    Commuter Rail: Commuter Rail Issues Should Be Considered in
    Debate over Amtrak (21-APR-06, GAO-06-470).

    Commuter rail agencies provide mobility to millions of people
    across the country, often using Amtrak infrastructure and
    services. Given these interactions, an abrupt Amtrak cessation
    could have a significant impact on commuter rail operations.
    Amtrak's chronic financial problems and recent budget proposals
    make such a cessation a possibility. GAO was asked to examine (1)
    the extent to which commuter rail agencies rely on Amtrak for
    access to infrastructure and services, (2) issues that commuter
    rail agencies would face if Amtrak abruptly ceased to provide
    them with services and infrastructure access, and (3) the options
    available to commuter rail agencies should Amtrak abruptly cease
    to provide them services and infrastructure access.
    -------------------------Indexing Terms-------------------------
    REPORTNUM:   GAO-06-470
        ACCNO:   A52237
      TITLE:     Commuter Rail: Commuter Rail Issues Should Be Considered
    in Debate over Amtrak
         DATE:   04/21/2006
      SUBJECT:   Accounting procedures
    	     Financial records
    	     Mass transit
    	     Railroad industry
    	     Railroad transportation operations
    	     Strategic planning
    	     Public/private partnerships
    	     Transparency
    	     Commuters
    	     Amtrak Northeast Corridor

    ******************************************************************
    ** This file contains an ASCII representation of the text of a  **
    ** GAO Product.                                                 **
    **                                                              **
    ** No attempt has been made to display graphic images, although **
    ** figure captions are reproduced.  Tables are included, but    **
    ** may not resemble those in the printed version.               **
    **                                                              **
    ** Please see the PDF (Portable Document Format) file, when     **
    ** available, for a complete electronic file of the printed     **
    ** document's contents.                                         **
    **                                                              **
    ******************************************************************
    GAO-06-470

         * COMMUTER RAIL
         * Commuter Rail Issues Should Be Considered in Debate over Amt
         * Contents
              * Results in Brief
                   * Background
                   * Most Commuter Rail Agencies Rely to Some Extent on Amtrak fo
                        * Access to Amtrak-owned Infrastructure Is Critical to
                          Many Co
                        * Many Commuter Railroads Rely on Amtrak for Services,
                          with Re
                        * Financial Arrangements between Amtrak and Commuter Rail
                          Agen
                             * Financial Arrangements between Commuter Rail
                               Agencies and Am
                             * Financial Arrangements between Amtrak and Commuter
                               Rail Agen
                             * New NEC Fee Could Improve Transparency but Poses
                               Potential C
                   * Abrupt Amtrak Cessation Could Raise Critical Issues for Some
                        * Decisions Made by Federal Policy Makers Will Play a
                          Critical
                        * One Critical Issue Commuter Rail Agencies Would Face
                          Would B
                        * Potential Loss of Access to Amtrak Infrastructure Is
                          Another
                        * Commuter Rail Agencies Also Described Other Issues They
                          Woul
                   * Some Options Are Available to Commuter Rail Agencies in the
                        * Most Commuter Rail Agencies Have Identified
                          Contingencies fo
                        * Federal Agencies Could Provide Short-Term Options for
                          Commut
                        * Private Transportation Companies Could Provide Options
                          for C
                             * Some Commuter Rail Agencies Are Moving away from
                               Amtrak to P
                   * Conclusions
                   * Recommendations
                   * Agency Comments
              * Appendix I: Scope and Methodology
              * Appendix II: Commuter Rail Agency Use of Amtrak Services and
              * Appendix III: GAO Contact and Staff Acknowledgments
                   * GAO Contact
                   * Acknowledgments
                        * Order by Mail or Phone

    Report to the Chairman, Committee on Banking, Housing and Urban Affairs,
    U.S. Senate

    United States Government Accountability Office

    GAO

    April 2006

    COMMUTER RAIL

    Commuter Rail Issues Should Be Considered in Debate over Amtrak

    GAO-06-470

    Contents

    Letter 1

    Results in Brief 2
    Background 5
    Most Commuter Rail Agencies Rely to Some Extent on Amtrak for Access to
    Infrastructure and Services 9
    Abrupt Amtrak Cessation Could Raise Critical Issues for Some Commuter Rail
    Agencies 25
    Some Options Are Available to Commuter Rail Agencies in the Event of an
    Abrupt Amtrak Cessation, but Service Disruptions and Financial
    Difficulties Would Be Likely 31
    Conclusions 40
    Recommendations 42
    Agency Comments 42
    Appendix I Scope and Methodology 45
    Appendix II Commuter Rail Agency Use of Amtrak Services and Infrastructure
    49
    Appendix III GAO Contact and Staff Acknowledgments 51

    Tables

    Table 1: Key Aspects of Recent Amtrak Reform Proposals and Legislation
    That Could Affect Commuter Rail Agencies 9
    Table 2: Percent of Commuter Rail Passengers Served by Railroad Service
    Providers 15
    Table 3: Commuter Rail Agency Reliance on Amtrak Services 16
    Table 4: Names and Locations of Commuter Rail Agencies, State Departments
    of Transportation, Class I Freight Railroads, and Private Non-Railroad
    Companies Interviewed 45
    Table 5: List of Labor Unions 48
    Table 6: Commuter Rail Agency Use of Amtrak Services and Infrastructure 49

    Figures

    Figure 1: NEC Ownership and Operations Map 6
    Figure 2: Overview of Commuter Rail Agency Reliance on Amtrak for
    Infrastructure and Services 10
    Figure 3: Amtrak's Key Facilities for Selected Commuter Rail Agencies 12
    Figure 4: Sound Transit Trains in Amtrak's Holgate Yard, Seattle, WA 14

    Abbreviations

    AAR Association of American Railroads Amtrak National Railroad Passenger
    Corporation APTA American Public Transportation Association ASLRRA
    American Short Line and Regional Railroad Association CETC Centralized
    Electrification and Traffic Control CSX CSX Transportation DELDOT Delaware
    Department of Transportation DOT Department of Transportation FRA Federal
    Railroad Administration FTA Federal Transit Administration ICC Interstate
    Commerce Commission LIRR Long Island Rail Road MARC Maryland Rail Commuter
    Service MBCR Massachusetts Bay Commuter Railroad Company MBTA
    Massachusetts Bay Transportation Authority NEC Northeast Corridor NICTD
    Northern Indiana Commuter Transportation District NJT New Jersey Transit
    PENNDOT Pennsylvania Department of Transportation RFP request for proposal
    SEPTA Southeastern Pennsylvania Transportation Authority SLE Shore Line
    East STB Surface Transportation Board TRE Trinity Railway Express VRE
    Virginia Railway Express

    This is a work of the U.S. government and is not subject to copyright
    protection in the United States. It may be reproduced and distributed in
    its entirety without further permission from GAO. However, because this
    work may contain copyrighted images or other material, permission from the
    copyright holder may be necessary if you wish to reproduce this material
    separately.

    United States Government Accountability Office

    Washington, DC 20548

    April 21, 2006 April 21, 2006

    The Honorable Richard Shelby Chairman, Committee on Banking, Housing and
    Urban Affairs United States Senate The Honorable Richard Shelby Chairman,
    Committee on Banking, Housing and Urban Affairs United States Senate

    Dear Mr. Chairman: Dear Mr. Chairman:

    Commuter rail is an important component of regional transportation systems
    throughout the country, accounting for over 400 million passenger trips in
    2004. While most of these trips occurred in the densely populated
    Northeast, commuter rail services are now provided in eight urban areas
    outside of the Northeast. A total of 18 commuter rail agencies now exist,
    and seven more commuter rail systems are in planning or design stages
    throughout the country according to the Federal Transit Administration
    (FTA). Regardless of location, most commuter rail agencies interact with
    the National Railroad Passenger Corporation (Amtrak) for access to
    infrastructure or services, such as train crews and equipment maintenance.
    Given these interactions, there is concern that if Amtrak abruptly ceased
    to provide services and infrastructure, commuter rail operations could be
    adversely affected. Amtrak's chronic financial problems and recent budget
    proposals make such a cessation a possibility. Commuter rail is an
    important component of regional transportation systems throughout the
    country, accounting for over 400 million passenger trips in 2004. While
    most of these trips occurred in the densely populated Northeast, commuter
    rail services are now provided in eight urban areas outside of the
    Northeast. A total of 18 commuter rail agencies now exist, and seven more
    commuter rail systems are in planning or design stages throughout the
    country according to the Federal Transit Administration (FTA). Regardless
    of location, most commuter rail agencies interact with the National
    Railroad Passenger Corporation (Amtrak) for access to infrastructure or
    services, such as train crews and equipment maintenance. Given these
    interactions, there is concern that if Amtrak abruptly ceased to provide
    services and infrastructure, commuter rail operations could be adversely
    affected. Amtrak's chronic financial problems and recent budget proposals
    make such a cessation a possibility.

    Although commuter rail agencies are typically owned and operated by state
    and local governments, there are several federal agencies involved in rail
    transportation and in specific aspects of commuter rail service. The
    Surface Transportation Board (STB) is responsible for the economic
    regulation of freight railroads and also has the authority to order other
    rail carriers to provide infrastructure and service(s) to commuter rail
    agencies (called "directed service") if Amtrak were to shut down. The
    Federal Railroad Administration (FRA), which is primarily focused on
    ensuring the safe operation of railroads, including commuter rail, would
    provide funding to STB to direct commuter rail service if ordered by STB.
    FTA helps fund the planning and development of commuter rail projects.
    Although commuter rail agencies are typically owned and operated by state
    and local governments, there are several federal agencies involved in rail
    transportation and in specific aspects of commuter rail service. The
    Surface Transportation Board (STB) is responsible for the economic
    regulation of freight railroads and also has the authority to order other
    rail carriers to provide infrastructure and service(s) to commuter rail
    agencies (called "directed service") if Amtrak were to shut down. The
    Federal Railroad Administration (FRA), which is primarily focused on
    ensuring the safe operation of railroads, including commuter rail, would
    provide funding to STB to direct commuter rail service if ordered by STB.
    FTA helps fund the planning and development of commuter rail projects.

    In response to your request, we examined (1) the extent to which commuter
    rail agencies rely on Amtrak for access to infrastructure and services,
    (2) issues that commuter rail agencies would face if Amtrak abruptly
    ceased to provide them with services and access to infrastructure, and (3)
    the options available to commuter rail agencies In response to your
    request, we examined (1) the extent to which commuter rail agencies rely
    on Amtrak for access to infrastructure and services, (2) issues that
    commuter rail agencies would face if Amtrak abruptly ceased to provide
    them with services and access to infrastructure, and (3) the options
    available to commuter rail agencies should Amtrak abruptly cease to
    provide them services and access to infrastructure. To address these
    objectives, we interviewed officials at all 18 existing commuter rail
    agencies and two of the seven proposed commuter rail services. We also
    visited seven commuter rail agencies and one proposed commuter rail
    service. During these site visits, we interviewed senior-level management
    and toured operation, dispatching, and equipment maintenance facilities.
    We interviewed officials at STB, FRA, FTA, and Amtrak, as well as
    representatives from the largest Class I railroads,1 10 of Amtrak's 15
    railroad labor unions, all of the private transportation companies that
    currently operate commuter rail service in the U.S., and industry
    associations. Additionally, we reviewed federal laws, internal documents
    from the STB, FRA, and Amtrak, and contracts between Amtrak and various
    commuter rail agencies.

    Our report focuses on the impact of an abrupt Amtrak cessation on commuter
    rail operations. For example, if policy makers acted on legislative
    proposals that end or substantially reduce federal funding, an Amtrak
    bankruptcy or shutdown could quickly follow. However, multiple bills to
    reform intercity passenger rail have been proposed in recent years-and
    these bills, if enacted, could result in outcomes other than an abrupt
    Amtrak cessation. We did not examine how other potential outcomes would
    impact commuter rail operations. We conducted our work from July 2005
    through April 2006 in accordance with generally accepted government
    auditing standards. (See app. I for a more detailed discussion of the
    report's scope and methodology.)

                                    Results in Brief

    Most existing 18 commuter rail agencies rely on Amtrak for some level of
    access to infrastructure and services. Although the level of reliance
    varies among these commuter rail agencies, access to Amtrak's
    infrastructure or Amtrak services is critical to the operations of many
    commuter rail agencies. For example, seven of the nine commuter rail
    agencies in the Northeast operate over Amtrak-owned portions of the
    Northeast Corridor (NEC). According to officials from these agencies,
    access to Amtrak's infrastructure is essential to their services. Commuter
    rail agencies typically pay Amtrak for access to infrastructure and
    providing services, although the financial relationships between commuter
    rail agencies and Amtrak vary widely and often lack clarity. Several
    issues contribute to the lack of clarity, including limitations in
    Amtrak's accounting practices, the lack of transparency in Amtrak's
    financial reports, and the structure of the financial arrangements between
    Amtrak and commuter rail agencies. The lack of clarity makes it difficult
    to determine the full extent of the financial relationship between
    commuter rail agencies and Amtrak and whether commuter rail agencies are
    contributing their fair share to the cost of capital improvements to
    Amtrak-owned infrastructure. Amtrak's fiscal year 2006 appropriation
    directs the Secretary of Transportation to assess a fee on commuter rail
    agencies that use the NEC. This fee is designed to compensate Amtrak for
    maintenance and capital expenditures resulting from commuter rail
    agencies' use of the NEC and has important budgetary implications for some
    commuter rail agencies.

    1Class I railroads are the largest railroads, as defined by operating
    revenue, and account for the majority of U.S. rail freight activity. There
    are three classes of railroads. The Surface Transportation Board (STB)
    designates the class of railroad and in 2004 defined Class I railroads as
    railroads with operating revenues of $289 million or more.

    An abrupt Amtrak cessation could raise two critical operational issues for
    commuter rail agencies that rely on Amtrak services and infrastructure.
    Specifically, commuter rail agencies would be confronted with the
    potential loss of skilled Amtrak labor and access to Amtrak-owned
    infrastructure. For example, some commuter rail agencies could not take
    over train operations or dispatching services provided by Amtrak employees
    because they do not have the workforce capabilities or expertise to do so
    in a short time period. Additionally, some commuter rail agencies on the
    NEC and in other parts of the country could not continue to fully operate
    service-or would cease service-without the ability to access Amtrak-owned
    tracks and other key facilities. Commuter rail agencies also identified
    other issues they would face if Amtrak abruptly ceases to provide services
    and infrastructure, such as the loss of revenue from Amtrak for the
    services or infrastructure that a few commuter rail agencies provide to
    Amtrak.

