Improving Intercity Passenger Rail Service in the United States

Summary: The federal government has been involved in preserving and improving passenger rail service since 1970, when the bankruptcies of several major railroads threatened the continuance of passenger trains. Congress responded by creating Amtrakâofficially, the National Railroad Passenger Corporationâto preserve a basic level of intercity passenger rail service, while relieving private railroad companies of the obligation to maintain a business that had lost money for decades. In the years since, the federal government has funded Amtrak and, in recent years, has funded passenger-rail efforts of varying size and complexity through grants, loans, and tax subsidies.

Summary: Efforts to improve intercity passenger rail can be broadly grouped into two categories: incremental improvement of existing services operated by Amtrak and implementation of new rail service where none currently exists. Efforts have been focused on identifying corridors where passenger rail travel times would be competitive with driving or flying (generally less than 500 miles long) and where population density and intercity travel demand create favorable conditions for rail service.

Summary: Improving existing routes: On the busy Northeast Corridor line owned by Amtrak, several projects to modernize or extend the life of existing infrastructure have been completed using federal grants overseen by the Federal Railroad Administration (FRA). Amtrak has also received annual appropriations above authorized levels for use on the Northeast Corridor in recent years, but proposed projects to add capacity or reduce trip times require a level of investment that outstrips existing options for passenger rail funding. Federal grants have enabled state-supported routes off the Northeast Corridor to add additional trains per day and/or to reduce trip times (whether by increasing speeds or rerouting trains onto more direct alignments). Some grant funds have also preserved service on Amtrak's long-distance lines, which account for under 15% of ridership but incur the largest operating subsidies.

Summary: State-supported and long-distance routes generally operate over tracks owned and maintained by freight railroads (called "host" railroads), which can interfere with existing service and complicate plans to add trains to already congested freight lines. Interference by freight trains has been cited by Amtrak as a major contributor to its trains' poor on-time performance, although freight railroads sometimes dispute this. A federal law passed in 2008 was designed to hold host railroads to new performance standards, but has been the subject of court challenges for nearly a decade. While legal issues surrounding on-time performance standards may be resolved in the short term, on-time performance has fallen from its system-wide high of 80% (four trains out of five arriving at all stops on time) achieved in 2012 and has been slow to rebound.

Summary: New rail services: Amtrak has partnered with several states to extend existing routes beyond their former termini to serve new stations, sometimes using additional federal grant money. A high-profile project to build a truly high-speed rail system in California was awarded nearly $4 billion out of the roughly $10 billion appropriated for intercity rail projects in 2009-2010, but projected costs exceed earlier estimates and current funding is sufficient to build only an initial segment. The Trump Administration is now seeking the return of some federal grants. A smaller and less technically complex project to introduce new rail service connecting Chicago, IL, and Iowa City, IA, received federal funding but was delayed at the state level, and it is not clear when or if it will be completed. Meanwhile, several efforts are under way in the private sector to bring intercity passenger rail to major urban corridors. One of these, the Brightline service in Florida, has already begun serving Miami and West Palm Beach on a line that will eventually reach Orlando. While privately funded and operated, these projects do benefit from public assistance in other ways, as Brightline was allowed to issue tax-subsidized qualified private activity bonds to finance construction. Pilot programs to allow private railroads to compete for the right to serve existing Amtrak routes have been less successful.

Summary: Rail programs were included in the most recent surface transportation authorization, which expires at the end of FY2020. Issues in reauthorization include whether and how to fund plans to build new infrastructure for improved rail services, especially on the federally owned Northeast Corridor; federal support for operating intercity rail services; the process by which rail lines are planned; the obligations of freight railroads to carry passenger trains; and whether other opportunities exist for the private sector to build or operate passenger rail services.

Intercity passenger rail in America dates to the rail industry's origins in the 19 th century. As common carriers engaged in interstate commerce, railroad companies built hundreds of thousands of miles of track across the country offering both freight and passenger transportation, making the distinction between a freight railroad and a passenger railroad a relatively recent one. Federal regulation was important in the industry's development. The Hepburn Act of 1906 (34 Stat. 584) authorized the Interstate Commerce Commissi on (ICC) to regulate maximum interstate passenger fares to ensure that they were "just and reasonable." The Transportation Act of 1958 (P.L. 85-625, 72 Stat. 571) gave the ICC authority to allow a railroad to discontinue passenger service on a line while continuing freight service.

By the mid-20 th century, passenger services faced increased competition from jet airliners offering faster travel times and private automobiles offering convenient access to a network of new federally funded highways. The rail industry's worsening financial health meant that infrastructure conditions also worsened as maintenance was deferred, contributing to reduced speeds and reliability. With ridership declining, the ICC permitted railroads to discontinue many passenger services and focus on carrying freight. In an effort to shore up flagging passenger rail service, Congress passed the High Speed Ground Transportation Act of 1965 (P.L. 89-221), creating an office in the Department of Commerce to foster research and development of new transportation technologies (the Department of Transportation did not yet exist). This contributed to the establishment of the nation's fastest rail service, the Metroliner, on the Washington, DC, to New York City portion of the Northeast Corridor (NEC), when that line was still under private ownership.

In the years since, Congress has taken an active role in preserving and improving passenger rail service. Although ridership is much lower than in the heyday of long-distance trains, the federal government continues to support passenger rail through a variety of grants, loans, and tax preferences. There continues to be debate over whether federal subsidies for passenger rail are justified, given competing alternatives by air or highway that dominate most intercity travel markets (though these alternatives may also receive subsidies). The Trump Administration has called for "the end of the [federal] Government subsidizing operating losses" on passenger trains, shifting decisionmaking and cost responsibility to states.

As several freight railroads, including the Pennsylvania Central, the nation's largest, entered bankruptcy in 1970, Congress created Amtrakâofficially, the National Railroad Passenger Corporationâto preserve a basic level of intercity passenger rail service, while relieving private railroad companies of the obligation to run passenger trains that had lost money for decades. Amtrak is structured as a private company, but virtually all of its shares are held by the U.S. Department of Transportation (U.S. DOT).

Amtrak owned no infrastructure at the time of its creation. It was originally structured as a contracting agency, and Amtrak trains were operated by private railroads over tracks they owned. Under the Railroad Revitalization and Regulatory Reform Act (4R Act) of 1976, ownership of the NEC was transferred from the bankrupt Penn Central Railroad to Amtrak. At the same time, Congress initiated the Northeast Corridor Improvement Program, which required travel times of 3 hours and 40 minutes between New York and Boston, and of 2 hours and 40 minutes between New York and Washington, by 1981. While the act funded many improvements along the corridor, these goals were not achieved.

The law that created Amtrak also stipulated that Amtrak pay host railroads for the incremental costs specific to Amtrak's usage of tracksâfor instance, the additional track maintenance costs required for passenger trains. Amtrak is not required to contribute to a freight railroad's overhead costs. Then, in 1973, Congress granted Amtrak "preference" over freight trains in using a rail line, junction, or crossing ( P.L. 93-146 , Â§10(2), 87 Stat. 548), but Amtrak has been unable to enforce this preference to ensure that host railroads operate its trains on schedule.

Several railroads continued to operate long-distance passenger services after 1970 rather than contracting with Amtrak. The last of these services was discontinued in 1983. Amtrak itself discontinued a number of the routes it originally operated, but has been required by Congress to maintain a "national network" of long-distance trains. Amtrak has received federal funds to cover operating losses and capital expenditures since its creation.

Federally Designated High-Speed Rail Corridors

In 1991, the Intermodal Surface Transportation Efficiency Act (ISTEA, P.L. 102-240 ) empowered the Secretary of Transportation to designate up to five high-speed rail corridors. These were required to be "rail lines where railroad speeds of 90 miles per hour are occurring or can reasonably be expected to occur in the future" (Â§1010). ISTEA created an annual set-aside of $5 million from a highway funding program to fund railway-highway crossing safety improvements on these corridors. As the presence of grade crossings can restrict how fast trains can travel, this provision funded projects that had the potential to boost maximum speeds.

The Transportation Equity Act for the 21 st Century (TEA-21, P.L. 105-178 ) increased the number of high-speed rail corridors to 11 (see Table A-1 ). These have a total length of roughly 9,600 miles, less than half the length of the current Amtrak network. Several of the designated "corridors" are in fact networks of interlocking or diverging lines. For example, the Midwest high-speed rail corridor, as initially designated, consisted of lines radiating outward from Chicago to Milwaukee, St. Louis, and Detroit; further extensions to these lines have since been added to the corridor designation, which now goes by the name of the Chicago Hub Network. Most corridors were designated at the discretion of U.S. DOT, but threeâthe Gulf Coast, Keystone, and Empire State corridorsâwere designated by statute. Almost all corridors are between 100 and 500 miles in length, the distance range in which rail is expected to be competitive with other modes.

