June 18, 1999

Docket Clerk
U.S. DOT Central Dockets Office
Room PL-401
400 Seventh Street, S.W.
Washington, DC 20590-0001

Dear Docket Clerk:

The American Public Transit Association (APTA) is pleased to respond to the Federal Railroad Administration’s (FRA) May 20, 1999, Federal Register Notice requesting comments on a proposed rule implementing Section 7203 of the Transportation Equity Act for the 21^st Century (TEA 21). These comments are being submitted in duplicate, as requested in the above notice. We appreciate the opportunity to present APTA’s views on this matter.

APTA is a nonprofit international association of over 1,250 member organizations including transit systems; planning, design, construction and finance firms; product and service providers; academic institutions, and state associations and departments of transportation. APTA members serve the public interest by providing safe, efficient and economical transit services and products. Over ninety percent of persons using public transportation in the United States and Canada are served by APTA members.

The proposed rule would implement the Railroad Rehabilitation and Improvement Financing (RRIF) Program, otherwise known as the Petri Amendment to the House TEA 21 bill. This Program enables FRA to provide loans and loan guarantees for railroad capital projects, including freight railroads of all sizes, state and local passenger and commuter railroads, and Amtrak.

APTA urges the prompt implementation of the FRA regulations. Commuter railroads, like other forms of mass transit, have great unmet capital needs. The USDOT estimates that for all mass transit, capital needs exceed $13 billion annually, with $3 billion annually just for commuter railroads. Prompt implementation of the RRIF program will help commuter railroads meet these outstanding capital needs and better serve our 360 million annual customers. For example, commuter railroads that are building a project under a Full Funding Grant Agreement with the Federal Transit Administration, could use the RRIF Program to maintain continuity in spite of the uncertain annual appropriations process. A loan or loan guarantee could bridge the gaps in funding or could help a commuter railroad leverage federal, state, and local funds to complete the project sooner, thereby reaping safety and operational benefits much sooner.

Benefits to the freight railroads will also benefit commuter railroads. For example, many commuter railroads operate over track owned by freight railroads. If freight railroads have access to loans via the RRIF program, it is more likely that track infrastructure will be well-maintained by the freight railroad owner. Better maintenance of track infrastructure means greater safety benefits and fewer delays for commuter railroads using the same track.

To maximize the benefit, FRA should ensure that the RRIF program will allow railroads to obtain FRA loans/loan guarantees at favorable interest rates and terms of repayment, with a simple application process. To the extent possible, the procedures for loan processing should be streamlined. First, we recommend that the term "lender of last resort" be eliminated from the proposed regulations. It is not part of the program as enacted by Congress, and it would render the program less flexible and effective as an innovative financing tool. Second, the statute permits a 100 percent guarantee. Therefore, the regulations should be changed to permit a 100 percent guarantee, and not be limited to an 80 percent guarantee, which is the maximum the proposed rule would allow. Third, the regulation describing the processing fee should clarify that the processing fee could be up to ½ percent of the loan amount, as set out in the statute. FRA should consider all the circumstances of the applicant (complexity of application, size of applicant, ability to pay, etc.) when determining the appropriate processing fee. Finally, since these loans are for a public purpose, the interest rate on direct loans should never exceed the cost of money to the government.

We would urge, as well, that FRA keep in mind that the RRIF program should be as accessible to passenger railroads as it is to freight railroads. To this end, when FRA analyzes whether passenger railroads "promote economic development," APTA expects that FRA will consider the "big picture" of economic benefit that transit confers, including increased land values and enhanced employment opportunities, for example. FRA should also ensure that the environmental procedures set out in Section 260.35 do not penalize those passenger rail projects for which the Federal Transit Administrator is the deciding official on environmental matters.

APTA appreciates the opportunity for an ongoing partnership with FRA in the implementation of TEA 21. Again, we are pleased to have the opportunity to present these views and stand ready to help FRA implement its regulations. For further information, please contact Kristin O’Grady at (202) 898-4108, or e-mail address kogrady@apta.com.

Sincerely yours,

William W. Millar
President

WWM/cmb