    Most commuter rail agencies that rely on Amtrak services and
    infrastructure have identified options to mitigate service disruptions if
    Amtrak abruptly ceased to provide services and infrastructure access.
    However, these options are largely dependent on the ability to retain
    Amtrak employees and access Amtrak-owned infrastructure, particularly in
    the short term. STB could provide short-term options to mitigate potential
    impacts on commuter rail agencies in the event of an abrupt Amtrak
    cessation by using their directed-service authority to gain access to
    Amtrak's infrastructure and equipment, and, with the FRA, continue to fund
    affected commuter operations. Although directed service could be used as a
    short-term solution, federal officials stated that commuter rail service
    disruptions are likely under any directed-service scenario. Further, the
    costs of providing directed service are unknown, and the logistics and
    time required to implement directed services are unknown because STB has
    never issued directed-service orders for passenger rail. According to FRA
    officials, the major concern in a directed service scenario is whether
    former Amtrak employees will agree to work for the new provider. A
    longer-term solution in the event of an abrupt Amtrak cessation is for
    commuter rail agencies to contract with private transportation companies
    for the services currently provided by Amtrak. Private transportation
    companies with whom we spoke expressed interest in providing the services
    that Amtrak currently provides to commuter rail agencies. However,
    transitioning from Amtrak to private transportation companies would take
    months, not weeks. Moreover, labor and liability issues would need to be
    addressed to ensure a smooth transition.

    To help ensure that policy makers have the needed information to make
    fully informed decisions, we recommend that the Department of
    Transportation (DOT), in consultation with STB and commuter rail agencies,
    further refine cost estimates of directed-service scenarios and that
    Amtrak improve its accounting practices-and financial reporting-to clearly
    show the revenues and costs of providing services and infrastructure
    access to commuter rail agencies. We provided draft copies of this report
    to DOT and Amtrak for their review and comment. DOT officials generally
    agreed with the draft report's findings and the intention of the
    recommendation. However, FRA officials expressed concerns about
    limitations in the data required to refine the estimates as well as
    limited staff resources to devote to such an effort. Consequently, FRA
    officials indicated their preference to focus on other priorities. We
    recognize that FRA, like other federal agencies, has resource constraints
    and must focus those resources on certain priorities. However, given
    previous and current debate over the future of Amtrak, we believe
    providing policy makers with accurate information as to the implications
    of directed service-including the costs of such services-is a worthwhile
    investment of agency resources and deserves some level of attention.
    Further, we believe that refinements to the cost estimates could be made
    using existing information from Amtrak and commuter rail agencies. DOT
    officials acknowledged that the current estimates are inaccurate, and most
    likely significantly underestimate the true costs of directed service.
    Therefore, any refinements would be a step in the right direction in
    providing better information to policy makers. Amtrak generally agreed
    with the report's findings, conclusions, and recommendations.

                                       Background

    Commuter rail is a type of public transit that is characterized by
    passenger trains operating on railroad tracks and providing regional
    service (e.g., between a central city and adjacent suburbs). Commuter rail
    systems are traditionally associated with older industrial cities, such as
    Boston, New York City, Philadelphia, and Chicago. However, over the past
    decade, commuter rail systems have been inaugurated in such cities as
    Dallas and Seattle, and seven new systems are in various stages of
    planning in cities across the country. Currently, there are 18 commuter
    rail agencies throughout the country, and, in 2004, these agencies
    provided an average of 1.1 million passenger trips each weekday. Advocates
    of commuter rail contend that it provides a number of public benefits,
    including reductions in highway congestion, pollution, and energy
    dependence. Moreover, commuter rail service can operate on existing
    railroad rights-of-way,2 which eliminates the time and significant expense
    associated with constructing new infrastructure.

    Most commuter rail service uses rights-of-way (to run over tracks) that
    are owned by Amtrak, freight railroads, or are publicly owned. Amtrak owns
    most of the NEC between Boston, MA, and Washington, D.C., but there are
    several portions of the NEC owned by either commuter rail agencies or
    states. The NEC is also the busiest rail corridor in the U.S. For example,
    on an average weekday, over 1,800 commuter rail and Amtrak trains operate
    on the NEC.3 Figure 1 shows the ownership of-and Amtrak and commuter rail
    operations on-the NEC. Commuter rail agencies located outside of the NEC
    for the most part use rights-of-way owned by freight railroads.

    2Rights-of-way include the fixed infrastructure required for train
    operations, including tracks and signals.

    3In addition, in fiscal year 2001, an average of 38 freight trains used
    the NEC each day.

    Figure 1: NEC Ownership and Operations Map

    Note: Only service on the main portion of the NEC between Washington,
    D.C., and Boston is shown. This represents commuter rail agencies' primary
    operating routes on the NEC and does not include smaller segments of their
    service operating over the NEC. For example, New Jersey Transit also
    operates over 7 miles of the NEC between Shore Interlocking and 30th
    Street Station in Philadelphia, and VRE operates over a small portion of
    the NEC into Washington Union Station. Amtrak's right-of-way from
    Harrisburg, PA, to Philadelphia, over which PENNDOT service operates, is
    not shown on this graphic. SEPTA also operates service over this portion
    of Amtrak's right-of-way between Philadelphia and Parkesburg,
    Pennsylvania.

    Commuter Railroads

    Long Island Rail Road (LIRR) Maryland Rail Commuter Service (MARC)
    Massachusetts Bay Transportation Authority (MBTA) Metro North Commuter
    Railroad (MNCR) New Jersey Transit (NJT) Connecticut Department of
    Transportation's Shore Line East service (SLE) Southeastern Pennsylvania
    Transportation Authority (SEPTA) Virginia Railway Express (VRE)

    Departments of Transportation

    Connecticut Department of Transportation (CDOT) Pennsylvania Department of
    Transportation (PENNDOT)

    Three federal agencies-FRA, STB, and FTA-are responsible for different
    aspects of federal rail transportation policy, including freight,
    intercity passenger, and commuter rail service. FRA administers and
    enforces the federal laws and related regulations that are designed to
    promote safety on railroads, such as track maintenance, inspection
    standards, equipment standards, and operating practices.4 Commuter rail
    agencies are subject to FRA regulations. FRA provides funding for Amtrak's
    operating and capital improvements, and since fiscal year 2003 has
    administered these funds through grants. STB is responsible for the
    economic regulation of freight railroads, which encompasses those
    instances when there is an impasse in negotiations over Amtrak's access to
    freight rail facilities. STB also has authority to issue directed (or
    emergency) service orders to continue rail service if a rail carrier is
    unable to provide service to its customers.5 In 2004, this authority was
    amended to authorize such orders in the event that there is a failure of
    freight or commuter rail service due to a cessation of service by Amtrak.
    Directed-commuter-service orders could enable one or more operators to
    gain access to Amtrak's facilities and equipment. In addition,
    directed-service orders could provide these operators the ability to offer
    employment to former Amtrak personnel for the provision of essential
    commuter service.6 The Secretary of Transportation, through the FRA, would
    be the funding agency for any STB directed-service order for commuter rail
    operations.7 According to STB staff, while the STB (and its predecessor
    agency, the Interstate Commerce Commission) have directed freight service
    in the past when freight railroads have experienced service failures, STB
    has not issued any directed-service orders explicitly for passenger rail
    service. Unlike FRA and STB, FTA is not principally a regulatory agency.
    FTA is the primary federal financial resource for supporting locally
    planned, implemented, and operated transit capital investments. As a form
    of public transit, commuter rail projects are eligible for FTA funding.

    4The Federal Railroad Administration (FRA) exercises jurisdiction over all
    areas of railroad safety under title 49 U.S.C., chapter 201.

    5STB has this authority under section 11123 of title 49 U.S.C. STB's
    predecessor, the Interstate Commerce Commission, also had this authority.

    6"Final Report: Directed Service for Amtrak-Dependent Carriers," prepared
    by The Woodside Consulting Group, Inc., for the FRA (Palo Alto, CA: Oct.,
    2005), 2.

    Amtrak has struggled to become financially solvent since its founding in
    1971, receiving over $29 billion in federal funds for operational and
    capital improvements. Despite federal subsidies, Amtrak's financial
    situation reached critical points when it had to mortgage Pennsylvania
    Station in New York City in 2001 and obtain an emergency loan of $100
    million in 2002 to meet expenses and continue operations. Although Amtrak
    has made progress in containing its operating expenses, its operating
    losses have increased to over $1 billion a year.8 In light of Amtrak's
    continuing financial difficulties, different Amtrak reform proposals and
    legislation have been introduced, some of which could impact commuter rail
    agencies. For example, the administration's fiscal year 2006 budget
    proposal for Amtrak did not include any federal funds for Amtrak, however
    it did include $360 million to maintain commuter and freight service
    operated by Amtrak.9 Other proposals and legislation included, among other
    things, curtailing money-losing operations and transferring Amtrak assets
    to other companies or directly to the federal government. (See table 1.)

    7Congress directed the Secretary of Transportation to withhold $60 million
    for directed commuter and freight service from Amtrak's fiscal year 2004,
    2005, and 2006 appropriations.

    8GAO, Amtrak Management: Systemic Problems Require Actions to Improve
    Efficiency, Effectiveness, and Accountability, GAO-06-145 (Washington,
    D.C.: Oct. 2005), 6.

    9Amtrak's fiscal year 2006 appropriation was $1.3 billion.

    Table 1: Key Aspects of Recent Amtrak Reform Proposals and Legislation
    That Could Affect Commuter Rail Agencies

    Key aspects of reform
    proposals                 Description of proposed change
    Zero funding                 o  No operating or capital federal funding
                                    for Amtrak
                                    o  $360 million provided to STB to fund
                                    directed commuter and freight service
    Infrastructure separation    o  Separate Amtrak operations from
                                    infrastructure into different companies
                                    o  Separate Amtrak infrastructure from
                                    operations by creating a subsidiary company
                                    under Amtrak's Board of Directors
    NEC commuter rail fee        o  Fee for maintenance and capital costs
                                    assessed on commuter rail agencies that use
                                    the NEC
    Multi-state NEC compact      o  Passenger rail operations on the NEC would
                                    be transferred to multi-state compact of
                                    Northeastern states
    DOT ownership of NEC         o  Ownership of NEC would be transferred to
                                    the Secretary of Transportation, who, in
                                    turn, would competitively procure contractors
                                    for maintenance and operations of NEC
    Cost-reduction proposals     o  Would require Amtrak to reduce losses on
                                    sleeper car, and food and beverage service
    Accounting reforms           o  Would require Amtrak to acquire a new
                                    accounting system that would enable Amtrak to
                                    assign revenue and expenses to each of its
                                    lines of business and to distinguish
                                    infrastructure revenue and expenses from its
                                    operational revenue and expenses

    Source: GAO analysis of U.S. House and Senate bills from the first session
    of the 109th Congress.

        Most Commuter Rail Agencies Rely to Some Extent on Amtrak for Access to
                              Infrastructure and Services

    Most commuter rail agencies rely on Amtrak to some extent for access to
    infrastructure and services. This dependence can range from heavy use of
    Amtrak infrastructure and services to limited reliance on Amtrak
    infrastructure and services. (See fig. 2.) Having access to Amtrak-owned
    infrastructure, rights-of-way, stations, platforms, equipment maintenance
    facilities, and storage yards is critical to many commuter rail agencies'
    operations. The reliance on Amtrak for infrastructure and services by many
    commuter rail agencies has led to a variety of financial relationships
    between commuter rail agencies and Amtrak. In general, these financial
    relationships are complicated and lack clarity. This lack of clarity makes
    it difficult to determine if commuter rail agencies are paying their fair
    share for access to infrastructure and services. Amtrak's fiscal year 2006
    appropriation directs the Secretary of Transportation to levy a fee on
    commuter rail agencies that use the NEC as compensation for maintenance
    and capital expenditures resulting from their use of the NEC. This fee has
    important budgetary, and other, implications for commuter rail agencies.

    Figure 2: Overview of Commuter Rail Agency Reliance on Amtrak for
    Infrastructure and Services

    Note: This figure indicates whether a commuter rail agency relies on
    Amtrak for services or access to infrastructure. Darkened figures do not
    necessarily mean that Amtrak is the primary provider of a service; rather,
    it means that Amtrak provides some level of service or access to
    infrastructure. See appendix II for detailed data on the extent to which
    each commuter rail agency relies on Amtrak.

    Access to Amtrak-owned Infrastructure Is Critical to Many Commuter Rail
    Agencies' Operations

    Most existing commuter rail agencies (12 of 18) rely on Amtrak-owned or
    Amtrak-operated infrastructure, such as stations or platforms;
    rights-of-way; and maintenance facilities. Amtrak owns most of the NEC,
    which runs from Washington, D.C., to Boston. Of the nine commuter rail
    agencies in the Northeast, eight agencies-including the Long Island Rail
    Road (LIRR) and New Jersey Transit (NJT), two of the largest commuter rail
    agencies in the country-operate over Amtrak-owned infrastructure.10 Seven
    of these nine commuter rail agencies operate on the NEC between
    Washington, D.C., and Boston.11 On an average weekday, these seven
    commuter rail agencies run approximately 1,630 trains on the NEC, which
    represents over 90 percent of all passenger train traffic on the NEC.
    According to officials from the commuter rail agencies that operate over
    Amtrak-owned portions of the NEC, access to this infrastructure is
    essential for their services. In addition to providing access to the
    Amtrak-owned portions of the NEC, Amtrak also maintains its rights-of-way
    and dispatches all trains on its rights-of-way, including commuter rail
    traffic; these are critical services for commuter rail agencies using the
    NEC. For example, from its centralized dispatching center in Boston,
    Amtrak dispatches all of the Massachusetts Bay Transportation Authority's
    (MBTA) trains on one of its lines and provides initial dispatching for
    two-thirds of all other MBTA trains, as well as its own intercity trains.
    Amtrak also distributes power to commuter rail agencies that use
    electrically powered trains on the NEC. These trains, which may be hauled
    by locomotives or made up of self-propelled, multiple-unit cars, require
    electric power (called "traction power") delivered directly from overhead
    power lines.12

    10The nine commuter rail agencies in the Northeast are the Long Island
    Rail Road, the Maryland Transit Administration's MARC Commuter Service,
    the Massachusetts Bay Transportation Authority, Metro-North Railroad, New
    Jersey Transit (NJT), the Pennsylvania Department of Transportation's
    Keystone Service from Harrisburg to Philadelphia, the Southeastern
    Pennsylvania Transportation Authority (SEPTA), the Connecticut Department
    of Transportation's Shore Line East service, and the Virginia Rail
    Express. Metro-North, which operates in New York and Connecticut, is the
    only commuter rail agency in the Northeast that does not use any
    Amtrak-owned track or infrastructure.

