Northeast Rail Corridor: Information on Users, Funding Sources, and Expenditures
Released: 1996-06-27T00:00:00

Letter

Background

In 1970, the Congress passed the Rail Passenger Service Act, which created Amtrak to operate and revitalize intercity passenger rail service. Amtrak acquired ownership of most of the right-of-way along the Northeast Corridor from the bankrupt Penn Central Transportation Company through the Regional Rail Reorganization Act of 1973 and the Railroad Revitalization and Regulatory Reform Act of 1976. Amtrak did not acquire ownership of the 56-mile section between New Rochelle, New York, and New Haven, Connecticut. New York’s Metropolitan Transportation Authority owns the New York portion of this segment, while the Connecticut Department of Transportation owns the Connecticut portion. Also, Amtrak did not obtain ownership of the 38-mile section within Massachusetts. This segment is owned by the Massachusetts Bay Transportation Authority.

As figure 1 shows, Amtrak shares most of the main line’s right-of-way (the route between Washington, D.C., and Boston, Mass., excluding spur lines) with commuter railroads. On three segments—namely, between Perryville, Maryland, and Wilmington, Delaware; between Sunnyside Yard (N.Y.) and New Rochelle, New York; and between Old Saybrook, Connecticut, and Providence, Rhode Island—Amtrak did not share the track with commuter railroads from 1988 through 1993. Although not shown in figure 1, the Virginia Railway Express uses Union Station in Washington, D.C., as the terminus of its commuter operations from Fredericksburg and Manassas, Virginia. Also not shown in figure 1 are the three freight railroads that operate on the corridor. Appendix I provides you with background information on the commuter and freight railroads that operate on the Northeast Corridor main line.

Amtrak operates trains from Washington, D.C., to Boston, Mass.

Maryland Rail Commuter Service (MARC) Southeastern Pennsylvania Transportation Authority (SEPTA) New Jersey Transit (NJT) Long Island Rail Road (LIRR) Metro-North Commuter Railroad (MNCR) Shore Line East (SLE) Massachusetts Bay Transportation Authority (MBTA)

Amtrak owns and maintains about 365 miles of the corridor’s main line. On these sections, Amtrak provides dispatching services for all trains and maintains and upgrades the track, bridges, signals, fencing, and electric traction system (between Washington, D.C., and New Rochelle, N.Y.) that make up the right-of-way. The Metropolitan Transportation Authority of New York and the Connecticut Department of Transportation, through the Metro-North Commuter Railroad, provide for these services on their respective portions of the corridor between New Rochelle, New York, and New Haven, Connecticut. On the Massachusetts segment, Amtrak provides maintenance and dispatching services for all trains under contract with the Massachusetts Bay Transportation Authority.

Commuter and freight railroads that operate over the Amtrak-owned portion of the corridor pay access fees to Amtrak for the use of its tracks. Between New Rochelle, New York, and New Haven, Connecticut, Amtrak pays access fees to Metro-North for the use of its tracks, and Amtrak allocates some capital subsidies to support major projects on this segment. Between Providence, Rhode Island, and Boston, Massachusetts, access fees are incorporated into the contract between Amtrak and the Massachusetts Bay Transportation Authority. The Consolidated Rail Corporation (Conrail), a freight railroad, pays access fees to the Massachusetts Bay Transportation Authority for its operations on the corridor in Massachusetts.

The Northeast Corridor Is a Key Transportation Asset Used by Daily Commuters and Intercity Travelers

The Northeast Corridor is used not only by Amtrak’s intercity trains, but also by commuter trains that carry commuters to and from work each day. Commuter railroads account for about 91 percent of the passenger train movements on the corridor. Commuter railroads also carry far more passengers annually than Amtrak does. For example, Metro-North carried 26 million passengers in 1994 on its 56-mile segment between New Rochelle, New York, and New Haven, Connecticut. Similarly, in 1995, New Jersey Transit carried over 19 million passengers on the 58-mile segment between Trenton, New Jersey, and New York City. In contrast, Amtrak’s annual ridership over the entire length of the corridor averages about 11 million.

Train-miles—the product of the number of trains times the number of miles traveled—is another measure of the corridor’s utilization. Amtrak operates fewer trains than the commuter railroads do, but its trains generally travel farther. Conversely, commuter railroads operate many trains over limited distances on the corridor. Figure 2 shows the percentage of train-miles that Amtrak, commuter railroads, and freight railroads operated on the corridor in 1993.

Although the percentage of train-miles operated by freight railroads on the corridor is relatively small, Amtrak officials stressed that because freight trains are typically longer and heavier than passenger trains, they cause a larger share of wear and tear on the infrastructure.