Most federally designated corridors already receive some intercity passenger rail service, and roughly half of all federally designated corridors are served by Amtrak's NEC or state-supported routes. Approximately 1,500 miles of federally designated high-speed rail corridors currently receive no intercity passenger rail service of any kind. Some of these segments were regularly served by Amtrak trains as recently as 2005; others have not seen intercity passenger rail service since before Amtrak initiated operations in 1971. There is no longer a dedicated funding program for this network as there had been under ISTEA, but federal designation was incorporated into later efforts to improve passenger rail as discussed below.

The Passenger Rail Investment and Improvement Act (PRIIA, P.L. 110-432 , Division B), enacted in 2008, created discretionary grant programs to expand or otherwise improve passenger rail service. Sections 301, 302, and 501 of PRIIA authorized up to $3.725 billion in grants to states to develop intercity passenger rail service. One of these new programs, which authorized $1.5 billion specifically for high-speed rail corridor improvements, explicitly defined "corridor" as a federally designated corridor established by ISTEA or TEA-21.

With PRIIA in effect, the 111 th Congress appropriated a total of $10.6 billion to develop intercity passenger rail services in the American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5 ) and the FY2009 and FY2010 Department of Transportation Appropriations Acts (Division A, Title I, P.L. 111-117 ), well in excess of authorized levels. That same year, the Federal Railroad Administration (FRA) published its High-Speed Rail Strategic Plan, which outlined the Obama Administration's priorities to improve intercity passenger rail service using the programs created by PRIIA and the infusion of funds provided by ARRA. This document indicated that the federally designated high-speed rail corridors were to be prioritized in the coming solicitations for intercity passenger rail grant funds.

FRA ultimately used this money to award 158 grants under the new High-Speed Intercity Passenger Rail (HSIPR) Grant Program. Some 80% of the funding went to a relatively small number of large-scale projects, each within a federally designated priority corridor. These included multi-billion-dollar grants to California and Florida for new high-speed rail lines; Florida subsequently turned down its grant. Most grants funded projects that made incremental improvements to existing services, rather than the establishment of new lines (with the notable exception of California's high-speed rail project, discussed later in this report). HSIPR also offered grants for passenger rail planning, which previously had not been addressed by departments of transportation in some states. The 112 th Congress rescinded $400 million of the $10.6 billion previously appropriated and did not adopt the Obama Administration's requests for additional funding. No subsequent HSIPR funding has been provided.

Several states ultimately declined HSIPR grants to improve or expand intercity passenger rail service. That funding was reallocated to other states. Some of the remaining projects encountered delays in delivery, meaning their effects on passenger rail service have only recently begun to be felt. Other projects are still years away from completion, and still others funded planning and engineering work that requires additional funding for construction. Specific improvements in rail service brought about by these grants are discussed in later sections of this report.

Intercity Passenger Rail in the FAST Act

Authority for passenger rail programs lapsed when PRIIA expired at the end of 2013. After a gap of two years, passenger rail programs were reauthorized by the Passenger Rail Reform and Investment Act of 2015, enacted as Title XI of the Fixing America's Surface Transportation Act (FAST Act, P.L. 114-94 ).

In the FAST Act, Congress did not continue the approach taken in PRIIA of authorizing large sums for capital grants to implement or improve passenger rail service over entire corridors. The FAST Act did, however, contain a number of measures intended to improve passenger rail in other ways. The collective effect of these programs has been to advance some passenger rail projects initiated under PRIIA, but on a comparatively smaller scale. Some intercity passenger rail projects have also been advanced using funds from U.S. DOT's TIGER/BUILD grant program, a discretionary program that supports infrastructure investments deemed to have significant local or regional impact.

Consolidated Rail Infrastructure and Safety Improvements Program (CRISI)

Section 11301 of the FAST Act created this grant program, which merged eligibility from several programs, including the Intercity Passenger Rail and Congestion Reduction programs created by Sections 301 and 302 of PRIIA. A total of $1.103 billion was authorized for this program from FY2016 through FY2020; to date, $916 million has been appropriated by Congress. The program has not yet resulted in any increases in speed or frequency within the intercity passenger rail system. However, it has been used to fund implementation of Positive Train Control (PTC) systems in many areas. PTC is primarily a crash-avoidance technology, but in certain cases it can allow trains to travel faster.

Federal-State Partnership for State of Good Repair Program

In Section 11302 of the FAST Act, Congress created the Federal-State Partnership for State of Good Repair program to fund the rehabilitation or replacement of aging infrastructure used for passenger rail service. A total of $997 million was authorized for this program; to date, $675 million has been appropriated. By statute, preference is given to grant applications with at least a 50% nonfederal share of project costs, to applications submitted jointly by multiple applicants, and to projects sponsored by other entities than Amtrak alone. The Partnership program is more explicitly directed to intercity passenger rail projects by statute, but similarly to CRISI it is primarily designed to fund the replacement or rehabilitation of aging infrastructure rather than to implement new or dramatically improved passenger rail service.

Restoration and Enhancements Grant Program

In Section 11303 of the FAST Act, Congress created the Restoration and Enhancements program to cover the operating costs of reinitiating passenger rail services that have been suspended. This sets it apart from other grant programs administered by FRA, which generally fund capital grants for infrastructure improvements. Many corridors are potentially eligible for these funds, as many passenger routes have been discontinued by Amtrak since its creation, but the program was primarily aimed at restoring service along the coast of the Gulf of Mexico. A section of Amtrak's long-distance Sunset Limited ran between New Orleans and Orlando from 1993 until it was suspended after sustaining damage during Hurricane Katrina in 2005.

Funding was made available for the program in FY2017, which did not result in any successful applications. However, a $33 million CRISI grant was awarded to the Southern Rail Commission (a multi-state coalition formed to promote passenger rail in Southern states) in 2019 for capital improvements necessary to reinstate service between New Orleans and Mobile. Such a service would be eligible to receive Restoration and Enhancements grant funding to support its operating costs.

The federal government has taken several steps to improve passenger rail by supporting the acquisition of new rail cars and locomotives. Rail equipment can have an effect on the speed and frequency of rail service. Older equipment may not be capable of running at high speeds or be compatible with modern train control systems or accessibility laws. Amtrak periodically rehabilitates and expands its own fleet of rail cars and locomotives, although some states have purchased specialized rail equipment to supplement Amtrak's existing fleet.

Section 305 of PRIIA tasked Amtrak with creating a Next Generation Corridor Equipment Pool Committee to design, develop specifications for, and procure standardized rail equipment for use on state-supported short distance corridors. The committee developed specifications for diesel locomotives and bi-level passenger cars. Five statesâCalifornia, Illinois, Michigan, Missouri, and Washingtonâagreed to jointly procure a total of 130 passenger cars and 32 locomotives for use on their state-supported rail corridors. They did so using a mix of state funds, federal funds awarded for corridor improvements, and a $268 million HSIPR grant awarded specifically for equipment procurement.

The locomotive procurement was awarded to Siemens, and Siemens-built "Charger" diesel locomotives are now in service on several Amtrak routes, with the potential for additional follow-up orders. The regional passenger car procurement was awarded to Sumitomo Corporation of America, and subcontractor Nippon Sharyo was to assemble the cars at a newly expanded factory in Rochelle, IL. However, a prototype car failed an important structural test, and the requisite design changes would have delayed the project beyond certain deadlines imposed by the federal funding agreement. Ultimately, Nippon Sharyo was replaced by Siemens, and the procurement was modified to substitute single-level rail cars for the bi-levels originally contracted. The delays resulted in a portion of the $268 million grant expiring and being returned to the Treasury.

Procurement of new rail equipment can be constrained by certain federal regulations. Purchases of rail equipment using federal funds are subject to "Buy America" requirements for domestic content and final assembly. FRA safety standards require passenger rail cars that operate in mixed traffic with freight trains to be able to withstand certain crush forces. This makes most passenger rail equipment designed for use in Europe or Asia impossible to deploy in the United States without major modifications, increasing unit production costs. The safety standards also make passenger rail equipment heavier, which in turn makes it more difficult for trains to accelerate and decelerate quickly, increasing trip times. Regulations promulgated by FRA in 2018 attempt to address this, creating a category of Tier III passenger rail equipment permitted to operate at speeds up to 220 miles per hour (mph) on dedicated tracks or up to 125 mph on lines also used by freight trains. The regulation also modifies certain crashworthiness and occupant-protection requirements on Tier I equipment (designed for speeds below 125 mph) to permit a greater variety of train car designs to operate on the U.S. network.

