Freight Issues in Surface Transportation Reauthorization

Summary: Economic growth and expanded global trade have led to substantial increases in goods movement over the past few decades. The growth in freight transportation demand, along with growing passenger demand, has caused congestion in many parts of the transportation system, making freight movements slower and less reliable. Because the condition and performance of freight infrastructure play a considerable role in the efficiency of the freight system, federal support of freight infrastructure investment is likely to be of significant congressional concern in the reauthorization of the surface transportation program. The program is currently authorized by the Fixing America's Surface Transportation Act (FAST Act; P.L. 114-94), which is scheduled to expire on September 30, 2020.

Summary: Until recently, the federal surface transportation program did not pay specific attention to freight movement. However, the two most recent surface transportation acts, the Moving Ahead for Progress in the 21st Century Act (MAP-21; P.L. 112-141), approved in 2012, and the FAST Act, passed in 2015, encouraged federal and state planning for freight transportation from a multimodal perspective. The FAST Act also directed a portion of federal funds toward highway segments and other projects deemed most critical to freight movement. It did this by creating two new programs: a discretionary grant program administered by the Secretary of Transportation and a formula program for distributing federal funds to states.

Summary: Trucks continue to move the bulk of freight in the United States. Freight tonnage is projected to increase by an average of 1.4% per year through 2045, according to the Department of Transportation (DOT), and trucks are projected to carry the largest share of the additional freight traffic. Much of the growth in truck traffic has occurred in urban areas, and this trend is expected to continue. Consequently, most truck congestion occurs in urban areas, and comparatively few highway miles are responsible for a disproportionately large share of congestion costs. Highway infrastructure decisions are mainly made by the states, but federal fuel tax revenue is an important source of funds for the projects states pursue. With fuel taxes no longer able to fully cover the cost of existing highway infrastructure programs, Congress has considered strategies to raise new revenue and to make more effective use of federal dollars to facilitate the movement of freight. The trucking industry has favored raising additional revenue by increasing fuel taxes and has generally opposed greater use of highway tolls out of concern that these may disproportionately affect truckers. DOT studies have shown that the structure of motor fuel taxes provides a subsidy to heavily loaded trucks at the expense of passenger vehicles.

Summary: One significant question is whether additional funding for freight-related infrastructure should be distributed to the states by formula or on a discretionary basis. Federal projections indicate that a relatively small number of Interstate Highway segments and interchanges are likely to face large increases in truck traffic by 2045. However, individual states may have limited incentives to use their federal formula funds to alleviate increasing congestion in those locations, as many of the trucks affected may be passing through rather than serving local businesses. Discretionary grants may be more effective in providing large amounts of federal funding for very costly freight-related projects, particularly those requiring interstate cooperation, but could also lead to fewer projects receiving federal funds.

Summary: Besides appropriating funds for freight infrastructure, Congress has created programs to support research and development of new transportation technologies. Autonomous and connected vehicle technologies have potential applications in the freight sector, but many federal regulations are written assuming that a single person is in full control of a vehicle at all times. Congress has considered, but not advanced, proposals to update such regulations. Industry is eager to explore the cost-saving potential of new technology, so it will likely remain an issue for Congress.

Economic growth and expanded global trade have led to substantial increases in goods movement over the past few decades. The growth in freight transportation demand, along with growing passenger demand, has caused congestion in parts of the transportation system, making freight movements slower and less reliable. Because the condition and performance of freight infrastructure play a considerable role in the efficiency of the freight system, federal support of freight infrastructure investment is likely to be of significant congressional concern in the reauthorization of the surface transportation program. The program is currently authorized by the Fixing America's Surface Transportation Act (FAST Act; P.L. 114-94 ), which is scheduled to expire on September 30, 2020.

Congress has begun to place greater emphasis on freight over the course of recent reauthorizations, but national policy is still vague or silent on a number of issues. There are ongoing disagreements about the best way to accomplish improvements in freight system infrastructure—notably, how to raise new funds for investment, the magnitude of the amounts required, which projects to prioritize, and the role of the federal government in the planning process. Meanwhile, technological advances in mobility have prompted new questions about how best to accomplish the efficient movement of people and goods in a multimodal transportation system. Autonomous vehicle technology could have potential applications in the trucking industry, as could greater deployment of automation in the rail and port industries.

While the FAST Act concerns many aspects of surface transportation funding and safety policy, the focus of this report is on truck freight and that portion of the rail and port industries that transports truck trailers and containers (intermodal freight). This report does not address operational issues that also may be of interest during reauthorization, such as hours of service and hazardous material transport safety. Moreover, this report does not contain in-depth discussion of environmental issues associated with freight movements, such as carbon emissions and climate change, or air and noise pollution, though these issues may be germane to the topics of funding and project selection.

The freight transportation system is a complex network of different types of transportation, known as modes, that carries everything from coal to small packages. It handles domestic shipments of a few miles as well as international shipments of thousands of miles. Often, a shipment of cargo will move across multiple modes before reaching its destination, using road, rail, air, pipeline, and/or maritime infrastructure in the process; when freight changes modes in this way, it is referred to as multimodal . Freight moved in stackable containers is easier to move among ships, trains, and trucks; this is referred to as intermodal freight.

Rail alone carries the second-largest share of domestic freight measured in ton-miles, but only a small proportion by value ( Table 1 ), reflecting the fact that major rail cargos such as coal and grain have low ratios of value to weight. Trucks carry by far the most freight by value but a smaller proportion of ton-miles, as the average truck shipment travels a much shorter distance than the average rail shipment. Air transportation is a relatively minor mode for domestic shipments because it is expensive to ship goods by air. The proportions for international shipments to and from the United States are quite different from those for domestic shipments, with about three-quarters of goods, measured by weight, arriving or departing by ship. Measured by value, nearly one-fourth of U.S. international freight moves by air.

Trucks operate over a four-million-mile system of public access highways and streets. Of this, approximately 209,000 miles has been designated by the Federal Highway Administration (FHWA) as the "National Truck Network," a network of highways able to accommodate large trucks. This network includes the Interstate Highway system, which extends approximately 47,000 miles, plus principal arterial highways designated by the states. Trucks account for about 9% of vehicle miles traveled on the entire U.S. road system, but 15% of vehicle miles on Interstates and 24% on rural Interstates.

The railroad sector is dominated by seven large railroads, or Class I carriers, that generally focus on long-distance moves. The Class I railroads are complemented by more than 500 short line and regional railroads (Class II and Class III, respectively) that tend to haul freight shorter distances, provide connections between the Class I networks, or connect the Class I networks and ports. For the most part, railroad infrastructure, including track and associated structures and the land they occupy, is owned by the carriers themselves. The U.S. railroad network consists of approximately 140,000 miles of railroad, of which approximately 94,000 miles could be considered transcontinental or mainline railroad and 46,000 miles could be considered regional or local railroad. In some places, freight trains share space with intercity and commuter passenger trains.

Overall, freight traffic has recovered to the level prior to the 2007-2009 recession, but the modal composition of freight traffic is now quite different ( Figure 1 ). While truck tonnage has risen steadily and is now 33% higher than a decade ago, rail tonnage dropped sharply in 2008-2009 and has recovered more slowly. Increased intermodal traffic has offset declining volumes of coal and crude oil shipped by rail. Barge traffic on inland waterways recovered from recession lows in 2010, but since then has grown only slightly.

