IISTPS Report 99-3

 

 

 

Analysis of Policy Issues

Relating to Public Investment in Private

Freight Infrastructure

 

 

 

 

December 1999

 

 

 

 

 

 

 

 

Daniel M. Evans

Norman Kelley

 

 

 

 

 

 

 

 

 

a publication of the

Norman Y. Mineta

International Institute for

Surface Transportation Policy Studies

IISTPS

Created by Congress in 1991

Technical Report Documentation Page

Form DOT F 1700.7 (8-72)

Copyright © 1999 by IISTPS

All rights reserved

 

 

Library of Congress Catalog Card Number: 99-076244

 

 

To order this publication, please contact the following:

IISTPS

College of BusinessóBT550

San JosÈ State University

San Jose, CA 95192-0219

Tel (408) 924-7560

Fax (408) 924-7565

Email: iistps@iistps.cob.sjsu.edu

http://transweb.sjsu.edu

ACKNOWLEDGMENTS

 

The IISTPS Project Team consisted of Daniel M. Evans, J.D.óPrincipal Investigator, and Norm Kelley. Student assistant Denise Staudt contributed to this project.

The Project Team wishes to thank

…        The staff of the Office of State Planning of the California Department of Transportation for assistance, and

…        David A. Zavattero of the Chicago Area Transportation Study; Paul J. Malir of TransSystems Corp. in Kansas City; and Gill Hicks of the Alameda Corridor Transportation Authority for their personal time and guidance.

Special appreciation is also due

…        Peter Beaulieu of the Puget Sound Regional Council;

…        John E. Brown of the Pennsylvania DOT;

…        Ted Dahlburg of the Delaware Valley Regional Planning Commission;

…         Paul Flygar of L. A. Engineering;

…        Alan Harger of the Washington State DOT;

…        Mike Klaus of the Eastern Idaho Railroad;

…        Bob Lawlor of the Mid-Ohio Regional Planning Commission;

…        Jim Mallery of the Nevada DOT;

…        Cliff McKinney of the Arkansas State Highway and Transportation Department;

…        Loren Milligan, Supervisor of Jasper County, Iowa;

…        Stefan M. Natzke of the Federal Highway Administration, Statewide and Intermodal Programs Division;

…        Ralph Rizzo of the Federal Highway Administration, Rhode Island Division; and

…        Carlos Ruiz of the New Mexico State Highway and Transportation Department.

We would also like to thank the IISTPS staff and Research Associate John Vargo for editing and publishing assistance.

TABLE OF CONTENTS

 

EXECUTIVE SUMMARY.............................................................................. 1

Legal ANALYSIS...................................................................................... 1

Case Studies........................................................................................... 2

Recommendations............................................................................... 2

LEGAL ANALYSIS......................................................................................... 3

Legal Issues............................................................................................ 3

Summary Conclusions....................................................................... 3

Comprehensive Legal Analysis..................................................... 3

Constitutional Power of the State of California.............. 4

Exercise of the Legislative Power in Transportation....... 5

Role of the State in Transportation......................................... 6

The Gasoline Tax.................................................................................. 7

Gas Tax Case Law................................................................................. 8

SB 45.......................................................................................................... 10

Federal Law......................................................................................... 12

CASE STUDIES............................................................................................. 17

Complex freight infrastructure projects............................ 17

Rail improvement primarily for passenger service......... 29

Highway improvement for the benefit of freight infrastructure  31

OBSERVATIONS AND RECOMMENDATIONS.................................... 33

Observations....................................................................................... 33

Recommendations for Caltrans................................................ 35

REPORT SUMMARY.................................................................................. 39

ABBREVIATIONS And Acronyms.............................................................. 41

LITERATURE REVIEW.............................................................................. 43

Chicago Area Transportation Study....................................... 43

Puget Sound Regional Council.................................................... 43

BIBLIOGRAPHY.......................................................................................... 45

ABOUT THE AUTHORS.............................................................................. 49

Dan Evans.............................................................................................. 49

Norman Kelley................................................................................... 49

pre-publication peer review............................................................................ 50

 

EXECUTIVE SUMMARY

 

The federal Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA) focused increased attention on the nationís freight transportation infrastructure and on the efficient and reliable movement of goods. This national legislative focus intensified with the passage, in 1998, of the Transportation Equity Act for the 21st Century (TEA-21). Issues have also arisen from the emergence of just-in-time delivery systems, the recent mergers involving major American railroads, the passage of the North American Free Trade Agreement (NAFTA), and the integration of railroads in the United States, Canada, and Mexico.

