Amtrak lost $1.1 billion in 2001, the most in its 30-year history, and has not made progress toward meeting Congress' goal of self-sufficiency, a new government report said.

The report by Transportation Department Inspector General Kenneth Mead also bolsters Amtrak's perennial plea for a greater federal investment in rail.

Mead's annual assessment of the nation's passenger railroad, released Friday, reported that Amtrak's 2001 cash loss was $585 million, $24 million worse than in 2000.

The cash loss will determine whether Amtrak will meet a 1997 order from Congress to end its reliance on federal operating subsidies by Dec. 2, 2002.

Mead, Transportation's internal watchdog, said Amtrak would have to reduce its cash loss by more than $300 million to meet the deadline and cannot do so without the "cannibalization" of the company.

The Associated Press obtained a copy of the report prior to its official release Friday. Amtrak officials had no immediate comment.

Mead said Amtrak faces "a formidable challenge" this year just making ends meet without further borrowing. Last summer, Amtrak had to mortgage part of Penn Station in New York City -- one of its most important assets -- to raise $300 million to continue operating through Sept. 30, the end of the fiscal year.

The report supports the longtime assertion by Amtrak leaders that, regardless of its self-sufficiency effort, the federal government needs to continue investing in tracks, rail yards, stations and other assets.

Mead said Amtrak needs at least $1 billion a year for the foreseeable future to handle deteriorating conditions "that will need to be addressed if rail service is to continue, regardless of who operates that service."

And he warned, "It is not clear whether Amtrak or any other entity could ever operate a linked national system such as that in place today without operating subsidies."

The report is the fourth issued by the inspector general under the 1997 Amtrak Reform and Accountability Act, which provided billions of dollars for Amtrak but gave it five years to prove it could run without annual operating subsidies.

The report was originally expected in November, and its delayed release has been the subject of a dispute on the Amtrak Reform Council, which was formed under the 1997 law to report to Congress on Amtrak's progress toward self-sufficiency.

In November, the council voted narrowly that Amtrak would not meet the mandate. The council is putting the finishing touches on a report that recommends breaking up Amtrak and opening passenger rail to competition.

Last week, 11 unions sued to stop the council from issuing its recommendations. The union alleged, among other things, that the council reached its conclusions prematurely because Mead's report had not yet been released.

In a statement Friday, the council said the report affirms its finding that Amtrak will fail to achieve operational self-sufficiency by December.

Chairman Gil Carmichael said the council's focus now "is how to restructure Amtrak so that the American people can have a new, modern national rail passenger system early in this century."