House Subcommittee Eyes Federal Rail Funding Reform

Pinsly Railroad Company executive and ASLRRA Board Member Kristin Bevil was among those testifying on ways to improve the efficiency and effectiveness of federal rail assistance at a May 6 hearing of the House Committee on Transportation and Infrastructure, Subcommittee on Railroads, Pipelines, and Hazardous Materials. The hearing’s aim was to review the opportunities and challenges that grant applicants encounter in utilizing Federal Railroad Administration (FRA) and other Department of Transportation (DOT) rail discretionary grant programs and the potential for reform in the upcoming surface transportation reauthorization bill.

“Most of us are familiar with the unfortunate and unnecessary reputation of our country for building and repairing infrastructure: it takes too long and costs too much,” Subcommittee Chairman Daniel Webster (R-Fla.) said in a prepared opening statement. “Recognizing the importance of a safe, efficient, and reliable freight and passenger rail transportation system, Congress has authorized several programs to assist those carriers who, owing to their size or market segments, lack the resources of larger operators to invest substantial funds in their infrastructure. These include programs like CRISI, which serves as a vital source of funding to assist short line railroads to rehabilitate and expand infrastructure necessary for their mission to provide ‘first and last mile’ freight service. Improving the efficiency and effectiveness of these programs is the purpose of today’s [May 6] hearing and a goal as the Committee works to reauthorize Department of Transportation surface transportation programs. Additionally, federal infrastructure funding should support core programs and the construction of infrastructure. The POTUS 47 Administration inherited a backlog of more than 3,000 unobligated DOT grants. Responsibly, the Administration took the time to review these grants to ensure the best use of taxpayer dollars. Today, the Department announced it approved more than 180 grants totaling over 3 billion dollars. I look forward to working with the Administration to reduce the Biden backlog in a timely manner and ensure that federal grants are focused on improving critical infrastructure.”

While House T&I Committee Senior Democrat Rick Larsen from Washington State supported the hearing’s goals, he noted in prepared remarks that he is “concerned this Administration is more worried about rhetoric than rolling up its sleeves to get us there.”

“We have seen chaos and confusion in the constant freezing and unfreezing of transportation grants, attacks on the workforce that delivers these transportation investments, and conditions placed on grants that have nothing to do with transportation,” Larsen said. “The Bipartisan Infrastructure Law [BIL; a.k.a. the Infrastructure Investment and Jobs Act/IIJA] was a transformational investment in passenger rail. After 50 years of under-investments, Amtrak and the recipients of rail competitive grants can plan and succeed thanks to five years of guaranteed funding for capital projects. This funding has allowed Amtrak to address decades of deferred maintenance and begin construction on long-delayed capital projects. This investment has allowed Brightline West to begin construction … Funding has [also] been announced to support safety improvements across the country, including in my district … Secretary Duffy testified last month before the Senate Environment and Public Works Committee that roughly 3,200 previously awarded projects were on hold. The BIL invested more than $48 billion in 445 projects to improve rail safety and expand passenger rail travel nationwide. Still, the Administration refuses to even tell us which of these projects are on hold … Just last month, Secretary Duffy reduced previously-awarded grants for rail infrastructure in New York, Newark, Dallas, and Houston. He also sent a letter to put all federal grant recipients on notice that previously-awarded grants will be reviewed, and possibly paused, to ensure they align with this Administration’s priorities. If jobs and investments aren’t the Administration’s priorities, what are?”

“Moving forward,” Larsen said, “public investment is vital to building a truly national intercity passenger rail system. Every passenger rail system in the world developed with some form of public investment. Highways, transit, airports, and harbor maintenance projects have access to dedicated revenue. It’s time to provide long-term funding certainty for intercity passenger rail. I am committed to building on the successes of the investments in the BIL and ensuring this Committee can say that ‘America Builds Rail’ at hearings for many years to come.” 

“In addition to helping expand passenger rail service, federal rail grants also make our rail networks safer,” said Dina Titus, Senior Democrat of the Subcommittee on Railroads, Pipelines, and Hazardous Materials, in prepared remarks. “For example, the Railroad Crossing Elimination Program helps address safety concerns at grade crossings. There are over 2,000 incidents and 200 fatalities at these dangerous intersections each year. We can and must do better. The $3 billion Congress allocated to this program is helping eliminate or make these intersections safer across the United States.”

