House Transportation & Infrastructure Committee's Panel on Public-Private Partnerships Release Recommendations

On September 17, the House Transportation & Infrastructure Committee’s Panel on Public-Private Partnerships (P3s) released its report and recommendations.  The group, empaneled in February of this year, was tasked with examining “issues regarding public-private partnerships across all aspects of the Committee’s jurisdiction.”  The panel held two hearings and seven roundtable discussions in addition to other meetings and briefings. The report recognizes that the nation’s infrastructure needs are extraordinary and P3s in certain situations can provide innovative solutions, and in some ways, incentives for projects to be delivered on-time and on-budget.

Under three broad areas, the panel makes a series of recommendations:

  1. Improving Public Sector Capacity;
  2. Breaking Down Barriers to Consideration; and
  3. Ensuring Transparency and Accountability.

Improving Public Sector Capacity:

The panel recommends directing the U.S. Department of Transportation (USDOT) to create a “Transportation Procurement Office” to work with federal funding recipients to implement best practices for design-bid-build, design-build, and P3 procurements, including P3 model contracts. The Transportation Procurement Office would also develop and institute project delivery performance standards for the same three types of procurements. It would also “issue best practices on standardizing state P3 authorities and practices.” The report also recommends directing USDOT to require State Departments of Transportation (State DOTs) to submit annual reports on project procurement performance as measured against the Transportation Procurement Office’s standards. USDOT should also “encourage the simplification and standardization of P3 contracts,” act as a clearinghouse for “lessons learned,” and encourage inter-state coordination in creating legislation to authorize P3 procurements so that states successfully using P3s can share their expertise. 

In background notes on these recommendations, the panel observes that because State DOTs currently contract for most design work and project construction, they are already engaging in P3s. But missing in these current contract structures are the incentives for on-time and on-budget performance.

Breaking Down Barriers to Consideration:

The panel supports a continuation of the Transportation Infrastructure Finance and Innovation Act (TIFIA) program and encourages “Congress to review Private Activity Bond (PAB) eligibility to support infrastructure P3s across the jurisdiction of the Committee.”  It also makes specific recommendations to USDOT and other federal agencies to encourage the use of P3s, such as clarifying the “statutory authority to allow states to use federal-aid highway funds to ensure robust competition in P3 procurements.”  It encourages federal agencies currently implementing TIFIA to share lessons learned as the federal government begins to implement the new Water Infrastructure Finance and Innovation Act (WIFIA). Additionally, it recommends changes in budgetary scoring rules and fully utilizing existing lease authorities as they relate to property leases.

Ensuring Transparency and Accountability:

The panel makes several recommendations that would provide additional information to the public about components of P3s that use federal grants, loans and tax incentives. The Panel recommends that USDOT be directed to require P3 project sponsors using federal funds to make publicly available a Value for Money (VfM) analysis before advancing the project via a P3 procurement.  The panel also recommends directing agencies to provide a “detailed summary” of federal investment in the project at the time federal funds are committed. The report suggests that key terms and conditions of P3s using federal funds be made available to the public “at an appropriate time in the decision-making process.” Further, the panel recommends requiring public project sponsors to conduct a review of P3 projects that utilized federal funds within three years of construction completion or revenue service and make publicly available information about whether the private partners are living up to the goals of the agreement.

In background notes on these recommendations, the panel observes that VfM analyses currently vary in “quality and content” and are not always publicly available. The panel also heard concerns that the public should be made aware of all factors involved in the P3 delivery method to make a fully informed decision about an agreement that could last for 30 years or more.
 

USDOT Official Comments on P3s

Victor Mendez, Acting Deputy Secretary at the U.S. Department of Transportation, participated this morning in a Bloomberg Government panel entitled “America on the Move: Investing in U.S. Infrastructure.” In a wide-ranging discussion, he addressed the issue of long-term funding for U.S. infrastructure.

He commented that there is a need for many funding options and we need the private sector in the mix. The TIFIA program has been successful, financing 40 or so projects so far with the private sector, many of them toll roads.  Some of the projects are very long term, up to 50 years.

Mendez was asked specifically about the House Transportation and Infrastructure Committee’s panel on public-private partnerships and what USDOT thinks about P3s. He repeated that the private sector has to be engaged, as we do not have enough public sector funding to do what we need to for U.S. infrastructure, and the Department supports P3s.  He commented that we have not figured out completely how to advance P3s and bring the private sector to the table, and we need to keep working on it. He spoke directly to the private sector, saying that “your ideas are critical.”  He said that through TIFIA, successful loans have been made, but getting through the negotiations can be onerous, with every deal different, and some of them very complex.  Getting the negotiations done in a more streamlined fashion will be important for all players.

He also talked about the importance of streamlining the permitting process for infrastructure.  He noted that while much of the discussion about infrastructure is focused on funding, there are other policy areas, like the permitting process, to be addressed.

