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OpenMarket: Transportation and Infrastructure

  • STB Reauthorization Bill Threatens Rail Investment

    September 16, 2014 3:31 PM

    The U.S. Senate Committee on Commerce, Science, and Transportation has scheduled a markup for tomorrow afternoon of the Surface Transportation Board (STB) Reauthorization Act (S.2777). If enacted, the bill (specifically, Section 14) would threaten much needed investment in railroad infrastructure and reverse three decades of progress on railroad regulation.

    Senate Commerce chair Sen. Jay Rockefeller (D-W.V.), irresponsibly joined by Sen. John Thune (R-S.D.), has for years sought to reverse the partial deregulation enacted by Congress over 30 years ago. Since 1980, when the Staggers Act was enacted, average real freight rates have fallen by nearly 50 percent, railroad employee productivity and safety have dramatically improved, and the industry is now healthy and reinvesting more than $20 billion of its own funds every year.

    But hydraulic fracturing revolution has led crude oil shipments to skyrocket in recent years—since 2005, originated carloads of crude oil on major railroads have increased by more than 6,500%. With continued steady growth in intermodal movements, new capacity investments are needed to ensure America’s freight rail system remains the envy of the world. Unlike road and air carriers, the railroad industry owns and manages its own networks and uses its own funds for infrastructure investment.

    While singling out the private railroad industry for its alleged sins, Sen. Rockefeller has often championed subsidies for other modes of transportation. West Virginia’s highway system has long been one of the most federally subsidized in the nation, and Sen. Rockefeller never misses an opportunity to protect wasteful taxpayer subsidies of government-owned Amtrak and the completely misnamed and unessential Essential Air Service.

  • Regulator: True Ridesharing Illegal in California

    September 15, 2014 11:34 AM

    In the past, I’ve noted that carve-outs for ridesharing providers leaves more innovative and disruptive business models—particularly future automated services—illegal. While self-driving on-demand transportation services are still a ways off, California’s Public Utilities Commission last week sent letters to Uber, Lyft, and Sidecar warning them that operating commercial carpooling services they have proposed is illegal. (See the letter to Uber here.)

    This is not surprising. The narrow carve-out secured by Uber et al. in California, the “Transportation Network Company,” basically only authorizes taxi-like services that utilize digital hail networks across a distributed ownership model. True commercial ridesharing where co-passengers face individualized fares has long been illegal across the country.

  • User Fees Are Not Taxes: The Case for PFCs

    September 9, 2014 3:14 PM

    I've noted in the past the natural appeal passenger facility charges (PFCs) should have with fiscal conservatives. These are the user fees airports are allowed to charge passengers leaving their airports. Unlike federal Airport Improvement Program grants (funded via an array of taxes through the Airport and Airway Trust Fund) and local debt financing, PFCs offer a fair, transparent, and direct way for users to pay for the infrastructure investments from which they benefit. The monies collected by the airports are kept by the airports, who then use the funds to make Federal Aviation Administration-approved airport improvements. There are no Washington fiscal sleights of hand about which to worry and accountability remains a local matter.

    Unfortunately, Congress has capped the maximum PFC at $4.50, an amount unchanged since 2000. Since then, inflation has eroded that buying power by nearly half. Major airports are lobbying Congress to raise that cap, something we at CEI believe is badly needed. Illustrating that this is beyond ideology, the White House has also endorsed raising the PFC cap.

    Over at Human Events, CEI President Lawson Bader explains why those who attempt to conflate user fees with taxes (and raising the PFC cap with dreaded tax increases) are mistaken:

  • Michael Grunwald's High-Speed Rail Fantasies

    August 13, 2014 1:55 PM

    Perhaps the one thing Time magazine's Michael Grunwald loves more than drone assassinations of American citizens and dissident journalists is heavily subsidized passenger rail. This is not the first time I’ve criticized Grunwald’s sloppy high-speed rail reporting, and it probably won’t be the last.

    Over at Time, Grunwald takes issue with a recent New York Times story on President Obama's high-speed rail initiative. In particular, Grunwald attacks the Times article for referring to the over $10.5 billion in high-speed rail obligations as "$11 billion." Grunwald also argues that the Times' use of "spending" is an inaccurate way to describe the total obligations since actual outlays so far are only around $2.5 billion.

    First, rounding up from $10.5 billion to $11 billion does not work against the main thrust of the Times article. And note that if Grunwald wanted to be really accurate, he would have noted, as the federal government has, that “approximately $10.6 billion” has been made available for high-speed rail projects.

    Second, Grunwald doesn't seem to fully grasp budget lingo, yet spends much of his piece attacking the Times for supposedly misusing it. Now, "spending" is an imprecise term that could mean either apportionments, obligations, or outlays—or it could simply refer to the spending process, which involves apportionments, obligations, and outlays.

