partment position with respect to such subsidies was 
summarized in its 1975 policy statement: *° 
(1) Federal subsidies are necessary in 
certain instances to serve important na- 
tional purposes. These include conserva- 
tion of energy, protection of the environ- 
ment, preserving the urban centers, 
relieving congestion in certain high density 
corridors, promoting rational land use in 
metropolitan areas, preventing ultimate 
nationalization of a vital service and main- 
taining access to remote areas; 
(2) Even when it has been determined 
that Federal subsidies are really necessary, 
they should be periodically reexamined; 
(3) Wherever possible the costs of Fed- 
eral support should be recovered by user 
charges; [Emphasis added.] 
(4) The effect of subsidies on competing 
modes should be considered and where 
there is an adverse effect the preference 
should be to reduce or eliminate the sub- 
sidy or adjust the user charges so that all 
users pay their full share; 
(5) There should be a preference for cap- 
ital rather than operating subsidies; how- 
ever, (a) care must be taken that capital 
subsidies do not induce excessive in- 
vestment, [and] (b) where State and local 
governments are involved in the decision- 
making and operation, they should bear a 
share of the total cost sufficient to ensure 
commitment to efficient management; and 
(6) Where the political process determines 
that a subsidy is essential to the national 
interest because a particular form of trans- 
portation serves these interests more effec- 
tively, we should be prepared to take the 
next step in order to get the full benefit 
of the subsidy. This involves compatible 
adjustments in the Federal support of 
competing modes. We should not be in- 
consistent by continuing to subsidize com- 
peting modes, thereby diverting traffic 
away from the preferred mode and de- 
creasing its chances of economic self- 
sufficiency. 
Although water carriers have vigorously opposed 
the concept of user charges in the past, it now ap- 
pears that at least some limited Federal tax on 
FR Department of Transportation, op. cit. note 15, pp. 
V-9 
commercial waterway users is likely in the near 
future. In exchange for support for funding the re- 
construction of Locks and Dam 26, which has been 
a major impediment to the free flow of water traffic 
on the upper Mississippi, water carrier groups have 
recently agreed to support a limited waterway user 
charge bill. Under the terms of H.R. 8309 a 4-cent 
per gallon fuel tax on commercial traffic using 26 
specified inland waterways would be imposed begin- 
ning October 1, 1979. The tax would rise to 6 cents 
per gallon in 1981. Although small in size and lim- 
ited in scope, this program would constitute a major 
breakthrough for waterway user charge proponents 
and would further the generai transportation user 
charge philosophy advanced by DOT. 
The growing role of DOT in U.S. port policy also 
arises from activities relating to intermodal facilita- 
tion. Developments in unitized and containerized 
cargo handling procedures have significantly affected 
not only water carriers, but Jand-based rail and truck 
operations as well. As the link between land and 
water modes, the port figures prominently in the 
successful and efficient operation of both. With 
major responsibilities relating to both rail and high- 
way transportation, DOT has a natural interest in 
assuring that ports do not unduly constrain the flow 
of commerce between modes. 
In addition, new land transportation opportunities 
(which have arisen from the ability to carry con- 
tainerized cargo over new routes using a combina- 
tion of land and water modes), have drawn the 
Department into the controversies relating to the 
so-called “landbridge” services which have emerged 
in recent years. Using container cargo handling pro- 
cedures, new land/water services have been devel- 
oped which have tended to alter traditional trading 
patterns. Ports which have lost traditional cargo to 
these new services have protested to the Federal 
Maritime Commission, arguing that allowing such 
services violates the principle of nondiscrimination 
among ports and that the rates being charged for 
portions of the service are not fully compensatory. 
Since its modal constituents have a definite stake in 
the outcome and because of its broad objective to 
improve U.S. transportation efficiency, DOT has 
been actively involved in these proceedings which 
have raised fundamental U.S. port policy issues. The 
“Jandbridge” issue will be considered again when 
specific attention is directed to Federal economic 
regulation of the U.S. water transport system. 
A final major role in port development was added 
to the Department’s responsibilities with enactment 
of the Deepwater Port Act of 1974. After consider- 
able Congressional debate as to which Federal agen- 
cies should license and regulate offshore deepwater 
ports, it was decided that the licensing authority 
would be vested in DOT and the task of regulating 
operations delegated to the Coast Guard. (Ports 