Along various segments of the corridor, the percentage of train-miles operated by commuter railroads differs, as figure 3 shows. Because we did not collect the amount of freight railroads’ train-miles on a segment-by-segment basis, figure 3 shows only the commuter railroads’ percentage of total passenger train-miles (i.e., the total of Amtrak’s and commuter railroads’ train-miles) operated on the corridor.

The shaded bars in figure 3 reveal that some of the heaviest use by commuter railroads on the corridor is in the vicinity of New York City. New Jersey Transit and the Long Island Rail Road use the corridor’s main line to directly access Penn Station in New York City. Although the Long Island Rail Road uses the corridor for only 4 miles—mostly in the East River tunnels—the railroad operates the highest percentage of total commuter train-miles on any segment of the corridor. Metro-North also serves New York City, operating trains between New Haven, Connecticut, and New Rochelle, New York, on the corridor’s main line. Metro-North uses its own right-of-way from New Rochelle to New York City’s Grand Central Terminal. Appendix II shows commuter and freight railroads’ train-miles for each year, from 1988 through 1993.

About Half of the Northeast Corridor’s Funding for Operations and Maintenance Comes Through Non-Amtrak Sources

As figure 4 shows, non-Amtrak sources provided, in total, about $126.3 million (52 percent) annually for operations on and maintenance of the corridor. From 1988 through 1993, commuter railroads used an annual average of $105.3 million in revenues and operating subsidies to pay for operating and maintenance expenditures on the corridor. Commuter railroads operating on Amtrak-owned segments used these funds for the operation and maintenance of stations and for access fees to Amtrak. Freight railroads also paid Amtrak and the Massachusetts Bay Transportation Authority an average annual total of $21 million in access fees. Amtrak used commuter and freight railroads’ access fee revenues to help fund its operating and maintenance expenditures. On segments not owned by Amtrak, commuter railroads or their parent agencies used revenues and operating subsidies to pay for the major portion of infrastructure operations and maintenance.

Amtrak’s revenue and operating subsidies ($117.7 million) 8.6% Freight railroads’ revenues ($21 million)

From 1988 through 1993, Amtrak provided, in total, for about $117.7 million (48 percent) of the Northeast Corridor’s average annual expenditures for operations and maintenance. Amtrak pays for operating and maintenance expenditures on the portions of the corridor that it owns and pays access fees to Metro-North for the segment between New Rochelle, New York, and New Haven, Connecticut. From 1988 through 1993, Metro-North provided for an annual average of $57.3 million in operations and maintenance expenditures on this segment on behalf of the Metropolitan Transportation Authority of New York and the Connecticut Department of Transportation, the owners of the right-of-way. Together, Amtrak and Metro-North funded 72 percent of the total average annual expenditures for operations on and maintenance of the corridor. On the segment owned by the Massachusetts Bay Transportation Authority, Amtrak performs operations and maintenance under its commuter operator contract.

Figure 5 shows the funding sources for capital projects on the corridor, on the basis of average expenditures from 1988 through 1993. Amtrak provided for about 42 percent of the average annual capital expenditure during this time period, using funds from its Northeast Corridor Improvement Program (NECIP) and general capital subsidies. From 1988 through 1993, Amtrak spent an average of $76.2 million of NECIP funds and $28.9 million of general capital funds on the corridor annually. Capital expenditures were for major upgrades and the maintenance of track, stations, signal systems, and high-speed rail improvements.

Figure 5 includes Amtrak’s and commuter railroads’ expenditures that are directed at achieving each entity’s specific objectives. For example, figure 5 includes Amtrak’s expenditures to support high-speed inter-city service, as well as commuter railroads’ expenditures for their stations and parking facilities. The degree to which Amtrak and the commuter railroads receive mutual benefits from these expenditures varies.

Federal Transit Administration ($54.5 million)

Amtrak’s NECIP appropriation ($76.2 million)

Amtrak officials stressed that their annual capital spending is constrained by the level of capital subsidies appropriated by the Congress. From 1985 through 1990, the Congress appropriated very few funds for NECIP, which affected Amtrak’s average annual capital expenditures from 1988 through 1993. In contrast, commuter railroads benefited from an annual average of $93.1 million from state and local sources, as well as $54.5 million that was provided by the Federal Transit Administration for capital projects. State and local funding comprised over 63 percent of the average annual non-Amtrak capital funding from 1988 through 1993.

