Compilation of certain railroad laws within the jurisdiction of the Committee on Interstate and Foreign Commerce

MISSING IMAGE

Material Information

Title:
Compilation of certain railroad laws within the jurisdiction of the Committee on Interstate and Foreign Commerce Regional rail reorganization act of 1973 ...
Uniform Title:
Laws, etc
Physical Description:
iii, 650 p. : ; 24 cm.
Language:
English
Creator:
United States
United States -- Congress. -- House. -- Committee on Interstate and Foreign Commerce
Publisher:
U.S. Govt. Print. Off.
Place of Publication:
Washington
Publication Date:

Subjects

Subjects / Keywords:
Railroad law -- United States   ( lcsh )
Genre:
federal government publication   ( marcgt )
non-fiction   ( marcgt )

Notes

Statement of Responsibility:
prepared for the use of the House Committee on Interstate and Foreign Commerce.
General Note:
Reuse of record except for individual research requires license from LexisNexis Academic & Library Solutions.
General Note:
Feb. 1979.
General Note:
At head of title: 96th Congress, 1st session. Committee print. Committee print 96-IFC 2.
General Note:
CIS Microfiche Accession Numbers: CIS 79 H502-13

Record Information

Source Institution:
University of Florida
Rights Management:
All applicable rights reserved by the source institution and holding location.
Resource Identifier:
aleph - 024871394
oclc - 05098322
Classification:
lcc - KF49
System ID:
AA00024818:00001

Full Text
X;,

V
.1- 44 . "

96thCongress CO TE PRI COMMITTEE
19t Session PRINT 98-IFC 2





COMPUILATION OF CERTAIN RAILROAD LAWS 41 r, WITHIN THE TIRISDICTION -OF THE

COMMITTEE ON INTERSTATE AND

FOREIGN COMMERCE
i .4.,






REGIONAL RAIL RF ORGANIZE 9
RAILROAD REVITALIZATION AN R LATORY ACTOF


44..... ,
SUBTITLE IV OF TITLE 49, ED TES COD
RAIL PASSENGER ICE A
FEDERAL RAILROAD SA ACT 0470 c
RAILWAY LAB 6
RAILROAD RETIRED T
RAILROAD UNEMPLOYMENT INSU ACT
DEPARTMENT OF TRANSPORTATION ACT












II
EMERGENCY RAIL SERVICES ACT- OF 1970
HOURS OF SERVICE ACT
FEDERAL EMPLOYERS' LIABILITY ACT
4CELATED MATERIALS



PREPARED FOR THE USE OF THE

HOUSE COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE








FEBRUJARY 1979


-Pited f or fheuse of the
House Comdmittee on Interstate and Foreign Commerce










96th Congress 1 COMMITTEE PRINT fCOM -NIITT EE 1st Session j I PRINT 96-IFC 2



COMPILATION OF CERTAIN RAILROAD LAWS

WITHIN THE JURISDICTION OF THE

COMMITTEE ON INTERSTATE AND

FOREIGN COMMERCE




REGIONAL RAIL REORGANIZATION ACT OF 1973
RAILROAD REVITALIZATION AND REGULATORY REFORM ACT OF 1976
SUBTITLE IV OF TITLE 49, UNITED STATES CODE
RAIL PASSENGER SERVICE ACT
FEDERAL RAILROAD SAFETY ACT OF 1970
RAILWAY LABOR ACT
RAILROAD RETIREMENT ACT
RAILROAD UNEMPLOYMENT INSURANCE ACT
DEPARTMENT OF TRANSPORTATION ACT EMERGENCY RAIL.SERVICES ACT OF 1970
HOURS OF SERVICE ACT
FEDERAL EMPLOYERS' LIABILITY ACT
RELATED. MATERIALS



PREPARED FOR THE USE OF THE

HOUSE COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE








FEBRUARY 1979


Printed for the use of the
House Committee on Interstate and Foreign Commerce


U.S. GOVERNMENT PRINTING OFFICE
36-573 0 WASHINGTON :1979


For sale by the Superintendent of Documents, U.S. Government Printing Office Washington, D.C. 20402
Stock Number 052-070-04853-1
























COMMITTEE E ON INTERSTATE ANI) FOREIGN COMMERCE
HARLEY O. STAGGERS, West Virginia, Chairman .JOIN D. DINGELL, Michigan SAMUEL L. DEVINE, Ohio
LIONEL VAN DEERLIN, California JAMES T. BROYIIILL, North Carolina JOHN M. MURPHY, New York TIM LEE CARTER, Kentucky
DAVID E. SATTERFIELD III, Virginia CLARENCE J. BROWN, Ohio BOB ECKHARDT, Texas JAMES M. COLLINS, Texas
RICHARDSON PREYER, North Carolina NORMAN F. LENT, New York JAMES II. SCHEUER, New York EDWARD R. MADIGAN, Illinois
RICHARD L. OTTINGER, New York CARLOS J. MOORHEAD, California
HENRY A. WAXMAN, California MATTHEW J. RINALDO, New Jersey
TIMOTHY E. WIRTII, Colorado DAVE STOCKMAN, Michigan
PHILIP R. SHARP, Indiana MARC L. MARKS, Pennsylvania
JAMES J. FLORIO, New Jersey TOM CORCORAN, Illinois
ANTHONY TOBY MOFFETT, Connecticut GARY A. LEE, New York JIM SANTINI, Nevada TOM LOEFFLER, Texas
ANDREW MAGUIRE, New Jersey WILLIAM E. DANNEMEYER, California
MARTY RUSSO, Illinois
EDWARD J. MARKEY, Massachusetts THOMAS A. LUKEN, Ohio DOUG WALGREN, Pennsylvania ALBERT GORE, Ja., Tennessee BARBARA A. MIKULSKI, Maryland RONALD M. MOTTL, Ohio PHIL GRAMM, Texas
AL SWIFT, Washington
MICKEY LELAND, Texas
RICHARD C. SHELBY, Alabama
W. E. WILLIAMSON, chief f ('lerk aid Staff Director
KENNETII .1. PAINTEIR. First ANssis-tant ('lerk EIIZAHETII IIAIIISON. I'rof)fssional Ntaff LEIWis E. BEIRRY. Minority ('Counsel
(II)











CONTENTS


Page
Regional Rail Reorganization Act of 3
Railroad Revitalization and Regulatory Reform Act of 1976 ------------- 97
Subtitle IV of title 49, United States 233
Rail Passenger Service Act ----------------------------------------- 381
Federal Railroad Safety Act of 415
Railway Labor 427
Railroad Retirement 453
Railroad Unemployment Insurance 509
Department of Transportation 545
Emergency Rail Services Act of 579
Hours of Service Act --------------------------- 585
Federal Employers' Liability 593
Related Materials:
Excepts from title 11, United States 601
Excepts from title 45, United States Code showing:
Safety Appliance 609
Ash Pan 615
Locomotive Inspection 615
Block Signal 621
Inspection and Testing of Railroad Cars and Appliances ------- 621 Accident Reports 621
Hazardous Materials Transportation 625
Independent Safety Board Act of 637
Act of March 12, 1914 (Alaska Railroad Act) --------------------- 647
































REGIONAL RAIL REORGANIZATION ACT OF 1973


















Digitized by the Internet Archive
in 2013













http://archive.org/details/compcerOOunit














REGIONAL RAIL REORGANIZATION ACT OF 19073

(as amended through 1.978)

AN ACT To authorize and direct the maintenance of adequate and efficient rail services in the Midwest and Northeast region of the United States, and for other purposes

Be it enacted by the Senate and House of Representatives of the United States of America h Congress assembled, That this* Act. divided into titles and sections according to the following table of contents, may be cited as the "Regional Rail Reorganization Act of 1973".
TABLE OF CONTENTS

TITLE I-GENERAL PROVISIONS
Sec. 101. Declaration of policy. See. 102. Definitions.

TITLE II-UNITED STATES RAILWAY ASSOCIATION
See. 201. Formation and structure. See. 202. General powers and duties of the Association. See. 203. Access to information. See. 204. Report.
See. 205. Rail Services Planning Office. See. 206. Final system plan. See. 207. Adoption of final system plan. See. 208. Review by Congress. See. 209. Judicial review. Sec. 210. Obligations of the Association. See. 211. Loans.
See. 212. Records, audit, and examination. Sec. 213. Emergency assistance pending implementation. See. 214. Authorization for appropriations. See. 215. Maintenance and improvement of plant. See. 216. Purchase of debentures and series A preferred stock.

TITLE III-CONSOLIDATED RAIL CORPORATION
Sec. 301. Formation and structure. See. 302. Powers and duties of the Corporation. See. 303. Valuation and conveyances of rail properties. See. 304. Termination and continuation of rail services. See. 305. Continuing reorganization; supplemental transactions. Sec. 306. Certificates of value. See. 307. Protection of Federal funds.

TITLE IV-LOCAL RAIL SERVICES
See. 401. Findings and purposes. Sec. 402. Rail service continuation assistance. See. 403. Acquisition and modernization loans.
(3)







4

TITLE V--EMPLOYEE PROTECTION
Sec. 501. Definitions. Sec. 502. Employment offers. Sec. 503. Assignment of work. Sec. 504. Collective-bargaining agreements. Sec. 505. Employee protection. Sec. 506. Contracting out. Sec. 507. Arbitration. Sec. 508. Duties of acquiring and selling railroads. Sec. 509. Payment of benefits.

TITLE VI-AMISCELLANEOUS PROVISIONS
Sec. 601. Relationship to other laws. Sec. 602. Annual evaluation by the Secretary. Sec. 603. Freight rates for recyclables. Sec. 604. Separability. Sec. 605. Duty of transferee.










TITLE I-GENERAL PROVISIONS

DECLARATION OF POLICY
SEC. 101. (a) FiNDINGs.-lihe Congress finds and declares that(1) Essential rail service in the midwest and northeast region
of the United States is provided by railroads which are today insolvent and attempting to undergo reorganization under the
Bankruptcy Act.
(2) This essential rail service is threatened with cessation or
significant curtailment because of the inability of the trustees of such railroads to formulate acceptable plans of reorganization.
This rail service is operated over rail properties which were acquired for a public use, but which have been permitted to deteriorate and now require extensive rehabilitation and modernization.
(3) The public convenience and necessity require adequate and
efficient rail service in this region and throughout the 'Nation to meet the needs of commerce, the national defense, the enviroiiment, and the service requirements of passengers, United States mail, shippers, States and their political subdivisions, and
consumers.
(4) Continuation and improvement of essential rail service in
this region is also necessary to preserve and maintain adequate national rail services and an efficient national rail transportation
system.
(5) Rail service and rail transportation offer economic and
environmental advantages with respect to land use, air pollution, noise levels, energy efficiency and conservation, resource allocation, safety, and cost per ton-mile of movement to such extent that the preservation and maintenance of adequate and efficient
rail service is in the national interest.
(6) These needs cannot be met without substantial action by
the Federal Government.
(b) PURPosEs.-It is therefore declared to be the purpose of Congress in this Act to provide for(1) the identification of a rail service system in the midwest and
northeast region which is adequate to meet the needs and service requirements of this region and of the national rail transportation
system:
(2) the reorganization of railroads in this region into an economically viable system capable of providing adequate and efficient rail service to the region;
(3) the establishment of the United States Railway Association,
with enumerated powers and responsibilities;
(4) the establishment of the Consolidated Rail Corporation,
with enumerated powers and responsibilities;
(5)






6

(5) assistance to States and local and regional transportation authorities for continuation of local rail services threatened with cessation: and
(6) necessary Federal financial assistance at the lowest possible
cost to the general taxpayer.
DEFINITIONS
SEC. 102.. As used in this Act, unless the context otherwise requires(1) "Assoc nation" means the United States Railway Associat ion, established tinder section 20t of this Act
(2) "'Commission"" means the Interstate Commerce Commission; (3) "Corporation" means the Consolidated Rail Cor-poration
required to be established tinder section 301 of this Act or its successor bv meraer, consolidation or other form of succession carried out under applicable law for the purpose of changing the State of
its incorporation:
(4) "effective date of the final system plan" means the date on
which the final system plan or any revised final system plan is deemed approved by Congress, in accordance with section 208 of
this Act;
(5) "employees stock ownership plan" means a technique of
corporate finance that uses a stock bonus trust or a company stock money purchase pension trust which qualifies tinder section 401
(a) of the Internal Revenue Code of 1954 (26 U.S.C. 401 (a)) in' connection with the financing of corporate improvements, transfers in the ownership of corporate assets, and other capital requirements of a corporation and which is designed to build beneficial equity ownership of shares in the employer corporation into its employees substantially in proportion to their relative incomes, without requiring any cash outlay, any reduction in pay or other employee benefits, or the surrender of any other rights
on the part of such employees.
(6) final system plan" means the plan of reorganization for
the restructure, rehabilitation, and modernization of railroads in reorganization prepared pursuant to section 206 and approved
pursuant to section 208 of this Act;
(7) "Finance Committee" means the Finance Committee of the
Board of Directors of the Association established under section
201 (i) of this Act
(8) "includes" and variants thereof should be read as if the
phrase "but is not limited to" were also set forth;
(9) "local or regional transportation authority" includes a
political subdivision of a State.
(10) "Office"" means the Rail Services Plannincr Office established tinder section 205 of this Act;
(11) "profitable railroad" means a railroad which is not a railroad in reorganization. The term does not include the Corporation, the National Railroad Passen(rer Corporation, or a railroad ]eased, operated, or controlled by a railroad in reorganization in
the region;





