1). Moreover, the current  structure does not appear to effectively target federal funds where they  may achieve the greatest level of public benefits. In contrast, corridor routes account for most of  Amtrak’s ridership and appear to offer greater potential to provide  passenger transportation benefits and public benefits. 2). 3). Over 80 percent of the nation’s  population now lives in a metropolitan area. Canada did not have debt at the time of their  restructurings. United States Will Need to Address Three Key Elements to Improve the Benefits of Intercity Passenger Rail

We found that other countries we visited addressed key reform elements in  the process of reforming or restructuring their intercity passenger rail  systems. However,  Amtrak has a history of poor financial and operating performance. Amtrak is taking actions within its existing authority to  implement these initiatives, although most of the actions currently being  taken are operating in nature. Instead, Amtrak’s financial condition deteriorated. Amtrak Is Not Positioned to Address the Three Key Reform Elements

Amtrak, as an operator, is not in a position to adopt and ultimately  implement key elements to begin reforming intercity passenger rail in the  United States. Most of all, Amtrak  cannot address the three key elements of reform we observed in other  countries: 1) clearly defining national policy goals, 2) clearly defining the  various roles and responsibilities of public and private sector entities  involved, and 3) establishing a level of funding to devote to these goals. However, federal-state cost sharing is common in highway and transit  programs where investment is encouraged through matching grants. However,  states are challenged to leverage their expenditures on intercity passenger  rail. Freight railroads have other concerns as well. Options for the Future of Intercity Passenger Rail Will Determine the Level of Federal Involvement

As the federal government is the primary provider of funds, oversight, and  direction for intercity passenger rail service, federal policy makers should  take the lead in deciding what the federal government’s role in intercity  passenger rail service should be and what changes, if any, need to be made  to its goals, structure, and funding. This section discusses each option  separately, although some combination of these options could also be  implemented. Leading  private and public organizations we have studied in the past, such as  General Electric and the state of Washington, have stressed the importance  of developing performance measures and then linking investment decisions  and their expected outcomes to overall strategic goals and objectives.While federal funding is currently a major source of financial support for  intercity passenger rail service in the United States, currently there are no  requirements for a periodic, regular evaluation of the use of federal funds  (outside of annual appropriations legislation and yearly FRA grant  reviews). For  example, furthering this goal could include using federal subsidies for  intercity passenger rail to: reduce highway congestion, increase intermodal  connectivity, provide environmental benefits, or increase redundancy in  regional or urban transportation. The status quo and  incremental change options do not allow for a reexamination by all  stakeholders of the goals, roles and funding mechanisms of the system and  would not significantly increase the potential benefits of the system  relative to the expenditures required. Conclusions

If the role of intercity passenger rail is to be effectively integrated into the  national transportation system and federal support is to be targeted to  assure its performance, results and accountability, we believe that there is  a clear need to change the current structure of and the federal role in  intercity passenger rail in the United States. In particular, we focused on: (1) the characteristics of the  U.S. intercity passenger rail system and the value and benefits provided by  this system, (2) foreign experiences with passenger rail reform and lessons  learned for the United States, (3) how well the United States is positioned  to reform intercity passenger rail, (4) challenges that must be addressed in  any reform efforts, and (5) potential options for the federal role in intercity  passenger rail. We reviewed data for Australia, Canada, France,  Germany, Japan, Sweden, and the United Kingdom (U.K.). Each region has its own rail company. GAO Comments

1. 4.
Why GAO Did This Study

Intercity passenger rail service is at a critical juncture in the United States. Amtrak, the current service provider, requires $1 billion a year in federal subsidies to stay financially viable but cannot keep pace with its deteriorating infrastructure. At the same time, the federal government faces growing fiscal challenges. To assist the Congress, GAO reviewed (1) the existing U.S. system and its potential benefits, (2) how foreign countries have handled passenger rail reform and how well the United States is positioned to consider reform, (3) challenges inherent in attempting reform efforts, and (4) potential options for the federal role in intercity passenger rail. GAO analyzed data on intercity passenger rail performance and studied reform efforts in Canada, France, Germany, Japan, and the United Kingdom.

What GAO Found

The existing intercity passenger rail system is in poor financial condition and the current structure does not effectively target federal funds to where they provide the greatest public benefits, such as transportation congestion relief. Routes of 750 miles or more, while providing service for some rural areas and connections between regions, show limited public benefits for dollars expended. These routes account for 15 percent of riders but 80 percent of financial losses. "Corridor" routes (generally less than 500 miles in length) have higher ridership, perform better financially, and appear to offer greater potential for public benefits. The countries GAO studied varied in their reform approach, but their experience shows the United States needs to consider three key elements in attempting any reform: (1) define national policy goals, (2) define the roles of government and other participants, and (3) establish stable funding. Countries found these elements important in setting the role of passenger rail in the national transportation system and increasing the benefit from investing in passenger rail. Currently, however, the United States is not well positioned to address these key elements. The goals or expected outcomes of intercity passenger rail policies are ambiguous, participants' roles are unclear, and there is widespread disagreement about the level of funding to devote to this effort. Amtrak is taking actions within its authority to reduce costs and increase efficiency, but Amtrak is not in a position to address all key elements. To undertake reform, federal leadership is needed. Addressing key elements of reform poses many challenges, because those who have a stake in the process have divergent goals or points of view. Amtrak workers, freight railroads that own much of the rail system over which passenger trains operate, and federal and state governments would be among those affected. The diversity of viewpoints poses challenges for determining both the overall goal for passenger rail in the United States and the federal role in achieving this goal. Funding-related challenges include identifying how to pay for achieving these goals and how to overcome disadvantages intercity passenger rail faces relative to leveraging of federal funds. Although federal-state cost sharing is common in highway and transit programs, states face difficulty leveraging their expenditures on rail service. There are four main options for the federal role in intercity passenger rail service: (1) keep the existing structure and funding, (2) make incremental changes to improve financial or operational performance, (3) discontinue federal involvement, or (4) fundamentally restructure the system. Each option has advantages and disadvantages, and each faces its own challenges. Each requires some level of federal funding, a clear articulation of expected goals, and, except for the status quo option, substantial time to implement. Of these options, the fourth--fundamental restructuring--would allow for effectively integrating rail into the national transportation system and substantially improving overall performance and accountability.