    11The Pennsylvania Department of Transportation service uses Amtrak-owned
    infrastructure from Harrisburg, PA, to Philadelphia that connects with the
    NEC.

    12Amtrak also provides traction power for one SEPTA-owned line in its
    entirety (other than those lines that are on the NEC) and for certain
    other NJT lines.

    In addition to owning most of the track comprising the NEC, Amtrak also
    owns or controls a number of key facilities both on and off the NEC, many
    of which are critical to commuter rail service. (See fig. 3.)

    Figure 3: Amtrak's Key Facilities for Selected Commuter Rail Agencies

    These facilities include many of the busiest passenger stations in the
    country, such as Pennsylvania Station in New York City and Chicago Union
    Station, as well as the platforms and train storage facilities outside of
    Washington Union Station. For example, according to LIRR officials, LIRR
    and NJT trains account for 87.4 percent of the trains coming into
    Pennsylvania Station in New York City, while Amtrak intercity trains
    represent the remaining 12.6 percent.13 Amtrak also owns or controls a
    number of equipment maintenance and storage yards that are strategically
    located near key urban or downtown stations. For example, some commuter
    locomotives and coaches used by Virginia Railway Express (VRE) and
    Maryland Transit Administration, which owns Maryland Rail Commuter Service
    (MARC), are maintained at Amtrak's Ivy City Yard, just north of Washington
    Union Station. These trains are also stored in Washington, D.C., during
    midday so that they can make evening rush hour trips. This allows VRE and
    MARC to avoid running trains back out to storage yards in outlying areas
    during the middle of the day-a practice officials from both agencies said
    would make the service too costly to provide. Similarly, Sound Transit in
    Seattle relies on Amtrak to maintain and store its trains during the
    midday at Holgate Yard, an Amtrak maintenance facility near Sound
    Transit's King Street Station in downtown Seattle, which serves both Sound
    Transit and Amtrak trains. (See fig. 4 for a picture of Holgate Yard.)
    According to Sound Transit officials, the use of Amtrak's facility saved
    Sound Transit the one-time cost of building its own multi-million dollar
    maintenance facility.

    13Based on passenger counts, LIRR and NJT account for 92.6 percent of
    arriving passengers, while Amtrak accounts for 7.4 percent.

    Figure 4: Sound Transit Trains in Amtrak's Holgate Yard, Seattle, WA

    Many Commuter Railroads Rely on Amtrak for Services, with Reliance on Amtrak
    Greater along the NEC

    Out of the 18 existing commuter rail agencies, 14 rely on Amtrak for some
    level and type of service-including the operation of commuter trains,
    maintenance of equipment (i.e., locomotives and train cars),
    maintenance-of-way (i.e., track and related infrastructure), train
    dispatching, and other services such as ticketing and security. Although
    most passengers ride commuter rail lines that use their own in-house
    employees for services critical to the operation of their service, Amtrak
    is a key player when commuter rail agencies do contract with other
    providers for services, compared to other individual companies (see table
    2).

    Table 2: Percent of Commuter Rail Passengers Served by Railroad Service
    Providers

                                        Maintenance                         Train
                           Dispatching of equipment Maintenance-of-way operations
    Commuter rail
    agency in-house
    employees                 51.2%        71.5%              64.4%      74.7%
    Amtrak                    30.4%         8.2%              11.7%       4.7%
    Freight                   17.9%         7.2%              14.1%       8.1%
    BNSF Railway               1.7%         1.7%               1.6%       2.1%
    Union Pacific
    Railroad                   6.0%         5.2%               6.3%       5.2%
    Other freights            10.1%         0.3%               6.2%       0.8%
    Private operators          0.6%        13.2%              10.0%      12.6%
    Herzog                     0.6%         1.6%               2.8%       1.3%
    Massachusetts Bay
    Commuter Railroad           N/A         8.9%               7.2%       8.9%
    Other                       N/A         2.7%                N/A       2.4%
    Total                  100.1% a       100.1%             100.2%     100.1%

    Source: GAO analysis of commuter rail agency information.

    Note: This table estimates the percentage of services provided by the
    various railroad service providers to commuter rail agencies. In order to
    account for the relative size of the commuter rail agencies, we weighted
    the percentages in our calculations. Specifically, we used the total
    number of passengers riding each commuter rail agency during July -
    September 2005 as a rough proxy for the size and service requirements of
    each agency. Totals may not add to 100% due to rounding.

    aData on dispatching was not available for MBTA, and MBTA was excluded
    from the dispatching column. MBTA data was available, and was included in
    the other service categories.

    However, the extent to which commuter rail agencies rely on Amtrak for
    services varies. In general, those commuter rail agencies that use
    Amtrak-owned segments of the NEC have a greater level of reliance on
    Amtrak for services than those who do not. For example, all eight commuter
    rail agencies that use Amtrak-owned portions of the NEC rely on Amtrak for
    services related to that infrastructure-specifically, dispatching and
    maintenance-of-way-and they also are more likely to contract with Amtrak
    for additional services. Five of the eight commuter rail agencies
    accessing the Amtrak-owned NEC also contract with Amtrak for train
    operation and maintenance of equipment. By comparison, three of the ten
    commuter rail agencies, which do not operate over Amtrak-owned portions of
    the NEC, contract with Amtrak for train crews and maintenance of
    equipment.14

    As shown in table 3, we classified the commuter rail agencies we contacted
    based on their level of reliance on Amtrak for services in one of four
    categories-heavy reliance, moderate reliance, limited reliance, or little
    to no reliance on Amtrak. Specifically:

    Table 3: Commuter Rail Agency Reliance on Amtrak Services

                                            Heavy   Moderate Limited   Little to
                                           reliance reliance reliance no reliance
    Existing commuter rail agencies
    Altamont Commuter Express (ACE)                          X
    Connecticut Department of              X
    Transportation's Shore Line East
    and New Haven Lines (SLE)
    Maryland Transit Administration        X
    (MARC)
    Massachusetts Bay Transportation                X
    Authority (MBTA)
    MTA Long Island Rail Road (LIRR)                X
    MTA Metro-North Rail Road                                           X
    New Jersey Transit Corporation                  X
    (NJT)
    North County Transit District          X
    (Coaster)
    Northeast Illinois Regional                              X
    Commuter Railroad Corporation
    (Metra)
    Northern Indiana Commuter                                           X
    Transportation District (NICTD)
    Peninsula Corridor Joint Powers        X
    Board (Caltrain)
    Pennsylvania Department of             X
    Transportation (PENNDOT)
    Sound Transit, Central Puget Sound              X
    Regional Transportation Authority
    (Sounder)
    Southeastern Pennsylvania                       X
    Transportation Authority (SEPTA)
    Southern California Regional Rail                        X
    Authority (Metrolink)
    Tri-County Commuter Rail Authority                                  X
    (Tri-Rail)
    Trinity Railway Express (TRE)                                       X
    Virginia Railway Express (VRE)         X
    Proposed commuter rail agencies
    Nashville Music City Star                                           X
    New Mexico Rail Runner Express                                      X

    14This number will be reduced to two in 2006, as Amtrak was not selected
    to be the service provider for San Diego's Coaster service.

    Source: GAO analysis.

    Notes:

    (1) We determined the level of reliance on Amtrak for services through
    interviews with commuter rail agencies in which we discussed to what
    extent Amtrak provided services critical to the commuter rail operations,
    the results of which are summarized in appendix II. For the purposes of
    this classification, we considered train operation crews, maintenance of
    equipment, maintenance-of-way, and dispatching, as services critical to
    commuter rail operations.

    (2) We used the following definitions to classify the commuter rail
    agencies:

    Heavy reliance: Commuter rail agency contracts with Amtrak for at least
    half of two (or more) of the services critical to the commuter rail
    agency's operations.

    Moderate reliance: Commuter rail agency contracts with Amtrak for at least
    half of one service critical to the commuter rail agency's operations.

    Limited reliance: Commuter rail agency contracts with, or in some other
    way relies on, Amtrak for less than half of any service critical to the
    commuter rail agency's operations.

    Little to no reliance: Commuter rail agency does not contract with, or in
    some other way rely on, Amtrak for any services critical to the commuter
    rail agency's operations.

               o  Heavy reliance on Amtrak: We classified six commuter rail
               agencies as having a heavy reliance on Amtrak for services. For
               example, Caltrain-a commuter rail service connecting San Francisco
               and San Jose-contracts with Amtrak for all train operations,
               maintenance of equipment, and dispatching services. In addition,
               Amtrak provides maintenance-of-way services for about 65 percent
               of the track Caltrain uses. Commuter rail agencies that rely
               heavily on Amtrak services told us they would face significant
               challenges, such as having to conduct emergency procurement for
               replacement service providers and potential service shutdowns, if
               Amtrak suddenly ceased to provide these services. Of these six
               agencies, four use the Amtrak-owned NEC.

               o  Moderate reliance on Amtrak: We classified five agencies as
               having a moderate reliance on Amtrak for services. For example,
               the Southeastern Pennsylvania Transportation Authority (SEPTA), a
               service linking Philadelphia to its outlying suburbs and
               Newark/Wilmington, Delaware, contracts with Amtrak to maintain
               almost 40 percent of the track that SEPTA traverses, and to
               dispatch more than half of SEPTA's trains.15 Amtrak also provides
               traction power for many SEPTA trains. One of these five agencies
               classified as having moderate reliance on Amtrak-Sound Transit in
               Seattle, which contracts with Amtrak for all of its maintenance of
               equipment service-does not travel on Amtrak-owned NEC tracks. The
               impact of an abrupt Amtrak shutdown on agencies with moderate
               reliance is the most uncertain and depends on the particular
               circumstances of a shutdown. For example, if an Amtrak shutdown
               included discontinuation of propulsion power to the NEC, SEPTA's
               service would cease. However, if power remained, SEPTA could
               potentially operate its service, although other challenges such as
               dispatching services currently provided by Amtrak would still need
               to be addressed.
               o  Limited reliance on Amtrak: We classified three agencies as
               having limited reliance on Amtrak for service. None of these
               agencies use the NEC, and these agencies could likely cope with an
               abrupt shutdown of Amtrak services by using existing resources
               until more resources became available. For example, Metra, a
               commuter rail agency in Chicago, relies on Amtrak for dispatching
               services and access to infrastructure in and around Chicago Union
               Station-a key station for several of Metra's lines that is owned
               and operated by Amtrak. Provided that Metra was granted the
               authority to assume responsibility for Chicago Union Station and
               obtained information regarding the employees it would need to hire
               to operate the station, a senior Metra official stated that it
               would be able to take over the operation of the station, and could
               do so over a weekend if necessary.
               o  Little to no reliance on Amtrak: We classified six commuter
               rail agencies, including two proposed commuter rail services, as
               having little to no reliance on Amtrak. These agencies either have
               their own in-house employees or they contract for services with
               private transportation companies or freight railroads. For
               example, the Northern Indiana Commuter Transportation District
               (NICTD) operates commuter rail service from South Bend, Indiana,
               to Chicago with its own employees and equipment on its own track.
               In addition, none of the agencies require access to Amtrak-owned
               NEC tracks, and all reported that they could continue service with
               minimal or no disruption in the event of an abrupt Amtrak
               cessation of services. Although these six agencies do not rely on
               Amtrak for services, most of these agencies have some kind of
               relationship with Amtrak. For example, the Fort Worth
               Transportation Authority-one of the two transit agencies that owns
               Trinity Railway Express (TRE)-built a multi-modal transportation
               facility that serves as a train, bus, and cab station for
               commuters in Fort Worth, Texas. In developing the center, Amtrak
               requested a number of features that would allow its intercity
               trains to use the station, and in turn Amtrak agreed to a 10-year
               operating lease of the station. According to TRE officials, the
               transportation authority would stand to lose a revenue stream of
               more than $500,000 per year if Amtrak ceased to use the station.

               The reliance on Amtrak for infrastructure and services by many
               commuter rail agencies has led to a variety of financial
               arrangements between these parties. While information on these
               arrangements could help decision makers in their efforts to reform
               Amtrak, these arrangements vary significantly and frequently lack
               clarity. As a result, it is difficult for Amtrak's internal and
               external stakeholders to identify the overall amount of revenues
               Amtrak generates, and the costs it incurs, in providing services
               and infrastructure access to commuter rail agencies. Several
               factors contribute to the lack of clarity, including limitations
               in Amtrak's accounting practices, lack of transparency in Amtrak's
               financial reports, and the structure of some of the arrangements.
               Amtrak's fiscal year 2006 appropriations bill directs DOT to levy
               a fee on commuter rail agencies that use the NEC to compensate
               Amtrak for maintenance and capital expenditures resulting from
               their use of the NEC. This fee could increase the transparency of
               Amtrak's-and commuter rail agencies' financial-arrangements, but
               it does pose some challenges.

               The financial arrangements between commuter rail agencies and
               Amtrak vary. One reason for this variation is the negotiation
               process. Although some financial arrangements have grown from the
               historical relationships between Amtrak and commuter rail
               agencies, most of today's arrangements are the product of
               individual negotiations. Through these negotiations, Amtrak and a
               commuter rail agency reach agreement on the terms and
               conditions-including price-for the commuter rail agency's use of
               Amtrak services and infrastructure. This agreement is typically
               documented in a contract between Amtrak and the commuter rail
               agency. The specific contract terms and conditions vary due to a
               number of factors, such as the comparative bargaining power of
               each party, the specific services and infrastructure used, and the
               extent of competition for the contract.16

               According to Amtrak officials, another factor that influences the
               specific terms and conditions of some of Amtrak's commuter rail
               contracts is the Interstate Commerce Commission's17 1983 ruling
               known as Ex Parte 417. This ruling governed compensation for
               access to the NEC for some commuter rail agencies, but not
               necessarily others.18

               o  Amtrak officials stated that NEC commuter rail agencies that
               were established prior to the ruling-namely, LIRR, SEPTA, NJT,
               MBTA, and MARC-start from an avoidable cost basis in NEC-access
               negotiations with Amtrak. Avoidable costs refer to only those
               expenses above what Amtrak would pay if the commuter rail did not
               use Amtrak infrastructure.
               o  Amtrak officials stated that other commuter rail agencies must
               negotiate NEC-access agreements from a fully allocated cost basis,
               which could include all of Amtrak's costs for running commuter
               rail trains over the NEC (e.g., including avoidable costs,
               depreciation, and overhead). These agencies include PENNDOT, SLE,
               and VRE.19

               Commuter rail agencies' financial arrangements with Amtrak also
               vary in relation to the terms of their capital contributions for
               shared infrastructure. Some commuter rail agencies contribute
               significantly more to capital projects that benefit both the
               commuter rail agency and Amtrak than others. For example, NJT has
               negotiated a $600 million, 10-year (1997-2006) joint benefit
               capital investment program with Amtrak. In contrast, SEPTA made
               over $30 million in capital investments on Amtrak-owned portions
               of the NEC between fiscal years 1995 and 2005.20

               The financial arrangements between Amtrak and commuter rail
               agencies also vary in terms of how they are structured. For
               example, Amtrak may have separate contracts for services,
               infrastructure access, and capital investment with one commuter
               rail agency, while another agency might have only one contract
               that bundles several services and access fees together in a fixed
               price. In addition, a few commuter railroads have entered into
               "quid-pro-quo" exchange arrangements with Amtrak. For example,
               Sound Transit and Amtrak have an exchange arrangement where
               monetary values are not established for maintenance of the two
               stations they share-that is, Amtrak uses the Tukwila Station,
               which is maintained by Sound Transit, and in turn Sound Transit
               uses the King Street Station, which is maintained by Amtrak. No
               recognition is given to this exchange in Amtrak's financial
               records and reports. Similarly, Amtrak grants MBTA commuter
               service access to 5.7 miles of track that Amtrak owns and
               maintains; in exchange, MBTA grants Amtrak the right to run
               intercity trains over 37 miles of track owned by MBTA. No money is
               exchanged between Amtrak and MBTA for the use of those portions of
               track.