The Proportion of Amtrak and Non-Amtrak Funding Varies Widely on Various Segments of the Corridor

As figure 6 shows, the relative portion of average annual expenditures for the corridor’s operations and maintenance from 1988 through 1993 funded by Amtrak and non-Amtrak sources varied substantially from segment to segment. The Southeastern Pennsylvania Transportation Authority received an annual average of $630,045 from 1988 through 1993 from the Delaware Transit Corporation, an agency of the Delaware Department of Transportation, to support commuter services between Marcus Hook and Philadelphia, Pennsylvania. These expenditures are included in figure 6 in the non-Amtrak totals for the Wilmington-to-Trenton segment.

Between New Rochelle, New York, and New Haven, Connecticut, where Amtrak does not own the right-of-way, Amtrak-funded expenditures are only a small portion of the total. Metro-North’s revenues and operating subsidies provided for the non-Amtrak expenditures. Major components of these expenditures include train dispatching; maintenance of the tracks, and signal and electrification systems; and station operations and maintenance. Amtrak’s expenditures on this segment are mostly the access fees that Amtrak pays to Metro-North for use of its tracks.

Capital expenditures also varied substantially from segment to segment, as figure 7 shows. Between New York City’s Penn Station and Sunnyside Yard, in Queens, New York, the Long Island Rail Road invested relatively large sums of capital. State and local sources provided for most of this funding from 1988 through 1991 and about half of the funding in 1992 and 1993. According to a Long Island Rail Road official, the expenditures include those for improvements to Penn Station and for a lump-sum payment to Amtrak for a 99-year lease to use the station.

Between New Rochelle and New Haven, the Metropolitan Transportation Authority of New York and Connecticut Department of Transportation used Federal Transit Administration funding as well as state and local funding sources for capital projects. The Connecticut Department of Transportation’s expenditures paid for major projects such as the replacement of crossties, improvements to station platforms and maintenance-of-way facilities, and the replacement of the Peck drawbridge and approaches in Bridgeport, Connecticut.

The Virginia Railway Express uses Union Station in Washington, D.C., and stores its commuter trains during the day at Amtrak’s Ivy City Yard, just north of Union Station. The railway pays access fees to Amtrak for the use of Union Station and the Ivy City Yard and has spent some capital funds, primarily on projects at the Ivy City Yard. These expenditures are included in the Washington-to-Perryville segment of figures 6 and 7. Not included in figure 7 is $1.3 million that the Rhode Island Department of Transportation spent in 1992 and 1993 on station improvements and switching systems.

Additional Annual Expenditures May Be Required to Maintain a State of Good Repair and Continue Improvements

Information provided by Amtrak and other corridor users indicates that about $677 million will be needed annually over the next 15 years to operate and maintain the infrastructure of the corridor, return it to a state of good repair, and continue existing improvement programs. Because past expenditures did not keep pace with repair needs, a backlog of repairs exists, and service interruptions and delays are increasing. Amtrak believes that continued deterioration could result in reduced ridership and the loss of the associated revenue.

Total Expenditure Requirement Depends on Continuation of Improvement Programs

Amtrak estimates that about $180 million in additional expenditures, or an additional 36 percent over actual 1988-93 average annual spending levels, will be needed each year for 15 years to return the corridor to a state of good repair while continuing to make capital improvements. Adding the $180 million to the $497 million average annual expenditure for operations, maintenance, and capital improvements from 1988 through 1993 brings the total to $677 million annually for the next 15 years.

However, future expenditure requirements depend on improvement plans. A portion of the $497 million in average annual expenditures for operations, maintenance, and capital was used for high-speed and capacity improvements. If the rate of improvement spending continues as it did from 1988 through 1993, then $677 million, adjusted for future inflation, may be a good approximation of annual expenditure requirements. Expenditures for upgrades could decrease after speed and trip-time goals have been achieved. In such a case, the required annual expenditures in the future could be less than $677 million.

Amtrak and other users of the corridor plan to continue improving the corridor for the next several years. Amtrak plans to spend about $1 billion over the next several years on high-speed rail service on the corridor. Most of this will be focused on establishing high-speed service between New York City and Boston, Massachusetts. The Maryland Rail Commuter Service plans over $110 million in capital improvements at its stations and parking facilities on the corridor. New Jersey Transit has spent $322.5 million since 1993 on its Secaucus Transfer project, and the agency’s proposed capital program includes more than $250 million over the next several years for a variety of capital projects to improve stations and connections between its off-corridor routes and the corridor. The Rhode Island Department of Transportation plans to spend over $140 million by 2001 mostly to build a third track to facilitate freight railroad movements within the state.

The Corridor’s Infrastructure Needs Repair

Amtrak has received about $3.4 billion (in nominal dollars) in NECIP capital grants since 1976 specifically for improvements to the corridor. However, in accordance with NECIP’s goals, Amtrak focused most of these funds on improving the infrastructure for high-speed rail rather than giving a high priority to other capital needs. Additionally, from 1985 through 1990, the Congress provided Amtrak with very little NECIP funding.

