Railroad Bridges and Tunnels: Federal Role in Providing Safety Oversight and Freight Infrastructure Investment Could Be Better Targeted
Published: 2007-08-06T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Freight railroads account for over 40 percent (by weight) of the nation's freight on a privately owned network that was largely built almost 100 years ago and includes over 76,000 railroad bridges and over 800 tunnels. As requested, GAO provides information on this infrastructure, addressing (1) the information that is available on the condition of railroad bridges and tunnels and on their contribution to railroad congestion, (2) the federal role in overseeing railroad bridge and tunnel safety, (3) the current uses of public funds for railroad infrastructure investments, and (4) criteria and a framework for guiding any future federal role in freight infrastructure investments. GAO reviewed federal bridge safety guidelines and reports, conducted site visits, and interviewed federal, state, railroad, and other officials.
section_title: What GAO Found
paragraphs: Little information is publicly available on the condition of railroad bridges and tunnels and on their contribution to congestion because the railroads consider this information proprietary and share it with the federal government selectively. Major (Class I) railroads maintain detailed repair and inspection information, while other (Class II and III) railroads vary, from keeping detailed records, to lacking basic condition information. Despite their age, bridges and tunnels are not the main cause of congestion, although some do constrain capacity. Because bridge and tunnel work is costly, railroads typically make other investments to improve mobility first. The federal role in overseeing the safety of railroad bridges and tunnels is limited because the Federal Railroad Administration (FRA) has determined that most railroads are sufficiently ensuring safe conditions. FRA has issued bridge management guidelines, makes structural observations, and may take enforcement actions to address structural problems. However, FRA bridge specialists use their own, not a systematic, consistent, risk-based, methodology to select smaller railroads for safety surveys and therefore may not target the greatest safety threats. Federal funds are used to meet many different goals, but are not invested under any comprehensive national freight strategy, nor are the public benefits they generate aligned with any such strategy. Some state investments are structured to produce state and local economic and safety benefits, and public-private partnerships have facilitated investments designed to produce public and private benefits. GAO has identified critical questions that can serve as criteria for reexamining the federal role in freight investments--including railroad bridge and tunnel investments--and a framework for implementing that role that includes identifying national goals, clarifying stakeholder roles, and ensuring that revenue sources and funding mechanisms achieve maximum national public benefits. The Department of Transportation's draft Framework for a National Freight Policy takes a step forward, but more is needed to guide the implementation of a federal role in freight transportation investments.

section_title: Letter
paragraphs: Freight railroads have been an important part of the U.S. transportation  network for over 150 years and account for over 40 percent of the ton- miles of the intercity freight transported in the United States. Much of the  current U.S. freight railroad network was originally built by private  corporations in the late 1800s and early 1900s and is still privately owned,  including most of the nation’s over 76,000 railroad bridges and over 800  railroad tunnels. While many parts of the railroad infrastructure, such as  signals and track, have been replaced and upgraded, bridges and tunnels,  which are the single most expensive railroad infrastructure components,  have not been replaced and are still being used, some long after their  originally predicted useful life. In the future, however, with projected  increases in railroad traffic and further aging, these expensive components  may need replacement, presenting funding challenges to private railroads.
This report responds to your request for information on issues related to  bridges and tunnels on the national freight railroad network. Specifically,  this report addresses the following questions:  (1) What information is available on the condition of railroad  bridges and tunnels and on the contribution of this infrastructure  to railroad network congestion?  (2) What is the federal role in overseeing railroad bridge and tunnel  safety?  (3) How are public funds currently used for freight railroad  infrastructure capital investments, including those for bridges and  tunnels?  (4) What criteria and framework could be used to guide the future  federal role, if any, in freight-related capital investments, including  those for railroad bridges and tunnels?
Our overall approach to addressing these topics was to (1) review federal  legislation, regulations, and guidance; transportation planning literature;  and forecasts of future freight railroad demand and capacity from private  railroads, public agencies, and industry organizations; (2) interview a wide  variety of representatives; and (3) review pertinent documentation from  railroads of various sizes; federal, regional, state, and local governments;  and industry groups. In particular, we interviewed representatives from six  Class I railroads, two Class II railroads, and nine Class III railroads. At the  federal and state levels, we interviewed officials from six federal agencies  that have some relationship dealing with railroad bridges and tunnels on  the freight railroad network—including officials in the Department of  Transportation’s (DOT) Federal Railroad Administration (FRA), which has  primary responsibility for overseeing the safety of the nation’s freight  railroad network—as well as officials in nine state DOTs. We selected the  railroads and the state and local government agencies for interviews to  include a cross section of characteristics, including geographic diversity,  the presence of noteworthy public-private partnerships between the  railroads and government agencies, and state DOTs that actively  participated in planning or funding railroad infrastructure projects. We  conducted our review from June 2006 through July 2007 in accordance  with generally accepted government auditing standards. See appendix I for  further details about our scope and methodology.
subsections: section_title: Background
paragraphs: Currently, seven Class I railroads own and maintain over 61,000 bridges  and over 800 tunnels, and 40 Class II and 509 Class III railroads own and  maintain over 15,000 bridges. According to FRA documents, in 2002, the  U.S. railroad network contained approximately one bridge for every 1.4  miles of track. Class I railroads operate on approximately 70 percent of the  total route miles in the United States and generate 90 percent of total  railroad revenues. Class II and III railroads also play a critical role in the  national freight railroad network, serving as feeders to Class I main lines.  According to the American Short Line and Regional Railroad Association  (ASLRRA), Class II and III railroads handle one out of every four carloads  moved on the U.S. freight railroad system.
Between 1978 and 2004, railroad traffic on Class I railroads increased  dramatically while the number of railroad track miles decreased, as  evidenced by an increase in the ratio of train-miles to track-miles (see fig.  1). In addition, freight volumes increased, as evidenced by a 105 percent  increase in ton-miles per route-mile since 1990, from 8.63 million in 1990  to 17.70 million in 2005 (see fig. 2). These changes have focused more and  heavier traffic over fewer core lines, thereby increasing both the strain on  and the importance of key bridges and tunnels, such as those over the  Mississippi River and underneath Baltimore.
Bridges and tunnels on the freight railroad network are aging and are  susceptible to a variety of conditions that may cause wear or deterioration.  Railroad bridges are constructed from timber, steel, masonry or concrete,  or a combination of these materials. According to an FRA bridge survey  completed in 1993, more than half of the nation’s railroad bridges were  built before 1920. This survey, which FRA’s Chief Structural Engineer  told us is largely applicable today, found that 36 percent of railroad  bridges were made of timber, 32 percent of steel, and 20 percent of  masonry; the remaining 12 percent of bridges were not identified by bridge  type. Increased weight and traffic can cause fatigue in timber and steel  bridges. Timber bridges are also susceptible to decay from weather and  insects, and steel bridges near salt water may be susceptible to high rates  of corrosion. Masonry bridges are more vulnerable to the effects of time  and nature than to the weight of traffic, but reinforced concrete bridges  are susceptible to the effects of traffic loads. According to FRA, from 1998  through 2006 a total of 22 train accidents, involving one injury and no  fatalities, were attributed to bridge structural failures. The most recent  fatality resulting from a bridge structural failure occurred in 1957.  Likewise, very few major railroad tunnels have been built within the last  50 years, according to FRA’s Chief Structural Engineer, although some  have undergone maintenance or capacity expansion in recent years. Some  tunnels are driven directly through rock; some are lined with brick or  stone masonry, concrete, or timber; and many tunnels include two or more  types of construction. Tunnels do not take stress from train traffic in the  same way that bridges do, but they are susceptible to drainage issues, and  timber-lined tunnels are particularly susceptible to fires. According to  FRA, from 1982 through 2006 there were five reportable train accidents  whose cause could have been related to the tunnel structure. One of these  accidents resulted in two injuries, and none of the accidents resulted in a  fatality.
Many railroad bridges and tunnels were designed to have long useful life- spans, but were built for use by different types of trains. Until recent years,  stress from locomotives and cars did not exceed the original design loads  for bridges. For example, steel bridges built between 1895 and 1916 were  engineered for steam locomotives that inflicted greater stress on bridges  than today’s locomotives. However, because of their increased weight,  freight cars are approaching the design load limits of older bridges. Railcar  weight standards have increased from 263,000 pounds to 286,000 pounds,  and some cars now weigh as much as 315,000 pounds; however,  approximately 45 percent of Class II and III railroad lines are not equipped  with track capable of handling 286,000 pound cars, according to ASLRRA.  In addition, freight cars have increased in height as increased intermodal  freight traffic has led to double-stacking intermodal containers on railroad  cars. Some bridges and tunnels do not have the clearance needed to  accommodate these double-stack intermodal trains.
The majority of the freight railroad network is privately owned, and  federal economic regulation of freight railroads has decreased since the  federal government deregulated the railroad industry in 1980. All seven  Class I railroads are privately owned, and according to ASLRRA,  approximately 95 percent of Class II and III railroads are privately owned,  with the rest owned by government entities. Private railroads have an  incentive to maintain their infrastructure in order to maintain business  operations, and most railroads privately finance their infrastructure  maintenance and improvement projects.
Railroads invest large amounts in fixed assets such as track, signals,  bridges, and tunnels. The Association of American Railroads (AAR)  estimates that in calendar year 2006 Class I railroads alone invested over  $8 billion in “capital commitments,” that is, expenditures for capital  projects and operating leases. Compared with other industries, railroads  invest a higher percentage of revenue in their infrastructure. For example,  in 2000, the average U.S. manufacturer spent 3.7 percent of revenue on  capital spending, while railroads spent 17.8 percent—almost five times as  much, according to an analysis of U.S. Census data prepared by the  American Association of State Highway and Transportation Officials  (AASHTO). As railroads take steps to increase their capacity—by  increasing the size or weight of railroad cars or by adding track—some of  their bridges and tunnels may require alterations. A bridge’s configuration  and condition dictates weight restrictions, and most bridges and tunnels  cannot accommodate the additional track, if needed, without replacement  or significant reconstruction. Similarly, the dimensions of some bridges  and tunnels restrict railroad car height and width. Because bridges and  tunnels are the most expensive pieces of railroad infrastructure, with  replacement and construction costs ranging from 11 to 550 times as much  per linear foot as regular track, capacity expansion projects involving  bridge and tunnel work require significant capital investment.
