customer can be said to affect, and be affected by, all these

systems. Freight consumers' perspectives can take on several

dimensions, corresponding to the service provider/carrier, the shipper,

and the ultimate consumer of the commodities (the value of which

contains a transport component). Goods movement deserves significant

treatment beginning with the inventories/descriptions of usage and

systems. This should be followed up by evaluations of those systems as

input to public decisionmaking to identify strategic freight

investments.

Thus, determining transportation infrastructure needs for freight

is as much a demand-side assessment as it is a supply-side one. An

important element of system strategy is to determine the facility or

operational change needed to fit the job. Designing a quality and cost-

effective facility--that is, the supply side--comes after determining

which services are the most needed.

3. Safety Analysis and Research

Truck accidents are frequently caused by errors of either truck

drivers or drivers of other vehicles involved in collisions with

trucks, rather than failures of vehicle components. Nevertheless,

vehicle design and performance affects truck drivers' ability to

respond to, or recover from, those errors. Additionally, safe highway

design and special safety features reduce the potential for accidents

and the severity of accidents that occur. Therefore, a balanced program

focused on optimizing driver, vehicle, and highway performance is

warranted. Attention will be given to issues of human behavior,

operator proficiency, emergency response, and training to reduce the

influence that deficiencies in any factor may have on accidents.

Additionally, efforts will be made to optimize vehicle collision

avoidance and crashworthiness performance.

Understanding the factors that influence truck accident rates will

lead to better, more informed freight policy decisions. Assessing the

value of safety investments so that informed public decisions can be

made requires that truck travel data, accident information, and the

investment levels themselves be more comprehensive and accurate. Since

a variety of factors affect the safe operation of trucks, a more

comprehensive approach to data collection is needed. Factors such as

the growth in truck travel, industry structure, traffic densities, and

passenger and freight vehicle dimensions and weights are changing.

Improved data is needed to better monitor both safety program

performance and carrier performance.

More analysis and research on motor carrier safety is needed to

identify changes in safety levels and the factors producing these

changes, evaluate policies that may affect these factors, and target

safety investments accordingly. The analysis must be coupled with

research to answer questions on vehicle, roadway, and driver

performance and develop new technologies that will improve motor

carrier program effectiveness and efficiency.

4. Finance and Taxation

Publicly provided facilities and services for highway/motor carrier

freight transportation are financed in whole or in part by user fees.

The extent to which user fees assessed on each mode cover public costs

varies widely. Several criteria are important in evaluating the level

and structure of user fees, including:

1. To the maximum extent possible, user fees should cover

appropriate costs of public infrastructure improvements and other

public programs;

2. Users should contribute a proportionate share of their costs of

facilities and services; and

3. Federal subsidies to one mode should not unfairly affect

competition with other modes.

Federally-sponsored studies of freight user fees have been

conducted for highways, airports, railroads, and waterways. These

studies vary significantly in detail; comprehensive cost allocation

studies have been conducted for highways and airways while more general

studies have been conducted for the other modes. The last major Federal

Highway Cost Allocation Study in 1982 showed that heavy trucks paid

substantially less in Federal user fees than their estimated Federal

highway cost responsibility. User fee adjustments were made in 1982 and

1984 to partially address study findings. However, recent increases in

the fuel tax have likely changed the equity of the overall user fee

structure. Also, the ISTEA changed the Federal program structure,

system responsibility, and flexibility in the use of funds, which would

likely change cost responsibility among users. A new Federal cost

allocation study is underway to evaluate implications of these and

other prospective changes in highway or intermodal programs.

5. Truck Size and Weight (TS&W) Policy

The question of appropriate size and weight limits for trucks has

always been a difficult one. It conjures up images of ``grandfather

rights'' from the Interstate era, conflicting views of proper State-

Federal relationships, rival economic interests, and uncertainty as to

the operational safety of various types of trucks.

The TS&W issues are extremely complex; they relate not only to

questions of highway safety and stewardship but to local, State, and

national economic performance. At a time when transportation is

becoming a larger part of the goods production as well as distribution

systems, the effects of additional regulation on productivity take on

renewed significance.