Titus welcomed suggestions “for how we can work together to speed up the grant implementation process.” Whether it be through improving the obligation process or ensuring that the FRA has sufficient staff to execute these grants, she noted, “I believe targeted changes could speed up grant implementation.”

Testifying at the hearing, “America Builds: Improving the Efficiency and Effectiveness of Federal Rail Assistance,” were:

• Kristin Bevil, General Counsel and Chief Legal Officer, Pinsly Railroad Company; on behalf of ASLRRA (American Short Line and Regional Railroad Association)
• Matthew Dietrich, Executive Director, Ohio Rail Development Commission
• Garrett Eucalitto, Commissioner, Connecticut Department of Transportation; on behalf of the American Association of State Highway and Transportation Officials
• Kevin Hicks, Senior Vice President, TranSystems; on behalf of the National Railroad Construction and Maintenance Association

Following are highlights from the presenters’ written testimony (also downloadable).

Kristin Bevil, Pinsly Railroad Company

Representing the short line industry perspective, Bevil detailed the impact to rail safety and efficiency for customers that has been made possible by several rail infrastructure grant programs.

“Support for CRISI, OLI, RCE and Section 130 has been crucial to our ability to maintain our infrastructure, improve safety and make significant, game-changing improvements to rail service in the communities we serve,” she said.

CRISI, in particular, Bevil pointed out, delivers six “clear and measurable benefits”: It addresses critical infrastructure needs, improves safety, creates and sustains jobs, enhances environmental outcomes, promotes rural economic development, and improves service for customers. To maximize the program’s impact and further improve its efficiency and effectiveness, she offered these suggestions:

• “Protect CRISI’s ability to bolster the freight rail network.” ASLRRA “discourages” set-asides within CRISI for passenger rail projects or expansions of the program to include major new eligible applicants such as commuter railroads, according to Bevil. “With so many challenges facing our freight supply chain, short lines need to remain viable competitors for these limited funds,” she said. “While we have no opposition to passenger rail, there are other federal grant programs that provide passenger rail applicants with funding levels that dwarf CRISI.”
• “CRISI projects should move from announcement to obligation to completion faster than they currently do.” For almost all short line projects, “most of which are quite simple in the context of infrastructure investments,” Bevil said, “this would result in better outcomes for the public, for short lines, for communities, and for shippers with no additional risk, and would help avoid the significant cost escalation associated with delay.”
• “Encourage the use of pre-award authority (PAA).” More extensive use of PAA would allow CRISI grant awards for small railroad infrastructure projects to move “more quickly and efficiently,“ Bevil pointed out. “PAA authorizes grant recipients to begin their projects immediately at their own risk rather than being stuck in limbo during the current lengthy federal approval process. When questions of the National Environmental Policy Act Process (NEPA) clearance as a necessary precedent arise in the context of PAA, the agency should consider segmented provision of PAA for non-ground disturbing elements of scope such as engineering analyses and acquisition of materials. Prompt acquisition of materials can be a particularly useful step to mitigate project cost inflation risk, and delays in completing engineering and design work correspondingly delay entry into the construction phase of a project.”
• “Increase transparency across the grant lifecycle to enable benchmarking and process improvement.” Congress could require that FRA “file regular reports on the status of processing grants, from award notification through obligation to close out, to the transportation authorizing and appropriating committees,” Bevil suggested. “This data will help stakeholders understand how long it takes the agency to move through the process for each award to achieve grant obligation and begin work. It will also create some beneficial pressure encouraging the agency to innovate to move the process faster.”
• “Publish regular grant status reports.” According to Bevil, FRA could “proactively shine light on the status of processing grants, from award notification through obligation to closeout.” This data, she said, “would be useful for setting realistic stakeholder expectations regarding the timeline for the agency to execute the process for each award to achieve grant obligation. Regular (e.g., quarterly) public reporting would also foster accountability and incentivize a faster program.”
• “Optimize grant application processes and program accessibility.” Bevil said that FRA should consider a mechanism to share and analyze “high-level” CRISI grant application information with ASLRRA. “This information is publicly shared for programs like RAISE that have only public applicants, but not for CRISI, due to the broader eligibility,” Bevil noted. “ASLRRA could work directly with FRA under an information sharing agreement to enable better analysis of what parts of the short line population are either not applying for CRISI grants or not applying successfully. Such collaboration could help the agency and the association to work together better to improve outreach to ensure that the CRISI program is broadly accessible, especially to the smallest railroads.”
• “Improve Notices of Funding Opportunity (NOFO) and the application review process.” The prior Administration’s NOFOs, Bevil said, “included requirements beyond those in the program statute in the section on ‘administrative and national policy requirements.’ These requirements caused confusion among applicants as to how their applications would be reviewed and what project implementation steps they would need to take.” She suggested that FRA “carefully review these requirements as they revise their standard NOFO text and strike requirements conditioning grant agreement execution on policies that are not required by the grant program statute.”
• “Improve elements of the NEPA process.” Railroads are an environmentally friendly way to move goods, said Bevil, noting that ASLRRA encourages efforts “to ensure NEPA requirements reflect this sustainable way to move freight and do not undermine it.” Specifically, she said, “we believe there could be room within USDOT’s NEPA implementing regulations to expand definitions of selected categorical exclusions (CEs) without risking significant environmental impacts. Bundling like CEs for review and approval is an effective procedure for expediting grant awards that Congress can encourage.”
• Improve the Grant Adjustment Request Form (GARF) process by “streamlining the steps, improving communication, and aligning requirements with real-world project conditions,” Bevil suggested.    
• “Coordinate Section 106 reviews.” According to Bevil, FRA can reduce delays “by coordinating with DOT’s Office of the Secretary (OST) and the White House to expedite the Advisory Council on Historic Preservation’s acceptance of the final Section 106 exemption of railroad rights-of-way (ROW) from review under Section 106 of the National Historic Preservation Act.” She noted that “[u]nnecessary Section 106 reviews can introduce serious delays into the grant obligation process.”
• “Consider Buy America waivers.” FRA, in coordination with OST and the Office of Management and Budget, “should judiciously deploy Buy America waivers where appropriate,” Bevil said. “These waivers can be a useful tool when domestic production capacity does not yet exist. We have seen the due diligence on waiver requests go awry. Inexperienced analysts can incorrectly assume domestic capacity when none practically exists or may conduct excessive research to determine non-availability.”

