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Passenger Rail


  • [ Barrels of Oil Equivalent Saved:]

    306K
  • [ Jobs Impact:]

    • Low
    • Medium
    • High
  • [ Budget Impact:]

    • Low
    • Medium
    • High
  • [ Conventional Pollutants Reduced: ]

    CO
    2753 tons
    NOx
    116 tons
  • [ Megatons of GHG Reduced: ]

    0.03

Overview

While rail has always been a major carrier of freight in the U.S., railroad passenger travel declined sharply in the mid-20th century, following regulatory changes and massive federal investment in the highway system.1 Today, passenger rail is beginning to rebound, as Americans look for alternatives to high gasoline costs and congested highways.2 AMTRAK ridership is up 49% since 2000,3 and the nation’s first high-speed rail projects are under development.4 If this growth continues, passenger rail can move America significantly closer to its goals of reducing highway congestion, oil consumption, and greenhouse gas emissions.

Analysis

Roughly 80% of Americans live in or near an urban center.5 As such, the vast majority of the population could benefit from a rail system that efficiently moves passengers between nearby cities. America needs to take greater advantage of this potential demand for passenger rail in order to reduce strain on existing infrastructure, reliance on petroleum, and transportation-related pollution.

Highway congestion is becoming a bigger problem each year, with Americans spending a collective 5.5 billion hours stuck in traffic in 2011.6 A single passenger rail car can take up to 125 vehicles off the road, making rail an effective congestion-reduction tool.7 U.S. airports face similar congestion issues,8 some of which could be alleviated by high-speed rail.9

Transportation by rail uses up to 42% less energy than traveling by passenger vehicle and 20% less than by aircraft,10 and it already helps U.S. travelers avoid over $200 million in fuel costs each year.11 Expanding passenger rail systems and increasing ridership can increase these savings, while simultaneously reducing GHG emissions and other pollutants from the transportation sector. Such expansion projects can take several years to complete, however, pushing many of these benefits beyond the timeframe of this analysis.

Despite the potential benefits of increased passenger rail ridership, tight budgets at the state level and limited flexibility in the use of federal funds have kept rail from reaching its potential in the U.S. transportation system.

Implementation

To encourage greater ridership, Congress and the Department of Transportation (DOT) should unlock opportunities for passenger rail in existing programs and leverage federal funds to attract private investment.

Open Transportation Program to Intercity Rail

Congress should add intercity rail to the list of projects eligible for Transportation Development Credits (TDCs). Most transportation projects that use federal funds must receive “matching funds” from a non-federal source, like a state or local government. To cover some or all of their share of costs, states are allowed to use TDCs, which they earn by making certain investments in federal highways through revenue collection tools like tolling. In this way, TDCs let states access federal funds for projects without having to cut other transportation priorities.12 States should be given the flexibility to use the credits they earn for passenger rail projects as well.

Remove Unnecessary Restrictions on Federal Funds

DOT should remove restrictions on the use of Congestion Mitigation and Air Quality (CMAQ) funds on intercity rail. Even though the operation of passenger rail service meets CMAQ’s goals of reducing congestion and improving air quality in transportation, CMAQ funds can only be used to support passenger rail operations for three years.13 This limitation on an effective practice is unique to passenger rail and inhibits the purpose of the CMAQ program.

Improve Access to the Financing Program for Railroads

Congress should provide the Railroad Rehabilitation and Improvement Financing (RRIF) Program with annual appropriations, so that it can deliver loans and loan guarantees to a larger number of worthy projects, as was its original intent. RRIF has the ability to provide an impressive $30 billion in loans, yet less than 2% of that amount is being used.14 Two of the greatest barriers that keep passenger rail projects from accessing this financing are the upfront cost associated with the loans15 and the extended lead time before passenger rail generates revenue.16 By providing appropriations to reduce these costs, as it does with the Transportation Infrastructure Finance and Innovation Act program used mainly by highways, Congress could unlock this important financing tool.17 RRIF appropriations could be used to reduce the credit risk payment or interest rate paid by the applicant, or they could cover the cost of a temporary deferral of repayment.18

Adjust Rules for Loan Program to Encourage Passenger Rail

Policies affecting collateral in the RRIF program should be adjusted to better fit the needs of passenger rail projects. RRIF applicants are required to offer a certain amount of collateral, which is easier for established railroads to provide than it is for brand new projects like a passenger rail line—no matter how viable it might be. However, a new intercity or high-speed rail line often has future assets that could be considered collateral, if RRIF were to permit it. For instance, voters in certain states and municipalities have approved revenue-raising mechanisms like fees or taxes to cover the expense of a new transportation project. If RRIF allowed the guarantee of these future revenues as collateral, more passenger rail projects would be able to access RRIF funds.19

