The Railroad Rehabilitation and Improvement Financing (RRIF) Program was established as part of 1998's Transportation Equity Act for the 21st Century (TEA 21) and authorizes $3.5 billion in direct and guaranteed loans for rail equipment and infrastructure. As written, $1 billion of that total is dedicated to smaller (Class II and Class III) railroads. Since TEA 21's passage, however, regulations enacted by the previous Administration, as well as a June 23, 2000 memo between the Department of Transportation and the Office of Management and Budget, have crippled the effectiveness of the loan program. Funds have yet to be provided in any Presidential budget proposal to support the program.

The program must be made operative immediately, Chairman Don Young said.

"Not a dollar of this $3.5 billion revolving fund has been put to work, almost three years after enactment," said U.S. Rep. Don Young (R-Alaska), Chairman of the Transportation and Infrastructure Committee.

Young expressed concern that the Administration was defying the will of Congress, embodied in TEA 21, by enacting the regulations that impeded the issuance of loans under the RRIF Program. "I hope that we can explore with the Department of Transportation what has gone wrong and how it can be fixed -- now," said Young. "All of our railroads, large and small, as well as their intermodal transportation partners, are potential beneficiaries of this program, and it must be made operative and user-friendly right away."

There's a dire need for infrastructure improvements in the railroad industry, said Rep. Quinn.

"Today's hearing showed the dire need for infrastructure improvements on much of the nation's railroad tracks," said U.S. Rep. Jack Quinn, Chairman of the Subcommittee on Railroads. "The Subcommittee will work diligently on a bipartisan basis, whether through legislation or negotiations with the Administration, to help railroad companies make much-needed infrastructure improvements.

"Three years is already too long to release money as part of the Railroad Rehabilitation and Improvement Financing (RRIF) Program, which would allow railroads to better compete with other modes of transportation," Quinn said. Rep. Ferguson stressed the need for the Committee to help modernize the nation's railroads.

"Railroads are the backbone of our nation's freight and commuter transportation," said U.S. Rep. Mike Ferguson (R-NJ), Vice Chairman of the Railroads Subcommittee.

"We must do everything in our power to modernize our railroads to make them safer and more efficient."

The rail management and labor representatives also gave their support to H.R. 1020, The Railroad Track Modernization Act of 2001.

Introduced by Subcommittee Chairman Quinn, this bill establishes a program of direct grants to Class II and Class III railroads for rehabilitation and improvement of tracks, to bring the infrastructure up to a level permitting safe and efficient operation, including traffic containing the new heavier 286,000-pound rail cars being adopted as an industry standard by the large (Class I) railroads. The general fund authorization level is $350 million per year for FY 2002-2004.

Several witnesses cited a recent study that concluded about $6.8 billion would be required to provide the needed infrastructure improvements to the Class II/Class III rail network.