USDOT to Hire Director, Office of Infrastructure Finance and Innovation

The U.S. Department of Transportation is looking to hire a new Director of the Office of Infrastructure Finance and Innovation.

The Office of Transportation Policy is responsible for recommending overall surface transportation policy initiatives to the Secretary as well as reviewing all proposed Department of Transportation (DOT) rulemakings, legislation, testimony and reports to Congress.  Additionally, the office is responsible for reviewing economic analyses of air safety regulations, reviewing airport infrastructure programs, and planning air freight policies.

The Director of the Office of Infrastructure Finance and Innovation develops DOT-wide financially efficient policies to improve transportation infrastructure, creates new initiatives to finance this effort and analyzes the cost and benefits of transportation rulemakings.  The Director will serve as the program manager for the $3.6 billion Transportation Investment Generating Economic Recovery (TIGER) discretionary grant program.  The Director provides oversight of the life cycle of over 120 infrastructure grants administered and advises the Secretary. The Director consults with the Assistant Secretary for Transportation Policy, the Under Secretary and the Secretary while providing executive direction in the formulation and recommendation of policies pertaining to the development of nationally significant projects that utilize efficient pricing mechanisms and/or new approaches to leveraging private sector resource expertise.

In addition, the Director will guide the $6.7 billion Transportation Infrastructure and Finance Innovation Act (TIFIA) Program and the $2.1 billion Private Activity Bond (PAB) Program.  These programs are critical in helping the Department create policies, programs and regulations promoting more efficient transportation infrastructure pricing and finance alternatives.  For more information, see www.dot.gov.

For more information on this opportunity, view the position announcement and organizational chart.

The Government Shutdown's Impacts on Federal Transportation Agencies

In anticipation of the US federal shutdown which occurred on October 1st, this year, the U.S. Department of Transportation (USDOT) on September 27th outlined its shutdown plan, which includes furloughs for more than 18,000 of its approximately 55,000 employees. 

The various agencies within USDOT have been impacted differently by the shutdown, depending on the extent to which their activities are funded through the federal government’s annual appropriations process, which lapsed this year and resulted in the current funding gap that caused the shutdown.  

The shutdown’s impact on the Federal Highway Administration (FHWA) has been minimal. While the transportation appropriations bill is a part of the annual appropriations process, FHWA is funded out of the Highway Trust Fund, for which MAP-21 granted multi-year spending authority through the end Fiscal Year 2014 (September 30, 2014).  In general, federal activities funded with multi-year appropriations of budget authority that did not expire at the end of Fiscal Year 2013 were not subject to the shutdown.  As a result, all of FHWA’s operations continue as normal.

In contrast, staffing for the Federal Transit Administration (FTA) is dependant on the annual appropriations process, so almost all of the agency’s staff was furloughed as a result of the shutdown.  Consequently, much of FTA’s normal activities were suspended, including the obligation of grants, the reimbursement to grantees for ongoing operations and construction projects, and the carrying out of environmental, legal, civil rights, and other reviews essential for advancing projects to the point of a funding obligation. 

As to TIFIA, we understand that that Joint Program Office is working during the shutdown but that USDOT is not granting PABs allocations because of staff furloughs.

Click on the following link to view the UDSOT’s shutdown plan which describes the operations of all its agencies during the shutdown: http://www.dot.gov/sites/dot.dev/files/docs/DOT%202014%20Plan%20for%20Approp%20Lapse.pdf.  And for a detailed explanation of the causes, processes, and effects of the federal shutdown visit: http://www.fas.org/sgp/crs/misc/RL34680.pdf.

USDOT Announces Fifth Round of TIGER Discretionary Grants

This morning, U.S. Department of Transportation (USDOT) Secretary Anthony Foxx announced the winners of the fifth round of the Department’s highly competitive Transportation Investment Generating Economic Recovery (TIGER) discretionary grant program.  From 585 applications requesting more than $9 billion, USDOT selected 52 transportation infrastructure projects in 37 states that will receive a total of $474 million. 

Notable grants awarded today include more than $9 million to the Michigan Department of Transportation for its Kalamazoo to Dearborn passenger rail project, $14 million for the San Diego Association of Governments for the Pacific Surfliner Coastal Railway Bridges project, nearly $14 million to the Florida Department of Transportation for the South Florida Freight & Passenger Rail Enhancement project, $20 million for the Kansas City Downtown Streetcar, and $18 million to the City of Atlanta to construct a portion of the Atlanta Beltline Corridor.  All projects selected today – which include, roads, bridges, railroads, ports, and transit systems – are summarized in these USDOT fact sheets.