EndNotes
  1. Robert Puentes, Adie Tomer, and Joseph Kane, “A New Alignment: Strengthening America’s Commitment to Passenger Rail,” Report, The Brookings Institute, March 2013, p. 2. Accessed March 4, 2013. Available at: http://www.brookings.edu/research/interactives/2013/amtrakroutes.
  2. Nearly all intercity passenger rail service in the U.S. is provided by Amtrak, which serve served 30.2 million passengers over 21,200 miles of rail in 2011. See “National Fact Sheet: FY 2011,” Fact Sheet, Amtrak, June 2012, p. 1. Accessed March 4, 2013. Available at: http://www.amtrak.com/servlet/ContentServer?c=Page&pagename=am%2FLayout&cid=1246041980246.
  3. “Amtrak Sets New Ridership Record,” Press Release, Amtrak, October 10, 2012. Accessed March 4, 2013. Available at: http://www.amtrak.com/servlet/ContentServer/Page/1237608337144/1237608345018?passedYear=2012.
  4. State of California, High Speed Rail Authority, “Project Vision and Scope,” Webpage. Accessed March 4, 2013. Available at: http://www.cahighspeedrail.ca.gov/project_vision.aspx; See also Tim O’Reiley, “LV-to-LA Train Extension in Works,” The Las Vegas Review-Journal, June 9, 2012. Accessed March 4, 2013. Available at: http://www.lvrj.com/business/lv-to-la-train-extension-in-works-158290685.html.
  5. This urban concentration surpasses that of countries like France, Italy, and Japan, all of which have successful intercity rail systems. See “Connecting America: Making the Case for Intercity Rail,” Report, Reconnecting America, November 2005, p. 3. Accessed March 4, 2013. Available at: http://www.reconnectingamerica.org/resource-center/books-and-reports/2005/connecting-america-making-the-case-for-intercity-rail/.
  6. David Schrank, Bill Eisele, Tim Lomax, “2012 Urban Mobility Report,” Report, Texas A&M Transportation Institute, Texas A&M University System, December 2012, p. 1. Accessed March 4, 2013. Available at: http://mobility.tamu.edu/ums/report/.
  7. Commonwealth of Virginia, Department of Transportation, “Green Initiatives in Virginia Transportation,” Webpage, 2013. Accessed March 4, 2013. Available at: http://www.transportation.virginia.gov/Green/drpt.cfm.
  8. United States, Department of Transportation, Bureau of Transportation Statistics, Research and Innovative Technology Administration, “Transportation Statistics Annual Report 2010,” Report, p. 102. Accessed March 4, 2013. Available at: http://www.rita.dot.gov/bts/sites/rita.dot.gov.bts/files/publications/transportation_statistics_annual_report/2010/index.html.
  9. “Opportunity Cost of Inaction: High-Speed Rail and High Performance Passenger Rail in the United States,” Report, American Public Transportation Association, July 2012, p. 12. Accessed March 4, 2013. Available at: http://www.trb.org/Main/Blurbs/167542.aspx.
  10. Mathematical analysis based on data from the Transportation Energy Data Book and National Household Travel Survey. See United States, Department of Energy, “Energy Intensities of Highway Passenger Modes, 1970–2010,” Table, Transportation Energy Data Book, Edition 31, July 31, 2012. Accessed March 4, 2013. Available at: http://cta.ornl.gov/data/chapter2.shtml; See also United States, Department of Energy, “Energy Intensities of Nonhighway Passenger Modes, 1970–2010,” Table, Transportation Energy Data Book, Edition 31, July 31, 2012. Accessed March 4, 2013. Available at: http://cta.ornl.gov/data/chapter2.shtml; See also United States, Department of Energy, “Light Vehicle Market Shares by Size Class, Model Years 1975–2011,” Table, Transportation Energy Data Book, Edition 31, July 31, 2012. Accessed March 4, 2013. Available at: http://cta.ornl.gov/data/chapter4.shtml; See also United States, Department of Transportation, Federal Highway Administration, “Average Vehicle Occupancy for Selected Trip Purpose 1977, 1983, 1990, and 1995 NPTS, and 2001 and 2009 NHTS (Person Miles per Vehicle Mile),” Table, Summary of Travel Trends: 2009 National Household Travel Survey, June 2011, p. 33. Accessed March 4, 2013. Available at: http://nhts.ornl.gov/publications.shtml.
