Statement of

Mark E. Yachmetz
Associate Administrator for Railroad Development
Federal Railroad Administration

To

The Subcommittee on Railroads, Pipelines and Hazardous Materials
Committee on Transportation and Infrastructure
U.S. House of Representatives

April 22, 2009

Chairwoman Brown, Mr. Shuster and members of the Subcommittee:   I am pleased to have this opportunity to appear before you on behalf of Secretary of Transportation Ray LaHood to update you on the status of the Railroad Rehabilitation and Improvement Financing Program, also known as RRIF.

By way of introduction, I am Mark Yachmetz, Associate Administrator for Railroad Development of the Federal Railroad Administration (FRA.)   The Office of Railroad Development which I have the honor to lead is responsible for FRA’s investment programs including:

• Railroad Research and Development;
• Support to the Secretary of Transportation in his role as a member of Amtrak’s Board of Directors;
• Analyses in support of development of intercity passenger rail policy;
• Operating and capital grants to Amtrak;
• Grants to States for rail line relocation, grants to the Alaska Railroad for capital improvements benefitting passenger service, grants to railroads for rehabilitation and repair resulting from natural disasters, and grants for high-priority rail-related projects designated by Congress.
• Implementation of FRA’s responsibilities under the Passenger Rail Investment and Improvement Act of 2008;
• Implementation of FRA’s responsibilities under the American Recovery and Reinvestment Act of 2009.; and
• FRA’s credit program responsibilities under RRIF and Transportation Infrastructure Finance Innovation Act (TIFIA).

I joined the staff of the FRA in 1978 to work in the program providing credit-based financial assistance to the rail industry that was authorized by Title V of the Railroad Rehabilitation and Regulatory Reform Act of 1976.   That program was the predecessor to RRIF, thus I have been involved to some degree with FRA’s credit-based programs since just after their inception.

Touching on the highlights of the RRIF program since its creation in the Transportation Equity Act for the 21^st Century (TEA-21):

• FRA has made 22 loans totaling $786.72 million dollars.  FRA has not yet guaranteed any loans. (A list of loan recipients is attached to this testimony.)
• Three of these loans, totaling $381 million dollars have been repaid in full.
• Payments on all other loans are current; there have been no defaults of RRIF loans.
• There are currently 3 complete applications being reviewed by FRA, with several additional draft applications in various stages of development.
• On March 30, 2009, the U.S. Department of Transportation published a notice in the Federal Register withdrawing a proposed rulemaking initiated in the prior administration that would have changed RRIF policies and procedures.

RRIF Program in Brief

The RRIF program was established by section 7203 of TEA-21 and amended by section 9003 of the Safe, Accountable, Flexible, and Efficient Transportation Equity Act: a Legacy for Users (SAFETEA-LU) and section 701(e) of the Rail Safety Improvement Act of 2008.  Under this program the Federal Railroad Administrator is authorized to provide up to $35 billion in direct loans and loan guarantees.   Of this amount, $7 billion is reserved for projects benefiting freight railroads other than Class I carriers.

Applicants

Entities eligible for this financial assistance are:

• State and local governments;
• Interstate compacts consented to by the Congress under section 410(a) of the Amtrak Reform and Accountability Act of 1997 (49 U.S.C. 24101);
• Government sponsored authorities and corporations;
• Railroads (which means a rail carrier subject to Part A of subtitle IV of Title 49 U.S.C. – specifically freight railroads, intercity passenger railroads and commuter railroads that operate on the general system of railways of the U.S. and are subject to FRA’s safety jurisdiction)
• Joint ventures that include at least one railroad;
• Solely for the purpose of constructing a rail connection between a plant or facility and a second rail carrier, limited option rail freight shippers that own or operate a plant or other facility that is served by no more than a single railroad.

Eligible purposes

Loans or loan guarantees provided under RRIF can be used to:

• Acquire, improve, or rehabilitate intermodal or rail equipment or facilities, including track, components of track, bridges, yards, buildings and shops;
• Refinance outstanding debt incurred for the purposes described above; and
• Develop or establish new intermodal or railroad facilities.

Priorities for Consideration

When evaluating applications, FRA gives priority consideration to projects that:

• Enhance public safety;
• Enhance the environment;
• Promote economic development;
• Enable the United States to be more competitive in international markets;
• Are endorsed by the plans prepared under section 135 of title 23, United States Code, by the State or States in which they are located;
• Preserve or enhance rail or intermodal service to small communities or rural areas:
• Enhance service and capacity in the national system; or
• Would materially alleviate rail capacity problems which degrade the provision of service to shippers and would fulfill a need in the national transportation system.

Loan Terms

The maximum repayment period for direct loans or loan guarantees is 35 years or if collateral is pledged, the life of the asset whichever is less.   The interest rate on direct loans is equal to the rate on Treasury securities of a similar term.

Fees

Applicants may be required to pay an investigation charge of up to one half of one percent of the principal amount of the direct loan or the portion of the loan to be guaranteed.   These fees have been used only for the cost of independent financial advisors, including appraisers of collateral, related to the specific loan under consideration, and reflect actual expenses incurred for the review of the application.   FRA’s experience has been that investigation fees for loans ranging from $10 million to $100 million normally fall in the range of $30,000 to $60,000.     For smaller proposed loans, where the cost of the consultant is greater than the maximum fee that can be charged, FRA absorbs the additional costs if the Agency’s financial resources permit or undertakes the needed analysis using FRA staff.

Credit Risk Premium

The Federal Credit Reform Act of 1990, as amended, (FCRA) changed the budgetary measurement of the cost for direct loans and loan guarantees from the amount of cash flowing into or out of Treasury to the estimated long-term cost to the Government.  This estimated long-term cost is referred to as the subsidy cost.  FCRA requires that Federal agencies reserve this subsidy cost before entering into a new direct loans or loan guarantees.  For the RRIF program, this subsidy cost can be paid for by or on behalf of applicants for credit assistance in the form of a credit risk premium.

Calculating the credit risk premium can be done in one of two ways.   Where the applicant has received a recent credit rating from one or more nationally recognized rating agencies, that rating is used to estimate the credit risk.   For applicants that have not received a credit rating, the credit risk is based upon an evaluation by FRA of the business risk based upon the applicant’s industry outlook, market position and management financial policies; the financial risk based upon the applicant’s past financial performance; the project risk; and the potential recovery in event of default, including the value of any collateral offered by the applicant.   To date, the credit risk premiums charged by FRA have ranged between 0 and 6.16 -percent.

Collateral

Applicants are not required to offer collateral, but by offering collateral, an applicant may significantly enhance the strength of the RRIF credit and thus significantly reduce the required credit risk premium.  As collateral, an applicant or any other party may offer anything of marketable value, not just assets related to the project under consideration.   Indeed, collateral need not necessarily be related to the railroad or rail operations.

FRA is required, if possible, to value collateral as a “going concern”, based upon the premise that a business sold as a going concern has greater value than liquidating its component parts.   The going concern valuation, however, is only relevant and thus only used when a whole business or a business unit is used as collateral.   Other collateral such as a building is valued at its net liquidated value that is the value that could be received by selling the asset on the open market for its highest and best value.

The Application Process

Pre-Application

FRA encourages potential applicants to engage FRA in pre-application discussions.  Such discussions help the applicant understand the application process, the issues that need to be addressed and the nature of the finance agreement that would result from a successful application.  Some applicants have only one pre-application discussion.  Other pre-application discussions can become quite extensive as the potential applicant refines description, scope and cost estimates of the proposed project.   These differences in the length of the pre-application stage frequently reflect the wide differences in applicants.   Some are public agencies or large corporations with in-house financial and engineering expertise, while others are smaller corporations that need outside help, and thus more time, in developing information necessary to support an application.  

A RRIF application may be the first time an applicant has dealt with the Federal Government from a financial assistance perspective.  Pre-application discussions thus also address certain requirements inherent in any Federal program, including the need for FRA to comply with National Environmental Policy Act of 1969 (NEPA) and its environmental review requirements.  Because FRA does not have funds for this purpose, the financial burden of complying with NEPA falls on the applicant and NEPA clearance is a prerequisite to an application being complete.   Fortunately, most RRIF projects to date have fallen under established categorical exclusions from NEPA review, have required nominal environmental reviews, or have involved projects for which NEPA documentation has been prepared for other purposes.  

Application and Review

FRA’s website includes the RRIF application form.   Once the applicant submits a draft application,  it is assigned to a staff analyst for review.   Once the staff analyst is comfortable that the application is complete or nearly complete, an estimate of the investigation charge is provided the applicant.   Upon receipt of these funds, FRA retains its independent financial advisor (IFA) from among a group of advisors FRA has under contract.   The IFA’s first task is a final review of the draft application and development of any additional materials needed to make it final.   Frequently, the IFA identifies additional documents needed to support detailed financial data or supporting information for traffic and revenue projections.

Normally within 30 days of the initial filing the staff analyst, based upon her or his review and recommendations of the IFA, sends a letter to the applicant explaining the information needed to complete the application.    Upon the receipt of this information from the applicant and completion of any NEPA-related documentation, the application is deemed complete.   FRA sends a letter to the applicant to this effect.  This initiates the statutory 90 day period for review of the application.

FRA’s exercise of due diligence involving the review of the financials of the proposed project and applicant is relatively intense, with substantial work occurring over a brief period of time.    In cases where applicants do not have a credit rating from one of the national rating agencies, the analyst supported by the IFA analyzes all relevant aspects of the proposed transaction.   This analysis includes such activities as interviewing existing and potential shippers and independently developing projections of traffic, revenues and expenses, leading to the development of pro-forma financial statements.

During this period, FRA’s staff engineers review the engineering aspects of the proposed project to develop an independent assessment of the reasonableness of cost estimates and the ability of the proposed improvements to accomplish the intended purpose.   When infrastructure is involved, this includes a site inspection.   The Office of Railroad Development also consults with appropriate regional officials of FRA’s Office of Safety to identify any specific concerns that they might have identified in their periodic inspections of the railroad.   FRA also consults with other modes of the Department if the applicant or proposed project might interface with their programs (e.g. Federal Transit Administration for commuter rail projects.)

Upon the completion of the review of the application by FRA staff supported by the IFA, a recommendation is made to FRA’s Administrator by the Associate Administrator for Railroad Development for action on the application.   Those the Administrator decides to advance are presented to the U.S. Department of Transportation’s Credit Council (the Credit Council.)  Alternatively, the Administrator may choose to deny the application at this point.  

 The Credit Council is an organization created by the U.S. Department of Transportation to ensure the application of consistent credit policies and management practices across all the Department’s credit programs.  The members of Credit Council are the Assistant Secretary for Budget and Programs/Chief Financial Officer (chair), the Under Secretary of Transportation for Policy, General Counsel, the Assistant Secretary for Transportation Policy, the Federal Railroad Administrator, the Federal Highway Administrator, the Federal Transit Administrator, the Maritime Administrator and the Director of the Small and Disadvantaged Business Utilization.   The Credit Council will provide to the Federal Railroad Administrator a recommendation regarding the financial viability of a proposed project and the merits of the requested credit assistance and its consistency with Department credit policies.

After considering the recommendation of the Credit Council, the Administrator then decides whether or not to approve the loan.   If the loan is approved, FRA’s calculation of the credit risk premium is submitted to the Office of Management and Budget (OMB) for concurrence.  While FRA develops estimates of the credit risk premium using its model, in accordance with the FCRA, OMB must agree to the final calculation of the subsidy cost and thus the credit risk premium.  

