The Local Rail Service Assistance Program was established by the Regional Rail Reorganization Act of 1973 to provide financial support to states for the continuation of freight rail service on abandoned light density lines in the Northeast. The Railroad Revitalization and Regulatory Reform Act of 1976 expanded the program to all states. The program was further expanded and amended in 1978 to allow capital assistance for rehabilitation prior to, rather than after, abandonment. Amendments in 1981 prohibited the use of these funds for operating subsidies. The program was reauthorized in 1989 and renamed the Local Rail Freight Assistance (LRFA) Program.
The Rail Safety Improvement Act of 2008 (Public Law No. 110-432, Division A, enacted Oct. 16, 2008, 122 Stat. 4848-4906) amended LRFA. The United States Government's share of repaid money, contingent interest, and any interest is now considered to be state funds. The state shall use such funds to make other grants and loans, consistent with the purposes for which financial assistance may be used in accordance with LRFA regulations as the state considers appropriate.