USDOT awards TIGER grants on a competitive basis based on published selection criteria.  Unlike traditional federal programs, TIGER often funds large, multi-modal projects that are not suitable for other federal funding sources.  TIGER funds also leverage private and other non-federal funds, and USDOT reports that this current round of TIGER funding supports $1.8 billion in overall project investments.

Congress created the TIGER program through the American Recovery and Reinvestment Act of 2009 to provide economic stimulus during the previous recession, and Congress has continued to fund the program (albeit in decreasing annual amounts) over the last four years through annual appropriations.

USDOT Issues Temporary Exemption from Buy America for Certain Utility Relocations

Following up on our previous post regarding the uncertainty surrounding the application of Buy America requirements to utility relocations, the United States Department of Transportation (USDOT) has recently released two documents that provide further clarification on the matter.

On July 11, 2013, USDOT circulated an internal memorandum to Federal Highway Administration (FHWA) Division Administrators and the Directors of Field Services acknowledging that the broadened application of Buy America has created implementation issues for the utility industry and caused delays for ongoing highway construction projects.  To address these concerns, for non-Federally funded utility relocations, FHWA will allow utility companies until December 31, 2013 to take the necessary steps to ensure that the steel and iron products they use are in compliance with Buy America requirements.  On July 12th, the FHWA California Division issued a subsequent letter to the California Department of Transportation further noting that project-specific utility agreements executed on or before December 31, 2013, that do not have federal funding, are exempt from Buy America requirements.

Click on the following links to view the full memorandum and letter.

Thanks to Frank Liu for his assistance with this entry.

TIFIA Joint Program Office to Move?

In addition to taking testimony from public agency project sponsors and industry leaders during the July 24, 2013 oversight hearing on TIFIA conducted by the Senate Committee on Environment and Public Works, the Committee heard from the Secretary of Transportation, Anthony Foxx, regarding the U.S. Department of Transportation’s (“USDOT”) implementation of the TIFIA Program since the July 6, 2012 enactment of MAP-21. 

While touting the overall success of the TIFIA program and detailing USDOT’s efforts to move projects through the TIFIA pipeline, Secretary Foxx also announced preliminary plans to move the TIFIA Joint Program Office from its current home under the Federal Highway Administration to the Office of the Secretary.  Citing a need to create a “more streamlined management approach” to address increasingly large and complex loan requests, Secretary Foxx indicated his belief that such a move would allow for more effective implementation of the TIFIA program.  It remains to be seen whether this change will occur and, if it does, whether it will expedite the TIFIA process and approval time.

Click here for Secretary Foxx’s full testimony.
 

Senate Committee on Environment and Public Works Holds Oversight Hearing on TIFIA, Nossaman Partner Testifies

Showing concern for the TIFIA JPO’s slow pace of credit approvals for major US transportation, on July 24, 2013, the Senate Committee on Environment and Public Works conducted an oversight hearing on the implementation of the TIFIA Program following MAP 21’s expansion of the program almost a year ago.  We are aware of only one project that has received credit approval in that time frame.

Geoff Yarema, a partner in the Infrastructure Practice Group and a member of the National Surface Transportation Infrastructure Financing Commission, provided testimony today at the hearing.

In his testimony, Geoff pointed to the importance of the TIFIA program in supporting large scale infrastructure projects by allowing applicants to leverage fewer federal dollars to maximize local, state and private funds.  The passage of MAP-21, he said has greatly enhanced the availability of TIFIA loans from approximately $122 million a year to $750 million in FY 2013 and $1 billion in FY 2014.  States and regional governments have been increasingly looking to the TIFIA program as a key component of their transportation funding and financing plans.  

However, Geoff noted that the U.S. Department of Transportation (“USDOT”) faces certain challenges that need to be resolved to accelerate TIFIA’s approval process: (a) streamlining the pre-application process, (b) enhancing bidding competition with earlier TIFIA commitments to public sponsors, (c) accelerating financial closing, (d) preserving TIFIA’s value proposition to maintain flexible loan terms, (e) enhancing transparency, (f) processing higher quality credits more quickly and efficiently, and (g) implementing the authorization of loans up to 49% of eligible project costs, as approved by MAP-21.

James Bass, CFO of the Texas Department of Transportation, D.J. Gribbin of Macquarie Capital, Arthur Leahy, CEO of Los Angeles County Metropolitan Transportation Authority and James Roberts, President and CEO of Granite Construction Incorporated also provided their testimony to the committee.

Click here for Geoff's full testimony or click here to watch video of the full Committee hearing.

Update: Geoff Yarema provided supplemental testimony to the Committee in response to follow-up questions posed by Senators Boxer and Vitter.