These developments have highlighted the economic importance of investment in freight infrastructure. However, investment of public funds in privately-owned railroad infrastructure has been very limited due to institutional, legal, political, and competitive issues. The general prohibition against use of public funds for private development or benefit may bear some re-examination in light of the national and regional economic benefits of more efficient freight movement.

The California Department of Transportation (Caltrans) requested that the Mineta Transportation Institute review these issues and make appropriate suggestions. This study will focus on the following issues.

Legal ANALYSIS

Before we could discuss how the State of California should engage in freight infrastructure projects, we had to resolve several legal issues to determine whether or not the State can make such investments, and which state funds can be used. We reached the following conclusions.

1. The California Legislature has the legal power to invest public funds in privately-owned freight infrastructure projects. The Legislature already has made the determination that such investment can and should be made.

2. State Highway funds, except for gas tax revenues, may be used for investment in freight infrastructure projects.

3.  Motor vehicle fuel tax (gas tax) revenues are restricted to highway use by prevailing interpretations of the California Constitution. Although there are constitutional grounds to challenge the gas tax restriction, we do not recommend such a challenge. Such important changes in interpretation of the law should be made through the political, not the legal, process.

4.  Gas tax revenues may be used to invest in roadway segments of a freight infrastructure project.

Case Studies 

We have identified numerous case studies in the U.S. of freight infrastructure projects that include some form of public financial support.

Recommendations 

We make the following recommendations:

1. We suggest a system of guidelines that objectively score and evaluate quantifiable factors regarding any proposed freight infrastructure project. The analytical scoring guidelines should enable Caltrans, Metropolitan Planning Organizations (MPOs), and other agencies to set priorities among many freight infrastructure projects that compete for public funds.

2. Because economic development, including jobs retention and creation, always leads the list of rationales for a project, this factor must be included in the analytical scoring guidelines.

3. The planning process is complicated politically by "demonstration projects" and "high priority projects."  Political influence is unavoidable, but public agencies such as MPOs should maintain better political contacts in order to maintain some control of the planning process. Analytical scoring guidelines should help avoid arbitrary political interference in planning.

4. Caltrans should undertake the development of a Freight Improvement Priority System (FIPS) for the purpose of setting priorities for all freight improvement projects, including intermodal projects, for potential inclusion in the State Transportation Improvement Program (STIP).

LEGAL ANALYSIS

Legal Issues

Before we discuss how the State of California should engage in freight infrastructure projects, we must address several legal issues to determine whether the State can even make such investments. We shall examine the following legal questions:

1.  To what extent may the State of California invest public funds in freight infrastructure projects where the underlying property is privately-owned?

2.  To what extent may the State of California use State Highway Funds for investment in freight infrastructure projects?

3.  May motor vehicle fuel tax (gas tax) revenues be used for investment in such freight infrastructure projects?

Summary Conclusions

1.  The California State Legislature has very broad power to determine the scope of state activity. The Legislature may decide that public funds should be used to pay for investment in freight infrastructure projects where the facilities are privately-owned. To a great extent, the California Legislature already has done so.

2.  Unless specifically restricted, State Highway Fund resources may be used for freight infrastructure investment.

3.  Revenue specifically derived from gas taxes is specifically restricted and may not be diverted from highway uses.  However,

(a) "Highway uses" may be broadly defined to include road-related aspects of a freight infrastructure project.

(b) There are constitutional grounds to challenge the gas tax restriction.  We do not, however, recommend such a challenge.  Such important changes in the interpretation of the law should be made through the political, not the legal process.