Consequently, the infrastructure has aged and now needs major renovation. For example, Amtrak officials have stated that the 1930s-era electrification system between Washington, D.C., and New Rochelle, New York, is badly deteriorated and needs replacing at a cost of nearly $700 million. The loss of power at an electrical substation not only halts trains but restoring power by transferring the load to other equipment not affected by the failure results in overloads and accelerated equipment failure rates. Also, track switches are prone to failure, delaying all trains on the corridor until repairs are completed.

Deteriorated Infrastructure Has Caused Delays

Figure 8 shows the number of Amtrak train delays on the Northeast Corridor from 1990 through 1994 caused by infrastructure problems, such as signaling, broken track, and routine maintenance activities. Since 1990, Amtrak has encountered at least 7,000 such delays on the corridor each year. In 1994, the number of delays increased sharply. While a 1-year increase does not indicate a trend, Amtrak believes that delays will continue to increase if the corridor’s repair needs are not addressed. Continued Amtrak and commuter service delays and interruptions could affect federal, state, and local transportation funding in the northeast region and result in a shift of Amtrak and commuter railroad riders toward other modes of transportation.

Amtrak Developed a Strategic Plan to Address Cuts in Federal Funding

The Congress has made substantial cuts in the federal operating subsidy for commuter railroads and has pressed Amtrak to develop a plan to end its dependence on operating subsidies. In response, Amtrak’s Board of Directors passed a resolution to develop a business strategy to eliminate or significantly reduce the federal operating subsidy by 2002. Shortly, we will report on Amtrak’s progress in implementing this plan. A key component of Amtrak’s long-term plan to operate free of federal operating subsidies is the anticipated increase in revenues resulting from high-speed improvements on the Northeast Corridor. Reduced revenues could jeopardize this plan. A second key component of Amtrak’s plan is having a continuing source of capital funds.

Scope and Methodology

To conduct our work, we visited officials at Amtrak’s headquarters in Washington, D.C., and its Northeast Corridor Strategic Business Unit in Philadelphia, Pennsylvania; the Federal Railroad Administration in Washington, D.C.; and the eight commuter railroads and the state and local agencies responsible for their operations. At these locations, we also obtained and reviewed pertinent documents and discussed activities relating to all aspects of operations on and funding for the corridor’s main line from Washington, D.C., to Boston, Massachusetts. We obtained similar information from the three freight railroads that operate on the Northeast Corridor’s main line. We conducted our review from June 1995 through June 1996 in accordance with generally accepted government auditing standards.

Agency Comments and Our Evaluation

We provided the Department of Transportation, Amtrak, and the 11 other users of the corridor with a draft of our report for their review and comment. We discussed this report with officials at the Department of Transportation, Amtrak, and Conrail and with a member of the Northern Virginia Transportation Commission who serves on a board that oversees Virginia Railway Express’ operations. The Metropolitan Transportation Authority of New York, New Jersey Transit, and the Massachusetts Bay Transportation Authority provided us with written comments which are included along with our response in appendixes IV, V, and VI. The Massachusetts Bay Transportation Authority took no exception with our report. The Southeastern Pennsylvania Transportation Authority did not provide us with written comments in time to be included in this report. The other four users did not provide us with comments.

A Senior Transportation Economist at the Department of Transportation, the Executive Director of New Jersey Transit, and the Director of Policy and Planning at the Metropolitan Transportation Authority of New York all commented that our report should present side-by-side comparisons of each railroad’s usage and expenditures and address whether users of the corridor were contributing their fair share. We did not present such a comparison because the issue of equitable cost sharing is outside the scope of this report. However, we clarified the scope of our work by adding a statement to this effect at the beginning of the report.

Officials at the Metropolitan Transportation Authority of New York and Amtrak commented that our draft should more accurately describe Amtrak’s $180 million annual need to achieve a state of good repair. We clarified that Amtrak’s state-of-good-repair estimate does not include the segment between New Rochelle and New Haven and that no state-of-good-repair backlogs exist on this segment. On the basis of Amtrak’s comments, we clarified the text to reflect that the $180 million is the additional annual expenditure that will be needed over the next 15 years to achieve a state of good repair.

The Controller of the Northern Virginia Transportation Commission commented that Virginia Railway Express’ capital expenditures on the corridor were mostly for projects at Amtrak’s Ivy City Yard. We clarified this point in the text of our report.