  11. Analysis based on data from the American Public Transportation Association, the Department of Energy’s Transportation Energy Data Book, and AAA. See Matthew Dickens, John Neff, Darnell Grisby, “2012 Public Transportation Factbook,” Report, American Public Transportation Association, September 2012, p. 41. Accessed March 4, 2012. Available at http://www.apta.com/resources/statistics/Pages/transitstats.aspx; See also United States, Department of Energy, “Energy Intensities of Highway Passenger Modes, 1970–2010,” Table, Transportation Energy Data Book, Edition 31, July 31, 2012. Accessed March 4, 2013. Available at: http://cta.ornl.gov/data/chapter2.shtml; See also United States, Department of Energy, “Energy Intensities of Nonhighway Passenger Modes, 1970–2010,” Table, Transportation Energy Data Book, Edition 31, July 31, 2012. Accessed March 4, 2013. Available at: http://cta.ornl.gov/data/chapter2.shtml; See also “National Average Prices,” Report, AAA’s Daily Fuel Gauge Report, AAA, April 15, 2013. Accessed April 15, 2013. Available at: http://fuelgaugereport.aaa.com/?redirectto=http://fuelgaugereport.opisnet.com/index.asp.
  12. United States, Congress, House of Representatives, Committee on Transportation and Infrastructure, “An Update on the High Speed and Intercity Passenger Rail Program: Mistakes Made and Lessons Learned,” Testimony by Paul J. Hammond, 112th Congress, 2nd Session, December 6, 2012, p. 8. Accessed March 4, 2013. Available at: http://www.onerail.org/documents/aashto-honorable-paula-j-hammond-pe-house-committee-transportation-and-infrastructure-upat.
  13. Paula Hammond, Caitlin Hughes Rayman, Allison Dane Camden, Ron Adams, “SPRC Letter Supporting Congressional Amendments for CMAQ Funding,” March 23, 2012, States for Passenger Rail Coalition, March 23, 2012. Accessed March 4, 2013. Available at: http://www.s4prc.org/PolicyandAdvocacy/AdvocacyOutreach.htm.
  14. United States, Congress, House of Representatives, Subcommittee on Railroads, Pipelines, and Hazardous Materials within the Committee on Transportation and Infrastructure, “Sitting on our Assets: Rehabilitating and Improving our Nation’s Rail Infrastructure,” Summary of Subject Matter, 112th Congress, 1st Session, February 17, 2011, p. viii. Accessed March 4, 2013. Available at: http://www.gpo.gov/fdsys/pkg/CHRG-112hhrg65451/pdf/CHRG-112hhrg65451.pdf.
  15. United States, Congress, House of Representatives, Subcommittee on Railroads, Pipelines, and Hazardous Materials within the Committee on Transportation and Infrastructure, “Sitting on our Assets: Rehabilitating and Improving our Nation’s Rail Infrastructure,” Testimony of John E. Fenton, 112th Congress, 1st Session, February 17, 2011, p. 34. Accessed March 4, 2013. Available at: http://www.gpo.gov/fdsys/pkg/CHRG-112hhrg65451/pdf/CHRG-112hhrg65451.pdf.
  16. United States, Congress, House of Representatives, Subcommittee on Railroads, Pipelines, and Hazardous Materials within the Committee on Transportation and Infrastructure, “Sitting on our Assets: Rehabilitating and Improving our Nation’s Rail Infrastructure,” Testimony of Thomas P. Loftus, 112th Congress, 1st Session, February 17, 2011, p. 47. Accessed March 4, 2013. Available at: http://www.gpo.gov/fdsys/pkg/CHRG-112hhrg65451/pdf/CHRG-112hhrg65451.pdf.
  17. United States, Department of Transportation, Federal Highway Administration, “TIFIA Portfolio ($Millions),” Table, December 14, 2012. Accessed March 4, 2013. Available at: http://www.fhwa.dot.gov/ipd/tifia/projects_project_profiles/tifia_portfolio.htm.
  18. It can take several years after receiving financing for a passenger rail project to be constructed, draw ridership, and generate profits with which to repay a loan. For example, an $11 billion appropriation could allow for a 10-year deferral on $50 billion worth of loans. See Thomas P. Loftus, p. 38.
  19. State or municipal governments should be required to assume liability in the event of default.