Federal Loans for Passenger Rail Projects

Passenger rail projects are eligible under two federal loan programs, the Railroad Rehabilitation and Improvement Financing (RRIF) program and the Transportation Infrastructure Finance and Innovation Act (TIFIA) program. Neither of these programs was designed with passenger rail specifically in mind; RRIF was intended for use primarily by freight railroads, and TIFIA has primarily been used for toll road and transit projects. Because loans require a revenue source to establish creditworthiness (the ability to repay a loan), and because passenger rail lines rarely generate an operating profit, these programs have seen limited application to intercity rail. However, Amtrak has used RRIF loans to purchase new locomotives for the Northeast Corridor, which does generate an operating profit. Amtrak's two active RRIF loans, totaling over $3 billion, now represent almost 60% of total nominal RRIF loan amounts.

Metrics and Standards to Improve Performance

Only 73% of Amtrak trains arrived at all stations on time in 2018, and Amtrak routes often fall short of internal on-time performance goals. Among trains on long-distance routes, half arrived at their final destinations within 15 minutes of the scheduled time in 2018. The freight lines used by most Amtrak services may have little incentive to give priority to Amtrak trains at the expense of their own more profitable operations. However, trains on the Amtrak-owned NEC also reached their final destinations late on one trip out of five. Figure 1 below illustrates the fluctuations in endpoint on-time performance for Amtrak's three business lines over the last 15 years. In general, reliability on state-supported routes and on the NEC has been relatively stable compared to long-distance routes. Where state-supported routes used to lag behind the NEC, they are now more or less equal in terms of reliability, though both have dipped from their historic highs.

Amtrak has made forceful statements blaming host railroads for poor on-time performance. In one recent example from February 2019, a Twitter account used by Amtrak to alert riders of service issues identified host railroad Norfolk Southern by name as the cause of a delay. In response, Norfolk Southern issued a letter disputing the cause of the delay, accusing Amtrak of damaging Norfolk Southern's reputation, and threatening further action. Amtrak's response continued to blame Norfolk Southern, listing additional delays it attributed to the company and suggesting that it take "immediate action to improve the on-time performance of Amtrak trains on your railroad."

The 110 th Congress attempted to address on-time performance in Section 207 of PRIIA. This section directed FRA, Amtrak, and the Surface Transportation Board (STB), which regulates competition in the rail industry, to develop minimum performance standards, incorporate those standards into rail service contracts, and resolve disputes arising from these standards in arbitration. Another section in PRIIA, Section 213, gave STB enforcement power over railroads that failed to meet their performance standards. Final metrics and standards went into effect in 2010.

The Association of American Railroads, an industry group representing freight rail companies, sued to block the metrics and standards in 2011, asserting that Congress improperly gave Amtrak, defined in statute as a private entity, the power to regulate other private entities and that exercising such power deprived host railroads of their right to due process. A series of federal court decisions culminated in a unanimous Supreme Court ruling that Amtrak could be considered part of the government for the purposes of deciding the case. The 2010 standards were suspended during much of the legal proceedings, and Amtrak on-time performance has decreased since reaching a systemwide high of roughly 80% in 2012.

On July 20, 2018, the U.S. Court of Appeals for the District of Columbia Circuit ruled that without an arbitrator to enforce the standards, Amtrak is not exercising undue coercive power over its competitors. The Supreme Court declined AAR's appeal of this decision on June 3, 2019, allowing the federal government's power to set performance standards to remain in place. The 2010 standards remain vacated, but FRA is free to establish new standards with Amtrak's input.

Recent Improvements to the Existing Network

Most recent attempts to improve intercity passenger rail have involved making improvements to infrastructure and equipment on existing routes, rather than the planning and implementation of new routes. However, the geography of existing lines can constrain efforts to increase speeds, and the freight railroads that control most of the lines Amtrak uses have little incentive to allow higher speeds or more frequent passenger service without concessions in return, such as capital improvements that also serve to improve freight flows. This section describes federally funded programs to improve Amtrak's route network in order to extend the life of existing infrastructure, improve reliability, increase service frequency, and/or reduce scheduled trip times.

The Northeast Corridor (NEC), already the busiest intercity passenger rail line in the nation at the time of PRIIA's enactment, received nearly $1 billion in HSIPR funds divided among several projects. Some of these projects resulted in the construction of infrastructure intended to improve train service or prevent its deterioration, while others completed prerequisite environmental and engineering studies for large projects that remain unfunded.

Apart from funding specific infrastructure projects, PRIIA also called for a corridor improvement plan for the NEC. The planning project, NEC Future, has identified goals for rail service along the corridor and recommended specific infrastructure investments necessary to bring about the desired level of service. A corridor-level Environmental Impact Statement evaluated several alternatives, from maintaining the corridor at what are essentially current service levels to building a brand new corridor adjacent to the existing one capable of much faster trips but at a considerably higher capital cost. The Selected Alternative, approved in a Record of Decision (ROD) issued in July 2017, fell in between these two options, improving speed and capacity on existing infrastructure without building an entirely new parallel route.

One limitation of the existing Northeast Corridor is the path taken by trains along the coast of Long Island Sound in southeastern Connecticut. The tight curves along the shore reduce speeds and lengthen trip times. NEC Future planners initially recommended the construction of new tracks set farther inland along a straighter path, but this was met with opposition from local groups that objected to the construction of new rail lines in their towns. The Selected Alternative considered in the Final Environmental Impact Statement recommended further study of this segment of the corridor.

Amtrak says that no further significant expansion of intercity service on the NEC is possible without increasing capacity into and through Manhattan. Also, the reliability of that service is threatened due to the aftereffects of the flooding of the rail tunnel under the Hudson River during Hurricane Sandy in 2012. The Gateway Program is a package of projects proposed to increase both reliability and capacity. The centerpiece is a new two-track tunnel under the Hudson River, supplementing the current tunnel, and conceived in the aftermath of the 2010 cancellation by the State of New Jersey of a similar tunnel project called Access to the Region's Core (ARC). The cost estimates for the entire program of work are in the range of $24 billion to $29 billion.

One challenge facing the Gateway Program is that Amtrak, the infrastructure owner, and New Jersey Transit, the other primary beneficiary of the improvements, have limited ability to fund the improvements. New Jersey Transit does not earn a profit and needs several billion dollars for other projects. Amtrak earned an operating profit of $526 million on its NEC operations in FY2018, but at least a portion of its NEC operating profit is pledged starting in 2022 to repay a $2.45 billion federal loan Amtrak received in 2016 to purchase new train cars. Amtrak also has several billion dollars in other needs, including a backlog of projects to restore its infrastructure to a state of good repair.

A second challenge facing the program is that while assistance may be sought from the federal government, current federal transportation grant programs are not structured to provide large amounts of funding to a particular project on a predictable basis over many years. Funding under discretionary programs depends on the amount that Congress appropriates each year. Since the Gateway Program would improve both intercity passenger rail service and commuter rail service, the individual projects that are part of the program could be eligible for assistance from federal programs that focus on either intercity passenger rail or public transit, but no program of either type currently provides multi-year funding in the amount sought by Gateway project sponsors.

The two projects within the Gateway program that are farthest along in their planning and design phasesâthe Portal North Bridge and Hudson Tunnel Projectsâare in project development for Federal Transit Administration (FTA) Capital Investment Grant (CIG) funding, but FTA has cast doubt on the strength of their local financial commitments. Sponsors of both projects have planned to use federal RRIF and TIFIA loansâto be repaid with local fundsâas part of the nonfederal share of project costs, but FTA has not accepted this approach.

Most federal grant funding to improve the existing passenger rail system has gone to routes on Amtrak's National Network, outside the Northeast Corridor. These routes do not routinely generate the operating surpluses found on the NEC and are generally operated over tracks owned by private freight railroads, so the HSIPR program involved spending public funds to improve privately owned rail infrastructure, or else to facilitate the purchase of that infrastructure by a public agency.

One criticism of the HSIPR program has been that investments were spread out so thinly that they could fund only limited service improvements. Building a true high-speed rail line under HSIPR would have required FRA to concentrate considerable funding on a single project, something Congress did not direct FRA to do. Developing true high-speed passenger rail services with federal assistance will be challenging given the inevitable pressures to distribute federal funding widely.

Half of all Amtrak trips are taken on state-supported routes, and state-supported routes have accounted for a large portion of the growth in Amtrak's ridership over the last two decades. To build on this growth, several states received infusions of federal funding to increase speeds, add additional frequencies, extend service to new stations, or generally improve reliability by replacing aging infrastructure.

Table 2 below contains a list of selected improvements to state-supported routes to receive HSIPR grants. Some of these projects are already complete and have been successful; others, especially the larger and more complex corridor improvement projects, have encountered delays and have not yet delivered their intended benefits. Status updates for three of these projects appear beneath the table.