Officials at the Metropolitan Transportation Authority of New York and Conrail commented that our draft did not accurately state to whom Conrail pays access fees. We clarified circumstances under which Conrail would pay access fees to Metro-North and stated that Conrail pays access fees to the Metropolitan Bay Transportation Authority for use of the corridor’s track in the state of Massachusetts. In addition, users of the corridor provided us with additional clarifying comments, which we incorporated throughout this report where appropriate.

We are sending copies of this report to congressional committees and subcommittees interested in rail transportation matters; the Secretary of Transportation; the Administrator, Federal Railroad Administration; the Administrator, Federal Transit Administration; the President of Amtrak; the Director, Office of Management and Budget; and other interested parties. We will make copies available to others on request.

Please call me at (202) 512-2834 if you or your staff have any questions. Major contributors to this report are listed in appendix VII.

Information on Commuter and Freight Railroads That Operate on the Northeast Corridor

Virginia Railway Express

The Virginia Railway Express (VRE) initiated service in June 1992 under agreements with Amtrak, Norfolk Southern Railway, CSX Transportation, and Consolidated Rail Corporation (Conrail). VRE’s two routes—the Manassas line and the Fredericksburg line—join in Alexandria, Virginia, to provide commuters with service to Union Station in Washington, D.C. VRE’s routes cover 84 route-miles. The major stations served by VRE include Alexandria, Woodbridge, Fredericksburg, and Manassas in Virginia, and Washington, D.C.’s Union Station. In 1995, VRE carried 1.85 million passengers.

Maryland Rail Commuter Service

The Maryland Rail Commuter Service (MARC) descends from the former Baltimore & Ohio Railroad and the former Pennsylvania Railroad. In 1974, the Maryland Department of Transportation began subsidizing the Baltimore & Ohio’s unprofitable passenger service. When Amtrak took over passenger service from Conrail, the Maryland Department of Transportation signed a new agreement to have Amtrak provide service for commuters along the Northeast Corridor between Washington, D.C., and Baltimore.

Today, what is called MARC train service includes the Penn line, operated by Amtrak, and the Camden and Brunswick lines, operated by CSX Transportation. The system serves Washington, D.C., and Baltimore, Maryland, and continues as far north as Perryville, Maryland, and as far west as Martinsburg, West Virginia. In fiscal year 1994, 5.05 million riders traveled over MARC’s 187-mile route system, of which 77 miles are on the Northeast Corridor.

Southeastern Pennsylvania Transportation Authority

In 1983, the Southeastern Pennsylvania Transportation Authority’s (SEPTA) railroad division took over the operation of commuter rail lines formerly operated by the Reading and Pennsylvania Railroads. SEPTA is an intermodal transit authority with responsibility for running local transportation, including commuter rail, and a variety of other urban and suburban transit systems. According to SEPTA, the authority is an instrumentality of the Commonwealth of Pennsylvania created by the state legislature, and oversight responsibility rests with the Pennsylvania Department of Transportation. SEPTA’s board is appointed by various state and county authorities including the governor, the majority and minority parties in the state senate and state house of representatives, and the five counties served by SEPTA.

SEPTA’s Regional Rail Division operates seven commuter rail routes arranged in a radial configuration with central Philadelphia at the locus. Since 1983, SEPTA has expanded commuter rail service westward along the Amtrak-owned Harrisburg line. The regional rail system operates 243 route-miles serving 152 stations in five counties. Two of SEPTA’s routes, totaling 58 route-miles, lie on the Northeast Corridor’s main line and provide riders with service from Wilmington, Delaware, to Trenton, New Jersey. In 1995, SEPTA’s ridership was 25.2 million.

New Jersey Transit Corporation

The New Jersey Transit Corporation (NJT) commuter rail system descends from some of the country’s oldest railroads, including the former Central Railroad of New Jersey; the former Pennsylvania Railroad; the former Erie Railroad; the Delaware, Lackawanna & Western Railroad; the former Lehigh Valley Railroad; and the Pennsylvania-Reading Seashore lines. The portion of NJT on the Northeast Corridor began as part of the extensive Pennsylvania Railroad System. NJT is a component unit of the state of New Jersey.

NJT operates 12 commuter rail lines covering 427 route-miles, 58 of which lie on the Northeast Corridor between Trenton, New Jersey, and New York City’s Penn Station. The system serves 14 of New Jersey’s 21 counties and includes New York City and Newark, Atlantic City, and Trenton in New Jersey. In 1995, NJT carried 45.4 million riders.

Long Island Rail Road

The Long Island Rail Road (LIRR), which was incorporated in 1834, is the oldest U.S. railroad still operating under its original name. In 1980, LIRR’s Certificate of Incorporation was amended to convert it to a subsidiary public benefit corporation, and in 1982 LIRR embarked on a capital program to add new cars, improve switching and storage of rail cars, and extend electric service.

