News | February 8, 2022

Rail Law Alert: Office of Inspector General Report Highlights Need for Improved Amtrak Relationship with State-Supported Rail Agencies

Amtrak’s Office of the Inspector General (OIG) issued  report on January 31, 2022 outlining the need for Amtrak to improve communications, billing and trust with the twenty (20) transit operators in seventeen (17) states and recommended several improvements.  The report follows passage of the Infrastructure Investment and Jobs Act, P.L. No. 117-58, Section 22211, 135 Stat. 429, 708-721 (2021) (IIJA), which requires Amtrak and the Federal Railroad Administration to update the cost-sharing methodology required by the Passenger Investment and Improvement Act (PRIIA), 49 U.S.C. § 209, by March 31, 2022.

Concerns raised by the states in a 2020 OIG report regarding Amtrak’s poor service levels on state-supported lines remain, even more so now that states are paying Amtrak approximately 26% more under PRIIA and the COVID-19 pandemic created unprecedented losses for the states.  With Amtrak looking to expand service into 160 new communities across sixteen states, the Inspector General found that it is more important than ever to correct inequities in Amtrak’s control, resource allocation and cost sharing methodologies on state-supported rail lines.  Particularly concerning is the lack of a cost-allocation methodology for capital infrastructure and weak quality control in Amtrak’s billing systems. The report notes that Amtrak should take advantage of ongoing negotiations with its state partners to improve its relationships, build trust and resolve remaining challenges and tensions with its state partners. The report’s findings and recommendations focused on Amtrak’s need to increase transparency and communication with the states.

The report included the following specific recommendations:

  • Clarify and document decisions impacting state-supported costs, improve the timing of when and how Amtrak communicates those decisions to its state partners and improve the level and type of support Amtrak will provide in response to its’ state partners’ inquiries;
  • Clarify and document the cost-allocation methodology, state partner contact requirements and work towards a cost-sharing mechanism for capital and fixed asset expenditures;
  • Clarify, document and better communicate to the states the revised cost-allocation methodology required by the IIJA;
  • Implement a process to track and regularly share with the states the number, type and magnitude of errors that occur on bills submitted to the states;
  • Procure an independent third party to periodically review and validate Amtrak’s billing practices; and
  • Establish a policy to regularly communicate with internal and external stakeholders any changes Amtrak makes that could materially impact a state’s costs.

Amtrak management agreed with the report’s recommendations and pledged to comply by specific dates.  It is targeting October 31, 2023 as the date by which a cost-allocation methodology for capital and fixed assets will be implemented.

If you have questions about the OIG report, please contact Ayelet Hirschkorn, Suzanne Silverman, Charles Spitulnik, or Christian Alexander.