The Chicago-St. Louis corridor improvement program, though it was dubbed Illinois HSR, did not have as its immediate objective the implementation of true high-speed rail along the corridor. Rather, a series of targeted investments was planned to create additional rail capacity, reducing interference from freight trains and allowing passenger trains to reach speeds of 110 mph. In 2012, 110-mph service was initiated on the 15-mile segment between Dwight and Pontiac, IL, but not on the remaining segments from Dwight to Joliet and Pontiac to Alton. Portions of the routeâfrom Chicago to Joliet, from St. Louis to Alton, and passing through Springfieldâare congested with freight and/or commuter traffic and impose lower speed limits, further hampering efforts to reduce trip time.

A federally funded environmental study identified alternatives for double-tracking the entire corridor, including the segments not improved by the HSIPR corridor development grant. These alternatives would double existing service levels to eight round trips daily, and have the potential to reduce end-to-end travel times by nearly two hours. The corridor-level study estimated the costs of implementing these alternatives at between $4.9 billion and $5.2 billion, including building new tracks in the congested areas in Springfield and just outside Chicago and St. Louis. A project in Springfield that would reroute passenger and freight trains onto separate tracks is under construction with the support of TIGER grants, but the environmental reviews for the Chicago-Joliet and Granite City-St. Louis segments were suspended in November 2018. FRA indicated that the project sponsors did not want to pursue the environmental reviews at that time.

Freight railroad Norfolk Southern no longer wished to maintain a 135-mile section of the corridor from Kalamazoo, MI, to Dearborn, MI, to the standards necessary to run passenger trains at 79 mph, meaning speeds would have decreased and trip times would have increased without outside intervention. The State of Michigan used HSIPR grant funds to purchase the section from Norfolk Southern, bringing it into public ownership and making improvements that would allow top speeds of 110 mph. In 2012, 110-mph service was initiated on a separate 97-mile segment from Porter, IN, to Kalamazoo, the result of upgrades paid for with ARRA funds awarded directly to Amtrak, which owns that segment. As of 2019, the cumulative effect of these improvements has been to reduce average trip times between Chicago and Detroit by approximately 25 minutes. Further reductions may be possible as additional segments are upgraded to 110 mph.

A federally funded environmental study for the corridor resulted in a Draft Environmental Impact Statement that identified alternatives for further improvements on the route, increasing service to six or 10 daily round trips (from the existing three) and making further reductions to trip time. Key among these improvements would be the selection of a new route from Chicago to Michigan City, IN. On November 30, 2018, FRA announced it was rescinding the Notice of Intent issued as part of this environmental review, effectively halting the planning process before reaching the Final EIS or Record of Decision stage. However, FRA also noted that planning work completed to that point could be reused in future projects, given sufficient interest and funding.

On December 18, 2017, a southbound Amtrak Cascades train derailed near DuPont, WA, killing three and injuring 62. The train was the first in regular service to use the Point Defiance Bypass, an inland rail route upgraded using some of Washington State's HSIPR funds. The Bypass was to reduce travel times between Seattle and Portland by 10 minutes without raising the maximum allowable speed on the track. In the aftermath of the derailment, Amtrak has been operating trains on its original route and schedule.

On May 21, 2019, the National Transportation Safety Board (NTSB) published an abstract of its final report and recommendations following an investigation of the 2017 derailment. NTSB recommended that Amtrak no longer operate the route with a certain type of passenger car. Amtrak and the Washington State Department of Transportation (WSDOT) have announced they will comply with the recommendation, reducing the fleet of usable cars.

Some efforts to put Amtrak on more stable financial footing have centered on reforming the long-distance routes that Amtrak operates as part of the National Network. These routes require the largest operating subsidies, have the lowest on-time performance of Amtrak's three business lines, and make many stops at small communities that are not major generators of passenger traffic. At the same time, those communities may see Amtrak service as an important link to other cities or as a point of local pride. This has led to the federal government pursuing policies, sometimes simultaneously, that preserve existing long-distance train service while pushing Amtrak to reduce or eliminate operating losses.

Grants to Improve or Retain Existing Long-Distance Routes

Congress has supported long-distance routes primarily through annual appropriations to the National Network, which help cover operating subsidies and some capital projects necessary to maintain service. The FAST Act authorized gradual increases in grants to the National Network, from $1 billion in FY2016 rising to $1.2 billion in FY2020. Appropriators have generally met or exceeded these authorized levels.

For FY2019, appropriations to the National Network included $50 million to support capital grants necessary to maintain long-distance service over tracks where "Amtrak is the sole operator on a host railroad's line and a positive train control system is not required by law or regulation." These funds were allowed by statute to be used as nonfederal matching funds for competitive discretionary grants that would lead to such projects.

This measure was instrumental in sustaining operations of the Southwest Chief route that runs from Chicago to Los Angeles. A segment of the route, between La Junta, CO, and Lamy, NM, receives no freight service; track owner BNSF Railway did not wish to pay to maintain the tracks for Amtrak's exclusive benefit, instead offering to reroute the train on different tracks between Kansas and New Mexico. Local communities along the route applied for and received federal TIGER grants, which required $3 million in matching funds from Amtrak. In 2018, Amtrak signaled it would not contribute these matching funds and would instead consider replacing trains with buses in certain areas. However, the $50 million set-aside from FY2019 appropriations funded the remaining share of project costs, allowing the project to proceed and train service to continue along the entirety of the route.

Proposals to Convert Long-Distance Routes to State-Supported Corridors

Both the Administration and Amtrak itself have proposed changes to long-distance train service. These changes closely parallel Amtrak's plan, ultimately suspended, to replace a section of the Southwest Chief with bus service. In its FY2020 budget request, the Administration proposed eliminating operating support for long-distance trains and a corresponding reduction in National Network grants, but an increase in funding to the Restoration and Enhancements grant program. To replace federal operating support for a route, states would be eligible to apply for Restoration and Enhancements funding to bridge the funding gap until funds could be raised locally to support the service. Federal funding would be gradually phased down over the five-year duration of a grant agreement, with the states concerned assuming full responsibility for operating costs on the route by FY2024. States could potentially negotiate with Amtrak about changes to schedules or service levels, or about retaining certain segments while discontinuing others. Trains could be replaced with bus service or discontinued if a state did not wish to support rail service on the route.

In its own FY2020 grant request, Amtrak has shown some willingness to alter how long-distance routes are funded and operated, stating that "a modernization of the National Network, with the right level of dedicated and enhanced federal funding, would allow Amtrak to serve more passengers efficiently while preserving our ability to maintain appropriate Long Distance routes" (emphasis added). In a recent letter to Senator Moran, Amtrak CEO Richard Anderson stated,

While we strongly believe that there is a permanent place for high-quality long-distance trains in our network, the time to closely examine the size and nature of that role is upon us for numerous reasons. ...[Congress] will need to decide whether to continue to fund the operation of all existing long-distance trains with funding to buy new rolling stock and increased levels of financial support or consider changes to the network that could either enhance transportation value or reduce capital and operating expenses.

Nevertheless, the FY2019 Consolidated Appropriations Act contained a Sense of Congress that "long-distance passenger rail routes provide much-needed transportation access for 4,700,000 riders in 325 communities in 40 states and are particularly important in rural areas; and long-distance passenger rail routes and services should be sustained to ensure connectivity throughout the National network." While there were 4.7 million trips on long-distance routes in 2017, and 4.5 million in 2018, many stations that receive only long-distance train service have very few daily boardings and alightings.

One way Congress has attempted to control or reduce operating subsidies for passenger rail is to open the network to a greater degree of competition. This has proven to be difficult given Amtrak's advantages over other operators, including a statutory requirement that freight railroads grant Amtrak trains preference in using their tracks, and another requiring Amtrak to be charged only the incremental cost of using another railroad's tracks.

Section 214 of PRIIA required FRA to implement a program that would allow other operators to submit competing bids to take over certain routes operated by Amtrak. This program would be open to any of the railroad companies that serve as hosts to Amtrak long-distance routes, with Amtrak able to respond to any outside bid with one of its own. FRA would then select a winning bidder, which would be entitled to receive an annual operating subsidy of no more than the prior fiscal year's subsidy amount, adjusted for inflation. Up to two routes could be operated in this manner for up to five years, selected from among the worst-performing routes according to a classification system contained elsewhere within PRIIA. FRA promulgated its final rule establishing this program in 2011, but no bids were submitted.

The program was revisited in the FAST Act, which increased the number of available routes from two to three, reduced the operation period from five years to four with the possibility of reapplication for a second four-year term, and capped operating subsidies at 10% below its level in the prior fiscal year. The list of eligible bidders was also expanded to include not just host railroads, but also to one or more states, and to partnerships between a state and a host railroad. FRA promulgated its final rule reestablishing this program in 2017, but again no bids have been submitted.

Projects to retain or improve existing Amtrak services, as described in the previous section, routinely require investments amounting to tens or hundreds of millions of dollars. High-speed rail systems of the type in use in Europe and Asia, which can make only limited use of infrastructure designed for conventional rail, require significant investments in new infrastructure. Even when built for conventional rail equipment compatible with existing lines, establishing new rail service is a capital-intensive, time-consuming process. For example, a federally funded study of rail options in New York State estimated that instituting 125-mph service from New York City to Albany and Buffalo would require $14.7 billion in capital funding.