While the freight railroad industry is projected to grow substantially with  expected increases in freight traffic, the industry’s ability to fund this  projected growth, including making needed capital infrastructure  investments in railroad bridges and tunnels, is largely uncertain. For  private companies seeking to maximize returns to stakeholders, railroad  investment poses a substantial risk. A railroad contemplating an  infrastructure investment must be confident that the market demand for  that infrastructure will hold up for 30 to 50 years. Furthermore, while  railroads own and maintain their own infrastructure, some other modes of  transportation, such as the trucking and maritime barge industries, use  infrastructure that is owned and maintained by the government, providing  them with a competitive price advantage over railroads. We have  previously reported that railroad investment is critical to freight mobility  and economic growth, and investments in railroad projects can produce  public benefits, such as (1) reducing highway congestion, (2)  strengthening intermodal connections and the efficiency of the publicly  owned transportation system, and (3) enhancing public safety and the  environment. (See the list of related GAO products at the end of this  report.) However, even when the public benefits of freight projects may be  sufficient to warrant public funding, federal funding mechanisms may not  be well tailored to freight projects. Whereas freight projects are frequently  intermodal, most federal funding mechanisms are focused on one mode. In  addition, freight projects generate private benefits, raising questions about  whether and how to provide public support for them.
section_title: Little Information Is Publicly Available on Bridge and Tunnel Conditions and Congestion, Although Major Railroads Collect, Maintain, and Use This Information to Prioritize Investments
paragraphs: Major railroads collect and maintain detailed information on the  condition of their bridges and tunnels and on the extent to which these  structures contribute to network congestion, but less is known about how  much information Class II and III railroads collect. Freight railroads  generally consider this information proprietary, citing concerns over  security and liability, and they selectively share bridge and tunnel  information with the government. Meanwhile, the federal government  plays a limited role in collecting information on railroad bridges and  tunnels because they are privately owned and maintained. In addition,  FRA has no regulations or standards for railroad bridges and tunnels; and,  in FRA’s view, the safety benefits that might accrue from collecting and  maintaining information on their condition would not justify the expense.  Various other federal agencies collect some information on railroad  bridges and tunnels that pertain to their mission. While most bridges and  tunnels are not the main cause of freight railroad congestion, some  structures are chokepoints and do constrain capacity. Freight railroads set  maintenance and investment priorities by considering bridge and tunnel  information, together with comparable information on other components  of their network infrastructure, and identify those repairs and  improvements that will improve safety, provide the highest return on  investment, and increase capacity. A bridge or tunnel is likely to cost more  to repair—and much more to replace—than other components of railroad  infrastructure networks, such as track or signals. As a result, railroads of  all classes are more likely to invest in other components sooner and to  consider extensive bridge or tunnel repair or replacement as one of their  last investment options.
subsections: section_title: Railroads Collect and Maintain Information on the Condition of Their Bridges and Tunnels to Varying Degrees
paragraphs: Class I railroads, which own over 75 percent of U.S. railroad bridges and  over 800 tunnels, maintain detailed information on the condition of their  bridges and tunnels and generally have the resources to invest in a robust  maintenance and inspection regime; however, less is known about the  information Class II and III railroads collect on bridge and tunnel  conditions, according to FRA’s Chief Structural Engineer. Officials from  five of six Class I railroads with whom we spoke said they maintain bridge  and tunnel information electronically in databases—including data on  location, age, and other characteristics of the structures; inspection  reports; condition information, maintenance histories, design drawings or  construction documents; and other pertinent information. While Class I  railroad bridge departments vary in size, these departments all have in- house bridge inspectors, engineers, and maintenance-of-way crews that  conduct inspections, carry out maintenance and repair activities, and may  also design and construct bridges. Class I railroads use in-house bridge  inspectors to conduct inspections at least once a year on all bridges and  tunnels to monitor safety and assess current conditions. For example,  one Class I railroad we interviewed has over 100 personnel dedicated to  bridge inspections on their network.
According to the limited data we have, Class II and III railroads collect and  maintain less information on their bridges and tunnels, and the reliability  of the data collected may be poor. Based on our discussions with two  Class II and nine Class III railroads, and on the documentation of 43 bridge  safety surveys of Class II and III railroads that FRA completed from  January 2004 through March 2007, Class II and III railroads collect less  information on the condition of their bridges and tunnels, generally  contract out bridge and tunnel inspection and repair work, and have less  in-house bridge expertise. For example, 18 of the 43 Class II and III  railroads reviewed by FRA since January 2004 could not produce some  critical documentation related to the safety of their bridges, including past  bridge inspection reports, design documents, or complete bridge  inventories. Furthermore, only 16 of 43 Class II and III railroads, surveyed  by the FRA inspect their bridges at least once a year. Also, according to  FRA officials, many Class II and III railroads lack the in-house bridge  expertise to conduct their own bridge inspections and rely instead on  outside consultants. For example, according to the 43 FRA bridge safety  surveys of Class II and III railroads, 26 of the railroads contracted out  bridge inspections, 7 did not conduct bridge inspections, 4 did not mention  who conducted the railroad’s bridge inspections, 4 conducted inspections  in-house, 1 had an informal inspection arrangement, and 1 was found to  have no bridges. In addition, 8 bridge safety surveys provided to us by FRA  either found inconsistencies between bridge inspection reports and actual  bridge conditions or found insufficient detail in inspection reports.
One Class III railroad representative with whom we spoke stated that the  true condition of that railroad’s bridges, all of which were built by  railroads not in existence today, is unknown because the railroad does not  have design or construction documents, lacks past maintenance and  inspection records, and has never conducted a complete engineering study  to determine its bridges’ load-carrying capacity. FRA officials stated that,  based on the limited data they have, they believe that some Class III  railroads do not have the training or experience needed to recognize  critical structural deficiencies or even understand the severity and urgency  of identified bridge or tunnel defects. However, FRA officials also stated  that some Class II and III railroads have very good bridge management  practices because they use qualified outside consultants to perform safety  and inspection processes.
section_title: The Federal Government Does Not Have Comprehensive Data on the Nation’s Railroad Bridges and Tunnels
paragraphs: The federal government’s efforts to collect data on railroad bridges and  tunnels are limited in scope, and the data are not updated regularly. FRA  collects railroad traffic information and maintains geographic data on U.S.  freight railroad lines; however, this information does not show the  location of bridges or tunnels on these routes. FRA maintains records of  railroad accident and incident reports, some involving bridges and tunnels,  dating back to 1982, but the information collected is limited to accident  descriptions, repair costs, structure locations, and information about the  train, crew, and track involved in the accidents and does not show bridge  or tunnel condition, age, structure type, or design documents. In addition,  as part of the Railroad Rehabilitation and Improvement Financing (RRIF)  loan application process, FRA’s Office of Railroad Development hires  independent engineering firms to verify the condition of the infrastructure  and the feasibility of proposed infrastructure improvements. These  assessments may provide detailed information on specific railroad  infrastructure, including bridges and tunnels; however, the data are limited  to the projects submitted in the RRIF loan application process.  Furthermore, while FRA collects and updates data on track defects from  its track inspections, it collects less information on bridges and tunnels,  because the FRA has regulations detailing track standards but only  guidelines for bridges.
Although FRA has authority to obtain records related to the safety of  railroad operations, including those involving bridges and tunnels, FRA  officials expressed concern about the agency becoming a repository for  railroad bridge and tunnel data. In addition, FRA’s Chief Structural  Engineer stated that the expense of collecting and maintaining a  comprehensive railroad bridge and tunnel inventory could not be justified  from a safety standpoint because railroads already maintain inventories of  their own bridges and tunnels, which FRA officials review.
No comprehensive inventory exists on the nation’s railroad bridges and  tunnels; however, through unrelated initiatives over the years, FRA has  obtained some information on bridges and tunnels, although, in some  cases, this information has not been updated regularly. For example, in  1993, FRA compiled a list of railroad bridges over navigable waterways  based on data from the U.S. Coast Guard. However, the list has not been  regularly updated. Other federal agencies collect some information on  railroad infrastructure as it pertains to their mission, but this information  is not comprehensive or exclusive to railroad structures. This information  is mainly collected by Department of Defense (DOD), DHS, TSA, the Coast  Guard, the Army Corps of Engineers, and the Environmental Protection  Agency and centers on either security or construction permitting  functions.
section_title: Railroad Bridges and Tunnels Are Aging but Are Not Generally the Main Cause of Freight Railroad Congestion, Although Some Are Chokepoints
paragraphs: While railroad bridges and tunnels are aging, their condition is not the  main cause of freight railroad congestion; however, some critical bridges  and tunnels are chokepoints on the freight railroad network. According  to FRA officials and railroad representatives with whom we spoke, many  of these structures are reaching or have exceeded their originally  estimated useful life. For example, an FRA bridge survey completed in  1993 found that more than half of the nation’s railroad bridges were built  before 1920 and, according to FRA’s Chief Structural Engineer, very few  railroad tunnels have been built within the last 50 years. As a bridge ages,  it undergoes natural deterioration, including corrosion, and weather- related stresses. In addition, fatigue may occur in some components of  older bridges because of stress resulting from repeated heavy freight train  operations. FRA’s Chief Structural Engineer told us that, as bridges and  other components of railroad infrastructure age and their condition  worsens, the railroads may need to increase their investment in inspection,  maintenance, and replacement to keep existing railroad lines serviceable.  One Class I railroad representative said his railroad has a growing  inventory of about 300 to 400 older bridges that are deteriorating and  therefore need additional inspections and assessments. Quantifying the  future maintenance and replacement needs of the freight railroad network  is difficult, since private railroads do not make information on the  condition of railroad bridges and tunnels publicly available because of  concerns over sharing proprietary information and losing competitive  advantage. However, the American Society of Civil Engineers gave railroad  infrastructure a “C-” grade in its 2005 assessment of the nation’s  infrastructure, noting that limited capacity on the freight railroad network  has created significant chokepoints and delays.
Although officials at a few railroads with whom we spoke expressed some  concerns about the effect of aging bridges on congestion, they were more  concerned about the effect of increased train traffic on congestion.  Demand for freight railroad capacity has increased over the last decade  with some Class I railroads reaching record traffic levels, especially in  ethanol, coal, and intermodal traffic. The demand for such capacity is  expected to continue increasing. For example, the DOT has projected a 55  percent increase in freight railroad traffic from 2000 to 2020. Increased  train traffic places additional stress on existing infrastructure, especially  railroad bridges; requires capacity expansion investments in rolling stock,  infrastructure, and personnel; and increases congestion on the railroad  network.
Class I railroads consider congestion a networkwide problem whereas  officials of the Class II and III railroads with whom we spoke said they  generally experience congestion around crossings, yards, and interchanges  with Class I railroads. Although officials from four of the nine Class II and  III railroads with whom we spoke said they currently experience  congestion on their entire networks, generally, those railroads were more  concerned about upgrading existing infrastructure to handle the heavier  railcars and longer trains being demanded by Class I railroads than they  were with increasing capacity. The American Short Line and Regional  Railroad Association estimates that out of the 48,000 miles of track owned  by Class II and III railroads, 20,000 to 25,000 miles need to be upgraded to  handle the heavier railcars that are becoming the industry standard.  ASLRRA estimated these upgrades would cost $7 billion to $11 billion.  Officials at seven of the nine Class II and III railroads with whom we spoke  said the railroads had completed or needed to complete track or bridge  upgrades to accommodate heavier railcars.
Several factors contribute to congestion on freight railroad networks,  including grade crossings and passenger trains, both of which can  decrease freight railroad capacity and cause freight train delays. Bridges  or tunnels may also cause network congestion. For example, single-track  bridges and tunnels constrain capacity on double-track lines, as do low  clearances that do not accommodate double-stack intermodal trains,  bridges that open for marine traffic, and other structural characteristics  such as sharp curves and steep grades that require slower train speeds.  Deteriorated bridge and tunnel conditions can also contribute to  congestion by requiring reduced train speeds, closures, and increased time  out of service for maintenance. Where repairs or improvements to bridges  and tunnels may not be financially viable or sufficiently profitable,  railroads may institute slow orders or shut down lines and reroute traffic.  In some cases, especially for Class III railroads, a bridge or tunnel closure  can isolate a shipper and cripple a railroad’s entire network.
