Rail Renaissance: Administration Allocates at Least $8 Billion for High Speed Rail

DLA Piper | Publications | Rail Renaissance: Administration Allocates at Least $8 Billion... Page 1 of 5 Search NEWS & INSIGHTS Publications 8 JUN 2009 Rail Renaissance: Administration Allocates at Least $8 Billion for HighSpeed Rail PROJECT FINANCE ALERT Michael A. Bedke The Obama Administration has allocated $8 billion over the next two years as a “down payment” to Federal Railroad Association (FRA) in order to improve the high-speed rail (HSR) network in the United States, and the Administration will seek another $1 billion per year for the following five years. President Barack Obama envisions the creation of a nationally integrated network of high-speed rail to be part of his legacy, just as the federal highway system was part of President Dwight Eisenhower’s. President Obama has touted the environmental and commercial advantages of such a network—not least for its ability to move commuters and other travelers from roads to mass transit and for its potential to decrease the “$80 billion” that he cited as the cost of lost productivity and wasted fuel from road congestion. The programs relating to high-speed rail are established under The Passenger Rail Investment and Improvement Act (PRIIA) and the funding for such programs is part of The American Recovery and Reinvestment Act (ARRA). The programs funded under ARRA include Intercity Rail Corridors (Section 301 of PRIIA); Congestion Grants (Section 302 of PRIIA); and High-Speed Rail Corridors (Section 501 of PRIIA). There are three categories of HSR that are supported by the Administration’s strategic plan: (a) HSR-Express is intended to provide express service between major population centers 200 to-600 miles apart, at top speeds of at least 150 miles per hour. It is intended to relieve both air and highway capacity constraints. (b) HSR-Regional is intended to provide service between major and moderate population centers 100 to http://www.dlapiper.com/rail-renaissance-administration-allocates-8b-for-high-speed-rail/ 6/10/2009 DLA Piper | Publications | Rail Renaissance: Administration Allocates at Least $8 Billion... Page 2 of 5 500 miles apart, at top speeds of 110 to150 miles per hour. (c) Emerging HSR includes the development of corridors 100 to 150 miles long, with trains traveling at top speeds of 90 to 110 miles per hour. The Obama Administration has identified ten major corridors in the US with the potential have been prioritized in the US for HSR investment They are: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Northern New England Empire Keystone Southeast Florida Chicago Hub Network/Midwest Gulf Coast South Central California; and Pacific Northwest. For a host of reasons, political and practical, we believe the corridor projects most likely to be funded include Florida, California and the Midwest. We believe Florida is the only HSR Express project that is “shovel ready.” California has strong state support for rail (for example, California accounts for 20 percent of Amtrak’s entire national ridership) and has established a strong “brand.” In addition, a San Diego – Los Angeles line could be accomplished fairly quickly. In the Midwest, eight states and the City of Chicago are all working together on a strong plan and implementation program and strategy. It seems logical that the Federal Rail Administration will want a well-coordinated national rail system with a modernized national fleet (and with that fleet manufactured in the US). Many observers are waiting to see if the guidelines, due out this month, make this explicit. If the guidelines fail to spell this out, it is very possible that the result will be a national network that is a hodge-podge of different systems, with incompatible technology, rolling stock and infrastructure—harkening back to the earliest days of railroads. The guidelines are also expected to contain some compliance requirements, such as the Buy American provisions of Section 1605 of Title XVI of Division A of ARRA. DLA Piper is a market leader in the transportation sector with a special emphasis on rail. For more information about your business and the development of the high-speed rail network, please contact: Richard M. Ornitz Michael Barz Ross Altman Michael Bedke http://www.dlapiper.com/rail-renaissance-administration-allocates-8b-for-high-speed-rail/ 6/10/2009 DLA Piper | Publications | Rail Renaissance: Administration Allocates at Least $8 Billion... Page 3 of 5 http://www.dlapiper.com/rail-renaissance-administration-allocates-8b-for-high-speed-rail/ 6/10/2009 DLA Piper | Publications | Rail Renaissance: Administration Allocates at Least $8 Billion... Page 4 of 5 close http://www.dlapiper.com/rail-renaissance-administration-allocates-8b-for-high-speed-rail/ 6/10/2009 DLA Piper | Publications | Rail Renaissance: Administration Allocates at Least $8 Billion... Page 5 of 5 false Galleries of by http://www.dlapiper.com/rail-renaissance-administration-allocates-8b-for-high-speed-rail/ 6/10/2009