New Round of TIGER Announced

The U.S. Department of Transportation announced Monday that it is making $474 million in financing available through its transportation investments grant program pursuant to the Full-Year Continuing Appropriations Act, 2013 (Pub. L. 113-6, March 26, 2013).  The appropriation is similar to the appropriation for the “TIGER” program and USDOT will continue to refer to the program as ‘‘TIGER Discretionary Grants.’’ As with previous rounds of TIGER, funds for the FY 2013 TIGER program will be awarded on a competitive basis for projects that will have a significant impact on the Nation, a metropolitan area or a region.  

“President Obama has challenged us to make sure our nation’s transportation infrastructure is up to the job of attracting and supporting businesses and the families that rely on them," U.S. Transportation Secretary Ray LaHood said in a statement. “And because the Appropriations Act that funds TIGER requires that funds be obligated by October 1, 2014, this round of TIGER will be making a difference soon.”  To give USDOT enough time to obligate funds by the statutory deadline, a project must be ready to go by June 30, 2014.  

Grants will range from $10 million to $200 million to fund eligible projects, which include highways and bridges; public transit; passenger and freight rail; intermodal facilities; and marine and port investments.   According to the USDOT, at least $120 million of the $474 million must be awarded to projects in rural areas.

TIGER money can be used to fund up to 80% of a project’s total cost, though if a project can show that is has a significant amount of nonfederal funds included in its overall financing package, the project may have a competitive edge, the USDOT has said.

Recent projects that have benefitted from TIGER include the 3.3 mile M-1 Rail project in Detroit, which received $25 million, and the Port of Corpus Christi, Texas, which received a grant of $10 million to expand rail service at the port with a new rail yard.

This is the fifth round of financing being distributed under TIGER since the program was put in place by the American Recovery and Reinvestment Act of 2009.  Since its inception, demand for funding under the TIGER program has been significant.  According to the USDOT, in the first four rounds of the TIGER program, the USDOT received more than 4,050 project proposals seeking more than $105.2 billion.  While demand has been great, only approximately $3.9 billion in transportation project grants have been given out so far under the program.

Interested applicants can review the USDOT’s grant resources page and view the full Notice of Funding Availability.   Applications for grant money are due by June 3.

FHWA Holds P3 Model Contract "Listening Sessions" and Beta-tests "P-3 VALUE Toolkit"

As part of its effort to meet MAP-21’s legislative requirement to develop “standard public-private partnership transaction model contracts for the most popular types of public-private partnerships,” the Federal Highway Administration held a “listening session” with representatives from the transportation industry at the U.S. Department of Transportation in Washington D.C. on January 16.  Representatives from state departments of transportation, general contractors, trade associations, legal advisors and others were in attendance, and solicited to provide FHWA with the P3 community’s view of what the model contracts should be. 

In her introductory remarks, the Hon. Beth Osborne, Deputy Assistant Secretary of Transportation for Policy, saw the effort as “compiling best practices” of the P3 community, but one for which FHWA did not have “pre-conceived notions.”  FHWA and USDOT representatives spent the better part of four hours hearing out the industry’s hopes for, expectations about and cautionary recommendations regarding FHWA’s final product.  The resounding theme of the audience comments was that “every P3 is different,” FHWA’s effort should tilt toward educating public sponsors as to the project-specific risk-sharing and “value-for-money” considerations that makes a P3 an effective delivery tool, and FHWA should refrain from prescribing risk allocations or other contract terms.

In a companion effort, FHWA is also beta-testing an interactive model, which intends both to help educate public sponsors in alternative procurement strategies (like the public-private partnership (“P3”)) “apples to apples” comparison with conventional procurements).  The “P3-VALUE Toolkit” collects project sponsors’ (and their consultants’) project-specific risks, quantifies their value, and, with other financing assumptions and project-specific parameters considered, produces a snapshot of the value-for-money that a P3 strategy may or may not present for that project.  FHWA held an initial roll-out “webinar” of the draft toolkit on January 10, with a follow-up webinar session on January 24.

FHWA has set up a docket, Federal Register No. FHWA-2012-0126, to collect industry comments by May 31, to keep pace with the rigorous requirement of MAP-21 to produce and promulgate model contracts by December 31, 2013.

Fred Kessler co-authored this entry.

U.S. Department of Transportation Launches Historic Expansion of TIFIA Program

On July 27 U.S. Transportation Secretary Ray LaHood announced the availability of over $16 billion in TIFIA credit assistance for critical infrastructure projects across the country as a result of the recently enacted MAP-21.  The notice of funding availability can be found here.  The TIFIA Joint Program Office is conducting a web conference tomorrow, August 1, on its plans for TIFIA implementation under the new law.

MAP-21’s TIFIA amendments provide $1.75 billion in budget authority over two years for the TIFIA credit assistance program and will be the largest transportation infrastructure finance fund in the USDOT’s history.  Each dollar of federal funds (except funds to pay program administrative costs) can provide approximately $10 in TIFIA credit assistance (or approximately $16.1 billion) and can leverage up to $20-$30 billion in transportation infrastructure investment.  As a whole, the federal loan program could support up to $50 billion in Federal, state, local and private sector investment.