Although FRA officials estimated that 10 percent or less of freight railroad  congestion is attributable to capacity constraints caused by railroad  bridges and tunnels, railroad officials whom we spoke with identified  some key bridges and tunnels as chokepoints on their networks. For  example, one chokepoint is a moveable bridge that is one of only a few  bridges across the Mississippi River owned by a Class I railroad.  According to railroad officials, during peak periods, the bridge must open  up to 15 times per day for river traffic while accommodating between 65  and 70 trains per day. Each opening for river traffic generally takes an  average of 25 to 30 minutes, although the bridge is sometimes open for  more than an hour, causing train delays as far as the West Coast. In  addition, this bridge is closed for routine maintenance for over an hour  several times a week. Another chokepoint is the 1.7 mile Howard Street  Tunnel (see fig. 3), constructed in 1895 under downtown Baltimore,  Maryland, which is the largest and most expensive obstacle to transporting  double-stack railcars from Baltimore to Chicago. The tunnel regularly  causes passenger and freight train delays in the Baltimore area and beyond  because it is a single-track tunnel with insufficient clearance for double-  stack railcars on a double-track main line. Grades in and curves near the  Howard Street tunnel also contribute to congestion, constraining freight  traffic to 25 miles per hour through the tunnel. In addition, during a fire in  the tunnel in 2001, freight traffic was rerouted, resulting in 18- to 36-hour  delays.
section_title: Railroads Use Condition and Congestion Information with Other Information to Prioritize Investment, Including Projects Designed to Address Deterioration and Congestion
paragraphs: Freight railroad officials with whom we spoke consider information on  bridge and tunnel conditions and congestion, along with information on  demand, cost, and other factors, to set infrastructure maintenance and  investment priorities. According to all of the Class I railroad officials with  whom we spoke, maintaining or increasing safety is one of their highest  investment priorities, along with return on investment. Hence, most Class I  railroad officials with whom we spoke said the railroads consider  immediate safety concerns first, ongoing maintenance and asset  replacement next, and capacity expansion last when prioritizing bridge  and tunnel projects.
Bridge and tunnel rehabilitation or replacement is expensive, and the costs  are highly variable, depending on the complexity of the structure’s design,  the length and location of the structure, the construction materials, and  the type of replacement structure. The cost of replacing a bridge can range  from $600,000 for a small timber trestle bridge on a lightly trafficked Class  III railroad line to $100 million to replace a large steel bridge with a 2,500- foot moveable span located on a Class I railroad’s main line. See appendix  II for more examples of railroad bridge and tunnel costs. Because  replacement costs are high, railroads prefer to use asset extension  programs and replace components rather than replacing entire structures  to address deterioration and extend the useful life of their bridges and  tunnels. Often, an individual component of a bridge may deteriorate faster  than other components; therefore, replacing the component could  significantly extend the life of the entire bridge.
Bridge and tunnel replacement is typically one of the last options railroads  choose to address infrastructure deterioration and mitigate congestion.  Railroads typically try to improve their processes before enhancing  infrastructure to mitigate congestion. Process improvements and other  strategies generally cost less and are more cost effective than  infrastructure enhancements. Class I railroads have used a number of  process improvements to mitigate congestion, including updating their  operating plans to reflect changes in business volume and traffic mix,  increasing train lengths and the number of fully loaded cars per train,  double-stacking trains, decreasing car cycle times, increasing service,  hiring more train crews, and using pricing strategies to shape demand.
When process improvements can no longer reduce congestion, railroads  use infrastructure enhancements to expand the capacity of their networks.  Infrastructure enhancements include adding sidings or track, expanding  yards and terminals, upgrading signal systems, and rehabilitating or  replacing bridges and tunnels. Per linear foot, bridge and tunnel  replacement costs more than other infrastructure improvements, as shown  in figure 4. Moreover, according to several Class I railroad representatives  with whom we spoke, bridge replacement typically has a lower return on  investment than other infrastructure improvements. Consequently,  railroads invest in other enhancements before rehabilitating or replacing  bridges.
While bridge and tunnel work is expensive for all freight railroads,  railroads vary in their ability to make these investments. Class I railroads  generally have more resources than Class II and III railroads to invest in  bridge and tunnel inspection, maintenance, rehabilitation, and  replacement. According to AAR, in 2006, the seven Class I railroads spent  an average of $1.2 billion each for capital investments, while all the Class  II and III railroads surveyed by ASLRRA spent an average of over $795,000  each in 2004. Class II and, to a greater extent, Class III railroads face  challenges in funding bridge and tunnel rehabilitation or replacement  efforts because they may have limited funds, lack in-house bridge and  tunnel expertise, and own bridges and tunnels purchased from Class I  railroads on lines that those railroads had disinvested in. When repairs or  improvements to bridges or tunnels are not financially feasible for Class II  or III railroads, the railroads may instead modify their operations—by, for  example, reducing train speeds over bridges or in tunnels. According to  ASLRRA, some railroads may even stop operating on routes when bridge  or tunnel repairs are both unavoidable and unaffordable. As a result,  according to FRA officials, fewer serious problems are found on bridges  and in tunnels owned by Class I railroads than on bridges or in tunnels  owned by smaller railroads. Nonetheless, in response to several accidents  caused by bridge failures, near accidents involving bridges, and results  from its bridge safety surveys, FRA is developing a formal rail safety  advisory on railroad bridges, to be released in late 2007, that will urge all  railroads to increase their attention on bridge safety and bridge  management programs.
section_title: The Federal Role in Overseeing Railroad Bridge and Tunnel Safety Is Limited
paragraphs: Freight railroads are responsible for the structural safety of their bridges  and tunnels; moreover, the federal government does not regulate railroad  bridge and tunnel inspection requirements or conditions. In 1995, after  determining that railroads were already inspecting bridges according to  detailed industry standards, FRA decided to issue advisory guidelines for  railroad bridge management instead of regulations. Because FRA has  general authority over railroad infrastructure safety, it may make  observations of and assess bridge and tunnel conditions, but it does not  routinely inspect these structures to monitor their condition. FRA bridge  specialists may make observations while investigating complaints,  following up on track inspectors’ concerns, and conducting bridge safety  surveys. If an FRA bridge specialist determines that there is a safety  problem, FRA attempts to work cooperatively with the railroad to correct  the problem rather than shut down the railroad’s operations. FRA has  taken enforcement action to protect public safety when there is a  documented problem of immediate concern over a structure’s stability.  Other federal agencies also have limited roles in railroad bridge and tunnel  safety. FRA’s bridge safety oversight has evolved; however, bridge  specialists individually apply different criteria in their selection of  railroads for bridge safety surveys. FRA has not established a systematic,  consistent risk-based approach to selecting Class II and III railroads for  bridge safety surveys. As a result, FRA may not be selecting the railroads  whose bridges or tunnels are most likely to present safety issues.
subsections: section_title: Federal Railroad Bridge and Tunnel Safety Efforts Are Limited Because FRA Has Determined That Railroads Are Sufficiently Ensuring Structural Stability
paragraphs: Historically, the federal role in railroad bridge and tunnel safety has been  narrow. The federal government does not routinely inspect railroad  bridges or tunnels and does not regulate their condition. After a highway  bridge collapsed in 1967, Congress debated instituting bridge inspection  standards that would apply to railroad bridges, but railroads were already  inspecting their bridges according to their established industry standards.  In 1968, Congress required national inspection standards for highway  bridges; however, current law does not regulate railroad bridge conditions  or establish inspection standards. Under the authority originally granted to  it by the Railroad Safety Act of 1970 to issue safety regulations as  necessary, from 1975 to 1981 FRA considered establishing bridge safety  regulations based on industry standards created by the American Railway  Engineering and Maintenance of Way Association. However, according to  FRA, these standards are actually recommendations for a thorough bridge  management program, including very detailed specifications for particular  types of bridges, rather than minimum inspection standards. In light of the  industry’s detailed safety standards and the low frequency of accidents  caused by structural conditions on bridges or in tunnels, FRA determined  that regulating bridge or tunnel structural conditions or requiring  inspections would not be cost-effective to FRA when considering the cost  of implementation and enforcement. Additionally, while establishing  minimum standards might improve some railroads’ structural management  policies and procedures, it could also influence some railroads to reduce  the frequency or effectiveness of their inspections.
FRA observes and assesses bridge and tunnel conditions, but does not  inspect these structures to regulate their condition. Although FRA does  not regulate bridge and tunnel conditions, it does regulate track  conditions, and it uses track inspectors, as well as bridge specialists, to  identify potential bridge and tunnel safety issues. Historically, FRA track  personnel have overseen bridge and tunnel safety. Under the authority  originally granted by the Federal Railroad Safety Act of 1970, an FRA track  inspector may take action to address a structural concern identified on a  bridge or in a tunnel, such as a visible crack in a steel beam, to ensure the  safety of the public and railroad employees. Additionally, in 1992, FRA’s  Office of Safety established the position of Bridge Engineer (currently  filled by FRA’s Chief Structural Engineer) to assist track personnel in  identifying and resolving issues of bridge structural integrity and to  oversee standards regulating the safety of railroad bridge workers. After  completing a bridge survey in 1993, FRA concluded that most railroads  were inspecting bridges to a higher standard than would be required by  any FRA-issued minimum standards, which prompted FRA to issue  guidelines for bridge management rather than regulations. In 1995, FRA  began implementing these guidelines as part of its Bridge Safety Assurance  Program. FRA has hired five full-time bridge specialists since 2000 to  implement this program. These specialists provide expertise to track  personnel and work with them to relieve some of the track personnel’s  inspection workload related to railroad structures as well as carry out  other activities to promote bridge safety. Besides the Chief Structural  Engineer, the program now includes one bridge specialist at FRA  headquarters and four bridge specialists in the field. Each field bridge  specialist is responsible for all of the passenger and freight railroad  infrastructure in two FRA regions and one or two Class I railroads (whose  infrastructure usually spans multiple FRA regions). In addition to  addressing bridge structural concerns, FRA bridge specialists address  tunnel structural concerns. However, FRA’s involvement in tunnels is not  as extensive as its involvement in bridges, since bridges are more affected  by stress from trains moving over them than tunnels are from trains  moving through them. In addition, there are many more railroad bridges  in the United States than there are tunnels.
In observing bridge conditions, FRA bridge specialists use FRA advisory  guidelines for railroad bridge management programs. These guidelines  recommend, among other things, that organizations responsible for the  safety of a bridge ensure that a qualified engineer determines the weight- bearing capability of a bridge; collect bridge design, construction,  maintenance, and repair records; and have a competent inspector  periodically inspect structures. The guidelines do not pertain to tunnels or  other types of structures on railroad property. FRA encourages, but does  not require, that railroads comply with these guidelines because the  railroads are responsible for inspecting, maintaining, and ensuring the  safety of bridges and tunnels that carry their track. However, when a  bridge or tunnel owner fails to resolve a structural problem, FRA can use  legal means, including emergency orders, to ensure safety.
section_title: Federal Enforcement of Bridge and Tunnel Structural Safety Is Primarily Limited to Addressing Immediate Safety Concerns
paragraphs: FRA is the primary federal agency responsible for overseeing the safety  and structural integrity of railroad bridges and tunnels. FRA bridge  specialists perform both enforcement and nonregulatory activities aimed  at ensuring the safety of railroad structures. Other federal agencies have  more limited roles in railroad bridge and tunnel safety related to their  particular missions.
