The  Recovery Act provided up to 100 percent federal funding available for  expenditure until 2017 and exempted projects from having to be included  in a state rail plan; however, it did require, by incorporating the programs  and the requirements of PRIIA, that the funds be competitively awarded  and that the Department of Transportation develop a strategic plan to use  these funds. Amtrak’s trains are generally limited to top  speeds of 79 miles per hour off the Northeast Corridor and up to 150 miles  per hour on the corridor. 1.) States Developed Services by Generating Support, Securing Funding, Obtaining Equipment, and Managing Services

Officials from states that initiated or improved intercity passenger rail  services in the recent past told us that their ability to start or upgrade their  services largely hinged on their ability to resolve a number of issues. Second, states acquired equipment  for their services through collaborative and cost-saving approaches. The activities that helped states initiate and improve their services will be  important for states seeking to initiate or improve services in the future— including developing conventional passenger rail, higher speed passenger  rail, and high speed rail. Public and Political Support and Funding Provided a Foundation for States to Develop Passenger Rail Services

State officials favoring investment in intercity passenger rail services  secured funding to initiate or expand such services by achieving public  and political support and by using innovative approaches for funding both  capital and operating costs. States Managed Services by Building Consensus with Stakeholders, Borrowing Expertise, and Developing State Capacity

States developed a variety of planning processes and approaches to  stakeholder involvement as a way to build consensus among freight  railroads, Amtrak, and other states. Industry Stakeholders View Federal Leadership as Important in Creating a Robust Intercity Passenger Rail Market

Rail industry stakeholders, such as passenger rail operators, freight rail  right-of-way owners, passenger rail car manufacturers, and general  contractors are optimistic that they can meet increased public investment  in intercity passenger rail, but they are looking for federal leadership and  funding to create a structure for developing high speed rail. Additionally,  stakeholders said that a stable federal funding stream would encourage  firms to enter and invest in the intercity passenger rail marketplace. However, even after guidance is given on the application of federal laws  and states advertise contracts, it could take several years to provide the  necessary infrastructure such as new passenger rail cars, potentially  making it difficult to spend Recovery Act high speed rail funds by  September 30, 2017, as required by law. 2.) Among  other things, recent legislation required FRA to draft a preliminary  national rail plan and quickly develop a strategic vision for high speed rail  while creating a new federal program to distribute and oversee a large  increase in federal funds. Development of a National Rail Plan Consistent with State Rail Plans Could Increase the Accountability and Transparency of Federal High Speed Rail Funds

FRA’s Preliminary National Rail Plan recognizes the importance of these  state rail plans and anticipates coordinating its National Rail Plan with  them into an “efficient national system…meeting both regional and  national goals.” However, FRA officials stated that as the agency is  developing its capacity and processes to manage this new intercity  passenger rail program, some states are further behind in developing their  capacity and processes to apply for passenger rail funds. As a result, Congress  specifically exempted projects funded with Recovery Act funds and fiscal  year 2010 appropriations from this requirement to speed their distribution  and use. The strategic  vision outlined FRA’s proposed strategy to implement the act’s funding for  high speed rail corridors; however, it did not define the goals, roles of  stakeholders, or objectives for federal involvement in high speed intercity  passenger rail. FRA is  planning to address these principles in its grant oversight approach. In  particular, some states do not have a state rail plan that identifies the  states’ strategies, priorities, and possible public benefits of public  investment in rail transportation. The department did not express an overall view on  the draft report. It did provide technical comments and clarifications,  which we incorporated. We reviewed federal laws including the Recovery Act and the Passenger  Rail Investment and Improvement Act of 2008 to describe FRA’s new  responsibilities regarding passenger rail investment. We also interviewed FRA officials responsible for  passenger rail development to determine how FRA is planning to oversee  the use of Recovery Act and other federal funds for intercity passenger rail  investments.
Why GAO Did This Study

The American Recovery and Reinvestment Act (Recovery Act) and subsequent appropriations have dramatically increased federal funds available for high speed intercity passenger rail from $120 million in fiscal year 2008 and fiscal year 2009 combined to $10.5 billion available in fiscal year 2010. Other issues, such as developing industry capacity to supply rail equipment and fostering multiyear public support for such systems must be resolved. As part of its efforts to assess Recovery Act initiatives, GAO reviewed (1) how states started or improved passenger rail services in the recent past, (2) rail industry plans to accommodate the increased passenger rail investments, and (3) Federal Railroad Administration (FRA) plans to oversee the use of federal intercity passenger rail funds. GAO reviewed federal legislation; interviewed state, industry and federal officials; and reviewed selected literature. GAO is not making any recommendations. The Department of Transportation did not express an overall opinion on a draft of this report. It did provide technical and clarifying comments, which GAO incorporated.

What GAO Found

State successes to initiate or improve intercity passenger rail services in the recent past (the last 15 years), hinged largely on their abilities to build public and political support, secure funding, obtain equipment, and manage their services. Public and political support and funding provided a foundation for these services. States acquired equipment by using collaborative and cost-saving approaches. Further, states managed their rail services by building consensus with stakeholders, borrowing expertise, and developing state capacity. All of these activities will be important for states that seek to initiate or improve services in the future, including developing conventional passenger rail (operating at speeds up to 79 miles per hour), higher speed passenger rail (operating at speeds up to 150 miles per hour), and even high speed rail services (operating at speeds of 150 miles per hour or more). Rail industry stakeholders are optimistic that they can meet increased public investment in intercity passenger rail; however, they are looking for (1) federal leadership in setting safety standards for high speed rail and in promoting interstate cooperation for service across state lines, among other things, and (2) stable funding to create a structure for developing a passenger rail marketplace. Additionally, stakeholders said that a stable federal funding stream would encourage firms to enter and invest in the intercity passenger rail marketplace. However, even with strong federal leadership and funding it could take several years to provide the necessary infrastructure, such as for building new passenger rail cars, potentially making it difficult to spend some Recovery Act high speed rail funds by 2017, as required by law. As a result of Recovery Act funding and the Passenger Rail Investment and Improvement Act of 2008, FRA has had to develop a rail program and an oversight approach. Among other things, FRA had to quickly draft a preliminary national rail plan and a high speed rail strategic vision, as well as develop a program to distribute Recovery Act funds. As a result, FRA officials stated that they concentrated their efforts on meeting these requirements and they are currently designing their oversight program. FRA is in its early stages of setting up agreements with its state grantees and hiring both FRA and contractor personnel to oversee how the federal funds are used. FRA is planning to release another version of its national rail plan in September 2010 which it expects to discuss issues such as the roles of federal, state, and local governments in rail transportation and public and private funding sources. The strategic vision did not define the goals, stakeholder roles, or objectives for federal involvement in high speed intercity passenger rail and the preliminary national rail plan did not have any recommendations for future action. While states will be the recipients of Recovery Act funds, many states do not have state rail plans that would establish strategies and priorities, capital investments, and public benefits of rail investments in the state. To try to stimulate the economy quickly, Congress exempted projects funded by the Recovery Act and recent appropriations from being in state rail plans.