Finalizing the Assistance

Once the final credit risk premium is calculated, the applicant is informed and a term sheet is sent to the borrower.   The term sheet includes all of the basic information on the loan including repayment period, interest rate and credit risk premium.

Upon acceptance of the terms, closing documents are prepared and signed, the credit risk premium is paid and funds disbursed as needed.   FRA then monitors implementation of the project and repayment of loans.   FRA also monitors the overall financial condition of borrowers to identify any issues that could impact repayment of the loan.

Conclusion

I appreciate the opportunity to provide the Subcommittee with an update on the RRIF program.  I am available to answer any questions that you might have on FRA’s implementation of this program.

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Statement of

Joseph C. Szabo
Federal Railroad Administrator

Before The

Subcommittee on Railroads, Pipelines and Hazardous Materials
Committee on Transportation and Infrastructure
United States House of Representatives

October 14, 2009

Chairwoman Brown, Ranking Member Shuster and members of the Subcommittee: I am honored to appear before you today to discuss one of the most significant new initiatives of President Obama, Vice President Biden, and Secretary of Transportation LaHood – the development of high-speed rail transportation in America, which builds upon the solid foundation laid by Congress last year in the Passenger Rail Investment and Improvement Act of 2008 (PRIIA). In this statement I will touch on the opportunities and challenges we, the Administration, the Congress and a diverse group of stakeholders, face in creating a sustainable program to improve intercity passenger mobility in the United States and what FRA is doing today to make the vision for high-speed rail a reality.

Discussions of high-speed rail tend to begin with the fundamental question: “What is high-speed rail?” Some prefer to define high-speed by peak speed –say 200 miles-per-hour (mph). Some will say high-speed is average speed or trip time. The Federal Railroad Administration (FRA), in its 1997 report “High-Speed Ground Transportation for America" used a more market oriented definition – that is service that can cost effectively be the preferred option for intercity travel in a specific transportation market. Using that definition, high-speed rail is service that is superior from a time-competitive stand point than air and/or auto on a door-to-door basis. In other words, if I leave my home in Chicago and travel to a meeting in St. Louis and the total trip time by rail is better than flying or driving, then that rail service is high-speed. What that means is that the peak speeds and average speeds of high-speed rail are not one set number but can and should vary by the market served. The speeds needed to effectively serve the Los Angeles to San Francisco market, a distance of 450 miles is different from the speeds needed to effectively serve the market between Washington, D.C. and Richmond, VA., a distance of 90 miles.

In the Administration’s Vision for High-Speed Rail in America we used four definitions for the multiple types of intercity passenger rail that we will see in the future:

• Conventional Rail – Traditional intercity passenger rail services of more than 100 miles with peak speeds in the 79 mph to 90 mph range.
• Emerging High-Speed Rail – Developing corridors of 100-500 miles in length with top speeds in the 90-110 mph range
• High-Speed Rail-Regional – Relatively frequent service between major and moderate population centers 100-500 miles apart with top speeds in the 110-150 mph range
• High-Speed Rail –Express with frequent service between major population centers 200-600 miles apart with few intermediate stops and top speeds in excess of 150 mph.
• Ensure safe and efficient transportation choices. Promote the safest possible movement of goods and people, and optimize the use of existing and new transportation infrastructure.
• Promote energy efficiency and environmental quality. Reinforce efforts to foster energy independence and renewable energy, and reduce pollutants and greenhouse gas emissions.
• Build a foundation for economic competitiveness. Lay the groundwork for near-term and ongoing economic growth by facilitating efficient movement of people and goods, while renewing critical domestic manufacturing and supply industries. This strengthening of domestic manufacturing is particularly critical today as evidenced by the severe atrophy affecting the U.S. rail supply industry. A long-term market for railroad equipment, infrastructure and supplies will help rebuild this once proud part of the American economy.
• Support interconnected livable communities. Improve quality of life in local communities by promoting affordable, convenient, and sustainable housing, energy, and transportation options.

Thus, in discussing how we make high-speed rail a reality we need to be talking about a range of technologies and a range of investment options that each have their own sets of opportunities and challenges.

That is not to say that high-speed rail is preferable in all situations to air and/or auto. Indeed each has and will have an important place in the transportation system of our future. High-speed rail will only be successful as part of an integrated, intermodal transportation system that includes effective connections to our transit, highway and aviation systems.

High-Speed Rail – the Opportunities

President Obama proposes to help address the Nation’s transportation challenges by investing in an efficient, high-speed passenger rail network of 100-600 mile intercity corridors that connect communities across America. The vision for high-speed rail aligns well with the Department’s strategic goals:

I wish to offer one of many possible examples where these opportunities come together. FRA has been working with the California High-Speed Rail Authority since 2001 on the planning and environmental review of California’s State-wide high-speed rail initiative. The Final Environmental Impact Statement/Report for the California High-Speed Rail Program has been completed and is available for review[1]. This document is one of the most comprehensive environmental analyses of a new transportation system ever undertaken and helps crystallize the opportunities offered by the development of high-speed rail. Among the benefits of high-speed rail investment when compared to alternatives for meeting the identified travel demand are:

Transportation Investment requirements Avoided

• 2,970 lane-miles of highway construction no longer needed.
• Five runways and 90 gates at airports
• Annual Energy/oil consumption saved
• 6 – 12 million barrels per day
• Annual Air Pollution avoided
• 3.4 – 5.5 million tons of carbon emissions
• 730 tons of PM10
• 1,095 tons of PM2.5
• 3,650 tons of NOx
• 2,190 tons of TOG

Employment

• 168,000 job-years during construction
• 450,000 permanent jobs created from economic effect.

Access to Service

• Major cities in California will be served through downtown intermodal terminals, integrated in the city and region’s public transportation systems.

California happens to be the most recent EIS that FRA has completed on high-speed rail and is used as an illustrative example and should not be construed as an indication we favor one project over another. Such benefits can be realized from proposed high-speed rail projects across the country.

High-Speed Rail – the Challenges

While the potential for high-speed rail is great, so too are the challenges we face in delivering on that potential. FRA sees a number of pressing challenges in developing a successful high-speed rail program:

Safety

FRA’s first and foremost mission is Safety. If high-speed rail is to be successful, it must be safe. Newton’s second law of motion, that force equals mass times acceleration (f=ma) has significant implications for the safety of high-speed rail. When things go wrong at high speed, a derailment as an example, the repercussions can be very significant. Many point to the strong safety record of foreign systems operating primarily on purpose-built infrastructure to draw a conclusion that high-speed rail is inherently safe. That is just not the case. Safety comes from superior design, superior manufacturing, superior operating practices, superior maintenance and above all superior vigilance. At FRA, we call this a strong safety culture. This will be particularly needed in the U.S. where, in most instances, high-speed rail will not begin operations on dedicated right-of-way and infrastructure. Instead, most proposed systems will involve the use of rights-of-way and perhaps infrastructure owned and operated by America’s freight railroads. The co-location of high-speed rail and freight operations raises significant safety issues, not the least of which is determining what point high-speed passenger rail operations need to be separated from freight rail and the nature of that separation. Ultimately this will likely not be a “one size fits all” type determination but reflect such issues as volume of freight and passenger traffic, train, infrastructure condition, etc.

Capability of the States

A handful of States have been actively engaged in railroad issues for many years. As an example, if you go on the North Carolina DOT website you will see a rail bureau with 60 positions. Unfortunately, States with a strong and experienced rail-oriented institutional structure capable of undertaking the planning, developing the complex relationships, and implementing a complex rail improvement program are the exception rather than the rule. This is understandable. Up until just recently, the Federal role in passenger rail investment was overwhelmingly a bi-polar relationship between FRA and Amtrak. Until enactment of the Passenger Rail Investment and Improvement Act last October, there was no statutory role for States in the planning and implementation of intercity passenger rail except for the occasional one-off grant contained in FRA’s annual appropriation. Until February of this year, there was no real funding to go with this authorization. There is now a significant and pressing need to help the States develop and maintain the internal staff resources and capabilities to oversee the management of planning and program implementation of high-speed rail and to be effective negotiators and partners with the various stakeholders that will be essential to successful implementation. Over time, States have developed such resources for the highway and transit programs but rail is sufficiently different that it will take time and effort for many States to develop these skills for rail.

The Status of Planning

The Recovery Act has provided a stark contrast between the established highway and transit programs and the new high-speed rail initiative. States have a well established pipeline of highway and transit projects that have undergone years of planning, design and environmental review. Thus, when the opportunities were offered by the Recovery Act for additional funding, the States were able to turn to a list of highway and transit projects. While some States had undertaken planning and had some projects that could begin in the short-term, most States had not undertaken the development of a detailed service development plan with the accompanying service, or Tier 1 documentation required by the National Environmental Policy Act (NEPA) for the larger development of a high-speed rail corridor. Again this is understandable. While the surface transportation legislation has over the last several decades provided States and regions funding for planning, this planning has been primarily focused on those programs – highway and transit – that offered the potential of a Federal funding partner at the end of the planning process. The States that are better prepared today are those that decided that improved passenger rail was so important to meeting the State’s future mobility needs that they invested substantial State funding in the planning for these new services. The challenge we face with the advent of the high-speed rail program is that there are many States playing catch-up. How can we bring them up to the point that they have a realistic high-speed program plan and implementation strategy so that they too can have the pipeline of rail projects like they have for other forms of transportation?

Freight Railroad Partnerships

America’s freight railroad system is the envy of the world. The Obama Administration is committed to building a world class high-speed intercity passenger rail system but we will not do that at the expense of degrading our world class freight rail system. Until just a couple of years ago, America’s freight railroads were hauling record levels of freight traffic on a system substantially smaller than half a century ago. In a number of critical areas, bottlenecks in rail infrastructure were creating congestion in freight movements. And, as this Subcommittee is well aware, the ability of Amtrak to maintain an on-time reliable service over this intensely used freight system left much to be desired. On a rail infrastructure designed primarily for freight train movements, fast passenger trains can use up more capacity than if those trains were replaced by freight trains. The challenge that we face is how to develop the infrastructure that permits emerging high-speed rail and freight rail to not only co-exist but to find the synergy to keep both world class. This will require a new level of partnerships between the freight railroads and the State promoters of high-speed rail. Several States have recognized the growing benefits that accrue from investment in privately-owned rights-of-way and infrastructure. For many States used to solely investing in publicly owned infrastructure, however, the shift to investing public funds in privately-owned assets may be a new and challenging experience.

The Intellectual Infrastructure

Once the rail industry was a major driving force of the U.S. economy. It employed thousands of planners, engineers and other experts in railroad engineering and sciences. After World War II, as the railroads first slipped into the financial abyss of the 1960s and 1970s and then went through a recovery period by slimming down, the demand for engineers and planners with rail expertise plummeted. A substantial percentage of the experienced people in these professions are approaching retirement. A major challenge that we face today at the advent of the new high-speed rail program is rebuilding this intellectual infrastructure in such diverse areas as track design, signal engineering, track-train dynamics, etc. This will require a new partnership among the Federal and State DOTs, the larger rail industry and the academic community.

Sustainability and Managing Expectations

There have been many efforts to promote development of high-speed rail over the years. Indeed, one of the entities that were merged in 1967 to form the Federal Railroad Administration was the Office of High-Speed Ground Transportation that had been established in the Department of Commerce. To date, however, with a very few notable exceptions, these efforts have not been successful. Secretary LaHood and I believe that if we spend the $8 billion in Recovery Act funds really well on terrific projects that produce real results but the program meets the fate of the previous efforts and does not continue, then we have not been successful. The challenge for us – the Administration and the Congress – is to find a way to make this program sustainable. The model I like to point to is the model developed by President Eisenhower and the Congress of the mid-1950s that led to the successful development of the National System of Interstate and Defense highways – a program that took over four decades to complete.

