    Intercity Passenger Rail: Highlights of GAO Report on Need for
    National Policy and Strategies to Maximize Public Benefits from
    Federal Expenditures (18-JAN-07, GAO-07-382R).

    The future of intercity passenger rail service in the United
    States has come to a critical juncture. The National Railroad
    Passenger Corporation (Amtrak) continues to rely heavily on
    federal subsidies--over $1 billion annually in recent years--and
    operating losses have remained high. In addition, Amtrak will
    require billions of dollars to address deferred maintenance and
    achieve a "state of good repair." These needs for Amtrak come at
    a time when the nation faces long-term fiscal challenges. As we
    reported in February 2005, the federal government's financial
    condition and long-term fiscal outlook present enormous
    challenges to the nation's ability to respond to emerging forces
    reshaping American society, the United States' place in the
    world, and the future role of the federal government. Addressing
    the projected fiscal gaps will require policy makers to examine
    the affordability and sustainability of all existing programs,
    policies, functions, and activities throughout the federal
    budget. Reexamining the federal role and expenditures on
    intercity passenger rail service will be particularly difficult
    because opinions differ about what this service should be. Some
    advocate a greatly expanded federal role and the expansion of
    intercity passenger rail to relieve growing congestion on
    highways and airways and (as energy prices increase) to provide
    more fuel-efficient transport; others believe the federal role
    should be scaled back, and that at least some federal operating
    subsidies should be eliminated. Specific proposals vary--while
    one proposal would keep Amtrak largely intact and provide more
    funding for capital and other improvements, another proposal
    would significantly restructure the management and accountability
    for intercity passenger rail with regional, state, and local
    entities making fundamental decisions about what intercity
    passenger rail services are justified and will receive public
    financial support. Amtrak itself has proposed a new vision for
    intercity passenger rail service that would include a greater
    role for states in planning and developing passenger rail
    corridors. The former acting president of Amtrak told us that, in
    his view, Amtrak itself is not a substitute for a national
    intercity passenger rail policy and that Congress needs to
    develop such a policy. One of the primary difficulties in
    reexamining the federal role and expenditures on intercity
    passenger rail service and developing a clear national intercity
    passenger rail policy will be reconciling the wide diversity of
    views about what this service should be and what it should
    achieve. On November 13, 2006, we issued our most recent report
    on intercity passenger rail. The objectives of this report were
    to determine: (1) the characteristics of the current U.S.
    intercity passenger rail system and the potential benefits
    obtained from this system, (2) foreign experiences with passenger
    rail reform and observations for the United States, (3) how well
    the United States is positioned for reforming its intercity
    passenger rail system, (4) challenges the United States faces in
    overcoming obstacles to reform, and (5) potential options for the
    future of intercity passenger rail service.
    -------------------------Indexing Terms-------------------------
    REPORTNUM:   GAO-07-382R
        ACCNO:   A64991
      TITLE:     Intercity Passenger Rail: Highlights of GAO Report on
    Need for National Policy and Strategies to Maximize Public
    Benefits from Federal Expenditures
         DATE:   01/18/2007
      SUBJECT:   Accountability
    	     Federal aid to railroads
    	     Federal funds
    	     Federal/state relations
    	     Financial analysis
    	     National policies
    	     Passengers
    	     Policy evaluation
    	     Railroad industry
    	     Strategic planning
    	     Transportation

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    GAO-07-382R

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    January 18, 2007

    The Honorable Mary Peters
    Chairperson
    National Surface Transportation Policy
    and Revenue Study Commission

    Subject: Intercity Passenger Rail: Highlights of GAO Report on Need for
    National Policy and Strategies to Maximize Public Benefits from Federal
    Expenditures

    Dear Madam Chairperson:

    The future of intercity passenger rail service in the United States has
    come to a critical juncture. The National Railroad Passenger Corporation
    (Amtrak) continues to rely heavily on federal subsidies--over $1 billion
    annually in recent years--and operating losses have remained high. In
    addition, Amtrak will require billions of dollars to address deferred
    maintenance and achieve a "state of good repair."^1 These needs for Amtrak
    come at a time when the nation faces long-term fiscal challenges. As we
    reported in February 2005, the federal government's financial condition
    and long-term fiscal outlook present enormous challenges to the nation's
    ability to respond to emerging forces reshaping American society, the
    United States' place in the world, and the future role of the federal
    government.^2 Addressing the projected fiscal gaps will require policy
    makers to examine the affordability and sustainability of all existing
    programs, policies, functions, and activities throughout the federal
    budget.