7

(12) "rail properties" means assets or rights owned, leased, or otherwise controlled by a railroad (or a person owned, leased, or otherwise controlled by a railroad) which are used or useful in rail transportation service; except that the term, when used in conjunction with the phrase "railroads leased, operated, or controlled by a railroad in reorganization", shall not include assets or rights owned, leased, or otherwise controlled by a Class I railroad which is not wholly owned, operated, or leased by a railroad in reorganization but is controlled by a railroad in reorganization;
(13) "railroad" means a common carrier by railroad as defined in section 1(3) of part I of the Interstate Commerce Act (49 U.S.C. 1(3)). The term includes the Corportation and the National Railroad Passenger Corporation;
(14) "railroad in reorganization" means a railroad which is subject to a bankruptcy proceeding and which has not been determined by a court to be reorganizable or not subject to reorganization pursuant to this Act as prescribed in section 207(b) of this Act. A "bankruptcy proceeding" includes a proceeding pursuant to section 77 of the Bankruptcy Act (11 U.S.C. 205) and an equity receivership or equivalent proceeding;
(15) "Region"~ means the States of Maine, New Hampshire, Vermont, Massachusetts, Connecticut, Rhode Island, New York, New Jersey, Pennsylvania, Delaware, Maryland, Virginia, West Virgia, Ohio, Indiana, Michigan, and Illinois; the District of Colum'bia; and those portions of contiguous States in which are located rail properties owned or operated by railroads doing business primarily in the aforementioned jurisdictions (as determined by the Commission by order) ;
(16) "Secretary") means the Secretary of Transportation or the person at the time performing the duties of the Office of the Secretary of Transportation in accordance with law, or, in his absence, the Deputy Secretary of Transportation;
(17) "'State" means any State or the District of Columbia; (18) "subsidiary" means any corporation 100 percent of whose total combined voting shares are, directly or indirectly, owned or controlled by the Corporation; and
(19) "supplemental transaction" means any transaction set forth in a proposal under section 305 of this Act, within 6 years after the date on which the special court orders conve-yances of rail properties to the Corporation under section 303(b) of this Act, under which the Corporation or a subsidiary thereof would
(A) acquire rail properties not designated for transfer or conveyance to it under the final system plan, (B) convey rail properties to a profitable railroad, a subsidiary of the Corporation or, other than as designated in the final system plan, to the National Railroad Passenger Corporation or to a State or a local or regional transportation authority, or to any other responsible person for use in providing rail service, or (C) enter into contractual or other arrangements with any person for the joint use of rail properties or the coordination or separation of rail operations or services.






8

TITLE I-UNITED STATES RAILWAY ASSOCIATION
FORMATION AND STRUCTURE
SEC. 201. (a) ESTABLTSTTMET.-There is established in accordance with the provisions of this section, an incorporated nonprofit association to be known as the United States Railway Association.
(b) ADMINISTRATIO.-The Association shall be directed by a Board of Directors. The individuals designated, pursuant to subsection (d)
(2) of this section, as the Government members of such Board shall be deemed the incorporators of the Association and shall take whatever steps are necessary to establish the Association, including filing of articles of incorporation, and serving as an acting Board of Directors for a period of not more than 45 days after the date of incorporation of the Association.
(c) STATUs.-The Association shall be a government corporation of the District of Columbia subject, to the extent not inconsistent with this title, to the District of Columbia Nonprofit Corporation Act (D.C. Code, sec. 29-1001 et seq.). Except as otherwise provided, employees of the Association shall not be deemed employees of the Federal Government. The Association shall have succession until dissolved by Act of Congress, shall maintain its principal office in the District of Columbia. and shall be deemed to be a resident of the Dist rict of Columbia with respect to venue in any legal proceeding.
(d) BOARD OF DIRECTORs.-The Bord of Directors of the Association shall consist of 11 individuals, as follows:
(1) the Chairman, a qualified individual who shall be appointed
by the President, by and with the advice and consent of the
Senate;
(2) three Government members, who shall be the Secretary, the
Chairman of the Commission, and the Secretary of the Treasury, acting directly or at any time through the Deputy Secretary of Transportation, the Vice Chairman of the Commission, or the Deputy Secretary of the Treasury, as the case may be: and
(3) seven nongovernment members, who shall be appointed
by the President. by and with the advice and consent of the
Senate, on the following basis(A) one to be selected from a list of qualified individuals
recommended by the Association of American Railroads or its successor who are representatives of profitable railroads;
(B) one to be selected from a list of qualified individuals
recommended by the American Federation of Labor and Congress of Industrial Orfranizations or its successor who
are representative of railroad labor;
(C) one to be selected from a list of qualified individuals
recommended by the National Governors Conference:
(D) one to be selected from a list of nualified individuals
recommended by the National League of Cities and Conference of Mayors;
(E) two to be selected from lists of qualified individuals
recommended by shippers and orgranizations representative of
significant shipping interests including small shippers;






9

(F) one to be selected from lists of qualified individuals
recommended by financial institutions, the financial community, and recognized financial leaders.
As used in this paragraph, a list of qualified individuals shall
consist of not less than three individuals.
Except for the members appointed under paragraphs (1) and (3)
(A), (B), (E), and (F), no member of the Board may have any employment or other direct financial relationship with any railroad. A member of the Board who is not otherwise an employee of the Federal Government may receive $300 per diem when engaged in the actual performance of his duties plus reimbursement for travel, subsistence, and other necessary expenses incurred in the performance of such duties.
(e) TERMS OF OFFICE.-The terms of office of the nongovernment members of the Board of Directors of the Association first taking office shall expire as designated by the President at the time of nomination-two at the end of the second year; two at the end of the fourth year; and three at the end of the sixth year. The term of office of the Chairman of such Board shall be 6 years. Successors to members of such Board shall be appointed in the same manner as the original members and, except. in the case of government members, shall have terms of office expiring 6 years from the date of expiration of the terms for which their predecessors were appointed. Any individual appointed to fill a vacancy occurring prior to the expiration of any term of office shall be appointed for the remainder of that term. Upon the expiration of their terms of office, members of the Board shall continue to serve until their successors have been appointed and qualified.
(f) QUORUM.-Beginning 4.5 days after the date of incorporation of the Association, six members of the Board, including three of the nongovernment members, shall constitute a quorum for the transaction of any function of the Association.
(g) PRESIDENT.-The Board of Directors of the Association, upon the recommendation of the Secretary, shall appoint a qualified individual to serve as the President of the Association at the pleasure of the Board. The President of the Association, subject to the direction of the Board, shall manage and supervise the aff airs of the Association.
(h) EXECUTIVE COMMITTEE.-:The Board of Directors of the Association shall have an executive committee which shall consist of the Chairman of the Board, the Secretary, the Chairman of the Commission, and two other members who shall be selected by the members of the board.
(i) FINANCE COMITTEE.-Thie Board of Directors of the Association shall have a Finance Committee which shall consist of the Chairman of suchb Board, the Secretary, and the Secretary of the Treasury (acting directly or, at any time, through their respective Deputy Secretaries). The Finance Committee is authorized to exercise only such powers as are vested in it pursuant to any provision of this Act. The vesting of such powers in the Finance Committee shall not be deemed to relieve the Board of Directors of its authority to exercise any other powers of the Association. none of which may be delegated to the Finance Committee, or of its general authority to






10

study, analyze, and make advisory findings with respect to any matter relevant to the role of the Association as an investor in securities of the Corporation. Notwithstanding any provision of State law, (1) the Finance Committee, without any requirement of review or approval by the Board of Directors of the Association, is authorized to establish, revise, and maintain its own rules and procedures, by majority vote of the members thereof, and (2) the Board of Directors of the Association shall not have power to take, and shall not take, any action affecting the membership of the Finance Committee or limiting the exercise by the Finance Committee of the powers vested in it pursuant to any provision of this Act.
(j) MISCELLANEOUS.- (1) The Association shall have a seal which shall be judicially recognized.
(2) The Administrator of General Services shall furnish the Association with such offices, equipment, supplies, and services as he is authorized to furnish to any other agency or instrumentality of the United States.
(3) The Secretary is authorized to transfer to the Association or the Corporation rights in intellectual property which are directly related to the conduct of the functions of the Association or the Corporation, to the extent that the Federal Government has such rights and to the extent that transfer is necessary to carry out the purposes of this Act.
(4) Any reference in this Act to the Secretary of the Treasury is to the Secretary of the Treasury or the person who is at the time performing the duties of the Office of the Secretary of the Treasury in accordance with law or, in his absence, the Deputy Secretary of the Treasury. Any reference in this Act to the Chairman of the Commission is to the Chairman of the Commission or the person who is at the time performing the duties of the Chairman of the Commission in accordance with law.
(k) USE OF NAMEs.-No person, except the Association, shall hereafter use the words "United States Railway Association" as a name for any business purpose. Violations of this provision may be enjoined by any court of general jurisdiction in an action commenced by the Association. In any such action, the As sociation may recover any actual damages flowing from such violation, and, in addition, shall be entitled to punitive damages (regardless of the existence or nonexistence of actual damage) in an amount not to exceed $100 for each day during which such violation was committed. The district courts of the United States shall have jurisdiction over actions brought under this subsection, without regard to the amount in controversy or the citizenship of the parties.
GENERAL POWERS AND DUTIES OF TiE ASSOCIATION
SEC. 202. (a) GENERAL.-To carry out the purposes of this Act, the Association is authorized to(1) engage in the preparation and implementation of the final
system plan;
(2) issue obligations lnmder section 210 of this title; make loans
under section 211 of this title: purchase or otherwise acquire or receive ,nd hold and dispose of securities (whether debt or euity) of the Corporation under section 216 of this title and exercise all






11

of the rights, privileges, and powers of a holder of an ,y such securities; and issue certificates of value under section 306 of this
Act;
(3) provide assistance to States and local or regional transportation authorities in accordance with section 403 of this Act;
(4) sue and be sued, complain and defend, in the name of the
Association and through its own attorneys; adopt, amend, and repeal bylaws governing the operation of the Association and such rules and regulations as are necessary to carry out the authority granted under this Act; conduct its affairs, carry on
operations, and maintain offices;
(5) appoint, fix the compensation, and assign the duties of such
attorneys, agents, consultants, and other full- and part-time employees as it deems necessary or appropriate; except that (1) no officer of the Association, including the Chairman, may receive compensation at a rate in excess of that prescribed for level I of the Executive Schedule under section,5312 of title 5, United States Code; and (2) no individual may hold a position in violation of regulations which the Secretary shall establish to avoid conflicts
of interest and to protect the interests of the public;
(6) acquire and hold such real and p-ersonal property as it
deems necessary or appropriate in the exercise of its responsibilities under this Act, and to dispose of any such property held by it
(7) consult with the Secretary of the Army and the Chief of
Engineers and request the assistance of the Corps of Encrineers, and the Secretary of the Army may direct the Corps of Engineers to cooperate fully with the Akssociation, the Corporation, or any entity designated in accordance -with section 206(c) (1) (C) in
order to carry out the purposes of this Act;
(8) consult on an ongoing basis with the Chairmian of the Federal Trade Commission and the Attorney General to assess the possible anticompetitive effects of various proposals and to negotiate provisions which would, to the greatest extent practicable in accordance with the purposes of this Act and the goal set forth in section 206(a) (5) of this title, alleviate any such anticompetitive effects;
(9) consult with representatives of science, industry, agriculiture, labor, environmental protection and consumer organizations,
and other groups, as it deems advisable; and
(10) enter into, without regard to section 3709 of the Revised
Statutes of the United States (41 U.S.C. 5). such contracts, leases, cooperative agreements, or other transactions as may be necessary in the conduct of its functions and duties with any person
(including a governi-ent entity).
(b) DuTIs.-In addition to it's duties and responsibilities under other provisions of this Act. the Association shall()prepare a survey of existing rail services in the region
including patterns of traffic movement; traffic density over identified lines; pertinent costs and revenues of lines; and plant, equipment, and facilities (including yards and terminals) ;
(2) prepare an economic and operational study and analysis of
present and future rail and express service needs in the region ;