Comprehensive Legal Analysis

The primary legal issues regarding public investment in private freight infrastructure arise under California state law and federal law.

Constitutional Power of the State of California

There is no prohibition per se under California law that might restrict the ability of the State of California to invest in freight infrastructure owned by private entities.

Unlike the federal government, a state has very broad legal "sovereignty."  The federal Constitution specifies what the federal government may do. The state Constitution only specifies what the state government may not do; everything else is allowed. Article IV, Section 1, of the California Constitution gives the "legislative power" in California to the Legislature.  Several Gold Rush era decisions of the California Supreme Court emphasized this power:

The Legislature can pass such laws as it may judge expedient, subject only to constitutional prohibitions."  People v. Brooks, 16 Cal 11 (1860)

"Ö(I)t is competent for the Legislature to exercise all powers not forbidden by the Constitution, delegated to the general government, or prohibited by the U.S. Constitution"  People v. Coleman, 4 Cal 46 (1854).

"The Constitution is not, as in the case of the Federal Government, a grant of power to the Legislature; but from the organization of a State, all its powers not elsewhere invested or expressly interdicted, became lodged in the Legislature."  Smith v. Judge of Twelfth Dist.  17 Cal 547 (1861).

This principle remains California law today:

"The entire lawmaking authority of the stateÖis vested in the legislature, and that body may exercise any and all legislative powers which are not expressly, or by necessary implication, denied to it by the California ConstitutionÖ. (A)ny doubt as to the Legislature's powerÖshould be resolved in favor of the legislature's actionÖ.Unlike the federal Constitution, which is a grant of power to Congress, the California Constitution is a limitation or restriction on the powers of the legislature."  City of San Jose v. State of California, 45 Cal.App. 4th 1802 (1996).

This analysis of state powers is consistent with the federal system of government. The Tenth Amendment to the Constitution of the United States reads, in full, as follows:

"The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people."

However, this broad power may be exercised only if there is some "public purpose" involved, some "public benefit" to be gained from the exercise of the Legislature's power. The Legislature cannot use taxpayers' money purely for a private enterprise:

"The Legislature has no power to impose taxes for the benefit of individuals connected with a private enterprise."  People v. Parks, 58 Cal 624 (1881).

For this reason the Legislature recites the "public purpose" or "public benefit" of any major legislative action that invests public money. The Legislature makes its own rules regarding public benefit and the legitimate scope of the power of the State. Furthermore, the Legislature may give an administrative officer or board great discretion to carry out policies set by the Legislature.

Exercise of the Legislative Power in Transportation

The California Legislature has determined public benefit and set public policy by enacting California Government Code Sections 14000 et seq., which set policies for the Department of Transportation. The Legislature included freight infrastructure in official policy.  Government Code Section 14000(c) states, in part:

"A goal of the state is to provide adequate, safe and efficient transportation facilities and services for the movement of people and goodsÖ."  (emphasis added).

Rail transportation is included in Government Code Section 14038.2(b), which states:

"It is the policy of the LegislatureÖto give significance and importance to the state rail passenger program equal to that of the state highway program, and to that end, to provide the department with the appropriate powers."

The Legislature specifically contemplated that the Department of Transportation would carry out the Legislature's policies by investing in privately-owned freight facilities, such as railroad tracks and signals owned by railroad corporations. Government Code Section 14038(b) allows the Department to: "Öacquire, lease, design, construct, and improve track lines and related facilities."

If a privately-owned railroad corporation refuses to cooperate with the Department, the California Public Utilities Commission (CPUC) may order the railroad to allow the improvements. Furthermore, California Government Code Section 14040 states, in full:

Section 14040.  Ownership of tracks and signals

The department may provide by contract with a railroad corporation that any tracks or signaling devices constructed, improved, repaired, or acquired with funds made available by the state on property owned or leased by the railroad corporation shall become the property of the railroad corporation.

We have found no case law that interprets Section 14040; the statute appears to be uncontroversial.