A list of active or recently completed corridor plans and their cost estimate ranges can be found in Appendix B .

The California High-Speed Rail (CAHSR) program is a project led by the State of California with the goal of implementing a true high-speed rail system, capable of speeds in excess of 200 mph, between Los Angeles and San Francisco via the Central Valley cities of Fresno and Bakersfield. Ground was broken on the Central Valley section on January 6, 2015. Since that time, the California High-Speed Rail Authority (CHSRA) has completed civil works such as construction of viaducts or grade separations along the route. Construction of the full "Phase 1" system connecting San Francisco to Los Angeles, originally anticipated to be completed in 2028, is now expected to take until 2033.

Funding for CAHSR has never been committed in sufficient quantities to cover the entire projected cost of construction. In 2008, California voters approved ballot measure Proposition 1A, which authorized the state to issue $9 billion in bonds. At the time Proposition 1A was approved, California assumed a level of federal and private sector support that ultimately never materialized. The project did receive a total of $3.9 billion in federal HSIPR grants, some from ARRA and some from FY2010 appropriations. While estimates for the cost of the project have fluctuated, the 2018 business plan estimates the capital cost of the Central Valley segment alone at $10.6 billion, and the Phase 1 system at $77.3 billion.

In February 2019, California Governor Gavin Newsom announced in his State of the State Address that there "simply isn't a path" to complete the full system without additional funding. He later clarified that his comments were not intended to convey that the project was canceled; the section under construction is expected to result in improved passenger rail service in the central valley, and may still result in improved connections to San Francisco once other infrastructure projects are complete. The federal government has taken steps to reclaim federal grant money awarded to the project, on the grounds that the scope of the project has changed too much to be an eligible recipient of federal funding under the terms of the grant agreement. California is challenging these efforts in court; of the two largest grants CHSRA received, a $2.6 billion grant has already been fully spent in accordance with a federal deadline, while a second $929 million grant that has no such deadline remains untouched.

All Aboard Florida/Brightline/XpressWest/Virgin Trains USA

After the State of Florida turned down a federal HSIPR grant and canceled its Tampa-Orlando rail project, the private company All Aboard Florida (AAF) began making plans to initiate a new intercity passenger rail line between Miami and Orlando via West Palm Beach. That service, which would come to be called Brightline, does not use the same tracks used by Amtrak, instead using tracks owned by a regional freight railroad, Florida East Coast Industries (FECI; AAF and FECI were at the time both owned by asset management firm Fortress Investment Group). The diesel-powered trains are expected to provide faster service than Amtrak's route between Miami and Orlando, which currently provides two daily long-distance trains in each direction with poor on-time performance.

All Aboard Florida initially sought a $1.6 billion federal RRIF loan to finance construction of the portion of the route between West Palm Beach and Orlando, but no loan was authorized. Instead, AAF applied to U.S. DOT for allocations to sell $600 million of qualified private activity bonds to finance work on the Miami-West Palm Beach segment and another $2.25 billion for the West Palm Beach-Orlando segment. The interest on these bonds is exempt from federal income tax; hence, the federal government is subsidizing the project by allowing it to borrow money at a lower interest rate than it would have to pay without the federal tax exemption. Brightline rail service between Fort Lauderdale and West Palm Beach began on January 13, 2018, with service expanding to Miami by May 19 of that year. Service to Orlando is expected to begin in 2022.

In 2018, All Aboard Florida acquired XpressWest, a private company planning to build and operate a passenger rail service between Las Vegas, NV, and the Los Angeles area. XpressWest had been in the early stages of applying for a RRIF loan that was ultimately not issued. XpressWest was to be a true high-speed rail line with a connection to the California HSR system in Palmdale, and it is not clear whether California Governor Gavin Newsom's changes to the CAHSR plan will have repercussions for the project. In 2019, British based Virgin Group announced a partnership with All Aboard Florida, rebranding both Brightline and XpressWest as Virgin Trains USA. Other Virgin Group subsidiaries have operated intercity trains in the United Kingdom since the 1990s. Virgin Trains USA announced in January 2019 it would sell stock in an initial public offering, but in February the share offering was postponed. On May 30, Virgin Trains announced that construction of the Las Vegas-Southern California line would be delayed for two years.

A private company, Texas Central Partners, is moving forward with plans to construct a true high-speed rail line between the cities of Dallas and Houston. The project, which has the backing of a Japanese rail operator and would use Japanese high-speed rail technology and equipment, would reach top speeds of 186 mph and take 90 minutes end-to-end. There is currently no direct rail service of any kind linking Dallas and Houston. Although the sponsors have stated, "This project is not backed by public funds," news reports have indicated that the project is likely to depend on long-term loans from the federal government's RRIF and TIFIA programs.

The project is not yet under construction. One obstacle has been the acquisition of land on which to build the new tracks. There have been conflicting county-level court rulings on whether Texas Central can take the land it needs using eminent domain. Despite these legal issues, the company has stated it could begin construction on the line in 2019 or 2020.

Corridor Plans Outstrip Historical Funding Availability

Many HSIPR grants funded studies of new or improved passenger rail corridors. A few of these studies were ultimately canceled before reaching completion, but others have resulted in near-finished plans to enhance intercity passenger rail. These plans often feature capital cost projections in the billions of dollars, even for projects with comparatively conservative speed and frequency objectives.

The federal government's current approach to funding passenger rail differs from its approach to funding highways and transit. Although PRIIA and the FAST Act set authorized spending levels over multi-year periods, Amtrak funding is subject to the annual appropriations process, while many highway and transit programs are funded automatically out of Highway Trust Fund balances. Likewise, the HSIPR program lacked predictable funding in part because there was no dedicated revenue source for the program.

In the context of the federal appropriations process it is difficult to provide significant amounts of funding on a predictable basis to a grant program that depends on the Treasury general fund, as it must compete with many other programs for funding each year. This problem is exacerbated by the limits on overall discretionary spending that were imposed by the Budget Control Act of 2011. Supporters of passenger rail service have long called for a dedicated funding source for rail projects, and previous administrations have echoed such calls. To date, however, Congress has not taken such a step.

Rail planning in the United States is not centralized, relying on project sponsors (usually states) to formulate their own plans. Congress and several presidents have, at times, identified corridors as investment priorities or set out trip time goals for certain routes, but these have usually not been backed by any financial commitment or implementation plan. The lack of reliable funding for passenger rail capital projects and operations is one obstacle to rail planning, as some states may not wish to invest time and resources into a plan that may not be achievable without additional federal support.

PRIIA contained a requirement for FRA to develop a National Rail Plan (NRP), which has not taken the form of a standalone document. Instead, FRA has issued guidance for states to follow when drafting their own rail plans, as well as cost estimation and cost-benefit analysis guidance for project sponsors to follow when planning new or improved rail lines. FRA has also worked with groups of states to create regional rail plans, identifying service goals and rough cost estimates for passenger rail service between major cities. A rail study in the Southwest is complete, while rail studies in the Midwest and Southeast are ongoing. Regional rail plans are nonbinding and have no construction funding attached. Follow-on policies, including new dedicated funding for rail investment programs, were contained within U.S. DOT legislative proposals that were not enacted.

Legal and Regulatory Hurdles to Competition

The short-lived experiment contracting with an equipment provider for the Hoosier State and the failure of the long-distance competitive pilot program to generate any applications show that efforts to foster competition have not resulted in improvements to intercity passenger rail. Part of this may be attributed to the de facto monopoly status enjoyed by Amtrak since its private sector competitors ended their passenger businesses.

Amtrak has statutory privileges that currently would not extend to startup passenger rail operating companies hoping to compete over existing routes. Under current laws and regulations, a new entrant to passenger rail not wishing to negotiate with Amtrak or freight railroads for track access must either have a prior affiliation with an existing freight railroad (as with All Aboard Florida) or must plan to construct its own tracks (as with Texas Central). Congress could re-impose some obligation to accommodate passenger service on freight railroads. The freight rail industry would likely be opposed to such a step.

Appendix A. Federally Designated HSR Corridors

Appendix B. New, Improved, and Planned Intercity Passenger Rail Lines


National Security Space Launch

Summary: The United States is making significant efforts to pursue a strategy that ensures continued access to space for national security missions. The current strategy is embodied in the National Security Space Launch (NSSL) program. The NSSL supersedes the Evolved Expendable Launch Vehicle (EELV) program, which started in 1995 to ensure that National Security Space (NSS) launches were affordable and reliable. For the same reasons, policymakers provide oversight for the current NSSL program and encourage competition, as there was only one provider for launch services from 2006 to 2013. Moreover, Congress now requires DOD to consider both reusable and expendable launch vehicles for solicitations after March 1, 2019. To date, only expendable, or single-use, launch vehicles have been used for NSSL missions.