12

the nature and volume of the traffic in the region now being moved, by rail and express or likely to be moved by rail in the future; the extent to which available alternative modes of transportation could move such traffic as is now carried by railroads in reorganization; the relative economic, social, and environmental costs that would be involved in the use of such available alternative modes, includingr energy resource costs; and the competitive or
other effects on profitable railroads;
(3) prepare a study of rail passenger services in the region, in
terms of scope and quality;
(4) consider the views of the Office and of all government
officials aiid per'son~s who submit views, reports, or testimony under section 205 (d) (1) of this title or in the course of proceedings conducted by the Office;
(5) consider methods of achieving economies in the cost of rail
system operations in the region including consolidation, pooling, and joint use or operation of lines, facilities, and operating equipment; relocation; rehabilitation and modernization of equipment, track, and other facilities; and abandonment of lines consistent with meeting needs and service requirements; together with the anticipated economic, social, and environmental costs
and benefits of each such method;
(6) consider the effect on railroad employees of any restructuring of rail services in the region;
(7) make available to the Secretary, the Director of the Office
and appropriate committees of the Congress all studies, data, and other information acquired or developed by the Association; and
i(e8) study the feasibility of coordinating rail and express serviein the region.
(C) INVESTMENT Or, FuNDs.-UnICOMmitted funds of the Association shall be kept in cash on hand or on deposit, or invested in obligations of the United States or guaranteed thereby, or in obligations, participations, or other investments which are lawful investments for fiduciary, trust, or public funds.
(d) EXEMPTION FRzOM TAXATION.-The Association, including its franchise, capital reserves, surplus, security holdings, and income shall be exempt from all taxation now or hereafter imposed by the United States, any commonwealth, territory, dependency, or possession thereof, or by any State or political subdivision thereof, except that any real property of the Association shall be subject to taxation to the same extent according to its value as other real property is t a xed.
(e) REPORITS.- (1) The Association shall transmit to the Congress and the President, not later than 90 days after the end of each fiscal year, a comprehensive and detailed report on all activities of the Association during the preceding fiscal year. Each such report shall ineltide (A) the Association's statement of specific and detailed objectives for the activities and programs conducted and assisted under this
Act: () sateent oftheAssociation's conclusions as to the effectiveness of such activities and Jrograins in meetings the stated objectives and the purposes of this Act, measured through the, end of the preceding fiscal year: (C) recommendations with re sIect to any legislation or






13

administrative action which the Association deems necessary or desirable; (D) a statistical compilation of the obligations issued, certificates of value issued, securities purchased, and loans made under this Act; (E) a summary of outstanding problems confronting the Association, in order of priority; (F) all other information required to be submitted to the Congress pursuant to any other provision of this Act; and (G) the Association's projections and plans for its activities and programs during the next fiscal year.
(2) For the fiscal year beginning October 1, 1977, and ending September 30, 1978, the Association shall transmit to the Congress and the President, not later than 30 days after the end of each quarter of such fiscal year, a comprehensive and detailed report on all expenditures and use of funds during the preceding fiscal quarter, including an assessment of the status of projects for such preceding fiscal quarter and a projection of activities proposed for the next fiscal quarter.
(f) BUDGET. The receipts and disbursements of the Association (other than administrative expenses referred to in subsection (g) of this section and receipts and disbursements under section 216 of this title and section 306 of this Act) in the discharge of its functions shall not be included in the totals of the budget of the United States Government, and shall be exempt from any annual expenditure and net lending (budget outlays) limitations imposed on a budget of the United States Government. The Chairman of the Association shall transmit annually to the Congress a budget for program activities and for administrative expenses of the Association. The Chairman shall report annually to the Congress the amount of net lending of the Association, which would be'included in the totals of the budgets of the United States Government, if the Association's activities were not excluded from those totals as a result of this section.
(g ACCOUNTABHrry.-(1) Section 201 of the Government Corporation. Control Act (31 U.S.C. 856) is amended by striking out "and" at the end of clause (6) and by inserting immediately before the period at the end thereof the following: ", (8) the United States Railway Association".
(2) The Chairman of the Association shall transmit annually to the Office of Manag"ement and Budget a budget for administrative expenses of the Association. -Whenever the Association submits any budget estimate or request to the Office of MNanagrement and Budget, it shall concurrently transmit a copy of the estimate or request to the Congress. Within budgetary constraints of the Congress, the maximum feasible and prudent budgetary flexibility shall. be provided to the Association to permit effective operations.

ACCESS TO INFORMATION
SEC. 203. (a) PILA _NTN NG.-Each railroad operating in the region
shall provide such relevant information as may be requested by the Secretary, the Office, or the Association in connection with the performance of their respective functions under any provision of this
Act.
(b) OTHE.-Each railroad or other person or government entity
seeking financial assistance from the Association shall maintain and make available such records, make and submit such reports. and provide such data, materials, or other revelant information as may be
requested by the Association.






14

(c) ENfU EMEincxT.-Where authorized under subsection (a) or (b) of this section and upon presenting appropriate credentials and a written notice of inspection authority, any officer or employee duly designated by the Secretary, the Office, or the Association may, at reasonable times, inspIect records, papers, processes, rolling stock, systems, equipment, or facilities and may, on furtherance of their rspecti\e functions under this Act, hold such hearings, sit and act at such times and places, administer such oaths. and require by subpoena or other order the attendance and testimony of such witnesses and the production of such information as is deemed advisable. Subpoenas shall be issued under the signature of the Secretary, the Director of the Office, or the Chairman or President of the Association and may be Ferved by any duly designated individual. In case of contumacy or refusal to obey such a subpoena or order by any person who resides, is found, or transacts business within the jurisdiction of any district court of the United States, such district court shall, upon petition, have jurisdiction to issue to such person an order requiring him to comply forthwith. Failure to obey such an order is punishable by such court as a contempt of court.
(d) CoNGR:ss.-Nothing in this section shall authorize the withholding of information from any duly authorized committee of the Congress.
REPORT
SEC. 204. (a) PREPAATO.-Within 30 days after the date of enactment of this Act, the Secretary shall prepare a comprehensive report containing his conclusions and recommendations with respect to the geographic zones within the region in and between which rail service should be provided and the criteria upon which such conclusions and recommendations are based. The Secretary may use as a basis for the identification of such geographic zones the standard metropolitan statistical areas, groups of such areas, counties, or groups of counties having similar economic characteristics such as mining, manufacturing, or farming.
(b) Sulm3IissioN.-The Secretary shall submit the report required by subsection (a) of this section to the Office, the Association, the Governor and public utilities commission of each State studied in the report, local governments, consumer organizations, environmental groups, the public, and the Congress. The Secretary shall further cause a copy of the report to be published in the Federal Register.
RAIL SERVICES PLANNING OFFICE
SEc. 205. (a) ESTABIS1IMEN.T.-Tle Rail Services Planning Office is established as an office in the Commission. The Office shall function continuously pursuant to the provisions of this Act, and shall be administered by a director.
(1)) DiREcron.-The Director of the Office shall be appointed for a term of 6 years by the Chairman of the Commission with the concurrence of 5 members of the Commission. He shall be appointed and coml)ensated, without regard to the provisions of title 5, United States Code, governing appointments in the competitive service, classification, anld General Schedule pay rates, at a rate not in excess of the maximum rate for GS-18 of the General Schedule under section 5332 of such title. The Director of the Office shall administer and be respon-






15

sible for the discharge of the functions and duties of the Office from the date he takes office unless removed for cause by the Commission.
(C) POWERS.-The Director of the Office is subject to the direction of, and shall report to, such member of the Commission as the Chairman thereof shall designate. The Chairman may desi gnate himself as that member. Such Director is authorized, with the concurrence of such member or (in case of disagreement) the Chairman of the Commission, to enter into, without regard to section 3709 of the Revised Statutes of the United States (41 U.S.C. 5) such contracts, leases, cooperative agreements, or other transactions as may be necessary in the conduct of the functions and duties of the Office with any person (including a government entity). Each department, agency, and instrumentality of the executive branch of the Federal Governmentand each independent regulatory agency of the United States is authorized, and shall give careful consideration to a request, to furnish to the Director of the Office, upon written request, on a reimbursable basis or other-wise, such assistance as the Director deems necessary to carry out the functions and duties of the Office. Such assistance includes transfer of personnel with their consent and without prejudice to their position and rating.
(d) DUTIES.-In addition to its duties and responsibilities under other provisions of this Act and under the Railroad Revitalization and Regulatory Reform Act of 1976, the Office shall(1) assist the Commission in studying and evaluating any
pro osal, submitted to the Commission pursuant to section 5 (2) or F3) of the Interstate Commerce Act (49 U.S.C. 5 (2) or (3)), for a merger, consolidation, unification or coordination project, joint use of tracks or other facilities, or acquisition or sale of assets, which involves any common carrier by railroad subject
to part I of such Act;
(2) assist the Commission in developing, -with respect to economic regulation of transportation, policies which are likely to result in a more competitive, energy -efficient, and coordinated transportation system -which utilizes each mode of transportation to its maximum advantage to meet the transportation service
needs of the Nation;
(3) assist States and local and regional transportation acrencies in making determinations whether to provide rail service continuation subsidies to maintain in operation particular rail properties, by establishing criteria for determining whether particular rail properties are suitable for rail service continuation subsidies, with such criteria to include the following considerations: rail properties are suitable if the cost of the required subsidy for such properties per year to the taxpayers is less than (A) the cost of termination of rail service over such properties measured by increased fuel consumption and operational costs for alternative modes of transportation, (B) the cost to the gross national product in terms of reduced output of goods and services, (C) the cost of relocatinLy or assisting through unemployment, retraining, and welfare benefits to individuals and firms adversely affected thereby, and (D) the cost to the environment measured
by damage caused by increased pollution;
(4) conduct an ongoing analysis of the national rail transportation needs, evaluate the policies, plans, and programs of the Commission on the basis of such analysis, and advise the Commission of the results of such evaluation;






16

(5) within 180 days after the date of enactment of the Railroad Revitalization and Regulatory Reform Act of 1976, issue additional regulations, after conducting a proceedings in accordance with the provisions of section 553 of title 5, United States
Code, which contain(A) standards for the computation of subsidies for rail
passenger service (except passenger service compensation disputes subject to the jurisdiction of the Commission tinder section 402(a) of the Rail Passenger Service Act (45 U.S.C.
562(a))), which are consistent with the compensation principles described in the final system plan and which avoid cross subsidization among commuter, intercity, and f reight rail
services; and
(B) standards for the determination of emergency commuter rail passenger service operating payments pursuant to
section 17 of the Urban Mass Transportation Act of 1964;
(6) determine and publish, and from time to time revise and
reissue, standards for determining (A) the "revenue attributable to the rail properties," (B) the "avoidable costs of providing service," (C) a "reasonable return on the value," and (D) a "reasonable management fee," as those phrases are used in section 304 of this Act, after a proceeding in accordance with the provisions of
section 5503 of title 5, United States Code; and
(7) employ and utilize the services of attorneys and such other
personnel as may be required in order properly to protect the interests of those communities and users of rail service which, for whatever reason (such as their size or location) might not otherwise be adequately represented in the course of the reorganization process under this Act, until the assumption of such duties by the Office of Rail Public Counsel pursuant to section 27(4) (d) of the
Interestate Commerce Act (49 U.S.C. 27 (4) (d)).
(e) ADDITTONAL Du-Trs.-(1) Within 270 days after the date of enactment of the Railroad Revitalization and Regulatory Reform Act of 1976, the Office shall issue additional regulations. after conducting a proceeding in accordance with section 553 of title 5, United States Code. Such regulations shall (A) develop an accounting system which will permit the collection and publication by the Corporation or by profitable railroads providing service over lines scheduled for abandonment, of information necessary for an accurate determination of the attributable revenues, avoidable costs, and operations of lighbt density lines as operating and economic units, and (B) determine the "'avoidable costs of providing rail freight service", as that phrase is used in section la(6) (a) (ii) (A) of the Interstate Commerce Act. The Office may, at any time, revise and republish the standards and regulations required by this section to incorporate changes made necessary by the accounti ng system developed pu rsu ant to this subsection.
(2) Upon the request of a State in the region. within 90 days after the (late of enactment of tlie Railroad Revitalization and Regulatory Reform Act of 1976, the Office shall prepare and publish an evaluation of the economic viability of any or all light density lines within such State whiich are not desi-cnated for inclusion in the final system plan. Such an evaluation shall include an analysis of the actions 'which





17

may be necessary to make the operation of rail services over any such line economical. The results of each such evaluation shall be transmitted to the requesting State and published in the Federal Register, not later than 1 year after the date such request is received by the Office.
FINAL SYSTEM PLAN
SEC. 206. (a.) GOALS.-The final system plan shall be formulated in such a way as to effectuate the following goals:
(1) the creation, through a process of reorganization, of a financially self-sustaining rail and express service system in the region;
(2) the establishment and maintenance of a rail service sy stem
adequate to meet the rail transportation needs and service requirements of the region;
(3) the establishment of improved high-speed rail passenger
service, consonant with the recommendations of the Secretary in his report of September 1971, entitled "Recommendations for
Northeast Corridor Transportation";
(4 the preservation, to the extent consistent with other goals,
of existing patterns of service by railroads (including short-line and terminal railroads), and of existing railroad trackage in areas in which fossil fuel natural resources are located, and the utilization of those modes of transportation in the region which require the smallest amount of scarce energy resources and which can
most efficiently transport energy resources;
(5) the retention and promo ion of competition in the provision
of rail and other transportation services in the region;
(6) the attainment and maintenance of any environmental
standards, particularly the applicable national ambient air quality standards and plans established under the Clean Air Act Amendments of 1970, taking into consideration the environmental impact
of alternative choices of action;
(7) the movement of passengers and freight in rail transportation in the region in the most efficient manner consistent with safe operation, including the requirements of commuter and intercity rail passenger service; the extent to which there should be coordination with the National Railroad Passenger Corporation and similar entities; and the identification of all short-to-medium distance corridors in densely populated areas in which the major upgrading of rail lines for high-speed passenger operation would
return substantial public benefits; and
(8) the minimization of job losses and associated increases in
unemployment and community benefit costs in areas in the region
presently served by rail service.
(b) FACTORS.-The final system plan shall be based upon due consideration of all factors relevant to the realization of the goals set forth in subsection (a) of this section. Such factors include the need for and the cost of rehabilitation and modernization of.track, equipment, and other facilities; methods of achieving economies in the cost of rail operations in the region; means of achieving rationalization of rail services and the rail service system in the region; marketing studies; the impact on railroad employees; consumer needs; traffic