An integral part of developing a sustainable program will be managing expectations. The interest by the States in the high-speed program far exceeds the funds available today, or next year or over the next five years. But this was true of the Interstate Highway program at its beginning as well. The public support for the program did not wane, in part because our citizens could both see early successes and they knew that eventually the Interstate system would serve them as well. Of all of our challenges, this may be the most important to address.

What FRA is Doing to Make High-Speed Rail a Reality

This past June I had the opportunity to meet with the Subcommittee and review FRA’s progress in implementing the Recovery Act including the “standing up” of the high-speed rail program. At that time I was able to report that we had met the deadlines set in the Recovery Act and published the Obama Administration’s Vision for High-Speed Rail in America (April 2009) and High-Speed Intercity Passenger Rail (HSIPR) Program Notice of Funding Availability, Issuance of Interim Program Guidance (June 2009). Both documents are available on FRA’s website: www.FRA.DOT.GOV.

On August 24, we received applications for projects that are “ready to go”, including some projects for preliminary engineering and environmental review, and would be funded from the funds made available under the Recovery Act; projects for high-speed intercity passenger rail planning funded from FRA’s FY 2009 appropriation; and projects for capital improvements funded from FRA’s FY 2009 appropriation. There were a total of 214 applications received, representing projects proposed in 34 States and totaling approximately $7 billion. Those projects have been through a very intense period of first level reviews by staff of FRA along with volunteers from the Federal Transit Administration (FTA) and the Research and Innovative Technology Administration (RIITA) to whom we are grateful for their help. The results of these reviews are presently being evaluated at the senior leadership levels of FRA and the Department.

On September 16 we received expressions of interest for private sector participation in the development of high-speed intercity passenger service pursuant to a notice FRA published last December to implement the provisions of Section 502 of the PRIIA. These applications are currently under review, consistent with the statutory requirement that initial reviews be completed by the Department by mid-November.

On October 2, we received applications for what will amount to commitments to develop specific high-speed rail corridors. Our preliminary analysis shows that we received 45 applications representing 24 States totaling approximately $50 billion. FRA is currently undertaking a triage of these applications to eliminate duplicates and ineligible applicants and projects. Our preliminary review shows that the numbers presented above should be close to the final. Detailed review of applications by panels of FRA staff and volunteers from other modes of the Department will begin in earnest next week.

Our overriding goal in evaluating these applications is the development of a sustainable and truly national high-speed intercity passenger rail investment program. Due to the overwhelming response, our need to assure coordination among the various FRA programs and between the FRA programs and the Tiger Grant program being managed in the Secretary’s immediate office, we will be announcing all awards this winter. Our selections will be merit based and reflect President Obama’s vision to remake America’s transportation landscape.

FRA is also moving forward to addressing the other challenges important to developing a sustainable high-speed intercity passenger rail investment program.

Safety: FRA has recently made available for comment a draft High-Speed Passenger Rail Safety Strategy which is appended to this testimony. The goal of this strategy is to lay out how FRA will: establish safety standards and program guidance for high-speed rail; apply a system safety approach to address safety concerns on specific rail lines; and, ensure that railroads involved in passenger train operations can effectively and efficiently manage train emergencies. This strategy endeavors to achieve uniformly safe rail passenger service, regardless of speed.

Capability of the States: FRA is lucky to have someone like Karen Rae, who has had a long and distinguished career in transportation program management in several States, to play a leadership role in the design of the new high-speed program. Under her leadership we have engaged the States early and often and have committed to a continuing effort on the part of FRA in developing and enhancing the ability of the States to get involved in high-speed rail. Attached to my statement are two unsolicited statements concerning FRA’s outreach activities. I would take particular note of the statement from the chair of the Capitol Corridor (CA) Joint Power Authority that says “We know of no other federal agency that has asked its customers (the states and intercity passenger rail agencies) for comments, suggestions and even criticisms on the HSIPR Program funding applications and award criteria BEFORE (emphasis in original) any awards were made or applications received. This is an excellent example of how government should work ….”

Status of Planning: FRA has on our website a “how to” manual for the development of service development or transportation investment plans. This is based upon FRA’s previous experience in the planning of specific corridors in which all interested parties came to the table to work cooperatively in identifying investment needs. While FRA cannot and should not plan every corridor, we are a resource to facilitate the development of processes that can lead to successful completion of corridor wide service development plan and related environmental documents.

Freight Railroads: Freight railroads will be key to the successful development of high-speed intercity passenger rail in many corridors. Indeed, FRA’s grant guidance requires that applications demonstrate the stakeholders’ commitments, including that of the host railroad/infrastructure owner, to advance the high-speed intercity passenger rail program. FRA believes that there are opportunities to develop constructive partnerships between the freight railroads and States that can address areas of common interest including statutory requirements for positive train control and the safety at highway rail grade crossings. By placing a premium on such cooperative relationships FRA believes that we can facilitate their development. We also see our safety and research activities as complementary parts of this effort.

Intellectual Infrastructure: FRA is very concerned that this Nation has the people that can deliver on a successful high-speed rail program for the foreseeable future. As part of the President’s FY 2010 budget request, FRA proposed that 1% of the high-speed intercity passenger rail funds be available for research. Our first and highest priority for the use of these funds is the establishment of the Rail Cooperative Research Program (RCRP) at the Transportation Research Board of the National Academy of Sciences. The RCRP was authorized in PRIIA as a necessary counterpart to the National Cooperative Highway Research Program (NCHRP) and the Transit Cooperative Research Program (TCRP). These programs have helped these modes of transportation develop the corps of trained professionals they rely on. We are also exploring other opportunities of using research, including the use of University Transportation Centers managed by RITA to help in this effort.

FRA’s short term needs

As I said in a hearing before you this past June, FRA’s financial assistance staff today is sized for that earlier, quieter era. Even though the PRIIA added a number of responsibilities in the areas of passenger rail and financial assistance to FRA, that Act did not authorize an expansion of FRA’s financial assistance staff. That they have produced high quality products in response to the aggressive schedule in the Recovery Act, is a testament to knowledge, skill and dedication of that small staff. Having said that, we cannot successfully manage the high-speed rail program envisioned by the President and implement the provisions of PRIIA and undertake our other new and expanded financial assistance functions contained in other recent Acts with the present levels of staff and other resources. The President’s FY 2010 budget begins to address FRA’s financial assistance staff and resource needs. I urge members of this Committee to support this request. I will also note that successful implementation of the Recovery Act including oversight of the expenditure of $8 billion, will require that the amount of these funds available for use by the Secretary in project oversight be consistent with the 1% authorized in 49 U.S.C. 24403(b)(1) and not the one quarter of one percent authorized in the Recovery Act.

Conclusion

The FRA of two years from now will be a significantly different agency than you see today. Safety will always be our most important mission, but we will also be playing a leading role in making the investments that position this country’s transportation system for the future. I am incredibly proud to be at FRA today and have an opportunity to lead the dedicated team at FRA through this transformation.

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[1] Available on the CAHSR website at CAHighSpeed Rail.ca.

Statement of

Joseph C. Szabo
Administrator
Federal Railroad Administration

To

The Subcommittee on Surface Transportation and Merchant Marine Infrastructure, Safety and Security
Committee on Commerce, Science, and Transportation
United States Senate

June 23, 2009

Chairman Lautenberg, Senator Thune, and members of the Subcommittee: I am honored to appear before you today on behalf of President Obama, Vice President Biden, and Secretary of Transportation LaHood, to discuss one of our Administration’s most important initiatives – the development of high-speed rail transportation in America. To supplement this testimony, I wish to incorporate by reference two recent publications of the Federal Railroad Administration (FRA): Vision for High-Speed Rail in America (April 2009) and High-Speed Intercity Passenger Rail (HSIPR) Program Notice of Funding Availability, Issuance of Interim Program Guidance. (June 2009). Both documents are available on FRA’s website: www.FRA.DOT.GOV.

America faces a new set of transportation challenges - creating a foundation for economic growth in a more complex global economy, promoting energy independence and efficiency, addressing global climate change and environmental quality, and fostering livable communities connected by safe and efficient modes of travel. The existing transportation system requires significant investment simply to rebuild and maintain critical infrastructure and modernize aging technologies. Meeting our 21^st century challenges will require new transportation solutions as well.

The Obama Administration believes that our transportation investment strategy must address several strategic goals in the coming years:

• Ensure safe and efficient transportation choices. Promote the safest possible movement of goods and people, and optimize the use of existing and new transportation infrastructure.
• Build a foundation for economic competiveness. Lay the groundwork for near-term and ongoing economic growth by facilitating efficient movement of people and goods, while renewing critical domestic manufacturing and supply industries.
• Promote energy efficiency and environmental quality. Reinforce efforts to foster energy independence and renewable energy, and reduce pollutants and greenhouse gas emissions.
• Support interconnected livable communities. Improve quality of life in local communities by promoting affordable, convenient, and sustainable housing, energy, and transportation options.

A New Transportation Vision. President Obama proposes to help address the Nation’s transportation challenges by investing in an efficient, high-speed passenger rail network of 100-600 mile intercity corridors that connect communities across America. High-speed intercity passenger rail (HSIPR) is well positioned to address many of the nation’s strategic transportation goals:

Safe and efficient transportation options. Rail is a cost-effective means for serving transportation needs in congested intercity corridors. In many cases, modest investment on existing rights-of-way can result in HSIPR service with highly competitive trip times, while also providing ancillary benefits to energy-efficient freight rail service. HSIPR also has a strong track record of safety in the United States and overseas. In Japan, for instance, the Tokaido Shinkansen trains have operated without a derailment or collision since the inception of operations in 1964.

Foundation for economic competitiveness. America’s transportation system is the lifeblood of the economy. Providing a robust rail network can help serve the needs of national and regional commerce in a cost-effective, resource-efficient manner, by offering travelers and freight convenient access to economic centers. Moreover, investments in HSIPR will not only generate high-skilled construction and operation jobs, but it can potentially also provide a steady market for revitalized domestic industries producing such essential components as rail, control systems, locomotives, and passenger cars.

Energy efficiency and environment quality. Rail is already among the cleanest and most energy-efficient of the passenger transportation modes. A future HSIPR network using new clean diesel and electric power can further enhance rail’s advantages.

Interconnected livable communities. Rail transport has generally been associated with “smart growth” because it can foster higher-density development than has typically been associated with highways and airports. Rail is uniquely capable of providing both high-speed intercity transportation and its own efficient local access and egress system. For example, in the Boston Region, Amtrak’s Acela serves two downtown stations connected to public transit – South Station and Back Bay – as well as a suburban station near Route 128. Yet just a few miles down the line to the west, Acela achieves speeds up to 150 miles per hour.

Developing a comprehensive high-speed intercity passenger rail network will require a long-term commitment at both the Federal and State levels. The President proposes to jump-start the process with the $8 billion down payment provided in the American Recovery and Reinvestment Act of 2009 (Recovery Act) and a high-speed rail grant program of $1 billion per year (proposed in his fiscal year (FY) 2010 budget).