    Reexamining the federal role and expenditures on intercity passenger rail
    service will be particularly difficult because opinions differ about what
    this service should be. Some advocate a greatly expanded federal role and
    the expansion of intercity passenger rail to relieve growing congestion on
    highways and airways and (as energy prices increase) to provide more
    fuel-efficient transport; others believe the federal role should be scaled
    back, and that at least some federal operating subsidies should be
    eliminated. Specific proposals vary--while one proposal would keep Amtrak
    largely intact and provide more funding for capital and other
    improvements, another proposal would significantly restructure the
    management and accountability for intercity passenger rail with regional,
    state, and local entities making fundamental decisions about what
    intercity passenger rail services are justified and will receive public
    financial support. Amtrak itself has proposed a new vision for intercity
    passenger rail service that would include a greater role for states in
    planning and developing passenger rail corridors. The former acting
    president of Amtrak told us that, in his view, Amtrak itself is not a
    substitute for a national intercity passenger rail policy and that
    Congress needs to develop such a policy. One of the primary difficulties
    in reexamining the federal role and expenditures on intercity passenger
    rail service and developing a clear national intercity passenger rail
    policy will be reconciling the wide diversity of views about what this
    service should be and what it should achieve.

    ^1"State of good repair" is the outcome expected from the capital
    investment needed to restore Amtrak's right-of-way (track, signals, and
    auxiliary structures), other infrastructure (e.g., stations), and
    equipment to a condition that requires only routine maintenance.

    ^2GAO, 21^st Century Challenges: Reexamining the Base of the Federal
    Government, GAO-05-325SP (Washington, D.C.: Feb. 2005).

    On November 13, 2006, we issued our most recent report on intercity
    passenger rail.^3 The objectives of this report were to determine: (1) the
    characteristics of the current U.S. intercity passenger rail system and
    the potential benefits obtained from this system, (2) foreign experiences
    with passenger rail reform and observations for the United States, (3) how
    well the United States is positioned for reforming^4 its intercity
    passenger rail system, (4) challenges the United States faces in
    overcoming obstacles to reform, and (5) potential options for the future
    of intercity passenger rail service. In general, we found that the current
    system is in poor financial condition and does not target federal funds to
    where they provide the greatest public benefits, such as transportation
    congestion relief. We also found that foreign experience with reform shows
    that the United States needs to consider three key elements in attempting
    any reform: (1) defining national policy goals, (2) defining the roles of
    government and other participants, and (3) establishing stable funding.
    The U.S. is currently not well positioned to address these reform elements
    and there are a number of challenges to be overcome in addressing the key
    reform elements, including the wide diversity of views in determining the
    overall goal for passenger rail in the United States and the federal role
    in achieving this goal. There are four primary options for the future
    federal role in intercity passenger rail. These are keeping the existing
    structure and funding of intercity passenger rail, making incremental
    changes within the existing structure, discontinuing the federal role in
    intercity passenger rail, and restructuring intercity passenger rail. Our
    report recommends that Congress consider restructuring the approach for
    providing intercity passenger rail service in the United States.

    ^3GAO, Intercity Passenger Rail: National Policy and Strategies Needed to
    Maximize Public Benefits from Federal Expenditures, GAO-07-15 (Washington,
    D.C.: Nov. 13, 2006).

    ^4For purposes of this report, the word reform is intended to cover both
    incremental changes that might be made within the current structure of
    intercity passenger rail, as well as more significant changes that could
    be made, including wholesale restructuring in how intercity passenger rail
    service is provided.

                                       - - - - -

    In light of these findings, you asked us to testify before the National
    Surface Transportation Policy and Revenue Study Commission on January 17,
    2007, about issues in our recent report. The enclosure is my presentation
    to the Commission. A copy of our November 13, 2006, report (GAO-07-15) can
    be found at www.gao.gov .

    Sincerely yours,

    JayEtta Z. Hecker
    Director, Physical Infrastructure Issues

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