To date, the TIFIA program has used $9.2 billion in funding to leverage more than $36.4 billion in capital to help build 27 major transportation projects around the country.  The new funding will build on this impressive record and stimulate the development of necessary highways, bridges, tunnels, passenger rail projects and other transportation projects and provide a significant boost to the American economy.

A variety of transportation projects are eligible for the funding and many qualified, large-scale projects that where previously postponed may be able to progress due to the flexibility provided by the TIFIA program.

Although the TIFIA amendments do not take effect until October 1, the USDOT is acting with urgency to encourage early submissions of letters of interest, which start the process for obtaining TIFIA financing.  The USDOT has adapted its form of letter of interest to the amended eligibility criteria.  However, the notice also requires a preliminary rating opinion on senior and TIFIA debt and a $100,000 fee in order to conduct a robust initial screening of projects before inviting the project sponsor to submit a formal application.  The USDOT intends to retain financial and legal advisors at this early stage to help determine whether the eligibility criteria, especially creditworthiness, are satisfied.

MAP-21 ushers in a paradigm shift in the TIFIA program, from a merit-based project selection and evaluation system to a system of objective eligibility criteria under a rolling application process.  Nevertheless, the USDOT seemingly is unable to complete this shift and still clings to the role of arbiter of what projects deserve TIFIA support and in what amount.  The notice of funding availability requires that the letter of interest include quantitative or qualitative information on the project’s “public benefit” so that the USDOT can “evaluate each Letter of Interest to determine whether it would be in the public interest to provide credit assistance to the proposed project.”  The letter of interest also must contain the rationale for the amount of TIFIA credit assistance requested to “help DOT ensure that it allocates TIFIA’s budget authority effectively.”  Apparently, the USDOT intends to place the burden on the project sponsor to justify assistance greater than 33% of eligible capital costs, even though Congress expressly authorized loans up to 49%.  These provisions in the notice may generate controversy.

Secretary LaHood also announced the creation of the Project Finance Center (“PFC”), which will help state and local government project sponsors analyze financial options for highway, transit, rail, intermodal and other surface transportation projects facing funding challenges.  Through the PFC, the USDOT will have an opportunity to provide technical assistance to state and local sponsors of surface transportation projects seeking financial support and make the development process easier for all parties involved.

The notice of funding availability invites public comments by September 1.  The comments may broadly address any aspects of USDOT’s implementation of the TIFIA amendments in MAP-21.

Barney Allison co-authored this entry.

U.S. Department of Transportation Announces Fourth Round of TIGER Discretionary Grants

The U.S. Department of Transportation (USDOT) announced a much-anticipated fourth round of funding for USDOT’s popular TIGER Discretionary Grants program, totalling $500 million for capital investments in surface transportation infrastructure.

Pre-applications must be submitted by Feb. 20, 2012 and final applications must be submitted by March 19, 2012.  Previous rounds of competitive TIGER grants were heavily over-subscribed.  The last round attracted 848 applications with funding requests for $14.29 billion, while USDOT awarded funds in December 2011 for 46 capital projects totaling $511 million.

USDOT did not make many substantive changes in this week's notice to the TIGER application and selection process as compared to previous TIGER funding rounds.  Authorizing legislation for this round allows for an amount not to exceed $175 million of the $500 million total to be used to pay the subsidy and administrative costs for a project receiving credit assistance under the Transportation Infrastructure Finance and Innovation Act of 1998 (TIFIA) program.  Applicants for these TIGER TIFIA payments must submit a TIGER application and a separate TIFIA letter of interest.

USDOT will also specifically make up to $100 million in TIGER funds available to high speed and intercity passenger rail projects, which have fallen out of favor in Congress but remain an Obama Administration priority.

More detailed information can be found in USDOT’s Notice of Funding Availability published in the Jan. 31, 2012 Federal Register.

USDOT Announces TIGER III Grantees

This morning, U.S. Department of Transportation (USDOT) Secretary Ray LaHood announced the winners of the extremely competitive TIGER III grant application cycle.  Forty-six projects in 33 states will share $511 million in grant funds.  The announcement was made several months earlier than the originally scheduled date.

As has been the case with the previous two rounds of TIGER grants, this cycle was wildly oversubscribed.  According to the announcement, USDOT received 848 project applications from all 50 states, Puerto Rico, and Washington, DC, requesting a total of $14.29 billion, far exceeding the amount available under the TIGER III program. 

“The overwhelming demand for these grants clearly shows that communities across the country can’t afford to wait any longer for Congress to put Americans to work building the transportation projects that are critical to our economic future,” said Secretary LaHood. “That’s why we’ve taken action to get these grants out the door quickly, and that is why we will continue to ask Congress to make the targeted investments we need to create jobs, repair our nation’s transportation systems, better serve the traveling public and our nation’s businesses, factories and farms, and make sure our economy continues to grow."