Today, LIRR is a subsidiary of the Metropolitan Transportation Authority (MTA) of New York. The railroad links New York City with 134 stations in Nassau and Suffolk Counties on Long Island. Although the system comprises 11 branches and 117 route-miles, only 4 route-miles lie on the Northeast Corridor. This segment passes through the East River tunnels, providing riders with access to New York’s Penn Station. LIRR shares Penn Station with Amtrak and New Jersey Transit. In 1994, LIRR’s ridership was 73.2 million.

Metro-North Commuter Railroad

The routes of the present-day Metro-North Commuter Railroad date from 1831 with the incorporation of the former New York and Harlem Railroad and the former Hudson River Railroad, which was incorporated in 1847. When the Congress decided that Conrail would no longer have to provide service for passengers, New York created Metro-North on January 1, 1983, to assume operation of the metropolitan commuter rail service.

Metro-North operates as a subsidiary of MTA. New York and Connecticut share oversight and financing responsibilities for the New Haven line pursuant to a 1985 contract. Connecticut administers its share of Metro-North’s activities through its Department of Transportation. New York administers its share through MTA, a public authority with a statutory mission to provide the public with transit services in the New York City region.

Metro-North’s total system encompasses 338 route-miles. The railroad’s New Haven line operates on the Northeast Corridor’s main line for 56 miles between New Rochelle, New York, and New Haven, Connecticut. At New Rochelle, the New Haven line diverts from the corridor and continues to New York’s Grand Central Terminal. In Connecticut, three branch lines—from Waterbury, Danbury, and New Canaan—feed into the New Haven line. In New York, Metro-North also runs along the Hudson and Harlem lines east of the Hudson River and the Port Jervis and Pascack lines west of the Hudson. In 1994, Metro-North’s ridership was 61.9 million.

Shore Line East Commuter Service

The Connecticut Department of Transportation began the Shore line East Commuter Service (SLE) on May 29, 1990. SLE operates solely as a commuter rail service, restricting operation to peak weekday hours. The Connecticut Department of Transportation administers and funds SLE and contracts with Amtrak for the daily operation of that service.

From 1990 through 1996, SLE operated 33 miles of commuter service between New Haven and Old Saybrook, Connecticut, making five intermediate stops. In February 1996, SLE extended its operations to New London, Connecticut, bringing its total route-miles to about 50, all of which are on the Northeast Corridor. In 1994, ridership was 282,687.

Massachusetts Bay Transportation Authority

In 1947, the state legislature created the Metropolitan Transit Authority, which was renamed the Massachusetts Bay Transportation Authority (MBTA) in 1964. MBTA is an independent state authority. The chairman of its board is the state’s Secretary of Transportation. MBTA’s commuter rail provides access to Boston for most of eastern Massachusetts via 11 separate lines. The system covers 226 route-miles, of which 44 lie on the Northeast Corridor between Providence, Rhode Island, and Boston, Massachusetts. MBTA’s 1993 commuter-rail ridership was 21.6 million.

Conrail

Conrail began operations in April 1976 as a federal government-owned corporation, although its origins go back to the earliest days of railroading in North America. The oldest segment of what became Conrail was the Granite Railway Co., built in 1826 to carry granite blocks for the Bunker Hill Monument in Massachusetts. By the early 1970s, scores of railroads in the Northeast and Midwest had been acquired or merged into six different lines, and all were bankrupt. The federal government, recognizing the national economic importance of the six railroads, responded by creating Conrail and appropriating the funds needed to rebuild tracks, locomotives, and freight cars.

In 1981, Conrail no longer required federal investment and finished the year with its first profit. In 1987, the federal government sold its ownership interest in Conrail through what at the time was the largest initial public stock offering in the nation’s history. In 1996, Conrail operated a railroad route network of about 11,000 miles with a fleet of about 2,100 locomotives and nearly 53,000 freight cars.

Providence and Worcester Railroad Company

The Providence and Worcester Railroad Company is an interstate freight carrier conducting railroad operations in Connecticut, Rhode Island, and Massachusetts. The railroad interchanges freight traffic with Conrail at Worcester, Massachusetts, and at New Haven, Connecticut; with the Springfield Terminal Railway Company (formerly the Boston and Maine Railroad) at Gardner, Massachusetts; and with the New England Central Railroad (formerly the Central Vermont Railway) at New London, Connecticut. In 1994, the railroad handled 28,404 carloads of freight and 45,405 containers.

The Providence and Worcester Railroad operates over 470 miles of track, approximately 170 miles of which it owns. On the Northeast Corridor, the railroad operates between Providence, Rhode Island, and South Norwalk, Connecticut.

