A Study of the Proposed Virginia Rail Transportation Development Authority

About the report:

Virginia Senate Bill 1279 (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." Virginia Senate Joint Resolution 354 provided the 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; thus, (4) a new rail authority is needed to finance or assist in the financing of the needed investments. The authors investigated rail authorities in other states in hopes of finding a model for the new rail authority. This survey did not provide any straightforward and unambiguous model for the "appropriate" structures and powers of the new authority. An examination of the Virginia Port Authority proved to be illuminating. It seems reasonable to attribute a significant part of the Virginia Port Authority's success to its "independence" from state government. Its "independence" allows it to function as a business with little interference from state government. The authors examined three options for satisfying the needs that were to be fulfilled by creating the new authority: (1) create an independent rail authority, (2) create a new rail agency within the government, or (3) provide the powers needed (such as bonding) to a rail agency that already exists: the Department of Rail and Public Transportation. A range of financial options that could be used by the new authority to mobilize additional capital for investment in rail is discussed. The authors also discuss the different ways that an authority could involve itself in the rail transport sector. Finally, the report addresses the question whether the new rail authority would violate the Constitution of Virginia. The authors argue that the chances (with some caveats) of withstanding a constitutional challenge are good.

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