Summary

Amtrak has been providing free or reduced rate transportation to certain railroad employees, retirees, and their spouses and dependents since 1972. Pass riders are entitled to free or reduced rate travel, provided space is available. They travel free or at half fare depending on factors such as length of railroad employment, whether they are retired, and whether they are traveling on or off the rail lines of their home railroad. The Amtrak Reorganization Act of 1979 required the railroads to pay Amtrak 25 percent of the monthly average yield for each mile traveled by pass riders. The Act further required GAO to recommend the appropriate means to reimburse Amtrak for its costs, taking into account the value of the service provided.

The costs Amtrak incurs in furnishing transportation to pass riders are debatable. The basic question is whether Amtrak is to be reimbursed for (1) its incremental costs which are small compared to total operating costs, or (2) a portion of total operating costs equal to the value of the service pass riders receive. GAO does not recommend one position over the other. The choice is a policy decision Congress should make. It is difficult to place a definitive value on the service pass riders receive. Amtrak considers pass privileges to be a valuable fringe benefit to the employees and the railroads and, for this reason, the incremental cost argument to be inappropriate. Congressional action will be required to decide the issue of reimbursement. Two options are available: (1) to provide for Amtrak to be reimbursed only for the incremental costs of providing free or reduced rate transportation to eligible persons or (2) to provide for Amtrak to be reimbursed for the value of the service it provides.