Investigation of funding for railroad construction

As discussed in the last edition of Making Tracks, the Northern Nevada Railway Foundation has formally requested that the Tricounty Railway Commission investigate the availability of funding for the V&T Railroad reconstruction project through the Federal Railroad Rehabilitation and Improvement Financing Program.

The RRIF program is administered by the U.S. Department of Transportation's Federal Railroad Administration. This new direct loan and loan guarantee program is intended to provide up to $3.5 billion in loans, including $1 billion for projects primarily benefiting shortline and regional railroads.

According to Federal Railroad Administrator Jolene Molitoris, under the RRIF program, priority consideration will be given to projects that enhance safety, enhance the environment, promote economic development, are included in state transportation plans, promote U.S. competitiveness and preserve and enhance rail or intermodal service to small communities and rural areas.

Specifically, RRIF funding may be used to acquire, improve or rehabilitate intermodal or rail equipment or facilities, including track, components of track, bridges, yards, buildings and shops, to refinance existing debt incurred for the previous purposes and to develop and establish new intermodal or railroad facilities.

Although the qualification requirements may prove to be too onerous for the V&T reconstruction project, the commission will, nevertheless, review the criteria to determine if the program offers a realistic source of funding. Given the repayment obligation that accompanies the state's commitment to bond for $5 million to support the reconstruction effort, there is some trepidation among commission members about the wisdom, let alone the feasibility, of incurring additional debt.

Contained in the press release announcing the RRIF program were some interesting statistics about U.S. railroads. Despite advances in travel technology, railroads are still a critical component of our transportation system. More than 650 shortline and regional railroads connect rural and small communities to the economic mainstream of North America. Collectively, these railroads operate over more than 47,000 miles of track exceeding the 46,000 miles of roads in the nation's interstate highway system.

A recent survey by the American Short Line and Regional Rail Association found that 100 small railroad operations need external financing to upgrade their track to safely accommodate the heavier cars that major carriers are now using. Shortline and regional railroads that cannot safely handle heavier cars will lose traffic essential to their viability and continued existence.

According to the U.S. Department of Transportation, if these railroads cease to exist, "rail traffic will be diverted to highways accelerating their deterioration and increasing their reconstruction costs and adversely affecting the environment."

The report goes on to say that "without financing, some track operated by small railroads may be abandoned and the freight traffic moved by less energy efficient trucks. This will result in additional air pollution and fuel consumption, as well as significantly increased highway maintenance costs."

As a confirmation of the continued importance of railroads to our country not only from an economic standpoint, but also from the standpoint of preserving the integrity of our environment, the report concludes that funding provided by the RRIF program will "strengthen the linkage between transportation and environmental policy by helping to ensure the continuation of energy efficient rail freight service."


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