Midwest passenger car project may have to pay back millions to Feds

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Nippon
A bilevel passenger car mock-up stands gleaming under shop lights at the Nippon Sharyo Rochelle, Ill., plant in May 2014.
Bob Johnston
Little progress has been reported since a prototype shell for a fleet of new bilevel passenger railcars for California and the Midwest failed a key compression test last fall at Nippon Sharyo’s factory in Rochelle, Ill., and now a large portion of the project is threatened by a funding deadline.

In a statement provided to Trains News Wire, Caltrans, the lead agency in the 172-car project, acknowledged that some American Recovery and Reinvestment Act funds designated for the $551 million project will likely revert back to the U.S. Treasury. The deadline for spending the stimulus funds is Sept. 30, 2017.

Most at risk are the 130 cars intended for use in the Midwest, an order dependent on the ARRA funds.

“California’s 42 cars (plus additional options) are not at risk even if production were delayed, due to the limited amount of ARRA funding the state portion of the contract,” says Bruce Roberts, chief of California’s Division of Rail in the Department of Public Transportation, the agency overseeing the procurement.

“Only Congress can extend the funding, but, at this time it does not seem likely,” Roberts says.

In the September 2015 test at Nippon Sharyo, a prototype shell buckled under the compression of the required 800,000 pounds. Although the manufacturer has not identified the cause of the failure, it immediately suspended work on the order, laying off 98 workers in its fabrication and welding shop. Nippon Sharyo had invested $50 million in the facility as part of ARRA “Buy America” provisions.

Roberts says Nippon Sharyo is “actively working” on a redesign of the cars to address the test requirements, and together Caltran, the Illinois transportation department, and the Federal Railroad Administration are “working with (the manufacturer) to explore other funding options.”

Meanwhile, the September 2017 deadline still looms.

UPDATED: Headline reflects uncertainty about which agency, government, or contractor may be required to return money to the U.S. government. May 10, 2016, 3:40 p.m. Central time.

NEWSWIRETrains News Wire

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