Bevil also recommended the continued funding of Operation Lifesaver (OLI), Section 130, and RCE to protect the public. 

“Federal grant funding is an example of bipartisan, high-impact, efficient infrastructure investment that supports American jobs, enhances safety, and strengthens our supply chain—all across the United States,” Bevil told the Subcommittee. “As you shape the nation’s next surface transportation bill, we urge that these vital programs and policies be secured in legislative text, and that process improvements are considered to help maximize the value and impact of each dollar granted, ensuring the continued success and growth of the short line industry, the nation’s freight rail network, and most importantly the tens of thousands of critical agricultural, energy, manufacturing, and industrial rail shippers.”

Matthew Dietrich, Ohio Rail Development Commission

The Ohio Rail Development Commission delivers projects using both FRA and Federal Highway Administration (FHWA) funds and both formula funds and discretionary grant awards, according to Dietrich. “Since 2010 the Rail Commission has been awarded and administered 24 federal discretionary grants,” he said. “These discretionary grants, specifically Railroad Crossing Elimination (RCE) and Consolidated Rail Infrastructure and Safety Investment (CRISI), are critical to improving freight rail infrastructure and safety. My organization has been successful leveraging private freight railroad and state funding for these programs to complete projects that simply would not have happened without the federal funding.”

Dietrich focused his comments on FRA’s RCE Program. He said there are six ways that project delivery could be streamlined while still meeting all federal requirements:

1. “Accept projects developed under the project development process of other US DOT Administrations.” Why this would be beneficial? Dietrich provided this example: “The Rail Commission won an RCE grant for a grade separation in Fostoria, Ohio, in the first year of the program. Between the time of application submission and the award announcement, we secured additional FHWA funding through standard Ohio DOT programs to advance the planning and engineering work and progressed that work following FHWA procedures. Rather than accelerate the project, the additional funding and work created delay and resulted in FRA determining that $70,000 of the RCE award was no longer eligible because we had progressed the work. It was the first instance in my career that identifying more funding for a project became an obstacle to overcome. This work could be avoided if the FRA accepted other approved USDOT Administrations’ processes, such as NEPA, to develop projects.”
2. “Provide Pre-Award Authority Letters with notification of award.” Currently, the Ohio Rail Development Commission has five grant awards under the RCE program. “Work has stopped on three of the projects because we have not received pre-award authority,” Dietrich said. “These delays could be avoided if the FRA provided a pre-award authority letter with the notification of an award. While not full obligation of funding, these pre-award letters allow grant recipients to continue to develop these projects concurrently with the administrative processes. For several CRISI projects, the Rail Commission has been able to use pre-award authority from the FRA to purchase materials and conduct NEPA work while the rest of the project documentation is finalized. This process not only allowed the projects to advance more quickly but also mitigated some of the impacts of inflation on material costs.”
3. “Streamline the grant documentation process for state DOT recipients.” If the FRA developed a “tiered grant agreement process that considers the recipients’ experience and authority administering federal funding,” Dietrich pointed out, “projects could advance more quickly. For instance, lengthy legal review is required for grant documentation that is not related to the actual project but focused on governance and compliance. As a recipient of federal funding, our entire organizational structure is designed to comply with federal regulations so the need to have standalone documents is redundant and creates additional steps unrelated to project delivery.”
4. “Prequalify states to administer grants.” Dietrich suggested that FRA create a pre-qualification program for states to assume more direct responsibility for project delivery after award. “A precedent and possible blueprint for this suggestion is National Environmental Policy Act 4 (NEPA) Assignment,” he said. “Many states, including Ohio, have received authority from US DOT Administrations to assume the federal responsibilities regarding NEPA. In Ohio, we have NEPA Assignment for both Federal Highway and Federal Rail programs. Expanding this program to encompass the administration of discretionary grants would reduce the burden on federal staff while simultaneously allowing states to more quickly advance awarded projects.”
5. “Reconsider the obligation process.” Dietrich suggested revising the FRA obligation process “to more accurately represent the commitments of the agency, such as entering into grant agreements and obligating funding earlier in the process.” The certainty, he said, “would provide assurance to grantees and accelerate work by eliminating the need to continually revise and renegotiate grant documents to move to the next step in the process.”
6. “Allocation to states for project development.” An additional step to advance projects more efficiently would be to allocate a portion of program funding to states to develop projects, according to Dietrich. “I think it is telling that of the 123 awards from the FY 23-24 RCE Program, just 34 received construction funding,” he said. “Allocating a portion of the funding to states based on criteria such as railroad mileage and population would accomplish two goals: allow states to develop projects on timelines that are not dictated by the next Notice of Funding Opportunity and improve the quality and readiness of discretionary grant applications that are submitted to the FRA for funding. The Rail Commission is currently using the one-time state funding provided by Governor DeWine’s Administration for grade 5 crossing safety to conduct project development activities for potential RCE project applications. Allocation of funding to states would allow us to further this work through the NEPA process for new projects.”

Garrett Eucalitto, Connecticut DOT

“Rail is critical to the state of Connecticut, and a key component of Connecticut DOT’s infrastructure and operations portfolio,” Eucalitto said. “With over 230 route miles of passenger rail, half of which is owned by Connecticut DOT, and 582 miles of freight rail, with 40% owned by Connecticut DOT, we invest heavily in railroad infrastructure to keep our economy moving.”

In addition to discussing BIL rail program success, Eucalitto provided an overview of the challenges state DOTs have experienced since BIL’s passage and an overview of the rail program policy recommendations currently being considered by AASHTO members.

Eucalitto said association members believe there are “reasonable modifications to project delivery and permitting requirements that could more efficiently and effectively move rail projects forward without doing damage to the environment.” For example, he said, “Congress should direct executive branch agencies to fully implement the One Federal Decision process to speed up the review timeline for projects and improve the accountability for all parties involved in a project’s development. Congress should also take steps to modernize the use of the National Environmental Policy Act—including by modifying the definition of a ‘major project’ and ‘federal action.’” Additionally, he said, with many large projects receiving funding from multiple federal partners, “coordination amongst the various federal modal agencies should be improved, preferably with the agencies accepting their peer agencies’ environmental reviews and quickly designating a lead oversight agency/project sponsor.” These types of changes would “better align federal resource agencies’ review and permitting actions that improve transportation and environmental outcomes while reducing delays,” he pointed out.

Stable federal funding is also important, according to Eucalitto. “[It] is essential to maintain the flow of anticipated investment in rail transportation improvements, maintenance, and operations; the absence of this stability leads to project delays that escalate costs,” he noted.

Additionally, there are improvements to the financial processing of grants that could make the process much more efficient for awardees, Eucalitto pointed out. “Grantees should be able to seek federal reimbursement at a defined percentage, for example, 80% federal and 20% state, and not based on the total project cost, provided the non-federal match is met,” he suggested.