FRA bridge specialists play a number of roles intended to promote bridge  and tunnel safety, most of which involve responding to identified safety  issues. One of their principal roles is to alert FRA’s Chief Structural  Engineer when they encounter an immediate bridge or tunnel safety  concern so that an emergency order may be issued if necessary. These  safety concerns may be identified in response to a track inspector’s  findings, in response to an accident or a complaint, or through  independent observation of a railroad’s bridges or tunnels. Each bridge  specialist has numerous safety responsibilities as part of the Bridge Safety  Assurance Program. In particular, the FRA bridge specialists are involved  in the following activities:    Enforcement. If a bridge specialist notices a track defect on or near  a bridge or tunnel, the specialist typically first recommends  remedial actions, such as a reduction in train speeds over the  affected track segment. If conditions warrant, the FRA  Administrator may issue an emergency order. However, FRA  prefers to seek cooperative solutions with railroads and has issued  only three emergency orders for bridges and none for tunnels since  1970.
Accident Investigation. When an accident occurs on a bridge or in  a tunnel, one or more bridge specialists may conduct an on-site  investigation. In the case of a bridge or tunnel structural failure, the  bridge specialist may identify the individual component that caused  the failure, although the entire structure may need to be replaced  after the accident (see fig. 5).
Complaint Investigation. Bridge specialists are responsible for  addressing and investigating almost all formal complaints  concerning bridges and tunnels filed by the general public, Members  of Congress, and railroad employees. According to FRA, most  formal bridge complaints from the public are related to aesthetic  issues rather than the stability or safety of a structure. Bridge  specialists may also conduct structural evaluations in response to  concerns identified by FRA track personnel or as part of a  complaint investigation.
Monitoring Compliance Agreements. In response to systemic  safety concerns that FRA identifies on a railroad through the bridge  specialists’ or track personnel’s activities, FRA may work with the  railroad to implement a compliance agreement to improve safety  across the entire railroad. FRA often initiates a compliance  agreement to avoid issuing an emergency order for the railroad to  cease operations on a bridge. FRA has found that compliance  agreements can be an effective tool to address systemic weaknesses  in a railroad’s bridge management practices, while emergency  orders usually address serious safety problems on specific bridge  structures.
Training. At FRA conferences, the bridge specialists teach FRA  track inspectors about bridge conditions. This training supports  communication between FRA track staff and bridge specialists and  is designed to increase the number of FRA personnel that can  detect immediate safety concerns on bridges.
Conducting Bridge Safety Surveys. During a bridge safety survey,  a bridge specialist interviews railroad bridge staff and uses FRA  guidelines as criteria for reviewing a railroad’s bridge management  policies, procedures, and records. After reviewing the railroad’s  records and policies, the bridge specialist observes a sample of the  railroad’s bridges and compares the results of the sample  observation with the railroad’s bridge inspection reports to  determine the inspection reports’ reliability. The bridge specialist  documents the findings and follows up with the railroad to  document any necessary repairs to structures or improvements to  bridge management procedures.
Besides FRA, several federal agencies have responsibilities related to  railroad bridges and tunnels in areas such as security and clearance for  maritime traffic. Within DHS, TSA has issued freight railroad security  action items in cooperation with the railroad industry, but compliance  with these action items is voluntary. Much as FRA monitors compliance  with its guidelines, TSA security inspectors assess a railroad’s compliance  with TSA’s action items and may make recommendations if the railroad  does not comply with certain items. Additionally, TSA issued a proposed  rule in December 2006 that would require freight railroads and other  transportation entities to allow TSA and DHS to enter, inspect, and test  property, facilities, and records relevant to railroad security. Also within  DHS, the U.S. Coast Guard is responsible for overseeing all bridges over  navigable waterways and for assessing obstructions to maritime traffic.  The Coast Guard regulates movable bridge schedules and prescribes  bridge lighting for navigational safety. Within the DOD, the Transportation  Engineering Agency designates STRACNET, a network of railroad lines  that form the minimum railroad network required to meet the  transportation needs of the military. The Transportation Engineering  Agency does not directly oversee the condition of bridges or tunnels on  this network.
section_title: FRA Is Not Using a Systematic, Consistent, Risk-Based Methodology to Target Bridge Safety Surveys to Class II and III Railroads
paragraphs: FRA’s field bridge specialists monitor bridges and tunnels in a large area  and have not been able to assess the bridge policies or the bridges and  tunnels of many of the Class II or Class III railroads in the specialists’  assigned areas. Furthermore, as previously discussed, the railroads share  information on the condition of their bridges and tunnels with the federal  government selectively. As a result, the structural conditions of some  bridges and tunnels and the practices used to inspect and maintain them,  particularly on Class III railroads, are largely unknown to the federal  government. According to ASLRRA, there are 549 Class II and III railroads  in the United States. Although FRA has conducted bridge safety surveys  on all of the Class I railroads, FRA officials estimate that they have  conducted, on average, approximately 25 to 35 bridge safety surveys per  year on Class II and III railroads since the introduction of the field bridge  specialists in 2004. As we mentioned earlier, our analysis of FRA’s  completed bridge safety surveys during this period showed that some of  the surveyed Class II and III railroads had sound bridge management  practices and records, but most did not. The limited number of bridge  safety surveys that the FRA bridge specialists have been able to  accomplish relative to the number of Class II and III railroads could  indicate potential bridge and tunnel safety concerns on railroads that FRA  has not surveyed.
According to FRA, the goal of the Bridge Safety Assurance Program is not  to monitor all railroads, but rather to identify railroads whose bridge  management policies and bridge conditions may lead to safety threats.  However, the FRA bridge specialists do not select Class II and III railroads  for bridge safety surveys using a consistent methodology based on a  comprehensive, prioritized assessment of safety issues that could focus  FRA’s inspection and enforcement resources on those railroads that could  have the greatest safety risks. Each field bridge specialist uses individually  developed criteria, based on personal experience and other available  information--such as whether a railroad’s bridges carry passenger traffic-- to help identify Class II and III railroads as candidates for bridge safety  surveys. This is in contrast to how FRA implements its National Inspection  Plan to target inspections of other railroad safety areas. This plan provides  guidance to each FRA regional office on how its inspectors should divide  their work, by railroad and by state, on the basis of trend analyses of  available accident, inspection, and other data. Before implementing this  plan, FRA had a less structured, less consistent, and less data driven  approach to planning inspections, under which each region prepared its  own inspection plan, on the basis of judgments and available data. The use  of data was not consistent from region to region, and individual inspectors  had greater discretion to select sites for inspection using their own  knowledge of their inspection territories.
In our previous work, we have noted that risk management can help to  improve safety by systematically identifying and assessing risks associated  with various safety hazards, prioritizing them so that resources may be  allocated to address the highest risk first, and ensuring that the most  appropriate alternatives to prevent or mitigate the effects of hazards are  designed and implemented. FRA’s safety oversight role in other areas,  such as operating practices and track, includes inspections that focus on  compliance with minimum standards; however, these inspections do not  attempt to determine how well railroads are managing safety risks on their  systems. In contrast, by examining how railroads manage safety risks  during its bridge safety surveys, FRA is, in part, addressing risk- management issues, even though it has not established a systematic, risk- based methodology to select Class II and III railroads that may need  additional oversight. For example, one bridge specialist is contacting all  Class III railroads in one region to obtain specific information on their  bridge management policies, such as whether a railroad has regular  inspections by a qualified civil engineer and how the railroad records and  uses the bridge inspection data, to better identify railroads for bridge  safety surveys. Additionally, FRA’s Chief Structural Engineer is  considering a research project that would use new technology to measure  the stress trains inflict on timber bridges. If this project were  implemented, FRA would analyze stress data that might indicate bridge  problems and a need for monitoring problematic bridges.
section_title: Federal Investments in Freight Railroad Infrastructure Are Typically Not Targeted to Maximize National Benefits, Whereas Some State and Private Investments Are Strategically Targeted
paragraphs: Federal, state, and local governments make limited investments in freight  railroad infrastructure, including bridges and tunnels, in an effort to  enhance the public benefits associated with freight and passenger  transportation. However, federal investments in all modes of freight- related infrastructure are not aligned with a national freight policy or with  a strategic federal freight transportation plan. DOT has developed a draft  Framework for a National Freight Policy, but it lacks a strategic federal  component that specifies federal goals, roles, and revenue sources and  funding mechanisms. In contrast, some states structure their investments  in freight railroad infrastructure to produce public benefits at the state and  local levels, and some public-private partnerships have facilitated  investments designed to produce public and private benefits. Freight  congestion and demand are expected to increase, and given the highly  constrained fiscal environment, the federal government may be challenged  to increase the efficiency of the national multimodal freight transportation  system.
subsections: section_title: Federal Funding for Freight Railroad Infrastructure Is Not Guided by a National Freight Strategy and Is Generally Not Targeted to Maximize National Benefits
paragraphs: While the private sector is largely responsible for investing in the freight  railroad infrastructure that it owns and maintains—an estimated $9 billion  during calendar year 2006—the federal government invests some public  funds in this infrastructure as well—an estimated $263 million during  fiscal year 2006. The federal government funds freight railroad  infrastructure investments through the General Fund and the Highway  Trust Fund, and funding mechanisms include loans, grants (such as  formula grants and legislative earmarks), and tax expenditures (such as  tax credits). However, these funding mechanisms are (1) targeted toward  individual transportation modes and address different transportation  safety and economic issues, (2) are administered by different agencies that  have different missions, and (3) are not coordinated by a strategic federal  multimodal freight transportation policy to maximize specific national  public freight transportation benefits (see table 1). For example, in  accordance with its mission to protect maritime economic interests, the  U.S. Coast Guard administers the Truman-Hobbs program to alter railroad  and highway bridges that obstruct maritime traffic (see fig. 6). While this  program can enhance maritime, railroad, and highway freight mobility, it is  targeted toward maritime traffic and is not coordinated with other DOT  freight mobility investments.
Today’s federal investments in freight railroad infrastructure are not  guided by a clear federal freight strategy. In 2006, DOT attempted to move  beyond the traditional modal approach to freight transportation by  developing a draft Framework for a National Freight Policy, which,  among other things, incorporates some previously established federal  freight railroad infrastructure funding mechanisms. Although this draft  Framework represents an important step toward developing a national  intermodal freight transportation policy, it does not go far enough, in our  view, toward delineating a clear federal role and strategy for carrying out  that policy. DOT describes its draft Framework as a living document and  emphasizes that the nation’s freight transportation challenges are of such a  nature and magnitude that governments at all levels and the private sector  must work together to address them. We agree, and we note that as the  draft Framework evolves, DOT and other stakeholders will have an  opportunity to clarify their respective freight strategies.
As we have reported, the federal approach to a given transportation  strategy should include clearly and consistently defined goals, roles,  revenue sources, and funding mechanisms to ensure that federal  investments in the nation’s intermodal freight transportation infrastructure  will maximize national public benefits. DOT’s draft Framework sets forth  some “objectives” for freight transportation, together with strategies and  tactics for achieving them; acknowledges that a variety of public and  private stakeholders play important roles in freight transportation; and  identifies some funding mechanisms and other tools that the federal  government can use to support freight infrastructure. However, in some  instances, these objectives are vague, and federal and other stakeholders’  roles and funding mechanisms are not clearly and consistently defined.  For example, one DOT draft Framework objective is to “add physical  capacity to the freight transportation system in places where investment  makes economic sense,” with supporting strategies and tactics that  include focusing on facilitating regionally based solutions for freight  gateways and projects of national or regional significance and utilizing and  promoting new and expanded financing tools, such as RRIF, to incentivize  private sector investment. To implement this objective, DOT would need  to define “economic sense” and develop criteria—as the draft Framework  says—to identify specific freight gateways and projects of national or  regional significance; and determine whether federal revenues should be  used to help subsidize any project components and, if so, which federal  funding mechanisms would be most appropriate.
