House Subcommittee Hearing Tackles Capital Funding Challenges, but Fails to Address the Ballooning Cost of U.S. Rail Infrastructure

On Wednesday, March 4, the House Subcommittee on Railroads, Pipelines, and Hazardous Materials held a hearing entitled “Funding a Robust Freight and Passenger Rail Network.” Witnesses included:

  • Stephen Gardner, Senior Executive Vice President and, Chief Operating and Commercial Officer, Amtrak
  • Sandra Bury, Mayor, Village of Oak Lawn, Illinois
  • Kevin Corbett, President and Chief Operating Officer, NJ TRANSIT Corporation
  • Rob Shanahan, Assistant to the President, Brotherhood of Maintenance of Way Employees Division – International Brotherhood of Teamsters
  • Kevin Artl, President and Chief Operating Officer, American Council of Engineering Companies of Illinois
  • Ian Jefferies, President, Association of American Railroads

In the wake of the impending surface transportation reauthorization and House Democrats’ recently unveiled $55 billion in proposed investment in rail infrastructure, the subcommittee discussed opportunities and challenges in utilizing federal investment in rail. Witnesses and members addressed a range of topics including lengthy state of good repair backlogs, lack of dedicated funding for grade separation projects, labor protections, and the role of the federal government in partnering with freight railroads.

Amtrak’s Gardner highlighted recent ridership and passenger revenue growth along with reduced operating losses that will allow Amtrak to maximize federal funds for its capital investment backlog. He argued that intercity passenger rail service could and should become a key part of the nation’s response to the climate crisis, but cited four key obstacles that stymie Amtrak’s ability to expand service: 1) insufficient long-term federal funding for frequency expansion and route improvements, 2) a high burden on states to provide capital and operational funding, 3) decades of insufficient federal funding for fleet improvements and a lack of equipment to support growth, and 4) Amtrak’s ongoing struggle to get reasonable access to host railroads’ infrastructure.

As lawmakers gear up for the FAST Act reauthorization, Gardner called for the establishment of a long-term source of revenue for capital expansion, fleet replacement, and infrastructure renewal, funding to provide initial capital assistance to states, a fair and expedited process for Amtrak to secure access to host railroads, stronger enforcement of preferential access laws, and significant funding for rail mega projects.

Dr. Bury, Mayor of Oak Lawn, Illinois, spoke about the challenges her city faces as a result of Metra’s capital backlog. Metra’s lack of funding for signal replacement has prevented Oak Lawn from activating a new traffic signal near its rail station and consequently delaying planned development in the heart of her city. In addition to depressing local economic development, the lack of steady capital funding and cooperation with freight railroads has precluded service expansion for commuter rail and reduced Oak Lawn residents’ access to jobs and recreation in Chicago.

Corbett spoke about the need for more flexibility for FRA grant recipients to use unexpended funds to further other elements of a project if they come under budget, and emphasized the importance of replacing the Portal North Bridge. He also emphasized the need for new tunnels under the Hudson River, citing the maxed-out capacity on the region’s two century-old tunnels and impact of train disruptions and a lack of capacity on both regional and national economic productivity.

Shanahan testified about his personal experiences as a union railroad worker and the dangerous environments workers often find themselves in when performing repairs and maintenance of aging infrastructure. His testimony emphasized the need to ensure future rail work is carried out by properly-trained union workers, and criticized Amtrak for assigning work to non-union contractors who only minimally comply with FRA regulations.

Artl’s testimony primarily focused on the importance of federal funding in completing critical capital projects, addressing state of good repair backlogs, and leveraging state and local funding for projects, particularly for larger urban rail projects. He also praised Chicago’s CREATE program – a $3.2 billion public-private partnership between USDOT, Illinois, Cook County, City of Chicago, Metra, Amtrak, and freight railroads to fund over 70 capital projects – as a model for federal investment, while also citing the need for more investment in grade separation projects given their public safety and quality of life implications.

