Transit Mega Projects: Legal Issues (2023)

digest may also be useful for transportation agency managers, procurement officers, planners, engineers, and financial managers.

The researchers began by defining and characterizing transit mega projects, as discussed further in Section III. Using this definition and characterization, areas of inquiry were developed that represent legal themes that are commonly faced in developing transit mega projects. The researchers relied on professional experience and involvement in the legal aspects of developing transit mega projects as the basis for development of this initial list of inquiry areas. They then conducted desktop legal research to review applicable laws, regulations, guidance, and secondary materials covering these topics.

Given the range and complexity of legal issues that arise in transit mega projects, the researchers identified a shortlist of ongoing and completed mega projects through which to investigate common legal themes. Thereafter, they contacted individuals in positions of authority with direct experience on these projects to interview them. Representatives from a subset of these cases agreed to in-depth interviews from which the team further developed its themes and analysis.

The results of these interviews were combined with the desktop legal research to provide five illustrative core case studies, which serve as reference points for the balance of this digest. Where appropriate, the researchers complemented this discussion with additional examples from other contexts.

B. Key Documents

The researcher conducted desktop research across multiple sources to refine the candidate case studies. An illustrative list of key documents consistently consulted (and revisited) includes:

• Federal and state statutes, administrative rules, and guidance;
• Federal and state court decisions;
• National Environmental Policy Act (NEPA) documents;
• Funding agreements, contracts, and other transactional documents; and
• Project specific websites, public presentations, board materials.

C. Screening

The researchers conducted preliminary research and informal interviews for fourteen projects delivered across eleven states.⁴ These projects were then screened based on project status, potential for meaningful insight, and staff availability. Agency staff, lawyers, and key project personnel involved and available to share insights and successes were contacted. But as a practical matter, litigation and ongoing contractor claims foreclosed access to certain “candidate” case studies beyond publicly available information. The researchers also considered the full range of issues from project conception through delivery (e.g., the critical requirement to finalize agreements with railroads prior to applying for a Full Funding Grant Agreement (FFGA); harmonization of regulations from multiple funding agencies; and negotiating and navigating public-private partnerships). From the initial pool of candidate projects, and from the initial fourteen projects identified during scoping, five projects were selected.

D. Interviews

The researchers conducted seven formal interviews in the summer and fall of 2021 to develop five case studies. Interview questions were provided to participants in advance to facilitate more substantive, detailed conversation. The list of interview questions used are included as Appendix C to this digest. The researchers then pulled common themes from interview responses and used those themes to determine key areas of focus and analysis for this digest’s discussion. High level summaries of the interviews are included as Appendix D.

The interviews helped identify key legal issues encountered in transit mega projects and this digest describes lessons learned by transit agencies. However, since every project is unique, and every transit agency is subject to different state statutory frameworks and case law, the lessons learned may not necessarily be generalized for other projects.

III. TRANSIT MEGA PROJECTS: AN OVERVIEW

A. What Is a Transit Mega Project?

While there is no single, generally accepted standard definition of a “transit mega project” in the United States, the term usually refers to capital projects that (1) involve design and construction, (2) of transit infrastructure (i.e., public transportation, infrastructure, systems, and not just the procurement of rolling stock), which are both (3) large in scale, and (4) have one or more other indicia of relatively greater complexity relative to what is typical for a particular jurisdiction, agency, or modality (e.g., with respect to engineering challenges, funding, permitting, inter-party coordination).

A common and readily quantifiable means of determining the scale of a project is its overall cost. Such a focus on project cost as a defining characteristic also aligns with past federal statutory definitions. For example, Congress previously defined “mega project” under the public transportation provisions of the United States Code as “a project with an estimated total cost of $1 billion or more.”⁵ Although that definition was eliminated by Congress in 2012,⁶ this amount nevertheless serves as a use-

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⁴ CA: BART Silicon Valley Extension; CA: California High-Speed Rail; CO: Eagle P3; HI: Honolulu Area Rapid Transit; IL: Red-Purple Line Modernization; MA: Silver Line Gateway Project; MD: Purple Line; NJ: Hudson-Bergen Light Rail; NY: East Side Access Project; NY: Second Avenue Subway; TX: Houston Light Rail; TX: Project Connect; VA: Virginia Capacity Projects; WA: East Link Extension.

⁵ 49 U.S.C. § 5327(f) (amended 2012).

⁶See MAP-21, Pub. L. 112–141, § 20020(2), 126 Stat. 405, 708. Following the elimination of the $1 billion designation the formal “mega project” designation no longer existed for certain highway projects valued in excess of $1 billion. However, current federal law does account for major project designations in various related contexts, including FTA’s “major capital project” definition under 49 C.F.R.

ful metric for defining what constitutes a transit mega project. While any dollar amount is somewhat arbitrary, projects of $1 billion or more occupy, for now, a fairly rarefied space that often correlates to issues of a nature and complexity that set them apart from smaller projects. This results in large measure because increased costs are often not just a function of size but also of complexity and risk. Thus, for the purpose of this digest, $1 billion is used as the threshold for determining a transit project to be a mega project.

The “transit” component of transit mega projects differentiates such projects from other infrastructure mega projects. This is true not just for projects in other sectors, such as water and energy infrastructure, but even with respect to other types of transportation projects, such as on the federal highway system. As may be gleaned from the discussion below, transit mega projects resemble and sometimes borrow from other types of mega projects. This is particularly the case for passenger rail projects more broadly, which may not receive funding from the FTA or be subject to its conditions and requirements, but may nevertheless be similar in many other respects, including similar federal regulatory requirements. The specific mechanisms for federal public funding of transit projects make the requirements unique to public transportation.

