On June 18, 2015, the Railroad Reform, Enhancement, and Efficiency Act (RREEA), a $9 billion, four-year Amtrak reauthorization bill, was introduced in the U.S. Senate.  It was marked up on June 25, with seven amendments approved.  It would authorize a total of $6.6 billion in Amtrak grants over four years, increasing from $1.45 billion in Fiscal Year 2016 to $1.9 billion in FY19.  Additionally, the bill would authorize $2.28 billion in "National Infrastructure and Safety" capital grants, rising from $350 million in FY16 to $900 million in FY19. 

On the whole, the RREEA would increase funding for intercity passenger rail service.  It also includes numerous policy reforms, including a new approach to Amtrak's budgeting system, provisions to encourage private investment in intercity passenger rail, and various safety provisions. 

Authorized funding levels

The proposed authorization levels in the RREEA are generally an increase over those provided for in the previous Amtrak reauthorization law, the Passenger Rail Investment and Improvement Act of 2008 (PRIIA), which authorized a total of $2.9 billion in operating assistance and $5.3 billion in capital grants over five years (FY09-13).  While the PRIIA authorization levels for capital assistance were much higher than those in RREEA, they were never fully appropriated, as illustrated in the following table.

Comparison of dollars authorized to appropriated Amtrak funds, FY 2009-13

Note: All units in billions of dollars.  Totals may not add due to rounding.  Capital refers to general capital assistance.  Does not include authorized debt service payments.
Source: CMAP staff analysis of PRIIA text, Amtrak FY11 Grant and Legislative Request, and Amtrak FY13 Budget and Comprehensive Business Plan.

Rather, actual capital and operating appropriations to Amtrak over the FY09-13 period were about $5.66 billion or about $1.13 billion each year.  In comparison, RREEA would authorize a total of $7.68 billion or $1.92 billion each year.  This authorization level represents about a 70 percent increase in average annual funding compared to actual appropriations during the PRIIA era.

Additionally, the proposed authorization levels in the Senate's RREEA represent an increase over those provided for in the U.S. House of Representatives' Amtrak reauthorization bill, the Passenger Rail Reform and Investment Act (PRRIA), approved by the full House on March 4, 2015.  PRRIA has many similarities to a previous version of the bill introduced last year, including separate accounting controls for Amtrak's Northeast Corridor, an emphasis on improved transparency, and provisions to encourage greater private investment.  PRRIA would authorize $5.8 billion in grants to Amtrak and $1.2 billion in capital assistance over the same FY16-19 period as the Senate bill.  The following table compares the Senate and House authorization bills' annual and total funding levels.

Comparison of authorized funding levels in dollars in the House and Senate Amtrak reauthorization bills, FY16-19

Note: All units in billions of dollars.  Totals may not add due to rounding.  Capital refers to general capital assistance.  Does not include authorized debt service payments.

In total, the Senate's bill would provide an additional $790 million in operating assistance and an additional $1.08 billion in capital grants to Amtrak over the same four-year period.  Put another way, RREEA would provide a total of 13.6 percent more operating funding and 90 percent more capital funding than PRRIA.

Budgeting approach

The bill would separate Amtrak's budgeting system into four business line accounts: Northeast Corridor (NEC), state-supported routes, long-distance routes, and national network activities.  Revenues received into these accounts -- including compensation from states and operating surpluses -- would be restricted to expenditures from these accounts.  Because of the separate accounting process, surplus revenues in the accounts would be reinvested in these accounts only.  For the NEC account, surplus revenues could be dedicated to capital improvements only, while surplus revenues accruing to the state-supported and long-distance routes could be spent on either capital or operating assistance.

The NEC is currently one of the few Amtrak corridors that   produce surplus  ticket revenue over and above  their operating expenses; this new accounting would require profits from NEC routes to be reinvested back into that corridor.   While U.S. DOT has called for predictable, dedicated funding that would ensure operating support for the long-distance network and provide capital grants to improve the financial and operational performance of state-supported corridors, this bill fails to provide those robust resources.  Without such funding assurances, separating Amtrak's accounting system -- while sound public policy -- could result in fewer resources for long-distance and state-supported routes, such as those that serve the Chicago region.

The bill includes other provisions aimed at improving the transparency of Amtrak's accounting system, requiring Amtrak to develop fiscally constrained five-year business line and asset plans, develop methodologies to evaluate its routes and services, and to submit a business case to Congress for major capital procurements.  It also requires Amtrak to make operational efficiencies in areas such as food and beverage policy.

Private sector provisions

The bill would provide incentives for greater private investment in intercity passenger rail.  For example, it would encourage development opportunities at stations and along rights-of-way.  In northeast Illinois, Amtrak owns Chicago Union Station as well as key yards on the near South Side.  Given their central location, these facilities present an unknown but potentially significant opportunity for joint development with utility companies and real estate investors.

The bill would also provide two opportunities to promote competition in the provision of intercity passenger rail service:

• The first would be a pilot program allowing competition among private operators or others to provide long-distance service.  The selected carrier would replace Amtrak service for four years, with options for renewal, and would be required to reduce operating costs by at least 10 percent compared to existing service. 
• The second would require Amtrak to solicit proposals for capital and maintenance projects on selected corridors (generally more regional services, including the Chicago Hub Network).  The bill requires that the proposals reduce existing travel times by at least 25 percent and, for proposals on the NEC, must provide two-hour express travel times between Washington and New York.  The Secretary of Transportation may advance proposals for further analysis, establishing special corridor-specific commissions to do so.

