By Ron Thaniel
January 12, 2004

As Congress completed a hectic schedule leading to the holiday recess, U.S. Senators Ernest Fritz Hollings (SC), Susan M. Collins (ME), Thomas R. Carper (DE), Arlen Specter (PA), James M. Jeffords (VT), and Joseph R. Biden (DE) introduced legislation to revitalize America's rail system by strengthening Amtrak and giving states a new funding partnership to invest in intercity high'speed rail, passenger rail service, and freight rail projects.

"American Railroad Revitalization, Investment and Enhancement Act" (ARRIVE 21), S. 1961, introduced November 25, calls for a 6-year, $42 billion investment in U.S. rail infrastructure and service to expand high'speed passenger rail in congested corridors, strengthen Amtrak, improve freight mobility, and better balance nation's transportation system. And, for the first time, it puts rail on par with the nation's highway and aviation infrastructure by creating a guaranteed, rail'specific funding source.

ARRIVE 21 creates a non-profit, public-private partnership - the Rail Infrastructure Finance Corporation (RIFCO) - to issue $30 billion in tax-credit bonds over 6 years to fund rail infrastructure development. The bill authorizes RIFCO to award discretionary capital grants to states and Amtrak for high'speed rail and intercity passenger rail projects. The bill also authorizes formula grants to all states for freight rail capital projects that benefit the public.

Passenger and freight rail projects eligible for funding through RIFCO include planning, rail line rehabilitation and upgrades, rail safety and security projects, passenger rail equipment acquisition, station improvements, and intermodal facilities development. In order to receive grants, states must prepare a state rail plan and provide a 20 percent non-federal funding match to RIFCO, similar to what states currently do for other transportation investments. Prior to issuing grants, RIFCO will deposit a portion of the bond proceeds, along with state matching funds, into a secure and continually monitored repayment fund managed by the RIFCO investment trust to retire the debt over the life of the bonds.

The measure also provides incentives for future rail-related planning, by requiring states to craft state rail plans in order to be eligible for funding from RIFCO. It directs the federal government to develop a national rail plan and a "50-Year Intermodal Blueprint" to promote an efficient transportation system, and it authorizes additional funds for planning of high'speed rail projects.

ARRIVE 21 adopts many of the authorizations originally included in S. 1991, the "National Defense Rail Act," legislation approved by the Senate Commerce, Science and Transportation Committee by a vote of 20-3 in the 107th session, including a one-time $515 million for rail security needs and assessments.

The bill includes an average of $1.5 billion in annual funding authorizations for Amtrak's capital and operating expenses, including station and facility improvements, environmental compliance, and debt retirement. These funds will enable Amtrak to operate its current national system, address its backlog of urgent capital projects and improve its capacity to accommodate projected growth in traffic, especially in the Northeast Corridor, which has become an invaluable transportation asset to passengers traveling between Washington, D.C. and Boston.

In addition to these funds, the states and Amtrak can pursue major intercity passenger rail capital improvements and equipment acquisition through RIFCO, with reductions in Amtrak's capital authorizations for projects funded through RIFCO capital grants. Through this process, the amount needed for annual Amtrak appropriation for capital will be reduced over the life of the reauthorization, as RIFCO begins to finance a growing share of Amtrak's capital needs.

As is the case today, operating costs on long distance trains will be covered by Amtrak's annual appropriation, while states will share the costs with Amtrak for operations of short distance corridors. For such short distance corridors, ARRIVE 21 infuses greater fairness into the current system by requiring parity between Amtrak and all states for cost sharing, putting an end to disparate treatment among the states that contract with Amtrak to provide corridor service, noted the Senators.

ARRIVE 21 also requires a whole host of new Amtrak reforms, including accounting a five-year financial plan, which Amtrak will submit on an annual basis to detail categories of projected capital and operating cash flows; a quarterly grant process for Amtrak through the U.S. Department of Transportation; the creation of new service metrics that will improve the monitoring and quantification of Amtrak service performance and quality; and others.

The Bush Administration sent to Congress July 28, it's reform plan for passenger rail known as The Passenger Rail Investment Reform Act of 2003. The plan essentially calls for states to assume responsibility of providing intercity passenger rail service.

The Passenger Rail Investment Act of 2003 replaces federal subsidies to Amtrak with a system of 50/50 matching capital grants and operating assistance grants to states, which would be phase down to zero. Under the plan states would assume the responsibility of operating the railroad including the transfer of current and projected future operating deficits.

The transition would be accomplished over six years, during which Amtrak would be split into three entities:

• A private passenger rail company that would operate trains under contract to states and multi'state compacts;
• A private rail infrastructure company that would maintain and operate the infrastructure on the Northeast Corridor under contract to a multi'state Northeast Corridor Compact. Title to Amtrak's current tracks, stations and other infrastructure on the Northeast Corridor will be held by the federal government and leased to the Northeast Corridor Compact; and
• The National Passenger Rail Corporation, which would continue as a government corporation that would retain Amtrak's current right to use the tracks of the freight railroads, and the Amtrak corporation name. Both the track-access rights and the Amtrak brand would be provided under contract to states and multi'state compacts for qualifying passenger rail service they sponsor.

Texas Senator Kay Bailey Hutchinson, Chairwoman of the Surface Transportation Subcommittee, joined with Senators Trent Lott (MS), Conrad Burns (MT), and Olympia J. Snowe (ME) to introduced the American Rail Equity Act the last week of July as well.

The American Rail Equity Act provides a plan for Amtrak over the next six years, including an allocation of $12 billion in operating expenses.

The plan also creates an independent non-profit organization, the Rail Infrastructure Finance Corporation (RIFCO), to underwrite $48 billion in government-backed tax credit bonds for capital expenses, which will be used for repairs and improvements to the National System and the Northeast Corridor, divided at a ratio of 4 to 1.

Senator Hutchison's proposal calls for the separation of the North East Corridor from Amtrak and turns it over to the Department of Transportation. The Department of Transportation is required to seek proposals within one year of enactment on how to best handle the Northeast Corridor.

The proposal provides a framework for dispute settlement between freights and Amtrak with the condition that freights accepting federal funds for improvements must allow Amtrak to meet its schedule. If Amtrak is unable to meet an 80 percent on'time arrival rate on a route, that route will be opened for bidding by other operators.