               The financial arrangements between Amtrak and commuter rail
               agencies also lack clarity. That is, although such information
               could help decision makers consider potential reforms to Amtrak,
               it is difficult for commuter rail agencies, Amtrak's management,
               and external stakeholders (such as Congress and DOT) to identify
               the overall amount of revenue Amtrak generates and the costs it
               incurs in providing services and infrastructure access to commuter
               rail agencies. It is also difficult to determine whether commuter
               rail agencies are being over- or under-charged for services and
               infrastructure access. Several factors contribute to the lack of
               clarity, including limitations in Amtrak's accounting practices, a
               lack of transparency in Amtrak's financial reports, and the
               structure of some of the arrangements. Specifically:

               o  Limitations in Amtrak's accounting practices: Limitations of
               Amtrak's cost-accounting practices produce a lack of clarity in
               the financial relationships between commuter rail agencies and
               Amtrak-particularly with respect to Amtrak's ability to clearly
               show all of the costs it incurs in providing access to
               infrastructure and various services. While Amtrak can support
               amounts in periodic billing statements to some of its commuter
               rail customers, it cannot identify (and does not allocate and
               bill) the full cost of providing these services or access. In
               prior reports, we noted that Amtrak has insufficient unit cost
               metrics to measure the full costs of its core functions, such as
               train operations or infrastructure maintenance. Amtrak officials
               acknowledged that the methods for assigning its costs are not
               exact, and some commuter rail agencies with whom we spoke
               expressed dissatisfaction with Amtrak's ability to clearly
               document these costs. For example, officials from one commuter
               rail agency explained that Amtrak relied on historical cost data
               from prior negotiations and regularly adjusted these amounts for
               inflation rather than on clear and transparent actual annual
               costs. As a result, these commuter rail agency officials believed
               that Amtrak significantly overcharges for some items and
               significantly undercharges for others. In October 2005, we
               recommended that Amtrak enhance financial management transparency
               by lines-of-business (which include commuter operations) and
               establish unit cost measures, which could help Amtrak increase the
               accuracy of its cost information in providing services and
               infrastructure access to commuter railroads.21 Amtrak received $5
               million in its fiscal year 2006 appropriations to develop and
               implement a new managerial accounting system, which could also
               help improve its financial transparency.22
               o  Lack of clarity in Amtrak's financial reports: Amtrak's
               financial reports do not clearly and transparently present useful
               information for all amounts of revenue generated and all costs
               incurred for providing infrastructure access and services to
               commuter rail agencies. Amtrak has made some progress in showing
               its revenues and costs in its monthly performance reports;
               however, the total amount of revenue and costs from providing
               infrastructure access and services to commuter rail agencies is
               still unclear. For example, income generated from Amtrak's
               operation of commuter rail service is shown as commuter revenue;
               however, infrastructure access fees from commuter rail agencies
               are included with other railroads' access fees as infrastructure
               management revenue. Similarly, Amtrak's audited consolidated
               financial statements-while they properly report all items of
               revenue, cost, and offsets to capital items from commuter rail
               activities-Amtrak's management does not separately disclose all of
               this activity in one place, which would increase its usefulness.
               The lack of transparency in Amtrak's financial reports is due, in
               part, to limitations in Amtrak's accounting practices. Although
               commuter rail activities are not the focus of Amtrak's financial
               reports, the lack of transparency about the revenues and costs
               incurred as a result of Amtrak's commuter rail activities makes it
               difficult for Amtrak's management and external stakeholders to
               make fully informed decisions about its commuter line-of-business.
               o  Structure of financial arrangements: The structure of Amtrak's
               financial arrangements with commuter rail agencies also
               contributes to the lack of clarity. For example, as noted above,
               some commuter rail agencies have a single contract for both
               infrastructure access and services. According to Amtrak officials,
               while these contracts separate charges for infrastructure access
               and services, commuter rail agencies are not able to identify
               Amtrak's specific costs associated with these charges. As a
               result, several commuter rail agencies stated that this makes it
               difficult to determine the value of the specific services or
               access that they are purchasing from Amtrak. In addition, the
               "quid-pro-quo" arrangements are not recorded as revenues or
               expenses by Amtrak. Because these arrangements are not assigned
               monetary values, it is difficult to quantify the financial value
               or impact to Amtrak's or commuter rail agencies' bottom line.

               Officials from Amtrak acknowledged that there is a lack of clarity
               in the current financial arrangements between Amtrak and commuter
               rail agencies. In particular, officials noted that because of Ex
               Parte 417 and the practice of some (but not all) commuter rail
               agencies contributing to capital projects, there is a built-in
               imbalance in access fees and capital contributions paid to Amtrak
               from commuter railroads on the NEC. Amtrak officials said they
               would welcome a uniform capital contribution and access fee policy
               from the federal government.

               As part of Amtrak's fiscal year 2006 appropriation, Congress
               directed the Secretary of Transportation to assess a fee on
               commuter rail agencies using the NEC. According to the statute,
               the fee will be based on annual NEC maintenance and capital
               costs-net of any current contributions from commuter rail
               agencies-attributable to commuter rail use of the infrastructure.
               The statute directs the Secretary of Transportation to calculate
               the fee based on relative use of the NEC (e.g., train mile usage
               or another factor). The revenue generated from this fee would be
               used to support capital projects on the NEC. As of March 2006, FRA
               was working to develop and implement the fee.

               FRA and FTA officials identified several challenges in
               implementing this new fee. First, FRA officials stated that
               developing a formula for assessing the fee could be complicated;
               several factors could be used as a basis for the fee, including
               ridership or train miles-both of which are already used in other
               federal funding formulas-or other factors. Second, FTA officials
               noted that most commuter rail agencies already have negotiated
               agreements with Amtrak concerning cost-sharing approaches for
               capital investments, which will complicate the development of a
               separate formula for assessing the fee. Finally, FTA officials
               stated that they will need clarification regarding whether the
               Congress intended this fee as a rescission to federal funding of
               capital projects from FTA to commuter rail agencies, or as a new
               federal funding source to Amtrak.

               Commuter rail agencies using Amtrak-owned NEC share many of these
               concerns-especially that the contracts they have negotiated with
               Amtrak already establish their contribution for infrastructure
               access and capital contributions. These agencies also noted to us
               that their state fiscal year 2006 budgets have already been passed
               and did not include any funding for such a fee. As a result, these
               agencies may face difficulties in securing funding to pay the fee
               if DOT levies the charge as directed during the remainder of
               fiscal year 2006. In addition, because commuter rail agencies and
               Amtrak use the NEC in different ways (e.g., Amtrak high-speed
               intercity trains require more costly maintenance-of-way
               requirements as compared to slower commuter trains) and have
               different levels of use, commuter rail agencies argue that there
               are valid reasons for cost differentials between commuter rail
               agencies and Amtrak. Finally, officials from several commuter rail
               agencies expressed concern that they were not consulted prior to
               the enactment of this fee and believe that Amtrak, the federal
               government, and representatives of the affected states and
               commuter rail properties should cooperatively develop a formula
               for determining and allocating costs and compensation for
               shared-track operations on the NEC. According to FRA officials,
               FRA is in the process of meeting with commuter rail agencies to
               develop a methodology to calculate and apply this fee.

               Decisions made by federal policy makers in the debate over Amtrak
               will play a critical role in whether or not Amtrak abruptly ceases
               to provide services and infrastructure to commuter rail agencies.
               In the event that Amtrak abruptly ceases to provide services and
               infrastructure, commuter rail agencies would face two critical
               operational issues that could make it difficult for some to
               continue operations and avoid severe service disruptions. One
               critical issue they would face would be the potential loss of
               Amtrak skilled labor. Another critical issue would be the
               potential loss of access to Amtrak-owned infrastructure. Some
               commuter rail agencies also described facing additional issues,
               such as the loss of revenue or a strain on capacity.

               Decisions made by federal policy makers will play a critical role
               in whether or not Amtrak abruptly ceases to provide services and
               infrastructure to commuter rail agencies.23 The most likely cause
               for an abrupt Amtrak cessation is bankruptcy. Amtrak has been on
               the edge of bankruptcy several times. For example, in 2001, Amtrak
               lost over $1.2 billion and had to mortgage a portion of
               Pennsylvania Station in New York City to generate enough cash to
               meet its expenses. As we reported in October 2005, Amtrak's
               financial troubles have continued since that time, with operating
               losses now totaling over $1 billion per year.24 Given Amtrak's
               precarious financial position, federal policy makers' decisions
               could either usher Amtrak into bankruptcy or prevent Amtrak from
               slipping into bankruptcy. For example, if policy makers acted on
               legislative proposals that end or substantially reduce federal
               funding, an Amtrak bankruptcy or shutdown could quickly follow.
               Specifically, Amtrak officials have stated that proposals with
               zero funding for Amtrak operating or capital costs would promptly
               trigger an Amtrak bankruptcy. In contrast, federal policy makers
               could also act to prevent Amtrak from declaring bankruptcy, as was
               the case in July 2002 when DOT approved an emergency loan because
               the railroad was running out of cash.

               If federal policy makers allow an Amtrak bankruptcy to occur, a
               trustee would be appointed to oversee the bankruptcy proceedings.
               Under current law, the trustee, along with the bankruptcy court,
               would make decisions about Amtrak's future.25 Although it is
               difficult to predict what decisions a bankruptcy court would make,
               there is no guarantee that all of Amtrak services-such as the
               services it provides to commuter rail agencies-would continue. In
               October 2005, we suggested that as a first major step toward
               implementing and rationalizing the provision of intercity
               passenger rail service, Congress should consider establishing a
               clear national policy for intercity passenger rail service that
               would address, among other things, the interests of the diverse
               set of Amtrak stakeholders and limit unintended consequences to
               these parties.26 Commuter rail agencies are one kind of
               stakeholder, and the effect of an abrupt Amtrak shutdown on
               commuter rail agencies could be one such unintended consequence.

               For those commuter rail agencies that contract with Amtrak to
               provide services, an abrupt Amtrak cessation could result in a
               shortage of qualified labor needed to maintain commuter service
               and avoid severe disruptions or a shutdown of service. Amtrak
               employees provide a number of services to commuter rail agencies
               that support a wide range of commuter rail functions. In addition,
               these employees have institutional knowledge regarding the use and
               maintenance of the equipment and infrastructure needed to provide
               safe and efficient passenger rail service. If Amtrak employees no
               longer provided these services, commuter rail agencies would need
               to replace Amtrak labor with other experienced railroad employees
               or hire new employees and train them. However, the narrowed
               available pool of qualified rail employees due to the recent
               increase in freight traffic as discussed by freight railroad
               officials, as well as the time required to train new employees,
               could limit the ability of commuter rail agencies to replace
               Amtrak employees in the short term.

               STB staff placed Amtrak employees that provide services to
               commuter rail agencies in the following categories based on the
               type of service they provide to commuter rail agencies:

               o  Dedicated-contract employees: these employees are mainly
               dedicated to a single commuter rail service and include
               conductors, engineers, and maintenance of equipment personnel. For
               example, the Amtrak engineers and conductors that operate VRE
               commuter trains are dedicated to this service by contract,
               although they may occasionally work on Amtrak service.
               o  Cross-cutting employees: these employees provide services, such
               as maintenance-of-way, signals and communications, or dispatching,
               for more than one passenger rail service. For example, Amtrak and
               LIRR dispatchers working in Pennsylvania Station Central Control
               facility in New York City are jointly managed by Amtrak and LIRR.
               These dispatchers control the movement of Amtrak intercity trains
               as well as LIRR and NJT commuter trains.
               o  Overhead employees: these employees take care of functions such
               as payroll and training, and provide support to both Amtrak and
               the various commuter operations. These employees support
               dedicated, cross-cutting, and other overhead functions. It is
               unclear how many of these employees would be needed to support
               each individual commuter service contract.

               According to STB staff, dedicated-contract employees may be easier
               for commuter rail agencies to replace or assume in the short term
               than employees that provide either cross-cutting or overhead
               functions. For instance, dedicated-contract employees are easier
               to identify because they generally work for only one commuter rail
               service. In addition, the costs associated with dedicated-contract
               employees, such as salaries and benefits, are easier to quantify
               than costs associated with employees that support functions for
               more than one passenger rail service.

               If Amtrak abruptly ceased to provide services and infrastructure
               to commuter rail agencies, officials from a few commuter rail
               agencies told us they might be able to replace the Amtrak
               employees who are dedicated to their particular commuter rail
               service with employees from another railroad. For example, SLE,
               which operates between New London and New Haven, Connecticut, may
               be able to replace Amtrak train and engine crews with Metro-North
               employees that are already familiar with SLE's operation in 6 to
               12 months. Similarly, according to a senior Coaster official, the
               Coaster service operating between San Diego and Oceanside,
               California, would be able to replace Amtrak maintenance-of-way
               employees more quickly than other employees because either
               Burlington Northern Santa Fe, a Class I freight railroad, or local
               contractors could step in to perform this type of work.

