The nation’s transportation infrastructure consists of over 4 million miles of public highways and roads; over 140,000 miles of national, regional, and local railroad networks; and 25,000 miles of commercially navigable waterways over which trillions of dollars worth of freight move annually. Public roads account for the majority of our nation’s transportation infrastructure mileage, reaching nearly every corner of the United States, and as a result, enable trucks to move the greatest amount of freight on a tonnage basis. However, tonnage as a measure does not capture important aspects of freight mobility across the modes, such as the distances over which freight moves. For making comparisons across the modes throughout this report, we use ton-miles as a unit of measurement. Ton- miles measure the amount of freight moved, as well as the distance over which it moves. Table 1 shows the estimates and sources for ton-miles of freight moved on each mode for 2007, the most recent year that data are available. Appendix I provides more detail on our methodology for determining ton-miles used for the estimates in this report. Freight shipments can also move by more than one mode before reaching their final destination. In particular, freight moved by rail or waterways may also be moved by truck at some point to reach its final destination, as rail and waterways may not reach locations that can be reached by truck. On the other hand, trains and waterborne vessels typically have far greater capacity than does a single freight truck, so rail and waterways generally move large volumes of commodities (e.g., coal and grain) long distances that would not be feasible by truck alone. Modes often work as complements to complete a shipment. For example, a ton of grain may move from a grain elevator by rail, be transported to a port on an inland waterway, move by barge to another port on an inland waterway, and then be distributed by truck to its final destinations. A particular type of shipment known as “intermodal” is designed to move on multiple modes, using a container that can be moved from a truck to a train to a ship without handling any of the freight itself when changing modes. Such freight movements are growing and FHWA forecasts that intermodal freight will continue to increase in the future. In some cases, the modes may be substitutable for certain types of trips and will compete directly for shipments or for segments of shipments based on price and performance. For example, long-haul trucking and rail shipments may be substitutable, or short sea shipping legs can be a substitute for rail or truck shipments along coastal routes. The extent to which mode-shifting is possible in the United States is difficult to estimate and will largely be determined by the types of parameters discussed above, such as whether shipping is feasible by another mode (e.g., rail lines or waterways may not be available for some routes), or practical (e.g., sending heavy coal shipments by truck or time-sensitive shipments by rail or waterways are not practical), and by the relative prices and other service characteristics of shipping by different modes. Figure 1 geographically depicts the national freight transportation infrastructure and tonnage of freight activity by mode, which provides a sense of the physical reach of each modal network. Federal, state, and local governments each play a crucial role in planning, designing, constructing, and maintaining the highways and waterways infrastructure, as well as raising revenues for the highway and waterway portions of the surface transportation system. Governments also play a role in regulating the freight industry, which we address in the next section. FHWA, state departments of transportation, and local transportation organizations plan and fund new highway infrastructure and maintain existing highways. The Corps has the responsibility for construction, operation, and maintenance of the nation’s waterway system. There is limited public sector funding for rail infrastructure. All Class I railroads, which comprise about 91 percent of all railroad revenues, are privately owned and, as one of the most capital-intensive industries in the United States, make considerable investments in their own transportation networks. Highway infrastructure. The federal government authorized over $190 billion for the federal-aid highway program for fiscal years 2005 through 2009. A small portion of this funding was specifically identified for surface freight transportation projects, including $25 million for the freight Truck Parking Facilities program and $30 million for the Freight Intermodal Distribution Pilot Grant program. For the most part, however, funding is provided for construction, reconstruction, restoration, and rehabilitation of roads that serve both freight and nonfreight users. Because the federal government’s expenditures for highways are based, in part, on the user pay principle, the government collects taxes and fees, which flow into the Highway Trust Fund—historically, the principal mechanism for funding federal highway programs. The fund’s highway account reported revenues of about $34 billion in fiscal year 2007—mainly from fuel (diesel and gasoline) tax that constitutes the majority of revenues from both freight