The steady growth in truck traffic, which includes smaller delivery trucks in addition to tractor-trailer "combination" trucks, has been linked to the growth of e-commerce establishments and just-in-time delivery services. As companies push to offer quicker delivery, they are opening new distribution centers in urban areas. These centers depend on large trucks to replenish inventory, and on small trucks to quickly deliver products to consumers.

Coal has been the most significant revenue source for the rail industry aside from intermodal traffic, and the decline in rail traffic reflects a general decline in demand for coal. Since 2011, the volume of coal carried by railroads has declined significantly despite rebounding slightly in 2017. This decline has been mitigated somewhat by an increase in intermodal traffic, and by more short-lived booms in other commodity groups. A spike in oil production and a shortage of pipeline capacity contributed to a bump in rail shipments from 2012 to 2016, but the quantity of oil moved by rail has since receded. Crude industrial sand, which includes sand used in hydraulic fracturing of oil and gas wells, saw a similar rise and fall in that period before spiking again in 2017.

Tonnage carried by trucks as a single mode has increased a modest 2% over the past decade. Meanwhile, tonnage moving only by rail has decreased 16%, due largely to a significant decline in coal shipments. Most of the growth in surface freight has occurred in intermodal tonnage (mainly involving combined truck/rail shipment), which has increased by 188% in 10 years.

The U.S. Department of Transportation (DOT) forecasts that domestic freight tonnage will increase by an average of about 1.4% per year from 2015 to 2045. In that span, truck tonnage is projected to increase by 38%, rail tonnage by 20%, and multimodal tonnage (of which intermodal is a subset) by 120%. Overall, this would represent an acceleration compared to recent trends. Freight tonnage in the United States grew at an average annual rate of 1.1% from 1993 to 2017, with truck tonnage growing slightly faster (1.4%) in that period. By contrast, DOT forecasts truck tonnage to grow more slowly than total tonnage over the coming decades.

River and coastal ports are hubs for considerable truck and rail activity, making the road and rail links to these facilities an important component of surface transportation infrastructure. Over the last two decades, barge traffic on inland rivers has been flat or declining. Meanwhile, the volume of containerized cargo grew rapidly from 17.9 million twenty-foot equivalent units (TEUs) in 2000 to 32.0 million TEUs in 2015. Container traffic declined during the 2007-2009 recession but has since recovered. In 2018 it was approximately 40% above its 2009 low.

The Ports of Los Angeles and Long Beach together handled 29.9% of all container traffic at ocean ports in the United States in 2017. Container trade at these two ports increased by 64% between 2000 and 2017, but was outpaced by the growth in container trade for the entire United States, which grew by 106%. Congress has requested studies on the condition of road and rail links to ports (also known as intermodal connectors ) in past surface transportation reauthorization legislation. The most recent study by DOT indicates that of the approximately 1,484 miles of freight intermodal connectors in the National Highway System, roughly half are two lanes wide.

Certain port projects are eligible for funding from surface transportation programs, including the BUILD and INFRA competitive grant programs discussed later in this report, but eligibility reflects a primary concern with the intermodal connections to these facilities. Most capital programs to benefit marine transportation, such as harbor dredging and lock repair, are undertaken by other federal agencies, notably the U.S. Army Corps of Engineers, rather than by DOT. Historically, these programs have not been included in surface transportation legislation.

Evolution of National Freight Transportation Policy

Until recently, there was no separate federal freight transportation program, but instead a relatively loose collection of freight-related programs that were embedded in a larger surface transportation program aimed at supporting both passenger and freight mobility. Historically, most highway funding has been distributed to the states via several large "core" formula programs, leaving states to decide how to use their allocated funds. Other, smaller programs provide grant awards for more targeted projects. The Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA; P.L. 109-59 ), which was enacted in 2005 and expired in 2012 after a series of extensions, funded over 70 highway programs. Almost all of these have now been combined into a handful of formula programs with broader objectives.

Core surface transportation program funds are distributed to states by formula, but freight transportation is often interstate in nature. The funds received by a single state may not be sufficient to construct the infrastructure necessary to relieve congestion at freight bottlenecks whose effects are felt several states away. Recognizing this, Congress created the Projects of National and Regional Significance program within SAFETEA as a way of directing federal funds to large projects with wide-ranging benefits. All funds made available through the program were earmarked in the legislation and were not available for other projects.

The American Recovery and Reinvestment Act of 2009 ( P.L. 111-5 ) created a discretionary grant program for transportation infrastructure investments, originally known as the Transportation Investment Generating Economic Recovery (TIGER) program and now called the Better Utilizing Investments to Leverage Development (BUILD) program. BUILD grants are distributed at the discretion of the Secretary of Transportation, subject to a set-aside for rural areas and limits on maximum and minimum grant size. The program is not authorized in law, but has received funding in appropriations bills every year since its introduction in FY2009 through FY2018. Since its inception, roughly one-quarter of grants have gone to freight-specific projects, and almost half to road projects that could benefit freight as well as passengers (see Table 2 ).

Moving Ahead for Progress in the 21st Century (MAP-21) Act

The successor to SAFETEA, the Moving Ahead for Progress in the 21 st Century Act (MAP-21; P.L. 112-141 ) of 2012, contained the first articulation of a national freight policy. Whether the federal government should make a more focused effort toward funding projects that benefit freight movement was a major policy question in the reauthorization debate. The Senate version of MAP-21 ( S. 1813 , 112 th Congress) would have created a separate program for funding freight-related projects, but this was not enacted. Instead, MAP-21 allowed a larger share of project costs to come from federal sources if a project could be demonstrated to improve the efficient movement of freight: the state cost share for freight-specific projects on Interstate Highways was reduced from 10% to 5% and on other highways from 20% to 10%.

MAP-21 enacted planning provisions related to identifying infrastructure components critical to freight transport. It directed DOT to designate a "Primary Freight Network" (PFN) consisting of 27,000 centerline miles of existing roadways (independent of the number of lanes), based primarily on freight volume and in consultation with shippers and carriers. The Secretary of Transportation could designate up to an additional 3,000 centerline miles of existing or planned roads as part of the PFN based on their future importance to freight movement. States could designate "critical rural freight corridors" based on the density of truck traffic if they connect the PFN or Interstate System with sufficiently busy freight terminals. The act designated a larger National Freight Network to include the critical rural freight corridors, portions of the Interstate System not designated as parts of the PFN, and roads in the PFN. DOT, in consultation with partners and stakeholders, was directed to develop a National Freight Strategic Plan that identifies highway bottlenecks and to report every two years on the condition and performance of the National Freight Network.

Each state was encouraged, but not required, to create a state freight advisory committee comprising representatives of freight interests and a state freight plan "that provides a comprehensive plan for the immediate and long-range planning activities and investments of the State with respect to freight." Among other things, a state's freight plan was to describe how it will improve the ability of the state to meet the national freight goals established by DOT.

