On June 9, 1998, the President signed into law PL 105-178, the Transportation Equity Act for the 21stCentury (TEA-21) authorizing highway, highway safety, transit and other surface transportation programs for the next six years. TEA-21 builds on the initiatives established in the Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA), which was the last major authorizing legislation for surface transportation.

This report is an update of the U.S. DOT FRA September 1996 report entitled Intercity Freight and Passenger Rail: State and Local Reference Guide, Public - Private Partnerships and ISTEA: planning, evaluating and financing public benefit rail infrastructure projects ,

This Federal Railroad Administration (FRA) reference guide is designed as a document to assist local and state planners and decision makers in considering rail projects in their transportation plans and programs and in determining cost-effective allocation of scarce transportation resources.  It discusses:  (1) the transportation planning process; (2) intercity rail project evaluation; (3) project priority setting; (4) project opportunities under the Transportation Equity Act for the 21^st Century (TEA-21); (5) assessment of projects= environmental/societal benefits; and (6) innovative financing mechanisms that can be employed to advance public benefit rail projects.  Examples are presented to illustrate how project funding might be structured.  Each section identifies contacts within FRA.

New Opportunities Under TEA-21

The Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA) increased flexibility through new planning requirements and funding opportunities so that states and Metropolitan Planning Organizations (MPOs) could create a more integrated, environmentally sensitive, intermodal transportation network.  These planning requirements and opportunities are discussed in Section 2 .  TEA-21 refined ISTEA with key rail provisions, including:  enhancement of the Operation Lifesaver, High Speed Rail corridors, and Highway Rail Grade Crossing Programs; and establishment of the Transportation Infrastructure Finance and Innovation (TIFIA) program, a Federal credit program for transportation projects of national significance, providing secured loans, loan guarantees, and lines of credit for eligible projects including intercity passenger rail facilities and vehicles and components of magnetic levitation rail systems.

Of particular interest to freight railroads, TEA-21 also established:  the State Infrastructure Bank Program, which authorized state infrastructure banks in four states to fund transportation projects, including rail; the Light Density Rail Line project, which funds studies on the effectiveness of light density rail projects; and the Railroad Rehabilitation and Improvement Financing (RRIF) program to provide direct loans and loan guarantees to state and local governments, government-sponsored authorities and corporations, and to railroads and joint ventures for rail and intermodal capital projects. 

TEA-21 also amended the Congestion Mitigation and Air Quality Improvement Program to include explicit recognition that a state, MPO or project sponsor may enter into an agreement with any public, private, or nonprofit entity to cooperatively implement an eligible project.

Additionally, the National Corridor Planning and Development Program (NCPD) and the Coordinated Border Infrastructure Program (CBI), were established to provide funding for planning, project development, construction and operation of projects that serve border regions near Canada and Mexico and for high priority corridors throughout the United States.  Under the NCPD program, states and MPOs are eligible for discretionary grants for corridor feasibility; corridor planning; multi-state coordination; environmental review; and construction.  Under the CBI program, border states and MPOs are eligible for discretionary grants for transportation and safety infrastructure improvements, operation and regulatory improvements, and coordination and inspection improvements in a border region.  The eleven major TEA-21 program categories under which rail and rail-related projects may be considered are discussed in Section 3.

Innovative Financing

Executive Order 12893 of January 26, 1994, "Principles for Federal Infrastructure Investments," established the Department of Transportations innovative financing initiative, the Partnership for Transportation Investment (PTI).  The PTI  leveraged federal resources through expanded use of innovative mechanisms and private sector investment and increased state and local use of ISTEA.  

FRA, in cooperation with the Federal Highway Administration (FHWA) and the Federal Transit Administration (FTA), advanced innovative financing concepts, including public-private cost sharing for construction of intermodal terminals, relocation of rail lines, bridge clearance projects, and grade crossing separation/elimination.  Over a dozen rail and rail-related intermodal projects, encompassing short lines as well as Class I railroads, received Department of Transportation (DOT) approval for use of ISTEA funding, benefitting from this flexible interpretation of requirements and procedures.

The concepts embodied in the PTI have been institutionalized in revised regulations under TEA-21.  FRA continues to work with states, localities, MPOs, rail carriers, and users in the formulation and presentation of publicly sponsored project proposals with significant public benefits.

General questions concerning this guidebook should be addressed to:
 202/493-6405, FRA.