Of the grants awarded, only three included payments to support TIFIA loans.  The projects that will receive TIFIA payments are the SR-91 Corridor Improvement Project managed lanes being developed by the Riverside County Transportation Commission; Virginia DOT’s I-95 HOT Lanes; and Dallas Area Rapid Transit’s Orange Line Extension.

TIGER grants are awarded to transportation projects that have significant national or regional impact.  USDOT allocated the TIGER III funds to transportation projects in both urban and rural areas.  The funding was distributed between a broad array of road and bridge, transit, port and freight rail projects.  The three rounds of TIGER grants have resulted in an award of over $2.6 billion for critical transportation funding.

Karen J. Hedlund Appointed Deputy Administrator of the Federal Railroad Administration

U.S. Department of Transportation Secretary Ray LaHood plans to name Karen J. Hedlund as Deputy Administrator at the Federal Railroad Administration (FRA).  Hedlund moves to the Deputy Administrator position from her current role as Chief Counsel at FRA, replacing Karen Rae, who Gov. Cuomo recently appointed as New York State Deputy Transportation Secretary.  Before moving to FRA, Hedlund served as Federal Highway Administration Chief Counsel from June 2009-June 2010, where she helped implement the American Recovery and Reinvestment Act, including new investments in highway, intermodal and freight rail facilities.
 
Prior to joining DOT, Hedlund was a partner in the Washington, DC, office of Nossaman. She has 35 years of experience in transportation and is recognized nationally for her expertise in structuring public-private partnerships. All of us at Nossaman offer congratulations to our former partner on this new appointment.

USDOT Works Around Freight Railroads on New Passenger Rail Level-Entry Boarding Requirements

As discussed in a previous blog post, the U.S. Department of Transportation (USDOT) recently set new level-entry boarding requirements for disabled passengers on intercity and commuter railroads through amended regulations implementing the Americans with Disabilities Act (76 Fed. Reg. 57924).

In the proposed rule, USDOT stated its intent to require passenger railroads to provide level-entry boarding at all new or altered station platforms, unless the passenger railroad could show that level boarding was infeasible.  In the final rule, USDOT retained the level-boarding mandate, but will permit alternatives at platforms adjacent to track used by freight railroads if the passenger railroad can demonstrate reliability, safety and access to all cars available to non-disabled passengers.

Due to concerns about equipment clearance issues, freight railroads generally refuse to permit passenger railroads to construct station platforms more than 8 inches above top-of-rail.  USDOT’s ADA regulations give it authority over owners or persons in control of a station (e.g., passenger railroads), but not owners or persons in control of track that passes through the station (e.g., freight railroads). Due to this limitation, USDOT concluded that it “does not currently have legal tools to overcome this refusal” (76 Fed. Reg. at 57927).

This is an unusually candid assessment on the part of USDOT, especially in the context of the ADA.  What remains unclear is what passenger railroads will need to demonstrate in order to meet this performance based standard for an alternative to level boarding and what will happen if the standard cannot be met at a particular location.

Stay tuned.

USDOT Sets Costly New Passenger Rail Station Platform Level-Entry Boarding Requirements

In a recent move that will have wide-ranging impact on the rail industry, the U.S. Department of Transportation (USDOT) set new level-entry boarding requirements for the access of passengers with disabilities to passenger railroads, applicable to new and altered station platforms where construction or alteration begins on or after March 2, 2012.  Through a final rule promulgated on September 19, 2011, USDOT amended its Americans with Disabilities Act regulations to require intercity and commuter passenger railroads to provide that disabled passengers can access any passenger cars accessible to non-disabled passengers (76 Fed. Reg. 57924)  This rule does not require railroads to retrofit existing station platforms.

In stations not shared with freight railroads, passenger railroads must provide level-entry boarding to all passenger cars.

In stations where freight railroads run on track adjacent to passenger platforms, passenger railroads may choose among non-level boarding alternatives – including car-borne lifts, station-based lifts or mini-high platforms – to meet a prescribed performance standard.  In order to use a non-level boarding alternative, a passenger railroad must submit a detailed plan to the Federal Railroad Administration (FRA) and the Federal Transit Administration (FTA) demonstrating that the selected alternative meets USDOT’s accessibility performance standard efficiently and safely, and in a manner that integrates disabled and non-disabled passengers.  The plan must provide details on deployment, maintenance and operation of the non-level boarding alternative, and FRA and FTA have discretion to modify or disapprove the plan.  If proposing an approach other than car-borne lifts, USDOT also requires railroads to submit a cost/benefit analysis of car-borne lifts versus that other technique.

