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| INTERCITY       FREIGHT AND PASSENGER RAIL:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           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| ****Section�         1**
**INTRODUCTION**

**Purpose**

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 21st 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:**

**Jane H. Bachner , Deputy           Associate Administrator for Industry & Intermodal Policy, 202/493-6405,           FRA.**                                       |        |
| Site         Index

Section         1.

Section         2.

Section         3.Section 4.Surface Transportation         ProgramTIFIANCPD and CBI ProgramsTransportation Enhancements         Program

Section         5.Air QualityEnergy**TEA-21         Role in Transportation and the Environment**

Section         6.�

Appendix         1.        Appendix 2.        Appendix 3.

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         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