T4America Blog

Passenger rail funding in the infrastructure bill: Building a national network

Passenger rail was one of the brightest spots in the new infrastructure bill, with $102 billion for passenger and freight rail projects through direct grants to Amtrak and competitive grant programs. Here’s what you need to know about this new money and the bill’s rail policy changes, and how they can be best used to expand and improve passenger rail service across the U.S.

When it comes to the new infrastructure bill, there was a lot of bad and ugly in the highway and transit sections, but passenger rail was by far the biggest winner, with over $102 billion set aside to invest in the expansion of reliable and frequent rail service and much needed changes to Amtrak’s mission and priorities that can put us on a path to a more robust national and regional passenger rail network. But the work is far from done. The ultimate verdict will rest on Amtrak and the Biden administration’s ability to get organized, engage with regional leaders, and then spend this historic money quickly and effectively.

This post is part of T4America’s suite of materials explaining the 2021 $1.2 trillion Infrastructure Investment and Jobs Act (IIJA), which governs all federal transportation policy and funding through 2026. What do you need to know about the new infrastructure law? We know that federal transportation policy can be intimidating and confusing. Our hub for the new law will walk you through it, from the basics all the way to more complex details.

What’s in the law?

New funding

Building upon the success of the FAST Act, which included passenger rail in a multi-year authorization for the first time (see p.4), the 2021 infrastructure law takes the biggest step forward yet to invest in the future of passenger rail in America. Congress increased rail funding by 750 percent over FAST Act levels with an increased focus on bolstering service on the national network and making needed investments to improve the Northeast Corridor. The law also made policy changes to several key grant programs, making them more attractive to eligible recipients.

$41.5 billion of the law’s $102 billion for rail will go to Amtrak, and a majority of those funds ($27.5 billion) will go to Amtrak’s national network. This is in stark contrast to how funding has been traditionally allocated, when passenger rail networks had to justify their existence by showing a high profit margin. In the FAST Act, the Northeast Corridor (Amtrak’s busiest and most profitable rail corridor from DC to Boston) received a larger share of federal funds.

This vital step will encourage more passenger rail and intercity rail expansion, giving more people in more places the ability to affordably travel, thanks in part to a recalibrated Amtrak mission to place customer experience and community connections over profits.

Policy changes

The law also makes a number of changes to improve the passenger experience. For the stations in many (mostly rural) parts of the country, there are no station agents available to answer questions, help riders purchase tickets, or check luggage. For those who do not have access to a computer or internet at home, not having a station agent at their local station means they cannot purchase a ticket or if they are elderly, do not have assistance to check luggage. A station agent will now be required at any location that has 40 or more passengers per day. From a service standpoint, the bill also prohibits Amtrak from discontinuing or cutting rural services as long as Amtrak receives at least baseline funding (i.e. the same amount of money they received last year) to operate service, preserving the national network.

Amtrak is also no longer required to provide food service with a profit margin. The old requirement to turn a profit on food put Amtrak in a position of either providing cheaper, nutrient poor food (i.e. junk food) or no food service at all. Access to good, nutrient rich food on passenger trains will drastically improve the rider experience, which will help increase ridership. 

When it comes to governance, Amtrak’s board of directors has traditionally drawn heavily from people that lived or had expertise in the Northeast Corridor, leading to a very lopsided investment and expansion strategy focused on northeastern passenger rail, often at the expense of better service elsewhere or a truly national network—the stated purpose of Amtrak. The infrastructure law changes the requirements and sets quotas for who can be appointed to the Board, enabling a more regionally diverse group of decision-makers that will more fully represent the interests of a truly national network. (Right now the board is functionally empty, with all board members serving expired terms. The Biden administration should have appointed a new board yesterday. More on that below.)

The law also directs funding to improve accessibility for all riders, especially those who may use assistive devices (wheelchairs, walkers, canes, etc.). It invests $50 million annually to help cover the additional costs that make the Railroad Rehabilitation & Improvement Financing (RRIF) program (a loan program for making capital improvements) more user-friendly and less financially onerous. This same RRIF program was also tweaked so that it can help finance transit-oriented development projects around passenger rail stations—a smart way to grow ridership. 

The law includes $50 million annually to the Restoration and Enhancement (R&E) grant program that provides funds to help operate passenger rail. The increase in funds can help subsidize the overall cost a state or locality may need to pay in order to cover the costs of operating new or existing passenger rail routes. As an example, the Gulf Coast rail project has long planned to use these R&E grants to support the new service as it gets off the ground for the first three years. A change in this law allows projects like this one to extend R&E funds over six years rather than the current three, allowing for a longer off-ramp to help cover operations costs. Lowering the financial burden that poorer states would need to contribute for service operations would significantly benefit their communities by connecting them to regional economic centers, healthcare, and educational opportunities. The law also allows Tribal entities to apply for R&E grants.