18

analyses; financial studies; and any other factors identified by the Association under section 202(b) of this title or in the report of the Secretary required under section 204(a) of this title.
(c) DESIGNATIONs.-The final system plan shall designate(1) which rail properties of railroads in reorganization in the
region or of railroads leased, operated, or controlled by any railroad in reorganization in the region(A) shall be transferred to the Corporation: Provided,
That the Corporation shall, within 95 days after the effective date of the final system plan, give notice to the Association of which such rail properties, if any, are to be transferred to a subsidiary of the Corporation in the event that the Board of Directors of the Association finds that such transfer would
be consistent with the final system plan;
(B) shall be offered for sale to a profitable railroad operating in the region and, if such offer is accepted, operated by such railroad; the plan shall designate what additions shall be made to the designation under subparagraph (A) of this paragraph and what alternative designations shall be made under this paragraph in the event such profitable railroad
fails to accept such offer:
(C) shall be purchased, leased, or otherwise acquired from
the Corpration by the National Railroad Passenger Corporation in accordance with the exercise of its option under section 601 (d) of this Act for improvement to achieve the
goal set forth in subsection (a) (3) of this section;
(D) may be purchased or leased from the Corporation by
(i) a State or a local or regional transportation authority t 0 meet the needs of commuter and intercity rail passenger service. or (ii) the National Railroad Passenger Corporation to meet the needs of improved rail passenger service ov4-r intercity routes, other than properties designated pursuant to
subparagraph (C) of this paragraph; and
(E) if not otherwise required to be operated by the Corporation, a government entity, or a responsible person, are suitable for use for other public purposes, including highways, other forms of transportation, conservation, energy transmission, education or health care facilities, or recreation. In carrying out this subparagraph, the Association shall solicit the views and recommendations of the Secretary, the Secretary of the Interior, the Administrator of the Environmental Protection Agencyand other agencies of the Federal Government and of the States and political subdivisions thereof
within the region, and the general public; and
(2) which rail properties of profitable railroads operating in
the region may be offered for sale to the Corporation or to other profitable railroads operating in the region subject to paragraphs (3) and (4) of subsection (d) of this section. Any rail properties designated to be offered for sale to the Corporation may be sold
instead to a subsidiary of the Corporation.






19

(d) TRANSFERS.-All transfers or conveyances pursuant to the final system plan shall be made in accordance with, and subject to, the following principles:
(1) All rail properties to be transferred to the Corporation or
any subsidiary thereof by a profitable railroad, by trustees of a railroad in reorganization, or by any railroad leased, operated, or controlled by a railroad in reorganization in the region, shall be transferred in exchange for stock and other securities of the Corporation or any subsidiary thereof (including obligations of the Association) and the other benefits accruing to such railroad by
reason of such transfer.
(2) All rail properties to be conveyed to a profitable railroad
operating in the region by trustees of a railroad in reorganization, or by any railroad leased,.operated, or controlled by a railroad in reorganization in the region, shall be conveyed in exchange for
compensation from the profitable railroad.
(3) Notwithstanding any other provision of this Act, no acqui
sition under this Act shall be made by any profitable railroad operating in the region without a determination with respect to each such transaction and all such transactions cumulatively (A) by the Association, upon adoption and release of the preliminary system ]an that such acquisition or acquisitions will not material y impair the profitability of any other profitable railroad operating in the region or of the Corporation, and (B) by the Commission, which shall be made within 90 days after adoption and release by the Association of the preliminary system plan, that such acquisition or acquisitions will be in full accord and comply with the provisions and standards of section 5 of part I of tfie Interstate Commerce Act (49 U.S.C. 5). All determinations made by the Association in the correction to the preliminary system plan published on April 11, 1975 (40 Fed. Reg.
16377) shall be treated for all purposes as if they had been made upon adoption and release by the Association of the preliminary system plan. All determinations made by the Commission with respect to such correction shall'be treated for all purposes as if they had been made within 90 days after adoption and release by the Association of the preliminary system plan. All determinations made by the, Commission with respect to acquisitions by profitable railroads referred to in any supplement to the preliminary system plan published under section 207(b) (2) of this title shall be deemed to be timely if made prior to the adoption of the final system plan under section 207(c) of this title. The determination b the Association shall not be reviewable in any court. The determination by the Commission shall not be revie-%vable in any court.
(4) Where the final system plan designates specified rail properties of a railroad in reorganization in the reorion, or of a railroad leased, operated, or controlled by a railroad in reorganization in the region, to be offered for sale to and operated by a profitable railroad operating in the region, such designation shall terminate 7 days after the date of the enactment of the Railroad Revitaliza-






20

tion and Regulatory Reform Act of 1976 unless, prior to such date, Such profitable railroad has notified the Association in writing of its acceptance of such offer. Any such offer may be modified until the date of acceptance thereof, unless such modification results ini an offer for the sale of rail properties at less than the net liquidation value thereof. Where the final system plan, designates specified rail properties of a profitable railroad operating in the region as authorized to Ibe offered for sale or lease to the Corporation or to other profitable railroads operating in the region, such designation and authorization shall terminate 95 days after the effective (late of the final system plan unless, prior to such date, a binding agreement with respect to such properties has been entered into and concluded.
(5) All properties(A) transferred by the Corporation pursuant to sections
206 (c) (1) (C) and 601 (d) of this Act;
(B) transferred by the Corporation to any State (or local
or regional transportation authority), pursuant to subsection
(c) (1) (D) of this section, or
(C) transferred by the Corporation to any State, local or
regional transportation authority, or the National Railroad Passenger Corporation, within 3 years after the (late of conveyance, pursuant to section 303(b) (1) of this Act, to meet
the needs of commuter or intercity rail passenger service,
shall be transferred at a value related to the value received from the Corporation pursuant to the final system plan for the transfer to such Corporation of such properties. The value of any such properties, which are transferred pursuant to subparagraph (B) or (C) of this paragraph, shall be adjusted to reflect the value attributable to any applicable maintenance and improvement provided by the Corporation (to the extent the Corporation has not been released from the obligation to pay for such improvements) and the cost to the Corporation of transferring such properties. The Corporation, its Board of Directors, and its individual directors shall not be liable to any party, for money damages or in any other manner, solely by reason of the fact that the Corporation transferred property pursuant to section 303 of this Act to meet the needs of commuter or intercity rail passenger service or for purposes of providing rail marine f reight floating service, except as otherwise provided with respect to the Corporation pursuant to section. 303 (c) (2) of this Act.
(6) Notwithstanding any statement to the contrary in the final system plan, a State (or a local or regional transportation authority) shall not be required to deliver to the Corporation a firm commitment to acquire rail properties designated to such State or authority prior to 7 days af ter the (date of enactment of this paragraph.
(7) Notwithstanding any contrary provision in the options conveyedl to the Corporation by railroads in reorganization, or railroadls leased, operated, or controlled by a railroad in reorganizationl, with respect to thle acquisition by the Corporation pursuant to the final system plan, on behalf of a State (or a local or regional tansp)orta tioni aut hority) of rail properties desigae une see-






21

tion 206 (c) (1) (D) of this title, such options shall not be deemed to have expired prior to 7 days after the date of enactment of this paragraph. The exercise by the Corporation of any such option shall be effective if it is made, prior to the expiration of such 7-day
period, in the manner prescribed in such options.
(e) CORPORATION FEATURES.-The final system plan shall set forth(1) pro forma earnings for the Corporation, as reasonably projected and considering the additions or changes in the designation of rail properties to be operated by the Corporation which may
be made under subsection (d) (4) of this section;
(2) the capital structure of the Corporation, based on the pro
forma earnings of the Corporation as set forth, including such debt capitalization as shall be reasonably deemed to conform to the requirements of the public interest with respect to railroad debt securities, including the adequacy of coverage of fixed
charges; and
(3) the manner in which employee stock ownership plans may,
to the extent practicable, be utilized for meeting the capitalization requirements of the Corporation, taking into account (A) the relative cost savings compared to conventional methods of corporate finance; (B) the labor cost savings; (C) the potential for minimizing strikes and producing more harmonious relations between labor organizations and railway management; (D) the projected employee dividend incomes; (E) the impact on quality of service and prices to railway users; and (F) the promotion of the objectives of this Act of creating a, financially self -sustaining railway system in the region which-'also meets the service needs
of the region and the Nation.
(f ) VALtE.-The final system plan shall designate the value of all rail properties to be transferred under the final system plan and the value of the securities and other benefits to be received for transferring those rail properties to the Corporation in accordance with the final system plan.
(g) OTHER PROVISIONS.-The final system plan may recomnmen d arrangements among various railroads for joint use or operation of rail properties on a shared ownership, cooperative, pooled, or cond'minium-type basis, subject to such terms and conditions as may be specified in the final system plan. The final system plan shall also make such designations as are determined to be necessary in accoi d ance with -the provisions of section 402 or 403 of this Act.
(h) OBLIGATIONAL AUTHoRITY.-The final system plan shall reco mmend the amount of obligations of the Association which are necessary to enable it to implement the final system plan.
(i) TERMS AND CONDITIONS FOR SECUITIEs.-The final system pl[an may include terms and conditions for any securities to be issued by the Corporation in exchange for the conveyance of rail properties under the final system plan which in the judgement of the Association will minimize any actual or potential debt burden on the Corporation. Any such terms and conditions for Securities of the Corporation which lpurport to directly obligate the Association shall not become effectivewithout affirmative approval, with or without modification by a joint resolution of the Congress.






22

(j) Any rail properties ov-er which rail service was being provided as of the (late of enactment of this Act, and which were recommended in the preliminary system plan for transfer to the Corporation, shall be deemed to be designatedd in the final system plan for transfer to the Corporation under subsection (c) (1) (A) of this section. Any desimiation, in the final system plan, pursuant to subsection (c) (1)
(B) of this section, of overhead trackage rights to be acquired by a profitable railroad operating in the region over specified rail properties to be acquired by the Corporation, where such designation does not (1) authorize such profitable railroad to interchanore traffic with at least one railroad, or (2) p~rov~ide for the connection of portions of such p~rofitable railroad's rail properties, and where the transfer of ownership of such rail properties (including trackage rights) to such profitable railroad was recomnmendled in the preliminary system plan, and the Commission has made a determination with respect thereto, in accordance with subsection (di) (3) of this section, shall be deemed to authorize such profitable railroad to interchange traffic with the Corporation and any- other~ profitable ralra connecting withsuhpei fied rail properties.