As we have also reported, federal investments should be directed to  maximize national public benefits. Allocating benefits and their costs  among beneficiaries is difficult and may be subject to interpretation.  Hence, it will be important for DOT to define national benefits and to  establish criteria for determining whether federal investments are  warranted. DOT’s draft Framework suggests, but does not explicitly  identify as such, certain criteria for federal investment, such as a project’s  national or regional significance, opportunities to incentivize more private  investment in transportation infrastructure, and opportunities to leverage  private and other public funds to add freight transportation capacity.
Without a federal freight strategy, the existing federal freight funding  mechanisms are not designed to maximize national public benefits. For  example, although all railroads may apply for RRIF loans, the only freight  railroads that have been awarded loans have been Class II and III  railroads, whose operations tend to be more regional and local. Also, the  Federal Highway Administration’s (FHWA) Section 130 grant program  mainly benefits localities by improving or eliminating railroad-highway  grade crossings and the public safety benefits of the program are more  local than national. Benefits from the Truman-Hobbs program’s  investments directly accrue primarily to private maritime shipping and  secondarily to railroad companies by improving each mode’s  infrastructure, thereby enhancing the efficiency of freight transportation.  On the other hand, depending on the project, legislative earmarks can  generate public and private benefits that could be national, regional, and  local in scope; however, these projects do not compete for funding against  other alternatives. For example, through the Projects of National and  Regional Significance program, Congress earmarked funds to support the  Chicago Region Environmental and Transportation Efficiency (CREATE)  project, which is mainly designed to reduce railroad congestion in the  nation’s largest railroad hub—the effects of which, among other things,  could improve the mobility of the national freight railroad network,  improve local commuter railroad service, and reduce railroad-highway  grade crossing hazards and congestion. Finally, Class II and III railroads  can use the Railroad Track Maintenance Credit—a tax credit—to offset  capital investment expenditures, but as previously stated, individual Class  II and III railroad operations tend to benefit the private and local sectors  more than the nation as a whole.
section_title: Some State Investments in Freight Railroad Infrastructure Are Targeted to Achieve State and Local Benefits
paragraphs: In contrast to the federal government, some states that invest in freight  railroads administer various goal-oriented and criteria-based programs  that are funded through a mixture of state and federal resources  specifically to produce anticipated state and local benefits. Some states  have been helping short line railroads maintain track in their jurisdictions  for almost 20 years. For example, the Tennessee DOT provides  approximately $8 million in grants annually to 18 of 20 Class III railroads  in the state to fund track and bridge work, including bridge inspections  and rehabilitation projects. As we have previously reported, governments  at all levels—including states—have increasingly been providing support  for freight railroad improvement projects that offer potential public  benefits, and over 30 states have published freight plans that describe their  goals and approach to freight-related investments. The scope of state- administered freight railroad programs includes railroad infrastructure  improvements, construction of intermodal facilities, elimination of public  railroad-highway grade crossings, and inspection of bridges. For example,  the Pennsylvania DOT administers a matching grant program—funded at  $10.5 million as of October 2006—to support freight railroad maintenance  and construction costs; and eligible recipients include freight railroads,  transportation organizations, municipalities, municipal authorities, and  other eligible users of freight railroad infrastructure.
Officials from three of the nine state DOTs whom we interviewed are  developing and implementing multimodal freight policies. However, such  initiatives may be limited by state and federal funding criteria that restrict  most state transportation spending to highway infrastructure. As we have  reported, efforts to improve freight mobility are hampered by the highly  compartmentalized structure and funding of federal transportation  programs—often by transportation mode—that gives state and local  transportation agencies little incentive to systematically compare the  trade-offs between investing in different transportation alternatives to  meet mobility needs because funding is tied to certain programs or types  of projects. Officials from several state agencies and oversight  organizations whom we interviewed stated that funding available for  freight projects, regardless of mode, would be more useful than  “stovepiped” funding that would be available only for investment in certain  transportation modes.
Officials at six of the state agencies and oversight organizations whom we  interviewed administer freight railroad programs that have identified  programmatic goals, eligibility criteria, and funding sources aimed at  generating state and local benefits. For example, officials from the Kansas  DOT told us that the goals of its loan program for local and regional  railroads are to improve railroad lines, enhance railroads’ customer  service to shippers, limit the number of trucks on highways, and increase  state and local economic vitality by transporting local agricultural  products. While officials from some state agencies that we interviewed  acknowledged that public benefits are difficult to quantify for any public  investments, six state agencies and oversight organizations we interviewed  were trying to quantify them. For example, the Kansas DOT sponsored a  study which found that the short line railroad system saves the state an  estimated $49 million annually in pavement damage costs.
The scope of state freight railroad programs may be either broad,  including infrastructure investments of all kinds for railroads of all sizes,  or narrow, focusing on eligible projects and award recipients. For  example, the Pennsylvania DOT has two broad grant programs for freight  railroads and shippers, both of which may be used to fund maintenance  and new construction projects. In contrast, the Tennessee DOT makes  funds available specifically to Class III railroads by allocating funds for  track and bridge rehabilitation. State freight railroad initiatives have  supported investments in track rehabilitation and other infrastructure  improvements, railroad acquisition and line preservation assistance,  intermodal facility construction and increased industrial access to  railroads, and road and railroad-highway crossing safety enhancements.
Some of the state entities we interviewed reported using a number of  funding mechanisms for their freight railroad programs. Specifically, 6 of  the 12 said they provide grants and long-term below-market rate loans, and  one state reported issuing tax-exempt bonds. Some of these states require  that entities applying for loans or grants secure matching funds. States  fund freight railroad programs through state general funds, user fees,  federal Section 130 and other grants, and other sources. Some states have  taken an innovative approach to funding freight railroad infrastructure.  For example, Tennessee created a user-fee based Transportation Equity  Fund to support investments in nonhighway infrastructure, including short  line freight railroad track and bridge rehabilitation. The fund is financed  through the revenue from state sales taxes on diesel fuel paid by railroad,  air, and water transportation modes; and the portion available for the  Tennessee Short Line Railroad Rehabilitation Track and Bridge grant  program is typically $7 million to $8 million annually. The program’s  purpose is to preserve freight railroad service and thereby contribute to  the state’s economic development. Construction grants are funded at a 90  percent state and 10 percent local (nonstate) matching share. Each grant  can be matched with in-kind work, cash contributions or both.
section_title: Public-Private Partnerships Have Supported Some Freight Railroad Investments Designed to Produce Both Public and Private Benefits
paragraphs: States, localities, and railroads have used public-private partnerships as a  strategic approach to develop freight-related transportation solutions that  benefit both sectors. In using this approach to resolve freight issues,  public and private participants of the partnerships we reviewed identified  common goals, individual roles, and funding sources and mechanisms,  which have affected partnership outcomes. In some cases, these  partnerships have supported railroad bridge and tunnel projects. A well- structured partnership balances the various strengths, limitations, and  respective contributions of both the public sector—federal, state, local,  and regional—and private sector participants in order to secure specific  public and private freight-related benefits.
Both the public and the private sectors have initiated freight railroad  public-private partnerships. For example, according to AASHTO  representatives we interviewed, in 2002 the Delaware DOT approached a  Class I railroad to reopen the Shellpot Bridge, which had been out of  service since 1994. The state associated the abandonment of this bridge  with increased congestion on the Northeast Corridor and saw it as a threat  to the competitiveness of the Port of Wilmington in attracting freight  traffic. The state and the railroad jointly developed the project’s goals,  roles, and funding mechanisms. The state agreed to finance the  approximately $13.5 million cost of restoring the bridge by contributing $5  million in state grant appropriations and funding the remainder by issuing  tax-exempt bonds. The railroad agreed to compensate the state over a 20- year period by paying a fee for each train car that uses the bridge. In  another public-private partnership, members of the Kansas City Terminal  Railway Companyand their project designer approached the state of  Missouri and the Unified Government of Kansas City/Wyandotte County,  Kansas, to propose assisting in financing the construction of two flyovers  and the rehabilitation of a bridge. The purpose of these three  infrastructure improvement projects was to separate freight trains from  different railroads at several points where they came together to form  what amounted to four-way stops for trains in the Kansas City region and  caused a significant chokepoint on the U.S. freight railroad network (see  fig. 7). The railroads had already determined the goals of their proposed  public-private partnership and came to the bargaining table with proposed  roles and funding mechanisms. The railroads acknowledged that they  could pursue the project using strictly private market resources; however,  a wholly private project would have taken longer to complete. The state  and county saw value in relieving their communities of the grade-crossing  congestion this chokepoint caused, determined the project risk was  acceptable, and each agreed to issue tax-exempt bonds that totaled over  $190 million, which will be repaid by the railroads through user fees. In  both the Delaware and Kansas City cases, the entities that initiated the  partnership brought well-defined goals, identified stakeholder roles, and  guaranteed a set amount of funding to the public-private partnership over  a period of years.
Public-private partnerships can make funds available and define goals and  roles for all stakeholders for large, expensive freight railroad projects  when it is difficult for a public or private entity to fund the entire project  on its own, or when a project is not part of a railroad’s strategic plan, but  would be beneficial to a locality’s or a region’s quality of life. For example,  public and private players bring various strengths and limitations to the  partnerships. The private sector often can bring a more global view of  freight needs to the project planning process, help identify and implement  projects, contribute significant funds, and promote efficient use of  infrastructure. The public sector can offer various public financing tools,  such as low-interest loans and private activity bonds, to create incentives  for private investments in freight railroads that would not otherwise be  made and to generate anticipated public benefits.
Public-private partnerships also present certain challenges. As we heard  from both public and private freight railroad stakeholders, the extent to  which the public sector can engage the private sector, identify anticipated  public benefits from railroad investments, and provide funding that is  commensurate with those benefits, affects partnership outcomes. Our past  work has shown that an integral part of public-private partnerships is  ensuring that sound analytical approaches are being applied locally and  meaningful data are available, not only to evaluate and prioritize  infrastructure investments but also to determine whether public support is  justified in light of a wide array of social and economic costs and  benefits. Moreover, as private entities that own most of the nation’s  railroad infrastructure, freight railroads typically have not worked with the  public sector because of concerns about the requirements and regulations  associated with federal funding. These railroads need to be convinced  that a proposed infrastructure project will yield financial returns for the  company. Still another challenge is to reconcile the lengthy planning and  construction time associated with public infrastructure projects with the  shorter planning and investment horizons of private companies.
section_title: Growing Freight Congestion and Demands May Challenge the Federal Government to Strategically Invest Limited Funds to Maximize National Public Benefits
paragraphs: Overcoming congestion and improving mobility is one of the biggest  transportation challenges facing the nation. Congestion increases delays  and creates economic losses that cost Americans roughly $200 billion a  year, according to DOT estimates. As we have previously reported,  increases in freight traffic on all modes over the next 10 to 15 years are  expected to put greater strain on ports, highways, airports, and railroads.  In addition, we have found that this increase in freight transportation  demand seems to be particularly acute on highways, since trucks transport  over 70 percent of all freight tonnage nationally and freight truck traffic on  urban highways more than doubled from 1993 through 2001. The increased  congestion, coupled with long lead times for completing infrastructure  projects (5 to 15 years), may put pressure on all stakeholders, including  the federal government, to find other more effective investments to  increase freight mobility.