Fixing America's Surface Transportation (FAST) Act

National freight policy was updated significantly by the FAST Act. The act repealed the Primary Freight Network and National Freight Networks established by MAP-21. It instead directed DOT to create a National Freight Strategic Plan and identify the components of a National Highway Freight Network, consisting only of highways, and a National Multimodal Freight Network, which must include railroads, marine highways, and the infrastructure necessary to connect these networks to one another in order to facilitate the movement of containerized freight. The multimodal network was to be officially designated within a year of enactment. However, while DOT sought public comment on an interim network and released a draft strategic plan, it has not taken final action. No public comment was sought on the National Highway Freight Network, as the FAST Act defined it by expanding upon the Primary Freight Network already defined by MAP-21.

The FAST Act also directed a portion of federal funds toward highway segments and other projects deemed most critical to freight movement. It did this by creating a new discretionary grant program and a new formula program for distributing federal funds to states. The stated goals of these two programs are very similar: to increase U.S. global economic competitiveness, reduce congestion and bottlenecks, increase the efficiency and reliability of the highway network, and reduce the environmental impact of freight movement.

The National Highway Freight Program created in the FAST Act is a formula program with funding of $1.1 billion in FY2016 rising to $1.5 billion in FY2020. Funds are administered by state departments of transportation and must be directed toward highway components designated as especially important to freight movement. These components include a Primary Highway Freight Network (PHFN) designated by the Federal Highway Administration, "critical rural freight corridors" designated by the states, and "critical urban freight corridors" designated by either states or metropolitan planning organizations, depending on the population size of an urban area. These components, along with other Interstate Highway segments, comprise the National Highway Freight Network.

States containing 2% or more of the total mileage of the PHFN are required to spend their program funds on the PHFN, critical rural, or critical urban freight corridors. Other states may spend their program funds on any part of the larger National Highway Freight Network. Up to 10% of a state's apportionment can be directed toward projects within rail or port terminals "that provide surface transportation infrastructure necessary to facilitate direct intermodal interchange, transfer, and access into or out of the facility."

Nationally Significant Freight and Highway Projects Program (FASTLANE/INFRA)

The Nationally Significant Freight and Highway Projects Program is a discretionary grant program with funding of $800 million in FY2016 rising to $1 billion in FY2020. It was initially known as the Fostering Advancements in Shipping and Transportation for the Long-Term Achievement of National Efficiencies (FASTLANE) program, but is now called Infrastructure for Rebuilding America (INFRA). Public entities are eligible to apply, including states and groups of states, metropolitan planning organizations, local governments or groups of local governments, political subdivisions of states or local governments, transportation-related authorities such as port authorities, and tribal governments. Eligible uses of funds include highway projects, railway-highway grade crossing projects, connections to ports and intermodal freight facilities, and elements of private freight rail projects that provide public benefits. However, grants for freight intermodal or freight rail projects are capped at $500 million over the life of the program. A grant is to provide not more than 60% of the cost of a project, but other federal assistance can be used to provide up to a total federal share of 80% (i.e., the local cost share required must be at least 20%).

This grant program is designed primarily for relatively high-cost projects; each grant awarded must be at least $25 million, and the project must have eligible costs amounting to at least $100 million or a significant share of a state's highway funding apportionment the previous fiscal year (e.g., 30% in the case of a project within a single state). However, 10% of grant funds are reserved for smaller projects with minimum grants of $5 million. DOT is to consider the dispersion of projects geographically, including between rural and urban communities. Congress has 60 days to disapprove a DOT grant approval.

While not an explicit focus of federal freight programs, it can be argued that projects that do not serve freight directly can reduce traffic in areas where infrastructure is shared between passengers and freight, freeing up roadway capacity and alleviating some impacts of congestion. For example, reconstruction of the Memorial Bridge in Washington, DC, was partially funded by a $90 million FASTLANE grant in 2016. This bridge is not currently open to trucks, but supporters of the project argued that returning the infrastructure to a state of good repair for use by passenger vehicles would relieve congestion on other crossings of the Potomac River used by freight carriers.

Implementation of Provisions in MAP-21 and FAST

In October 2015, DOT published a draft National Freight Strategic Plan, fulfilling one of the requirements of MAP-21 (three months after the deadline initially set by law). A comment period would have required a final version of that plan to be released by December 2016, but the passage of the FAST Act in the interim updated the requirements of the National Freight Strategic Plan with a new deadline of December 2017; DOT opted to complete the document required by the FAST Act rather than continue updating the MAP-21 strategic plan, now superseded. As of year-end 2018, this requirement of the FAST Act had not been met.

The Federal Highway Administration Conditions and Performance Report released in May 2018 was the first to fulfill the requirement of Section 1116 of the FAST Act to report specifically on the conditions of the National Highway Freight Network. This report found that in 2014, 77% of network mileage had "good" pavement, while 19% of miles were graded "fair" and the remaining 4% "poor." The report also found that there are approximately 57,600 bridges on the network, of which 4.3% are structurally deficient. The report contains measures of congestion at the 25 most congested points in the freight network, and for key freight corridors, generally dealing with speed and trip times. Since this is the first report to contain these figures, it can be used as a baseline to assess whether the condition and functioning of the network are improving over time.

The FAST Act also required DOT to report on the conditions and performance of the National Multimodal Freight Network, but as this network has not yet been defined, no report has been issued.

The federal government supports surface transportation projects mostly through funds distributed to the states. Financing initiatives, on the other hand, are arrangements that rely primarily on borrowing. The federal government supports freight infrastructure financing arrangements mainly through direct loans, loan guarantees, and tax preferences for certain types of bonds. The FAST Act created a new Surface Transportation Infrastructure Finance Bureau to consolidate some of the support functions for several of these programs.

The Transportation Infrastructure Finance and Innovation Act (TIFIA) program provides loans for highway projects, public or private freight rail facilities providing intermodal transfer, infrastructure providing access to intermodal freight facilities, and surface transportation improvements facilitating intermodal transfers or improved access at port terminals. Since FY1999, according to DOT, TIFIA financing for all types of projects amounted to $30.1 billion. This assistance was provided to 77 projects that have a total cost of $108.4 billion. Highway and freight projects account for approximately 60% of TIFIA assistance. The largest project specifically related to freight, receiving a $341 million TIFIA loan, is the Port of Miami Tunnel, which opened August 3, 2014, to improve truck access to and from the port.

The FAST Act provided a total of $1.435 billion for TIFIA loans, including $300 million in each of FY2019 and FY2020. Because the government expects most of the loans to be repaid, the program's funding need only cover the subsidy cost of credit assistance and administrative costs. According to the Federal Credit Reform Act of 1990, Title XIII, Subtitle B of the Omnibus Budget Reconciliation Act of 1990 ( P.L. 101-508 ), the subsidy cost is "the estimated long-term cost to the government of a direct loan or a loan guarantee, calculated on a net present value basis, excluding administrative costs." Consequently, the loan capacity of the TIFIA program is much larger than the budget authority available. DOT estimates that since each dollar of funding has historically allowed TIFIA to provide $14 in credit assistance, FAST Act funding levels could allow for up to $20 billion in total credit assistance over the life of the law.

The Railroad Rehabilitation and Improvement Financing (RRIF) program provides loans and loan guarantees for rail infrastructure and equipment through the Federal Railroad Administration up to a total of $35 billion of unpaid principal, with $7 billion reserved for Class II and III railroads. Direct loans can be up to 100% of a project's cost and for a maximum term of 35 years. Interest is charged at the rate paid by the U.S. Treasury to issue bonds of a similar maturity. Eligible borrowers are state and local governments, government-sponsored authorities and corporations, railroads, joint ventures that include at least one railroad, freight rail shippers served by one railroad wanting to connect a facility to a second railroad, and interstate compacts.

