Strategy Overview

On April 16, 2009, the US Department of Transportation (the “DOT”) released its “High-Speed Rail Strategic Plan” (the “Plan”) pursuant to The American Recovery and Reinvestment Act (the “ARRA”). The Plan sets forth the DOT’s vision for jump-starting further development of America’s high-speed rail system by disbursing US$8 billion appropriated under the ARRA and US$5 billion (to be spread over five years) in annual federal budget appropriations.

Legislative Framework. There are four principal pieces of recent federal legislation providing the framework for federal involvement in high-speed rail development:

  • FY 2008 Appropriation Act: Established a new pilot program for joint federal-state intercity passenger rail (IPR) capital investment, providing US$30 million in federal funds (subject to a 50 percent funding match by states).
  • Rail Safety Improvement Act of 2008 (RSIA): Reauthorized and supplemented Federal Railway Administration (FRA) safety programs, including for intercity passenger rail.
  • Passenger Rail Investment and Improvement Act of 2008 (“PRIIA”): Established three competitive grant programs for high-speed and intercity passenger rail:

Section 301: Grants to states, groups of states, and public agencies established by states funding up to 80 percent of the cost of intercity passenger rail capital improvements.

Section 501: Grants similar to Section 301 grants, but for the purpose of developing federally designated high-speed rail corridors.

Section 302: Grants to States or Amtrak (in cooperation with States) funding up to 80 percent of the capital costs of facilities, infrastructure, and equipment to reduce congestion and facilitate use of intercity passenger rail transportation.

The PRIIA contains two other notable features:

State and National Rail Plans: Requires states to develop state rail plans as a prerequisite to receiving federal grant funding, and requires US DOT to develop a national rail plan.

Public-Private Partnerships: Encourages P3 proposals for high-speed rail within federally designated corridors. Pursuant to an FRA solicitation, expressions of interest must be submitted by September 14, 2009. This is a good opportunity for P3 participants to either team with states or advance alternative proposals to US DOT for high-speed rail projects with P3 components. The RFP may be found at 73 FR 76443.

  • ARRA: Provided funding for Sections 301, 302 and 501 of the PRIIA (and eliminated certain criteria that would otherwise be applicable to grants under those sections), giving priority to high-speed rail development.

Three-Track Funding Approach. US DOT has identified a three-track funding approach for the initial US$8 billion under ARRA and annual appropriations:

Track 1: Projects: Grants for individual projects (infrastructure, facilities, and equipment) eligible under PRIIA Sections 301 and 302 for the benefit of existing services. This track is aimed at “ready to go” projects (e.g., NEPA approval and preliminary engineering completed) that demonstrate “independent utility” (i.e., provides benefits even if additional transportation improvements are made).

Track 2: Corridor Programs: Cooperative agreements to develop segments or phases of corridor programs eligible under PRIIA Sections 301 and 501, benefiting existing or new services. Funding would be set aside at the outset with milestone payments for actual funding. This track involves a higher level of federal oversight.

Track 3: Planning: Cooperative agreements for planning activities eligible under PRIIA Section 301, using non-ARRA funds. The intention of Track 3 is to create a pipeline for future corridor development, and give states an opportunity to prepare for future appropriations.

Proposed Timeline

The Plan sets forth the following short-term timeline for implementing a high-speed rail strategy and disbursing funds provided in the ARRA and 2009 appropriations funds:

  • May 2009: FY 2010 budget released
  • June 17, 2009: US DOT issues specific guidance for applicants for ARRA funding, including any updates to the timetable
  • August 2009: Round 1 solicitation for Track 1 and Track 3 projects (decision Sept. 2009)
  • September 2009: Round 1 solicitation for Track 2 projects (decision late Nov. 2009); expressions of interest for HSR P3 proposals due September 19
  • January 2010: Round 2 solicitation for Track 3 projects (decision late Feb. 2010)
  • March 2010: Round 2 solicitation for Track 1 projects (decision late April 2010)
  • April 2010: Round 2 solicitation for Track 2 projects

For private sector participants, it is key to note that US DOT intends to seek input throughout this process and plans to hold workshops at yet to be specified dates. Consideration should be given to responding to the FRA solicitation for HSR proposals to identify P3 opportunities. Further guidance should be forthcoming in the US DOT June 17 release.