Compliance with these new level-entry boarding requirements will involve significant cost to passenger railroads.  First, covered railroads must alter design plans for any station platform construction that will begin on or after March 2, 2012.  Passenger railroads that alter or construct station platforms accessing track shared with freight railroads will also incur expensive ongoing work-arounds to the level-entry boarding requirement.

TIFIA Office Hiring Lead Negotiator and Financial Analyst

USDOT’s TIFIA Office is hiring a new lead negotiator/financial policy advisor and a financial analyst.  Both positions are based in Washington, DC, and applications are due September 21st. 

The ideal candidate for the lead negotiator position will be a senior finance expert who has negotiated transportation finance and/or infrastructure project finance credit agreements as practiced in domestic and international capital markets.

For the financial analysts role, the ideal candidate is a mid-level professional with experience in the financial operations and practices of corporate business organizations, U.S. capital markets and transportation finance.  

Questions about either position should be directed to TRANSJOBS@dot.gov.

The Biggest Winner in Latest Round of High-Speed Rail Grants - Northeast Corridor

Monday, U.S. Transportation Secretary Ray LaHood announced an additional $2 billion in High-Speed Intercity Passenger Rail Program funding, bringing the total awards for the program to $10.1 billion.  USDOT distributed the $2 billion to 22 projects in 15 states, but three big winners together received over $1.8 billion or about 90 percent of the additional money.

We said we will roll out our view of the big winners on three successive days, in reverse order.  On Monday, we explained why we think California is the third biggest winner in this latest round of funding. Yesterday, we outlined the package of funded projects that make the Midwest region the second biggest winner.

Today, we tell you why we think the biggest winner of all in the latest round is the Northeast Corridor, which runs from Washington, DC, to Boston, including stops in Baltimore, Philadelphia, New York and Providence.  All together, USDOT awarded $795 million to the projects on the Northeast Corridor, including $450 million for power, track, and signal improvements on a 24-mile stretch between New Brunswick and Trenton, NJ; $295 million to unsnarl an interlocking in Queens, NY; and a total of $50 million for preliminary engineering and environmental work for a bridge replacement on the Susquehanna River and station improvements in Kingston and Providence, RI.

The $450 million awarded to Amtrak for the New Brunswick to Trenton corridor project will boost capacity, reliability, and speed in this heavily-used segment of the Northeast Corridor by adding high-tension catenary, upgraded power facilities, and high-speed interlockings.  The award also will fund track and interlocking upgrades between Morrisville, PA, and Trenton and at New York Penn Station.

The $295 million awarded to New York DOT will pay for new routings through Harold Interlocking in Queens, NY, one of the busiest passenger rail interlockings in the nation, allowing Amtrak through trains to/from New York or Boston to bypass the interlocking.  The project also will improve access to nearby Sunnyside Yard.

In March, Secretary LaHood designated the Northeast Corridor as a federally-recognized high-speed rail corridor, making Amtrak eligible to compete for this round of funding awards.  Several Democratic senators from Northeast Corridor states praised this designation and issued a statement applauding Monday’s awards.

Not all influential elected officials were as sanguine.  House T&I Committee Chairman John Mica (R-FL), a strong supporter of improved passenger service on the Northeast Corridor, issued a statement on the announced awards: “. . . with Amtrak’s plan to spend $117 billion over the next 30 years, the Administration continues to take a piecemeal approach to improving the NEC.  We need a comprehensive, responsible plan for the Northeast Corridor, and Amtrak – our nation’s Soviet-style passenger rail service – is incapable of carrying out a project of this scope and significance.  We need to bring in the private sector to finance, design, build, operate and maintain true high-speed service in the Northeast Corridor if we are going to have any chance of success.”

First Runner-Up in Latest Round of High-Speed Rail Funding - The Midwest

As discussed in yesterday's post on California, three big winners have emerged from the U.S. Department of Transportation’s announcement of $2 billion in federal funds to 15 states for 22 different high-speed and intercity passenger rail projects.  The second biggest winner of this funding round is the Midwest region.

Illinois received $186 million for upgrades and improvements to the Chicago – St. Louis corridor between Dwight and Joliet, Ill., to allow trains to operate at 110 mph (from 79 mph) and increase operational flexibility and reliability.  Also on the Chicago – St. Louis corridor, Missouri received $13.5 million for design work on a new span to replace the circa-1890 Merchant’s Bridge over the Mississippi River.

Michigan received $196 million for track rehabilitation and positive train control implementation along the Chicago – Detroit corridor between Kalamazoo and Dearborn, which will allow trains to travel at 110 mph for 235 miles.  Michigan also received $2.8 million for preliminary engineering and environmental work on a new high-speed rail station in Ann Arbor, Mich.

Michigan Gov. Rick Snyder welcomed the news, stating that an “investment of this magnitude can spur economic development in our communities with rail stations, and provide access to a 21st century rail system that will help Michigan citizens compete in a global economy.”