These two basic elements—valuation in excess of $1 billion, and the transit sector context itself—inform a host of other factors that can generally be said to set transit mega projects apart from other capital projects. Most immediately, within transit, the dollar-value threshold results in most mega projects including elements of “fixed guideway” projects, largely because the cost threshold for transit mega projects normally means that it includes the acquisition of property and the construction of infrastructure specifically or uniquely serving public transportation. The federal statute defines “fixed guideway” as “a public transportation facility—(A) using and occupying a separate right-of-way for the exclusive use of public transportation; (B) using rail; (C) using a fixed catenary system; (D) for a passenger ferry system; or (E) for a bus rapid transit system.”⁷ The most common form of fixed guideway transit system are rail systems. Transit mega projects are more likely to involve construction of costly, capital-intensive facilities like fixed guideway systems or multimodal stations that incorporate multiple transit modes.

In addition, while transit mega projects generally follow the same project phases—planning, environmental, permitting, right-of-way acquisition, funding, financing, design, engineering, construction, and commissioning—the complexity of these phases are compounded by the project size. Because of their size and complexity, transit mega projects also more often involve a larger number of jurisdictions, partners, funders, and regulators with whom a project sponsor must coordinate or contract. Size also dictates other characteristics indirectly, such as federal involvement in funding and the resulting funding conditions and obligations. Transit mega projects therefore virtually always involve the entity that administers federal funding for and regulation of transit, the FTA, although other transportation-specific agencies often play important roles if their jurisdictions fall within the project boundaries.

B. Key Characteristics of Transit Mega Projects

This section of the digest highlights three common characteristics of transit mega projects in the United States: (1) their multi-jurisdictional nature, (2) the role and nexus of federal funding, and (3) the presence of elevated project risks. These characteristics are expounded in later sections of this digest. Many more common characteristics exist; however, these three elements illuminate the core issues that arise in transit mega projects—a sea of corresponding interests and, at times, competing priorities driven by more than a strict transportation need. Transit mega projects are more complex than building the fastest, most efficient transportation facility. Therefore, attorneys advising on transit mega projects must have a keen sense of all the parties involved and each party’s nuanced role, as well as how the project’s risk profile might evolve over time from project conception through operations.

1. Multi-Jurisdictional Nature

One key characteristic of transit mega projects is the involvement of multiple jurisdictions, which may hold both complementing and, at times, competing interests. As a result of their size and function, transit mega projects often extend beyond the geographical jurisdiction of a single governmental unit. The multi-jurisdictional scope of transit mega projects necessitates local, state, and federal coordination.⁸

At the local level, projects are crafted by the social and economic values of key stakeholders that seek to influence the outcome of the transit mega project. While local stakeholders may start with a unifying vision, along the life of a project corresponding priorities (like the need for a new facility) may morph into competing priorities (e.g., the impact of station location(s) on costs, operational performance, and regional

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§ 633.5 (2022) (total project costs of $300 million or more, $100 million or more of federal funding, and expenditure not limited to vehicles or rolling stock), FHWA’s discretionary designation for “major projects” with costs of $500 million or more, and the “major project” designation” for purposes of the one federal decision environmental review under 23 U.S.C. § 139(a)(7) which focuses not on a dollar value but on projects requiring multiple permits, approvals, reviews or studies under federal law other than NEPA.

⁷ 49 U.S.C. § 5302(8).

⁸ As described in Section IV.I.1. of this digest, in most cases, the multi-jurisdictional nature of mega projects requires some form of agreement or understanding between the parties as to roles, responsibilities, and rights as well as the regional needs of the area. This often takes the form of an intergovernmental agreement. Intergovernmental agreements are interpreted and construed under the principles of contract law. In order to be valid, the governmental parties to an intergovernmental agreement must have adequate authority to enter into such an agreement. In negotiating intergovernmental agreements, project sponsors should expect to engage early on with regional planning associations, state and local governmental agencies, as well as the public to avoid unnecessary delays, issues and misunderstandings.

economic activity). The multi-jurisdictional nature of transit mega projects may inform who should be the project sponsor.

Beyond local jurisdictional considerations, there also exists a suite of state and federal interests.⁹ These external stakeholders maintain different types of responsibility and authority, all of which must be coordinated to successfully deliver a transit mega project. And yet further removed, although not readily apparent, transit mega projects directly benefit from (or rely upon) the international transfer of technologies and the procurement of key components.¹⁰

Therefore, it is incumbent upon attorneys advising on transit mega projects to have a clear sense of all the parties involved and the nuanced roles they may play within their respective jurisdictions; for where one entity’s authority ends, another’s begins.

2. Federal Funding and Oversight

Another key characteristic of transit mega projects is the presence of federal funding and oversight, primarily by the FTA. The sheer size of transit mega projects and their connection to interstate commerce and mobility virtually guarantees federal involvement. The federal government has a multifaceted role in any transit mega project, but primarily provides funding support, which accounted for approximately one-sixth of the $79 billion spent on public transit in 2019.¹¹ In fact, from 2016 to 2019, annual federal funding for public transportation averaged $13 billion dollars.¹² The recent passage of the IIJA adds to this number by providing unprecedented federal funding for rail improvement projects across the United States. The IIJA contains $102 billion in total rail funding, including $66 billion from advance appropriations, and $36 billion in authorized funding.¹³

The FTA is the federal agency primarily responsible for the administration of federal funds for non-highway public transportation projects. The FTA provides this funding through non-discretionary, formula-based programs such as the Urbanized Area Formula Program,¹⁴ and through discretionary programs like the CIG Program.¹⁵ From 2016 to 2019, approximately $3 billion of the $13 billion in annual federal transportation funding went to the CIG Program.¹⁶ The IIJA authorizes $3 billion per year in annual appropriations for the CIG Program, including funding that may be awarded under the Expedited Project Delivery Pilot Program.¹⁷ In addition, the IIJA directly provides $1.6 billion per year in advance appropriations as a supplement to annual appropriations for the CIG Program.¹⁸