In summary, the State of California has every right to invest funds that are not specifically restricted in the improvement of private freight infrastructure, such as investment in railroad tracks and intermodal facilities. The problem arises not in the legal ability, but rather in restrictions on specific funds.

Role of the State in Transportation

For many years the only transportation infrastructure investment by the State of California was in the form of roads and highways.

Rail infrastructure was the responsibility of the private railroad companies (heavily subsidized by the federal government), while harbor and airport development was considered a local issue (also heavily subsidized by the federal government). The Federal Government invested in such infrastructure because railroads and harbors promoted interstate commerce (Article I, Section 8 of the Constitution of the U.S.), and often were perceived to have military significance. Federal investment in the first "transcontinental" railroad dates from the Civil War, in part to tie California to the Union by a union Pacific route to the northern states rather than a southern Pacific route.  As the railroads consolidated their power, they became subject to federal regulation (and price-fixing) in the form of the Interstate Commerce Commission (ICC). California railroad regulation was subject to federal ICC dominance, and usually did not involve any expense of state funds for railroad purposes.

Contrary to railroad history, roads and highways developed as a state matter.  The federal government only became active many years after the states began to develop state highway systems. Over the years, the investment by the State in the roads and highways of California became investment financed exclusively by gasoline taxes and other charges paid by car and truck drivers; state transportation investment thus became a user-financed matter. The state used gasoline taxes, not general funds, to pay for road and highway investment.

The Gasoline Tax

This user-financing principal was set into the California Constitution in 1938, and eventually became Article XIX to the Constitution. Article XIX, Section 1(a), as amended, now reads as follows:

Section 1.  Fuel taxes; use; streets and highways; mass transit

Section 1.  Revenues from taxes imposed by the state on motor vehicle fuels for use in motor vehicles upon public streets and highways, over and above the costs of collection and any refunds authorized by law, shall be used for the following purposes:

(a) The research, planning, construction, improvement, maintenance, and operation of public streets and highways (and their related public facilities for non-motorized traffic), including the mitigation of their environmental effects, the payment for property taken or damaged for such purposes, and the administrative costs necessarily incurred in the foregoing purposes.

In other words, these Section 1(a) gas tax funds may only be used for public roads and highways. This exclusive use of gas tax money was loosened in 1974, when Article XIX, Section 1(b) was added to allow some investment of gas tax money for environmental purposes and for mass transit.  Section 1(b) reads as follows:

(b) The research, planning, construction, and improvement of exclusive public mass transit guideways (and their related fixed facilities), including the mitigation of their environmental effects, the payment for property taken or damaged for such purposes, the administrative costs necessarily incurred in the foregoing purposes, and the maintenance of the structures and the immediate right-of-way for the public mass transit guideways, but excluding the maintenance and operating costs for mass transit power systems and mass transit passenger facilities, vehicles, equipment, and services.

However, Article XIX, Section 4 specifies that gas tax money may not be used for mass transit unless the voters of the affected counties approve, by a majority of votes cast, of the use of the funds for the specific mass transit project.

The apportionment of gas tax money among the cities and counties of California is outlined in Article XIX, Section 3. This section was amended in 1974 to read, in part, as follows:

Section 3.  Allocation of revenues; determination of another basis for distribution: statutory revision

...Any future statutory revisions shall provide for the allocation of these revenuesÖin a manner which gives equal consideration to the transportation needs of all areas of the state and all segments of the population consistent with the orderly achievement of the adopted local, region, and statewide goals for ground transportationÖin the California Transportation Plan.  (emphasis added).

It would appear that the 1974 amendment was intended to allow gas tax funds to be used for the entire ground transportation plan of the state, not just for roads and highways. Arguably, gas tax funds could be used to carry out a priority freight infrastructure project in the California Transportation Plan (CTP). So far, we have found no authority that interprets this aspect of Article XIX, Section 3.

Gas Tax Case Law

There is relatively little case law that interprets the exclusive use of state funds derived from the gas tax.