and nonfreight users, as well as a variety of taxes imposed on trucks used in freight movement, including a truck and trailer sales tax, a heavy vehicle use tax, and a tire tax. In the following year, 2008, the Highway Trust Fund held insufficient amounts to sustain the authorized level of funding, and partly as a result, we placed it o To cover the shortfall, from fiscal years 200 list of high-risk programs. through 2010 Congress transferred a total of $34.5 billion in additional general revenues into the Highway Trust Fund, including $29.7 billion the highway account. Consequently, highway funding shifted aw the contributions of highway users, breaking the link between highway taxes paid and benefits received by users. The American Recovery and Reinvestment Act of 2009 (Recovery Act) further augmented transportation spending using general fund revenues of about $48 billion, of which about 57 percent was identified for federal highway projects. State and local governments also invest in public highways and roads. Within the federal-aid highway program, the federal government is responsible for funding 80 to 100 percent of highway project costs, and state and local governments are responsible for the remainder of the costs. State governments spent about $36 billion on capital outlays and about $21 billion more on maintenance of state-administered highways in 2007, while local governments spent approximately $69 billion on public roads. According to FHWA, state governments collected about $61 billion in user revenue, and local governments collected about $4 billion from a combination of fuel taxes, vehicle taxes and fees, and tolls. State and local governments supplement user revenue with general fund appropriations to support highway and road activities. Railroad infrastructure. The federal government has helped improve public safety on freight railroad infrastructure by providing limited funds to states for railroad-highway grade crossings and grants for relocating railroad tracks away from urban centers. Since January 1, 2007, freight railroads no longer pay federal fuel taxes, and there is no federal user fee specific to freight railroads. However, the federal government pays freight rail companies for intercity passenger train usage of the companies’ railroad tracks to the extent that these costs are not recovered through passenger fares. Recently, the Recovery Act funded two discretionary grant programs, the Transportation Investment Generating Economic Recovery (TIGER) grant program at $1.5 billion and the High-Speed Intercity Passenger Rail program at $8 billion, both of which can provide capital investment in railroad infrastructure. Additional funding for these programs were made available through the 2010 appropriations for DOT, nearly $600 million for TIGER grants and $2.5 billion for the high speed rail program. Because these programs are new, they are not included in the scope of our analysis of government spending on freight transportation. Little systematic information is available about state programs and financial assistance for the freight railroad industry. A 1997 survey of state departments of transportation found 10 states with dedicated freight railroad budgets exceeding $1 million annually. A few states (e.g., Alabama, North Dakota, and Tennessee) tax fuel for locomotives, but this revenue is not always used for rail projects. Railroads also pay state and local property taxes on their infrastructure; the nation’s major railroads paid $625 million in property taxes in 2008, according to the Association of American Railroads. Waterway infrastructure. The Corps, under its civil works program, is responsible for planning, constructing, operating, and maintaining the nation’s waterways used primarily by commercial vessels, as well as recreational and commercial passenger boats along some sections of the waterways. For fiscal year 2007, the Corps spent about $1.2 billion to operate and maintain the inland waterways, as well as the nation’s coastal harbors and channels (deep and shallow draft), and $686 million more for a variety of construction projects along inland waterways and coastal harbors and channels. For the same year, the Saint Lawrence Seaway Development Corporation budgeted about $33 million for operations and maintenance activities and $1 million for construction activities. Much of these funds are from the Harbor Maintenance Trust Fund. The general fund pays for all of the Corps’ operations and maintenance activities and one-half of the inland waterway construction costs for rehabilitating, modernizing, or replacing locks and dams. The other half comes from commercial waterway users that pay fuel taxes which flow into the Inland Waterways Trust Fund. The Inland Waterways Users Board and the National Academy of Public Administration have both reported on inefficiencies in the delivery of construction projects which have led to delays and cost escalation that have strained the trust fund and resulted in fewer and less-beneficial projects being funded. Some waterborne vessels are exempt from the fuel tax, including oceangoing ships, passenger boats, recreational craft, or government vessels. Receipts totaled about $101 million, including excise taxes and interest on investments, in fiscal year 2007.