AAR’s Jefferies focused on the role that public-private partnerships like CREATE can play as models for federal investment and partnership with railroads, and the need to emphasize safety, capacity for shippers, sufficient passenger rail funding, and mutually agreed-upon timetables for successful freight and passenger rail agreements.

Economic Development and Congestion Relief

Questioning from several representatives highlighted the need for capacity expansion in major rail corridors and the impact of capital funding constraints on economic growth. T&I Committee Chairman Peter DeFazio (D-OR), Rep. Donald Payne (D-NJ), and Rep. Tom Malinowski (D-NJ) all emphasized the critical need for new tunnels under the Hudson River and panned recent comments from Secretary Chao that suggested that the existing tunnels could be repaired until an agreement is reached on new capacity. The representatives argued that such an arrangement would not be possible, and that any repairs to existing tunnels will not addresses the major capacity constraints on the regions’ rail infrastructure and cited the significant national economic disruption that could come with rail disruption and lack of service in the region that serves as a center of global commerce.

Concerns about limited service and capacity were not limited to a megaregion like New York, but was also cited as a challenge for suburbs like Oak Lawn. In response to questioning by Subcommittee Chairman Dan Lipinski (D-IL) on commuter rail service expansion, Dr. Bury explained how low weekend ridership is often used to push back against requests for more weekend service in Oak Lawn even though the low ridership could be a result of inconvenient weekend service. She further discussed the impact that limited service has had on the property values and economic development opportunities in a suburb like Oak Lawn.

Grade Separation and Rural Rail Service

Several members, including Chairman Lipinski, Rep. Greg Pence (R-IN), and Rep. Jesús García (D-IL), pressed for more suggestions on how the federal government can help advance grade separation projects, which often fare poorly when competing for funding with other highway projects. Mr. Artl suggested that offering dedicated grants for grade separation projects would be a promising first step, and argued for full funding of the Section 130 program, which allocates federal funding for a range of projects including grade crossings and separations. In addition to dedicated funding for grade separations, witnesses like Jefferies spoke in favor of making the shortline tax credit permanent to provide more opportunities for strengthening and expanding rail service in rural areas, which are often served by shortline railroads.

The High Cost of American Rail Infrastructure

Wednesday’s hearing underscored the need for stable, dedicated funding for capital investments in rail and laid bare the challenges in delivering transformative projects that can relieve congestion, boost economic growth, and reduce emissions. However, among the project delivery challenges missing from the discussion, was the high cost of U.S. rail infrastructure. The United States consistently has some of the most expensive rail projects in the world. From notorious outliers like the Second Avenue Subway ($2.6 billion per mile) project in New York to other costly projects like San Francisco’s Central Subway ($920 million per mile), Boston’s Green Line ($490 million per mile), and Los Angeles’ Purple Line ($800 million per mile), U.S. cities are getting less infrastructure for each dollar invested than their counterparts.

Cities like Paris ($160-320 million per mile), Madrid ($80-125 million per mile), and Copenhagen ($323 million per mile) have built out expansive rail and public transit systems for a fraction of the cost. Policymakers and researchers point to a range of possible culprits, from overregulation and Buy America requirements to labor, contracting, and governance models, among others.  In December 2019, Eno kicked off a year-long study to better understand factors driving the costs and delayed delivery of America’s notoriously expensive rail projects. Eno staff will be conducting three domestic and three international case studies of rail projects to further explore the challenges in delivering major transit projects in the United States and identify best practices.

While the capital funding challenges raised in Wednesday’s hearing will play an important role in building a robust network of freight and passenger rail in the United States, lawmakers seeking to make the most of every federal dollar spent on rail infrastructure would be remiss to not also tackle the ballooning cost of U.S. rail. New capital funding solutions are an important first step, but may ultimately be of limited utility so long as transformative rail projects that could make a significant dent in emissions and congestion reduction remains cost prohibitive to build.

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