SD4 - A Study of the Proposed Virginia Rail Transportation Development Authority

Executive Summary:

Senate Bill 1279, passed by the Virginia General Assembly in 2003, calls for the creation of the Virginia Rail Transportation Development Authority. The purpose of this authority is “to finance or assist in the financing of the construction, repair, renovation, restoration, acquisition, and extension of rail lines, equipment, and facilities in the Commonwealth, including rolling stock, shops, terminals, bridges, tunnels, and any other passenger rail or freight rail facilities, equipment or infrastructure, upon a determination by the authority that such action is in the public interest.” Senate Joint Resolution 354 provides the following argument for creating the new rail authority: (1) appropriate investments in railroad infrastructure will divert passenger and freight traffic from the highways to the railroads; (2) this will reduce the need for highway maintenance and construction, and it will reduce congestion, promote safety, and make it possible to avoid significant air and water pollution; (3) the railroads in Virginia do not have the financial resources to make the needed investments; and thus (4) a new rail authority is needed to finance or assist in the financing of the needed investments.

In addition, the bill requests the Virginia Department of Rail and Public Transportation (DRPT) to undertake a study of the proposed Virginia Rail Transportation Development Authority’s powers to finance improvements to railroad freight and passenger transportation in Virginia. The DRPT asked the Virginia Transportation Research Council to assist in carrying out this study. This document is the Research Council’s report to the DRPT.

In debate and discussion of the bill, Senator John S. Edwards of Roanoke provided the following arguments in its support:

"This bill would create a rail transportation development authority in Virginia to help finance rail lines in Virginia. Mr. President, we all know we must have an intermodal transportation system in Virginia, and a rail component is absolutely essential if we are going to have a 21st Century transportation system.

Unfortunately, in terms of infrastructure and the capital, the railroads don't have the money, the state doesn't have the money, and the federal government is not giving us any money to do this, so we need to create an authority which can issue bonds to be paid for with the surcharge on the freight (for example) to upgrade the rail lines. There is a great need to upgrade the rail-lines parallel to I-81 in order to shift some of the truck traffic to trains. There is a great need to upgrade the rail lines for high-speed rail. There is a great need to upgrade the rail lines for the TransDominion Express, and I am sure there are other needs as well.

So this would give us an opportunity to provide the capital improvements that are so essential to upgrading the rail lines."


SJR 354 specified the scope of the study in the following way:

(i) analyze the feasibility of various options to finance improvements to railroad freight and passenger transportation in Virginia, including strategies that may be considered by the Virginia Rail Transportation Development Authority, pursuant to SB 1279 (2003);

(ii) conduct a literature search of national best practices relative to creating rail authorities and other relevant issues;

(iii) examine how the Virginia Rail Transportation Development Authority can finance and facilitate financing of the acquisition, construction, repair, improvement, and extension of rail facilities, including rolling stock and infrastructure that the Authority determines to be in the public interest; and

(iv) recommend the appropriate structure, powers and duties of the Authority, and revenue and sources of revenue needed to perform its responsibilities.


To achieve the study objectives of addressing the four tasks specified in SJR 354, the study team did the following:

The environment in which the proposed new Virginia rail authority would function was examined. A discussion of the state of freight rail today is presented. This discussion shows how important the maintenance of a healthy rail system is to the highway network. It also shows the environment in which the new rail authority would operate.

A survey of the Virginia Port Authority (VPA), the DRPT, the Virginia Resources Authority (VRA), and 11 rail entities in other states was conducted. In this response to Task 2, the research team examined the entities in other states that most resembled the proposed Virginia Rail Transportation Development Authority either in its goals or in its structure. A variety of sources were examined, but the emphasis was on the enabling legislation. It was felt that the structure of the entities as well as their powers would most clearly be revealed by examining the enabling legislation that created them. Annual reports and other financial statements as well as published articles were examined. In a few cases, a telephone interview was conducted to gain more information about the actual operation of the authority. The research team also examined the enabling legislation of the DRPT, the VPA, and the VRA. Again, it was felt that the enabling legislation would reveal a great deal about the structure and powers of each of these organizations. Information about the finances and operations of these organizations was also gathered.

Financial issues concerning the new authority were examined. Tasks 1 and 3 are so closely related that the research team decided to address them jointly by investigating the following questions:

• How can an organ of the Commonwealth mobilize additional capital for investment in rail transport?

• How can an organ of the Commonwealth participate in the rail transport sector?

• What institutional structure would best suit a Commonwealth organ whose purpose is to mobilize capital for rail investment?

• What other policy initiatives of the Commonwealth might indirectly affect the purposes envisioned for the Virginia Rail Transportation Development Authority?

Three options regarding the creation of the new authority were examined. In response to the request in Task 4 for recommendations as to the appropriate structure, powers, and duties of the proposed authority, as well as sources of revenue, the research team examined three important options regarding the creation of the authority. The team applied the insights derived from the investigations undertaken in response to Tasks 1, 2, and 3 in an attempt to make clear the pros and cons of each. These options included:

• Option 1: Create an independent rail authority with bonding powers.
• Option 2: Create a new rail agency within the government with bonding powers.
• Option 3: Do not create a new authority or a new agency: Give bonding powers to the DRPT.

Finally, the possibility that the proposed rail authority with its intended purpose would violate Article 10, Section 10, of the Constitution of Virginia was examined.