A major reshaping of the Nation’s transportation system is not without significant challenges. After decades of relatively modes investment in passenger rail, the United States has a dwindling pool of expertise in the field and a lack of manufacturing capacity. Federal and State Governments face a difficult fiscal environment in which to balance critical investments priorities, and many will have to ramp up their program management infrastructure. The country’s success in creating a sustainable transportation future, however, demands that we work to overcome these challenges through strong new partnerships among State and local governments, railroads, manufacturers, and other stakeholders, along with the renewed Federal commitment proposed here.

The near-term investment strategy seeks to:

• Advance new express high-speed corridor services (operating speeds above 150 mph on primarily dedicated track) in select corridors of 200-600 miles.
• Develop emerging and regional high-speed corridor services (operating speeds up to 90–110 mph and 110-150 mph respectively on shared and dedicated track) in corridors of 100-500 miles.
• Upgrade reliability and service on conventional intercity rail services (operating speeds up to 79-90 mph).

This near-term strategy emphasizes making investments that yield tangible results within the next several years, while also creating a “pipeline” that enables ongoing corridor development.

Proposed Funding Approach. In order to meet the goals of the Recovery Act while initiating a transformational new program, we propose to advance four funding “tracks”:  

• Projects. Provide grants to complete individual projects that are “ready to go” with preliminary engineering and environmental work completed.
• Corridor programs. Enter into cooperative agreements to develop entire phases or geographic sections of corridor programs that have completed corridor plans and service level environmental documentation, and have a prioritized list of projects to meet the corridor objectives; this approach would involve additional Federal oversight and support.
• Planning. Enter into cooperative agreements for planning activities using FY 2009 appropriations funds, in order to create the corridor program and project pipeline need to fully develop a high-speed rail network.
• FY 2009 Appropriations Funded Projects. As an alternative for projects that would otherwise fit under Track 1, but for State applicants offering at least a 50 percent non-Federal share of total project financing, enter into grants with more simplified terms, including more time to complete the project, than required under Track 1.

As President Obama outlined in his March 20, 2009, memorandum, Ensuring Responsible Spending of Recovery Act Funds, program evaluation will be based on “transparent, merit-based selection criteria.” Criteria will include:

• Public Benefits. The extent to which the project or corridor program provides specific, measurable, achievable benefits in a timely and cost-effective manner, including: (1) contributing to economic recovery efforts, (2) advancing strategic transportation goals (outlined above), and (3) furthering other passenger rail goals articulated in the Passenger Rail Investment and Improvement Act of 2008 (PRIIA).
• Risk Mitigation. The extent to which the project or corridor program addresses critical success factors, including: (1) fiscal and institutional capacity to carry out projects, (2) realistic financial plans for covering capital and operating costs, (3) formal commitments from key stakeholders (e.g., railroads and participating States), and (4) adequate project management oversight experience and procedures.

As provided for in the Recovery Act and PRIIA, the universe of potential applicants is limited to States, groups of States, and under some circumstances, Amtrak. The focus on State-based passenger rail investment decisions is new for FRA. It is abundantly clear that success, which I take to mean a sustainable program delivering true transportation benefits in a cost-effective, environmentally positive and energy efficient manner, can only be achieved through the development of new partnerships between FRA and the tates and regions.

Finally, the President’s high-speed rail initiative will transform FRA as an agency in many ways. In the more than 25 years that I have known of FRA, it has been a safety agency that also gave Amtrak its annual grant. In my mind, safety will always be FRA’s top priority. But we now have a new, and very important financial assistance mission with a new set of partners and stakeholders. While high-speed rail is an important part of this new mission, so too are our expanded relationship with Amtrak, the new grant programs authorized over the last couple of years and our credit assistance program.

FRA’s financial assistance staff today is sized for that earlier, quieter era. Even though PRIIA added a number of responsibilities in the areas of passenger rail and financial assistance to FRA’s mission, that Act did not authorize an expansion of FRA’s financial assistance staff. That they have produced high quality products in response to the aggressive schedule in the Recovery Act is a testament to the knowledge, skill and dedication of that small staff. Having said that, we cannot successfully manage the high-speed rail program envisioned by the President and implement the provisions of PRIIA and undertake our other new and expanded financial assistance functions contained in other recent Acts with the present levels of staff and other resources. The President’s FY 2010 budget begins to address FRA’s financial assistance staff and resource needs. I urge members of this Committee to support this request. I will also note that successful implementation of the Recovery Act, including oversight of the expenditure of $8 billion, will require that the amount of these funds available for use by the Secretary in project oversight be consistent with the 1% authorized in 49 U.S.C. 24403(b)(1) and not the one quarter of one percent authorized in the Recovery Act.

In closing, let me restate the obvious, these are exciting times at FRA and the Department of Transportation. Long-serving staff at FRA have told me that they have never before seen the level of Administration support for rail programs that they see today from President Obama, Vice President Biden and Secretary LaHood. But if our efforts are to be successful, we will need Congressional support too. I look forward to working with the members of the Congress in general and this Committee in particular to help this nation reap the numerous benefits offered by high-speed rail.

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Statement of

The Honorable Joseph C. Szabo
Federal Railroad Administrator
U.S. Department of Transportation

before the

Subcommittee on Railroads, Pipelines and Hazardous Materials
Committee on Transportation and Infrastructure
U.S. House of Representatives

March 11, 2011

Chairman Shuster, Ranking Member Brown, and members of the Subcommittee:  I am honored to appear before you today to discuss the implementation of the Passenger Rail Investment and Improvement Act of 2008, also known as PRIIA.

Introduction

In response to the tragic Metrolink accident at Chatsworth, California in 2008, Congress enacted the most sweeping single piece of legislation aimed at FRA and the programs we manage since the agency was created in the Department of Transportation Act of 1967.   For the first time, in one piece of legislation, both parts of FRA’s mission, safety and infrastructure investment, were addressed in a comprehensive manner.  Division A of that legislation, the Rail Safety Improvement Act of 2008 (RSIA), was the first reauthorization of FRA’s safety program in 14 years.  It identified significant new direction, responsibilities and resources for FRA’s safety program.  Division B of that legislation, the Passenger Rail Investment and Improvement Act of 2008 (PRIIA), began the transformation of FRA’s investment programs.  PRIIA was the first reauthorization of Amtrak in 11 years, but it did this in the larger framework of intercity passenger rail service that went beyond the traditional view that Amtrak is synonymous with that mode of transportation.

As a result of this legislation, FRA, a comparatively small agency, was tasked with the challenge of taking on significantly expanded missions, which helps to explain why the Subcommittee has chosen to review this legislation in two hearings.  While much remains to be done, FRA has made significant progress in meeting the goals of PRIIA.  

Implementing PRIIA – the Progress To-Date

PRIIA began the transformation of the Federal role in intercity passenger railroad investment – which we believe should be on a par with the other surface transportation modes.  In this regard, PRIIA can be viewed as addressing three issues critical to the future of intercity passenger rail service.

PRIIA addressed the mission of Amtrak:  defining the national railroad passenger transportation system, improving and adding transparency to Amtrak’s business processes, and setting expectations for intercity passenger rail performance and the roles and responsibilities of Amtrak and the freight railroads that host Amtrak service to deliver on those expectations.  PRIIA addressed a new view of the investment relationships needed to deliver intercity passenger rail service.  Since 1971, this had been a bilateral relationship between the U.S. Department of Transportation and Amtrak.  PRIIA envisioned a trilateral relationship that involves relations among DOT, Amtrak, and the States.  Finally, PRIIA addressed high-speed intercity passenger rail service from both the public and private investment perspectives.  

The roles and responsibilities for implementing PRIIA are as diverse as the issues that the law addresses.  Amtrak, FRA, the Department of Transportation’s Office of Inspector General, the Surface Transportation Board, the States and others each found that PRIIA had significant mission shifts and expansion for them. 

Implementing PRIIA – the Challenges

PRIIA envisioned roles, responsibilities and relationships that previously had not existed or were being significantly modified.  In many ways, PRIIA began the establishment of a new paradigm for intercity passenger rail transportation, which the Obama Administration has expanded on. 

None of the stakeholders, and I include FRA in that group, initially had the resources and capabilities for fully participating in the new intercity passenger rail environment created by PRIIA.  FRA was sized for a financial assistance program that routinely provided annual operating and capital grants to Amtrak and evaluated applications for financial assistance under the Railroad Rehabilitation and Improvement Financing (RRIF) Program, together with a handful of other grants.

Compounding the challenge of the vastly expanded mission of FRA’s financial assistance team, are the significant new responsibilities placed upon our safety program which will be the subject of a discussion with this Subcommittee next week.  In balancing resources and priorities, we initially focused on the safety initiatives required by RSIA.  Safety is and will continue to be our top priority.  However, I want to assure this subcommittee that we are now quickly turning our attention to the outstanding rulemakings required by PRIIA. 

When PRIIA was enacted, Amtrak was in a defensive posture.  It had just survived yet another decade of limited funding, deteriorating assets, declining on-time-performance on its host railroads, threats to its very existence and was in the midst of a transition in management.  While capable in many areas, Amtrak was focused on tactical day-to-day actions of preserving a national system of intercity passenger rail service in a resource constrained environment.  Its ability to envision a new model for intercity passenger rail service, with new relationships and stakeholders, was constrained by decades where planning and tactical survival had precedence over planning a strategic vision.

Most States had no passenger rail investment programs, and those that did were primarily focused on continuation of existing State-supported Amtrak service.  Most States also had no or very limited long-term vision of a more robust role for rail in meeting their intercity passenger mobility needs, and limited rail expertise.  Thus, most States did not have the pipeline of intercity passenger rail projects that had been subjected to the rigorous planning, environmental review, design and engineering that would make them  “ready to go” as PRIIA-authorized funding became available.  Similarly, most States did not have the relationships with their private sector freight railroads that would be a critical stakeholder in implementing these projects.

Freight railroads were not prepared for public investments in their assets, for the obligations placed upon FRA and the States that required a tangible public sector benefit for the Federal investment, or for the rapid expansion in the interest in passenger rail investment by multiple States.

The good news is because of PRIIA and the Obama Administration’s efforts on rail, all of the parties have been rapidly expanding their capabilities.  The public sector and the private sector railroads have come to understandings on the roles, responsibilities and obligations that flow from public investment in private assets.  Indeed, I am happy to report that States and railroads have reached agreement on the development of most of the major intercity passenger rail corridors where high-speed passenger service will use freight railroad infrastructure.   

Under the leadership of Joe Boardman and a new Board of Directors on which I serve as Secretary LaHood’s representative, Amtrak is now thinking strategically while not forgetting those essential tactical elements that are important for rail service today.   Amtrak can point to 16 consecutive months of record ridership while also producing a visionary plan for high-speed rail on the Northeast Corridor and innovative partnerships with states to participate in the development of high-speed rail elsewhere.

The progress seen in intercity passenger rail over the last two years is due, in no small part, to PRIIA and President Obama’s commitment to rail.  The President’s commitment has given a renewed sense of purpose to intercity passenger rail stakeholders.  It also has us thinking about the next steps in the evolution of intercity passenger rail in the United States.

Next Steps

In his State of the Union address, President Obama laid out a bold vision for intercity passenger rail transportation.  To realize this vision, we will need to continue to build upon PRIIA.  I hope to soon be discussing the role of rail in the greater surface transportation context, but as Secretary LaHood advocates for so passionately, today I would like to highlight the Fiscal Year 2012 budget request and how it proposes a better passenger rail system for the nation. 

