	Introduction

The Railroad Rehabilitation and Improvement Financing (RRIF) program offers long-term, low-interest loans to railroad operators for improving rail infrastructure. The program is intended to operate at no cost to the government and does not receive an annual appropriation. Congress has authorized $35 billion in loan a uthority for the program, but freight railroads have been relatively unenthusiastic. Since 2000, RRIF has made 37 loans to 29 operators for a total of $5.4 billion, representing $5.9 billion in 2018 dollars. The Fixing America's Surface Transportation Act (FAST Act; P.L. 114-94 ), enacted in December 2015, included changes intended to make the RRIF program more attractive to potential applicants, though one change—elimination of the requirement that the U.S. Department of Transportation (DOT), which administers the program, refund borrowers' credit risk premiums—may make the program less attractive. The prospect of large loans for private intercity passenger rail and transit-related projects raises questions about potential risks to the RRIF program, because such projects may have no source of earnings until and unless they are completed and, even then, may not be able to generate sufficient revenue to service their loans. The RRIF program replaced a railroad financing program that Congress created in 1976. But the up-front costs of a RRIF loan may deter would-be applicants. By contrast, the other major DOT credit assistance program, established in the Transportation Infrastructure Finance and Innovation Act (TIFIA), covers the cost of the credit risk premium for loan recipients (known as TIFIA's subsidy cost). RRIF loan applications are reviewed by the Build America Bureau, independent financial analysts hired by the Bureau, and DOT's Office of Credit and Finance. The Secretary of Transportation has final authority over loan approval. The appeal of the RRIF program is that the recipient is able to borrow money at the lowest rate available (that paid by the federal government itself) and for a longer period of time than most other types of loans would permit. One loan is in default. State Programs

A number of states have established grant, loan, and tax benefit programs to help short line railroads finance infrastructure or equipment purchases. Congress has expressed a desire that the program be used more heavily, especially by short line railroads, and has identified two aspects of the program that may be reducing its attractiveness: the uncertain length of the loan review process and the cost to the applicant of the loan. Length of Review Process

By statute, a RRIF loan application is supposed to be approved or disapproved within 90 days. Management of the program was subsequently transferred to the Build America Bureau. Loan Costs

Federal law requires that federal credit programs operate at no cost to the government. Several private entities seeking to build and operate passenger rail projects have expressed interest in RRIF loans in recent years.
Congress created the Railroad Rehabilitation and Improvement Financing (RRIF) program to offer long-term, low-cost loans to railroad operators, with particular attention to small freight railroads, to help them finance improvements to infrastructure and investments in equipment. The program is intended to operate at no cost to the government, and it does not receive an annual appropriation. Since 2000, the RRIF program has made 37 loans totaling $5.4 billion (valued at $5.9 billion in 2018 dollars). The program, which is administered by the Build America Bureau within the Office of the Secretary of Transportation, has approved only four loans since 2012.
Congress has authorized $35 billion in loan authority for the RRIF program and repeatedly has urged the Department of Transportation (DOT) to increase the number of loans the program makes. Reports suggest the uncertain length and outcome of the RRIF loan application process and the up-front costs to prospective borrowers are among the elements of the program that have reduced its appeal compared with other financing options available to railroads.
By statute, the Build America Bureau has 90 days from the time a completed application is submitted to render a decision on the application. This timeline becomes uncertain due to the Bureau's discretion in determining when a loan application is "complete." A 2014 audit indicated that some loan applications had been in process for more than a year.
Unlike DOT's other prominent loan assistance program, the Transportation Infrastructure Finance and Innovation Act (TIFIA) program, RRIF requires loan recipients to pay a credit risk premium, which is intended to offset the risk of a default on their loan. The credit risk premium helps the program comply with a congressional requirement that federal loan assistance programs operate at no cost to the federal government. However, it may make RRIF loans less attractive to borrowers than other types of federal, state, or private financing.
Several RRIF loans have been made to government-run intercity passenger rail projects. A number of private companies seeking to build intercity passenger rail lines also have expressed interest in RRIF loans. Changes made by Congress in the Fixing America's Surface Transportation Act (P.L. 114-94), enacted in December 2015, may lead to even greater use of the RRIF program by sponsors of passenger rail and transit-related projects, as opposed to small freight railroads. Such loans likely would be quite large relative to those RRIF typically extends to small freight railroads, raising questions about the risk to the federal government if the projects are not completed or if they fail to generate sufficient revenue to service the loans.