ADOPTION OF FINAL SYSTEM PLAN
SEC. 207. (a) PRELIMINARY SYSTEM PLAN.-(1) Within 420 days a fter the (late of enactment of this Act, the Association shall adopt and release a preliminary system plan prepared by it on the basis of reports and other information submitted to it by the Secretary, the Office, and interested persons in accordance with tIs Act and on the basis of its own investigations, consultations, research, evaluation, and analysis pursuant to this Act. Copies of the preliminary system plan shall be transmitted by the Association to the Secretary, the Office, the Gover-nor and public utility commission of each State in the region, the Congress, each court having jurisdiction over a railroad in reorganization in the region, the special court, and interested persons, and a copy shall be published in the Federal Register. The Association shall invite and afford interested persons an opportunity to submit comments on the preliminary system plan to the Association within 60 days after the date of its release.
(2) The Office is authorized and directed to hold public hearings on the preliminary system plan to make available to the Association a summary and analysis of the evidence received in the course of such p)roceedlings, together with its critique and evaluation of the preliminary system plan, not later than 60 days after the date of release of such plan. The Office is authorized toehold public hearings on anv supplement to the preliminary system plan and to make available to the Association a summary and analysis of the evidence received in the course of such proceedings, together with its critique and evlaluat ion of such supplement, not later than 30 days after the release of such Slipll)emI ent.
(b) APPIROVA.- (1) Within 120 days after the date of enactment of this Act each United States district court or other court having_ jurisdiction ov-er a railroad in reorganization shall decide whether the railroadl is reor -ranizable, on an income basis within a reasonable time under section 77 of the Bankruptcy Act (11 U.S.C. 205) and that the public






23

interest would be better served by continuing the present reorganization proceedings than by a reorganization under this Act. Within 60 days after the submission of the report by the Office under section 205 (d) (1) of this title, on the Secretary's report on rail services in the region, each United States district court or other court having jurisdiction over a railroad in reorganization shall decide whether or not such railroad shall be reorganized by means of transferring some of its rail properties to the Corporation pursuant to the provisions of this Act. Because of the strong public interest in the continuance of rail transportation in the region pursuant to a system plan devised under the provisions of this Act, each such court shall order that the reorganization be proceeded with pursuant to this Act unless it (1) has found that the railroad is recognizable on an income basis within a reasonable time under section 77 of the Bankruptcy Act (11 U.S.C. 205) nd that the public interest would be better served by such 'a reorganizao
tion than by a reorganization under this Act, or (2) finds that this Act does not provide a process which would be fair and equitable to the estate of the railroad in reorganization in which case it shall dismiss the reorganization proceeding. If a court does not enter an order or make a finding as required by this subsection, the reorganization shall be proceeded with pursuant to this Act. An appeal from all order made under this section may be made only to the special court. Appeal to the special court shall be taken within 10 days following entry of an order pursuant to this subsection, and the special court shall complete its review and render its decision within 80 days af ter such appeal is taken. There shall be no review of the decision of the special court.
(2) Whenever it has been finally determined pursuant to the procedures of paragraph (1) of this subsection, that the reorganization of a railroad subject to reorganization under section 77 of the Bankruptcy Act (11 U.S.C. 205) shall not be proceeded with pursuant to this Act, the court having jurisdiction over such railroad may, upon a petition which is filed within 10 days after the date of enactment of this subsection by the trustees of such railroad, reconsider such order. Such reorganization court shall (i) affirm its previous order or (ii) issue an order that the reorganization of such railroad be proceeded with pursuant to this Act unless it finds that this Act does not provide a process which would be fair and equitable. The provisions of paragraph (1) of this subsection are applicable in such reconsideration, except that (A) such reorganization court shall make its decision within 30 days after such petition is filed, and (B) any decision by the special court on appeal from such a decision shall be rendered within 30 days after such reorganization court decision is made.- There shall be no review of the decision of the special court. The Association shall take any steps it finds necessary, consistent with time limitations and other provisions of this Act, to effectuate the consequences of such a revised order, including the preparation and submission of any necessary or appropriate supplements to the preliminary system plan.
(c) ADOPTION.-Within 540 days after the date of enactment of this Act, the executive committee of the Association shall prepare and submit a final system plan for the approval of the Board of Directors of the Association. A copy of such submission shall be simultaneously presented to the Commission. The submission shall reflect evaluation






24

of all responses and summaries of responses received, testimony at an'y public hearings, and the results of additional study and review. Within 30 days thereafter, the Board of Directors of the Association shall by a majority vote of all its members approve a final system plan which meets all of the requirements of section 206 of this title.
(d) REVIEW OF COMIMissIoN.-Within 30 days following the adoption of the final system plan by the Association under subsection (c) of this section. and the submission of such plan to Congress under section 208(a) of this title, the Commission shall submit to the Congress anl evaluation of the final system plan delivered to both Houses of Congress.
REVIEW BY CONGRESS
SEC. 208. (a) GENEmRL.-The Board of Directors of the Association shall deliver the final system plan adopted by the Association to both Houses of Congress and to the Committee on Interstate and Foreign Commerce of the House of Representatives and the Committee on Commerce of the Senate. The finial system plan shall be deemed approved at the end of the first period of 60 calendar days of continuous session of Congress after such date of transmittal unless either the i1-ouse of Representatives or the Senate passes a resolution during such period stating that it does not f avor the final system plan.
(b) REVISE D PLAN.-If either the House or the Senate passes a resolution of disapproval under subsection (a) of this section, the Association, with the cooperation and assistance of the Secretary and the Office, shall prepare, determine, and adopt a revised final system plan. Each such revised plan shall be submitted to Congress for review pursuant to subsection (a) of this section.
(C) COMPUTATION.-FOr purposes of this section(1) continuity of session of Congress is broken only by an
adjournment sine die; and
(2) the days on which either H-ouse is not in session because of
an adjournment, of more than 3 days to a day certain are excluded
in the computation of the 60-clay period.
(di) ADDITIONS.- (1) The supplemental report, dated September 18, 1975, to the final system plan, and the provisions of the Association's official errata supplement to the final system plan, dated December 1, 1975 including all designations made therein, shall be treated for all purposes as if they had been part of and included in the final system plan adopted by the Association and reviewed by the Congress. The final system plan shall, for all purposes, be deemed to be approved as modified and amended by such supplemental report and such supplement.
(2) The Association may, upon petition of any State, modify the final system plan to make further designations with respect to rail properties of railroads in reorganization in the region designated for transfer to the Corporation under such plan, if such designations (A) are likely to result in improved rail service onl such rail properties and connecting rail properties, and (B) would not materially impair the profitabiliy of the C'orporation. Such design ations, including designations of such rail properties to a State, a profitable railroad, or a responsible person, may be macie at any time prior to delivery of the final system plan to the special court under section 209 (c) of this title.






25

Such further designations shall be treated for all purposes as if they had been included in the final system plan adopted by the Association and reviewed by the Congress, and the final system plan shall for all purposes be deemed to be approved as modified by such designations. Any action of the Association with respect to any such petition shall not be subject to review by any court.
(3) (A) Within 20 days after the date of enactment of the Railroad Revitalization and Regulatory Reform Act of 1976, the Association may, by notice to the Congress and by publication in the Federal Register, modify, supplement, or add to the designations of rail properties in the final system plan if the Association finds such actions are necessary to-(i) achieve the efficient implementation of the final system
plan, or
(ii) provide for the offer to profitable railroads of rail properties designated in the final system plan to the Corporation, if such properties are not essential in the operation of other rail properties of the Corporation but are or would be integrally related to the operation of rail properties of (or which are offered pursuant to the final system plan to) such profitable railroad, or
(iii) provide for the designation of additional rail properties
to the Corporation or to a subsidiary thereof to enable the Corporation to serve efficiently a line of railroad designated to the Corporation in the final system plan if such line does not connect with any other line of railroad so designated to the Corporation or if such line would be served more efficiently as a consequence
of such design tion.
Any designation to a profitable railroad pursuant to this paragraph shall comply with the second sentence of section 206(d) (4) of this title, and shall only. be made upon a finding by the Associat ion that such designation is integrally related to an o ffer of rail Properties to a profitable railroad in the final system plan, that the goals of the final ~stem plan require that the rail properties be operated as a part of the rail properties included in such offer, and that the implementation of such designation will not materially and adversely affect the impact of such offer on the profitability of the Corporation or any profitable railroad operating in the region. Any designation to a profitable railroad pursuant to this subsection, which amends any prior offer, shall terminate 30 days after the date of enactment of this paragYraphi unless, prior to such date, such profitable railroad has notified the Association in writing of its acceptance of such amendment to the prior offer.
(B) If a line of railroad or any seg-ment. thereof is designated for rail service in the final system plan, no designation may be made by the Association pursuant to this paragraph which would result in such line or segment not heinz_ so designated. Any designations made pursuant to this paragraph shall be treated for all purposes as if they had been included in the final system plan adopted by the Association and reviewed by the Congress. The final system plan shall for all purposes be deemed to be approved as amended by such designations.
(C) Any designations made pursuant to thi"s paragraph shall not be subject to review by any court.





26

(D) Any labor agreements entered into under section 508 of this Act shall be subject to further negotiations for any modifications which may be necessary to implement designations made pursuant to this paragraph.
JUDICIAL REVIEW
SEc. 209. (a) GNEn-RAL.-Notwithstandinz any other provision of law, the final system plan which is adopted by the Association and which becomes effective after review by the Congress is not subject to review by any court except in accordance with this section. After the final system plan becomes effective under section 208 of this title, it mav be reviewed with respect to matters concerning the value of the rail properties to be conveyed under the lan and the value of the consideration to be received for such 'Properties.
(b) SPECTAL CoURT.-Within 30 days after the date of enactment of this Act, the Association shall make application to the judicial panel on multi-district litigation authorized l)y section 1407 of title 28, United States Code, for the consolidation in a single, three-judge district court of the United States of all judicial proceedings with respect to the final system plan. Within 30 days after such application is received, the panel shall make the consolidation in a district court (cited herein as the "special court") which the panel determines to be convenient to the parties and the one most likely to be able to conduct any proceedings under this action with the least delay and the greatest possible fairness and ability. Such proceedings shall be conducted by the special court which shall be composed of three Federal judges who shall be selected by the panel, except that none of the judges selected may be a judge assigned to a proceeding involving any railroad in reorganization in the region under section 77 of the Bankruptcy Act (11 IT.S.C. 205). The special court is authorized to exercise the powers of a district judge in any judicial district with respect to such proceedings and such powers shall include those of a reorganization court. The special court shall have the power to order the conveyance of rail properties of railroads leased, operated, or controlled by a railroad in reorganization in the region. The special court may issue rules for the conduct of any proceedings under this section and under section 305 of this Act, includina rules with respect to the time within which motions may be filed, and with respect to appropriate representation of interests not otherwise represented (including the Secretary with respect to a petition by the Association in the case of a proposal developed by the Secretary, under such section 305). No determination by the panel under this subsection may be reviewed in any court.
(c) IELIWvERY Or PLALN TO SPECIAL CoUnT.-Witin 90 days after its effective (late, the Association shall deliver a certified copy of the final system plan to the special court and shall certify to the special court(1) which rail properties of the respective railroads in reorganization inl the region, and of any person leased, operated, or controlled by such. railroads in reorganization are to be transferred to the Corporation or any subsidiary thereof, in accordance
with the final stem plan;
(2) which rail properties of the respective railroads in reorganization inl the region or person leased, operated, or controlled bv such railroads in reorganization are to be conveyed to profitable railroads, in accordance with the final system plan;





27

(3) the amount, terms, and value of the securities of the Corporation or any subsidiary thereof (including any certificates of value of the Association) to be exchanged for those rail properties to be transferred to the Corporation or any subsidiary thereof pursuant to the final system plan, and as indicated in paragraph
(1) of this subsection; and
(4) that the transfer of rail properties in exchange for securities of the Corporation or any subsidiary thereof (including any certificates of value of the Association) and other benefits is fair
and equitable and in the public interest.
Notwithstanding any other provisions of this subsection and subsection
(d) of this section, the time for the delivery of a certified copy of the final system plan shall be March 12, 1976, and may be extended to a date not more than 30 davs thereafter, prescribed in a notice filed by the Association not later than February 17, 1976, with the special court, the Congress, and each court referred to in such subsection (d). Such notice shall contain the certification of the Association that an orderly conveyance of rail properties cannot reasonably be effected before the date for conveyance determined with respect to such notice. The time prescribed in section 303 (a) of this Act shall be determined with respect to the date prescribed in such notice.
(d) BANKRUPTCY CoRT.-Within 90 days after its effective date, the Association shall deliver a certified copy of the final system plan to each district court of the United States or any other court having jurisdiction over a railroad in reorganization in the region and shall certify to each such court(1) which rail properties of that railroad in reorganization are
to be transferred to the Corporation or any subsidiary thereof
under the final system plan; and
(2) which rail properties of that railroad in reorganization, if
any, are to be conveyed to profitable railroads operating in the
region, under the final system plan.
(e) ORIGINAL AND EXCLUSION JuRIsDIcTIo.-(1) Notwithstanding any other provision of law, any civil action(A) for injunctive or other relief against the Association
from the enforcement, operation, or execution of this Act or any provision thereof, or from any action taken by the Association pursuant to authority conferred or purportedly conferred under
this Act;
(B) challenging the constitutionality of this Act or any provision thereof;
(C) challenging the legality of any action of the Association,
or any failure of the Association to take any action, pursuant to
authority conferred or purportedly conferred under this Act;
(D) *to obtain, inspect, cop. or review any document in the
possession or control of the Association that would be discoverable
in litigation pursuant to section 303(c) of this Act(E)' brought after a conveyance, pursuant to section 303(b)
of this Act, to set aside or anml such conveyance or to secure in any way the reconveyance of any rail properties so conveyed; or
(F) with respect to continuing reorganization and supplemental transactions, in accordance with section 305 of this Act; shall be within the original and exclusive jurisdiction of the special