Section 201 of PRIIA defined the National Railroad Passenger Transportation System.  In doing so, PRIIA separately recognized Amtrak’s service on the Northeast Corridor, long distance routes of more than 750 miles in length and short distance corridors (routes of not more than 750 miles in length).  However, section 101 of PRIIA lumps all of these together in a single authorization.  The President’s budget request views each of these different services as important to the nation’s mobility, but each needs to be viewed as business units or lines treated differently by Federal funding.   Thus, the President’s proposal would focus the operating surplus of the Northeast Corridor on financing needed capital improvements in the Northeast Corridor.  Long distance trains and certain operating and capital costs needed to maintain national connectivity, including the national reservations system, security, training, and other national backbone systems, would be funded as part of a new National Network Service program.

Section 209 of PRIIA requires the establishment of a single, nationwide standardized methodology for allocating the operating and capital costs among the States and Amtrak for trains operated on corridors of less than 750 miles in length or designated as high-speed corridors by the Secretary.  We support this provision but in many cases it places additional burdens on the States that could jeopardize valuable and relied upon current passenger rail service.  The President’s budget recognizes this and provides temporary support to States for operating and capital subsidies of these shorter corridor services.  As state rail service evolves with greater state control of their passenger service, the federal grants will shift to high-speed corridor services during their ridership “ramp-up” phase.

Section 205 and Section 211 of PRIIA address the legacy of limited investment in intercity passenger rail that has left Amtrak’s infrastructure and equipment in a deteriorated state and the corporation burdened by debt obligations it took on over a decade ago.  The public values safe, clean, reliable transportation systems, including passenger rail services.  To do this while attracting new riders requires a commitment and priority to fund fleet replacement, equipment, and infrastructure.  The President’s Budget does this in a new System Preservation Account.  Once so improved, the funds must be available to assure that they stay that way.

Section 305 of PRIIA began an effort leading to the development of a standardized pool of intercity passenger rail equipment that provides the cost-effective capacity to move people by rail.  We need to take the next step.  The President’s budget proposes to do this by providing initial capital necessary to procure, maintain and make available to the States and Amtrak, standardized, interoperable 100% U.S. manufactured state-of-the-art rail cars and locomotives.  The freight industry does this already and we believe the passenger side should also. 

Section 501 of PRIIA defines high-speed rail as “intercity passenger rail service that is reasonably expected to reach speeds of at least 110 miles per hour”.  That definition of high-speed rail needs to be revised as we begin the development of a system that provides 80 percent of Americans access to a high-quality intercity passenger rail network featuring high-speed service within 25 years.  The President’s budget uses three different descriptions of high-speed rail – Core Express that would connect large densely populated metropolitan areas less than 500 miles apart with trip times of three hours or less at speeds of 125 mph-250mph; Regional high-speed service that will connect medium sized metropolitan areas with frequent and fast service at speeds of 90 mph-125 mph, and Emerging/Feeder high-speed service connecting smaller communities with improved conventional rail service up to 90 mph.  This three-tiered approach best balances fast service with the time, distance, speed, and geographic dynamics of our country. 

High-speed service around the world, including in our Northeast Corridor, is successful because it has frequent and optimally located connections at intermodal stations where people live and do business.  As we move from the programs authorized by PRIIA to those that can meet our expanded vision, we need to assure that this essential element of successful transportation is addressed.  That’s why the President’s Budget leaves no one stranded by fully funding ADA accessibility at all rail stations. 

Finally, the President’s budget proposes that funding made available for intercity passenger rail should be done so with the same degree of predictability and multi-year commitment that helps define our successful highway and transit programs.

Competition and the Role of the Private Sector

Section 502 of PRIIA, which was designed to solicit private sector initiatives in the development of high-speed rail, did not result in many proposals, in part because the roles of the Federal Government, States and the private sector in developing high-speed rail are still being worked out.  Realization of the President’s vision for high-speed rail in America will require significant capital investment but also a long-term commitment from government and private enterprise.     

The California High-Speed Rail Program anticipates that a third of project costs will come from non-Federal, non-State sources.  Florida, before ultimately rejecting high speed rail funding, was preparing to seek expressions of interest from private sector consortiums on a design, build, operate, maintain and finance (DBOMF) arrangement that would have the private sector bear the construction and operating risks of developing high-speed service in the State.  Those prospects looked good for the passenger rail industry.  More work needs to be done to identify and develop the programmatic structures that will effectively attract private sector interest.   Secretary LaHood and I look forward to working with the Congress to better define these structures.

 One of the specific issues that you asked to be addressed at this hearing is the potential for competition in providing intercity passenger rail service.  I know this Subcommittee has a particular interest in Section 214 of PRIIA.  Section 214 would allow for a pilot program involving competition on up to two Amtrak routes.  Mr. Chairman, I want to assure you that we will move expeditiously on this rule making.  Assuming we have adequate resources in the current fiscal year, we plan to have a Notice of Proposed Rulemaking Making underway later this year.

As you know, states currently have the ability to choose their own operators for rail service.  Additional competition may have the potential to improve efficiency and drive down costs.  Key considerations include a commitment and dedication to safety, tangible benefits to passengers in terms of fast efficient service, effective accountability for any liability associated with operations, and a level playing field whereby all providers of intercity passenger rail service are railroads covered by the full panoply of railroad laws, as reflected in section 301 (49 U.S.C. 24405 (b), (c) and (d)) and section 214 (49 U.S.C. 24711(c)(3)) of PRIIA.   

We at the FRA want to work with you to ensure that the private sector is an active partner in the success of high speed and intercity passenger rail.   

Conclusion

In closing Mr. Chairman, I have spent my entire adult life in the rail industry.  I have known of and observed FRA for more than 30 years.  At no time has there been such a period of transformation in the Agency’s mission and its ability to impact the safety and mobility of the American public and the freight on which the world’s greatest economy depends.  Secretary LaHood and I look forward to working with the Congress to ensure that America can fully realize the benefits of rail transportation.

I would be happy to address any questions the Committee might have.

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Before the

Subcommittee on Railroads, Pipelines, and Hazardous Materials,
Committee on Transportation and Infrastructure,
U.S. House of Representatives

March 17, 2011

Chairmen Mica and Shuster, Vice Chairman Reed, Ranking Members Rahall and Brown, and other Members of the Committee and Subcommittee, I am very pleased to be here today, on behalf of Secretary of Transportation LaHood and Administrator Szabo of the Federal Railroad Administration (FRA), to discuss FRA’s role in carrying out the Rail Safety Improvement Act of 2008 (RSIA), especially the provisions in that Act regarding positive train control (PTC) and hours of service.  My prepared testimony for this hearing is intended to supplement and update the written information on FRA’s work to effectuate RSIA that the agency has supplied to Congress previously. 

As background for the discussion of FRA’s implementation of RSIA, I would like to report that the railroad industry’s safety record is very positive for calendar year 2010, the last complete year for which preliminary data are available.   The industry achieved all-time lows in two important indices of railroad safety:   in the accident/incident rate per million train-miles and in the train accident rate per million train-miles.  FRA is encouraged by the results, but will continue to work with industry to lower the rate and severity of railroad accidents.

Through delegations from the Secretary of Transportation (Secretary), the Federal railroad safety laws provide FRA with very broad authority over every aspect of railroad safety.  In exercising that authority, the agency has issued and enforces a wide range of rail safety regulations and orders.  FRA currently has active rulemaking projects on a number of important safety topics; some of those rulemakings pursuant to RSIA will be described later in this testimony.  FRA also enforces the Federal railroad safety statutes as well as the Hazardous Materials Regulations, promulgated by the Department of Transportation’s (DOT) Pipeline and Hazardous Materials Safety Administration, as they pertain to rail transportation.  Please see FRA’s Web site (http://www.fra.dot.gov) for additional background. 

I. Overview of RSIA Rulemakings and Other RSIA Projects in General

RSIA mandates that the Secretary produce more than 40 final rules, guidance documents, model State laws, studies, and reports, including 3 types of annual reports and hundreds of periodic audits of railroads’ reports of crossing accidents.  The Secretary has delegated this responsibility to FRA.  Roughly 36 of the mandated projects are to produce single deliverables, as opposed to periodic deliverables.  So far, FRA has essentially completed[1] 12 of the roughly 36 projects involving single deliverables and 4 of the 5 annual reports required so far by the 3 annual-reporting mandates.  The agency has also completed the first set of the RSIA-mandated periodic audits of railroads’ compliance with their duty to report grade crossing collisions and fatalities, with respect to the eight Class I railroads, and has set up a system to handle the first set of RSIA-mandated periodic audits of hundreds of other railroads. 

Besides final amendments to the hours of service recordkeeping regulations, interim guidance on the hours of service statutory amendments, and final rules on PTC, all of which will be discussed later, FRA has issued the following:  (1) bridge safety standards;  (2) regulations requiring the ten States that have had the most highway-rail grade crossing accidents during calendar years 2006-2008 to file State-specific action plans to improve grade crossing safety for FRA approval; and (3) most recently, a model State law on sight obstructions at passively signed highway-rail grade crossings. Moreover, FRA has made a great deal of progress on a number of other RSIA-mandated projects.  For example, just last month, FRA submitted a draft of the other RSIA-mandated model law, which concerns motorists’ violation of warning signals grade crossings, to various organizations with a request for their comments.  FRA has also published an advance notice of proposed rulemaking on the safety risk reduction program and five notices of proposed rulemaking (NPRM)--on concrete crossties, emergency escape breathing apparatus, conductor certification, camp cars used as sleeping quarters, and systems for telephonic notification of unsafe conditions at grade crossings.  Further, in 2008 and 2009, FRA completed two final rules that were necessitated by RSIA even though not explicitly mandated by it.  The first of these final rules revised the provisions on civil penalties in all of the safety rules to reflect the higher ordinary maximum and aggravated maximum penalty per violation.  The other final rule amended FRA’s rules of practice to provide for temporary waiver of safety rules on an emergency basis and revised FRA’s enforcement procedures to provide for disqualification of railroad employees from safety-sensitive service based on violations of the hazardous materials laws. 

In terms of RSIA-mandated single (as opposed to periodic) reports or studies, FRA has completed five and partially completed a sixth.  First, FRA has submitted a long-term strategy for improving rail safety, with annual plans for the five fiscal years involved.  Second, FRA has provided a report to Congress on whether diesel-electric locomotives operated by tourist, excursion, or museum railroads should be subject to less frequent inspections; the report did not support relaxing the requirement.  Third, FRA has posted on its Web site its evaluation of current laws on trespass, vandalism, and violation of crossing warning devices.  Fourth, after consultation with several other Federal agencies, FRA completed a report to Congress on the exposure of railroad employees to radiation, which it submitted by letter dated January 27, 2011.  Fifth, the Secretary submitted a report to Congress on station platform gaps by letter dated January 10, 2011.  Finally, FRA has also submitted a report to Congress on the use of personal electronic devices by locomotive engineers, conductors, trainmen, and other railroad operating employees; this initial report will be supplemented by a report dealing with other types of safety-related employees, such as maintenance-of-way employees.  

On February 23 of this year, FRA entered into a contract with a law firm to carry out the mandated study on whether barring discovery of certain documents related to safety risk reduction programs would be in the public interest; the contract provides that the study is to be completed within six months.  FRA has also made progress on a number of other RSIA-mandated reports, including those on (1) the effect of repeal of “the Conrail exemption,” (2) recommendations for assistance to families of those affected by passenger rail accidents, (3) the adequacy of transportation of domestically produced renewable fuels, and (4) track-inspection intervals. 

