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

Enclosure

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