Wednesday, May 19, 1999 (Washington, DC )

U.S. Secretary of Transportation Rodney E. Slater today announced a new rail direct loan and loan guarantee program that could provide up to $3.5 billion in loans, including $1 billion for projects primarily benefitting shortline and regional railroads.

"President Clinton is committed to building a transportation system for the 21st century that is safe and efficient and that will continue to grow our vibrant economy," said Secretary Slater. "This innovative financing program supports his goal by providing worthy rail and intermodal facilities an opportunity to leverage investments."

The program is called the Railroad Rehabilitation and Improvement Financing Program (RRIF), and it is being administered by the U.S. Department of Transportation’s Federal Railroad Administration (FRA).

"This investment program will help finance highway-rail grade crossing elimination projects and help the shortlines finance track to accommodate 286,000-pound cars and improve the environment by relying on energy efficient rail freight service," said Federal Railroad Administrator Jolene M. Molitoris.

More than 650 shortline and regional railroads in the United States operate more than 47,000 miles of track.

Molitoris said that priority consideration is provided for projects that enhance safety; enhance the environment; promote economic development; are included in state transportation plans; promote U.S. competitiveness; and preserve and enhance rail or intermodal service to small communities and rural areas.

RRIF will provide selected applicants loan guarantees and direct loans for improving railroad infrastructure, developing new intermodal and railroad facilities and refinancing railroad debt.

RRIF funding may be used to acquire, improve, or rehabilitate intermodal or rail equipment or facilities, including track, components of track, bridges, yards, buildings, and shops; to refinance existing debt incurred for the previous purposes; and to develop and establish new intermodal or railroad facilities. Eligible applicants include state and local governments, government-sponsored authorities and corporations, railroads, and joint ventures that include at least one railroad.

Payment for the cost of the loan will be through the Credit Risk Premium, which is a cash payment provided to the Federal Railroad Administration (FRA) by any non-federal entity. The Credit Risk Premium must cover the estimated long-term cost to the federal government of a loan or loan guarantee, taking into consideration estimated defaults, delinquencies, penalties, and prepayments. The direct loans or loan guarantees can be provided for up to 25 years.

The RRIF is authorized by the Transportation Equity Act for the 21st Century.

A notice of proposed rulemaking (NPRM) will be posted today and published in the Federal Register on May 20. This NPRM provides for a comment period of 30 days, after which a final rule will be issued that takes into consideration comments received by the FRA.