In terms of RSIA-mandated, periodic reports, FRA has provided two RSIA-mandated annual reports to Congress that list all unmet rail safety statutory mandates and open rail safety recommendations from the DOT Inspector General and the National Transportation Safety Board and summarize FRA’s responsive action.  The latest report that has been submitted to Congress is current through December 30, 2009.  A draft of the third such annual report is in clearance in the Executive Branch.  Finally, FRA has posted on its Web site its first two annual enforcement reports under RSIA (an expanded version of FRA’s traditional report on civil penalty cases closed), which provide specific analyses of civil penalty assessments and settlements as well as information on other types of enforcement actions, the activities of the Locomotive Engineer Review Board, and the results of FRA safety inspections. 

II. Four RSIA-Based Projects Involving Hours of Service

On May 27, 2009, less than eight months after enactment of RSIA, FRA published a final rule amending FRA’s existing regulations requiring records and reports on hours of service, primarily to reflect the RSIA amendments to the hours of service laws and also to permit electronic recordkeeping.  The mandatory rulemaking was conducted with the assistance of the Railroad Safety Advisory Committee (RSAC).  The RSAC includes representatives from all of FRA’s major stakeholder groups, including railroads, labor organizations, suppliers and manufacturers, other government agencies, and other interested parties.    

Less than a month after producing that final rule, on June 26, 2009, FRA published lengthy and detailed interim and proposed interpretations of the major hours of service statutory provisions amended by RSIA.  The RSAC aided FRA’s development of this document to a certain extent, as well.  During the comment period, FRA received 56 comments on the proposed interpretation and interim interpretations, the majority of which addressed either the proposed “continuous lookback” interpretation or the interpretation of the requirement of time off after a series of consecutive days of covered service.  Most opposed the new proposed interpretation.  FRA is in the process of drafting the Final Statement of Agency Policy and Interpretation, which will respond to comments and may revise some of the interim interpretations.

On January 3, 2011, FRA published a proposed rule on safety and health requirements for camp cars used as sleeping quarters for covered-service employees or maintenance-of-way employees.In response to the rulemaking mandate, FRA has proposed to require a number of improvements to camp-car living arrangements.In addition, to implement a related RSIA amendment, the proposal would extend FRA’s existing regulations prohibiting railroads from beginning construction or reconstruction of employee sleeping quarters in the immediate vicinity of switching or humping operations to cover camp cars used as sleeping quarters for maintenance-of-way workers.

Finally, with the assistance of the RSAC, FRA has recently issued and sent to the Federal Register for publication an NPRM to establish hours of service requirements for train employees providing commuter or intercity rail passenger transportation.   When the proposed rule is published in the FederalRegister, FRA will welcome comments.   FRA is working hard to meet the statutory deadline of producing a final rule that is effective before October 16, 2011, to avoid the requirements of the RSIA currently in effect for other train employees going into effect for these employees. 

III. Carrying Out RSIA Provisions on PTC

I would like to end my testimony by discussing the agency’s work to implement the two major RSIA provisions on PTC.  RSIA defines a “positive train control system” as “a system designed to prevent train-to-train collisions, over-speed derailments, incursions into established work zone limits, and the movement of a train through a switch left in the wrong position.”  RSIA requires that by April 16, 2010, each Class I railroad and each entity that provides regularly scheduled intercity or commuter rail passenger transportation submit to FRA (as the Secretary’s delegate) a plan for implementation of such a PTC system on certain specified lines by the end of calendar 2015.  RSIA also requires that the railroad implement a PTC system in accordance with its plan.  Further, RSIA requires that FRA review and either approve or disapprove each plan within 90 days of receipt, conduct an annual review to ensure that railroads are complying with their respective plans, issue regulations or orders necessary to implement that section, and report to Congress by December 31, 2012, on railroads’ progress in implementing PTC systems.  Finally, RSIA allows FRA to require PTC systems on lines other than those specified in the statute, provide technical assistance to railroads in developing their plans, and assess civil penalties for a railroad’s failure to submit a PTC implementation plan or comply with its PTC implementation plan. 

In response to this PTC regulatory mandate in RSIA, FRA conducted a rulemaking with the assistance of its RSAC.  In January 2010, when FRA issued the PTC final rule, the agency simultaneously sought comment on certain narrow issues, in contemplation of making future amendments to the PTC final rule.  The Association of American Railroads (AAR), The Chlorine Institute, Inc., and various other parties filed petitions for reconsideration of the January 2010 final rule, all of which FRA denied by letter in July 2010.  Final rule amendments were published in September 2010.

As to the contents of FRA’s January 2010 PTC final rule as amended in September 2010 (the PTC Rule), it provides that, with some limited exceptions, PTC systems must be installed and operated (1) on lines over which intercity rail passenger transportation or commuter rail passenger transportation is regularly provided and (2) on freight-only rail lines if they are part of a Class I railroad’s system, carrying at least 5 million gross tons (mgt) of freight annually, and carrying any amount of poison- or toxic-by-inhalation (PIH/TIH) material (e.g., chlorine or anhydrous ammonia). 

In issuing the PTC Rule, FRA provided the following exceptions and exclusions that provide relief to the railroads while maintaining safety.  First, a de minimis PIH risk exclusion for low volume Class I tracks that have no passenger traffic.  Second, an exception for low speed operations occurring in passenger yards and terminals when the trains are either empty or no freight operations are permitted and reverse movements are restricted.  Third, an exception for limited passenger operations where track speeds are restricted, temporal separation is maintained, or the passenger trains are operated under a risk mitigation plan.  Fourth, a number of exclusions for Class II and III railroads.  A Class II or III railroad is not required to install PTC on its locomotives when operating on a Class I PTC-equipped track if:  (1) the track segment has no regularly scheduled intercity or commuter passenger rail traffic, or if it does have such traffic, the applicable PTC system permits the operation of a non-equipped train; (2) the operations are restricted to four trains a day; and (3) the train movement is less than 20 miles or if the movement is greater than 20 miles, the non-equipped operations may continue only until December 31, 2020.  A Class II or III railroad is not required to install PTC on its line if:  (1) the freight traffic is less than 15 mgt per year; and (2) if the line segment is un-signaled, no more than 4 regularly scheduled passenger trains operate per day; or if the line segment is signaled, no more than 12 regularly scheduled passenger trains operate per day.

A PTC system or component of such a system may not be permitted to be installed in revenue service unless FRA has certified that the system or component has been approved by FRA.  In order to receive such approval, subject railroads must each submit, and FRA must approve, the following three plans:  (1) a PTC Implementation Plan, which includes a full schedule for PTC system implementation on the railroad by December 31, 2015; (2) a PTC Development Plan, which describes in technical detail the PTC system to be implemented, if the PTC system has not yet been approved by FRA; and (3) a PTC Safety Plan, which shows that the PTC system described in the PTC Development Plan will work correctly in the subject territory. 

Both the PTC Implementation Plan and the PTC Development Plan were required to be submitted together by April 16, 2010.  Simultaneous submission was required to evaluate the feasibility of the proposed PTC Implementation Plan schedule with respect to the technology being selected according to the PTC Development Plan.  In recognition that such an early deadline may limit the railroads’ opportunities to research, bid, and otherwise “shop around” for PTC systems, thus reducing market competitiveness, the rule permitted railroads to submit with their PTC Implementation Plan a shorter version of a PTC Development Plan, called a Notice of Product Intent.  The Notices of Product Intent describe the functions and requirements of the intended system without identifying the particular manufacturer or product.  If a railroad submitted a Notice of Product Intent with its PTC Implementation Plan, the railroad would have an additional 270 days to submit its PTC Development Plan.   

Pursuant to the January 2010 final rule, 41 railroads filed PTC Implementation Plans describing how they proposed to deploy PTC systems on their properties by the December 31, 2015, statutory deadline.  FRA successfully approved or disapproved all of these PTC Implementation Plans before the 90-day deadline specified in the January 2010 PTC rule.  If FRA disapproved the plan, the agency identified the specific issues needing to be addressed.   Of these 41 submissions, FRA approved 24 plans without conditions, provisionally approved 1 plan with conditions, provisionally approved 14 plans submitted with Notices of Product Intent pending resubmission with a PTC Development Plan, and disapproved two plans without prejudice.  FRA staff is diligently working with these two railroads to create an acceptable plan.  As FRA has already informed the Congress, a 42^nd railroad was recently identified that is required to submit a PTC Implementation Plan for a single small section of track, and FRA staff is working closely with a representative of that railroad. 

FRA has subsequently approved dozens of filings seeking approval to modify railroads’ PTC Implementation Plans so as not to install PTC systems on 100 passenger-traffic line segments.  FRA staff has also reviewed more than 100 freight-line-exclusion requests based on a de minimis PIH/TIH risk.  FRA action on some of these requests is pending resolution of the litigation.  FRA expects additional requests for exclusions.

FRA staff is also working with several railroads on final approval of their PTC Development Plans so that their proposed PTC systems may be approved.  FRA is providing both informal and formal technical assistance to railroads via conference calls, working meetings, e-mail exchanges, and other written correspondence.  FRA technical staff is also supporting both laboratory and field PTC system development and implementation testing.  Increased requests for support are expected as the December 31, 2015, implementation deadline approaches.

In addition to supporting PTC implementation by providing technical assistance, FRA has also supported PTC implementation by providing financial assistance.  FRA has two means of providing funding to help offset the significant costs of PTC:  the Railroad Rehabilitation and Improvement Financing Program (commonly known as the “RRIF Program”) and the Railroad Safety Technology Grant Program mandated by RSIA.

Under the RRIF Program, FRA is authorized to provide direct loans and loan guarantees up to $35 billion.  Eligible borrowers include railroads, State and local governments, government-sponsored authorities and corporations, joint ventures that include at least one railroad, and limited-option shippers that intend to construct a new rail connection.  Up to $7 billion is reserved for projects benefitting freight railroads other than Class I carriers.  Direct loans may fund up to 100 percent of a railroad project, with repayment periods of up to 35 years. 

RSIA requires FRA as the Secretary’s delegate “to establish a grant program for the deployment of . . . new or novel railroad safety technology,” which FRA has designated the Railroad Safety Technology Grant Program.  The section authorizes appropriations of $50 million annually from FY 2009 through FY 2013 to implement this section.  FY 2010 was the first year that FRA received an appropriation to carry out this mandate.   In view of the high costs associated with PTC implementation, and the limited funding available in the program, FRA elected to dedicate the FY 2010 funds for collaborative projects that address the resolution of shared technical issues associated with PTC system implementation.  Thus far, FRA has provided nine grants for a total of about $49.9 million under the program.  The nine grants are identified in the following table:

Finally, I would like to close my discussion of FRA’s implementation of the major PTC provisions of RSIA by focusing on the recent settlement agreement in the lawsuit filed by AAR challenging certain provisions of FRA’s PTC Rule.  As previously mentioned, under RSIA, all Class I railroads are required to install PTC systems by December 31, 2015, on their main lines carrying at least 5 million gross tons of annual traffic and any PIH/TIH hazardous materials.  Under the PTC Rule as currently crafted, each railroad’s PTC Implementation Plan must indicate that a PTC system will be implemented on each of its track segments that met these statutory criteria during the year that RSIA became law (2008).  However, the PTC Rule allows for relief from PTC implementation requirements on a track segment if two conditions are satisfied:  (1) if PIH/TIH traffic subsequently ceases on the particular track segment before the end of 2015 or if the annual gross tonnage on the track segment falls below 5 million before the end of 2015 and (2) the track segment passes both a residual risk analysis test (which would be defined in a future rulemaking) and an alternative route analysis test.  These tests have the potential of requiring PTC system implementation on Class I track segments that had PIH/TIH hazardous materials traffic in calendar year 2008, but that would not carry such traffic as of December 31, 2015.

