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				 

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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

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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
           [email protected]. 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, [email protected]

                                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)

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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. ***