               In most cases, however, commuter rail agencies told us they could
               not quickly replace current Amtrak employees because of workforce
               limitations, such as the availability of a qualified labor pool.
               For example, according to officials from several Class I freight
               railroads, their current workforce is already strained due to a
               growing demand for freight rail transportation and a narrow labor
               pool of qualified applicants. In addition, freight railroad
               employees could not immediately take over services provided by
               Amtrak employees without first obtaining training on commuter rail
               equipment. According to officials from one freight railroad, it
               would take at least 9 months to train someone to safely operate
               commuter service if existing Amtrak train crews were unavailable.
               Commuter rail agencies also told us they do not have the workforce
               capabilities or expertise to take over the services provided by
               Amtrak (especially overhead, dispatching, or maintenance services)
               in the short term. As a result, some commuter rail agencies would
               have to limit or shut down service in the short term unless
               current Amtrak employees could continue providing these services.
               For example:

               o  Caltrain bundles the services required to operate, maintain,
               and dispatch its commuter trains into one contract with Amtrak.
               According to one Caltrain official, if Amtrak no longer provided
               these services, Caltrain would likely go out of business and
               discontinue its commuter operations, because, among other things,
               Caltrain employees are not equipped to assume overhead functions
               currently provided by Amtrak, such as payroll, training, and human
               resources. Moreover, because of the small size of the commuter
               operation, it would be cost-prohibitive for Caltrain to handle
               these overhead functions compared to Amtrak, which can centralize
               such functions for its national network and all of its commuter
               services.
               o  While MBTA no longer contracts with Amtrak for operations and
               maintenance of equipment services, Amtrak personnel still provide
               some services, including maintenance-of-way, signal maintenance,
               and dispatching for some of its trains. In particular, Amtrak
               employees dispatch MBTA trains at the joint Centralized
               Electrification and Traffic Control (or CETC) center in Boston's
               South Station. The technical skills required to dispatch trains
               take time to develop and could not be replaced in a short time
               period. An official from the Massachusetts Bay Commuter Railroad
               Company (MBCR), the contract operator of the MBTA commuter
               service, stated that if Amtrak no longer provided dispatching
               services for MBTA trains, it would need to hire 18 dispatchers-and
               hiring and training these dispatchers would take about 15 months
               if it could not hire the existing, qualified Amtrak employees.
               Until these dispatchers were trained and in place, MBTA's service
               would be limited.

               Other commuter rail agencies on the NEC that rely on Amtrak's
               skilled workforce would also face issues in the event of an abrupt
               Amtrak cessation. For example, NJT relies on Amtrak employees to
               dispatch some of its trains out of the CETC center in
               Philadelphia's 30th Street Station. SEPTA also relies on Amtrak
               dispatchers to provide overhead electric power and dispatch both
               power and some of its trains out of this CETC center. According to
               NJT and SEPTA officials, these employees could not be replaced in
               the short term because of the training and expertise required to
               provide these services.

               To avoid disruptions or shutdowns, commuter rail agencies would
               need to be able to continue accessing Amtrak-owned infrastructure
               if Amtrak abruptly shut down. Commuter rail agencies on the NEC,
               in particular, could face severe service disruptions without the
               ability to access Amtrak-owned track and stations along the NEC.
               For example:

               o  Officials from LIRR stated that without access to Pennsylvania
               Station, which is the LIRR's major access point to downtown New
               York City, about 87.4 percent of LIRR's daily passengers would
               have to be taken to temporary west-end terminals and transferred
               to various subway stations in order to complete their trips into
               Manhattan.
               o  NJT officials estimated that over 77 percent of its daily
               passengers would be affected each day if it could no longer
               operate its trains over the NEC. According to these officials,
               there are not enough suitable alternative transportation options
               to accommodate these passengers because of capacity limitations on
               area highways and lack of additional bus equipment.
               o  According to a SEPTA official, almost all of its passengers
               would be affected without access to Amtrak-owned right-of-way and
               traction power, which is provided through the CETC Center in
               Philadelphia's 30th Street Station. This is because almost all
               SEPTA passengers begin or end their commute in the city center,
               where all of SEPTA's routes are connected through a central tunnel
               that has traction power provided by Amtrak. If access to
               Amtrak-owned infrastructure and power is unavailable, limited bus
               service to SEPTA heavy rail and light rail lines might be
               available to some passengers.

               As discussed previously, Amtrak also owns and controls
               infrastructure outside the NEC, including stations and maintenance
               yards that are used by commuter rail agencies. These commuter rail
               agencies would also need continued access to these facilities in
               order to limit service disruptions if Amtrak abruptly ceased
               service. For example, over half of Metra's commuter rail lines
               could not complete their trips without access to Chicago Union
               Station. In Seattle, Sound Transit officials stated that they
               would have to obtain access to another maintenance facility, which
               would likely cause severe service disruptions, or discontinue
               service if access to Amtrak's Holgate maintenance yard was
               unavailable due to an abrupt Amtrak cessation.

               While access to labor and infrastructure present critical issues
               for commuter rail agencies that rely on Amtrak, a number of other
               issues could also face commuter rail agencies in the event of an
               abrupt Amtrak cessation. These include loss of revenue and a
               strain on capacity.

               o  Loss of revenue: some commuter rail agencies could lose revenue
               received from access fees paid by Amtrak to operate its trains
               over tracks owned by the commuter authority. For example, the
               Coaster service in California receives $1.9 million a year from
               Amtrak to operate over infrastructure owned by Coaster. According
               to one Coaster official, without this revenue, service reductions
               or fare increases would likely result.
               o  Strain on capacity: some commuter rail agencies could also face
               a strain on capacity as a result of an abrupt Amtrak cessation.
               For example, some commuter rail services may have to accommodate
               passengers from Amtrak's intercity service or take over portions
               of Amtrak's intercity service. However, commuter rail agencies may
               not have adequate resources or the capacity to accommodate
               additional intercity passengers. For example, both Metro-North and
               Metrolink expect they would have to add equipment to their service
               in order to accommodate Amtrak intercity passengers. However,
               according to a Metrolink official, it is uncertain how quickly it
               could procure additional equipment to meet increased demand in the
               short term. In addition, some commuter rail agencies have
               cross-ticketing programs with Amtrak that allow one or both
               parties to increase capacity on their lines without having to add
               cars or trains to their service. For example, both Coaster and
               Metrolink have initiated "rail-to-rail" ticketing programs with
               Amtrak that allow commuters who hold monthly passes to ride Amtrak
               trains within the commuter rail's service territory. This
               effectively increases the number of trains that Coaster passengers
               can use each day from 22 to 44. An Amtrak cessation, therefore,
               would significantly reduce these commuter rail agencies' capacity.

               Most commuter rail agencies that rely on Amtrak services and
               Amtrak-owned infrastructure have identified short- and long-term
               options to mitigate service disruptions in the event that Amtrak
               abruptly ceases operations. However, those options are largely
               dependent on the ability to retain Amtrak employees and access to
               Amtrak's infrastructure, particularly in the short term. Federal
               agencies could provide short-term options to mitigate potential
               impacts on commuter rail agencies in the event of an abrupt Amtrak
               cessation. However, service disruptions are likely and the cost of
               funding such options is unknown. Private transportation companies
               could take over commuter rail services provided by Amtrak;
               however, labor and liability issues, among others, would need to
               be addressed.

               Contingencies identified by commuter rail agencies to respond to
               an abrupt Amtrak cessation vary depending on the reliance of that
               agency on Amtrak for services and access to infrastructure.
               Commuter rail agencies that have little to no reliance on Amtrak
               would be able to continue operating commuter service with little
               or no service disruption if Amtrak abruptly ceased to provide
               services and infrastructure. Nevertheless, some of these agencies
               have identified some options to mitigate the potential non-service
               impacts, such as the potential strain on capacity as a result of
               an Amtrak cessation. For example, Metro-North would add train cars
               to its current service in order to accommodate passengers from
               Amtrak's intercity service.

               Commuter rail agencies with limited to heavy reliance on Amtrak,
               however, could face minor to severe service disruptions depending
               on their ability to retain Amtrak employees and use Amtrak
               infrastructure-which is particularly critical for commuter rail
               agencies on the NEC. Commuter rail agencies identified short-term
               contingencies ranging from assuming portions of the service to
               curtailing or shutting down service if Amtrak abruptly ceases to
               provide services and access to infrastructure to them.

               o  Assume portions of service: In some cases, commuter rail
               agencies may be able to assume management of some of the services
               provided by Amtrak. For example, MBTA has the option to add
               dispatching and infrastructure maintenance functions to its
               contract with MBCR. These functions are currently provided by
               Amtrak on those portions of the NEC that MBTA operates commuter
               service. However, MBTA stated it would prefer to hire the current
               Amtrak personnel or would need the current workers to continue to
               provide these services until other workers were hired and
               trained-a process that could take more than 1 year.
               o  Find alternate service provider: A few commuter rail agencies
               would make arrangements for an alternate provider to take over
               services provided by Amtrak. For example, a commuter rail agency
               official told us that they would either conduct an emergency
               procurement to replace the current contract with Amtrak or would
               go directly to another operator and ask them to fill in. However,
               this process would likely be very expensive because there would
               not be sufficient time to competitively procure the contract. It
               would also require the willingness of Amtrak employees currently
               dedicated to that commuter rail agency's service to hire on with
               the new contractor.
               o  Curtail or shut down service: Several commuter rail agencies,
               particularly on the NEC, stated they would either have to curtail
               portions of their service or shut down service entirely,
               particularly if access to Amtrak employees and infrastructure were
               unavailable. For example, MARC officials told us if MARC could no
               longer access Washington Union Station, they would run only the
               trains that operate over CSX Transportation (CSX) infrastructure
               to stations outside of Washington, D.C., and passengers would need
               to transfer to subway or bus lines to complete their trips into
               Washington, D.C. Other commuter rail agencies told us they would
               likely shut down service if Amtrak abruptly ceased to provide
               services and infrastructure. For example, a Caltrain official
               stated that it would likely end all of its commuter rail service
               because it does not have the workforce capabilities to take over
               all of the services provided by Amtrak.

               Commuter rail agencies also identified long-term contingencies in
               the event of an Amtrak cessation. Commuter rail agencies that use
               Amtrak for services would issue request-for-proposals (RFP) to
               hire new contractors to replace Amtrak. However, several commuter
               rail officials told us that the procurement process takes an
               average of 18 months from the time the RFP is issued to the time
               the new contractor can begin providing service. These contractors
               would also need to hire a qualified workforce, which may or may
               not include Amtrak employees, and would require access to
               Amtrak-owned infrastructure in order to provide services to
               commuter rail agencies.

               STB has the statutory authority to direct a rail carrier to
               provide services, previously provided by Amtrak, to commuter rail
               agencies in the event of an abrupt Amtrak cessation of services.
               According to the statute, in order for STB to issue a
               directed-service order (1) a commuter rail agency must be
               adversely affected by an Amtrak shutdown and (2) funding must have
               been appropriated for directed service. The statute also
               establishes parameters for the use of directed service. For
               example, a single directed-service order cannot last more than 270
               days (about 9 months). In addition, in a directed-service
               scenario, STB must require the use of the employees who would have
               normally performed the work, to the extent practicable. Such
               employees could be former Amtrak employees or employees from
               another railroad,27 including commuter or freight railroads. The
               statute also gives STB the authority to direct a service provider
               to take over the provision of infrastructure functions related to
               operations, such as traction power, dispatching, and maintenance.
               Therefore, according to STB staff, STB could direct service over
               the NEC so that current commuter rail agencies could continue to
               operate on the NEC for a limited period of time. However, STB's
               authority to direct service for commuter rail agencies has never
               been used, and a number of uncertainties about directed
               service-such as the time required to implement a directed service
               order and the costs of such efforts-exist. Consequently, FRA
               officials believed that service disruptions under a
               directed-service scenario would be unavoidable and could be either
               brief or extended, depending on the particular situation of the
               commuter rail agency.

               Companies that could be directed to provide the services now
               performed by Amtrak for commuter rail agencies include freight
               railroads, the commuter rail agencies themselves, and possibly
               other entities. For example, Metra in Chicago might be directed to
               take over the operation, maintenance, and dispatching for Chicago
               Union Station-a responsibility Metra officials stated they would
               be able to do. STB staff did note that even though STB has the
               authority to direct entities to serve as a directed service
               provider, it would have to weigh their willingness to perform this
               task. For example, although STB can direct a freight railroad to
               provide train crews to operate commuter rail service, freight
               railroad officials with whom we spoke have consistently expressed
               a lack of interest in being directed-service providers. STB staff
               did note, however, that the freight railroads operating in the
               Northeast do have an interest in Amtrak's continued operations.
               For example, Norfolk Southern (NS) relies on Amtrak dispatching
               and infrastructure to provide freight service over some of the NEC
               to several major mid-Atlantic markets. According to a Norfolk
               Southern official, the NEC is the only practical route NS freight
               trains can use to reach Baltimore, Wilmington, and the Delmarva
               Peninsula,28 which are all major rail markets. STB staff recognize
               that directing an unwilling entity to provide service is an
               undesirable situation that could result in service delays, and STB
               staff stated that they would prefer to avoid this type of
               scenario.

               STB staff and FRA officials believe that directed service would be
               highly problematic and should be avoided if at all possible.29 FRA
               officials stated that the current directed service implementation
               plan contains some questionable assumptions, particularly the
               assumptions about labor and the cost of directed commuter service.
               For example, implementation plans assume that Amtrak employees
               (especially on the NEC) would be willing to continue performing
               their same duties for the directed-service provider. However,
               according to FRA and FTA officials as well as STB staff, former
               Amtrak employees would have no legal obligation to accept an
               employment offer from the directed-service provider. The labor
               unions we spoke with stated that they believed that in a
               directed-service scenario, Amtrak employees would be much more
               likely to accept jobs with employers that participate in the
               railroad retirement-system, such as freight railroads. These jobs
               would be more secure and would allow employees to remain in the
               railroad retirement-system.30 Not all commuter rail agencies
               participate in the railroad retirement-system, which would make
               jobs with those commuter rail agencies less desirable to employees
               currently covered by the retirement system. According to FRA
               officials, the biggest concern and unknown in a directed service
               scenario is whether former Amtrak employees will agree to work for
               the new provider.

