By Mary Kerr (202) 225-6260
Leaders from the House Committee on Transportation and Infrastructure today denounced a plan by the Department of Transportation (DOT) to make detrimental changes to a program that is critical to railroad infrastructure investment and the construction sector of the nation’s economy.
In a letter sent to DOT Secretary Mary Peters today, Rep. James Oberstar (Minn.), T&I Committee Chairman, and Rep. Corrine Brown (Fla.), Chairwoman of the Subcommittee on Railroads, Pipelines, and Hazardous Materials, expressed concern the Department is considering adopting a final rule that will jeopardize the Railroad Rehabilitation and Improvement Financing (RRIF) program. The RRIF program is a key resource that enables States, local governments, government-sponsored authorities, rail freight shippers, and railroads to make much-needed improvements to railroad tracks, bridges, and facilities. DOT is considering requiring RRIF applicants to meet new, burdensome requirements prior to receiving financial assistance through Federal loans and loan guarantees.
“Despite the importance of railroad infrastructure investments to our nation’s economic growth, many of our nation’s infrastructure needs are going unmet today. If we don’t make these crucial investments in passenger and freight railroad infrastructure now, many rail corridors will be operating above capacity by the year 2035,” said Oberstar. “The failure to adequately invest in rail infrastructure will likely result in a lot of freight being shifted to an already heavily congested highway system. This additional congestion will affect every region of the country and will make the U.S. less competitive in the world marketplace.”
Oberstar and Brown noted in their letter that DOT’s own studies show that an investment of $148 billion for infrastructure expansion over the next 28 years is required to meet future needs. DOT estimates that the demand for freight rail transportation alone will increase 88 percent by 2035. Meanwhile, nearly one million of the nation’s construction workers are currently unemployed, and the construction sector is experiencing the biggest sustained decline in at least four decades.
“Clearly, this is the Bush administration’s latest attempt to ‘reform’ a system that is working well, because the RRIF application process already requires a thorough examination of the applicant’s business and financial performance. According to the Federal Railroad Administration, no recipients of the 21 RRIF loans or loan guarantees that have been issued to date have defaulted on any loans or are delinquent in making payments. In fact, recipients have repaid two loans in full,” said Brown. “It appears that DOT is proposing a ‘solution’ in search of a problem.”
Among the additional preconditions DOT is considering are: requiring an equity contribution of between 20 and 30 percent; capping the cumulative outstanding balance of loans and loan guarantees to a single borrower; and requiring many applicants to obtain a credit rating or assessment prior to receiving financial assistance.
In the letter, Oberstar and Brown urged the Secretary to suspend action on the rulemaking.
Click here to view a copy of the letter.
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