Public transportation entities must apply for CIG funds, which are awarded after a competitive, multi-step process.¹⁹ The FTA rates projects pursuant to statutory evaluation criteria.²⁰ Successful CIG applicants must also sign an FFGA, a key nexus by which a host of federal laws and requirements are incorporated into a transit mega project, including environmental compliance provisions (as discussed below in Section IV.E.) and procurement rules (as detailed below in Section IV.C.).²¹

Beyond its funding role, the FTA also provides oversight and guidance on federal requirements, conditions, and obligations to which project sponsors and CIG recipients must adhere. The FTA has published Project Management Oversight Procedures to assist project sponsors on critical topics such as project management, value engineering, quality assurance, project delivery method, and third-party agreements.²² Even where the federal government (or more specifically, the FTA) provides a relatively small proportion of overall project funding, federal requirements will still apply to the entire project (for further discussion of federal requirements tied to project funding in see infra Section IV.B.). Accordingly, attorneys advising on transit mega projects must understand the need for federal funding, the specific funding program or source, and all accompanying requirements to ensure that the project is properly planned and executed.

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⁹ In situations where multiple states are involved, interstate compacts generally require some form of approval by each state legislature and consent by Congress. Often, transportation-related interstate compacts establish the governing entity controlling a major interstate service, system, or infrastructure. Examples of transit-related interstate compacts are the Port Authority of New York and New Jersey (compact between New York and New Jersey), Washington Metropolitan Area Transit Compact (between Maryland, Virginia, and Washington, DC to establish WMATA for the DC area), and the Connecticut-New York Railroad Passenger Transportation Compact (between New York and Connecticut to establish passenger rail service between New York City and New Haven, Connecticut). Understanding the intricacies of any pertinent interstate compact is crucial to success of a transit mega project.

¹⁰See, e.g., Memorandum of Cooperation on Strengthening Efforts to Combat Climate Change and Economic and Trade Relations between the Government of Japan and the State of California, the United States of America (March 21, 2022), https://www.sf.us.emb-japan.go.jp/files/100319559.pdf; Programs, CALIFORNIA HIGH-SPEED RAIL AUTHORITY (2022), https://hsr.ca.gov/programs/.

¹¹ CONGRESSIONAL BUDGET OFFICE, 57940, FEDERAL FINANCIAL SUPPORT FOR PUBLIC TRANSPORTATION 1 (2022).

¹²Id.

¹³Bipartisan Infrastructure Law Information from FRA, FED. R.R. ADMIN (June 14, 2022) https://railroads.dot.gov/BIL.

¹⁴ 49 U.S.C. § 5307.

¹⁵ 49 U.S.C. § 5309.

¹⁶ CONGRESSIONAL BUDGET OFFICE, 57940, FEDERAL FINANCIAL SUPPORT FOR PUBLIC TRANSPORTATION 4 (2022).

¹⁷ Infrastructure Investment and Jobs Act, Pub. L. No. 117-58, § 30005, 135 Stat. 429, 894-900 (2021) (codified as amended at 49 U.S.C. § 5309); Fact Sheet: Capital Investment Grants Program, FED. TRANSIT ADMIN. (Jan. 3, 2022), https://www.transit.dot.gov/funding/grants/fact-sheet-capital-investment-grants-program.

¹⁸Fact Sheet: Capital Investment Grants Program, FED. TRANSIT ADMIN. (Jan. 3, 2022), https://www.transit.dot.gov/funding/grants/fact-sheet-capital-investment-grants-program.

¹⁹See U.S. DEP’T OF TRANSP., FINAL INTERIM POLICY GUIDANCE FEDERAL TRANSIT ADMINISTRATION CAPITAL INVESTMENT GRANT PROGRAM 2 (2016).

²⁰Id. at 10.

²¹See FTA, Circular C 5200.1A, Full-Funding Grant Agreements Guidance, Chapter III: Terms, Conditions, and Attachments (Feb. 27, 2020) https://www.transit.dot.gov/regulations-and-guidance/fta-circulars/full-funding-grant-agreements-guidance#chapter3.

²²See Project Management Oversight Procedures, FED. TRANSIT ADMIN., (May 23, 2022) https://www.transit.dot.gov/regulations-and-guidance/project-management-oversight-procedures.

Furthermore, while the FTA may be the primary funding agency for transit projects at the federal level, other federal modal agencies often play a supporting role. These agencies include the FRA,²³ the Federal Highway Administration (FHWA), and the Surface Transportation Board (STB); their roles are generally a function of jurisdictional scope or the funding of joint infrastructure. For example, the FRA has jurisdiction over the safety of railroad passenger operations including, but not limited to, shared use operation of light rail passenger service on the general railroad system.²⁴ And, the STB has jurisdiction over rail line sales, and may become involved where a transit authority acquires an active rail line for provision of rail passenger or light rail services.²⁵

Similarly, there are other federal programs that may be used to fund and finance transit mega projects, such as the Rebuilding American Infrastructure with Sustainability and Equity (RAISE) (formerly BUILD and Transportation Investment Generating Economic Recovery (TIGER)) grants,²⁶ Infrastructure for Rebuilding America (INFRA) grants,²⁷ and Transportation Infrastructure Finance and Innovation Act (TIFIA) loans,²⁸ which are described with greater detail in Section IV.B (Funding and Financing).

Therefore, attorneys advising on transit mega projects should identify the applicable (and potential) federal funding sources and modal agencies. This preliminary step is critical to understanding what federal obligations and requirements may be triggered on a transit mega project. Experience suggests that understanding these agencies’ oversight roles, and working with them early, can avoid serious funding and compliance setbacks later in the project.

3. Project Risks

The third key characteristic of transit mega projects is best considered under the umbrella of project risks. The high cost of transit mega projects is well correlated with a high degree of complexity. Transit mega projects require an enormous amount of political capital, and as a result represent highly visible promises to the public. Simply put, satisfying a transit mega project’s purpose and needs implies overcoming elevated levels of project risks such as: engineering challenges, land use and resource considerations, and stakeholder coordination. In turn, these touchpoints dictate a high cost, which further implicates both the multi-jurisdictional considerations and federal funding role noted above.