Summary: The NSSL program is the primary provider for NSS launches. Factors that prompted the initial EELV effort in 1995 are still manifestâsignificant increases in launch costs and concerns over procurement and competition. In addition, the Russian backlash over the 2014 U.S. sanctions against Russian actions in Ukraine exacerbated a long-standing undercurrent of concern over U.S. reliance on a Russian rocket engine (RD-180) for critical national security space launches. Moreover, significant overall program cost increases and unresolved questions over individual launch costs, along with legal challenges to the Air Force rocket development and launch procurement contract awards, have resulted in legislative action.

Summary: In 2015, the Air Force began taking steps to transition from reliance on the Russian made RD-180 engine used on the Atlas V rocket. Some in Congress pressed for a more flexible transition to replace the RD-180 that allowed for development of a new launch vehicle, while others in Congress sought legislation that would move the transition process forward more quickly with a focus on developing an alternative U.S. rocket engine. Transitioning away from the RD-180 to a domestic U.S. alternative provided opportunities for space launch companies that sought to compete for NSS space launches. Because of the technical, program, and schedule risk, as a worst-case scenario, the transition could leave the United States in a situation in which some of its national security space payloads lack an available certified launcher.

Summary: The Space and Missile System Center (SMC), together with the National Reconnaissance Office (NRO), released a request for proposals in May 2019 to award two domestic launch service contracts. DOD plans to select two separate space launch companies in the summer of 2020 that will be responsible for launching U.S. military and intelligence satellites through 2027. NSS launch has been a leading legislative priority in the defense bills over the past few years and may continue to be so into the future.

The National Security Space Launch (NSSL) program aims to acquire launch services and ensure continued access to space for critical national security missions. The U.S. Air Force implemented the original program in 1995âEvolved Expendable Launch Vehicle (EELV)âand awarded four companies contracts to design a cost-effective launch vehicle system. The DOD acquisition strategy was to select one company and ensure that NSS launches were affordable and reliable. The EELV effort was prompted by significant increases in launch costs, procurement concerns, and the lack of competition among U.S. companies.

A major challenge and long-standing undercurrent of concern over U.S. reliance on a Russian rocket engine (RD-180), used on one of the primary national security rockets for critical national security space launches, was exacerbated by the Russian backlash over the 2014 U.S. sanctions against its actions in Ukraine. Moreover, significant overall NSSL program cost increases and unresolved questions over individual launch costs, along with legal challenges to the Air Force contract awards by space launch companies, prompted legislative action. In the John S. McCain National Defense Authorization Act (NDAA) for FY2019, Congress renamed the EELV to the NSSL program to reflect a wider mission that would consider both reusable and expendable launch vehicles.

The origins of the NSSL program date back to 1995, after years of concerns within the Air Force and space launch community over increasing cost and decreasing confidence in the continued reliability of national access to space. The purpose of EELV was to provide the United States affordable, reliable, and assured access to space with two families of space launch vehicles. Initially only two companies were in competition: Boeing produced the Delta IV launch vehicle, and Lockheed Martin developed the Atlas V. Overall, the program provided critical space lift capability to support DOD and intelligence community satellites, together known as National Security Space (NSS) missions.

The EELV program evolved modestly in response to changing circumstances, and the Air Force approved an EELV acquisition strategy in November 2011, further revising it in 2013. That strategy was designed to (1) sustain two major independent rocket-powered launch vehicle families to reduce the chance of launch interruptions and to ensure reliable access to space; (2) license and stockpile the Russian-made RD-180 heavy-lift rocket engine, a critical component of the Atlas V; (3) pursue a block-buy commitment to a number of launches through the end of the decade to reduce launch costs; and (4) increase competition to reduce overall launch costs. The Air Force and others viewed the overall EELV acquisition strategy as having successfully reduced launch costs while demonstrating highly reliable access to space for DOD and the intelligence community. Others in Congress and elsewhere, however, argued that the program remained far too costly and was not as competitive as it should be.

The NSSL program is managed by the Launch Enterprise Systems Directorate of the Space and Missile Systems Center, Los Angeles Air Force Base (El Segundo, CA). The NSSL program consists of four launch vehicles: Atlas V and Delta IV Heavy (both provided by United Launch Alliance [ULA] of Denver, CO) and Falcon 9 and Falcon Heavy (both provided by Space Exploration Technologies Corporation [SpaceX] of Hawthorne, CA). NSS launches support the Air Force, Navy, and National Reconnaissance Office (NRO). More specifically, the Atlas V has launched commercial, civil, and NSS satellites into orbit, including commercial and military communications satellites, lunar and other planetary orbiters and probes, earth observation, military research, and weather satellites, missile warning and NRO reconnaissance satellites, a tracking and data relay satellite, and the X-37B space plane (a military orbital test vehicle). The Delta IV has launched commercial and military communications and weather satellites, and missile warning and NRO satellites.

The Atlas V and Delta IV Heavy launch vehicles are produced by ULA, which was formed in 2006 as a joint venture of The Boeing Company (of Chicago, IL) and Lockheed Martin (of Bethesda, MD). In addition to the launch vehicles themselves, the NSSL program consists of an extensive array of support capabilities and infrastructure to permit safe operations of U.S. launch ranges. ULA operates five space launch complexes, two at Cape Canaveral Air Force Station, FL (Space Launch Complex-37 and Space Launch Complex-41), and three at Vandenberg Air Force Base, CA (Space Launch Complex-2, Space Launch Complex-3F, and Space Launch Complex-6). A large number of key suppliers for ULA are spread throughout 46 states.

DOD certified SpaceX to compete for NSS launches in 2015. The Falcon 9 flew its first NSSL mission on December 23, 2018, which delivered the Global Positioning System (GPS) III to orbit. SpaceX developed a more capable launch capability in the Falcon Heavy, which DOD certified in June 2018 and later awarded NSS missions under Phase 1A of the NSSL program. SpaceX maintains three launch sites, one at Cape Canaveral Air Force Station, FL (Space Launch Complex 40); one at Kennedy Space Center (Launch Complex 39A); and one at Vandenberg Air Force Base, CA (Space Launch Complex 4E).

On October 10, 2018, the Air Force awarded three Launch Service Agreement (LSA) Other Transaction Authority (OTA) agreements to space launch companies. The LSA OTA agreements are "public-private partnerships [that] leverage industry's commercial launch solutions to ensure those systems meet NSS requirements." They also "facilitate development of three NSSL launch system prototypes and maturing those launch systems prior to selecting two NSS launch service providers for launch service procurements beginning in FY2020." The Air Force released request for proposals (RFP) in May 2019 for Phase 2 of the NSSL program, with plans to award two separate Launch Service Procurement (LSP) contracts in the summer of 2020. The selected companies will be responsible for launching national security satellites through 2027. However, the Air Force acquisition strategy of down-selecting no more than two launch providers may mitigate short-term risk but could have second- and third-order effects for resiliency in the future.

Congress may consider whether the strategy's cost-benefit analysis warrants further research. Should no more than two launch providers be chosen for LSP contracts in Phase 2, the companies not selected would lose the LSA funds received from the Air Force and could potentially be faced with (1) the choice of abandoning NSSL development to focus on competing in the commercial launch sector or (2) investing vast company reserves to continue development on its own. Furthermore, DOD investment in only two launch providers could mean fewer options for an increasingly diverse range of national space security missions and possibly limit competition, once again, in the launch market.

By the early 1990s, the U.S. space industrial base supported the production of a number of launch vehicles (i.e., Titan II, Delta II, Atlas I/II/IIAS, and Titan IV) and their associated infrastructure. Although launch costs were increasing and operational and procurement deficiencies were noted by many decisionmakers, no clear consensus formed over how best to proceed. Congress took the initiative in the National Defense Authorization Act for Fiscal Year 1994 (NDAA; P.L. 103-160 , Â§213) by directing DOD to develop a Space Launch Modernization Plan (SLMP) that would "establish and clearly define priorities, goals, and milestones regarding modernization of space launch capabilities for the Department of Defense or, if appropriate, for the Government as a whole."

The recommendations of the SLMP led DOD to implement the EELV program as the preferred alternative. The primary objective of the EELV program was to reduce costs by 25%. The program also sought to ensure 98% launch vehicle design reliability and to standardize EELV system launch pads and the interface between satellites and their launch vehicles. Congress supported these recommendations through the FY1995 NDAA ( P.L. 103-337 , Â§211), directing DOD to develop an integrated space launch vehicle strategy to replace or consolidate the then-current fleet of medium and heavy launch vehicles and to devise a plan to develop new or upgraded expendable launch vehicles. Congress recommended spending $30 million for a competitive reusable rocket technology program and $60 million for expendable launch vehicle development and acquisition.