The RRIF program does not receive an appropriation from Congress, but allows project sponsors to pay the subsidy cost (termed the credit risk premium ). FRA evaluates applications for RRIF loans in terms of each applicant's creditworthiness and the value of collateral offered to secure the loan. These factors determine the credit risk premium.

Since 2002, there have been 40 loan agreements totaling $6.3 billion. Loans for freight railroads have ranged in size from $234 million, made to the Dakota Minnesota and Eastern Railroad in 2004, to $56,000, made in 2011 to C&J Railroad. Loans are typically relatively small; while the mean size of a loan is $142 million, the median is $21 million. While Class II and Class III freight operators have received most of the loans, the largest loans by value have gone to Amtrak or commuter railroads. A 2018 loan for $6 million to the Port of Everett, WA, the first extended to a port authority, is to be used to increase rail freight capacity.

Similar to the TIGER/BUILD program, many projects financed by TIFIA or RRIF loans may benefit passengers as well as freight.

In reauthorizing federal surface transportation programs, the primary freight-related issues before Congress are likely to be setting funding levels and, if necessary, raising revenue. Key questions include whether there should be a dedicated revenue stream for freight-related purposes and whether additional federal funding should be dedicated to freight projects selected by DOT rather than distributed by formula for spending at the discretion of the states.

One idea that has come before Congress is the creation of a new dedicated revenue stream for freight infrastructure, funded not by the motor fuels taxes that fund most federal surface transportation spending, but by a charge on goods movement. Under one such proposal, which was introduced in the 113 th , 114 th , and 115 th Congresses but not passed, a 1% tax would be assessed on the cost of freight shipments, with the revenue deposited in a new trust fund. A National Freight Program would then distribute these funds to states by formula for exclusive use for freight projects. A similar proposal would reserve 5% of the import duties collected by Customs and Border Patrol for freight purposes, directing the money into a Freight Trust Fund.

Proposals for taxes and fees on freight traffic have been raised before, including taxes based on trucking charges, a combined weight-distance or ton-mile tax such as those assessed already by certain states, and a tax on every maritime container imported and exported. Some proponents have advocated such fees specifically to raise money for freight-related projects, while others see them as a means of raising additional sums for general surface transportation use.

Existing law generally permits tolling of existing federal-aid highways only when they are rebuilt or replaced. In the case of Interstate Highways, the existing non-tolled lane count must be maintained, even if the facility is reconstructed (with exceptions for some toll roads that predate the Interstate System). In 1998, Congress created the Interstate System Reconstruction and Rehabilitation Pilot Program, allowing up to three states to toll Interstate segments in order to repair or rehabilitate them. One of the states accepted into the pilot program, Missouri, considered reconstructing 200 miles of Interstate 70 to include two truck-only lanes in each direction, with the entire project to be funded by tolls. The proposal encountered strong resistance in the state and is no longer being pursued. The other states participating in the pilot program, Virginia and North Carolina, also did not undertake proposed projects. The only other way an existing toll-free federal-aid highway (including non-tolled existing Interstate Highway lanes) may be converted is under the Value Pricing Pilot Program, a separate program established in 1991 that is designed primarily to mitigate congestion.

Congress has no direct control over the decision to impose highway tolls, which is up to the state or local entity that owns the infrastructure. It could, however, widen the circumstances under which states are permitted to toll Interstate Highways. Tolls could provide a source of funding for freight-related projects. Trucking interests generally oppose additional tolling, especially truck-only tolling, largely out of concern that political considerations will make it easier to raise tolls on trucks than on cars, and prefer higher motor fuels taxes to fund highway improvements. Studies have concluded that funding highways with motor fuels taxes provides trucks a cross-subsidy from automobile users' gas tax payments, due to the fact that the wear and tear caused by a heavy truck is much greater than that caused by a light vehicle.

Growth in freight and passenger transportation demand has brought an increase in truck and rail congestion. This congestion is particularly pronounced in major urban areas that contain important freight hubs such as ports, airports, border crossings, and rail yards. Many of the trucks delayed may be simply passing through the region rather than serving local shippers. As identified by DOT, the 25 most congested segments for trucks are generally urban Interstate Highway interchanges.

The most recent rankings published by DOT are based on 2014 data, so the impact of FAST Act programs on alleviating freight bottlenecks has not yet been assessed. However, a number of metropolitan areas have been at or near the top of the congestion list for several consecutive years. Five of the 25 most congested segments are in Houston and two are in each of Chicago, Atlanta, Los Angeles, Seattle, and Cincinnati. While the rankings of individual cities can fluctuate, 13 interchanges have been listed among the top 20 most congested for at least the last five years. The interchange of I-290 and I-90/94 in Chicago has ranked no better than second-worst since 2010, and the interchange of I-95 and SR 4 in Fort Lee, NJ, just outside New York City, has ranked no better than fourth-worst. A trucking industry study estimates that 86% of the total costs of congestion for trucks are concentrated on 17% of Interstate Highway mileage.

Similarly, the projected increase in highway freight traffic over the coming decades is not likely to be uniformly distributed across the nation's highways. Segments of the Interstate Highway system that are projected to see an increase of more than 10,000 trucks per day are spread out over parts of 15 states (see Figure 2 ). This is roughly equivalent to an additional truck traveling on a segment every 8.6 seconds. At the same time, many Interstate Highway segments are projected to have only small increases in truck traffic through 2045. The formula used to distribute most federal surface transportation funds to the states, including formula grants under the National Highway Freight Program, does not incorporate anticipated increases in truck traffic volume, meaning that the states expected to face the largest increases in truck traffic are not entitled to greater federal funding to address capacity constraints.

As Figure 2 indicates, the largest increases in truck traffic are expected to occur where Interstates intersect, but also along stretches of highway that connect busy nodes to each other. For example, a stretch of I-40 in Arkansas, connecting Little Rock to Memphis, TN, is one such segment. The nature of interstate commerce means that much of the truck traffic using this highway may simply be crossing Arkansas rather than moving freight to or from businesses in Arkansas. Although only Arkansas can use its federal highway funds to increase the capacity of the road, much of the benefit from such a project would likely accrue to other states, potentially limiting Arkansas's incentive to undertake the work.

One way for Congress to address this situation would be to adjust the methodology for calculating each state's apportionment of funds distributed under the National Highway Freight Program to consider freight-related metrics. The NHFP currently takes into account each state's share of National Highway Freight Network miles. The dedicated freight funding proposals introduced in the 113 th , 114 th , and 115 th Congresses, discussed above, would have incorporated several other measures intended to reflect a state's importance to the national freight system into the distribution formula. These would have included each state's share of the nation's ports, miles of freight rail track, cargo-handling airports, freight tonnage, and freight value relative to the national total.

Instead of adjusting formula programs to reflect freight-related needs, Congress has provided DOT with discretionary funds it can distribute for freight and other purposes through the INFRA and BUILD grant programs. These programs have proven to be popular and routinely receive applications for more funding than they can make available, but they have also been criticized for lacking transparent processes for project selection and for funding projects that may not have the highest estimated benefit/cost ratios. A 2017 Government Accountability Office report concluded that the INFRA (then known as FASTLANE) application review process allowed for broad discretion during certain team reviews, and that certain large projects were forwarded to the Secretary of Transportation for approval even if they did not initially meet certain statutory requirements.