While the federal government is often the primary funder of transit mega projects, federal funds are generally insufficient to fully fund a project by design. The FTA and other federal agencies are generally required by statute to condition federal grants on matching non-federal funds. In fact, projects that provide higher local matches are rated higher under discretionary funding programs like the CIG.²⁹ Therefore, transit mega projects must seek multiple funding sources. As an inherent result, project sponsors often wrestle with complex funding arrangements that grow increasingly complex in proportion to the project’s risk profile and expanded stakeholder list.

The identification, allocation, and mitigation of risks becomes one of an attorney’s primary concerns on transit mega projects. Typically, the topic of risk is generated by fiscal realities and requirements, but the topic inevitably touches every aspect of the project, including: project structure, procurement, engineering, environmental due diligence, safety, physical construction, and regulatory oversight—to name but a few. Additionally, the private sector’s role is increasing through the growth of public-private partnerships (P3s) wherein private entities are responsible for various aspects of developing and delivering transit mega projects. As a result, advising on transit mega projects has grown more complex to include ensuring that funding and financing arrangements align with stakeholder incentives, and to ensure that all risks are properly allocated. This requires understanding the project’s fiscal elements, and how a project’s risk profile evolves over time, from project conception through operation.

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²³See infra Section IV.B.1. for a more detailed discussion of FRA’s funding role.

²⁴ 65 Fed. Reg. 42528 (July 10, 2000).

²⁵ The acquisition of an active rail line and the corresponding common carrier obligation ordinarily requires STB approval. For acquisitions by a noncarrier, the standard for approval is set forth at 49 U.S.C. § 10901, even if the acquiring entity is a state. See Mass. Dep’t of Transp.—Acquis. Exemption—Certain Assets of CSX Transp., Inc., No. FD 35892, slip op. at 3 (STB served Mar. 19, 2015), https://dcms-external.s3.amazonaws.com/MPD/62491/78A4B30DE03B079385257E0C005B8245/44313.pdf; see also Common Carrier Status of States, State Agencies & Instrumentalities, & Pol. Subdivisions, 363 I.C.C. 132, 133 (1980), aff’d sub nom. Simmons v. ICC, 697 F.2d 326 (D.C. Cir. 1982). However, under the Board’s State of Maine line of precedent, a noncarrier’s acquisition of an ownership interest in the physical assets of a rail line (such as track or right-of-way) does not constitute the sale of a rail line within the meaning of 49 U.S.C. § 10901, provided that the arrangement establishes that: (1) the selling freight rail carrier retains (or transfers to another carrier) a permanent freight rail operating easement that is exclusive with respect to the noncarrier, together with the common carrier obligation on the line; and (2) the terms of the sale would protect the carrier from undue interference with the provision of common carrier freight rail service. See Maine, Dep’t of Trans.—Acquis. and Operation Exemption—Maine Cent. R.R. Co. 8 I.C.C.2d 835, 836-37 (May 20, 1991); see also Santa Cruz Cnty. Reg’l Transp. Comm’n––Pet. for Declaratory Ord., No. FD 36213, slip op. at 2-3 (STB served Oct. 24, 2018), https://dcms-external.s3.amazonaws.com/MPD/62491/F50388BBA07C861B8525832F0073E445/46596.pdf; Mass. Dep’t of Transp.––Acquis. Exemption––Certain Assets of CSX Transp., Inc., No. FD 35312, slip op. at 4-5 (May 3, 2010), https://dcms-external.s3.amazonaws.com/MPD/62491/6478E6C9C74BFF7985257718006E09F6/40677.pdf.

²⁶RAISE Discretionary Grants, U.S. DEP’T OF TRANSP. (Jan. 28, 2022), https://www.transportation.gov/RAISEgrants.

²⁷The INFRA Grants Program, U.S. DEP’T OF TRANSP. (March 21, 2022), https://www.transportation.gov/grants/infra-grants-program.

²⁸TIFIA Credit Program Overview, U.S. DEP’T OF TRANSP. (March 30, 2021), https://www.transportation.gov/buildamerica/financing/tifia/tifia-credit-program-overview.

²⁹ FED. TRANSIT ADMIN., FINAL INTERIM POLICY GUIDANCE FEDERAL TRANSIT ADMINISTRATION CAPITAL INVESTMENT GRANT PROGRAM 35 (2016).

C. Project Profiles

Notwithstanding the common key characteristics shared across transit mega projects, there is also a wealth of diversity. Each transit mega project is situated within a unique context. These projects are governed by the specific needs and priorities of the communities they serve and are subject to funding constraints and opportunities. Each project encounters its unique challenges along the way to completion. With the incredible diversity in transit mega projects, it can sometimes be a challenge to make general assertions.

Providing context is key, and reference to specific transit mega projects may further assist in contextualizing the issues encountered and lessons learned. Accordingly, five feature projects were employed to supplement and illuminate the general research conducted.³⁰ These five projects and broader experiences provide deeper insight into the legal issues that may arise in transit mega projects.

1. The Colorado Eagle P3 Project

The Colorado Eagle P3 Project is a 36.5-mile commuter rail transit system located in the Denver, Colorado, metropolitan area.³¹ The Eagle P3 Project is also part of the larger FasTracks Program, a voter-approved initiative designed to expand rail and bus transit across the Denver metropolitan region.³²

The now-completed project consists of five major elements: The A, B, and G lines, 56 commuter rail cars, and a commuter rail maintenance facility.³³

• The A Line consists of 22.8 miles of commuter rail and five transit stations, which extends east from Denver Union Station to the Denver International Airport;
• The B Line consists of 6.2 miles of commuter rail and runs from the Denver Union Station to the City of Westminster;
• The G Line consists of 11.2 miles of commuter transit rail, includes six transit stations, and extends from the Denver Union Station to the City of Wheat Ridge; and
• The Commuter Rail Maintenance Facility (CRMF), which is located adjacent to the B and G Lines, includes a control center, a maintenance shop, and a rail storage yard.