    Grunwald is equating “spending” to mean “outlays,” i.e., funds disbursed by the Treasury. But it is unclear that the Times was referring to anything beyond the apportionments and obligations. Indeed, these appear to be the two offending sentences in the Times article:

    High-speed rail was supposed to be President Obama’s signature transportation project, but despite the administration spending nearly $11 billion since 2009 to develop faster passenger trains, the projects have gone mostly nowhere and the United States still lags far behind Europe and China.

    And the second:

    Instead of putting the $11 billion directly into those projects, critics say, the administration made the mistake of parceling out the money to upgrade existing Amtrak service, which will allow trains to go no faster than 110 miles per hour.

    The second sentence implies the projects funded by the federal government have yet to be completed—“which will allow trains…” Anyone familiar with the budget process knows reimbursements are generally how the federal government involves itself in infrastructure investment. It works a little like this: a state applies for a grant, the federal agency approves a grant, the state builds whatever project is supported by the grant, the state is reimbursed by the federal government when the project is completed. This is why the Federal Railroad Administration wrote in its 2011 announcement regarding the availability of funds rejected by Florida for the Tampa-Orlando I-4 rail corridor that “[t]he funding provided under these cooperative agreements will be made available to grantees on a reimbursable basis.”

    While it is possible some readers of the Times believed, despite language to the contrary, that $11 billion is gone and all work funded by that money is completed, I am skeptical. The main point of the Times article is to compare President Obama’s lofty claims a few years ago to the reality today. Objectively, very little has happened and very little is likely to happen in terms of huge future high-speed rail investments necessary to support the president’s plan to give 80 percent of Americans access to high-speed rail by 2025, a project that would likely cost between $600 billion and $1 trillion to deliver. This simply isn’t going to happen and that's why the president's plan has been a complete failure.

  • Uber and Regulation: Pro-Business Is Not Pro-Market

    August 7, 2014 4:30 PM

    “Republicans love Uber. Young urban voters love Uber. And Republicans hope that means young voters can learn to love the GOP.”

    That was the opening line of Byron Tau and Kevin Robillard’s piece for Politico after the Republican Party rolled out a pro-Uber petition/prospecting campaign. Notice I say “pro-Uber” rather than “pro-market” or “free market.” Here’s the GOP appeal in full:

    Our country was built on the entrepreneurial spirit. Our cities deserve innovative and effective solutions without government getting in the way. 

    That’s what innovative businesses like Uber provide. And that’s why our cities need Uber. 

    But across the country, taxi unions and liberal government bureaucrats are setting up roadblocks, issuing strangling regulations and implementing unnecessary red tape to block Uber from doing business in their cities. 

    We must stand up for our free market principles, entrepreneurial spirit and economic freedom. 

    Show your support for Uber by signing the petition today.

    Despite the appeal to “free market principles,” the petition fails to mention actual free market policies beyond letting Uber operate lawfully. Furthermore, the notion that “liberal government bureaucrats” are only now “setting up roadblocks, issuing strangling regulations and implementing unnecessary red tape” in the transportation services market ignores many decades of stifling, anti-consumer regulation from these bureaucrats.

    I am a huge fan of the services offered by Uber, Lyft, and others. I understand their political strategy; I’d probably do the same thing in their shoes. But it is important to remember that being pro-business is not the same as being pro-market. As I’ve noted several times in the past, it appears the current legislative and regulatory advocacy coming from incumbent ridesharing providers is one of accommodation, not deregulation. Most unfortunately, many in the free market policy world also appear to be adopting this outlook as their own.

    This is most likely unintentional, as the current ridesharing policy debate in the free market movement is dominated by technology policy analysts or generalists, rather than transportation policy wonks. What this means is that many appear to be ignorant of the years of work by transport economists supporting the broad deregulation of the transportation services sector. As a result, legislative and regulatory proposals that merely grant Uber et al. a carve-out from existing regulations while piling on new rules—all while doing little to reduce barriers to entry for future firms with potentially very different shared-use mobility business models—are gaining support from some quarters of the free market movement. In advocating broad liberalization of transportation services, political realities dictate that compromises will sometimes be needed—particularly in the short run. But to accept accommodations and new regulations of Uber et al. as a victory for the free market is to miss the forest for the trees.

  • Public Still Favors Transportation User Fees over Tax Increases

    August 6, 2014 2:29 PM

    Voters in Missouri yesterday rejected a proposed constitutional amendment that would have imposed a 0.75 percent sales tax to fund transportation, with nearly 60 percent opposing a plan that would have increased annual state road funding by approximately $500 million. User fee advocates and progressive activists strongly opposed the measure, arguing that it was less efficient than direct and indirect user charges, and unfair for low-income urban residents to pay for the road use of wealthier households and businesses. These concerns have merit and supporters of sound transportation policy should applaud Missouri's voters.