A third approach would be to direct spending congressionally. From the start of the 112 th Congress in 2011 until the end of the 115 th Congress in January 2019, the House and Senate observed a ban on congressionally directed spending, also known as earmarking. The earmark ban effectively blocked Members of Congress from inserting language in authorization or appropriations bills to designate funds for specific freight-related projects, as frequently occurred prior to 2011. The ban was established through rules adopted by the House Republican Conference, the Senate Republican Conference, and the Senate Appropriations Committee. The Democratic Party majority that has controlled the House since January 2019 has not adopted similar language, and it is unclear whether earmarks are permitted in proposed legislation in that chamber.

Because freight infrastructure decisions are often made at the state or local level, it would be helpful for transportation planners to know the characteristics of the trucks traveling particular highway segments. Information about the industries served, the origin and destination of the shipments, and daily or seasonal variations in volume could help planners identify freight users that share an economic interest in mitigating a bottleneck or determine the feasibility of moving some of the traffic to off-peak hours or to other modes.

DOT's Bureau of Transportation Statistics and the Census Bureau conduct a survey of shippers every five years (the Commodity Flow Survey cited in Table 1 ) that provides information on outbound shipments. However, the sample size is not sufficient to provide reliable data for any specific urban area. The survey does not record through traffic, does not distinguish between imports and domestic freight, and occurs too infrequently to identify trends in freight patterns. The survey was designed more to provide a national picture of freight transport than to meet local or regional needs. In the FAST Act, Congress requested DOT to "... consider any improvements to existing freight flow data collection efforts that could reduce identified freight data gaps and deficiencies...." A policy decision for Congress is whether the federal government should be responsible for providing adequate freight data for state and local transportation planners.

Autonomous vehicle technology has potential applications in the freight sector. Autonomous trucks potentially offer significant freight transportation savings, as driver compensation represents either the largest or second-largest cost component for truck carriers, depending on the price of fuel. Fuel and driver compensation typically each account for about one-third of total operating costs. A truck driver may not drive for more than 11 hours per day under federal regulations, so it is difficult for carriers to improve labor productivity except by using larger trucks. Because driver error is the overwhelming cause of vehicle accidents, automation that reduces accident rates could improve public safety. Also, long-distance truck carriers experience exceptionally high driver turnover, and automation may reduce the need for drivers.

Despite the economic motivation, many in the trucking industry doubt whether driverless trucks are feasible in the foreseeable future given the current horizon of autonomous technology. An alternative scenario, at least for the next decade or two, is that truck driver jobs may come to resemble those of airline pilots in that drivers would spend part of their time monitoring an autonomous driving system rather than directly controlling the vehicle at all times. The skills of truck drivers when backing up an 18-wheeler to a warehouse or driving on local roads may be irreplaceable. In addition, some carriers may not be eager to forgo personal contact between drivers and customers, which may create sales opportunities.

The 115 th Congress debated federal policy regarding autonomous vehicle technology at length. H.R. 3388 , passed by the House, sought to establish new rules for testing and adoption of autonomous technology for cars and light trucks, but had no provisions pertaining to commercial vehicles. In the Senate, S. 1885 would have subjected commercial vehicles to the same safety evaluation requirements as private vehicles. Neither measure was enacted, but in debating these bills, Congress evaluated to what extent federal policy should assist autonomous vehicle technology by granting exemptions to certain federal requirements that otherwise would impede testing and demonstrations of these vehicles. Congress also considered preempting states from issuing certain regulations that are contrary to federal regulations or contrary to other states' regulations in order to avoid differing state requirements.

These provisions were relevant to a technology being tested in the trucking industry known as "platooning." In a platoon, trucks follow each other closely enough to save fuel by reducing drag at high speeds (around 10% for a following truck and 5% for the lead truck). All the trucks in a platoon have drivers, but only the driver of the lead truck is in full control of the vehicles. The drivers in the following trucks steer their vehicles, but their feet are off the accelerator and brake because truck speed is controlled by wireless communication from the lead truck. This communication reduces the braking response times of the following trucks and therefore allows trucks to follow closely enough to significantly reduce wind resistance. Absent federal legislation, it is possible that states would enact conflicting limits on platooning, reducing its utility in interstate commerce.

Congress may also be asked to support a technology known as Hyperloop, which proposes the use of pods or sleds to transport containers in vacuum-sealed tubes at high speed. While this technology has gone through some testing, it has not yet been commercially deployed. Hyperloop projects are not currently eligible for funding under surface transportation formula grant programs or any of DOT's discretionary grant programs, which are limited to road, rail, and some port projects.

There is no federal program dedicated solely to research and development of freight-specific technology. The federal government supports research and development of some surface transportation technologies through the Highway Research and Development Program (23 U.S.C. §503(b)) and the Technology and Innovation Deployment Program (23 U.S.C. §503(c)). The FAST Act currently authorizes $250 million and $135 million, respectively, for these programs through FY2020.


Grazing Fees: Overview and Issues

Summary: Charging fees for grazing private livestock on federal lands is a long-standing but contentious practice. Generally, livestock producers who use federal lands want to keep fees low, whereas conservation groups believe fees should be increased. The current formula for determining the grazing fee for lands managed by the Bureau of Land Management (BLM) and the Forest Service (FS) was established in the Public Rangelands Improvement Act of 1978 (PRIA) and continued by a 1986 executive order issued by President Reagan. The fee is based on grazing of a specified number of animals for one month, known as an animal unit month (AUM). The fee is set annually under a formula that uses a base value per AUM. The base value is adjusted by three factors—the lease rates for grazing on private lands, beef cattle prices, and the cost of livestock production.

Summary: For 2019, BLM and FS are charging a grazing fee of $1.35 per AUM. This fee is in effect from March 1, 2019, through February 29, 2020, and is the minimum allowed. Since 1981, when BLM and FS began charging the same grazing fee, the fee has ranged from $1.35 per AUM (for about half the years) to $2.31 per AUM (for 1981). The average fee during the period was $1.55 per AUM. In recent decades, grazing fee reform has occasionally been considered by Congress or proposed by the President, but no fee changes have been adopted.

Summary: The grazing fees collected by each agency essentially are divided between the agency, Treasury, and states/localities. The agency portion is deposited in a range betterment fund in the Treasury and is subject to appropriation by Congress. The agencies use these funds for on-the-ground activities, such as range rehabilitation and fence construction. Under law, BLM and FS allocate the remaining collections differently between the Treasury and states/localities.

Summary: Issues for Congress include whether to retain the current grazing fee or alter the charges for grazing on federal lands. The current BLM and FS grazing fee is generally lower than fees charged for grazing on state and private lands. Comparing the BLM and FS fee with state and private fees is complicated, due to factors including the purposes for which fees are charged, the quality of the resources on the lands being grazed, and whether the federal grazing fee alone or other nonfee costs are considered.

