Federal rail dollars sit idle

Rep. Mica letter criticizes DOT’s handling of RRIF money

News Rep. John L. Mica October 15, 2010
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Republican leaders of the House Transportation and Infrastructure Committee today called for the Obama administration to cut the red tape tying up tens of billions of dollars in available rail infrastructure financing and withdraw a proposed policy that would only increase the program’s bureaucratic obstacles.

Transportation Committee Republican leader John L. Mica (R-Fla.) and Railroads, Pipelines and Hazardous Materials Subcommittee top Republican Bill Shuster (R-Pa.) wrote to U.S. Department of Transportation Secretary Ray LaHood to outline their concerns with DOT’s implementation of the $35 billion Railroad Rehabilitation and Improvement Financing (RRIF) loan program. (Link to full Mica-Shuster letter http://republicans.transportation.house.gov/Media/file/111th/Railroads/2010-10-15-RRIF_Letter.pdf)

“Over $34 billion in this rail transportation financing program sits idle, while the Administration continues to call for billions more in tax and spend proposals for infrastructure,” Mica said. “The billions already available through the RRIF program could potentially put hundreds of thousands of people to work building our nation’s rail infrastructure.”

Mica said, “In addition to the unutilized $34 billion in the railroad rehabilitation program almost $40 billion in infrastructure stimulus funding is also sitting idle, as well as tens of billions in other transportation funds.

“Just as red tape has delayed spending stimulus infrastructure funds, the RRIF program is plagued with paperwork and obstacles,” Mica continued. “Unfortunately, rather than trying to free up this valuable rail infrastructure loan program from red tape, the Administration is planning to add more layers of bureaucracy, making the program even more difficult to utilize.

“Instead of coming up with new schemes and tax increases for infrastructure proposals, we should focus on using the revenue and financing tools already available and eliminating barriers in the programs at our disposal,” Mica said.

“Congress intended RRIF to be a strong and well-utilized program, but the Administration continues to subvert Congressional intent by making the program more difficult to use,” said Shuster. “The Administration should pursue policies that make financing projects through RRIF loans more accessible, not less.

“This is an innovative loan program—not a grant program that simply hands out money—and the private sector is incentivized to invest in good projects that will pay a dividend in the future. If properly utilized, the RRIF program could serve as a model for how government can encourage economic growth and take advantage of private sector resources to build America. Instead we are squandering the potential of this program while our infrastructure continues to deteriorate,” Shuster said.

In the letter to Secretary LaHood, Mica and Shuster call the RRIF loan program “an important and necessary tool for encouraging growth in the rail sector by providing a ready source of financing for rail initiatives.”

The RRIF program was established in 1998 under the Transportation Equity Act for the 21st Century. However, despite a high level of interest by potential applicants and congressional efforts to streamline RRIF, only two loans have been made this year under this consistently underutilized and cumbersome program. Of the program’s $35 billion authorization, there are only $400 million in outstanding RRIF loans.

Bureaucratic hurdles already make the application process difficult for likely applicants, but through a recent policy notice, DOT has introduced procedures that make acquiring a loan through RRIF even more time consuming. In addition, the new policy will limit the kinds of applications for which DOT will approve loans.

The new DOT policy is scheduled to go into effect Oct. 29, 2010.

According to industry estimates of jobs generated by infrastructure investment, if the entire RRIF loan authority was put to work in rail construction projects, approximately 700,000 jobs could be created.

“It is important that this program see internal reform at the DOT to ensure loans are made as expeditiously as possible for eligible projects,” Mica and Shuster state in their letter.

“We request that FRA [Federal Railroad Administration] withdraw this Notice, and cease any policy that seeks to rank or prioritize RRIF loans based on loan purpose.”

The RRIF loan program is not the only government program or source of infrastructure funding that is bogged down with red tape or is being underutilized. For example:

· As of Oct. 1, only 39% of the $63 billion in stimulus infrastructure funding had been spent, leaving $38 billion caught up in red tape and paperwork;

· One state, Virginia, recently identified $1.5 billion in state transportation funding sitting idle; and

· $9.7 billion of the $15 billion in Private Activity Bonds for highway projects is still available.

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