The Denver Regional Transportation District (RTD) is the responsible transit agency for the Eagle P3 Project.³⁴ The Colorado legislature created the RTD in 1969 to develop, operate, and maintain the region’s mass transportation system. The RTD is governed by a 15-member elected Board of Directors, with each director serving a four-year term.³⁵ RTD’s jurisdictional area includes eight counties and a service area of over three million people. Among other things, RTD’s statutory authority may be found, at least in part, in Colorado Revised Statutes Title 32, Article 9.³⁶

The Eagle P3 Project cost $2.2 billion and was funded and financed by federal, state, local, and private sources. The bulk of the project, $1.03 billion, was funded through an FTA New Starts FFGA. The project also received a $280 million TIFIA loan. Additional sources of funding and finance include $40 million in state and local contributions, $396.1 million in private activity bonds, and $54.3 million in private equity.³⁷

The Colorado Eagle P3 Project was delivered through a design-build-finance-operate-maintain (DBFOM) agreement made between the RTD and the project’s concessionaire, Denver Transit Partners, LLC. Under the concession agreement, availability payments are made by the RTD to the concessionaire over a term of 34 years.³⁸

The Eagle P3 Project is considered the first public-private partnership (P3 or PPP) for commuter rail in the United States to include design-build, financing, and long-term operations.³⁹

2. The Transforming Rail in Virginia Initiative

The Transforming Rail in Virginia Initiative is a multibillion-dollar program of projects, that include the Commonwealth of Virginia, Amtrak, CSX Transportation (CSXT), the Virginia Railway Express (VRE), and Norfolk Southern Railway.⁴⁰ These projects aim to double Amtrak state-supported service, increase the VRE’s service lines, and modernize stations to meet both existing and growing future demand for freight and passenger rail service in the corridor.⁴¹

According to some estimates, auto travelers experience 320 million hours of delay annually due to congestion across Virginia and the Washington metropolitan region. The limited ability to expand the interstate corridors, has made passenger rail a viable, cost-effective solution, both in the near and long

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³⁰ Although they are included in the five examples, The California High-Speed Rail and Transforming Rail in Virginia projects are not formal FTA transit projects. But, they are mega projects that offer critical insights into the inherent legal challenges faced by transit mega projects.

³¹Project Profile: Eagle Project, U.S. DEP’T OF TRANSP.: FED. HIGHWAY ADMIN. https://www.fhwa.dot.gov/ipd/project_profiles/co_eagle_project.aspx (last visited June 7, 2022) [hereinafter Project Profile: Eagle Project].

³²Eagle P3 Project, RTD-DENVER, https://www.rtd-denver.com/reports-and-policies/facts-figures/eagle-p3-project (last visited June 7, 2022).

³³Id.

³⁴ U.S. DEP’T OF TRANSP., EAGLE COMMUTER RAIL, DENVER COLORADO 1 (2016), https://www.transit.dot.gov/sites/fta.dot.gov/files/CO-Denver-Eagle-Commuter-Rail-FY-18-Profile.pdf.

³⁵ RTD, 2021 AGENCY PROFILE AND FACTS 32 (2021), https://www.rtd-denver.com/sites/default/files/files/2021-04/FactBook_2021_final-web-March31_0.pdf.

³⁶ COLO. REV. STAT. tit. 32, art. 9.

³⁷Project Profile: Eagle Project, supra note 31.

³⁸ Availability payments are payments made by the public entity or project sponsor to the concessionaire or developer in exchange for the delivery of the project and performance of an ongoing service, see discussion infra Section IV.C.2.

³⁹Project Profile: Eagle Project, supra note 31.

⁴⁰What is Transforming Rail in Virginia?, TRANSFORMING RAIL IN VIRGINIA, https://transformingrailva.com/resource-library/faq/ (last visited June 22, 2022).

⁴¹What does Transforming Rail in Virginia Involve?, TRANSFORMING RAIL IN VIRGINIA, https://transformingrailva.com/resource-library/faq/ (last visited June 22, 2022).

term. Between 2030 and 2040, Virginia’s population is expected to increase from 8.7 million to 10.2 million.⁴²

The Transforming Rail initiative originated under the Atlantic Gateway Project in 2016 and was formally established in 2019.

The Atlantic Gateway Project was a $1.4 billion package of rail and highway expansion projects that was funded through a federal FASTLANE grant⁴³ for $165 million, combined with $710 million in state transportation funds, and $565 million in private investments.⁴⁴

Since 2019, the Commonwealth of Virginia has acquired over 300 miles of railroad right-of-way and 200 miles of track in corridors that parallel I-95, I-64, and I-85. These property acquisitions were made pursuant to an agreement with CSXT and cover: half of the railroad’s right-of-way between Washington, DC, and Petersburg, VA; all of the railroad’s out-of-service right-of-way between Petersburg, VA, and Ridgeway, NC; nearly all of the railroad’s right-of-way between Doswell, VA, and Clifton Forge, VA; and the track within the right-of-way purchased by the Commonwealth.⁴⁵

Similarly, in 2021 the Commonwealth reached an agreement with Norfolk Southern Railway to expand passenger rail to southwest Virginia. Under this agreement the Commonwealth will acquire approximately 30 miles of the Norfolk Southern right-of-way from Salem, VA, to Christiansburg, VA.⁴⁶

In addition to the ongoing property acquisitions detailed above, the Transforming Rail in Virginia program currently features at least 12 active projects. Two notable examples are the Long Bridge Project, and the Washington, DC to Richmond Southeast High-Speed Rail (DC2RVA) Project.⁴⁷ The Long Bridge Project is a proposed expansion of the 2.0-mile Long Bridge Corridor from two railroad tracks to four. The project would build a new railroad bridge over the Potomac River and the George Washington Memorial Parkway (GWMP); it would be located between the existing railroad bridge and the Metrorail Bridge.⁴⁸ The current total project estimate is approximately $1.9 billion.⁴⁹ The goal of the DC2RVA Project is to increase high-speed rail options from Washington, DC, to Richmond, VA, through existing rail infrastructure, corridors, and railroad right-of-way.⁵⁰ The DC2RVA is part of the higher-speed intercity passenger rail network.⁵¹ The current total project estimate ranges from $4.3–$5.5 billion.⁵²