28

court. The special court shall not hear or determine any such action prior to the date of conveyance, pursuant to section 303(b) (1) of this Act, except as the Constitution may require. Relief shall not be granted in any action referred to in subparagraph (A), (C), or (E) unless the person seeking such relief establishes that the Association acted in reckless or deliberate disregard of applicable law.
(2) The original and exclusive jurisdiction of the special court shall include any action, whether filed by any interested person or initiated by the special court itself, to interpret, alter, amend, modify or implement any of the orders entered by such court pursuant to section 303 (b) of this Act in order to effect the purposes of this Act or the zoals of the final system plan. During the pendency of any procee&i'n(y described in this paragraph, the special court may enter such orders as it determines to be appropriate, including orders enjoining, restraining, conditioning, or limiting any conveyance, transfer, or use of any asset or right which is subject to such an order or which is at issue in such a proceeding, or which involves the enforcement of any liens or encumbrances upon such assets or rights. Any orders pursuant to this paragraph which interpret, alter, amend, modify, or implement orders entered by the special court shall be final and shall not be restrained or enjoined by any court.
(3) A final order or judgment of the special court in any action referred to in this section shall be reviewable only upon petition for a writ of certiorari to the Supreme Court of the United States, except that any order or Judgment enjoining the enforcement, or declaring or determining the unconstitutionality or invalidity, of this Act, in whole or in part, or of any action taken under this Act, shall be reviewable by direct appeal to the Supreme Court of the United States in the same manner that an injunctive order may be appealed under section 1253 of title 28, United States Code. Such review is exclusive and any petition or appeal shall be filed not more than 20 days after entry of such order or judgment.
(f ) DisposiTioN OF CAsH DEPOSITS.-M71ienever the compensation which is deposited with the special court under section 303 (a) of this Act is in the form of cash, such cash shall be invested and reinvested upon such terms and conditions as the special court shall determine, pending the making of the findings referred to in paragraphs (1),
(2), and (3) of section 303 (c) of this Act. Notwithstanding section 303(c) (4) of this Act, the special court may order (1) the income from such investments, (2) the dividends or interest, if any, received on any securities or obligations deposited with the special coiirt under such section 303 (a), and (3) the income. if any, received with respect to any other form of compensation so deposited, to be distributed to the trustee of each railroad in reorganization and to any person leased, operated or controlled by such a railroad which conveyed the right, title, and interest in the rail properties with respect to which such cash, seciirities, obligations, or other compensation have been so deposited with the.special cmirt. Notwithstanding section 303 (c) (4) of this Act, the special court may, within 90 days after the date of conveyance of rail properties pii r-suant to section 303 (b) of this Act. order up to 2.5 percent of any cash (inebiding investments made with cash) and other compensation deposited with the special coiirt to be distributed to such trustee or person. On petition of the applicable trustee or






29

pesn, the special court may order such additional distributions as it finds reasonable and appropriate, prior to the making of the findings referred to in paragraphs (1), (2), and (3) of such section 303(c).
()STAY OF COURTr PROCEEDINGS.-The special court may stay or enjoin any action or proceeding in any State court or in any court of the United States other than the Supreme Court if such action or proceeding is contrary to any provision of this Act, impairs the effective implementation of this Act, or interferes with the execution of any order of the special court pursuant to this Act.
(~h) SFECIAL MASER~S.-(1) The special court may appoint and fix the compensation and assign the duties of such special masters as it considers necessary or appropriate to conduct hearings, receive evidence and report thereon to the special court, and perform such other acts, as the special court may require. The special court may employ such special masters by contract or otherwise, without regard to section 3709 of the Revised Statutes of the United States (41 U.S.C. 5) or part III of title -0 of the United States Code. on such terms and conditions as it may determine. Such special masters shall not be deemed to be employees of the Federal Government or any department, agency, or instrumentality thereof. The special court may also appoint employees in such number as may be approved by the Director of the Administrative Office of the United States Courts, and may procure such administrative services as may be necessary for it or the special masters to complete their assignments expeditiously.
(2) There are authorized to be appropriated such sums ,is are necessary to carry out the purposes of this subsection. Sums appropriated under this subsection are authorized to remain available until expended.

OBLIGATIONS OF TIHE ASSOCIATION
SEC. 210. (a) GE-NERAL.-TO carry out the purposes of this Act, the Associ'ition is authorized to issue bonds, clebiintures, trust certificates, securities, or other oblioations (herein cited as "obligations") in accordance with this section. Such obligations shall have such maturities iind bear such rate or rates of interest as are determined by the Association with the approval of the Secretary of the Treasury. Such obligations shall be redeemable at the option of the Association prior to maturity in the manner stipulated in each such obligation, and may be purchased by the Association in the open market at a price which is reasonable.
(b) MIAXIUM OBLIGATIONAL AUTIORITY-The agregate principal amount (exclusive of interest or additions to principal on account of accrual of interest) of obligations issued by the Association under this section which may be outstanding at any one time shall not exceed $3901.000,000. 'No obligations or proceeds thereof shall be issued or made available after the date of enactment of the Railroad Revitalization and Regulatory Reform Act of 1976 except(1) to meet existing or potential commitments for loans under
section 211 of this title made or applied for prior to January 1,
1976; andy,
(2) for the 'Purpose of providing loans pursuant to subsections
(g) and (h) of section 211 of this title.


36-573 0 79 3






30

(c) G(uamxITi-. -is.-The Secretary shall guarantee the payment of p)rinicipal and interest on all obligations issued by the Association in accordance with this Act and which the Association requests be g?'oranteed. All guarantees entered into by the Secretary under this > section shall constitute general obligations of the United States for khe pavient of wlich its full faith and credit are pledged.
f(1) VALIDITY.-No obligation issued by the Association under this stt101, 1 shall be terminated, canceled, or otherwise revoked, except in accorIance with lawful terms and conditions prescribed by the Association. Such an obligation shall be conclusive evidence that it is in complif"nce with this section, has been approved, and is legal as to princip al, interest, and other terms. An obligation of the Association shall n, valid and incontestable in the hands of a holder, except as to frau.t duress, mutual mistake of fact, or material misrepresentation )' or involving such holder.
(0) THE SECRETARY OF TIlE TREASURY.-If at any time the moneys available to the Secretary are insufficient to enal)le him to discharge his responsibilities under subsection (c) of this section, he shall issue notes or other obligations to the Secretary of the Treasury in such forms and denominations, bearing such maturities, and subject to such terms and conditions as may be prescribed by the Secretary of the Treasury. Such obligations slall bear interest at a rate to be determined by the Secretary of the Treasury taking into consideration the current average market yield on outstanding marketable obligations of the United States of comparable maturities during the month preceding the issuance of such obligations. The Secretary of the Treasury is authorized and directed to purchase any such obligations and for such purpose is authorized to use as a public debt transaction the proceeds from the sale of any securities issued tinder the Second Liberty Bond Act, as amended. The purposes for which securities may be issued under such Act are extended to include any purchase of notes or other obligations issued under this subsection. At any time, the Secretary of the Treasury may sell any such obligations, and all sales, purchases, and redemptions of such obligations by the Secretary of the Treasury shall be treated as public debt transactions of the United States.
(f) AUTHORIZATION FOR APPROPRIATION5s.-There are hereby authorized to be appropriated to the Secretary such amounts as are necessary to discharge the obligations of the United States arising under this section.
(g) LAWFUL JNVESTMIENTS.-All obligations issued by the Associaion shall Ibe lawful investments and nay be accepted as security for all fiduciary, trust, and public funds, the investment or deposit of which shall" be tinder the authority and control of the United States or any officer or officers thereof. All such obligations issued pursuant to this section shall be exempt securities within the meaning of laws a(ministered by the Securities and Exchange Commission.

LOANS
SiEc. 211. (a) G-..'NEI AiL.-The Association is authorized, in accordance with the ipovisions of this section and such rules and regulations as it shall Ir'es(nie, to make loans to the Corporation, the National Railroad P'asseinger corporation and other railroads (including a





31

railroad in reorganization which has been found to be reorganizable under section 77 of the Bankruptcy Act pursuant to section 207(b) of this title) in the region, for purposes of achieving the goals of this Act; to a State or local or regional transportation authority pursuant to section 403 of this Act; and to provide assistance in the form of loans to any railroad which (A) connects with a railroad in reorganization, and (B) is in need of financial assistance to avoid reorganization proceedings under section 77 of the Bankruptcy Act (11 U.S.C. 205). No such loan shall be made by the Association to a railroad unless such loans shall, where applicable, be treated as an expense of administration. The rights referred to in the last sentence of section 77(j) of the Bankruptcy Act (11 U.S.C. 205(j)) shall in no way be affected by this Act.
(b) APPLICATIONs.-Each application for such a loan shall be made in writing to the Association in such form and with such content and other submissions as the Association shall prescribe to protect reasonably the interests of the United States. The Association shall publish a notice of the receipt of each such application in the Federal Register and shall afford interested persons an opportunity to comment thereon.
(c) TERMS AND CONDITIONs.-Each loan shall be extended in such form, under such terms and conditions, and pursuant to such regulations as the Association deems appropriate. Such loan shall bear interest at a rate not less than the greater of a rate determined by the Secretary of the Treasury taking into consideration (1) the rate prevailing in the private market for similar loans as determined by the Secretary of the Treasury, or (2) the current average yield on outstanding marketable obligations of the Association with remaining periods of maturity comparable to the average maturities of such loans, plus such additional charge, if any, toward covering costs of the Association as the Association may determine to be consistent with the purposes of this Act.
(d) MODIFICATIONs.-The Association is authorized to approve any modification of any provision of a loan under this section, including the rate of interest, time of payment of interest or principal, security, or any other term or condition, upon agreement of the recipient of the loan and upon a finding by the Association that such modification is equitable and necessary or appropriate to achieve the policy declared in subsection (f) of this section. Notwithstanding any other provision of this section, in the case of a loan made under subsection (a) of this section to a railroad in the region, the Association may, upon the request of such railroad(1) continue to make advances to such railroad pursuant to such
loan, uD to the total principal provided, as of the date of enactment of this sentence, under the agreement between such railroad and the Association under this section, upon finding only that (A) a %rood faith effort has been commenced bv such railroad towa.rd the establishment of an einlovee stock ownership plan, and (B) such continued advances will permit the continuation of rail service determined bv the Association, in the Final System Plan
or under the goals of this Act. to be desirable; and
(2) increase the principal amount of such loan to such railroad, in 'n amount not to exceed $2.000,000, only if the Association makes the, finding referred to in paragraph (1) (B) of this sub-






32

section and such railroad has in effect an employee stock ownership
plan which has been approved by the Association.
The Association may not take any action pursuant to the preceding sentence of this subsection after December 31, 1979.
(e) PREREQUisrrEs.-The Association shall make a finding in writing, before making a loan to any applicant under this section, that(1) the loan is necessary to achieve the goals of this Act or to
prevent insolvency;
(2) it is satisfied that the business affairs of the applicant will
be conducted in a reasonable and prudent manner; and
(3) the applicant has offered such security as the Association
deems necessary to protect reasonably the interests of the United
States.
(f) POLICY.-It is the intent of Congress that loans made under this section shall be made on terms and conditions which furnish reasonable assurance that the Corporation or the railroads to which such loans are granted will be able to repay them within the time fixed and that the goals of this Act are reasonably likely to be achieved.
(g) PRE-CoNvEYANCCE LOANS TO TIHE CORPORATIOx.-During the period between the effective (late of the final system plan and the date of the conveyance of rail properties pursuant to section 303(b) of this Act, the Association may make such loans in such amounts to the Corporation as the Association deems essential to provide for the purchase by the Corporation of material, supplies, equipment, and services necessary to permit the orderly and efficient implementation of the final system plan. Notwithlstanding any inability of the Association during such period to make the finding required by subsection
(e) (3) of this section because of any existing contingencies, the Association may make any such loans to the Corporation. subject to(1) the most favorable terms and conditions for assuring
timely repayment and security as may then be reasonably available, and
(2) the requirement that any loan to the Corporation under
this subsection be refinanced immediately out of the proceeds of the first sale by the issuance of debentures under section 216 of
this title.
In order to assure that necessary funds are available to the Corporation for implementation of the final system plan. the Corporation is authorized to accept such loans as may be approved by the Association under this subsection, and any such acceptance shall be deemed for all purposes to constitute a reasonable and prudent business judgment in compliance with any fiduciary obligations imposed on the Corporation or its directors. For purposes of this subsection, the term "Corporation" includes a subsidiary of the Corporation.
(h) LOANS FvOn PAYMENT F ()iOmIGATIONS.-(1) (A) The Association is authorized, subject to the limitations set forth in section 210(b) of this title, to enter into loan agreements, in amounts not to exceed, at any given time. $350.0().000 in the ag~jreate principal amount, with the Corp)oration, the National Railroad Passenger Corporation, and(i any profitable railroad to which rail properties are transferred or conveyed pursuant to section 303(h) (1) of this Act, under which the Corporation. the National Railroad Passenger Corporation, and any profitable railroad entering into such agreement will agree to