The law also creates the administrative infrastructure needed to expand passenger rail. It creates a new program that incentivizes up to ten interstate rail compacts—like the Southern Rail Commission at the center of Gulf Coast expansion—that are vital for developing and realizing a regional and national rail network. Interstate rail compacts are made up of contiguous states that want to establish a vision for and seek investments for intercity passenger rail in their region. (The final provisions were similar to a House proposal from Rep. Cohen, which we wrote about here.) The bill allows for these ten commissions to apply for up to $1 million annually to operate their respective commissions.

How else could the administration improve the rail program?

These rail provisions are worth celebrating, but in order for the nation to reap the benefits, the administration has much more work to do, and must take action quickly on several items. The work is not done, and if the administration is not proactive, they could squander the promise of this historic, once-in-a-generation investment in rail.

Their first step should be to immediately (it’s overdue) nominate a new board to lead Amtrak in accordance with the new law. We hope the administration will appoint a board that reflects the demographics of our nation and create a requirement that board members ride the three levels of service Amtrak offers on an annual basis (commuter, long-distance, etc.). The sooner the administration takes action on Amtrak’s Board, the quicker the American public can ride passenger trains in parts of the country that need it most.

The Federal Railroad Administration (FRA) should begin the process to stand up the new interstate rail compacts program, which is key to fostering the bottom-up growth of the national network. The FRA Administrator should convene those who have expressed interest in creating a compact to explain how to establish one, how the FRA can ensure their success, and how to maximize this new funding.

When it comes to awarding competitive grants such as CRISI, R&E, and others, the administration should be very careful with awarding grants to private sector passenger rail companies. Private sector passenger rail companies like the Brightline in Florida and Las Vegas are important components but are not essential to building the national network. While there are limited cases where private passenger rail can be additive to the national passenger rail network, it should remain the goal of the administration to connect communities, and we should not let the private sector reorient the goals and vision of the national rail network.

How can the new money advance our goals?

There are people across the country that are unable to experience everything their region or the country has to offer due to the barriers of long-distance travel. Not to mention the major greenhouse gas emissions that result from driving a personal vehicle or flying. Passenger rail can help bridge these equity gaps and achieve our climate goals.

Equity: For poorer Americans who live in rural areas, long-distance travel poses a number of financial obstacles to overcome. A regional airport that has commercial flights can often be a few hours’ drive away, require lengthy layovers, and charge expensive rates. And for many, driving long distances can be a challenge as well. The financial barriers of owning or renting a car are already extremely high for low-income families and the need to have and maintain a car that could sustain long hours of highway driving poses an even greater barrier to travel. Accessible passenger rail is an affordable option that can connect more people to regional economic hubs, educational opportunities, healthcare or even recreational activities. Passenger rail can boost local economies and create jobs for communities along a service route or who have a stop in their community. 

In a study conducted by the Trent Lott institute, the States of Louisiana, Alabama and Mississippi would bring in, at minimum, an estimated $107 million in economic output from restoring Gulf Coast passenger rail service. The funds from the infrastructure law should also be used to make platforms, train cars, and stations more accessible for all riders. The demand for rail service in this corridor is very high, as seen during the 2018 inspection train along this corridor.

Climate: While the overall law failed to prioritize climate change in a holistic way across all programs, passenger rail investments can be a powerful tool for reducing emissions. As mentioned above, investments in passenger rail can provide another viable alternative to car travel or plane travel which emit large amounts of dangerous pollutants. If travelers have affordable medium- to long-distance travel options, they will take advantage of those opportunities. This, however, requires a true investment in intercity passenger rail corridors throughout the country that work together to create a fully connected national network. The infrastructure law provides the money to make this happen, but it will be up to Amtrak and the Biden administration to get organized, engage with regional leaders, and then spend the money effectively.

So what?

There are ample opportunities for states, cities, localities and even advocates to help create our national rail network. There are multiple funding opportunities available for regions that, like the Gulf Coast, are working to reestablish and expand passenger rail service. Advocates can encourage their state to join or start an interstate rail commission or inform their state and local governments of the federal funding opportunities available.

An important note for advocates (that we will also address in detail in a future post about putting together strong applications for competitive grants): Strong local matching funds (ranging from 20 to 50 percent of project cost) are critical to winning these grants, and the process to raise these funds starts by engaging in state and local budget processes far in advance (6-9 months before the start of the fiscal year.) So advocates, this means you should engage agencies early and often on resource prioritization to realize transit projects.

If you have additional ideas for how to utilize these expanded programs, or have questions about the content listed here, please contact us. Our policy staff is eager to hear from you.