The macroeconomic impacts of change to these regulations are

initially private ones: equipment costs; fuel consumption; and

personnel expenditures. The direct costs imposed, if not

counterbalanced, are public ones: pavement and bridge deterioration;

and safety consequences. However, changing trucking productivity

quickly translates to changes in costs and efficiency for shippers, the

economy as a whole and, thus, the consuming public.

Extended fact-finding and debate are necessary to do justice to

TS&W issues. Good TS&W policy helps ensure safe and efficient freight

movement on our Nation's highway and intermodal systems. Beyond the

general freight principles which began this document,

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changes at this juncture should also, to the extent possible, address:

1. Highway and vehicle safety through a performance based

regulatory approach;

2. Efficient interstate and international commerce through advanced

highway and vehicle technologies;

3. Streamlined, uniform, and enforceable administrative procedures

and requirements for permitting and taxation purposes;

4. Compatible vehicle and infrastructure design; and

5. Equitable recovery of public costs.

The TS&W policies directly influence truck designs and

configurations. Choices made in this regard by motor carriers and truck

designers, in response to size and weight constraints, affect not only

the amount of weight carried by a truck and the effect that weight has

on highway infrastructure, but also the braking and handling and

stability properties of the vehicle. Vehicle size and weight policies

should be structured to encourage and ensure vehicle designs and

configurations that are optimized relative to all these concerns.

The TS&W policy and highway user fee issues are virtually

inseparable. Pavement and bridge costs attributable to heavy vehicles

will rise (or fall) as the result of size and weight policy changes.

Significant changes in size and weight limits should not be considered

without evaluating appropriate motor carrier user fees. Fines and other

penalties have proven to be ineffective deterrents to overweight

operations because they are too low to offset potential profits from

operating overweight. This is borne out by Federal estimates that show

10 to 20 percent of all combinations operate illegally overweight.

State permit fees for overweight operations generally are too low to

cover added pavement and bridge costs associated with the overweight

operations. States that issue overweight and oversize permits should

consider setting permit fees at levels that reflect added highway costs

of overweight operations to improve the effectiveness of their TS&W

enforcement efforts.

In an effort to better understand the effects of TS&W policy

changes on these many factors, the Department has undertaken a

comprehensive TS&W study to examine the relationship between TS&W

policy and safety, pavement and bridge condition, shipper logistics,

truck operating costs, intermodal operation, and energy and

environmental concerns, to evaluate the appropriate scope and extent of

Federal involvement. The FHWA published a notice in the Federal

Register on February 2, 1995, announcing the study and soliciting

comments (60 FR 6587).

Regarding international commerce, wide disparity between the

standards across the United States, Mexico, and Canada (as well as

those across our States) often inhibit the efficient flow of

continental trade. In a NAFTA context, the Department is committed to

finding a means, in consultation with Congress, to make TS&W and safety

standards compatible. Further, significant growth in international

container traffic, combined with varying international TS&W standards,

has created enforcement and economic efficiency concerns.

6. Highway Freight Transportation and Air Quality

With the passage of the Clean Air Act Amendments of 1990 and the

subsequent Federal Implementation Plan (FIP) for California in 1994,

concerns have been raised as to the effects that air quality

regulations may have on freight transportation in the near future,

especially in California. While air quality improvement is an important

public policy objective, it is important to remember that there are

typically multiple objectives and implications in all major public

policy decisions, and these must be balanced. For instance, the

original FIP issued on May 5, 1994, contained several proposals which

it was thought might significantly impact the freight industries, and

hence regional and national economic performance. Since that time, the

FIP has been revised, based on public comment, to more effectively

balance the national objectives of improving air quality and

maintaining economic competitiveness. The currently proposed standard

of 2.0 g/bhp-hr (grams per brake-horsepower-hour) for nitrogen oxide

emissions and the implementation time frame is considered more feasible

by industry.

Freight concerns are likely to play a more prominent role in other

State Implementation Plans now being considered. Recognizing these

concerns, the Environmental Protection Agency recently set up a

government and industry task force to look at various freight and air

quality issues.

Authority: 23 U.S.C. 315; 49 U.S.C. 301, 302, 305; Pub. L. 102-

548, 106 Stat. 3646.

Issued on: August 21, 1995.

Rodney E. Slater,

Federal Highway Administrator.

[FR Doc. 95-21305 Filed 8-25-95; 8:45 am]

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