Delaware & Hudson Railway Company, Inc.

In 1991, the Delaware and Hudson Corporation was renamed the Delaware and Hudson Railway Company, Inc., when it was purchased by Canadian Pacific Rail Systems and integrated into one of the largest transportation organizations in North America. The railroad operates over 1,500 miles of track—600 miles of owned track and 900 miles of trackage rights over other railroads’ tracks. On the Northeast Corridor, the railroad operates between Landover and Perryville, Maryland. In 1995, the railroad carried 7.3 billion ton-miles of freight.

Commuter and Freight Railroads’ Train-Miles Operated on the Northeast Corridor, 1988-93

Scope and Methodology

For purposes of this report, we limited our review to the main line of the Northeast Corridor, which lies between Washington, D.C., and Boston, Massachusetts. We held discussions with and obtained data on expenditures and train-miles operated on the corridor from officials of Amtrak, VRE, MARC, the Delaware Transit Corporation, SEPTA, NJT, LIRR, the Metropolitan Transportation Authority of New York, Metro-North Commuter Railroad, the Connecticut Department of Transportation, SLE, the Rhode Island Department of Transportation, MBTA, the Delaware and Hudson Railway, Conrail, and the Providence and Worcester Railroad.

We did not obtain data on expenditures from railroads that operate only on the Northeast Corridor’s spurs—the tracks between Philadelphia and Harrisburg, Pennsylvania; 11 miles of the track on the line between New York City and Albany, New York; and the track between New Haven, Connecticut, and Springfield, Massachusetts—all of which are owned by Amtrak. We collected data only on the expenditures that go toward making the corridor available as a transportation facility for the trains operated by Amtrak and by commuter and freight railroads. We did not collect data on expenditures for train operations, such as fuel and crews’ salary and purchases and maintenance of rolling stock.

To determine the relative usage of the corridor and the sources of funding among Amtrak and commuter and freight railroads, we requested train-mile, expenditure, and funding source data for 1988 through 1993. We chose this time period because (1) it provided several years of data for us to incorporate yearly funding variations and (2) a substantial portion of Amtrak’s expenditure data was readily available only through 1993. To determine the sources of funding for the expenditures, we requested that Amtrak and each corridor user include the sources of funding in their data on expenditures.

To determine the annual expenditures required to operate, upgrade, and maintain the Northeast Corridor’s infrastructure in a state of good repair, we collected data on expenditures from Amtrak and each user of the corridor for 1988 through 1993. We also asked Amtrak and the other right-of-way owners to estimate the amount of additional expenditures that are needed to bring the corridor to a state of good repair. The data in this report present an order-of-magnitude estimate of the annual expenditure required to operate the Northeast Corridor’s infrastructure in a state of good repair, rather than an exact accounting. Each railroad provided us with data based on its own fiscal year, some of which begin in June, October, and January. Officials at some railroads told us that they could not provide us with the data that we requested in a format that conformed to a different fiscal year. Table III.1 shows each railroad’s fiscal year.

Delaware & Hudson Railway Company, Inc.

In a number of cases, data were not available to allow for exact computations of expenditures and funding sources. In such instances, Amtrak and the commuter agencies developed estimates as follows:

Amtrak could not readily break out the exact amount of general capital and some NECIP funds that it spent on specific segments of the corridor. Therefore, Amtrak allocated these expenditures evenly over the route-miles of the corridor that it owns. Because the corridor is not in a state of good repair and a repair backlog exists, actual expenditures could understate the true requirement to operate and maintain the corridor in a state of good repair. Therefore, we used Amtrak’s estimate of the expenditures required over the next 15 years to bring the corridor to a state of good repair. We added this estimate to the actual average annual expenditure of all users of the corridor to arrive at the total annual expenditure to operate and maintain the corridor in a state of good repair while continuing capital improvements at their historical rate.

Amtrak and at least one commuter railroad commingle their revenues with operating subsidies before allocating these funds to various expenditures. Therefore, we have combined these funding sources in this report.

When NJT implemented a major upgrade of its automated financial system in 1993, data on expenditures for prior years were combined into totals for major projects. Agency officials allocated expenditures to specific fiscal years on the basis of their best recollection of each project’s spending.

LIRR could not readily determine the exact amount that it spent for operations on and maintenance of its 4-mile segment of the corridor. The railroad arrived at its expenditures by prorating its systemwide expenditures over the 4-mile segment of the corridor over which it operates.

