- The U.S. Department of Transportation's (DOT) Transportation Infrastructure Finance and Innovation Act (TIFIA) program was established in 1998 to help finance the construction of domestic surface transportation projects by providing credit assistance to various entities, including state and local governments, transit agencies, private companies and railroad companies.
- Recent announcements as a result of DOT technology-related initiatives are creating new opportunities and avenues for TIFIA to support the financing of innovative transportation technologies.
- A recent DOT report also paves the way for hyperloop projects – among other innovative transportation technologies – to obtain financing from the federal government, including through the TIFIA program.
The U.S. Department of Transportation's (DOT) Transportation Infrastructure Finance and Innovation Act (TIFIA) program was established in 1998 to help finance the construction of domestic surface transportation projects by providing credit assistance to various entities, including state and local governments, transit agencies, private companies and railroad companies. While this credit assistance is available to recipients in the form of direct loans, loan guarantees and lines of credit – it is traditionally not available for more innovative transportation technologies. However, recent announcements as a result of DOT technology-related initiatives are changing this precedent, as well as creating new opportunities and avenues for TIFIA to support the financing of innovative transportation technologies.
In April 2019, DOT Secretary Elaine Chao established the Nontraditional and Emerging Transportation Technologies (NETT) Council through DOT Order 1120.34. As set forth in the order, NETT was created to resolve jurisdictional and regulatory gaps associated with nontraditional and emerging transportation projects and to coordinate the DOT's engagement with project stakeholders.
The hyperloop is one example of a nontraditional and emerging transportation technology that has attracted significant attention in recent years, but would have faced significant obstacles to deployment in the absence of federal funding. Because the hyperloop is a mode of transportation that is different from traditional modes such as air, vehicle and rail, the DOT had to first determine which of its various agencies would exercise regulatory jurisdiction. In a July 2020 report, Pathways to the Future of Transportation, the DOT announced that the Federal Railroad Administration (FRA) possesses oversight authority over the hyperloop. In addition to enabling hyperloop companies to obtain safety certification from a federal agency, this announcement also paves the way for hyperloop projects to obtain financing from the federal government, including through the TIFIA program. Based on its past success in enabling the creation and acceleration of surface transport projects, there is reason to believe that the TIFIA program may encourage the proliferation of hyperloop projects in the United States. Further, since hyperloop projects would presumably be able to repay TIFIA program loans through a dedicated source of revenue (e.g., tickets) and lend themselves to public-private partnerships, it follows that hyperloop projects would appear to be ideal recipients of TIFIA program financing.
Moreover, the July 2020 guidance document allows for the deployment of a broader suite of innovative transportation technologies that could presumably be used to spur the adoption of innovative clean transportation projects across the rail vehicles, intelligent transportation systems, advanced air mobility and beyond. While clean energy deployment through NETT has not been a focus of the Trump Administration, the establishment of the NETT Council, announcements such as the hyperloop declaration, and the July 2020 report create a strong foundation for the utilization of this program to meet city, state and federal decarbonization goals in the months and years to come. This is a particularly compelling opportunity given the significant amount of funding appropriated to TIFIA each year in combination with the budget constraints that will inevitably lie ahead.
In sum, the July 2020 report is pivotal for the successful advancement of hyperloop projects across the U.S. Simultaneously, this development creates a foundation for advancing innovative transportation technologies that are not likely to be commercially financeable in the absence of government assistance.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.