The Virginia Passenger Rail Authority (VPRA), an independent authority, is the responsible transit agency for the Transforming Rail in Virginia Initiative.⁵³ The Virginia General Assembly created VPRA in 2020 “to promote, sustain, and expand the availability of passenger and commuter rail service in the Commonwealth and to increase ridership of such service by connecting population centers with passenger and commuter rail service and increasing availability of such service.”⁵⁴ VPRA is governed by a statewide board of directors made up of 12 voting members, one ex officio member from Amtrak, one ex officio member from VRE, and the director of the Department of Rail and Public Transportation (DRPT), who serves as chairperson.⁵⁵ Among other things, VPRA’s statutory authority may be found, at least in part, in the Code of Virginia Title 33.2, Article 6.⁵⁶ Notable examples of VPRA’s express powers include the authority to: ⁵⁷

• Grant others the privilege to design, build, finance, operate, and maintain rail facilities;
• Grant others the privilege to operate concessions, leases, and franchises;
• Borrow money and issue bonds to finance and refinance rail facilities;
• Fix, alter, charge, and collect fees, rates, rentals, and other charges for the use of rail facilities, the sale of products, or services rendered by the VPRA; and
• Make and enter into all contracts and agreements necessary or incidental to the performance of its duties including agreements with any person, federal agency, other state, or political subdivision of the Commonwealth.

3. The California High-Speed Rail Project

The California High-Speed Rail (HSR) Project is a proposed 800-mile, 24 station high-speed rail system.⁵⁸ There is no

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⁴²Id.

⁴³ The Fostering Advancements in Shipping and Transportation for the Long-term Achievement of National Efficiencies (FASTLANE) grant has since evolved into the INFRA grant program.

⁴⁴History, TRANSFORMING RAIL IN VIRGINIA, https://transformingrailva.com/about/background/ (last visited June 22, 2022).

⁴⁵Background, TRANSFORMING RAIL IN VIRGINIA, https://transformingrailva.com/about/background/ (last visited June 22, 2022).

⁴⁶Id.

⁴⁷Long Bridge Project, TRANSFORMING RAIL IN VIRGINIA, https://transformingrailva.com/projects/long-bridge/ (last visited June 22, 2022); Project Background, DC TO RICHMOND SOUTHEAST HIGH-SPEED RAIL, https://dc2rvarail.com/about/project-history/ (last visited June 22, 2022).

⁴⁸Long Bridge Project, TRANSFORMING RAIL IN VIRGINIA, https://transformingrailva.com/projects/long-bridge/ (last visited June 22, 2022).

⁴⁹ LONG BRIDGE PROJECT: EXECUTIVE SUMMARY, U.S. DEP’T OF TRANSP.: FED. R.R. ADMIN. 16 ( 2019) http://longbridgeproject.com/wp-content/uploads/2019/09/Chapter00_ExecutiveSummary_LonBridgeDEIS.pdf.

⁵⁰DC2RVA, TRANSFORMING RAIL IN VIRGINIA, https://transformingrailva.com/resource-library/dc2rva/ (last visited June 22, 2022).

⁵¹Project Background, DC RICHMOND SOUTHEAST HIGH-SPEED RAIL, https://dc2rvarail.com/about/project-history/ (last visited June 22, 2022).

⁵² ALTERNATIVES COST ESTIMATE AND METHODOLOGY REPORT, D.C. TO RICHMOND SOUTHEAST HIGH-SPEED RAIL 7-2 (2017) https://dc2rvarail.com/files/3915/0413/3650/APPENDIX_K_Capital_Costs_DC2RVA_DEIS.pdf.

⁵³What is the Virginia Passenger Rail Authority?, TRANSFORMING RAIL IN VIRGINIA, https://transformingrailva.com/resource-library/faq/ (last visited June 22, 2022).

⁵⁴ VA. CODE § 33.2-288(c).

⁵⁵What is the Virginia Passenger Rail Authority?, TRANSFORMING RAIL IN VIRGINIA, https://transformingrailva.com/resource-library/faq/ (last visited June 22, 2022).

⁵⁶ VA. CODE tit. 33.2, art. 6.

⁵⁷ VA. CODE § 33.2-292.

⁵⁸High-Speed Rail in California, CAL. HIGH-SPEED RAIL AUTH., https://hsr.ca.gov/high-speed-rail-in-california/ (last visited June 22, 2022).

commonly accepted definition of “high-speed rail,” however, the California legislature has defined high-speed rail to mean “intercity passenger rail service that utilizes an alignment and technology that makes it capable of sustained speeds of 200 miles per hour or greater.”^{59 60} As such, California’s high-speed rail system will be capable of operating at speeds in excess of 200 miles per hour on fully grade-separated track. The California HSR Project has been broken into two distinct project phases. Phase 1 refers to the 520-mile segment approved in 2008 by California voters. Phase 1 extends from the San Francisco/Merced Sections to the Los Angeles/Anaheim Sections of the California HSR Project. Additionally, Phase 2 refers to future program extensions from Merced to Sacramento, and from Los Angeles to San Diego.⁶¹

The California High-Speed Rail Authority (CHSRA) is the responsible agency for the California HSR Project.⁶² The California legislature created the CHSRA in 1996 to “direct the development and implementation of intercity high-speed rail service that is fully integrated with the state’s existing intercity rail and bus network.”⁶³ The CHSRA is governed by a Board of Directors consisting of nine members: five members are appointed by the Governor, two members are appointed by the California Senate Committee on Rules, and two members are appointed by the Speaker of the California General Assembly. Each member represents the entire state and serves a four-year term.⁶⁴ Among other things, the CHSRA’s statutory authority may be found, at least in part, in the California Public Utilities Code, Division 19.5.⁶⁵ Notable examples of the CHSRA’s express powers include the authority to:⁶⁶