               In addition, FRA officials stated that the estimates of the costs
               of providing directed service are unreliable and not based on a
               robust set of assumptions. In fiscal years 2004 - 2006, Congress
               directed the Secretary of Transportation to withhold $60 million
               from Amtrak's federal grant to use if STB issued a
               directed-service order.31 According to STB staff and FRA
               officials, the $60 million figure is a rough estimate of the cost
               of providing directed service that FRA developed based on Amtrak's
               overall cash burn rate per month. However, because of the
               assumptions used to calculate the estimate, officials from FRA and
               STB staff questioned the reliability of the estimate and the
               length of time this level of funding could cover. For example, FRA
               officials suggested that $60 million could cover no more than 2
               months-and likely far less-of directed commuter rail service.
               These officials stated that this estimate assumed only minimal
               services for the 2-month period. For instance, according to FRA
               officials, this level of funding would not allow for any
               significant mechanical work on any piece of commuter rolling
               stock, which would force any equipment requiring such servicing to
               be parked until additional funding was made available. Taking
               equipment that needs maintenance out of service is not sustainable
               for more than a few months. In addition, STB staff and FRA
               officials stated that the estimate reflects only the operational
               costs associated with providing directed service, and therefore,
               did not include funding for capital maintenance or for the backlog
               of capital improvements on the NEC. It also does not account for
               the access fees commuter rail agencies would presumably continue
               paying to the residual Amtrak (or new infrastructure owner) for
               the use of its infrastructure. STB staff and FRA officials stated
               that long-term directed-service scenarios (i.e., when directed
               service lasts longer than 1 or 2 months) would require additional
               funds for train operations, equipment maintenance, and capital
               funding for critical infrastructure. Some commuter rail agencies
               noted that directed service would probably be needed for more than
               a few months due to the time required to transition to a new
               service provider.

               Although the accuracy of the $60 million estimate for 2 months of
               directed service is questionable, it was used to calculate the
               costs of providing directed service for 12 months in the
               administration's fiscal year 2006 budget proposal. Specifically,
               the administration's fiscal year budget proposed that no capital
               or operating funds be provided to Amtrak, and that $360 million be
               set aside for directed service for commuter and freight rail.
               According to FRA officials, the $360 million was based on FRA's
               2-month estimate and multiplied out to cover an entire year.
               However, as the original estimate was not based on robust
               assumptions, officials do not think that $360 million would be
               able to cover 1 year of directed commuter rail service in the
               event of an Amtrak shutdown, much less commuter and freight rail
               services.

               In addition to Amtrak, freight railroads and other private
               transportation companies currently provide services, including
               train operations, equipment maintenance, infrastructure
               maintenance, and dispatching, to commuter rail agencies. Freight
               railroads typically provide some level of services to commuter
               rail agencies in cases where the commuter service operates in part
               (or entirely) over infrastructure owned and maintained by the
               freight railroad. For example, Burlington Northern Sante Fe
               provides access to-and maintenance of-its infrastructure for
               Metrolink, Sounder, and Metra. In addition, private transportation
               companies, including Bombardier, Connex, and Herzog, provide
               services to seven commuter rail agencies. These companies provide
               a range of services, including operations, equipment maintenance,
               infrastructure maintenance, and dispatching.

               While some freight railroads currently provide services to
               commuter rail agencies, most are not actively pursuing additional
               commuter rail contracts and would be hesitant to take over
               services provided by Amtrak if it abruptly ceased to provide
               services and infrastructure. Freight railroad officials told us
               they have limited resources to dedicate to commuter rail service
               because the freight industry continues to grow and expand. The
               growth of freight traffic also presents a greater opportunity for
               freight railroads to make a profit and limits the capacity freight
               railroads have to add commuter trains on their infrastructure. In
               addition, most of the freight railroad officials with whom we
               spoke told us liability is an issue in providing commuter rail
               service.

               Private transportation providers, on the other hand, expressed
               interest in expanding their role in the commuter rail market and
               in taking over services provided by Amtrak if Amtrak was to
               abruptly cease providing services and infrastructure access to
               commuter rail agencies. However, officials from some private
               transportation companies told us that they would need sufficient
               time to ensure a smooth transition, noting it would take months to
               work out all the operational and administrative details, such as
               complying with FRA safety regulations-particularly if the new
               operator was unable to hire Amtrak employees. For example, in
               taking over Metrolink's service from Amtrak in July 2005, Connex
               had to take responsibility for all regulatory requirements
               pertaining to the operation of the railroad, including, among
               other things, setting up a drug and alcohol testing regime,
               obtaining engineer certification, and setting up operating rules.
               According to Metrolink officials, it took Connex about 4 months to
               satisfy these regulatory requirements from the time the contract
               was awarded.

               In addition to addressing these issues, private transportation
               companies would need time to secure a workforce to provide the
               services. The private transportation companies do not have a pool
               of available and qualified rail employees to take over commuter
               rail services. Rather, these companies would need to hire, and
               possibly train, employees. Officials from the private
               transportation companies told us that the quickest and easiest
               option would be to hire the Amtrak employees currently providing
               the commuter rail services. Hiring these employees would provide
               the private transportation company a qualified workforce that is
               knowledgeable about the specific service, and therefore help
               ensure a smooth transition, according to officials from these
               private transportation companies. However, there is no guarantee
               that the Amtrak employees would want to switch to the private
               transportation company providing the commuter service. For
               example, in taking over MBTA's services from Amtrak, MBCR entered
               into labor agreements with 14 separate unions representing 1,600
               Amtrak employees within 6 months of winning the contract.32
               According to union representatives, MBCR was successful in hiring
               Amtrak employees because it was willing to "come to the table" and
               negotiate a fair contract that continued to participate in the
               railroad retirement-system and offered higher wages to employees
               than what they received working for Amtrak. As a result, MBCR was
               able to reach an agreement with all Amtrak employees in 3 months.
               In contrast, Bombardier was unable to hire sufficient Amtrak
               employees when it took over Amtrak's maintenance-of-equipment
               contract with Metrolink. According to union representatives, this
               situation can be expected as experienced railroad labor seeks to
               remain in the railroad retirement-system and retain other labor
               protections-conditions that Bombardier did not offer. As a result,
               Bombardier had to hire new maintenance staff with very little
               railroad experience and train them on Metrolink's procedures and
               equipment. According to Metrolink officials, this contributed to a
               "turbulent" and lengthy transition.

               The labor union representatives with whom we spoke told us that
               many senior Amtrak employees would be hesitant to accept a job
               offer from a private transportation company that did not have
               Amtrak's experience and understanding of the railroad business. In
               accepting an offer with another company, Amtrak employees may not
               only lose their employee benefits and collective bargaining
               agreements, but also could lose their seniority. That is, these
               employees would not likely transition to a new service provider
               and expect to maintain the same level of seniority they had with
               Amtrak. As a result, despite Amtrak's long-term financial
               uncertainty, Amtrak employees are cautious about taking on the
               risk of working for a private transportation company.

               In addition to securing a workforce, officials from private
               transportation companies with whom we spoke identified several
               other challenges, such as the regulatory process, in competing for
               or assuming commuter rail services. The most frequently cited
               challenge was liability. According to private transportation
               company officials, they carefully review liability and insurance
               language in evaluating whether or not they will bid on a
               particular commuter rail contract; although, according to an
               official from one private transportation company, liability and
               insurance language has never prevented it from submitting a bid
               for a commuter rail contract. These factors are particularly
               important when negotiating with a commuter rail agency that
               operates its service over infrastructure owned by freight
               railroads. According to an official from one private
               transportation company, freight railroads require public entities,
               including commuter rail agencies, to carry upwards of $200 million
               for liability insurance to operate over their track and also
               include expensive indemnification language in commuter contracts.
               Therefore, some commuter rail agencies are now using
               shared-liability contracts for services, in which the operator and
               commuter rail agency share exposure to liability risk. For
               example, in taking over the train operations contract from Amtrak,
               one commuter rail agency required its private operator to assume
               some of the liability if it was found to have shown willful
               misconduct in causing an accident. Specifically, if that operator
               is found responsible for an incident causing over $500,000 in
               damages, the operator is responsible for contributing $500,000
               toward the damages up to two times a year.

               Seven commuter rail agencies currently contract with private
               transportation companies to provide services, such as operations
               and equipment maintenance. Of these seven commuter rail agencies,
               two agencies had contracted with Amtrak for services in the past,
               but in one case, moved away from Amtrak because of dissatisfaction
               with the service Amtrak was providing and its unresponsiveness in
               meeting the needs of the commuter rail agency. In the other case,
               Amtrak withdrew from the commuter rail agency's most recent
               procurement process and did not submit a proposal in response to
               the agency's RFP to continue providing services.

               Other commuter rail agencies have also expressed interest in
               moving away from contracting with Amtrak for services, including
               commuter rail agencies on the NEC. These agencies cited a number
               of reasons, including Amtrak's unstable federal funding and
               long-term planning challenges, in their decisions to reduce their
               reliance on Amtrak-either by conducting more of their services
               in-house, or by contracting with a private transportation company.
               For example, one commuter rail agency constructed its own
               maintenance facilities so it would not have to rely entirely on
               Amtrak to service its equipment at Amtrak facilities. In addition,
               another commuter rail agency recently conducted a procurement
               process and recommended that a private transportation company be
               awarded the contract to provide the services previously provided
               by Amtrak. According to officials from the American Public
               Transportation Association, Amtrak's threatened service shutdown
               in 2002 over the level of federal funding for Amtrak may also have
               caused some commuter rail agencies to contemplate other service
               providers more seriously.

               Although some commuter rail agencies have moved away from
               contracting with Amtrak for services, officials from a few
               commuter rail agencies stated that they would like Amtrak to
               continue providing services to commuter rail agencies. According
               to these officials, Amtrak has a history of providing services to
               commuter rail agencies and its employees are knowledgeable about
               the commuter rail business. In addition, commuter rail agencies
               would like to have a number of firms or companies to choose from
               when competitively procuring service contracts. Two commuter rail
               agency officials mentioned that having more competition provides
               commuter rail agencies more flexibility in choosing a service
               provider, and can reduce costs.

               Given the dependence of most commuter rail agencies on Amtrak for
               services and infrastructure, an abrupt Amtrak cessation would
               likely result in major disruptions or shutdowns of commuter rail
               services throughout the country. This could strain regional
               transportation systems, as hundreds of thousands of regular
               commuter rail passengers would be forced to seek alternative forms
               of transportation. Although commuter rail agencies have some
               contingency plans and the STB has the authority to direct commuter
               rail service, an abrupt Amtrak cessation would create a worst-case
               scenario for many commuter rail agencies, especially those that
               use Amtrak-owned infrastructure in the densely populated NEC.

               Certainly, commuter rail issues should not drive or derail
               policy-makers' efforts to reform Amtrak. However, given the
               importance of commuter rail services to many regions and the
               negative impact an abrupt Amtrak exit would create, it seems
               appropriate that these issues are included as federal policy
               makers consider the debate over Amtrak. In our October 2005 report
               on Amtrak's management,33 we suggested that Congress consider
               establishing a nationwide policy for intercity passenger rail that
               would address, among other things, the interests of the diverse
               set of Amtrak stakeholders and limit unintended consequences to
               these parties. Given the complex relationships between commuter
               rail agencies and Amtrak, commuter rail agencies are one such
               stakeholder, and the effect of an abrupt Amtrak shutdown on
               commuter rail agencies would be an unintended consequence of some
               Amtrak reform proposals. Any such negative impact on commuter rail
               agencies should be taken into account when developing any national
               policy for intercity passenger rail.

               Our work indicates that two critical issues for commuter rail
               agencies that would need to be addressed in the event of an abrupt
               Amtrak shutdown are (1) the potential loss of Amtrak's skilled
               labor force and (2) access to Amtrak-owned infrastructure. Without
               access to key infrastructure, such as the NEC, and a skilled labor
               force to crew trains and maintain the right-of-way, among other
               things, commuter rail service disruptions throughout the nation
               are inevitable. A related issue is the time that commuter rail
               agencies need to transition from Amtrak to other operators in the
               event of an Amtrak shutdown. According to some commuter rail
               agencies and private transportation operators, a transition
               between qualified operators takes months, not weeks. To date, the
               various Amtrak reform proposals do not comprehensively address
               these issues. As deliberations about Amtrak move forward, such
               issues should be considered and addressed so that disruptions to
               commuter rail service can be minimized.

               To fully understand the relationship between commuter rail
               agencies and Amtrak, it will also be important to obtain better
               information on the costs Amtrak incurs-and the revenue it earns-in
               providing services and infrastructure access to commuter rail
               agencies. Although Amtrak has made some progress in improving its
               accounting systems and practices, its current practices do not
               allow for full transparency. In particular, Amtrak's financial
               reports do not clearly show the revenues earned and costs incurred
               for providing services and infrastructure access to commuter rail
               agencies. Moreover, Amtrak lacks a methodology to adequately
               allocate shared costs to different commuter rail users.
               Consequently, it is difficult to determine what Amtrak's true
               costs are in providing services and infrastructure to commuter
               rail agencies, and whether commuter rail agencies are paying their
               "fair share." Furthermore, the lack of this type of information
               clouds the negotiation process between commuter rail agencies and
               Amtrak-that is, commuter rail agencies do not necessarily know if
               they are being over- or undercharged for services. Likewise,
               Amtrak management cannot make fully informed decisions about
               competing for commuter rail contracts.

               As Amtrak's precarious financial position raises the possibility
               of an Amtrak cessation of service, it is prudent that commuter
               rail agencies and the responsible federal agencies plan for such
               an event. These plans are in place in many commuter rail agencies
               and include a range of options-from shutting down service to
               taking over control of key infrastructure by the commuter rail
               agency. STB and FRA's ability to order and fund directed service
               for commuter rail agencies is a limited, short-term option.
               However, directed service is not a panacea-rather there is
               agreement that service disruptions would occur in a
               directed-commuter-service scenario. Moreover, the cost of
               providing directed service is unknown. Current estimates of
               providing this service-including the $60 million estimate for 2
               months of directed service, or the $360 million estimate for an
               entire year of service-are, at best, rough estimates of how much
               such service would cost. Without accurate cost estimates, federal
               policy makers cannot make fully informed decisions about directed
               service.

               In order to provide more information to federal policy makers
               involved in the debate over Amtrak, we recommend that the
               Secretary of Transportation direct FRA, in consultation with STB
               and commuter rail agencies, to further refine cost estimates of
               commuter rail directed-service scenarios.

               To ensure that Amtrak provides useful information to both its
               internal and external stakeholders, including commuter rail
               agencies that contract with Amtrak, we recommend that the
               president of Amtrak improve its accounting practices, as well as
               its financial reports, to clearly show all revenues earned and all
               costs incurred when providing services and infrastructure access
               to commuter rail agencies. This information could increase the
               clarity of Amtrak's costs for providing services and access to
               infrastructure to Amtrak management, commuter rail agencies, and
               Congress. It would also allow for a more informed debate about how
               commuter rail agencies interact with Amtrak and compensate it for
               access to critical infrastructure and services.