In addition to the funds for track work, Illinois, Indiana, Iowa, Michigan and Missouri received $268 million for the purchase of 48 passenger rail cars and seven locomotives for eight separate intercity rail corridors.  The new bi-level cars replace aging and obsolete Amtrak equipment and can travel at speeds up to 125 mph.

All told, yesterday Midwestern states received approximately $657 million of the $2 billion in federal funds redistributed from the canceled Florida high-speed rail project.

"This is a big deal," said Transportation Secretary Ray LaHood. "America's ready for high-speed rail. Nothing can stand in the way of it. We're going to create a huge economic corridor between Chicago and Detroit and beyond."

The federally-designated Chicago Hub Network envisions mostly incremental upgrades to increase speeds of existing passenger rail service on a variety of rail lines radiating from Chicago, including service to St. Louis, Detroit, Milwaukee, Indianapolis, Des Moines, Cleveland, and Minneapolis.  While newly installed governors in Wisconsin and Ohio have rejected federal funds over concerns about operating subsidies and cost overruns, states like Illinois and Michigan have welcomed the passenger rail funding.  Total federal funds now awarded to Midwestern states for high-speed and intercity passenger rail include nearly $1.5 billion for Illinois, $400 million for Michigan, $230 million for Iowa, and $71 million for Indiana.

Kevin M. Sheys also contributed to this post.
 

Three Big Winners In Latest Round of High-Speed Rail Grants

Today U.S. Transportation Secretary Ray LaHood announced an additional $2 billion in High-Speed Intercity Passenger Rail Program funding, bringing the total awards for the program to $10.1 billion.

The $2 billion awarded today by the Department of Transportation was largely redistributed from initial awards to Florida, whose governor canceled the state’s high-speed rail project due to concerns about cost overruns and operating subsidies.  DOT distributed today’s funds to 22 projects in 15 states, but three big winners together received over $1.8 billion or about 90% of the additional money.

Secretary LaHood focused on the job-creating benefits of these grants, stating that “the investments we’re making today will help states across the country create jobs, spur economic development and boost manufacturing in their communities.”

On the theory that good news on high speed and intercity rail should be savored, we will roll out our view of the big winners on three successive days, in reverse order.

The third biggest winner in this latest round of funding is California.

The California High Speed Rail Authority (“CHSRA”) today received $300 million to help extend by an additional 20 miles construction of an initial 113-mile Central Valley segment (from Bakersfield to Fresno) of its proposed statewide system.  The CHSRA has already received almost $3 billion in federal funds for final design and construction of the Central Valley segment.  The additional funds will allow CHSRA to extend the initial construction segment from Fresno north to a wye junction, where one future track will be constructed to San Jose and another future track will be constructed to Merced.

Curt Pringle, chairman of CHSRA, said today: “It is a testament to the strength of California’s project that we have won 40 percent of every federal dollar awarded for the development of high-speed rail. In the past 15 months we have won the lion’s share of federal dollars, unlocked state bond funds and began engaging the private sector to secure their future participation, so that we can begin construction and begin creating thousands of quality jobs next year.”

The proposed California high-speed rail system will eventually traverse up to 800 miles and is currently estimated to cost about $45 billion.

 

Transportation Agencies Pen Letter to Congress on TIFIA Program

The fiscally conservative House majority continues to pursue reductions in federal spending, and federal transportation spending is part of the mix.  Further use of the general fund to supplement the Highway Trust Fund motor fuel taxes, as well as increases in fuel taxes, are opposed by the House majority.  Cuts could come in several forms, including cuts in Title 23 programs overall or cuts to specific programs.

Given the diminishing role of the Highway Trust Fund in funding future transportation investment, federal credit assistance under the TIFIA program needs to grow in significance.  But concerns are rising that TIFIA will be among the U.S. Department of Transportation programs targeted for substantial cuts in the current and next fiscal years.  Such cuts would put in jeopardy the financial feasibility of most of the large, complex projects that are being delivered via public-private partnerships in the U.S.

In response, leaders of transportation agencies from across the country delivered a letter to Congress on Feb. 14 urging against such action.  The letter, signed by 21 leaders of state and regional transportation agencies, states:

"The TIFIA program remains one of the critical methods available in this country to advance major transportation projects by leveraging private sector funding. While we would like to see the program’s capacity increased and are working to do so as part of the SAFETEA-LU authorization process, it is critical that Congress provide the authorized level of $122 million this fiscal year.  Given the fact that this authorized level can be leveraged to over a billion dollars of infrastructure investment, there are few federal programs that provide this return-on-investment for the American taxpayer and the economy as a whole."

The letter is a summons to all in the surface transportation sector to make the case to Congress and the Administration to preserve, if not expand, the TIFIA program.