• Conduct engineering and other studies related to the selection and acquisition of rights-of-way and the selection of a franchisee;
• Evaluate alternative high-speed rail technologies, systems and operators, and select an appropriate high-speed rail system;
• Establish criteria for the award of a franchise;
• Accept grants, fees, and allocations from the state, from political subdivisions of the state or from the federal government, foreign governments, and private sources;
• Select a proposed franchisee, a proposed route, and proposed terminal sites;
• Enter into contracts with public and private entities for the preparation of the plan; and
• Prepare a detailed financing plan, including any necessary taxes, fees, or bonds to pay for the construction of the high-speed train network.

The current project estimate for Phase 1 ranges from $72.3–$105 billion.⁶⁷ The CHSRA has identified approximately one-third of the funds needed to complete Phase 1 through federal and state sources.⁶⁸ These primary sources of funds include $9.95 billion approved by California voters through the passage of Proposition 1A (2008); $2.5 billion in federal funds through the American Recovery and Reinvestment Act (2009); and $929 million in federal funds through a Congressional appropriation. Additionally, through 2030, the California legislature has authorized appropriations of approximately 25% of annual proceeds from the state’s Cap-and-Trade Program to fund the California HSR Project.⁶⁹ The initial operating section of the project, located in the Central Valley, is being delivered through a series of design-build (DB) contracts broken into four construction packages.⁷⁰ The project is also procuring a “Track and Systems” design-build-maintain contract, which includes trackwork, railway systems, electrification, testing, and commissioning; and a 30-year maintenance agreement.⁷¹ Other project elements are also being delivered through more traditional design-bid-build (DBB) approaches as well

Upon opening, the California HSR Project will be the first high-speed rail system in the United States.

4. East Link Extension Project

The East Link Extension Project is a 14.5-mile light rail transit and managed lanes system located in the Seattle, Washington, metropolitan area.⁷² The East Link Project is part of the larger Sound Transit system. It will connect to the existing light rail system in downtown Seattle, extend the system east to Mercer Island, Bellevue, and Redmond, while adding ten transit stations to the system.

The East Link Extension Project also includes the I-90 Two-Way Transit project, which will provide eight miles of high-occupancy-vehicle (HOV) lanes across the I-90 Floating Bridge to improve transit and HOV reliability.

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⁵⁹ CAL. PUC CODE § 185012(c).

⁶⁰ 49 U.S.C. § 26106 defines the term “high-speed rail” to mean “intercity passenger rail service that is reasonably expected to reach speeds of at least 110 miles per hour.” See 49 U.S.C. § 26106(b)(4).

⁶¹Project Sections, CAL. HIGH-SPEED RAIL AUTH., https://hsr.ca.gov/high-speed-rail-in-california/project-sections/ (last visited June 22, 2022).

⁶²About California High-Speed Rail, CAL. HIGH-SPEED RAIL AUTH., https://hsr.ca.gov/about/high-speed-rail-authority/ (last visited June 22, 2022).

⁶³ CAL. PUC CODE § 185030.

⁶⁴Board of Directors, CAL. HIGH-SPEED RAIL AUTH., https://hsr.ca.gov/about/board-of-directors/ (last visited June 22, 2022).

⁶⁵ CAL. PUC CODE div. 19.5.

⁶⁶ CAL. PUC CODE § 185034.

⁶⁷ CAL. HIGH-SPEED RAIL AUTH., DRAFT 2022 BUSINESS PLAN 69 (2022), https://hsr.ca.gov/wp-content/uploads/2022/02/2022_Draft_Business_Plan.pdf.

⁶⁸Capital Costs & Funding, CAL. HIGH-SPEED RAIL AUTH., https://hsr.ca.gov/about/capital-costs-funding/ (last visited June 23, 2022).

⁶⁹Id.

⁷⁰Design-Build Construction Packages, CAL. HIGH-SPEED RAIL AUTH., https://hsr.ca.gov/business-opportunities/contractors/designbuild-construction-packages/ (last visited June 23, 2022).

⁷¹Track & Systems, CAL. HIGH-SPEED RAIL AUTH., https://hsr.ca.gov/business-opportunities/contractors/design-build-construction-packages/ (last visited Sept. 13, 2022).

⁷²Project Profile: East Link Extension, U.S. DEP’T OF TRANSP.: FED. HIGHWAY ADMIN. https://www.fhwa.dot.gov/ipd/project_profiles/wa_east_link_extension.aspx (last visited June 7, 2022) [hereinafter Project Profile: East Link Extension].

The Central Puget Sound Regional Transit Authority (Sound Transit)⁷³ is the responsible transit agency for the East Link Extension project. Pierce, King, and Snohomish Counties created Sound Transit in 1993 to plan, develop, implement, and operate a high-capacity transportation system within the region.⁷⁴ The Washington State legislature expressly enabled the creation of Sound Transit.⁷⁵ Sound Transit is governed by an 18-member Board made up of local elected officials proportional to the population included in the Sound Transit district.⁷⁶ Three members are from Snohomish County; ten from King County; and four from Pierce County. The last seat is held by the Washington State Secretary of Transportation.⁷⁷ Among other things, Sound Transit’s statutory and enabling authorities may be found, at least in part, in the Revised Code of Washington Title 81, Chapter 81.104.⁷⁸

The total project cost is $4.031 billion. Approximately $3.81 billion of the total cost is attributed to the transit line and supporting facilities, whereas the remaining $225.6 million serves as the transit contribution to the I-90 HOV facilities. The bulk of the project was funded and financed through $1.086 billion in Sound Transit’s tax revenues, $1.06 billion in bond proceeds, and $1.33 billion through a TIFIA loan.⁷⁹ Additional sources include a $281.4 million cash contribution from Sound Transit, and federal and local grants: a $184.5 million contribution from the City of Bellevue, and a $14 million TIGER USDOT federal grant.⁸⁰