    Yesterday also saw the release of new polling data from GfK and the Associated Press on questions related to transportation funding. While it has been noted that the public appears skeptical of the options presented (raise federal fuel excise tax rates, enter into public-private partnerships, devolve federal responsibility to the states, expand tolling), opposition to gas tax increases was the greatest, with 58 percent of respondents saying no. The full results are below:

    Here are some ways to pay for transportation projects, such as highway construction, improvements to roads and bridges, and maintenance of public roads. For each, please indicate if you support, oppose or neither support nor oppose it as a way to fund such projects. 


      Support Neither support 

    nor oppose
    Oppose Refused/

    Not answered
    1) Raise federal gasoline taxes from their current levels 

    of 18.4 cents per gallon of gasoline and 24.4 cents 

    per gallon of diesel fuel
    14 26 58 2
    2) Have private companies pay for construction of new 

    roads and bridges in exchange for the right to charge 

    17 35 46 2
    3) Turn the responsibility for paying for such projects 

    over to state and local governments
    30 46 22 3
    4) Replace federal gas and diesel taxes with taxes 

    based on how many miles a vehicle is driven
    20 37 40 3

    In addition, after being told by pollsters that 20 percent of driver tax revenue is currently diverted to mass transit, only about a quarter of respondents supported increasing transit's share of road user revenue.

  • New Report Highlights Driverless Car Urban Impact; Takes Techno-Dystopian Stance

    July 29, 2014 10:26 AM

    Earlier this month, Professor David Begg of Transport Times published a new report on automated transport technology focusing on the potential impacts on London. This is one of the first attempts to apply this new technology to urban areas in a systematic way.

    The U.S. Institute of Electrical Engineers has estimated that up to 75 percent of all vehicles will be autonomous by 2040. Automated vehicles are the future but they are also quickly becoming the present. The chief concern among proponents is the potential for burdensome government regulation. It is absolutely critical lawmakers and regulators do not stand in the way of automated vehicles.

    In his report, Begg explains, like many others have noted, an issue with this technology is who is to blame when a “robot car” is involved in a collision. He asks, “Who is liable? Is the driver to blame? Is the car maker to blame? Might ‘no fault’ legislation be needed to deal with his problem?”

    To be sure, there are very real issues surrounding products liability and insurance. But this is frankly a secondary concern when confronted with the overwhelming evidence that driverless transport will save thousands of lives annually, and so far there is little indication that common law evolution cannot handle the advent of automated vehicles. Yet Begg only mentions these potential accident reductions (over 90 percent of crashes are due to human error) after expressing his speculative concerns.

  • Uber, Regulation, and Free Markets

    July 23, 2014 1:56 PM

    Libertarians are justifiably excited about the prospects of ridesharing companies such as Uber and equally justified in their disgust of regulators intent on preventing the expansion of ridesharing services. However, supporting the regulatory accomodation strategy that Uber appears to have adopted and supporting free market policies are two very different things. Over at The Skeptical Libertarian, I attempt to briefly outline these concerns and urge libertarians to keep their eye on the prize: dramatic transportation services deregulation. Read it here.

  • Labor and Employment Scorecard: Pension Smoothing as a “Pay-For” in Highway and Transportation Funding Act

    July 16, 2014 4:57 PM

    On July 15, 2014, the Competitive Enterprise Institute (CEI) scored U.S. House of Representatives Roll Call Vote #414 on final passage of the Highway and Transportation Funding Act of 2014 (H.R. 5021), a bailout of the Highway Trust Fund and extension of the current federal transpiration law, MAP-21. 

    Critically, funding for this bill involved “pension smoothing,” a pernicious accounting gimmick that encourages deficit spending and increases the risk of pension insolvency.

    The vote is included in CEI’s Congressional Labor and Employment Scorecard, which can be found at CEI’s labor and employment policy project,

    The Competitive Enterprise Institute opposed final passage of the Highway and Transportation Funding Act of 2014 (H.R.5021):

  • One Year Later: TSA Still Flouting the Law on Body Scanners

    June 18, 2014 10:12 AM

    CEI Research Associate Matthew La Corte contributed to this article.

    The Transportation Security Administration (TSA) uses more than 700 full-body imaging scanners in 160 airports nationwide. In addition to the empirical evidence that shows they don’t actually make us safer and the questions on the intrusion of traveler privacy, the TSA is violating the federal Administrative Procedure Act. Next Tuesday, June 24, marks the one-year anniversary of the public comment deadline on body scanners and the TSA is still failing to comply with federal law and a federal court’s order.

    Why is this important to the average citizen? The TSA’s scanners inconvenience travelers, provide few if any safety benefits, and face high deployment costs. The limited data available suggest body scanners are a completely inappropriate airport security tool and should be scrapped in favor of more effective and less intrusive security measures. Given this, the TSA's thumbing its nose at the rule of law is especially troubling.

    The Administrative Procedure Act, which governs how federal agencies create regulations like airport body-scanners, states that agencies must publish a notice of proposed rulemaking in the Federal Register and solicit public comments before promulgating a rule. TSA failed to do this and has been flouting the law for years. 


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