Summary: Unauthorized grazing occurs on BLM and FS lands in a variety of ways, including when cattle graze outside the allowed areas or seasons or in larger numbers than allowed under permit. In some cases, livestock owners have intentionally grazed cattle on federal land without getting a permit or paying the required fee. The agencies have responded at times by fining the owners, as well as by impounding and selling the trespassing cattle. BLM continues to seek a judicial resolution to a long-standing controversy involving cattle grazed by Cliven Bundy on lands in Nevada.

Summary: There have been efforts to end livestock grazing in specific areas through voluntary retirement of permits and leases and subsequent closure of the allotments to grazing. Congress has enacted some such proposals. Congress also has considered measures to reduce or end grazing in specified states or to allow a maximum number of permits to be waived yearly. Among other reasons, such measures have been supported to protect range resources but opposed as diminishing ranching operations.

Summary: Another issue involves expiring grazing permits. Both BLM and FS have a backlog of permits needing evaluation for renewal. To allow for continuity in grazing operations, P.L. 113-291 made permanent the automatic renewal (until the evaluation process is complete) of permits and leases that expire or are transferred. The law provided that the issuance of a grazing permit "may" be categorically excluded from environmental review under the National Environmental Policy Act (NEPA) under certain conditions. NEPA categorical exclusions have been controversial.

Charging fees for grazing private livestock on federal lands is statutorily authorized and has been the policy of the Forest Service (FS, Department of Agriculture) since 1906, and of the Bureau of Land Management (BLM, Department of the Interior) since 1936. Today, fees are charged for grazing on BLM and FS land basically under a fee formula established in the Public Rangelands Improvement Act of 1978 (PRIA) and continued administratively.

BLM manages a total of 245.7 million acres, primarily in the West. Of total BLM land, 154.1 million acres were available for livestock grazing in FY2017. The acreage used for grazing during 2017 was 138.7 million acres. FS manages a total of 192.9 million acres. Although this land is predominantly in the West, FS manages more than half of all federal lands in the East. Of total FS land, more than 93 million acres were available for grazing in FY2017, with 74 million used for livestock grazing. For both agencies, the acreage available for livestock grazing reflects lands within grazing allotments. However, the acreage in those allotments that is capable of forage production is substantially less, according to the FS, because some lands lack forage (e.g., are forested or contain rockfalls). In addition, for both agencies, acreage used for grazing is less than the acreage available due to voluntary nonuse for economic reasons, resource protection needs, and forage depletion caused by drought or fire, among other reasons. Because BLM and FS are multiple-use agencies, lands available for livestock grazing generally are also available for other purposes.

On BLM rangelands, in FY2017, there were 16,357 operators authorized to graze livestock, and they held 17,886 grazing permits and leases. Under these permits and leases, a maximum of 12,333,568 animal unit months (AUMs) of grazing potentially could have been authorized for use. Instead, 8,820,617 AUMs were authorized for use. BLM defines an AUM, for fee purposes, as a month's use and occupancy of the range by one animal unit, which includes one yearling, one cow and her calf, one horse, or five sheep or goats.

On FS rangelands, in FY2017, there were 5,725 permit holders permitted (i.e., allowed) to graze commercial livestock, with a total of 6,146 active permits. A maximum of 8,238,429 head-months (HD-MOs) of grazing were under permit and thus potentially could have been authorized for use. Instead, 6,803,425 HD-MOs were authorized for use. FS uses HD-MO as its unit of measurement for use and occupancy of FS lands. This measurement is nearly identical to AUM as used by BLM for fee purposes. Hereinafter, AUM is used to cover both HD-MO and AUM.

BLM and FS are charging a 2019 grazing fee of $1.35 per AUM. This annual fee is in effect from March 1, 2019, through February 29, 2020. This is the minimum fee allowed. (See " The Fee Formula " section, below.) BLM and FS typically spend more managing their grazing programs than they collect in grazing fees. For example, $79.0 million was appropriated to BLM for rangeland management in FY2017. Of that amount, $32.4 million was used for administration of livestock grazing, according to the agency. The remainder was used for other range activities, i ncluding weed management, habitat improvement, and water development. For the same fiscal year, BLM collected $18.3 million in grazing fees. The FY2017 appropriation for FS for grazing management was $56.9 million. The funds are used primarily for grazing permit administration and planning. FS collected $7.6 million in grazing fees during FY2017.

Grazing fees have been contentious since their introduction. Generally, livestock producers who use federal lands want to keep fees low. They assert that federal fees are not comparable to fees for leasing private rangelands because public lands often are less productive; must be shared with other public users; and often lack water, fencing, or other amenities, thereby increasing operating costs. They fear that fee increases may force many small and medium-sized ranchers out of business. Conservation groups generally assert that low fees contribute to overgrazing and deteriorated range conditions. Critics assert that low fees subsidize ranchers and contribute to budget shortfalls because federal fees are lower than private grazing land lease rates and do not cover the costs of range management. They further contend that, because some of the collected fees are used for range improvements, higher fees could enhance the productive potential and environmental quality of federal rangelands.

Current Grazing Fee Formula and Distribution of Receipts

The fee charged by BLM and FS is based on the grazing on federal rangelands of a specified number of animals for one month. PRIA establishes a policy of charging a grazing fee that is "equitable" and prevents economic disruption and harm to the western livestock industry. The law requires the Secretaries of Agriculture and the Interior to set a fee annually that is the estimated economic value of grazing to the livestock owner. The fee is to represent the fair market value of grazing, beginning with a 1966 base value of $1.23 per AUM. This value is adjusted for three factors based on costs in western states of (1) the rental charge for pasturing cattle on private rangelands, (2) the sales price of beef cattle, and (3) the cost of livestock production. Congress also established that the annual fee adjustment could not exceed 25% of the previous year's fee.

PRIA required a seven-year trial (1979-1985) of the formula while BLM and FS undertook a study to help Congress determine a permanent fee or fee formula. President Reagan issued Executive Order 12548 (February 14, 1986) to continue indefinitely the PRIA fee formula, and established the minimum fee of $1.35 per AUM.

The 2019 grazing fee of $1.35 per AUM represents a 4% decrease from the 2018 fee. Since 1981, BLM and FS have been charging the same fee, as shown in Table 1 . The fee has ranged from $1.35 per AUM (for about half of the years during the 39-year period) to $2.31 per AUM (for 1981). The fee averaged $1.55 per AUM over the period.

Fifty percent of grazing fees collected by each agency, or $10.0 million—whichever is greater—go to a range betterment fund in the Treasury. BLM and FS grazing receipts are deposited separately. Monies in the fund are subject to appropriations. BLM typically has requested and received an annual appropriation of $10.0 million for the fund. FS generally requests and receives an appropriation that is less than the $10.0 million minimum authorized in law. For instance, for FY2017, the agency received an appropriation of $4.2 million, roughly half the fees collected.

The agencies use the range betterment fund for range rehabilitation, protection, and improvement, including grass seeding and reseeding, fence construction, weed control, water development, and fish and wildlife habitat. Under law, one-half of the fund is to be used as directed by the Secretary of the Interior or of Agriculture, and the other half is authorized to be spent in the district, region, or forest that generated the fees, as the Secretary determines after consultation with user representatives. Agency regulations contain additional detail. For example, BLM regulations provide that half of the fund is to be allocated by the Secretary on a priority basis, and the rest is to be spent in the state and district where derived. Forest Service regulations provide that half of the monies are to be used in the national forest where derived, and the rest in the FS region where the forest is located. In general, FS returns all range betterment funds to the forest that generated them.