Additionally, the bill would make several reforms to the Railroad Rehabilitation and Improvement Financing (RRIF) credit assistance program.  Some of these reforms are designed to add greater flexibility to the credit risk premium currently required by RRIF, which is currently one of the most significant barriers preventing potential applicants from accessing the program.  The bill would allow recipients to use federal funds to cover the credit risk premium, a provision that is typically forbidden for the RRIF program, and would also allow other entities aside from the applicant to cover credit risk premiums. 

Other reforms would create more flexible repayment terms for RRIF loans, allowing repayments to begin five years after the substantial completion of a project as well as deferred repayment of loans for up to one year.  The former provision allows time for a project to "ramp up" and begin generating revenues before the recipient is required to begin debt service.   The bill would also expand the list of eligible activities for RRIF assistance to include planning and design work as well as related economic development activities.  The latter could allow transit-oriented development activities at rail stations to become eligible for RRIF assistance.  Taken together, these reforms could make the RRIF program more attractive for complex, less traditional projects like the redevelopment of Union Station, a regional priority identified in GO TO 2040.

Safety provisions

RREEA includes a number of safety provisions.  Several of these provisions support positive train control (PTC), which refers to the use of advanced technologies to detect potential issues and automatically stop or slow a train before a crash occurs.  More specifically, the bill authorizes grants and prioritizes loans for PTC implementation.  The Rail Safety Improvement Act of 2008 requires PTC to be installed on track carrying hazardous materials or passenger traffic by December 31, 2015, although it appears unlikely that most railroads will meet that deadline.

Other safety provisions in the bill would require passenger railroads to create speed limit action plans, and states to develop grade crossing action plans.  Illinois already publishes five-year rail grade crossing improvement programs.  The bill would also encourage confidential "close call" reporting programs, along with signage improvements, signals and other technology implementation, track inspections, and other initiatives.  CMAP featured grade crossing delay as a key metric in its mobility data visualization website and further explored the issues related to region's 1,500 grade crossings in a Policy Update.

An amendment adopted during markup would require U.S. DOT to issue rules and regulations requiring certain tank cars to be equipped with thermal blankets, real-time information sharing of hazardous material shipments with emergency response officials, the installation of recording devices in locomotives, and for railroads carrying certain flammable liquids to develop comprehensive oil-spill response plans.  The amendment would raise the liability cap for passenger rail incidents from $200 million to $295 million, and would also require U.S. DOT or the Government Accountability Office to conduct various safety-related studies, including an evaluation of electronically controlled pneumatic brakes. 

Tank car design standards have become a prominent topic with the growth in crude-by-rail shipments.  Domestic oil production has grown in recent years, particularly in the upper Midwest, and the nation's pipeline system is not equipped to handle movements from these regions to oil refineries.  Oil shippers have increasingly relied on the rail system to move their product.  To illustrate, the U.S. Energy Information Administration estimates that total crude-by-rail shipments grew from about 20 million barrels in 2010 to over 370 million barrels in 2014, an 18-fold increase in four years.  Given the central role the Chicago region plays in the nation's rail system, a large number of these crude oil trains pass through northeastern Illinois, with the Chicago Tribune reporting that 40 crude trains pass through the region each week.

Other provisions

The bill would establish new competitive, performance-based operating and capital grant programs.  For the operating grants, states and other applicants would be able to propose new, restored, or enhanced intercity rail service; grants would be available for a three-year period with a decreasing federal share of 80 percent in the first year, 60 percent in the second year, and 40 percent in the third year.  For the capital grants, the emphasis would be on state of good repair, with a federal share of 80 percent.  

Additionally, the bill would change the membership of the Amtrak Board of Directors, adding two members and requiring particular composition of the entire membership.  In addition to the Amtrak President and U.S. Secretary of Transportation, the board would be reformed to include two members from the NEC, four members from outside the NEC (two members from states with long-distance routes and two members from states with state-supported routes), and one member from the NEC or a state with long-distance or state-supported routes.

Looking Ahead

The Amtrak reauthorization process is well underway in Congress, with both houses having passed four-year bills out of committee.  CMAP is encouraged by the overall increase of funding in RREEA compared to the proposed levels in PRRIA.  CMAP is also encouraged by the increased emphasis on safety and the reforms to RRIF, which could benefit redevelopment of one of the region's key transportation facilities. 

However, the bill does not provide predictable, dedicated funding, without which the new accounting system could place the Chicago region and Illinois at a relative disadvantage compared to Northeast states.  This arrangement could potentially reduce funds available for state-supported and long-distance services without a corresponding guarantee that locally generated revenues would be reinvested in those services.  This concern is especially timely, given the Governor's proposal to cut state assistance for Amtrak services in Illinois by $20 million in FY16.  Further, neither RREEA nor PRRIA provides a long-term, dedicated revenue source for intercity passenger rail, akin to the support received by the nation's highway and transit programs from the Highway Trust Fund.

Chicago is a major hub for Amtrak's regional and long-distance services, and federal authorization for intercity passenger rail has a significant impact on northeastern Illinois.  Chicago's Union Station is not only a major Amtrak hub but also the busiest commuter rail station in the region, providing increased accessibility to the central business district.  CMAP will continue to monitor RREEA and PRRIA as the legislative process continues.