The leading case is the February 1998 decision of the California Court of Appeal: Professional Engineers in California Government v. Wilson, 61 Cal. App. 4th 1013 (1998). In 1994 the California Legislature had shifted money from the State Highway Account (SHA) to the General Fund to pay debt service on some rail bonds. The gas tax is included in the SHA. Shortly thereafter, Caltrans announced layoffs due to lack of funds. The Professional Engineers (PECG) and the California State Employees Association detected a connection between fund diversion and layoffs, and filed a lawsuit to block the fund diversion. The court concluded that the portion of the transferred funds that could be traced to gas tax funds could not be diverted by the Legislature. "Öthe effect ofÖArticle XIX, Section 1(b)Öis to forbid the use of motor vehicle fuel tax revenues for [mass transit guideway] projects related to rail transportationÖunless the money is spent on a project which has been approved by the votersÖin the areaÖ."  (Ibid., pgs. 1026-1027).

However, the court declared that the Legislature did have the power to divert SHA money that was not traced to gas tax funds. In this case, most of the funds diverted from the SHA were traced to rental property income and other "miscellaneous income" sources, and therefore could be used elsewhere.

Reverse reasoning of the same principle prevailed in Short Line Associates v. City and County of San Francisco, 78 Cal. App. 3d 50 (1978). The City of San Francisco had purchased real property at Market and Powell Streets to develop Hallidie Plaza, and had used gas tax money for the purchase.  Because of the use of gas tax money, the court declared that the property in question must be considered to be a "public street" (therefore the plaintiff developer did not need to purchase an easement).

See also Kizziah v. Department of Transportation, 121 Cal. App. 3d (1981);  Amador Valley Joint Union High School District v. State Board of Equalization, 22 Cal. 3d 208 (1978).

The California Supreme Court noted the limitation on the use of gas tax funds in Santa Clara County Local Transportation Authority v. Guardino, 11 Cal. 4th 220 (1995). This decision, however, is based on a different pertinent rationale. Plaintiffs had complained that the requirement of a greater than 50 percent vote to raise a tax deprived California voters of federal "equal protection." The California Supreme Court rejected the argument, citing Gordon v. Lance, 403 U.S. 1 (1971), a U.S. Supreme Court decision that allowed state law to require 60 percent voter approval to increase bonded indebtedness.

Several opinions of the California Attorney General touch on Article XIX.  One opinion (70 Op. Atty. Gen. Cal. 119, 1987) is that bus-carpool transit ways are not "exclusive public mass transit guideways." but can be financed by the gas tax as part of the highway system. Another opinion declared that San Francisco could use highway users tax funds from the SHA to build an asphalt plant to supply asphalt for highway purposes; the asphalt plant is a "related facility." (22 Ops.Atty.Gen. 49, 1953). A third opinion allowed surplus highway land, which had been purchased with gas tax funds, to be turned into a city park  (58 Ops.Atty.Gen. 844, 1975). A city may not transfer gas tax funds to other accounts (20 Ops.Atty.Gen. 224, 1952).

A recent unusual state court decision in South Carolina held that the state could divert gas tax funds to the general fund of the state, despite a state constitutional restriction on the use of gas tax funds (Myers v. Patterson, 315 S.C. 248, (Supreme Court of South Carolina, 1993). This South Carolina decision is not binding precedent in California, but is interesting as a legal development.

SB 45

In 1997 the California Legislature passed Senate Bill 45 that, among other things, amends Sections 163, 164, and 167 of the California Streets and Highways Code. Section 163 of the Legislature's policy for use of transportation funds, now reads, in part, as follows:

The Legislature, through the enactment of this section, intends to establish a policy for the use of all transportation funds that are available to the state, including the State Highway Account, the Public Transportation Account, and federal fundsÖ (emphasis added).

(d) Annual expenditures for local assistance shall be the amount required to fund local assistance programs required by state or federal law or regulations, including, but not limited to, railroad grade crossing maintenance, bicycle lane account, congestion mitigation and air quality, regional surface transportation programsÖ (emphasis added).