The agencies allocate the remaining 50% of the collections differently. For FS, 25% of the funds are deposited in the Treasury and 25% are subject to revenue-sharing requirements. The revenue-sharing payments are made to states, but the states do not retain any of the funds. The states pass the funds to specified local governmental entities for use at the county level (16 U.S.C. §500; see Figure 1 ). For BLM, states receive 12.5% of monies collected from lands defined in Section 3 of the Taylor Grazing Act and 37.5% is deposited in the Treasury. Section 3 lands are those within grazing districts for which BLM issues grazing permits. (See Figure 2 .) By contrast, states receive 50% of fees collected from BLM lands defined in Section 15 of the Taylor Grazing Act. Section 15 lands are those outside grazing districts for which BLM leases grazing allotments. (See Figure 3 .) For both agencies, any state share is to be used to benefit the counties that generated the receipts.

History of Fee Evaluation and Reform Attempts

PRIA directed the Interior and Agriculture Secretaries to report to Congress, by December 31, 1985, on the results of their evaluation of the fee formula and other grazing fee options and their recommendations for implementing a permanent grazing fee. The Secretaries' report included (1) a discussion of livestock production in the western United States; (2) an estimate of each agency's cost for implementing its grazing programs; (3) estimates of the market value for public rangeland grazing; (4) potential modifications to the PRIA formula; (5) alternative fee systems; and (6) economic effects of the fee system options on permittees. A 1992 revision of the report updated the appraised fair market value of grazing on federal rangelands, determined the costs of range management programs, and recalculated the PRIA base value through the application of economic indexes. The study results, criticized by some as using faulty evaluation methods, were not adopted.

In the 1990s, grazing fee reform was considered by Congress but no change was enacted. In particular, in the 104 th Congress (1995-1996), the Senate passed a bill to establish a new grazing fee formula and alter rangeland regulations. The formula was to be derived from the three-year average of the total gross value of production for beef and no longer indexed to operating costs and private land lease rates, as under PRIA. By one estimate, the measure would have resulted in an increase of about $0.50 per AUM. In the 105 th Congress (1997-1998), the House passed a bill with a fee formula based on a 12-year average of beef cattle production costs and revenues. The formula would have resulted in a 1997 fee of about $1.84 per AUM. Since the 1990s, it appears that no major bills to alter the grazing fee have passed the chambers.

Also in the 1990s—and in subsequent years—certain Presidents proposed changes to grazing fees and related policies. However, these changes were not adopted. As one example, in 1993, the Clinton Administration proposed an administrative increase in the fee and revisions of other grazing policies. The proposed fee formula started with a base value of $3.96 per AUM and was to be adjusted to reflect annual changes in private land lease rates in the West (called the Forage Value Index). The current PRIA formula is adjusted using multiple indexes. As a second example, for some fiscal years (e.g., FY2008), President George W. Bush proposed terminating the deposit of 50% of BLM's grazing fees into the range betterment fund. The fee collections would have gone instead to the General Fund of the U.S. Treasury. As a third example, for some fiscal years, President Obama proposed a grazing administrative fee for BLM and FS (e.g., of $1.00 per AUM in FY2015 and $2.50 per AUM in FY2017). These administrative fees would have been additional to the annual grazing fee, and the agencies would have used them to offset the cost of administering the livestock grazing programs.

There is ongoing debate about the appropriate grazing fee, with several key areas of contention. First, there are differences over which criteria should prevail in setting fees: fair market value; cost recovery (whereby the monies collected would cover the government's cost of running the program); sustaining ranching, or resource-based rural economies generally; or diversification of local economies. Second, there is disagreement over the validity of fair market value estimates for federal grazing because federal and private lands for leasing are not always directly comparable. Third, whether to have a uniform fee, or varied fees based on biological and economic conditions, is an area of debate. Fourth, there are diverse views on the environmental costs and benefits of grazing on federal lands and on the environmental impact of changes in grazing levels. Fifth, it is uncertain whether fee increases would reduce the number of cattle grazing on sensitive lands, such as riparian areas. Sixth, some environmentalists assert that the fee is not the main issue, but that all livestock grazing should be barred to protect federal lands.

As noted, there have been proposals to alter the grazing fee in recent years, but these proposals have not been adopted. For example, the Obama Administration's proposed grazing administration fee of $2.50 per AUM in 2017 would have been in addition to the annual fee of $2.11 per AUM. The monies would have been used for administering grazing to shift a portion of the costs to permit holders. Use of the fees would have been subject to appropriations. BLM estimated that the proposed administrative fee would have generated $16.5 million in FY2017, and FS estimated revenues of $15.0 million in FY2017. Livestock organizations, among others, opposed the proposal as an unnecessary and burdensome cost for the livestock industry. The Administration had included similar proposals in earlier budget requests; none of these proposals were enacted.

As another example, in 2005, several groups petitioned BLM and FS to raise the grazing fees, asserting that the fees did not reflect the fair market value of federal forage. When the agencies did not respond to the petition, the groups sued. In addition to asserting that BLM and FS unreasonably delayed response to their petition, the petitioners argued that the agencies were required to conduct a study under the National Environmental Policy Act (NEPA) to determine the environmental impacts of the current grazing fee rate. In January 2011, BLM and FS responded to the petition, denying the request for a fee increase, and the lawsuit was settled.

The BLM and FS grazing fee has generally been lower than fees charged for grazing on other federal lands as well as on state and private lands, as shown in studies over the past 15 years. For instance, a 2005 Government Accountability Office (GAO) study found that other federal agencies charged $0.29 to $112.50 per AUM in 2004, when the BLM and FS fee was $1.43 per AUM. While BLM and FS use a formula to set the grazing fee, most agencies charge a fee based on competitive methods or a market price for forage. Some seek to recover the costs of their grazing programs. GAO also reported that in 2004, state fees ranged from $1.35 to $80 per AUM and private fees ranged from $8 to $23 per AUM.

In 2010, when the BLM and FS fee was $1.35 per AUM, state grazing fees continued to show wide variation. They ranged from $2.28 per AUM for Arizona to $65-$150 per AUM for Texas. Moreover, some states did not base fees on AUMs, but rather had fees that were variable, were set by auction, were based on acreage of grazing, or were tied to the rate for grazing on private lands. Further, a 2018 study of state grazing fees in 11 western states continued to show widely differing fees, ranging from $3.50 per AUM for New Mexico to $65-$100 per AUM for Texas. Fees for these states were higher than the 2018 BLM and FS fee ($1.41 per AUM).

For grazing on private lands in 2017, the average monthly lease rate for lands in 16 western states was $23.40 per head. Fees ranged from $11.50 in Oklahoma to $39.00 in Nebraska. For comparison, in 2017, the BLM and FS grazing fee was $1.87 per AUM.