We attempted to portray the amount actually expended in each fiscal year. However, some railroads use an accrual basis for recording operating and maintenance costs, while others do not. Therefore, the expenditures for operations and maintenance shown in figure 4 contain some accrued expenses from the period after 1993 and exclude some 1988 expenditures. Because the beginning and ending accrued expenses may offset one another, the net effect could be minimal. Although Amtrak officials were unable to quantify the impact of including accrued expenses in our data, a senior Amtrak official stated that the impact of accruals could be insignificant.

We reviewed Amtrak’s procedures to retrieve and compile the expenditure data used in this report. We also reviewed the procedures that each commuter railroad used to develop data on expenditures. However, we did not audit the data provided by Amtrak or the commuter and freight railroads. Each entity had the opportunity to review a draft of this report and provide us with comments.

Comments From the Metropolitan Transportation Authority

The following are GAO’s comments on the Metropolitan Transportation Authority’s letter dated June 4, 1996.

GAO’s Comments

1. The issue of equity is outside the scope of this report. 2(a). Because equity of each railroad’s contribution is outside the scope of this report, we did not list each railroad’s specific contribution. We stated Metro-North’s expenditures for operations and maintenance because of the corridor’s 12 users (Amtrak, eight commuter railroads, and three freight railroads); the combined Metro-North and Amtrak expenditures provided for 72 percent of the total expenditures for operations and maintenance. 2(b). We did not attempt to determine which portion of improvements was for maintaining the basic railroad and which was for upgrades. We have clearly stated that the expenditures include those for upgrades as well as for regular maintenance. 2(c). Amtrak told us that a major portion of its data, which were organized by corridor segment, was available only through 1993. We requested expenditure data for a 6-year period prior to 1993 to account for variations in annual spending on the corridor. 2(d). We did not independently verify the number of trains operating on the corridor. We attributed this statement, which was made by the Corporation’s President in testimony before the Congress, to Amtrak. 3(a). Our objective was to determine the funding required to operate the corridor in a state of good repair. Past expenditures did not keep pace with repair needs. Therefore, we added Amtrak’s state-of-good-repair estimate to the average annual expenditure of all corridor users from 1988 through 1993. In response to this comment and a similar comment by Amtrak officials, we clarified the basis of Amtrak’s state-of-good-repair estimate.

In a meeting at the offices of the Metropolitan Transportation Authority of New York on January 18, 1996, attended by representatives of the Authority, Metro-North, and LIRR, we asked whether Metro-North or LIRR had any unmet state-of-good-repair needs. Officials responded that, with the exception of tunnel upgrades, there were no unmet needs. We have clarified this point in the text of our report. 3(b). We have included a statement that Amtrak’s state of good repair estimate includes the estimated cost of electrification replacement between Washington, D.C., and New Rochelle, New York, and the needed tunnel upgrades. 4(a). We have modified figure 1 and the accompanying note to more clearly show Amtrak’s and commuter railroads’ operations and associated mileage. 4(b). We have corrected the reference to Conrail’s access fee payments. 4(c). The point of the paragraph is to show that commuter railroads carry far more passengers on the corridor than does Amtrak. The discussion shows that two commuter railroads—NJT and Metro-North—each carry more passengers over their respective segments than Amtrak carries over the entire corridor. 4(d). We did not collect data on train-hours, car-miles, or other data needed to allocate costs for a joint-use facility such as the Northeast Corridor because the issue of equity of expenditures versus usage is beyond our scope. 4(e). We have deleted this sentence from the report. 4(f). The text on page 12 of the draft accompanied figure 4, both of which deal with contributions for the entire corridor. The text on page 16 of the draft accompanied figure 6, both of which deal with contributions on a segment-by-segment basis. 4(g). The names of the Metropolitan Transportation Authority and LIRR have been corrected throughout the report.

The Authority’s letter included a Metro-North memorandum that provided us with separate comments as an attachment. Many of the comments in that memorandum mirrored those in the Metropolitan Transportation Authority’s letter or addressed points of clarification that we have considered and incorporated in the text as appropriate.

Comments From New Jersey Transit

The following are GAO’s comments on New Jersey Transit’s letter dated June 4, 1996.

GAO’s Comments

1. While the number of trains may not directly affect costs, the number of trains does affect the corridor’s capacity. Since cost allocation is not the focus of this report, we believe the number of trains presents a broad picture of the corridor’s utilization. 2. Any comparison of usage versus expenditures is outside the scope of this report. 3. After obtaining further clarification from NJT, we included the 1994-96 expenditures for the Secaucus Transfer project in our report. 4. We updated the ridership figure as suggested.

Comments From the Massachusetts Bay Transportation Authority

Major Contributors to This Report

Resources, Community, and Economic Development Division, Washington, D.C.

Boston Regional Office

New York Regional Office1

These staff performed the initial work for this report prior to the closing of the New York Regional Office in November, 1995.

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