Sound Transit and its partners are delivering the East Link Extension Project through a combination of contracting methods including DB and a construction manager/general contractor (CM/GC).⁸¹

5. Hudson-Bergen Light Rail (NJ)

The Hudson-Bergen Light Rail (HBLR) Project is a 20.6-mile light rail transit system located along the Hudson River water-front in Hudson and Bergen Counties, New Jersey.⁸² The now-completed project was comprised of three minimum operable segments (MOS) that opened between 2000 and 2011.⁸³

• MOS-I was a 9.5-mile, 16 station segment that extended from the Hoboken Terminal to 34^th Street in Bayonne, and Westside Avenue in Jersey City;
• MOS-II was a 6-mile, 7 station segment that extended the system from the Hoboken Terminal to the Tonnelle Avenue park-and-ride in North Bergen, and to 22^nd Street in Bayonne; and
• MOS-3 was a 4.9-mile segment that extended the system from Tonnelle Avenue to the New Jersey Turnpike’s Vince Lombardi Park-and-Ride, to 5^th Street in Bayonne, and to Route 440 in Jersey City.

The New Jersey Transit Corporation (NJ Transit) is the responsible transit agency for the HBLR Project.⁸⁴⁸⁵ The New Jersey legislature created NJ Transit in 1979 to acquire, operate, and contract for transportation service in the public interest.⁸⁶ NJ Transit is governed by an 11-member board of directors.⁸⁷ NJ Transit covers a service area of 5,325 square miles, is the nation’s third largest provider of bus, rail, and light rail transit services, and provides nearly 270 million passenger trips each year.⁸⁸ Among other things, NJ Transit’s statutory authority may be found in New Jersey Statutes Title 27, Chapter 25.⁸⁹

The total HBLR project cost was $2.3 billion: MOS-I cost $1.0 billion; MOS-II cost $1.2 billion; and MOS-III cost $100 million.⁹⁰ Similar to other transit mega projects, the primary source of funding was provided through FTA New Starts FFGAs. The rest of the project was financed through revenue bonds, which were backed by anticipated federal funding and passenger fares, and motor fuel tax receipts made available to the project through the state’s Transportation Trust Fund.⁹¹

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⁷³ “Sound Transit” to be the Name for Regional Transit Authority Services, SOUND TRANSIT (Aug. 15, 1997), https://www.soundtransit.org/get-to-know-us/news-events/news-releases/sound-transit-to-be-name-regional-transit-authority.

⁷⁴ WASH. STATE DEP’T OF TRANSP., SOUND TRANSIT BACKGROUND 1, https://wsdot.wa.gov/partners/erp/background/3-1_About%20the%20Agency-Sound%20Transit%20Background.pdf.

⁷⁵ SOUND TRANSIT, CENTRAL PUGET SOUND REGIONAL TRANSIT AUTHORITY 1 (2017) https://www.soundtransit.org/st_sharepoint/download/sites/PRDA/FinalRecords/2018/2017%20Subarea%20Equity%20Report.PDF.

⁷⁶Id. at 3.

⁷⁷Board of Directors, SOUND TRANSIT (2022), https://www.soundtransit.org/get-to-know-us/board-directors.

⁷⁸ WASH. REV. CODE § 81.104 (2022).

⁷⁹Project Profile: East Link Extension, supra note 72.

⁸⁰Id.

⁸¹ SOUND TRANSIT, PUBLIC WORKS DELIVERY METHODS AND USE AT SOUND TRANSIT 5-9 (2019), https://www.soundtransit.org/sites/default/files/documents/public-works-delivery-methods-and-use-presentation-20191205.pdf.

⁸²Project Profile: Hudson-Bergen Light Rail, U.S. DEP’T OF TRANSP.: FED. HIGHWAY ADMIN., https://www.fhwa.dot.gov/ipd/project_profiles/nj_hudson_bergen.aspx (last visited June 7, 2022) [hereinafter Project Profile: Hudson-Bergen Light Rail].

⁸³ FED. TRANSIT ADMIN., ANNUAL REPORT ON FUNDING RECOMMENDATIONS: FISCAL YEAR 2005 38-39 (2004) https://www.transit.dot.gov/sites/fta.dot.gov/files/docs/FY05_Annual_Report_on_Funding_Recommendations.pdf.

⁸⁴ U.S. DEP’T OF TRANSP.: VOLPE NAT’L TRANSP. SYSTEMS CENTER, HUDSON-BERGEN LIGHT RAIL, NJ (2010), https://www.transit.dot.gov/sites/fta.dot.gov/files/2021-03/Region-2-Hudson-Bergen.pdf.

⁸⁵Project Profile: Hudson-Bergen Light Rail, supra note 82.

⁸⁶How It All Began, N.J. TRANSIT (2021) https://www.njtransit.com/first-run/how-it-all-began.

⁸⁷ N.J. TRANSIT, 2020 ANNUAL REPORT 65-73 (Jan. 26, 2021), https://data.nj.gov/Transportation/2020-New-Jersey-Transit-Annual-Report/4def-4dk3.

⁸⁸About Us, N.J. TRANSIT https://www.njtransit.com/our-agency/about-us (last visited June 23, 2022).

⁸⁹ N.J. REV. STAT. § 27:25.

⁹⁰Project Profile: Hudson-Bergen Light Rail, supra note 82.

⁹¹ FED. TRANSIT ADMIN., ANNUAL REPORT ON FUNDING RECOMMENDATIONS: FISCAL YEAR 2005 38-39 (2004) https://www.transit.dot.gov/sites/fta.dot.gov/files/docs/FY05_Annual_Report_on_Funding_Recommendations.pdf.