33

meet existing or prospective obligations of the railroads in reorganization in the region which the Association, in accordanCe with procedures established by the Association, determines should be paid by the Corporation, the National Railroad Passenger Corporation, or a profitable railroad, on behalf of such railroads in reorganization, in order to avoid disruptions in ordinary business relationships. Such obligations shall be limited to(i) amounts claimed by suppliers (including private car lines)
of materials or services utilized or purchased in current rail
operations;
(ii) claims by shippers arising f rom current rail services;
(iii) payments to railroads for settlement of current interline
accounts and all other current accounts and obligations;
(iv) claims of employees arising under the collectiv-e-bargaining
agreements of the railroads in reorganization in the region and subject to section 3 of the Railway Labor Act (including claims for accrued vacation and wages and similar claims arisingr in connection with labor and services performed);
(v) claims of all employees or their personal representatives for
Personal injuries or death and subject to the provisions of Employers' Liability Act (43 U.S.C. 51-60)
(vi) amounts required for adequate funding of accrued pension
benefits existing at the time of a conveyance or discontinuance of service under employee pension benefit plans described in sectioiu
505 (a) of this Act;
(vii) amounts required to provide adequate funding for payment, when due, of claims dleriving from membership in any employee voluntary relief plan which provides benefits to its members and their beneficiaries in the event of sickness, accident, disability., or death, and to which both a railroad in reorganization and employee members have made contributions:
(viii) amounts required to provide acleqluate funding for
payment, when due, of medical and life insurance benefits for employees (whether or not. their employment was governed by a collective bargaining agreement) on account of their service.
with a railroad in reorganization prior to the date of conveyance pursuant to section 303 (b) (1) of this Act, and for individuals who retired, prior to such date of conveyance, from service
with a railroad in reorganization;
(ix) amounts required to discharge the obligations of each
such railroad in reorganization to nonemployee claimants for personal injuries suffered during, the period such railroad has
been in reorganization; and
(x) amounts required to discharge any oblination of a railroad in reorganization in the region to the National Railroad Passenger Corporation. arising out of a contract between such railroad in reorganization and such Cor-poration under -which such railroad in reorganization is required to provide a suitable rail passenger station. in any case in 'which such railroad in reorganization sold a rail passenger station pursuant to a judicial
order of condemnation prior to April 1, 1976.
(B) The Association shall make a loan pursuant to subparagraph
(A) of this paragraph if, notwithstanding any other requirement of






34

this subsection, it finds that the Corporation, the National Railroad Passenger Corporation, or a profitable railroad is entitled to a loan pursuant to section 303(b) (6). 504(e), or 504(g) of this Act. or if, with respect to an obligation referred to in subparagiriaph (A) of this paragraph, it finds that(1) provision for the payment of such obligation was not included in the financial projections of the final system plan;
(ii) such obligation arose from rail operations prior to the
date of conveyance of rail properties pursuant to section 303 (b) (1) of this Act and is, under other applicable law, the responsibility of a railroad in reorganization in the region, and a claim is presented to a railroad in reorganization in the region, or the Corporation within 2 years after the date of enactment of the
Rail Amendments of 1976;
(iii) the Corporation, the National Railroad Passenger Corporation, or a profitable railroad has advised the Association that the direct payment of such obligation by the Corporation, the National Railroad Passenger Corporation, or a profitable railroad is for services or materials, the furnishing of which served to avoid disruptions in ordinary business relationships prior to the date of conveyance of rail properties pursuant to section 303 (b) (1) of this Act, or is necessary to avoid postconveyance disruptions in ordinary business relationships;
(iv) the transferor is unable to pay such obligation within a
reasonable period of time: and
(v) with respect to loans made to the Corporation, the procedures to be followed by the Corporation, in seeking reimbursement front at railroad in reorganization in the region for an obligation paid on its behalf under this subsection, have been jointly agreed to by the Finance Committee and the Corporation,
and the joint agreement(I) provides for the Corporation to receive reimbursement
from the Association for any expenses incurred in seeking reimbursement from any railroad in reorganization in the region for an obligation paid on its behalf under this subsection; and
(II) includes a stipulation of the exact procedures the
Corporation shall undertake to avoid the finding, referred to in paragraph (6) (A) (i) of this subsection, that it has not
exercised due diligence.
(2) The trustees of each railroad in reorganization in the region shall attempt to negotiate agency agreements with the Corporation, the National Railroad Passenger Corporation, or a profitable railroad for the processing of all accounts receivable and accounts payable attributable to operations prior to the conveyance of property pursuant to section 3 03(b) (1) of this Act aInd for the payment of only those accounts IpaiNfble which relate to obligations of the estates identiftied in paraeraph (1) of this subsection. If any railroad in reorganization in the region fails to conelide such an agreement within a reasonable time rior to such conveyance, the applicable reorganization courts, after giving all parties an opportunity to be heard. shall l)rescri)e the ternls of schll a1n agency arrangement by order. giving (he consiteration to tIe need, wherever possible. to make such agree-






35

ments uniform among the various estates. Nothing in this subsection shall be construed as permitting any district court of the United States having jurisdiction over the reorganization of a railroad in reorganization in the region to enjoin, restrain, or limit the Corporation, the National Railroad Passenger Corporation, or a profitable railroad from applying, to payment of the obligations of the estates identified in paragraph (1) of this subsection, amounts collected as (A) accounts receivable pursuant to this paragraph, (B) cash or other current assets identified pursuant to paragraph (3) of this subsection, or (C) proceeds of loans pursuant to paragraph (1) of this subsection. Any agency agreement executed prior to the date of the enactment of the Rail Transportation Improvement Act shall be deemed amended to the extent necessary to conform such agreement or order to the provisions of this paragraph. Nothing in this paragraph shall be construed to affect any payment made prior to such date of enactment with respect to obligations other than those identified in paragraph (1) of this subsection.
(3) The Association may. not less than 30 days prior to tile (late of conveyance pursuant to section 303(b) (1) of this Act, petition each district court of the United States having jurisdiction over the reorganization of a railroad in reorganization in the region for an order, which shall be entered prior to such conveyance, and which(A) identifies that cash and other current assets of the estate
of such railroad which shall be utilized to satisfy obligations of the estates identified in paragraph (1) of this subsection; and
(B) provides for the application by the trustees of such railroads and their agents. consistent with the principles of reorganization under section 77 of the Bankruptcy Act (11 U.S.C. 205) and with the agency agreement specified in paragraph (2) of this subsection, of all such current assets, including cash available as of or subsequent to such date of conveyance, to the payment in the posteonveyance period of the obligations of the estates identified in paragraph (1) of this subsection.
(4) (A) Each obligation of a railroad in reorganization in the region which is paid with financial assistance under paragraph (1) of this subsection shall be processed. on behalf of such railroad. by tle Corporation, the National Railroad Passenger Corporation. or a 1)rofitable railroad, whichever is appropriate. An obligation of a railroad in reorganization in the region shall be paid, on behalf of such railroad, by the Corporation. the 'National Railroad Passenger Corporation, or a profitable railroad, whichever is appropriate, if(i) such obligation is (eemed bv the Corporation. the Nationlal
Railroad Passenger Corporation.'or a profitable railroad, whiclever is appropriate, to have been, on the date of convevance of rail properties pursuant to section 303 (b) (1) of this Act.'the obligation of a railroad in reorganization in the region:
(ii) such obligation accrues after such date of conveyance but
as a result of rail operations conducted prior to such date. and the trustees of such railroad in reorganization acknowledge that
it is an obligation of such railroad: or
(iii) the district court of the United States having jurisdiction
over such railroad in reorganization in the region approves sucl obligation as a valid administrative claim against such railroads:






36

to the extent that payment is required under a loan agreement with t lIe Associat ionll n(Ier such paIlra raph (1).
(B) The Association shall resolve any disputes among the Corporation. the Natiomnal Railro ad Passenger (Corporation, and a profitable railroad concerning which of them shall process and pay any particular obligation on behalf of a particular railroad in reorganization.
(C) The Corporation, the National Railroad Passenger Corporation, or a profitable railroad shall have a direct claim, as a current expense of administration, for reimbursement from the estate of a railrioad in reorganization in the region for all obligations of such estate (plhs interest thereon) which are paid by the Corporation, the National Railroad Passenger Corporation, or a profitable railroad, as the case may be. The right of the Corporation or the National Railroad Passenger Corporation to receive reimbursement under this subparagraph from the estate of a railroad in reorganization in the region shall be reduced by the amount, if any, of loans, plus interest forgiven under paragraph (5) of this subsection.
(1)) (i) Except as provided in clause (ii) of this subparagraph. any funds held in an escrow account by a railroad in reorganization onil the date of enactment of the Rail Transportation Improvement Act which are thereafter determined to be cash and other current assets of the estate of such railroad in reorganization, for purposes of paragraph (3) of this subsection, shall be applied as follows(I) first, to the reduction of any outstanding loans to the Corporation by the Association, pursuant to paragraph (1) of this subsectioll the proceeds of which were used to discharge obligations of such railroad in reorganization:
(II1) second. to the Association to the extent of any such loans
which have been forgiven pursuant to paragraph (5) of this subSection ; and
(III) third, to the payment of any remaining obligations of
suchI railroad in reorganization, in accordance with the provision of the agency agreement entered into pursuant to paragraph (2)
of t his subsection.
(ii) The manner of dispositon set forth in clause (i) of this subIparagraph shall not apply with respect to a railroad in reorganization if the Secretary (I) determines that a different disposition of assets is necessary to carry out a reorganization plan of such railroad in reorganiz.ation. and that sucl different disposition adequately protects the interests of the United States. and (II) transmits his determination to tl(he court lhavi g jurisdiction over the reorganization of such railroad.
(5) (A) If, at any time, the Finance Committee of the Association determines that the failure of the Corporation to receive full reimbursement with interest from the estate of a railroad in reorganization in the region for any obligation of such estate paid pursuant to this siibsect ion could adversely affect the fairness and equity of the transfers an(1 convceynnces pursuant to section 303(b) (1) of this Act, or that tlhe failure of the National Railroad Passenger Corporation to receive such fiull reimbursement plus interest for any such obligation ub]t he cont rary to the public interest, the Association shall forgive te i(ebt edness, plus accrued interest, of the Corporation or of the N:t ional Railroad Passenger Corporation incurred pursuant to paragralph (1) of this subsection in the amount recommended by the






37

Finance Committee. The Association shall have a direct claim, as a current expense of administration of the estate of such railroad in reorganization, equal to the amount by which loans of the Corporation or of the National Railroad Passenger Corporation, plus interest, have been forgiven. Such direct claim shall not be subject to any reduction by way of setoff, cross-claim, or counter-claim which the estate of such railroad in reorganization may be entitled to assert against the Corporation, the National Railroad Passenger Corporation, the Association, or the United States.
(B) The direct claim of the Association under this paragraph, and any direct claim authorized under paragraph (4) of this subsection, shall be, prior to all other administrative claims of the estate of a railroad in reorganization, except claims arising under trustee's certificates or from default on the payment of such certificates. The Corporation, the 1 national Rail Passenger Corporation, or a profitable railroad, as the case mav be. shall, with respect to each direct claim for reimbursement pursuant to paragraph (4) of this subsection. file a proof of administrative expense claim with the trustees of the railroad in reorganization from whom reimbursement is sougght.. Each such proof of administrative expense claim shall set forth, by category and amount the obligations of such railroad in reorganization whicl were paid pursuant to such paragraph (4).
(6) Notwithstanding any other provision of this subsection, the Association shall forgive any loan made to the Corporation or the National Railroad Passenger Corporation pursuant to this subsection, plus accrued interest thereon, on the 3rd anniversary date of any such loan, except that the Association shall not forgive any loan or portion thereof, in accordance with this paragraph, if(A) the Finance Committee makes an affirmative finding, with
respect to such I oan or portion thereof, that(i) the Corporation has not exercised due diligence in executing the procedures adopted pursuant to paragraph (1)
(B) (v) of this subsection, and
(ii) the f allure of the Association to forgive such loan
or portion thereof will not adversely affect the ability of the
Corporation to become financially self -sustaining;
(B) the Finance Committee so directs the Association; and
(C) neither House of the Congress disapproves such affirmative finding and direction, in accordance with the following provisions of this paragraph.
A copy of each such finding, the reasons therefor, and such direction made by the Finance Committee, toggetber with the comments and recommendations thereon of the Board of Directors of the Association, shall be transmitted to the Congress by the Association within 10 days after the date on which the Finance Committee makes such findin(T and direction, or if not so transmitted, shall be transmitted by the Finance Committee. Each such finding and direction So transmitted shall become effective immediately. and shall remain in effect. unless, within the first period of 30 calendar davs of continuous session of Con(yress after the date of transmittal of such finding and direction to Congress, either House of Congress disapproves such finding and direction in accordance with the procedures specified in section 1017 of the Congressional Budget and Impoundment Control Act of 1974 (31 U.S.C.






38

1 ( 7)For pit poses, of this paarp.continuity of session of Con('j-( ( 7) For. piii'poses of this subsection. the termn "Cor~por-ation" inci udehs a stil sidijairv of the (Corporat ion.
( i) Lu*v 1 11(11 11CATI()N.-dpon apple icationi by the Cor-poration, the Secret ary slia'l I. pilslai to the pr-ovsionis of and within the obligati ml Ii Iii ittionls co ika med ini sections .5ll through 513 of the Railr-oad Revitalizationi and R'ecruIatory Refo-m A.ct of 1976, granitee 01)1 r~ttionis of t li C mrpora.'tmon for. thle purpose of electrifying highlensit V mnaii e rouit s if the >ecr-etar-y finds thatJ such electrification Will1 retiiurn oper-at mniz and financial benefits to the Corporation and Avill facil itate. comnpatilbil ity with existing or- renewed electrification vstemrs. The ago-'e2'ate unp aid principal amount of oblirat ionis which nMay be guarnteed by thle Secr-etarv under this paragraph shall not eXcTe '-,200 .000 .000 at anyv one time.