The original EELV acquisition strategy, initiated in 1994, called for a competitive down-select to a single launch provider and development of a system that could handle the entire NSS launch manifest. In 1995, the Air Force selected four launch providers for the initial competition: Lockheed Martin, Boeing, McDonnell Douglas, and Alliant Techsystems. After the first round of competition, the Air Force selected Lockheed Martin and McDonnell Douglas to continue. When Boeing acquired McDonnell Douglas in 1997, Boeing took over the contract to develop an EELV. Soon thereafter, however, the Air Force revised the EELV acquisition strategy, concluding that there was now a sufficient space launch market to sustain two EELV providers.

Throughout the acquisition process, DOD maintained that competition between Lockheed Martin and Boeing was essential. At the time, the Government Accountability Office (GAO) reported that sufficient growth in the commercial launch business would sustain both companies, a premise that, in turn, would lead to lower launch prices for the government. But "the robust commercial market upon which DOD based its acquisition strategy of maintaining two launch companies [throughout the life-cycle of the program] never materialized, and estimated prices for future contracts, along with total program costs, increased."

Retaining two launch providers, however, did provide DOD with some confidence in its ability to maintain "assured access to space." This confidence soon collapsed, when in the late 1990s, the United States suffered six space launch failures in less than a year. These failures included the loss of three national security satellites in 1998-1999, at a cost of over $3 billion. One, a critical national security communications satellite (MILSTARâMilitary Strategic and Tactical Relay), was lost on a failed Titan IV launch in 1999. That satellite capability was not replaced until 2010 with an AEHF (Advanced Extremely High Frequency) satellite, which experienced substantial acquisition challenges and frequent changes in both design and requirements. The other two losses were an NRO reconnaissance satellite and a DSP (Defense Support Program) satellite. In addition to the cost, schedule, and operational impacts of these lost missions, including a classified national security loss in coverage with MILSTAR, these failures significantly influenced the transition to the EELV program, which had an initial goal to make national security space launches more affordable and reliable.

President Clinton directed a review of these failures and sought recommendations for any necessary changes. The subsequent Broad Area Review (BAR) essentially concluded that the U.S. government should no longer rely on commercial launch suppliers alone to provide confidence and reliability in the EELV program. Instead, the BAR recommended more contractor and government oversight through increasing the number of independent reviews, pursuing performance guarantees from the launch providers, and greater government involvement in the mission assurance process. Although these additional oversight activities eventually proved to significantly increase EELV costs, they also eventually led to notable improvements in launch successes.

The early 2000s saw considerable turmoil within the Air Force space community and among the EELV launch service providers due to competition in the shrinking space launch industrial base, cost increases, and the growing need for reliable access to space. During this time, the poor business prospects in the space launch market drove Lockheed and Boeing to consider leaving the market altogether. Therefore, to protect its objective of assured access to space, the U.S. government began to shoulder much of the EELV program's fixed costs.

To further protect the United States' ability to deliver NSS satellites into orbit, the George W. Bush Administration conducted a number of internal reviews that culminated in the 2004 National Security Policy Directive (NSPD)-40. This directive established the requirement for "assured access to space" and obliged DOD to fund the annual fixed launch costs for both Lockheed and Boeing until such time as DOD could certify that assured access to space could be maintained without two launch providers.

DOD thus revised its EELV acquisition strategy because of the collapse of the commercial launch market and the ongoing erosion of the space industrial base. GAO wrote that "in acknowledging the government's role as the primary EELV customer, the new strategy maintained assured access to space by funding two product lines of launch vehicles."

In 2006, The Boeing Company and Lockheed Martin announced plans to consolidate their launch operations into a joint ventureâULA. The companies argued that by combining their resources, infrastructure, expertise, and capabilities, they could assure access to space at lower cost. DOD believed that having two launch vehicle families (Atlas V and Delta IV) under one entity (i.e., ULA) provided significant benefits that outweighed the loss of competition. In October 2006, the Federal Trade Commission granted ULA antitrust clearance allowing the new company to form on December 1, 2006. As a result, "unparalleled EELV mission success" ensued, and the tradeoff over increased costs and reduced competition outside ULA was largely deemed acceptable.

Since 2006, the Air Force has procured space launches from ULA on a sole-source basis. The former EELV program focused primarily on mission successânot cost control. GAO reported, however, that by 2010 "DOD officials predicted EELV program costs would increase at an unsustainable rate" due to possible instabilities in the launch industrial base and the inefficient buying practice of purchasing one launch vehicle at a time. In 2009, SpaceX, a new entrant to the space launch industrial base, became the first private company to successfully develop a liquid fuel rocket that delivered a commercial satellite to orbit. However, SpaceX was not certified to compete for national security missions until 2005.

In response, DOD recognized a need to again reorganize the way it acquired launch services. Additional studies and internal reviews evaluated alternatives to the EELV business model, which in turn led to a new EELV acquisition strategy adopted in November 2011. The new acquisition strategy advocated a steady launch vehicle production rate. This production rate was designed to provide economic benefits to the government through larger buys, or block-buys, of launch vehicles, providing a predictable production schedule to stabilize the space launch industrial base. The new EELV acquisition strategy also announced the government's intent to renew competition in the program.

In addition to revising its acquisition strategy, DOD undertook significant efforts to obtain greater insight into ULA program costs in advance of contract negotiations. In May 2011, DOD solicited a Request for Information to prospective launch providers. In March 2012, DOD issued a sole-source solicitation for the block-buy to ULA, and in April 2012, the EELV program incurred a critical Nunn-McCurdy cost breach.

In December 2013, DOD followed through on its new EELV strategy, signing a contract modification with ULA committing the government to buy 35 launch vehicle booster cores over a five-year period, along with the associated infrastructure capability to launch them. DOD viewed this contract modification as a significant effort on its part to negotiate better launch prices through improved knowledge of ULA contractor costs. DOD officials expected the new contract to realize significant savings, primarily through stable unit pricing for all launch vehicles. However, some in Congress, and some analysts outside government, strongly disputed the DOD estimates of cost savings.

DOD announced that it would add up to 14 additional NSS launches to broader competition. However, in the FY2015 budget request, the Air Force announced that the number of EELV launches open to broader competition through FY2017 would be reduced from 14 to 7. Some Members of Congress, and SpaceX officials, raised questions about how many launches would ultimately be openly competed.

Perhaps resulting from turmoil associated with the Nunn-McCurdy cost breach, as well as the perceived instabilities mentioned above, the EELV acquisition strategy proceeded to a three-phased approach:

Phase 1 (FY2013-FY2019) would consist of the sole-source block-buy awarded to ULA to procure up to 36 cores and to provide 7 years of NSS launch infrastructure capability. Phase 1A (FY2015-FY2017) emerged as a modification to Phase 1 that would consist of opening up competition for NSS launches to new space launch entrants (such as SpaceX). The Air Force said it could award up to 14 cores to a new entrant over 3 years, if a new entrant became certified. Phase 2 (FY2018-FY2022) envisioned full competition among all launch service providers. The operational requirements, budget, and potential for competition are currently being worked on. Phase 3 (FY2023-FY2030) envisioned full competition with the award of any or all required launch services to any certified provider.

The Air Force's strategy appeared to fulfill the mandates to maintain assured access to space and introduce competition into the space launch market. To date, the NSSL program has launched more than 70 successful missions in support of the Air Force, the National Reconnaissance Office, and the U.S. Navy. ULA's Delta IV and Atlas V launch vehicles (which are older than the NNSL program) have performed over 90 consecutive successful missions, whereas SpaceX has performed five successful NSS launches.

Factors That Complicated EELV Acquisition Strategy

Several interrelated factors created uncertainty over the Air Force's ability to continue with the three-phased EELV acquisition strategy. These included ongoing concerns over program and launch costs, U.S. national security vulnerability from dependence on a Russian component in the EELV program (the RD-180 main engine), legal challenges to the acquisition strategy, and legislation that could change the EELV program.

In March 2012, the EELV program reported two critical Nunn-McCurdy unit cost breaches, which resulted in a reassessment of the program. The cost of the newly restructured program was estimated by GAO in March 2013 at $69.6 billion. This amount represented an increase of $34.6 billion, or about 100%, over the program's estimated cost of $35 billion from a year earlier. GAO identified several causes for this cost growth, including an extension of the program's life cycle from 2020 to 2030, an increase of the planned number of launch vehicles to be procured from 91 to 150 (an increase of 59%), the inherently unstable nature of demand for launch services, and instability in the industrial base. These causes related to changes in the scope of the program and reflected the industrial-base conditions under which the program was being undertaken; they did not appear to imply poor performance by the Air Force or the industry in executing the program. Even so, the overall increase in estimated program costs complicated the Air Force's challenge in funding the program within available resources without reducing funding for other program priorities. It also contributed to focusing attention on modifying their EELV acquisition strategy.

