PUBLICATION

MTI Report 99-03
Analysis of Policy Issues Relating to Public Investment in Private Freight Infrastructure

Principal Investigator: Daniel Evans
Published: January 2000
Keywords: Freight transportation, legislation, Transportation policy, Investment, public policy.

The federal Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA) focused increased attention on the nation’s 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.

ABSTRACT

The Norman Y. Mineta International Institute for Surface Transportation Policy Studies (IISTPS) at San José State University conducted this study to review the issues and implications involved in the investment of public funds in private freight infrastructure. After thorough legal research, the project team reached the following conclusions:

LEGAL ANALYSIS:

  1. The California legislature has the legal power to invest public funds in privately-owned freight infrastructure projects

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

  3. Gas tax revenues are restricted to highway use by current interpretations of the California Constitution. A challenge to this interpretation is not recommended.

  4. Gas tax revenues may be invested in roadway segments of freight infrastructure projects.

RECOMMENDATIONS

  1. An analytical system of guidelines should be developed to score and evaluate any proposed freight infrastructure project.

  2. Economic development must be included in these scoring guidelines.

  3. Public agencies should maintain political contacts in order to control the political short-circuits of the planning process.

  4. The California Department of Transportation should develop a Freight Improvement Priority System for the purpose of prioritizing all freight improvement projects.

ABOUT THE AUTHORS

Dan Evans

Dan Evans, J. D. has practiced business law for over 30 years. In addition to transportation law, his experience as an attorney includes the areas of corporate law, securities, and international investment law. More recently   Mr. Evans was a guest lecturer at the Law School of the University of Gerifswald , and a Fulbright Guest Professor at the new Europa-Universität-Viadrina in Frankfurt ( Oder ). Since 1995 Mr. Evans has served as visiting professor for international business law and international marketing at San José State University College of Business.

Evans received his Bachelor's Degree in International Relations from Pomona College and his Juris Doctor from the University of Southern California . He was the co-editor of The Confusing World of International Investments—Perspective on International Securities published in 1975 by World Business Institute of Pepperdine University and Current Legal Aspects of Foreign Investment in the United States published in 1976 by the American Bar Association.

Norman Kelley

Norman Kelley has over thirty years of domestic and international executive experience in both the public and private sectors. He is familiar with all aspects of governmental policy decision making, including capital project development, optimizing administrative and technical production, and translating conceptual policies into workable, practical products. He most recently performed consultative services to streamline a number of technical, administrative, and legal governmental processes.

TECHNICAL

MTI Report 99-03
Analysis of Policy Issues Relating to Public Investment in Private Freight Infrastructure

Principal Investigator: Daniel Evans
Published: January 2000
Keywords: Freight transportation, legislation, Transportation policy, Investment, public policy.
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