Increasing the capacity of the nation’s freight railroad network could be  one way to meet future growth in freight transportation demand. However,  as mentioned previously, aging railroad bridges and tunnels present  physical constraints to meeting this projected increased demand for  freight railroad transportation on key routes, thereby constraining  capacity. For example, as we previously mentioned, 100-year-old bridges  and tunnels that are currently in use—such as the moveable bridge over  the Mississippi River and the Howard Street Tunnel in Baltimore—create  chokepoints on the freight railroad network due to their operating  conditions or outdated design. Currently, freight railroads are investing  billions of dollars in freight railroad infrastructure to increase capacity,  but because they invest in projects that will maintain or increase safety or  provide the highest return on its investment, other investments may take  priority over their most expensive pieces of infrastructure, bridges and  tunnels. In addition, we have found that the railroads’ long-term ability to  meet the projected growth in demand for freight railroad transportation is  uncertain, which may increase pressure for public investment in private  railroad infrastructure.
As we have previously reported, Congress is likely to receive further  requests for funding and face additional decisions about how to invest in  the nation’s freight railroad infrastructure. However, Congress’s ability to  respond to these requests may be limited by (1) federal funding  constraints and increased demand for infrastructure investment in other  transportation modes, (2) differences in federal funding for different  transportation modes, and (3) the lack of a strategic federal freight  transportation plan to guide federal investments in freight transportation  infrastructure.
Revenue from current federal transportation sources may not be  sustainable. Because revenue from traditional transportation funding  mechanisms such as the Highway Trust Fund may not keep pace with the  increase in transportation demand, we designated transportation financing  as a high-risk area in January 2007. The recently enacted transportation  funding authorization, the Safe, Accountable, Flexible, Efficient  Transportation Equity Act – A Legacy for Users (SAFETEA-LU), is  expected to outstrip the growth in trust fund receipts. As a result, the  Department of the Treasury and the Congressional Budget Office (CBO)  are forecasting that the trust fund balance will steadily decline and be  negative by the end of fiscal year 2011. In addition, the nation’s long-term  fiscal challenges will constrain decision makers’ ability to use other  funding mechanisms, such as grants and tax expenditures, for  transportation needs.
Differences in federal funding for different transportation modes have  created a competitive disadvantage for freight railroads. Because the  federal government has an interest in an efficient national freight  transportation system, the federal role in freight transportation needs to  recognize that the freight transportation system encompasses many modes  that operate in a competitive marketplace and are owned, funded, and  operated by both the private and the public sectors. However, current  federal transportation policy treats each freight transportation mode  differently, thereby creating competitive advantages for some modes over  others. For example, trucking companies and barges use infrastructure  that is owned and maintained by the government, while railroads use  infrastructure that they pay taxes on, own, and maintain. Trucking and  barge companies pay fees and taxes for the government-funded  infrastructure they use, but their payments generally do not cover the  costs they impose on highways and waterways. The federal subsidy that  makes up the difference between the government’s costs and users’  payments gives trucking and barge companies a competitive advantage  over the railroads. CBO has observed that if all modes do not pay their  full costs, the result is inefficient use of roads and waterways and greater  government spending than otherwise would be necessary if capacity  investments are made in anticipation of demand that does not occur.
section_title: Examining Critical Questions and Implementing a Framework That Identifies Goals, Stakeholder Roles, Revenue Sources, and Funding Mechanisms Could Guide a Federal Role in Freight- Related Infrastructure Investments
paragraphs: As noted earlier in this report, the federal government lacks a strategic  freight transportation plan to guide its involvement in freight-related  capital infrastructure investments. DOT’s draft Framework for a National  Freight Policy represents an initial step toward such a plan, but it assumes  a federal role without indicating whether federal involvement is  appropriate or, when appropriate, what the goals of federal investment  should be, what specific roles the federal government and other  stakeholders should play, and what federal revenue sources and funding  mechanisms should be used to support freight-related investments. As we  have previously reported, critical factors and questions can be used as  criteria for determining the appropriateness of a federal role and a  framework with components that we believe would be helpful in guiding  any future federal freight-related investments. Implementing this GAO  framework would include setting national goals for federal investment in  freight-related infrastructure, clearly defining federal and other  stakeholder roles, and identifying sustainable revenue sources and cost- effective funding mechanisms that can be applied to maximize the national  public benefits of federal investments.
subsections: section_title: GAO’s Critical Questions and Framework Could Guide Future Federal Investment in Freight- Related Infrastructure
paragraphs: In light of the federal government’s long-term fiscal imbalance, it is  important for federal policy makers to determine how the federal  government can support efficient, mode-neutral, transparent, and  sustainable investments in freight-related infrastructure. In our report on  21st century challenges facing the federal government, we defined critical  factors and questions that are useful as criteria for determining the  appropriate federal role in a government program, policy, function, or  activity. These critical factors and questions are designed to address the  legislative basis for a program, its purpose and continued relevance, its  effectiveness in achieving goals and outcomes, its efficiency and targeting,  its affordability and sustainability, and its management. The factors and  questions can be used as criteria for determining the appropriateness of  federal involvement in freight-related transportation, including freight  railroad projects, as shown in table 2.
If federal policy makers determine that there is an appropriate role for the  federal government in freight infrastructure investments, including those  related to railroads, the implementation of that role should have several  components. From our past work on transportation investment—in such  areas as intercity passenger rail, intermodal transportation, and marine  transportation—we have defined a systematic framework that can also  guide the implementation of any future federal role in freight-related  infrastructure investments. Our framework’s components include setting  national goals, establishing clear stakeholder roles, and providing  sustainable funding (see table 3).
In conjunction with GAO’s framework, it would also be important to  evaluate freight investments periodically to determine the extent to which  expected benefits are being realized. Evaluations also create opportunities  for periodically reexamining established goals, stakeholder roles, and  funding approaches, and provide a basis for modifying them as  necessary. In addition, evaluations help to ensure accountability and  provide incentives for achieving results. Encouraging or requiring the  identification of all project costs and of all parties who will bear the costs  can help ensure that the costs are apportioned among all stakeholders  equitably. Leading private and public organizations that we have studied  in the past have stressed the importance of developing performance  measures and then linking investment decisions and their expected  outcomes to overall strategic goals and objectives.
section_title: Goals of a Future Federal Role in Freight-Related Infrastructure Investment Should Be Structured to Maximize National Benefits
paragraphs: The first component of GAO’s framework for guiding the federal role in  freight-related infrastructure investment is a set of clearly defined national  goals. Such goals can help chart a clear direction, establish priorities  among competing demands, and specify the desired results of any federal  investment. Since many stakeholders are involved in the freight  transportation system, the achievement of national goals for the system  hinges on the federal government’s ability to forge effective partnerships  with nonfederal entities. Decision makers need to balance national goals  with the unique needs and interests of all nonfederal stakeholders in order  to leverage the resources and capabilities of state and local governments  and the private sector. National goals should be structured in a way that  allows for reliably estimating and comparing national public benefits and  national public costs. As we have previously reported, quantifying public  benefits can be difficult, yet an effort should be made to determine that the  anticipated public benefits are sufficient to justify the proposed levels of  public investment. For example, at the state level, the Pennsylvania DOT  evaluates and justifies freight railroad investments, in part, by estimating  the wear and tear imposed by trucks on highways.
The primary goal of federal investments in freight infrastructure should be  to maximize the national public benefits of the investments. One way to  focus these goals could be through federally designated Projects of  National and Regional Significance, a program that has been designed to  address critical national economic and transportation needs and has  funded highway and railroad infrastructure projects. For example, one  goal could be to improve intermodal freight mobility—which encompasses  air, railroad, water, and highway facilities and infrastructure—at  designated ports of national significance that serve multistate regions  and/or large populations.
Federal policy makers and other stakeholders could define their  respective roles in many different ways once the goals for the federal role  in freight transportation infrastructure have been established. However,  the key elements in defining the federal and other stakeholder roles would  be to create incentives for collaboration, secure benefits, and promote  equity for all stakeholders, both public and private, that invest in freight- related infrastructure projects. Defining these elements is especially  important for the federal role in freight railroad infrastructure investments  because, while most of that infrastructure is privately owned, investments  to improve safety and increase capacity may benefit stakeholders at all  levels (national, regional, state, local and private sector).
section_title: Public and Private Stakeholder Roles for Future Involvement in Freight-Related Infrastructure Investments Should Be Clearly Defined
paragraphs: In our prior work, we have found that, in defining stakeholder roles, it is  important to match capabilities and resources with appropriate goals.  This is important for federal participation because other stakeholders may  want to emphasize other priorities and use federal funds in ways that may  not achieve national public benefits. This can happen if other stakeholders  seek to (1) transfer a previously local function to the federal arena or (2)  use federal funds to reduce their traditional levels of commitment. One  aim of federal participation in infrastructure investments is to promote or  supplement expenditures that would not occur without federal funding— to avoid substituting federal funding for funding that would otherwise  have been provided by private or other public investors.
Further refinements to DOT’s draft Framework could help to define  stakeholder roles in two ways, first by acknowledging that the interests of  federal, state, and local entities may compete, and second by recognizing  where public and private sector interests meet and diverge. When the  federal government invests in freight railroad infrastructure, it could  justify its involvement by establishing criteria for projects that (1) are  based on national freight goals, (2) are designed to capture national freight  transportation benefits, and (3) direct funds to state, local, and private  entities that would spend the funds in accordance with the national goals.  For example, the federal government might justify its investment in a  project that had national goals of improving interstate freight mobility,  reducing pollution and congestion, and enhancing safety on a multistate  railroad and highway transportation corridor. In contrast, states and  localities seek public benefits that accrue within their jurisdictions, such  as improved automobile safety at grade crossings and reduced air  pollution within a regional attainment area, and are able to channel state,  local, and discretionary federal funds accordingly. When examining public  versus private interests, public stakeholders must recognize that railroads  are privately owned and invest resources to maximize shareholder returns  and enhance the efficiency and capacity of their operations. Some railroad  infrastructure projects have spillover effects that produce public benefits,  such as more efficient goods movement. Yet other railroad infrastructure  projects that could benefit the public do not meet railroads’ internal  return-on-investment criteria, and therefore the railroads would not invest  in them, and the public would not realize the benefits.