In July 2010, the AAR petitioned the U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit) for review of those provisions of the PTC Rule as well as other provisions regarding requirements associated with the visibility of onboard PTC system information to crewmembers.  Recently the AAR approached FRA and suggested that the parties discuss a possible settlement of the suit.  On March 2 of this year, FRA and the AAR signed a settlement agreement regarding the AAR’s lawsuit, and on

March 3, the D.C. Circuit granted the parties’ motion to hold the case in abeyance with the parties required to file status reports at 60-day intervals. Under the parties’ agreement, FRA will issue two new NPRMs addressing issues that the AAR has raised regarding the PTC Rule.  The reexamination of the PTC Rule is consistent with the President’s recently issued Executive Order 13563 requiring agencies to review their significant rules and ensure that the safety benefits of the rules justify the costs imposed by the rules.    

The first NPRM will address issues related to the requirements to install PTC on Class I railroad mainline track segments that do not carry PIH traffic and are not used for intercity or commuter rail passenger transportation as of December 31, 2015.  The second NPRM will address the issues of how to handle enroute failures of PTC-equipped trains, circumstances under which a signal system may be removed after PTC installation, and whether yard movements and certain other train movements should qualify for a de minimis exception to the PTC Rule.  Upon the completion of the rulemaking proceeding related to the first NPRM, the parties will determine whether to file a joint motion to dismiss the lawsuit in its entirety.   In the second NPRM, FRA expects to address a number of PTC issues unrelated to the litigation that have been raised by the AAR and others since the issuance of the PTC Rule. 

It is our understanding that the AAR will be filing a petition with FRA requesting amendments to the PTC Rule and providing FRA with the safety rationale that the AAR believes supports the requested changes.  Other parties may also seek amendments to the rule. 

In developing an NPRM in response to any rulemaking petition that FRA receives with respect to the PTC Rule, this agency will consult with the PTC working group of the RSAC, which helped FRA develop the PTC Rule.  As previously mentioned, RSAC includes representatives of all of FRA’s major stakeholder groups, which include freight and passenger railroads, labor organizations, etc. 

Both NPRMs will invite public comments on the proposed changes to the PTC Rule.  FRA will consider all comments submitted during the rulemaking comment period in determining (1) whether to issue amendments to the PTC Rule, and (2) if so, the contents of those amendments; as a result, any amendments to the PTC Rule may differ from the proposals contained in the NPRMs. 

IV. Conclusion 

I appreciate this opportunity to speak with you today about FRA’s efforts to implement RSIA and look forward to working with the Committee and Subcommittee to learn your ideas on how FRA can do an even better job implementing this important legislation.  I would be happy to answer any of your questions.

WRITTEN STATEMENT OF

ROBERT C. LAUBY
ASSOCIATE ADMINISTRATOR FOR RAILROAD SAFETY &
CHIEF SAFETY OFFICER,
FEDERAL RAILROAD ADMINISTRATION,
U.S. DEPARTMENT OF TRANSPORTATION

BEFORE THE

COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
U.S. SENATE

“PASSENGER RAIL SAFETY: ACCIDENT PREVENTION AND
ON-GOING EFFORTS TO IMPLEMENT TRAIN CONTROL TECHNOLOGY”

June 10, 2015

Thank you, Chairman Thune and Ranking Member Nelson for inviting me to appear before you today to discuss passenger rail safety.  I want to start by extending our deepest sympathies to the victims and their loved ones of the May 12th Amtrak accident in Philadelphia.  Safety drives everything we do at the Federal Railroad Administration (FRA) and when an accident claims innocent lives and injures from so many it is truly painful for the FRA family.  I assure you that FRA will take every step it can to prevent accidents like this from happening again.

FRA continues to investigate the circumstances surrounding the accident.  While it will take time to complete the investigation, FRA has not and will not wait to take actions that will improve the safety of Amtrak and other passenger rail operations.  For example, on May 16, 4 days after the accident, Acting Administrator Sarah Feinberg directed Amtrak to take several actions before allowing its operations to resume north of Philadelphia.  We followed those directives with an Emergency Order (Emergency Order 31) on May 21.  Amtrak has complied with those directives thus far, and FRA will ensure that Amtrak follows through to fully implement them.

When we released the May 21st Emergency Order, we also stated that we were considering taking additional steps at other passenger railroads that may have similar curve and speed issues.  We continue our work on those directives and plan to release additional information about that work.

And while the cause of this accident has not been officially determined, we know that overspeed was a significant factor and that human error may be involved.  Human error, or human factor, accidents as described in our accident data base remain the leading cause of all rail accidents. They are also the most difficult to address.  Despite those difficulties, FRA is preparing a package of actions that we will finalize in the coming weeks and months aimed at addressing human factor safety issues – safety issues such as speeding, distraction, fatigue and training.  These actions may include additional emergency orders, safety advisories, rulemakings, voluntary agreements, or other initiatives.  

Beyond those next steps, I want to assure you that FRA is firmly committed to taking additional actions – as many as it takes – to mitigate the risks and hazards identified in the ongoing investigation. 

There has been a significant amount of public discussion about what could have prevented this accident.  Which specific technology?  Which new regulation?  The reality is that Positive Train Control (PTC) is specifically designed to prevent overspeed accidents.   If the cause of this incident was overspeed, it would have been prevented by PTC.  As this Committee is well aware, PTC is the single most important railroad safety technological development in more than a century, and it is absolutely necessary to ensuring the kind of safety that we expect on our rail system.  Safety is FRA’s highest priority and despite the challenges facing full implementation of PTC, FRA’s role is to enforce the December 31, 2015, deadline that Congress imposed, and to ensure that railroads implement PTC as safely and efficiently as possible. 

When railroads submitted their Initial PTC Implementation Plan (PTCIP) in 2010, they stated they would meet the 2015 deadline per the requirements of the Railroad Safety Improvement Act (RSIA).  All the submitted plans assumed that there would be few, if any technical and programmatic issues related to the design, development, integration, deployment, and testing that would require resolution. 

In 2013, U.S. Class I^[1] railroads operated approximately 162,000 miles of track, 60,000 miles of which potentially require the installation of PTC^[2] under the current laws and regulations.  Intercity passenger and commuter railroad operations account for an additional estimated 8,400^[3] miles of track that is required to be equipped with PTC.

FRA has been actively pushing the railroads to have PTC fully implemented by the deadline.  We have met with the railroads for years on this issue, we have hired staff to assist and oversee the implementation of the technology, we have urged the timely submission of PTC development and safety plans, we have discussed progress with individual railroads and with the Association of American Railroads (AAR), and we have worked directly with the FCC to resolve issues related to spectrum.  Acting Administrator Feinberg also established a PTC Implementation Team that is aggressively managing this critical, Congressionally-mandated safety technology that will reduce the risk of human factor caused accidents and save lives.

For more than three years, FRA has been sounding the alarm that most railroads have not made sufficient progress to meet the December 2015 deadline.  We have noted that the certification and installation of PTC systems are significant undertakings.  FRA highlighted its concerns about PTC implementation in its August 2012 PTC report to Congress, as well as in the GROW AMERICA Act[4].  Among those are the following challenges:

• Design Specification Availability
• Back office Servers and Dispatch System Availability
• Track Database Verification
• Installation Engineering
• Communications Spectrum Availability
• Radio Availability
• Reliability and Availability
• Funding

FRA has long stated that a lack of public sector funding may cause unwanted delays in fully implementing PTC.  FRA has requested funding for PTC development and implementation grants in every budget request dating back to Fiscal Year (FY) 2011.  For the past two years, as part of the GROW AMERICA Act, FRA has requested $825 million to assist commuter railroads with the implementation of PTC, as well as additional funding to aid with the implementation of PTC on Amtrak’s national network. 

Despite a lack of federal funding directed to commuter railroads, FRA is using the resources it has available now to assist railroads in implementing PTC.  For example, FRA issued a $967.1 million loan through the Railroad Rehabilitation and Improvement Financing (RRIF) program to the New York Metropolitan Transportation Authority, the nation’s largest commuter railroad provider, to facilitate the deployment of the technology.

In addition to the same practical and logistical project management challenges affecting the freight railroads, intercity and commuter passenger railroads face other challenges due to their public sector nature and heavy reliance upon operating subsidies.  These railroads must advance PTC system implementation within a fiscal environment already constrained by the limited availability of capital funds.  FRA expects that when PTC technology is fully mature, it will  have a positive, transformative impact on railroad safety and operating efficiency in the decades to come. 

If, on January 1, 2016, railroads required to implement PTC systems are in violation of this statutory deadline, FRA will take appropriate enforcement actions consistent with its statutory authority and regulatory oversight responsibilities to achieve compliance.  Stakeholders and the Congress have asked FRA for guidance on how to approach concerns about railroads not meeting the mandated deadline.  To address those concerns, the GROW AMERICA Act the Department submitted to Congress in April 2014 and March 2015 proposed that FRA be granted authority to review, approve, and provisionally certify PTC plans on a railroad-by-railroad basis.  FRA asked for this authority so that it could continue to assist the railroads to get PTC implemented as quickly as possible for it is only through implementation of PTC that accidents like the derailment of Amtrak train 188 can truly be prevented.

Provisional certification would also give FRA the authority to establish conditions to ensure railroads raise the bar on safety and establish appropriate back stops even as they continue to work towards full PTC implementation.  GROW AMERICA would also provide FRA the authority to establish implementation milestones, use alternative methods of protection in lieu of PTC systems to achieve safety improvements and require coordination between the U.S. Department of Transportation and the Federal Communications Commission (FCC) to assess required spectrum needs and availability to implement PTC systems.  GROW AMERICA also proposes to provide more than $3 billion over 6 years to help pay for PTC implementation on publicly-funded commuter railroads and Amtrak routes.

To summarize, FRA has actively supported deployment of PTC through the issuance of performance-based regulations and technical assistance documents to aid railroads, manufacturers, and suppliers to achieve full PTC functionality and interoperability.  Over the course of several decades, FRA and the railroad industry have sponsored and conducted numerous research and technology demonstration projects to evaluate or improve upon signal and train control technologies that have evolved into what is now known as PTC.  Since 2000 FRA has published over 50 technical reports, several Research Results, and numerous other reports to support its rulemaking activities.  FRA has also built a PTC system test bed at its Transportation Technology Center in Pueblo, CO.  This facility is available to the railroad industry as they work to successfully integrate and test all of component technologies necessary to achieve implementation.

The difficulties being encountered, while not insurmountable, are highly complex and require a significant investment of time, people, and resources to successfully resolve.  The public policy implications of railroads failing to meet the PTC deadline are serious.  FRA has been dedicating resources and working diligently to support the industry for years to achieve full PTC implementation where required by the statutory deadline.  If Congress provides FRA the authority and flexibility as requested in the GROW AMERICA Act, then PTC implementation can be managed safely, efficiently, and effectively.

In conclusion, safety will always be FRA’s first priority.  We appreciate this Committee’s attention and focus on issues related to railroad safety.  Again, I want to express our deepest sorrow for the victims and their families. We look forward to working with this Committee to improve our programs and make the American rail network as safe, reliable, and efficient as possible.  I am happy to respond to your questions.