(e)Öremaining funds shall be available for capital improvement projects to be programmed in the state transportation improvement program. 

This enactment logically follows the 1974 enabling amendment of Article XIX, Section 3 of the California Constitution.

Streets and Highways Code Section 164, Use of funds available for transportation capital improvement projects, now reads, in part, as follows: 

(a) Funds made available for transportation capital improvement projects under subdivision (e) of Section 163 shall be programmed and expended for the following program categories:

(1) Twenty-five percent for interregional improvements.

(2) Seventy-five percent for regional improvements.

Ö.

(d) Funds made available under paragraph (1) of subdivision (a) shall be used for transportation improvement projects that are needed to facilitate interregional movement of people and goodsÖ (emphasis added).

(e) Funds made available under paragraph (2) of subdivision (a) shall be used for transportation improvement projects (which)Ömay includeÖintermodal facilities. Ö (emphasis added)

Section 167, Priorities for use of funds in State Highway Account, now reads, in part, as follows:

(a) Funds in the State Highway Account in the State Transportation Fund shall be programmed, budgeted subject to Section 163, and expended to maximize the use of federal funds and shall be based on the following sequence of priorities:

(1)  Östate highway system.

(2)  Safety improvementsÖ

(3) Transportation capital improvements that expand capacity or reduce congestionÖ

(4) Environmental enhancement and mitigation programsÖ.  (emphasis added)

It appears that the Legislature intended to reorganize priorities in state transportation planning, and intended that all transportation funds - presumably including the gas tax - be applied according to the reorganized priorities. It appears that the Legislature wished to give some priority to goods movement and to intermodal facilities, i.e. investment in freight infrastructure. This is consistent with the 1974 enabling language of Article XIX, Section 3 of the California Constitution.

This interpretation leads us back to the decision in PECG v. Wilson, supra, which summarily dismissed the claim of plaintiff PECG that State Highway Account (SHA) funds could be used only for highways.  The court pointed out that "ÖStreets and Highways Code Section 182 does not limit the use of SHA moneys to highwaysÖsection 183.3 expressly contemplates that SHA funds can be appropriated not only for public mass transit guideway projects, but also for the more problematic expenditures, from PECG's point of view, on non-guideway items like rolling stock, ferry vessels and ferry terminals." (ibid., 1029).

SB 45 also amended Streets and Highways Code Section 182 et seq.  SB 45 added new Section 182.5, Legislative intent as to transition to new programs and procedures. Subsection (c) now reads, in part, as follows:

 

(c) Notwithstanding Section 164, there shall be set aside sufficient funding for every project that is included in the 1996 State Transportation Improvement ProgramÖ.(emphasis added).

These SB 45 amendments further reinforce the overall policy of the California Legislature that state transportation priorities have become far broader than streets and highways projects, and that all funds available should support all transportation plan priorities. Arguably, the 1974 amendment to California Constitution Article XIX opened the way for the California Legislature to use gas tax funds for the entire California Transportation Plan, not only for roads and highways. If Article XIX of the Constitution can be liberally so interpreted, then SB 45 is a valid move by the California Legislature to use the entire SHA, including gas tax funds, for the entire transportation plan.

Proponents of the principal that gas taxes can only be used for roads and highways will argue that Article XIX Section 3 is too vague to be a repudiation of the traditional gas tax rule of Article XIX, Section 1(a). If true, the gas tax limitation remains in the Constitution, and is thus superior to any enactment of the Legislature.

The more liberal interpretation of Article XIX, Section 3, which we suggest, would require court validation to be accepted, following exceedingly tedious litigation. Such litigation would be time-consuming and expensive, and the result uncertain. The only certain benefit would be for those collecting legal fees. We believe it is far preferable that the issue be clarified in the political process, not in litigation. A clear declaration by the Legislature that 'the 1974 amendment to Article XIX, Section 3 means that gas tax revenues should be used for the entire Transportation Plan' should be sufficient. Highway interests, of course, will argue that such a change can be made only by a direct amendment to Article XIX of the Constitution.