One possible way of defining stakeholder roles could be through public- private partnerships. As we have stated earlier, public-private partnerships  create a forum for bringing diverse stakeholders together around an issue  of mutual interest to determine how best to share resources, identify  stakeholder responsibilities, and achieve public and private benefits.  Encouraging public-private partnerships to provide efficient solutions to  freight transportation needs could increase the likelihood that the most  worthwhile improvements would be implemented and that projects would  be operated and maintained efficiently. One example of a public-private  partnership that addresses various private and public stakeholder interests  in railroad infrastructure is the CREATE project in the Chicago area. The  drive to make significant investments in the Chicago area’s railroad  infrastructure came from public and private railroad stakeholders because  of their concern over the heavy railroad congestion in that area. Under  the CREATE project, stakeholders established individual roles that  included owning and managing specific projects and assuming joint  financial obligations. The railroads initially invested $100 million to begin  addressing their interests, the federal government has added $100 million  by designating CREATE as a Project of National or Regional Significance,  and the state of Illinois and the city of Chicago have pledged $100 million  and $30 million, respectively, to begin addressing passenger railroad  projects. CREATE stakeholders also plan to leverage other federal, state,  and private funds over the lifetime of the project. The Alameda Corridor  Program in the Los Angeles area provides another example of how  effective partnering allowed the capabilities of the various stakeholders to  be more fully utilized. Called the Alameda Corridor because of the street it  parallels, the program created a 20-mile, $2.4 billion railroad express line  connecting the ports of Los Angeles and Long Beach to the  transcontinental railroad network east of downtown Los Angeles. The  express line eliminates approximately 200 street-level railroad crossings,  relieving congestion and improving freight mobility for cargo. This project  made substantial use of local stakeholders’ ability to raise funds. While the  federal government participated in the cost, its share was about 20 percent  of the total. In addition, about 80 percent of the federal assistance is in the  form of a loan rather than a grant.
section_title: Future Federal Role in Freight-Related Infrastructure Investments Should Meet Federal Goals While Recognizing Federal Financial Constraints
paragraphs: A well-designed and strategic national freight transportation policy—of  which there is a federal component—can help encourage investment by  other public and private stakeholders and maximize the application of  limited federal dollars for freight-related infrastructure. While it is  important to ensure that such a policy promotes federal investments in  freight infrastructure that generate national public benefits, especially  when those investments are in privately owned and operated freight  railroad infrastructure, it is also important to note that any federal  investments will face federal financial constraints. Although federal  investments could be crucial to securing the national public benefits of  certain freight-related infrastructure projects that would not otherwise  proceed, the scarcity of federal funds puts a premium on justifying and  targeting the use of federal funds for these projects to address critical  needs and maximize benefits.
As we have previously reported, determining the scope of government  involvement in transportation investments entails three major steps: (1)  determining that the project is worthwhile by applying a rigorous cost- benefit analysis or similar study; (2) justifying government involvement on  the basis of known criteria; and (3) deciding on the level of public subsidy  consistent with local, state, regional, or national interests and benefits.  Currently, most federal freight investments come from the fiscally  constrained General Fund and Highway Trust Fund; and typically these  investments are not subject to a thorough benefit-cost analysis or to the  consistent application of project criteria, nor are they funded with the  assurance that the funding provided by public and private beneficiaries is  commensurate with the benefits these parties receive.
Federal investments in freight infrastructure must be justified and meet  objective criteria to maximize the impact of federal funds. Justifying  government involvement in freight infrastructure projects involves  identifying and quantifying project costs and public and private benefits,  and having clear guidelines specifying the conditions under which public  involvement is warranted. Given constraints on federal, state, and local  funding, we have advocated that public entities implement project  justification tools such as benefit-cost analysis to better assess proposed  transportation investments and accordingly target limited funds. Results- oriented assessments can be used to determine what is needed to obtain  specific national outcomes. In October 2006, we recommended that DOT,  as it continues to draft the Framework for a National Freight Policy,  consider strategies to create a level playing field for all freight modes and  recognize the highly constrained federal fiscal environment by developing  mechanisms to assess and maximize public benefits from federally  financed freight transportation investments. Furthermore, as we testified  in March 2007, the federal government should make ensuring  accountability for results, as well as maximizing benefits, high priorities in  deciding on federal investments in transportation infrastructure.  Unfortunately, we have found that formal analyses are not often used in  deciding among alternative projects, evaluations of outcomes are not  typically conducted, and the evaluations that are done show that projects  often do not produce anticipated outcomes. The public sector faces many  challenges in quantifying national, regional, state, and local benefits, while  railroads are more able to determine the monetary and operational  benefits of proposed infrastructure projects and can invest accordingly.  For example, railroads can assess how much each hour of train delay  costs them, but public entities cannot easily quantify the environmental  benefits of faster freight railroad transport and less truck traffic.
Representatives of three state DOTs we interviewed acknowledged the  difficulty of quantifying public benefits, which may make it difficult to  judiciously allocate scarce transportation funds to those projects that may  accrue the highest public benefits.
According to the Transportation Research Board (TRB), public support for  freight infrastructure projects must be established on a project-by-project  basis to determine if a project produces certain benefits, such as  reductions in the external costs of transportation, efficiencies in the  transportation system beyond those recognized by the private sector, or  improvements in public safety. TRB stated that if government  involvement cannot be justified on one of these grounds, the private sector  should undertake the project. One federal program that awards funds  using project justification criteria is the Federal Transit Administration’s  discretionary New Starts program. This program is the federal  government’s primary source of funds for capital investment in locally  planned, implemented, and operated transit. Potential New Starts projects  must meet certain project justification criteria (e.g., mobility  improvements and operating efficiencies) and demonstrate adequate local  financial support (e.g., the ability of the sponsoring agency to fund the  operation and maintenance of the entire system once the project is built).  A comparable approach could be designed so that freight railroad  infrastructure investments—proposed by state or local governments,  private railroads, or public-private partnerships—meet appropriate project  justification criteria, demonstrate public and private support, and provide  the lowest cost to the federal government. Different funding mechanisms  and revenue sources could also be used to implement any future federal  role in freight infrastructure investments. See appendix III for a more  complete discussion of these revenue sources and funding mechanisms.
section_title: Conclusions
paragraphs: Projected increases in freight transportation demand will likely increase  the importance of the nation’s freight railroad infrastructure. Bridges and  tunnels are critical and expensive parts of infrastructure. Because most of  the freight railroad network is privately owned, the railroads have a keen  financial interest in maintaining and investing in their bridges and tunnels.  The federal role in overseeing the public safety of these structures, and in  funding improvements to them, has been limited.
Concerning the safety area, we have found in our prior work that a risk- management approach to oversight of companies’ overall management of  safety risks provides an additional assurance of safety in conjunction with  inspections. FRA has adopted this risk-management approach in applying  its guidelines for bridge management during its bridge safety surveys of  individual railroads. However, a more consistent and systematic approach  in selecting railroads for bridge safety surveys based on data about  railroads’ bridge management programs, such as whether or not the  railroads have regular inspections by a qualified civil engineer and how  they record and use that bridge inspection data, could enhance the  effectiveness of the FRA’s limited resources available for bridge and  tunnel safety. This approach could help target FRA’s limited bridge  inspection resources toward railroads that present the greatest safety risk,  especially numerous short lines that may have more deteriorated  infrastructure and less technical and financial resources to maintain their  bridges and tunnels.
With respect to the federal role in freight-related infrastructure, including  railroad bridges and tunnels, the federal approach to such investments  needs to be better structured to maximize achieving national public  benefits such as increased freight mobility, reduced congestion, and  improved environmental quality. Although the current federal structure of  loans, credits, and grants administered by different agencies with different  missions from disparate funding sources may attain some national public  benefits, that structure is not guided by a national freight strategy and may  miss opportunities for an even higher return of national public benefits for  federal expenditures. DOT has taken a first step in the direction of  articulating such a strategy by developing its Framework for a National  Freight Policy, but we believe that the agency needs to go further in  developing a true national freight transportation strategy that can help  organize and unify the current structure to achieve that higher return. Our  past work on public investments in transportation has found that such a  strategy should focus on national freight transportation related goals,  involve all public and private stakeholders, and distribute costs equitably  across all public and private beneficiaries.
section_title: Recommendations for Executive Action
paragraphs: To enhance the effectiveness of its bridge and tunnel safety  oversight function, we recommend that the Secretary of  Transportation direct the Administrator of the Federal Railroad  Administration to devise a systematic, consistent, risk-based  methodology for selecting railroads for its bridge safety surveys to  ensure that it includes railroads that are at higher risk of not  following the FRA’s bridge safety guidelines and of having bridge  and tunnel safety issues.
To help better focus limited federal resources, we recommend that  the Secretary of Transportation ensure that its draft Framework for  a National Freight Policy :  includes clear national goals for federal involvement in freight-    related infrastructure investments across all modes, including  freight railroad investments;  establishes and clearly defines roles for all public and private  stakeholders; and  identifies funding mechanisms for federal freight-related  infrastructure investments, including freight railroad  investments, which provide the highest return in national public  benefits for limited federal expenditures.
section_title: Agency Comments
paragraphs: We provided a draft of this report to DOT for review and comment prior to  finalizing the report. DOT and FRA officials—including FRA’s Associate  Administrator for Safety— generally agreed with the information in this  report, and they provided technical clarifications, which we have  incorporated in this report as appropriate. These officials agreed with the  recommendation related to the methodology for selecting railroads for  bridge safety surveys and said that they are already taking steps to  implement it, and DOT officials said that they would consider the  recommendation concerning changes to DOT’s draft Framework for a  National Freight Policy.
As agreed with your offices, unless you publicly announce the contents of  this report earlier, we plan no further distribution until 30 days from the  report date. We will then send copies of this report to the appropriate  congressional committees and to the Secretary of Transportation. We will  also make copies available to others upon request. In addition, this report  will be available at no charge on the GAO Web Site at http://www.gao.gov.
If you or your staff have any questions about this report, please contact me  at (202) 512-2834 or heckerj@gao.gov. Contact points for our Offices of  Congressional Relations and Public Affairs may be found on the last page  of this report. GAO staff that made key contributions to this report are  listed in appendix IV.
section_title: Appendix I: Scope and Methodology
paragraphs: To determine what information is maintained by railroads on the condition  of their bridges and tunnels, and the contribution of this infrastructure to  congestion, we reviewed documentation from railroads on bridge and  tunnel data management policies, inspection procedures, sample  inspection reports, and capital improvement plans. We also determined  the federal role in collecting and reporting information on railroad bridges  and tunnels by interviewing officials from federal agencies, state agencies,  freight railroads, and industry associations (see table 4), and by reviewing  bridge and tunnel data collected and maintained by these federal agencies.  To determine to what extent bridges and tunnels contribute to freight  railroad congestion, we reviewed literature on freight railroad congestion,  railroad corridor plans, and freight demand studies to identify current  levels of freight railroad congestion, major factors contributing to  congestion, and proposed solutions. We also interviewed representatives  from industry associations and railroads to understand how this  information is used, what challenges railroads face in maintaining and  replacing railroad bridges and tunnels, and what strategies railroads use to  enhance capacity and alleviate congestion. We did not independently  verify the accuracy of public or private bridge and tunnel condition  information, inspection reports, or congestion information. In addition, we  did not independently assess the conditions of bridges and tunnels.
To identify the federal role in overseeing railroad bridge and tunnel safety,  we reviewed public laws and interviewed officials from the public  agencies and railroads listed in table 4. In particular, we discussed the  Federal Railroad Administration’s (FRA) structural safety oversight role  with FRA’s Chief Structural Engineer, all five FRA bridge specialists, and  one FRA regional track specialist, and asked railroads about their  interactions with FRA. We reviewed examples of FRA’s bridge safety  survey documentation to determine the content of these surveys and what  actions FRA takes after assessing a railroad’s bridge conditions. We also  accompanied an FRA bridge specialist on a bridge safety survey and other  informal bridge and tunnel observations. We reviewed examples of FRA  emergency orders, compliance agreements, and structural observation  reports to determine how FRA enforces its oversight role. Because there  are more bridges than tunnels in the United States and because FRA has  established a policy on bridge safety, we reviewed more information on  railroad bridges than on tunnels. Moreover, because we used FRA’s  records to understand FRA processes and actions, we did not  independently verify the reliability of the data in this sample of FRA’s  observation records.
