Federal Assistance To Rehabilitate Railroads Should Be Reassessed

GAO undertook an appraisal of how the Department of Transportation has administered Federal assistance to railroads under the Railroad Revitalization and Regulatory Reform Act of 1976. When Congress passed the Act authorizing $1.6 billion for two programs to help the Nation's railroads overcome deferred maintenance, it expected the funds to be used up quickly. But 4 years later, much of the program authority was unused, and there seems to be little remaining interest in assistance solely to overcome deferred maintenance.

As of November 30, 1979, the Department of Transportation's Federal Railroad Administration had furnished $518 million to eight railroads to rehabilitate more than 2,100 miles of track and restore 8,800 locomotives and freight cars. Applications were pending for only $387 million of the $1 billion in unused program authority. Four of the seven pending applications, totaling $348 million, were from railroads that had already received assistance, and the three from railroads that had not already received assistance totaled only $39 million. Much of this pending assistance was not to reduce deferred maintenance on essential track segments. Further, since November 30, 1979, the six additional applications received requesting assistance were not for projects soley to overcome deferred maintenance. Thus, GAO concluded that Federal assistance solely to overcome deferred maintenance is not essential. The Federal assistance available could be used to provide restructuring assistance to achieve an efficient national rail system. Additionally, GAO believes that Congress should: (1) consider how pending regulatory reforms will affect the rail industry's need for Federal assistance and whether national priorities permit spending public funds to induce restructuring; (2) ensure that any restructuring assistance has specific purposes and goals; and (3) direct the Secretary of Transportation to specify which restructuring projects are essential to a healthy industry and should therefore be eligible for assistance.