In addition, the costs of individual launches themselves came under renewed scrutiny. SpaceX and others asserted that the launch costs charged by ULA were significantly higher than what SpaceX would charge the U.S. government once it was certified by the Air Force to conduct NSS launches. Part of the challenge in verifying these claims, however, is that much of the detailed cost data are proprietary, not readily comparable, and some are speculative to the extent that there is little empirical data on which those costs are provided. Although the Air Force, GAO, ULA, and SpaceX have provided some launch cost data, it is not apparent the data are directly comparable or are calculated using the same cost model assumptions. In addition, because SpaceX has limited data directly related to NSS launches, its cost figures are not likely based on a long history of actual cost, performance, and reliability. Thus, the issue of reliable and consistent cost data for comparative purposes has been a source of frustration for many in Congress.

Reliance on the Russian RD-180 Main Engine

The original impetus for licensing the Russian RD-180 as the main engine for the Atlas V launch vehicle grew out of concerns associated with the 1991 collapse of the Soviet Union. At the time, the CIA and others expressed serious concern about the potential export and proliferation of Russian scientific and missile expertise to countries hostile to U.S. interests. These concerns in turn spurred a U.S.-Russian partnership to acquire some of Russia's heavy lift rocket engine capabilities, thus expanding upon existing Cold War civil space cooperation. Initially, this took the form of a license agreement between Energomash NPO and RD Amross (of Palm Beach, FL) for the coproduction of the RD-180 engine as part of the EELV acquisition strategy. This later changed in an acquisition revision to simply purchase and stockpile roughly two years' worth of the engines for the Atlas V, an approach that was then viewed as highly cost-competitive. The existing license agreement for purchasing RD-180 engines extends to 2022.

In subsequent years, some Members of Congress and policy experts occasionally expressed concern over the potential vulnerability of the EELV program based on reliance on a single critical Russian component. For instance, the FY2005 defense authorization act ( P.L. 108-375 , Â§912) directed DOD to examine future space launch requirements. The resulting 2006 RAND study concluded that "the use of the Russian-manufactured RD-180 engines in the Atlas V common core is a major policy issue that must be addressed in the near term." Similar concern was noted by GAO in 2011: "the EELV program is dependent on Russian RD-180 engines for its Atlas line of launch vehicles, which according to the Launch Enterprise Transformation Study, is a significant concern for policymakers."

In the FY2013 defense authorization act ( P.L. 112-239 , Â§916), Congress directed DOD to undertake an "independent assessment of the national security implications of continuing to use foreign component and propulsion systems for the launch vehicles under the evolved expendable launch vehicle program." None of these concerns, however, led the Air Force to change its EELV acquisition strategy or to seek a change in legislation governing that strategy.

After Russian incursions in Ukraine triggered U.S. sanctions in 2014, Russian backlash against those sanctions heightened alarm over the potential vulnerability of the EELV program and catalyzed the desire for change. In March 2014, the United States imposed sanctions on various Russian entities and persons, including Deputy Prime Minister Dimitry Rogozin, the official overseeing export licenses for the RD-180 rocket engine. In retaliation, Rogozin announced that "we can no longer deliver these engines to the United States unless we receive guarantees that our engines are used only for launching civilian payloads." Precise details of what Rogozin meant, and whether any changes would be implemented, were unclear.

Many observers in the United States were increasingly concerned, however, that Russia could suddenly ban all exports of the engine to the United States, or ban exports for military use to some degree. To many outside of the Air Force and ULA, that uncertainty raised serious questions about the longer-term viability of the EELV program, and pointed to a need to completely shed U.S. reliance on the RD-180 as soon as practicable. Congress has since taken steps in each of the past several defense authorization bills (described below) to end this reliance and develop an alternative, domestic-produced U.S. main engine.

Although the Air Force committed in principle to this ultimate outcome, some in Congress questioned if Air Force efforts were proceeding at an acceptable pace. As the Air Force pursues the congressional mandates to eliminate dependence on the RD-180 engine and continue to transition to a truly competitive launch market, it foresees major challenges. These include ULA's recent retirement of the Delta IV Medium in August 2019, the fact that SpaceX is currently the only other space launch provider awarded NSS mission requirements, and restrictions on acquisition of the RD-180 engine during this interim period that affect the Atlas V launch schedules.

Legislative and Industry Options to Replace the RD-180

In spring 2014, DOD formed a commission to bring together various experts to examine the risks, costs, and options for dealing with the potential loss of the Russian RD-180 rocket engine in the EELV program. The 2014 Mitchell Commission recommended accelerating purchases of the RD-180 under the existing licensing agreement to preserve the EELV Phase 1 block-buy schedule and to facilitate competition in Phases 1A and Phase 2. The commission did not recommend coproducing the RD-180 in the United States, but instead recommended spending $141 million to begin development of a new U.S. liquid rocket engine to be available by 2022, to coincide with the end of Phase 2 in the EELV acquisition strategy.

Congress has remained supportive of sustaining current space access capabilities while working toward developing a U.S.-made main rocket engine to replace the RD-180. The FY2015 NDAA permitted ULA to use RD-180 Russian engines purchased before Russia's intervention in Ukraine for continued national security space launch missions if the Secretary of Defense determined it was in the national security interest of the United States to do so. The FY2016 NDAA increased this number to nine RD-180s in order to help maintain competitors in the NSS launch market for a longer period, while the market transitions away from the RD-180 and toward a new domestic-produced rocket engine.

The FY2017 NDAA increased the number of the Russian RD-180 rocket engines authorized to be used to a total of 18 rocket engines, beginning with the enactment of the FY2017 NDAA and ending on December 31, 2022. The defense bills since the FY2017 NDAA have not amended the total number of Russian RD-180 rocket engines authorized to be used.

The Air Force identified four main priorities in NSSL: mission success, innovative mission assurance, transitioning to new launch vehicles, and assured access for future space architectures.

DOD expects to achieve cost saving through acquisitions and operability improvements that consist of the use of common components and infrastructure, standard payload interfaces, standardized launch pads, and reducing on-pad processing. To improve acquisitions, the program offers block buys of launch vehicles and competition between certified providers. The competitions are accomplished through two contract vehicles: Launch Service Agreements (LSA) and Launch Service Procurement (LSP) awards:

Launch Service Agreement (LSA) awards are a set of three Air Force RDT&E awards intended to facilitate the development of three domestic launch system prototypes. DOD awarded LSA's to ULA, Northrop Grumman, and Blue Origin in October 2018. Launch Service Procurement (LSP) is an ongoing procurement competition that is currently in Phase 2. The second phase is a 5-year procurement of approximately 34 launches starting in 2022. The Air Force plans to select two space launch providers in 2020.

United Launch Alliance, Northrop Grumman, SpaceX, and Blue Origin have submitted bids for phase two, with each company proposing their rocket designs: Vulcan, OmegA, Falcon, and New Glenn, respectively. The two companies selected will share the NSSL notional manifest for the next five years. Phase 1 and Phase 1A awards were made to ULA and SpaceX. DOD has identified 18 active contracts for the NSSL program with obligations awarded to six companies (see Figure 1 ).

ULA and SpaceX are currently the only space launch providers certified to launch NSS payloads into orbit. The main focus for ULA is on developing a next-generation launch vehicle called the Vulcan. In July 2014, ULA signed commercial contracts with multiple U.S. liquid rocket engine manufacturing companies to investigate next-generation engine concepts. ULA selected Blue Origin (Kent, WA) BE-4 engine to power its Vulcan launch vehicle.

Although there are important differences in how to achieve it, widespread support appears to exist across the space community and within Congress for the NSS requirement for robust competition and assured access to space. The recurring challenge since the start of the NSSL program has been how best to pursue this requirement while driving down costs through competition and ensuring launch reliability and performance. The Air Force decision of down-selecting no more than two launch providers and award two separate Launch Service Procurement (LSP) contracts in the summer of 2020 is not without potential implications and could have second- and third-order effects. Congress may consider the following:

Directing the Air Force to provide a report on the cost-benefit analysis of selecting more than two launch providers. Drafting legislative in the NDAA for FY2021 authorizing additional funds that allows the Air Force to diversify its launch provider options by continuing to provide development funds through LSA awards to launch companies not selected for LSP contracts in Phase 2. Directing the Air Force to provide a report on the cost saving and associated risk using both reusable and expendable launch vehicles for future solicitations.

Lastly, efforts to transition away from the RD-180 to a domestic U.S. alternative engine or launch vehicle are not without technical, program, or schedule risks. Even with a smooth, on-schedule transition away from the RD-180 to an alternative engine or launch vehicle, the performance and reliability record achieved with the RD-180 to date would likely not be replicated until well beyond 2030 because the RD-180 has approximately 81 consecutive successful civil, commercial, and NSS launches since 2000.