Billions in federal rail grants offer more political benefits than infrastructure improvements

The Biden administration recently announced another deluge of federal transportation spending, including $8.2 billion in new grants for passenger rail construction projects outside the Northeast Corridor through the Federal-State Partnership for Intercity Passenger Rail and $34.5 million in grants through the Corridor Identification and Development program. 

The national rail network and dedicated high-speed rail grants build on the  $16.4 billion federal grant package for Amtrak’s Northeast Corridor announced in November. These may be new rail grants, but they follow a similar political justification to other Biden administration discretionary grant programs.

The Federal-State Partnership (FSP) grants, which stem from the 2021 bipartisan infrastructure law that passed 69-30 in the Senate, fund 10 projects. From a taxpayer perspective, most large high-speed rail projects receiving funding from this program are seriously flawed. The California High-Speed Rail Authority (CHSRA) receives $3.1 billion to help pay for the first segment connecting Merced to Bakersfield. That segment alone is estimated to cost $33 billion—more than voters were told the entire system would cost when they approved the rail project in 2008. I’ve written before about how no other country would place a high-speed rail terminus in a city with fewer than 500,000 people. Merced County has fewer than 300,000 people and is unlikely to serve or attract the riders needed for a high-speed rail system. 

The original high-speed rail line connecting Los Angeles and San Francisco that voters were promised seems unlikely. California now estimates the system will cost $128 billion and does not have the funding. With continued mismanagement by CHSRA, the $3 billion grant from federal taxpayers doesn’t move the needle but allows the state to put off discussions about admitting failure on the project.

Brightline, the company that built and recently opened a privately funded line in Florida between Orlando and Miami, sought and received a $3 billion grant for its high-speed rail line that would connect Las Vegas with Rancho Cucamonga in Southern California. Brightline West claims its total project will cost $10 billion plus financing, although high-speed rail is notorious for cost escalation. Additionally, the endpoint will sit near a commuter rail station, and some of the publicly funded improvements of the local commuter rail and local transit systems are being made for Brightline. If we include those costs to taxpayers and assume a total project cost of $15 billion, Brightline West’s federal grant share is about 20%. 

What’s unknown is how many people will transfer from high-speed rail to commuter rail to reach other parts of the vast Los Angeles metro area. As noted with California starting its high-speed rail project in the Central Valley, all other countries with successful high-speed rail projects have built stations in their significant population and employment centers, not in an exurb with a population of about 175,000. To be successful, Brightline is betting that, rather than fly or drive the whole way, people will take transit or drive to its station and then take the train to Las Vegas. 

The Raleigh to Richmond rail project received $1.1 billion to add and upgrade publicly owned track between Raleigh, North Carolina, and Wake Forest, a suburb 18 miles away. While these are conventional rail upgrades, the project is part of a long-term plan to build high-speed rail between Raleigh and Richmond, Virginia. The federal government is covering 80% of the cost, which is much higher than for the two California projects. Government officials claim the upgrade will be complete by 2033. But given the slow pace of construction, that seems doubtful. 

Also funded by FSP were $8.2 million for a bridge improvement on the state-owned Alaska Railroad, $50 million to reactivate the Chicago Union Station mail platform for passenger service along with $44 million for a Chicago Union Station platform expansion program, $27 million to improve privately owned track used by Amtrak’s Downeaster service between Maine and Boston, $15 million in improvements to private track used by Amtrak’s Empire Builder service in Montana, $144 million for modernizing a publicly and privately owned rail line between Philadelphia and Pittsburgh used by Amtrak’s Pennsylvanian service, and $729 million for enhanced commuter and intercity passenger rail in northern Virginia. 

 The Corridor Identification and Development (Corridor ID) Program is focused on intercity passenger rail projects and provides planning grants for 69 projects throughout the country, which are listed in Table 1.

Table 1: List of Corridor Identification and Development Project Selections 

How do the two federal grant programs differ? 

The FSP grants awarded by the Federal Railroad Administration (FRA), including the recent Northeast Corridor package, total $26.4 billion for 35 grants. The Corridor ID planning grants, also disbursed through the FRA thanks to the bipartisan infrastructure law, total $34.5 million for 69 grants. The average grant award for FSP corridors is $754 million compared to $500,000 for the Corridor ID program. 

Politically, presidential administrations tend to award more grants to their political allies. With a Democrat in the White House, these FSP grants are heavily concentrated on projects in states with Democrats as governors. Thirty-two of the 35 grants are in states with Democratic governors compared to just three in states with Republican governors. More than 97% of the funding goes to states with Democratic governors. By contrast, 46 of the Corridor ID grants are in states with Democratic governors, while 23 are in those with Republican governors. More details are in Table 2. 

Table 2: Rail Grants Awarded by Political Affiliation of Governor

This is the same old discretionary grant political favoritism we see regularly from the Biden administration and presidential administrations before them. While massive sums of taxpayer money are being spent through the FSP grants, the congressionally approved Corridor ID funding is spread to politicians around the country who cannot get an FSP grant. 

Any state transportation department or rail entity should be able to come up with its own $500,000 to fund a planning study, but federal taxpayers are paying for them. Most of the Corridor ID Grants awarded were Level 1, which means they’re planning grants for another planning study. Cities and states don’t need federal funding for these projects but are happy to take advantage of the grant program. Members of Congress, even those who voted against the funding, and state and local officials regularly send out press releases bragging about how they have secured federal funding for these types of projects. 

Similarly, when members of Congress win federal grants in their districts, it greases the skids for more money in the future via Transportation Housing and Urban Development annual appropriations bills and future surface transportation reauthorization bills. 

The latest batch of rail planning grants are funding many very questionable project studies. It’s hard to see how paying for a rail line between Asheville and Salisbury, NC, or between Hannibal, MO, and Quincy, IL, are in federal taxpayers’ best interests. Sadly, $500,000 isn’t deemed a significant amount of taxpayer money, and government officials know minimal scrutiny comes with that amount, so most of these grants won’t be questioned. In the world of federal budgeting and Washington, D.C., $35 million seems a small price to pay for political friends and support. 

The United States has many urgent infrastructure needs. Unfortunately, spending billions on these rail projects won’t address any of them.