               We provided DOT officials a copy of our draft report for their
               review and comment. On April 6, 2006, we met with DOT officials,
               including DOT's Audit Liaison, FRA's Assistant Chief Counsel, and
               an FTA Economist; as well as STB staff, including the Associate
               Director for the Office of Economics, Environmental Analysis, and
               Administration, to obtain their comments on our draft. These
               officials and staff represented the views of their respective
               agencies. Overall, they generally agreed with the draft report's
               findings and the intention of the recommendation. DOT officials
               indicated that the draft report provides useful information about
               the implications of directed service for commuter railroads.
               Further, they indicated that the draft report does a good job of
               explaining how Amtrak's internal costing and contracting systems
               do not adequately or accurately identify the costs incurred and
               the revenues received for specific lines-of-business, such as
               those provided for commuter railroads. DOT officials recognized
               that these Amtrak accounting systems were not designed with this
               intent in mind. As a result, DOT officials stated that until
               Amtrak accounting and contracting systems provide better
               documentation and greater clarity with respect to individual lines
               of business, further refinements of cost estimates associated with
               various commuter rail directed-service scenarios will continue to
               prove problematic. According to FRA officials, in light of the
               data limitations, attempting further refinements in the cost
               scenarios associated with the unlikely event of an Amtrak shutdown
               does not represent the best possible use of the limited staff
               resources. FRA officials indicated their preference is to continue
               focusing their resources on priorities related to maintaining and
               improving Amtrak operations. FRA and FTA officials and STB staff
               also provided technical clarifications to the draft report, which
               we incorporated as appropriate.

               We recognize that FRA, like other federal agencies, has resource
               constraints and must focus those resources on certain priorities.
               However, given previous and current debate over the future of
               Amtrak, we believe providing policy makers with accurate
               information as to the implications of directed service-including
               the costs of such services-is a worthwhile investment of agency
               resources and deserves some level of attention. Moreover, although
               the limitations in Amtrak's accounting systems that we detail in
               the report would prevent the development of a precise cost
               estimate of directed service, we believe that refinements could be
               made using existing information from Amtrak and commuter rail
               agencies. Further, as FRA works with Amtrak to improve its
               accounting systems-and thus improve its cost data-it could further
               refine the directed service cost estimates. DOT officials
               acknowledged that the current estimates-which are based on a
               limited set of assumptions-are inaccurate, and most likely
               significantly underestimate the true costs of directed service.
               Therefore, any refinements would be a step in the right direction
               in providing better information to policy makers.

               We also provided Amtrak officials a copy of the draft report for
               their review and comment. Amtrak generally agreed with the
               report's findings, conclusions, and recommendations. Amtrak
               provided technical clarifications to the draft report, which we
               incorporated as appropriate.

               As agreed with your office, unless you publicly announce the
               contents of this report earlier, we plan no further distribution
               until 30 days from the report date. At that time, we will send
               copies of this report to congressional committees with
               responsibilities for commuter rail issues; the Secretary of
               Transportation; the Acting President of Amtrak; the Administrators
               of FRA and FTA; the Chairman of STB; and the Director, Office of
               Management and Budget. We also will make copies available to
               others upon request. In addition, this report will be available at
               no charge on GAO's Web site at http://www.gao.gov .

               If you or your staff have any questions on matters discussed in
               this report, please contact me on (202) 512-2834 or at
               heckerj@gao.gov. Contact points for our Offices of Congressional
               Relations and Public Affairs may be found on the last page of this
               report. Key contributors to this report can be found in appendix
               III.

               Sincerely,

               JayEtta Z. Hecker Director, Physical Infrastructure Issues

               To address our objectives, we contacted officials from all
               existing (and two proposed) commuter rail agencies, the four
               largest Class I railroads, and private transportation companies
               that currently operate commuter rail service in the U.S. To
               identify the universe of existing and proposed commuter rail
               systems, we used information published by and provided to us by
               the American Public Transportation Association (APTA). We reviewed
               this information with APTA in order to identify transit agencies
               that are currently providing commuter rail services and proposed
               commuter rail agencies that were the closest to becoming
               operational. APTA categorized proposed commuter rail agencies as
               either "immediate," "midway," or "later"; those in the immediate
               category were considered closest to becoming operational. Using
               these sources we identified 18 existing commuter rail agencies and
               2 proposed commuter rail agencies. While APTA considered 8
               proposed commuter rail agencies as immediate, we selected the 2
               proposed commuter rail agencies APTA officials indicated were
               likely to begin operations during the course of our review. To
               identify the four largest Class I railroads, we reviewed the
               February 2005 Surface Transportation Board (STB) Report of
               Railroad Employment and information provided by the Association of
               American Railroads (AAR). AAR also provided contact information
               for each Class I railroad. To identify private transportation
               providers, we interviewed officials from APTA, the National
               Railroad Passenger Corporation (Amtrak), freight railroads, and
               commuter rail agencies to ask about companies that currently
               operate commuter trains or provide other services. We subsequently
               interviewed officials at all of the private transportation
               companies identified by these officials. Table 4 lists the names
               and locations of the commuter rail agencies, freight railroads,
               and private transportation providers we contacted.

    15The remainder of the services (e.g., train operations, equipment
    maintenance, and the rest of the dispatching) are provided by SEPTA
    employees.

    Financial Arrangements between Amtrak and Commuter Rail Agencies Vary and Lack
    Clarity

      Financial Arrangements between Commuter Rail Agencies and Amtrak Vary

    16Commuter rail contracts can either be a product of a competitive or
    non-competitive process. In a competitive process, a commuter rail agency
    requests proposals for a certain set of services and several companies
    submit offers to provide that service. The companies may be given feedback
    and an opportunity to refine their offers. One or more companies are
    ultimately selected for a contract. Where Amtrak owns the infrastructure
    necessary for commuter service, commuter rail agencies have entered into
    non-competitive contracts with Amtrak-for example, to access the
    Amtrak-owned NEC, Chicago Union Station, or Holgate Maintenance Yard in
    Seattle. A non-competitive contract is one in which the cost is developed
    through negotiations with a single provider such as Amtrak.

    17STB is the successor to the Interstate Commerce Commission (ICC).

    18According to STB staff, no commuter rail agency has petitioned the Board
    to apply the ICC ruling. Nevertheless, it serves as an option should
    Amtrak and those commuter rail agencies subject to the ruling fail to
    reach agreement as to the terms and conditions of access. Moreover, a
    senior Amtrak official stated that commuter rail agencies covered by the
    ICC ruling use it as the basis for access negotiations.

    19SEPTA provides commuter rail service for the Delaware Department of
    Transportation between Newark/Wilmington, DE, and Philadelphia, PA. This
    service was initiated after Amtrak's inception, and therefore, Delaware's
    Department of Transportation also negotiates a price for accessing the
    NEC.

      Financial Arrangements between Amtrak and Commuter Rail Agencies Lack Clarity

    20SEPTA and Amtrak are finalizing an agreement to invest $380 million on
    portions of the Amtrak-owned Keystone Corridor over 11 years.

    21 GAO-06-145 .

    22According to FRA officials, they are currently working with Amtrak to
    develop a plan for revamping its accounting system.

      New NEC Fee Could Improve Transparency but Poses Potential Challenges

    Abrupt Amtrak Cessation Could Raise Critical Issues for Some Commuter Rail
                                        Agencies

    Decisions Made by Federal Policy Makers Will Play a Critical Role in Whether
    Amtrak Abruptly Ceases to Provide Infrastructure and Services to Commuter Rail
    Agencies

    23Our report focuses on the impact of an abrupt Amtrak cessation on
    commuter rail operations. For example, if policy makers acted on
    legislative proposals that end or substantially reduce federal funding, an
    Amtrak bankruptcy or shutdown could quickly follow. Multiple bills to
    reform intercity passenger rail service have been proposed in recent
    years-and these bills, if enacted, could result in outcomes other than an
    Amtrak cessation. However, we did not examine how these other outcomes or
    scenarios would impact commuter rail operations.

    24 GAO-06-145 .

    One Critical Issue Commuter Rail Agencies Would Face Would Be the Potential Loss
    of Skilled Amtrak Labor

    25For more information on issues involved in an Amtrak liquidation, see
    GAO, Intercity Passenger Rail: Potential Financial Issues in the Event
    That Amtrak Undergoes Liquidation, GAO-02-871 (Washington, D.C.: Sept. 20,
    2002).

    26 GAO-06-145 .

    Potential Loss of Access to Amtrak Infrastructure Is Another Critical Issue
    Commuter Rail Agencies Would Face

    Commuter Rail Agencies Also Described Other Issues They Would Face with Abrupt
    Amtrak Cessation

     Some Options Are Available to Commuter Rail Agencies in the Event of an Abrupt
     Amtrak Cessation, but Service Disruptions and Financial Difficulties Would Be
                                         Likely

    Most Commuter Rail Agencies Have Identified Contingencies for an Amtrak
    Cessation that are Largely Dependent on Access to Amtrak Employees and
    Infrastructure

    Federal Agencies Could Provide Short-Term Options for Commuter Rail Agencies,
    but Service Disruptions Are Likely and Costs Are Unknown

    27According to the statute, "[for purposes of the section with regard to
    directed service,] the National Railroad Passenger Corporation and any
    entity providing commuter rail passenger transportation shall be
    considered rail carriers subject to the Board's jurisdiction." 49 U.S.C.
    S: 11123(e).

    28The Delmarva Peninsula refers to the peninsula between the Chesapeake
    Bay and the Atlantic Ocean made up of territory from the states of
    Delaware, Maryland, and Virginia.

    29STB staff have been working with FRA officials to identify possible
    implementation plans, but STB staff said that there has been no need for a
    meeting of the working group tasked with this activity since Amtrak's
    fiscal year 2006 appropriation was passed, which provided Amtrak nearly
    $1.3 billion. The Secretary of Transportation holds an additional $40
    million that may be released to Amtrak for efficiency incentive grants.
    This appropriation made Amtrak's financial situation potentially less dire
    and significantly reduced the chance that Amtrak would be in a bankruptcy
    situation in fiscal year 2006.

    30The railroad retirement-system provides retirement and disability
    benefits to the nation's retired railroad workers and their survivors,
    including those of Amtrak. If employees leave a company that participates
    in the railroad retirement-system, they may face reduced retirement
    benefits. Employees moving from one participant company to another (e.g.,
    from Amtrak to a freight railroad) would retain their full benefits. For
    more information on the railroad retirement-system, see GAO, Intercity
    Passenger Rail: Potential Financial Issues in the Event That Amtrak
    Undergoes Liquidation, GAO-02-871 (Washington, D.C.: Sept. 20, 2002).

    31In fiscal years 2004 and 2005, this money was released to Amtrak in the
    fourth quarter when it was clear that Amtrak would not run out of money
    and enter into bankruptcy before the end of the fiscal year.

    Private Transportation Companies Could Provide Options for Commuter Rail
    Agencies, but Challenges Exist

    32As part of its request for proposal process, MBTA required all bidders
    to offer comparable positions to the existing workforce, including key
    terms of the current contract, such as wages and benefits.

      Some Commuter Rail Agencies Are Moving away from Amtrak to Provide Services,
      but Others Like Having Amtrak as an Option

                                      Conclusions

    33 GAO-06-145 .

                                    Recommendations

                                    Agency Comments

    Appendix I: Scope and Methodology Appendix I: Scope and Methodology

    Table 4: Names and Locations of Commuter Rail Agencies, State Departments
    of Transportation, Class I Freight Railroads, and Private Non-Railroad
    Companies Interviewed

    Name                                              Location
    Existing commuter rail agencies
    Altamont Commuter Express                         Stockton, CA
    Connecticut Department of Transportation (Shore   New Haven, CT
    Line East line)
    Maryland Transit Administration (MARC)            Baltimore, MD
    Massachusetts Bay Transportation Authority (MBTA) Boston, MA
    MTA Long Island Rail Road                         New York, NY
    MTA Metro-North                                   New York, NY
    New Jersey Transit Corporation                    Newark, NJ
    Northeast Illinois Regional Commuter Railroad     Chicago, IL
    Corporation (Metra)
    North County Transit District (Coaster)           Oceanside, CA
    Northern Indiana Commuter Transportation District Chesterton, IN
    Peninsula Corridor Joint Powers Board (Caltrain)  San Francisco, CA
    Pennsylvania Department of Transportation         Harrisburg, PA
    (PennDOT)
    Southeastern Pennsylvania Transportation          Philadelphia, PA
    Authority (SEPTA)
    Southern California Regional Rail Authority       Los Angeles, CA
    (Metrolink)
    Sound Transit, Central Puget Sound Regional       Seattle, WA
    Transportation Authority
    Tri-County Commuter Rail Authority                Pompano Beach, FL
    Trinity Rail Express                              Dallas, TX
    Virginia Railway Express                          Alexandria, VA
    Proposed commuter rail agencies
    Nashville Regional Transportation Authority       Nashville, TN
    New Mexico Rail Runner                            Albuquerque, NM
    State Department of Transportation
    Delaware Department of Transportation (DELDOT)a   Wilmington, DE
    Class I railroads
    BNSF Railway                                      Fort Worth, TX
    CSX Transportation                                Jacksonville, FL
    Norfolk Southern                                  Norfolk, VA
    Union Pacific Railroad Company                    Omaha, NE
    Private transportation providers
    Massachusetts Bay Commuter Railroad               Boston, MA
    Bombardier, Inc.                                  Montreal, Quebec, Canada
    Connex North America                              Silver Spring, MD
    Herzog Transit Services                           St. Joseph, MO
    Washington Group International                    Boise, ID

    Source: GAO.

    Note: The commuter rail agencies that we visited are listed in italics.

    aIn addition to its regular commuter rail service, SEPTA also provides a
    "turnkey," or contracted commuter rail service, for the Delaware
    Department of Transportation (DELDOT) between Newark/Wilmington, DE and
    Philadelphia, PA. Information on SEPTA's use of Amtrak services and
    infrastructure for the Delaware service are included in SEPTA's data.
    Therefore, we did not consider DELDOT as a separate commuter rail agency.

    We conducted site visits to seven existing commuter rail agencies and one
    proposed commuter rail agency. We selected these agencies based on their
    dependence on Amtrak for services and access to infrastructure, as well as
    their location. Specifically, based on interviews with each commuter rail
    agency, we divided each commuter rail agency's relationship into several
    categories based on their reliance on Amtrak's infrastructure and
    services, and their current or past relationship with Amtrak. These
    categories included: the extent to which commuter rail agencies rely on
    Amtrak for infrastructure and services, whether the commuter rail agency
    operates on the Northeast Corridor (NEC), whether the commuter rail agency
    no longer contracts with Amtrak for services, and whether a newer commuter
    rail agency chose not to contract with Amtrak. Some commuter rail agencies
    were placed into multiple categories. Using this categorization, we
    selected commuter rail agencies that represent a range of reliance on
    Amtrak and are geographically disperse. During the site visits, we
    interviewed senior level management and toured operation, dispatching, and
    maintenance facilities. In addition to the site visits, we conducted
    semi-structured interviews with officials from all 18 existing commuter
    rail agencies and 2 proposed commuter rail agencies. We analyzed the
    information we collected from the site visits and semi-structured
    interviews to identify shared concerns across the commuter rail agencies
    we interviewed.