Federal Law

Federal action to promote freight infrastructure historically has been more inclusive than California state action.  Article I, Section 8 (3) of the U.S. Constitution gives Congress the power "To regulate CommerceÖamong the several StatesÖ." This is called the "Commerce Clause."  At the time of the Civil War, Congress used the Commerce Clause power to give substantial subsidies to the trans-continental railroad, including to the Central Pacific Railroad in California. Congress intended to promote passenger and freight traffic, not least, freight traffic to expedite California gold eastward. Congress enacted various subsidies over the years to promote port projects in California.  As railroads came to be perceived as villains in the late 19th Century, Congressional subsidies vanished. A World War I experiment in nationalized railroads was quickly terminated at war's end. Congressional interest turned to roads and highways in the 1920s and became intense with the 1956 Interstate Highways Act.

Recent Congressional enactments have reflected increasing interest in goods movement and intermodal facilities, parallel to a similar shift in interest in the California Legislature since 1974. The "Intermodal Surface Transportation Efficiency Act of 1991," Public Law 102-240 ("ISTEA") declared a major public policy shift in Section 2. Declaration of Policy, which reads, in part, as follows:

"It is the policy of the United States to develop a National Intermodal Transportation System thatÖwill move people and goods in an energy efficient manner. (emphasis added).

The National Intermodal Transportation System shall consist of all forms of transportation in a unified, interconnected mannerÖ (emphasis added).

The National Intermodal Transportation System shall include a National Highway SystemÖintermodal transfer facilities Ösignificant improvements in public transportationÖ improved access to ports and airportsÖ

The National Intermodal Transportation SystemÖwill be financedÖby the Highway Trust FundÖ." (emphasis added).

The major policy departure for ISTEA, however, was increased attention to public transportation system, in addition to, not as a replacement of, the National Highway System.

The most recent and most important federal legislation is the "Transportation Equity Act for the 21st Century." Public Law 105-178 ("TEA-21").  Congress declares: "Öit is in the national interest toÖserve the mobility needs of people and freight." (Section 1203(a)(1.) "(F)reight shippers, providers of freight transportation systems, private providers of transportationÖ" etc. are to be consulted (Section 1203(h)(1)(B)) (emphasis added).

TEA-21 contains numerous provisions regarding freight movement and intermodal terminals.

…        Intermodal Freight Connectors Study. 

The law requires the Secretary of Transportation to recommend ways to develop connections between the National Highway System and intermodal freight transportation facilities in order : "Öto facilitate the efficient movement of freight, including movements of freight between modes." (Section 1106(d)(2)).

…        National Corridor Planning and Development Program 

In addition to corridors identified in ISTEA, the Secretary is to identify corridors at border crossings where freight traffic has increased since the implementation of the North American Free Trade Agreement (NAFTA) (Section 1118(b)(2)(A)).

…        Coordinated Border Infrastructure Program 

Federal funds will be allocated to states: "Öto improve the safe movement of people and goods atÖthe border between the United States and Canada andÖMexico." (Section 1119(a)) (emphasis added).

…        Innovative Surface Transportation Financing Methods 

Öare the subject of Section 1216, and Section 1501 et seq.

…        Transportation and Community and System Preservation Pilot Program 

Federal funds are to be used to help states, MPOs, and local governments improve the overall transportation structure.  (Section 1221)

…        Transportation Infrastructure Finance and Innovation Act  (TIFIA)  Congress finds that transportation infrastructure, specifically including intermodal facilities are critical to the U.S., and that new financing methods must be developed.

…        Light Density Rail Line Pilot Projects 

Federal grants may go to states to make capital improvements to privately-owned rail lines with multimodal function.  (Section 7202).

…        Railroad Rehabilitation and Improvement Financing  (RRIF) 

An earlier program for federal loans and loan guarantees is augmented to assist railroads to develop intermodal facilities.  (Section7203).

The underlying philosophy of Congress is found throughout TEA-21: public transportation policy now specifically includes the more efficient movement of goods. T