Comparing the BLM and FS grazing fee with state and private fees is complicated due to a number of factors. One factor is the varying purposes for which the fees are charged. Many states and private landowners seek market value for grazing. As noted above, PRIA established the BLM and FS fee in accordance with multiple purposes. They included preventing economic disruption and harm to the western livestock industry as well as being "equitable" and representing the fair market value of grazing. While the base fee originally reflected what was considered to be fair market value, the adjustments included in the formula have not resulted in fees comparable to state and private fees. According to GAO's 2005 study, "it is generally recognized that while the federal government does not receive a market price for its permits and leases, ranchers have paid a market price for their federal permits or leases—by paying (1) grazing fees; (2) nonfee grazing costs, including the costs of operating on federal lands, such as protecting threatened and endangered species (i.e., limiting grazing area or time); and (3) the capitalized permit value." Regarding the latter, the capitalized value of grazing permits typically is reflected in higher purchase prices that federal permit holders pay for their ranches.

A second factor is the quality of resources on the lands being grazed and the number and types of services provided by the landowners. For example, in its 2005 study, GAO noted advantages of grazing on private lands over federal lands. They included generally better forage and sources of water; services provided by private landowners, such as watering, fencing, feeding, veterinary care, and maintenance; the ability of lessees to sublease, thus generating revenue; and limited public access. With regard to state lands, the study indicated that states also typically limit public access to their lands, while the quality of forage and the availability of water are more comparable to federal lands.

A third factor is whether the federal grazing fee alone or other nonfee costs of operating on federal lands are considered in comparing federal and nonfederal costs. Some research suggests that ranchers might spend more to graze on federal lands than private lands when both fee and nonfee costs are considered. Nonfee costs relate to maintenance, herding, moving livestock, and lost animals, among other factors.

Unauthorized grazing occurs on BLM and FS lands in a variety of ways, including when cattle graze outside the allowed areas or seasons or in larger numbers than allowed under permit. According to GAO, the frequency and extent of unauthorized grazing is not known, because many cases are handled informally by agency staff. However, during the five-year period spanning 2010 to 2014, BLM and FS documented nearly 1,500 instances of unauthorized grazing, some of which involved the livestock owners having to pay penalties and, less frequently, livestock impoundment.

In many cases the unauthorized grazing is unintentional, but in other cases livestock owners have intentionally grazed cattle on federal land without getting a permit or paying the required fee. The livestock owners have claimed that they do not need to have permits or pay grazing fees for various reasons, such as that the land is owned by the public; that the land belongs to a tribe under a treaty; or that other rights, such as state water rights, extend to the accompanying forage.

A particularly long-standing controversy involves cattle grazed by Cliven Bundy in Nevada. After about two decades of pursuing administrative and judicial resolutions, in April 2014, BLM and the National Park Service began impounding Mr. Bundy's cattle on the grounds that he did not have authority to graze on certain federal lands and had not been paying grazing fees for more than 20 years. BLM estimated at that time that Mr. Bundy owed more than $1 million to the federal government (including grazing fees and trespassing fees) as a result of unauthorized grazing. However, the agencies ceased the impoundment of the cattle due to fears of confrontation between private citizens opposed to the roundup and federal law enforcement officials present during the impoundment. Mr. Bundy had not been paying grazing fees to the federal government primarily on the assertion that the lands do not belong to the United States but rather to the state of Nevada, and that his ancestors used the land before the federal government claimed ownership. However, courts determined that the United States owns the lands, enjoined Mr. Bundy from grazing livestock in these areas, and authorized the United States to impound cattle remaining in the trespass areas. BLM continues to seek to resolve the issue through the judicial process.

BLM estimated that during the two decades prior to the 2014 intended impoundment of Mr. Bundy's cattle, the agency had impounded cattle about 50 times. The operation to remove Mr. Bundy's cattle from federal lands in Nevada was the biggest removal effort, in terms of the number of cattle and the area involved, according to BLM.  It was also one of the most controversial, in part because of the number and role of law enforcement officials and the temporary closures of land to conduct the impoundment.

There have been efforts to end livestock grazing on certain federal lands through voluntary retirement of permits and leases and subsequent closure of the allotments to grazing. This practice is supported by those who view grazing as damaging to the environment, more costly than beneficial, and difficult to reconcile with other land uses. This practice is opposed by those who support ranching on the affected lands, fear a widespread effort to eliminate ranching as a way of life, or question the legality of the process. In some cases, supporters seek to have ranchers relinquish their permits to the government in exchange for compensation by third parties, particularly environmental groups. The third parties seek to acquire the permits through transfer, and advocate agency amendments to land use plans to permanently devote the grazing lands to other purposes, such as watershed conservation.

Legislation to authorize an end to grazing in particular areas through voluntary donations of the permits by the permit holders has been introduced in recent Congresses. These measures generally provide for the Secretary of the Interior and/or the Secretary of Agriculture to accept the donation of a permit, terminate the permit, and end grazing on the associated land (or reduce grazing where the donation involves a portion of the authorized grazing). Provisions authorizing such voluntary permit donations in specific areas have sometimes been enacted.

Other bills have sought to establish pilot programs for livestock operators to voluntarily relinquish permits and leases in particular states. Still other measures have proposed allowing the Secretary of the Interior and the Secretary of Agriculture to accept a certain number of waived permits, such as a maximum of 100 each year. Under both types of measures, when the Secretaries accept waived permits, they would permanently retire such permits and leases and end grazing on the affected allotments (or reduce grazing where the relinquishment involves a portion of the authorized grazing). Provisions authorizing such pilot programs for particular states or authorizing acceptance of a certain number of waived permits have not been enacted.

In earlier Congresses, legislation was introduced to buy out grazing permittees (or lessees) on federal lands generally or on particular allotments. Such legislation provided that permittees who voluntarily relinquished their permits would be compensated at a certain dollar value per AUM, generally significantly higher than the market rate. The allotments would have been permanently closed to grazing. Such legislation, which had been backed by the National Public Lands Grazing Campaign, was advocated to enhance resource protection, resolve conflicts between grazing and other land uses, provide economic options to permittees, and save money. According to proponents, while a buyout program would be costly if all permits were relinquished, it would save more than the cost over time. Opponents of buyout legislation include those who support grazing, others who fear the creation of a compensable property right in grazing permits, some who contend that it would be too costly, or still others who support different types of grazing reform.

The extension, renewal, transfer, and reissuance of grazing permits have been issues for Congress. Both BLM and FS have a backlog of permits needing evaluation for renewal. For instance, BLM's backlog has been increasing for more than a decade, with a backlog of more than 7,000 permit renewals as of September 30, 2017. To allow for continuity in grazing operations, Congress had enacted a series of temporary provisions of law allowing the terms and conditions of grazing permits to continue in effect until the agencies complete processing of a renewal. The most recent provision, P.L. 113-291 (Section 3023), made permanent the automatic renewal (until the renewal evaluation process is complete) of grazing permits and leases that expire or are transferred.

Agency decisions regarding permit issuance are subject to environmental review under the National Environmental Policy Act (NEPA). That environmental review would include the identification of any additional state, tribal, or federal environmental compliance requirements, such as the Endangered Species Act (ESA), that would apply to a permitted grazing operation. P.L. 113-291 provided that the issuance of a grazing permit "may" be categorically excluded from this NEPA requirement under certain conditions. Provisions regarding categorical exclusions have been controversial. Supporters assert that they will expedite the renewal process, foster certainty of grazing operations, and reduce agency workload and expenses. Opponents have expressed concern that categorical exclusions could result in insufficient environmental review and public comment to determine range conditions.