According to Eucalitto, AASHTO has adopted “an overarching vision for surface transportation reauthorization that covers state DOT work across the USDOT modal administrations.” It calls for “a world-class, multimodal transportation system that supports and strengthens the nation’s transportation infrastructure for a strong economy with improved safety and mobility,” he said. “Achieving this vision requires the following: 

• “Federal funding stability. Stable federal funding is necessary to keep the pipeline of planned investments in transportation improvements, maintenance, and operations moving forward; a disruption to this stability will translate into project delays that increase costs, resulting in fewer projects per dollar.
• “Formula-based federal funding paired with state contributions. This approach to federal funding reflects the proven federal-state commitment that ensures the flexibility necessary for each state to best meet its unique investment needs.
• “Current funding levels plus inflation must be the baseline. The baseline for the next bill must grow from current levels and keep up with inflation to advance safety and mobility in a meaningful way.
• “User pay principles for all vehicles. Congress should ensure all vehicle types pay their fair share to fund transportation and to sustain the Highway Trust Fund.” 

On the last point, Eucalitto noted that “this Committee has started to discuss options for raising revenue for the Highway Trust Fund as part of its reauthorization process.” The shortfall in the Highway Trust Fund “is a serious issue,” he said, “and AASHTO members are grateful that the Committee understands this challenge.”

Kevin Hicks, TranSystems

“Let me preface my comments by saying that I think the staff of the FRA is full of hardworking and talented individuals and my comments are not an indictment on them,” Hicks said. “Rather, the grant process that has been established at the FRA has put burdens on the staff often times putting them in positions that do not make the grants process efficient or effective.” Hicks noted, too, that the NRC supports the continued funding of the FRA grant programs at existing or increased funding levels. “Spending on infrastructure, especially rail infrastructure, is truly a sound investment that pays dividends to our economy, supply chain, and our transportation network,” he said. “These funds will also help stimulate additional infrastructure investment by states, localities, and private sector partners, and will help to onshore additional manufacturing jobs here in the U.S.”

Following are among the recommendations Hicks put forward:

• “Congress should consider directing FRA to identify a ‘pre-approved’ or at least a prior vetted pipeline of projects,” to speed the selection process. “FRA NOFOs should have more stringent requirements (e.g., require projects to have more burden of proof of readiness) and/or eligibility to shrink the applicant pool,” he said. “FRA should consider further standardization of the grant applications, e.g., a more defined template, thereby reducing the effort required both in preparation and in review. FRA could also consider consolidating existing grant programs and having separate programs for preliminary engineering (PE) and NEPA versus final design and construction grants. For final design and construction grants, FRA should require PE/NEPA to be completed in order to be eligible for funding.”
• Because grants take “too long to obligate,” Hicks offered these recommendations: “FRA should establish a process to evaluate projects and allow them to proceed with NEPA before applying for a grant (e.g. establish a pipeline)”; the NEPA Categorical Exclusion (CE) process “should be streamlined to a simple grantee self-certification for an ordinary track rehabilitation project”; the FRA “should require PE, cost estimates, and stakeholder concurrence with grant applications”; “[i]f the host railroads would be willing to sign a 22905-only agreement, separate from the larger overarching agreements, and the FRA would require 22905 agreement with the grant application, this could potentially speed up the project timeline”; and the grant agreement processing timeline could be expedited by “sufficient and consistent FRA/USDOT staffing with experience, capacity, and the ability to make decisions.”

Hicks said that the NRC also offers the following broad grants recommendations to “help America build and improve the federal rail discretionary grant process”:

• “Standardize environmental approval processes across USDOT modal agencies.
• “Provide pre-award spending authority for advance construction and pre-construction activities across funding programs available to rail infrastructure projects. USDOT should provide clear and consistent guidance to grant recipients.
• “Provide each successful grantee with a target date for a completed grant agreement. Responsibility for meeting a target date would be shared by USDOT and the grantee. FRA should model its grant management system after FTA’s Transit Award Management System (TrAMS).
• “Make the grant process easier for smaller entities by establishing a page limit for NOFOs and grant applications. The complexity of NOFOs has grown and has disproportionately impacted smaller entities with less resources and personnel.
• “Codify authority for flexing and transferring funds between USDOT modal agencies when appropriate.”