Audit Reports

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Process Inefficiencies and Costs Discourage Participation in FRA’s RRIF Program

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The Railroad Rehabilitation and Improvement Financing (RRIF) program, established in 1998 and administered by the Federal Railroad Administration (FRA), provides loans and guarantees to railroads to finance rail infrastructure projects. To date, FRA has issued 33 RRIF loans totaling roughly $1.7 billion—less than 5 percent of the program’s $35 billion spending limit. Members of Congress have expressed concerns that a lengthy application process and associated costs may contribute to this low participation rate. Because of these concerns, we conducted this audit to (1) assess FRA’s policies and procedures for evaluating and selecting RRIF applications; and (2) identify factors that affect applicants’ decisions to apply for RRIF financing.

We found that inadequate guidance on RRIF’s eligibility criteria and application requirements, and ineffective pre-application meetings resulted in submission of incomplete applications and extended processing times. Program staff spent significant time obtaining missing information and working with applicants who were ultimately determined to be ineligible. Furthermore, before a loan’s terms can be finalized, it has to be reviewed by FRA, its independent financial analyst, the DOT Credit Council, and OMB. Because of these sequential reviews, FRA rendered decisions for only 2 of the 6 complete applications within the statutory 90 days. Passenger and large freight railroads informed us that the program’s unclear process and uncertain timeframes for final decisions outweighed program benefits and deterred them from applying. FRA concurred with our five recommendations.