WRITTEN STATEMENT OF

SARAH FEINBERG
ACTING ADMINISTRATOR,
FEDERAL RAILROAD ADMINISTRATION
U.S. DEPARTMENT OF TRANSPORTATION

BEFORE THE

COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE,
SUBCOMMITTEE ON RAILROADS, PIPELINES, AND HAZARDOUS MATERIALS
U.S. HOUSE OF REPRESENTATIVES

"The State of Positive Train Control Implementation in the United States"

June 24, 2015

Chairman Denham, Ranking Member Capuano, and Members of the Subcommittee, thank you for the opportunity to appear before you today to discuss issues related to positive train control (PTC) implementation in the United States.

PTC technology is arguably the single most important railroad safety technological development in more than a century.  The technology is not new—early versions of PTC technology existed in the early 20^th century—and regulators and safety advocates have been calling on the rail industry to implement some form of PTC technology for many decades.

The Rail Safety Improvement Act of 2008 (RSIA) requires our current version of PTC (i.e., the type that is designed to prevent train-to-train collisions, over-speed derailments, train incursions into established work zones, and movement of a train through a switch left in the wrong position) to be fully installed and implemented by December 31, 2015.  RSIA requires the technology to be implemented on Class I railroad main lines—lines with 5 million or more gross tons annually—over which any poisonous or toxic by inhalation hazardous materials are transported (with limited exceptions and exclusions).  RSIA also mandates the technology on any railroad’s main line over which regularly scheduled intercity or commuter rail passenger service is conducted. 

FRA currently estimates that this will equate to approximately 70,000 route miles of track and will involve approximately 20,000 locomotives.  

Since passage of RSIA, railroads submitted their PTC Implementation Plans (PTCIP) to FRA in 2010.  Each plan documented a path to implementation that would meet the deadline.

As I have stated before this Committee previously, and as I state again today in no uncertain terms, safety is the Federal Railroad Administration’s (FRA) top priority.  Simply put, the rail system is not as safe as it could be without full implementation of PTC.  A safe rail system requires full implementation of Positive Train Control.  Therefore, FRA will enforce the December 31, 2015, deadline for implementation, as mandated by Congress.

If PTC is not fully implemented by January 1, 2016, we can and should expect there to be accidents in the months and years to follow that PTC could have prevented.  We owe it to the public to ensure that PTC-preventable accidents, such as the Amtrak Train 188 derailment north of Philadelphia on May 12, 2015, do not occur by ensuring that certified, fully-operational PTC systems are in place on the routes that require them as quickly as possible.

Enforcement Policy

In the nearly seven years since RSIA was passed and in the four and a half years since the railroads submitted their PTC Implementation Plans, the freight and passenger railroad industry has worked to develop PTC systems that will meet Federal statutory and regulatory requirements.  

During this time, FRA has observed a wide range of efforts and resources that have been applied to PTC by different railroads.  Some have diligently worked to implement this technology on time, some have worked to make progress on implementation but have been stymied by costs or spectrum availability, and some have chosen not to make implementation a priority.

FRA has noted previously that the implementation and certification of PTC systems are significant undertakings—implementation of PTC is both expensive and complicated.  However, the challenges of implementing PTC are not insurmountable, particularly several decades after the introduction of PTC technology, two decades following NTSB recommendations, seven years following passage of RSIA, and more than four years following official FRA guidance.

The following is a summary of FRA’s enforcement policy under our current authorities.  The enforcement policy presented below is designed to bring railroads that are in violation of the deadline into compliance with the law as soon as safely possible.

• FRA can assess civil monetary penalties starting January 1, 2016.
• Fines vary based on a railroad’s failure to comply with Federal PTC regulations.  FRA’s PTC penalty guidelines establish different penalties depending on the violation. Examples include a $2,500 fine for a non-willful failure to keep records and a $25,000 fine for willful failure to complete PTC system installation on a track segment.  FRA may assess the penalties per violation per day
• FRA reserves the right to use any and all enforcement tools from civil penalties to emergency orders, to require the railroads to make progress on PTC implementation to ensure public safety prior to January 1, 2016.

Many railroads have stated publicly that despite significant enforcement and liability concerns, they still will not meet the December 31, 2015, deadline.

In light of the concerns that some railroads would not meet the deadline, the Department’s GROW AMERICA Act^[1] submitted to Congress in April 2014 and March 2015 proposed that the Congress provide FRA with additional authorities that would address the safety gap that will exist for many railroads between January 1, 2016, and full PTC implementation.  The Department requested these new authorities to allow FRA to review, approve, and require interim safety measures for individual railroads that may fail to meet the PTC deadline (such as allowing portions of PTC to be turned on for certain segments rather than waiting for an entire system to be completed; the goal of these interim safety requirements is to ensure adequate safety for railroads that miss the PTC deadline.  

These interim requirements will not serve as an extension of the PTC deadline; rather they are strictly designed to enable FRA to bring railroads into compliance safely.

FRA recommends that Congress:

1. Grant FRA authority over PTC systems and their operation under controlled conditions before final system certification is complete.  This would allow for the incremental use of PTC systems as they are progressively rolled out and simultaneously increase operating safety because railroads could “turn on” portions of PTC on certain segments of track prior to turning on the technology for the entire system; and   
    
2. Authorize FRA to require railroad use of alternative safety technologies on specified line segments in lieu of PTC until PTC is fully implemented.

These interim requirements will likely be costly to railroads, but FRA believes they will save lives while bridging the gap to successful PTC implementation.

Status of PTC Implementation

FRA Action

In the seven years since passage of RSIA, FRA has dedicated significant resources and worked closely with the railroad industry on PTC, including taking the following steps: 

• Hiring staff to assist and oversee the implementation of PTC technology;
• Urging timely submission of PTC development and safety plans;
• Discussing progress with individual railroads and with the Association of American Railroads (AAR) and American Public Transportation Association (APTA);
• Working directly with the Federal Communications Commission to resolve issues related to spectrum and improve the approval process related to PTC communication towers;
• Actively supporting deployment of PTC through the issuance of RSIA-mandated performance-based regulations in January 2010 as well as additional regulations that lightened the regulatory burden and technical assistance documents to aid railroads, manufacturers, and suppliers to achieve full PTC functionality and interoperability;
• Building a PTC system test bed at the Transportation Technology Center in Pueblo, CO (which is available to railroads as they work to successfully integrate and test all of component technologies necessary to achieve implementation); and
• Making loans available through the Railroad Rehabilitation & Improvement Financing (RRIF) program to applicants interested in assistance in paying for PTC implementation.

Railroads and Implementation

When railroads submitted their PTCIPs in 2010, they stated they would meet the 2015 deadline per the requirements of RSIA.  All submitted plans acknowledged that there would be few, if any, technical and programmatic issues related to the design, development, integration, deployment, and testing of PTC systems that would require resolution.

For more than three years, FRA has monitored these technical and programmatic aspects and has sounded the alarm that most railroads are not making sufficient progress to meet the December 2015 deadline.  FRA highlighted its concerns about PTC implementation in its August 2012 PTC report to Congress, as well as in the GROW AMERICA Act, and multiple public remarks, statements, and congressional testimony.

For those railroads that do not meet the PTC deadline, our goal is to achieve full PTC implementation as safely and efficiently as possible.

To facilitate implementation, I have established a PTC Implementation Team that is aggressively managing and monitoring the railroads’ progress so that we have accurate and critical information to inform our enforcement actions.  This team supplements additional staff working on PTC implementation full time. The team monitors the status of each railroad’s PTC implementation, works with the railroad to gather data and answer questions, and tracks when the railroad will have a fully operational system.  

Accurate and timely data from the railroads is essential to FRA’s effectiveness.  Recently, FRA received updated information about PTC implementation from 32 of the 38 railroads that we are currently tracking for enforcement purposes.  Initial analysis, along with supplementary data from AAR, indicates the following:

Class I railroads have:

• Completed or partially completed installations of more than 50 percent of locomotives that require PTC equipment;
• Deployed approximately 50 percent of wayside interface units;
• Replaced approximately 50 percent of signals that need replacement; and
• Completed most of the required mapping for PTC tracks.

By the end of 2015, AAR projects that:

• 39 percent of locomotives will be fully equipped;
• 76 percent of wayside interface units will be installed;
• 67 percent of base station radios will be installed; and
• 34 percent of required employees will be trained.

According to APTA, 29 percent of commuter railroads, excluding Amtrak, are targeting to complete installation of PTC equipment by the end of 2015.  Full implementation of PTC for all commuter lines is projected by 2020.  

A recent status update from Amtrak states: 

• 85 percent of locomotives have been equipped with PTC to date, including approximately 97 percent of locomotives for the Northeast Corridor (NEC);
• 63 percent of track miles have been mapped;
• For the NEC, New Haven, CT to Boston, MA and portions of the railroad between New York, NY and Washington, DC, have PTC in service presently. 
• By December 2015, PTC will be in service throughout the sections of the NEC operated and maintained by Amtrak.  This will leave a 56 mile section without PTC on the segment owned by the states of New York and Connecticut that Metro-North Railroad operates and maintains.  The Harold Interlocking, owned by Long Island Railroad, in Queens, NY also lacks PTC deployment; and
• Outside of the NEC, PTC is currently in service on the 97 miles of the Michigan Line owned by Amtrak between Porter, IN and Kalamazoo, MI.  By December 2015, the Amtrak-owned Keystone Corridor from Philadelphia, PA to Harrisburg, PA and the Empire Connection in New York will also be completed and in service.

FRA Financial Support for PTC

FRA has long stated that a lack of public sector funding may result in unwanted delays in fully implementing PTC.  FRA has requested funding for PTC development and implementation grants in every budget request dating back to Fiscal Year (FY) 2011. 

For the past two years, as part of the GROW AMERICA Act, FRA has requested $825 million to assist commuter railroads with the implementation of PTC and additional funding to aid with the implementation of PTC on Amtrak’s national network.

It is important to note that safety benefits, including those generated through the implementation of PTC, are a key criterion in FRA’s grant programs.  To that end, FRA has provided approximately $650 million in grant funds to support PTC.  This includes American Recovery and Reinvestment Act of 2009 grants through our High-Speed Intercity Passenger Rail program as well as Amtrak grants and other annual appropriations.

In addition to mandating the December 31, 2015, PTC implementation deadline, the RSIA also authorized a grant program to assist in the deployment of PTC and other rail safety technology.  Congress appropriated $50 million for the program in FY 2010.  FRA awarded these funds to ten projects to help mitigate technical PTC deployment challenges affecting stakeholders.  FRA recently added an additional $11 million from new authority provided under the FY 2014 Consolidated Appropriations Act for a total of $61 million in Railroad Safety Technology Grants.

Despite the lack of sufficient funding directed to commuter railroads, FRA is using the resources it has available to help railroads implement PTC.  On May 6, 2015, FRA issued a $967 million loan through the RRIF program to the New York Metropolitan Transportation Authority, the Nation’s largest commuter railroad provider, to facilitate deployment of the technology by Metro-North Railroad and Long Island Rail Road.

Conclusion

Thank you for the opportunity to testify and answer your questions today.  Safety is FRA’s first priority, and we appreciate your attention and focus on issues related to the impending deadline for PTC implementation and our enforcement policy for railroads that do not meet the deadline.

We look forward to working with this Subcommittee to improve our programs and make the American rail network as safe, reliable, and efficient as possible.  I will be happy to respond to your questions.