To determine how public funds are currently used for railroad  infrastructure investments, including those for bridges and tunnels, we  interviewed the entities included in table 4 and synthesized relevant  information from these entities, as well as from the Federal Highway  Administration and the Joint Committee on Taxation. We did not  independently verify the accuracy of the self-reported cost information  provided by the railroads, public agencies, and professional associations.  We reviewed Department of Transportation’s (DOT) draft Framework for  a National Freight Policy. We also analyzed pertinent legislation and  analyzed and synthesized relevant information from our reports and other  ongoing work.
To determine what criteria and framework could be used to guide the  future federal role in freight-related infrastructure investments, including  those for railroad bridges and tunnels, we relied extensively on  perspectives gained from our past work in transportation and  infrastructure systems and federal investment strategies. We also reviewed  DOT’s Draft Framework for a National Freight Policy. We used our prior  work and conventional economic reasoning to identify key considerations  regarding possible revenue sources and funding mechanisms for federal  government support for freight-related infrastructure investment and to  evaluate potential revenue sources and funding mechanisms on the basis  of those considerations.
In addressing all of our objectives, we conducted five site visits to    observe the conditions of selected bridges and tunnels on Class I,  II, and III railroads;    understand maintenance and deterioration issues inherent in  different geographies and structure types;  interview railroad and state agency personnel who manage, inspect,  and maintain these structures;  interview railroad operations personnel who monitor traffic  capacity and congestion and finance personnel who determine  capital investment priorities and allocations; and    meet with state and local transportation agency officials.
For a complete list of all entities interviewed, including those interviewed  as part of our site visits, see table 4. We selected our site visit locations— Baltimore, Maryland and Washington, D.C.; Illinois and Iowa; Kansas and  Missouri; Ohio and West Virginia; and Oregon—based on geographic  distribution and the presence of large and small railroads, private-public  partnership stakeholders, and state DOTs involved in freight railroad or  large freight railroad public-private partnerships.
In addition to interviews conducted as part of our site visits, we  interviewed representatives from the six largest Class I freight railroads in  the United States; Amtrak; industry associations; federal, state, and local  transportation officials; and federal agencies involved with collecting  information on, overseeing, or providing funding for railroad bridges and  tunnels. We also interviewed additional state agencies based on their  involvement in railroad bridge and tunnel oversight, freight railroad  funding, or major freight railroad public-private partnerships. Table 4 lists  the names and locations of all railroads; federal, state, and local agencies;  industry associations; and transportation, engineering, and academic  experts we interviewed as part of our review.
section_title: Appendix II: Examples of Bridge and Tunnel Maintenance, Component and Structural Replacement Costs on Selected Railroads
section_title: Appendix III: Considerations of Funding Sources and Mechanisms Available for Federal Funding of Freight-Related Infrastructure
paragraphs: Different funding mechanisms and revenue sources can be used to  implement any future federal role in freight infrastructure investments.  Two main revenue sources are available to the federal government in  financing freight infrastructure investments: (1) general revenue, which  comes primarily from broad-based personal and business income taxes  and (2) beneficiary financing revenue (such as user fees or fuel taxes),  which comes from taxes or fees assessed to specific groups that would  benefit from the federal investment. Revenue from both of these sources  could be used to increase investment in freight railroad infrastructure  beyond the level that the railroads would provide without federal support.  We note, however, that all revenue sources do have opportunity costs, that  is, the costs of any benefits forgone from alternative investments that  could have been made with that revenue.
As discussed earlier in this report, the federal government currently uses  three main funding mechanisms to support freight railroad infrastructure:  grants, loans, and tax credits. Each funding mechanism has its own  advantages and limitations, but some implications would apply to each.  For example, while the three mechanisms may make federal subsidies  available for freight infrastructure investments, they may not necessarily  increase the total amount of funding provided for those investments.  Instead, these subsidies might result in the substitution of federal funds for  the railroads’ own funds for investments that they would have made  themselves, even without federal support. Revenue sources and potential  funding mechanisms need to be evaluated in terms of several key  considerations—including equity, sustainability, and efficiency for revenue  sources, and efficiency and transparency for funding mechanisms—as  discussed below.
Equity - Equity is often assessed according to two principles: the benefit  principle and the ability-to-pay principle. Equity occurs according to the  benefit principle when those who pay for a service are the same as those  who benefit from the service. Under the ability-to-pay principle, those who  are more capable of bearing the burden of taxes or fees pay more in taxes  and fees than those with less ability to pay, and a tax or fee structure is  generally considered more equitable if that is the case. The use of general  revenues is most equitable according to the benefit principle when the  benefits are diffused across all taxpayers. Benefit financing sources (per- container or per-railroad-car fees or commodity-specific taxes) can be a  more equitable funding source when the benefits are more focused on a  locality or set of users and it is possible to collect the additional revenues  from beneficiaries through higher fees or taxes. Either approach could be  consistent with the ability-to-pay principle depending on how the revenue  source is structured. A combination of beneficiary financing, federal  general revenue, and local matching funds could also be used to enhance  equity in order to link the amount of payment for an infrastructure  investment to the anticipated amount of private, national, and local  benefits gained, although these benefits may be hard to quantify.
Sustainability - Sustainability can be defined as the ability of a revenue  source to maintain a given level of federal expenditure for an investment  over time. Technological change or inflation could affect the sustainability  of some beneficiary financing revenue sources by influencing revenue  levels or their purchasing power. But these sources can be more  sustainable if they have the flexibility to respond to reductions in demand  or consumption and can be indexed to inflation or otherwise periodically  adjusted. The sustainability of general revenue could be affected by the  federal government’s long-term structural fiscal imbalance.
Efficiency - Efficiency implications exist for both the choice of revenue  source and the choice of funding mechanism. For revenue sources,  efficiency can be assessed based on the impact of economic behavioral  changes likely to result from use of each source and by how much  accountability is provided. Using general revenue rather than beneficiary  financing revenue sources is likely to cause smaller behavioral changes  than using beneficiary financing. Beneficiary financing is likely to cause  larger behavioral changes in raising a given amount of revenue because  the impacts of a revenue increase would be more concentrated in a  geographic location (for example, a user fee assessed for using a specific  bridge or other structure) or on a group of beneficiaries (for example, a  diesel fuel tax assessed only on railroads). However, these behavioral  changes can have either negative or positive consequences on economic  efficiency, such that in different circumstances increasing revenues from  either funding source could be less efficient or more inefficient. In terms  of accountability, the efficiency of a revenue source can be enhanced by  collecting funds from the groups that are benefiting from federal  investments in freight infrastructure. For funding mechanisms, efficiency  can be defined as the amount of benefit gained for the amount of federal  resources provided. Grants may generally be more efficient than loans in  that their administrative costs may be lower. For tax credits, efficiency— or the benefits gained for the forgone tax revenue—is both difficult to  calculate and difficult to control, because private firms often control the  use of the credited funds rather than the government. Therefore, the  government may have less opportunity to direct the funds toward  generating specified national public benefits than it does for grants or  loans. To increase the efficiency of grants, maintenance of effort  provisions could be incorporated to decrease the likelihood that the  funding provided through them will be substituted for other funds, rather  than combined with other funds to increase the total investment. Although  tax credits do not involve outlays of federal funds, they do have analogous  costs in forgone tax revenue that would have to be considered in  evaluating their efficiency.
Transparency - Transparency can be defined as the extent to which the  costs of federal infrastructure investments are visible when using a  funding mechanism. The commitment of federal resources is visible if  there is a direct appropriation for a federal grant or loan program. With a  grant or a loan, the federal government can readily demonstrate how much  money was invested in what infrastructure. These funding mechanisms  can also be guided by objective, transparent criteria in conjunction with  congressional control over annual funding levels. With tax credits for  railroad infrastructure investment, however, it is less visible how much the  investment is costing the government through forgone revenue, and it is  harder for Congress to make trade-offs with other discretionary spending  programs.
section_title: Appendix IV: GAO Contact and Staff Acknowledgments
subsections: section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, Rita Grieco (Assistant Director);  Jay Cherlow; Steve Cohen; Elizabeth Eisenstadt; Alana Finley; Greg  Hanna; Carol Henn; Bert Japikse; Richard Jorgenson; Denise McCabe;  Elizabeth McNally; Sara Ann Moessbauer; Josh Ormond; Laura Shumway;  Ryan Siegel; and James Wozny made key contributions to this report.
section_title: Related GAO Products
paragraphs: Performance and Accountability: Transportation Challenges Facing the  Congress and the DOT. GAO-07-545T. Washington, D.C.: March 6, 2007.
High Risk Series: An Update. GAO-07-310. Washington, D.C.: January  2007.
Rail Safety: The Federal Railroad Administration Is Taking Steps to  Better Target Its Oversight, but Assessment of Results Is Needed to  Determine Impact. GAO-07-149. Washington, D.C.: January 26, 2007.
Intercity Passenger Rail: National Policy and Strategies Needed to  Maximize Public Benefits from Federal Expenditures. GAO-07-15.  Washington, D.C.: November 13, 2006.
Freight Railroads: Industry Health Has Improved, but Concerns about  Competition and Capacity Should Be Addressed. GAO-07-94. Washington,  D.C.: October 6, 2006.
Government Performance and Accountability: Tax Expenditures  Represent a Substantial Federal Commitment and Need to Be  Reexamined. GAO-05-690. Washington, D.C.: September 23, 2005.
Freight Transportation: Short Sea Shipping Option Shows Importance of  Systematic Approach to Public Investment Decisions. GAO-05-768.  Washington, D.C.: July 29, 2005.  21st Century Challenges: Reexamining the Base of the Federal  Government. GAO-05-325SP. Washington, D.C.: February 2005.
Highway and Transit Investments: Options for Improving Information  on Projects’ Benefits and Costs and Increasing Accountability for  Results. GAO-05-172. Washington, D.C.: January 24, 2005.
Surface Transportation: Many Factors Affect Investment Decisions.  GAO-04-744. Washington, D.C.: June 30, 2004.
Freight Transportation: Strategies Needed to Address Planning and  Financing Limitations. GAO-04-165. Washington, D.C.: December 19,  2003.
Marine Transportation: Federal Financing and a Framework for  Infrastructure Investments. GAO-02-1033. Washington, D.C.: September 9,  2002.
Surface and Maritime Transportation: Developing Strategies for  Enhancing Mobility: A National Challenge. GAO-02-775. Washington,  D.C.: August 30, 2002.
U.S. Infrastructure: Funding Trends and Federal Agencies’ Investment  Estimates. GAO-01-986T. Washington, D.C.: July 23, 2001.
Executive Guide: Leading Practices in Capital Decision Making.  GAO/AIMD-99-32. Washington, D.C.: December 1998.
Federal Budget: Choosing Public Investment Programs. GAO/AIMD-93- 25. Washington, D.C.: July 23, 1993.
Railroad Competitiveness: Federal Laws and Policies Affect Railroad  Competitiveness. GAO/RCED-92-16. Washington, D.C.: November 5, 1991.