    In addition, to obtain information on the options commuter rail agencies
    will have if Amtrak abruptly ceased to provide services and infrastructure
    access, we conducted semi-structured interviews with all of the existing
    commuter rail agencies and asked them to identify short- and long-term
    contingencies if Amtrak abruptly ceases to provide services and
    infrastructure to commuter rail agencies. We also interviewed
    representatives from the American Short Line and Regional Railroad
    Association (ASLRRA) to get an understanding of non-Class I railroads'
    interest in providing services to commuter rail agencies. We analyzed the
    information we collected from the semi-structured interviews to determine
    private transportation companies' and freight railroads' interest in
    entering the commuter rail market, as well as barriers to doing so.

    We also conducted informational interviews with the Federal Railroad
    Administration, STB, the Federal Transit Administration, and Amtrak; and
    with representatives from industry and government associations, including
    AAR, APTA, ASLRRA, the Coalition of Northeastern Governors and the
    National Railroad Construction and Maintenance Association. We also
    interviewed representatives from 10 of Amtrak's 15 total labor unions.
    (See table 5.) In addition, we interviewed a representative from the Law
    Office of Jenner and Block to get background information on railroad
    bankruptcy law.

    Table 5: List of Labor Unions

    Name
    Brotherhood of Locomotive Engineers and Trainmen
    Transport Workers Union of America
    United Transportation Union
    Transportation Workers Union
    Sheet Metal Workers International Association
    American Train Dispatchers Association
    International Brotherhood of Electrical Workers
    Brotherhood of Maintenance of Way Employees
    Transportation Communications International Union
    Brotherhood of Railroad Signalmen

    Source: GAO.

    Finally, we reviewed statutes, government reports on Amtrak, recent Amtrak
    reform proposals from the 109th Congress, and our past reports.
    Additionally, we reviewed Amtrak, STB, FRA, and APTA documents and
    statistics, as well as contracts and requests for proposals for services
    and access to infrastructure between several commuter railroads and Amtrak
    (or other operators).

    To ensure the reliability of the information presented in this report, we
    corroborated information provided from commuter rail agency officials and
    Amtrak officials about aspects of their contractual relationship with
    other sources. For example, we compared information we obtained from
    commuter rail agencies about the extent to which they rely on Amtrak for
    access to infrastructure and services against information obtained from
    Amtrak, as well as statistics compiled by STB staff and FRA. Based on our
    assessment, we concluded that the information provided from commuter rail
    agency officials and Amtrak officials about aspects of their contractual
    relationship was sufficiently reliable for the purposes of this report.

    A limitation of our review is that we only focused on the impact of an
    abrupt Amtrak cessation on commuter rail operations. For example, if
    policy makers acted on legislative proposals that end or substantially
    reduce federal funding, an Amtrak bankruptcy or shutdown could quickly
    follow. Multiple bills to reform intercity passenger rail have been
    proposed in recent years-and these bills, if enacted, could result in
    outcomes other than an Amtrak cessation. However, we did not examine how
    these other outcomes or scenarios would impact commuter rail operations.

    Appendix II: Commuter Rail Agency Use of Amtrak Services and
    Infrastructure Appendix II: Commuter Rail Agency Use of Amtrak Services
    and Infrastructure

    Table 6: Commuter Rail Agency Use of Amtrak Services and Infrastructure

                                                                           Amtrak-owned               Does this
                                                                           or                         commuter
                                Maintenance                                Amtrak-managed             operate over
                          Train          of                                stations and   Other       Amtrak-owned
                     operations   equipment Maintenance-of-way Dispatching platforms      services    NEC?
    Existing
    commuter rail
    agencies
    Altamont                 0%          0%                 7%          7% Minimal        Minimal     No
    Commuter Express
    (ACE)
    Connecticut            100%        100%               100%        100% Significant    Significant Yes
    Department of
    Transportation's
    Shore Line East
    and New Haven
    Lines (SLE)
    Maryland Transit        50%         83%                50%         50% Critical point Significant Yes
    Administration
    (MARC)
    Massachusetts            0%          0%                 7%        N/Aa Minimal        None        Yes
    Bay
    Transportation
    Authority (MBTA)
    MTA Long Island          0%          0%                 3%         50% Critical point Significant Yes
    Rail Road (LIRR)
    MTA Metro-North          0%          0%                 0%          0% None           None        No
    Rail Road
    New Jersey               0%         19%                27%         55% Critical point Significant Yes
    Transit
    Corporation
    (NJT)
    North County           100%        100%               100%          0% None           None        No
    Transit District
    (Coaster)b
    Northeastern             0%          0%               2.3%        0.5% Critical point Minimal     No
    Illinois
    Commuter
    Railroad
    Corporation
    (Metra)
    Northern Indiana         0%          0%                 0%          0% None           None        No
    Commuter
    Transportation
    District (NICTD)
    Peninsula              100%        100%                65%        100% Significant    Significant No
    Corridor Joint
    Powers Board
    (Caltrain)
    Pennsylvania           100%        100%               100%        100% Significant    Significant Yes
    Department of
    Transportation
    (PENNDOT)
    Sound Transit,           0%        100%                 0%          0% Minimal        None        No
    Central Puget
    Sound Regional
    Transportation
    Authority
    (Sounder)
    Southeastern             0%          0%                39%         54% Minimal        Significant Yes
    Pennsylvania
    Transportation
    Authority
    (SEPTA)c
    Southern                 0%          0%                 5%          0% None           None        No
    California
    Regional Rail
    Authority
    (Metrolink)
    Trinity Railway          0%          0%                 0%          0% None           None        No
    Express (TRE)
    Tri-County               0%          0%                 0%          0% None           None        No
    Commuter Rail
    Authority
    (Tri-Rail)
    Virginia Railway       100%         66%                 1%          2% Critical point Minimal     Yes
    Express (VRE)
    Proposed
    commuter rail
    agencies
    New Mexico Rail          0%          0%                 0%          0% None           None        No
    Runner Express
    Nashville Music          0%          0%                 0%          0% None           None        No
    City Star

    Source: GAO analysis of commuter rail agency responses.

    aWith the exception of one route dispatched entirely by Amtrak, all of
    MBTA's routes are dispatched by more than one company. Because of this,
    MBTA officials stated that it is not possible to represent the percent of
    trains dispatched by each of its dispatching service providers. MBTA
    officials indicated that Amtrak provides dispatching for MBTA's 34
    Attelboro line trains, and the initial dispatching for about two-thirds of
    all other MBTA trains before transferring them to another provider.

    bCoaster's contract with Amtrak expires on June 30, 2006. Amtrak was not
    selected to continue the service beyond this point.

    cIn addition to its regular commuter rail service, SEPTA also provides a
    "turnkey," or contracted commuter rail service, for the Delaware
    Department of Transportation between Newark/Wilmington, DE and
    Philadelphia, PA. Information on SEPTA's use of Amtrak services and
    infrastructure for the Delaware service are included in SEPTA's data.

    Table Definitions:

    "Other services" includes police/security, ticketing, and traction power.

    The following definitions refer to the station and platform category and
    other services .

    None = No reliance on Amtrak for access to-or management of-stations and
    platforms. No reliance on Amtrak for "other services."

    Minimal = Amtrak provides access to-or management of-less than 25 percent
    of the stations and platforms used by the commuter rail agency. Amtrak
    provides less than half of one "other service."

    Significant = Amtrak provides access to-or management of-more than 25
    percent of the stations and platforms used by the commuter rail agency.
    Amtrak provides more than half of one or more of the "other services," or
    provides less than half of one or more "other services"-but the service
    allows the commuter rail agency to access a critical point for its
    operations (e.g., a critical station).

    Critical point = Although the commuter rail agency may rely on Amtrak for
    access to-or management of-less than 25 percent of the stations and
    platforms it uses, one of these Amtrak-owned stations is critical to the
    service (e.g., a majority of riders enter or exit the commuter service at
    this point, or the station is a terminus for several of the agency's
    lines).

    Appendix III: GAOA Appendix III: GAO Contact and Staff Acknowledgments

                                      GAO Contact

    JayEtta Z. Hecker, Director, (202) 512-2834, heckerj@gao.gov

                                    Acknowledgments

    In addition to those named above, Jay Cherlow, Nikki Clowers, Greg Hanna,
    Joah Iannotta, Bert Japikse, Nancy Lueke, Sara Ann Moessbauer, Josh
    Ormond, Robert Owens, Eileen Tumalad, and Alwynne Wilbur made key
    contributions to this report.

    (544111)

    GAO's Mission

    The Government Accountability Office, the audit, evaluation and
    investigative arm of Congress, exists to support Congress in meeting its
    constitutional responsibilities and to help improve the performance and
    accountability of the federal government for the American people. GAO
    examines the use of public funds; evaluates federal programs and policies;
    and provides analyses, recommendations, and other assistance to help
    Congress make informed oversight, policy, and funding decisions. GAO's
    commitment to good government is reflected in its core values of
    accountability, integrity, and reliability.

    Obtaining Copies of GAO Reports and Testimony

    The fastest and easiest way to obtain copies of GAO documents at no cost
    is through GAO's Web site ( www.gao.gov ). Each weekday, GAO posts newly
    released reports, testimony, and correspondence on its Web site. To have
    GAO e-mail you a list of newly posted products every afternoon, go to
    www.gao.gov and select "Subscribe to Updates."

    Order by Mail or Phone

    The first copy of each printed report is free. Additional copies are $2
    each. A check or money order should be made out to the Superintendent of
    Documents. GAO also accepts VISA and Mastercard. Orders for 100 or more
    copies mailed to a single address are discounted 25 percent. Orders should
    be sent to:

    U.S. Government Accountability Office 441 G Street NW, Room LM Washington,
    D.C. 20548

    To order by Phone: Voice: (202) 512-6000 TDD: (202) 512-2537 Fax: (202)
    512-6061

    To Report Fraud, Waste, and Abuse in Federal Programs

    Contact:

    Web site: www.gao.gov/fraudnet/fraudnet.htm E-mail: fraudnet@gao.gov
    Automated answering system: (800) 424-5454 or (202) 512-7470

    Congressional Relations

    Gloria Jarmon, Managing Director, JarmonG@gao.gov (202) 512-4400 U.S.
    Government Accountability Office, 441 G Street NW, Room 7125 Washington,
    D.C. 20548

    Public Affairs

    Paul Anderson, Managing Director, AndersonP1@gao.gov (202) 512-4800 U.S.
    Government Accountability Office, 441 G Street NW, Room 7149 Washington,
    D.C. 20548

    www.gao.gov/cgi-bin/getrpt? GAO-06-470 .

    To view the full product, including the scope

    and methodology, click on the link above.

    For more information, contact JayEtta Z. Hecker at (202) 512-2834 or
    heckerj@gao.gov.

    Highlights of GAO-06-470 , a report to the Chairman, Senate Committee on
    Banking, Housing and Urban Affairs

    April 2006

    COMMUTER RAIL

    Commuter Rail Issues Should Be Considered in Debate over Amtrak

    Commuter rail agencies provide mobility to millions of people across the
    country, often using Amtrak infrastructure and services. Given these
    interactions, an abrupt Amtrak cessation could have a significant impact
    on commuter rail operations. Amtrak's chronic financial problems and
    recent budget proposals make such a cessation a possibility. GAO was asked
    to examine (1) the extent to which commuter rail agencies rely on Amtrak
    for access to infrastructure and services, (2) issues that commuter rail
    agencies would face if Amtrak abruptly ceased to provide them with
    services and infrastructure access, and (3) the options available to
    commuter rail agencies should Amtrak abruptly cease to provide them
    services and infrastructure access.

    What GAO Recommends

    GAO recommends that the Department of Transportation (DOT) further refine
    cost estimates of commuter rail directed-service scenarios. GAO also
    recommends that Amtrak improve its accounting practices as well as its
    financial reports. DOT generally agreed with the report's findings and the
    intention of the recommendation, but expressed concern about refining the
    cost estimate at this time because of data and resource limitations.
    Amtrak generally agreed with the report's findings, conclusions, and
    recommendations.

    Most commuter rail agencies rely on the National Railroad Passenger
    Corporation (Amtrak) for some level of access to infrastructure and
    services, particularly those that operate over Amtrak-owned portions of
    the Northeast Corridor (NEC). This reliance includes the use of key
    stations, access to the NEC, and equipment maintenance services (see
    figure below). Commuter rail agencies typically pay Amtrak for access to
    infrastructure and services, although their financial relationships with
    Amtrak vary and often lack clarity. Several issues contribute to the lack
    of clarity, including limitations in Amtrak's accounting practices, the
    lack of transparency in Amtrak's financial reports, and the structure of
    the financial arrangements between Amtrak and commuter rail agencies. This
    makes it difficult to fully understand the financial relationship between
    these agencies and Amtrak and whether they are contributing their fair
    share for improvements and maintenance of Amtrak's infrastructure. Also,
    this lack of clarity hinders Amtrak management's ability to make fully
    informed decisions about its commuter rail line-of-business.

    An abrupt Amtrak cessation would raise two critical operational issues for
    commuter rail agencies that rely on Amtrak. Specifically, agencies would
    face the potential loss of skilled Amtrak labor and access to Amtrak-owned
    infrastructure, which could make it difficult for some to avoid severe
    service disruptions. For example, agencies both on and off the NEC could
    not continue to fully operate their services without continued access to
    Amtrak-owned track and other facilities.

    Most commuter rail agencies that rely on Amtrak have identified ways to
    mitigate service disruptions in an abrupt Amtrak cessation. However, these
    options are largely dependent on retaining Amtrak employees and access to
    Amtrak's infrastructure. Federal agencies could provide short-term options
    to mitigate potential impacts on commuter rail agencies through their
    authority to order continued commuter service (called "directed service"),
    although federal officials stated that service disruptions are likely and
    the cost estimates are unreliable. Private transportation companies could
    provide options for commuter rail agencies in the long term; however,
    other issues would need to be addressed to ensure a smooth transition.

    Types of Services and Infrastructure Access Provided by Amtrak to Commuter
    Rail Agencies
    *** End of document. ***