II( '( RI)S, AUI) AND EXAMINATION
Si:,(. 212. (a) Thcl1s-ahrecipient of financial assistance, under this title. whlether- in the form of loans, obligations. or other arrangreienits, shall keel) such r-ecordls as the Association or the Secretary shall pi-re5eI'11 .iludinll- r0corlds which fully disclose the, amount and disPosition by such r.ecilpient of the proceeds of such assistance and such other r~ecor-ds as wi-1l facilIitate anl effective audit,.
(1)) AuDIT w ) tA IN ON-h Association, the Secretary, and
the Comptroller General of the 'United States, or any of their duly authiorize(I iepre entatives shall. until the expiration of 3 years after the imi-plementation of the final system pla n, have access for the pur'pose of audit andl examination to any bookcz. documents, paper-s, and recor'(ls of Such recipients which in the opinion of the Association, the Secr-et ary. or thie ( omptiroller, General may be related or peitiiient to he loans. obli~rationis 01' other arrangements referred to in subsection
(a) of this section. The Akssociation or any of its duly authorized repr-esent at tives shall. until any financial assistance received tinder' this title hias been repaid to the Association, have access to any such materi'als wviich ('owrien any mat-tter that may bear upon(1) the ability of the recipient of such financial assistance to
make repaymlent within the time fixed therefor;~
(2) the effectiveness with which the proceeds of such assistance
is usedl,- and
(3) the implementation of the final system plan and the realization of the declaration of policy of this Act.

EMIn;ECYASSISTX N'C PENING IMPLEMENTATION
Svc-(. 213. (a) E RGNYAsSISTVNCE.-le Secretary is authorized. peiiding ( Ilie li npleinentat ion of thle final system plan, to pay to the ru.1st ces of r-ailiroads in rleollranization such sums as are necessary for Hie ('011iillw' 1 l-ovisionl of esse'iit al ti ranisj)ortation services by siich i-a iiro:idls. Si icli laviiients shall, he made, by the Secretary upon such rea1sonli Ib e ter-ms anIid cowdit iotis as time Se Icretary C: talli'sheS, except di at I recipaeit s ii nist, agree to mnaiiit ain and provide service at a level W)o less 111:11 t hit in effect oii the late of enact iient of this Act.






39

Where the Secretary and the trustees agree that funds provided pursuant to this section are to be used (together with f unds provided pursuant to section 215 of this Act, if any) to perform program maintenance on designated rail properties until the date rail properties are conveyed under this Act or to improve such designated properties, such agreement shall contain the conditions set forth in section 215 (b) of this Act.
(b) AUTHORIZATION FOR ArPRoPRIATIONs.-There are authorized to be appropriated to the Secretary for carrying out this section such sums as are necessary, not exceed $282,000,000, to remain available until expended. Of amounts authorized to be appropriated under this subsection, $50,000,000 shall be available solely to pay to the trustees of railroads in reorganization such sums as may be necessary to provide such railroads with amounts equal to revenues attributable to tariff increases proposed by such railroads and suspended by the Interstate Commerce Commission during the calendar year 1975, if the Secretary determines that such payments are necessary to carry out this section.
AUTHORIZATION FOR APPROPRIATIONS
SEC. 214. (a) SECRETARY.-There are authorized to be appropriated to the Secretary for purposes of preparing the reports and exercising other functions to be performed by him under this Act such sums as are necessary, not to exceed $12,500,000, to remain available until expended. There are authorized to be appropriated to the Secretary such sums as may be necessary to discharge the obligations of the United States arising under section 303 (c) (5) of this Act.
(b) OFFICE.-There are authorized to be appropriated to the Commission for the use of the Office in carrying out its functions under this Act such sums as are necessary, not to exceed $7,000,000, to remain available until expended. The budget for the Office shall be submitted by the Commission directy to the Congress and shall not be subject to review of any kind by any other agency or official of the U~nited States. Moneys appropriated for the Office shall not be withheld by any agency or official of the United States or used by the Commission for any purpose other than the use of the Office. No part of any other moneys appropriated to the Commission shall be withheld by any other agency or official of the United States to offset any moneys aprpitdpr suant to this subsection. aprpitdpr
(c) AsSOCIATIOx-,.-For the fiscal year ending September 30, 1979, there, are authorized to be appropriated to the Association for purposes of carry ing out its administrative expenses under this Act such sums as are necessary. not. to exceed $21,200,000. Sums appropriated Tinder this subsection are authorized to remain available until expended.

INTERIM AGREEMENTS
SEc. 215. (a) PURPOSES.-Prior to the date upon which rail properties are conveyed to the Corporation under this Act, the Secretary, with the approval of the Association,, is authorized to enter into agrreements with the trustees of the railroads in reorganization in the region (or railroads ]eased, operated, or controlled by railroads in reorganization)
(1) to perform the program maintenance on dEsignated rail





40

I)properties of such railroads until the date rail properties are conveyed under this Act :
(2) to improve rail properties of such railroads; and
(3) to acquire rail properties for lease or loan to any such
railroads until the date such rail properties are conveyed under this Act, and subsequently for conveyance pursuant to the final system plan, or to acquire interests in such rail properties owned by or leased to any such railroads or inll purchase money obligations there for.
(b) ( oNDrrIONs.-Agreements pursuant to subsection (a) of this section shall contain such reasonable terms and conditions as the Secretary inlay l)prescribe. In addition, agreements under paragraphs (1) an1d (2) of subsection (a) of this section shall provide that(1) to the extent that physical condition is used as a basis
for determining, under section 206 ( f) or 303(c) of this Act, the value of pr op)ert ies subject to such an agreement and designated for transfer to the Corporation under the final system plan, the physical condl(lition of the prol)erties on the effective date of the
agreement slall be used; and
(2) in the event that property subject to the agreement is
sold, leased, or transferred to an entity other than the Corporation, the trustees or railroad shall pay or assign to the Secretary that portion of the proceeds of such sale, lease, or transfer which reflects value attributable to the maintenance and improvement
provided pursuant to the agreement.
(c) OuBLI.TI(No.-Notwithstanding section 210(b) of this title, the Association shall issue obligations under section 210(a) of this title in an amount sufficient to finance such agreements and shall require the Corporation to assume any such obligations. The aggregate amount of obligations issued under this section and outstanldinmg at any one time s1all not exceed $300.000,000. The Association, with the approval of the Secretary, shall designate in the final system plan that portion of such obligations issued or to be issued which shall be refinanced and the terms thereof, and that portion from which the Corporation shall be released of its obligations.
(d) CoNv.YANC.i.-The Secretary may convey to the Corporation or any subsidiary thereof with or without receipt of consideration, any property or interests acquired by, transferred to, or otherwise held by the Secretary pursuant to this section or section 213 of this Act.

DEBENTUHES ANI) SERIES A PHEFERRIED STOCK
Sc. 216. (a) G(rxNE .'-The Association is authorized, in accordi -liruls ad egulations
ance withI the l)provisions of this sect ion, and such rules and regulations as it may prescribe, to invest from time to time in the securities of the Corporation by purchasing (1) up) to $1,000.000.000 of debentures issued by the (Corporat ion, and (2) after t he acquisition of such debeniures, up to $2,30()0,000,000 of the Series A preferred stock of the (Corporat ion.
(b) PUioSES ANI) Po(En)UF r I'R In vRS PE .EN.-(1) The Association i s alitl orizl to purclhase (l)debentIIres anid, thereafter, series A preferred stock of the Corporation at such times and in such amounts as m1ay be re(lireIId and requested by t e Corporation in accordance






41

with the terms and conditions governing such purchases (which shall be prescribed by the Association), to provide(A) for the modernization, rehabilitation and maintenance
of rail properties of the Corporation;
(B) for the acquisition of equipment and other capital needs; (C) for the refinancing of indebtedness which was incurred
y the Corporation under section 211 of this title or which was
incurred under section 215 of this title and assumed by the Corporation; or
(D) working capital as contemplated by the final system plan.
(2) Purchases of up to $1,000,000,000 of debentures and, thereafter, of up to $2,300,000,000 of series A preferred stock shall be made by the Association as required and requested by the Corporation, unless the Finance Committee makes an affirmative finding that(A) the Corporation has failed in any material respect to
comply with any covenants or undertakings made to the Association and such failure remains uncorrected;
(B) the Corporation has failed substantially (as determined
by performance within the margins prescribed by the Board of Directors) to attain the overall operating (including rehabilitation) and financial results projected for the Corporation in the final system plan (including any modifications of such projected results and of the performance margins applicable to such projected results which are jointly approved by the Finance Committee and the Board of Directors and which would improve the possibility that the Corporation will attain such projected results
and perform within such margins, as modified) ; or
(C) it is not reasonably likely, taking into consideration all
relevant factors includin!rr the overall operating (including rehabilitation) and financial results achieved by the Corporation. that the Corporation will be able to become financially self-sustaining without requiring Federal financial assistance substantially in
excess of the amounts authorized in this section.
(C) FINDING, DIRECTION, AND REVIEW BY CONGRESS.-(1) If the Finance Committee makes an affirmative finding pursuant to subsection (b) (2) of this section, it may direct the Association(A) not to purchase any debentures or series A preferred stock
of the Corporation after the date of such affirmative finding; or
(B) to purchase debentures or series A preferred stock of the
Corporation, after the date of such affirmative finding, only in such amounts, at such times, and on such terms and conditions (n otwithStan ding subsection (e) (1) of this section) as the Finance Committee determines to be appropriate to the role of the Association as an investor in such debentures and series A preferred
stock.
(2) A copy of each affirmative finding, the reasons therefor, and each direction made by the Finance Committee under paragraph (1) of this subsection, together with the comments and recommendations thereon of the Board of Directors of the A.csociation, shall be transmitted to the Congress by the Association within 10 days after the date on which the Finance Committee makes such finding and direction, or if not so -transmitted, shall be transmitted by the Finance Committee. Each such direction so transmitted shall become finally effective and





42

is required to be implemented bv the Association, unless within the first Iperiod of 30 calendar days of continuous session of Congress after the date of its transmittal to Congre s either House of Congress disapI)roes such direction (except that sclh direction shall become finally effective ininiedlatelv 111)on approval of such direction by both Houses of Congress) in accordance with the procedures specified in section 1017 of the Congressional Budget and linpoundncint Control Act of 1974 (31 U.S.C. 1407). For purposes of this paragraph, continuity of session of Congress is broken only in the circumstances described in section 1011 (5) of that Act (31 I7.S.C. 1401 (5) ). During review by the Association and Congress, the Association shall take no action inconsistent with the direction of the Finance Committee pursuant to paragraph (c) (1) of this section, except to the extent the Association finds necessary, in its discretion, to assure continuous orderly operation of the Corporation.
(3) If the Congress, pursuant to paragraph (2) of this subsection, disapproves a direction submitted to the Association pursuant to paragraph (1) of this subsection, the Association shall continue to purchase tle debentures or series A preferred stock of the Corporation as otherwise provided in this title until such time as a direction is submitted under this section which is not so disapproved (or affirmatively approved). The powers of the Association and of the Board of Directors of the Association shall remain in effect except to the extent modified by any such direction. If any such direction is disapproved by either House of Congress. the Finance Committee may, not earlier than 30 days after the date of such disapproval, make (and the Board of Directors of the Association shall transmit) any additional affirmative finding and direction with respect to the same matter, which direction shall become effective in accordance with paragraph (2) of this subsection. An affirmative finding and direction under this subsection, or action by the Association during a review thereof by the Congress, may not be held unlawful or set aside by any reviewing court on the ground that such finding and direction or action were not adequate to meet the requirements of subparagraph
(A), (E), or (F) of section 706(2) of title 5, United States Code.
(4) Notwithstanding any other provision of this section, or any terms and conditions governing its purchase of securities of the Corporation, the Association shall, upon written application by the Corporation at least 30 (lays prior to such investment, make an initial investment in debentures of the Corporation within 60 days after the date of conveyance of rail properties pursuant to section 303 (b) (1) of this Act. Such initial investment shall be limited to such amounts as the Association and Finance Committee. acting jointly, determine are necessary for the continued and orderly operations of the Corporation prior to any additional investment.
(5) Not later than 60 days after the date of conveyance pursuant to section 303(b) (1) of this Act, the Associ1tion shall select 6 individuals to serve as members of the Board of Directors of the Corporation, subject to the provisions of section 301(d) of this Act.
(d) Tj.:RAs AN) CoNIrmONs.-Not withstanding any other provision of State law, the debentures and the series A preferred stock of the Corporation shall have such terms and conditions, not inconsistent






43

with the final system plan or this title, as may be prescribed by the Association, except as follows:
(1) The Corporation shall not be required to issue to the
Association additional shares of series A preferred stock of the
Corporation as a dividend on any such stock.
(2) The dividends payable on series A preferred stock of the
Corporation shall not be cumulative and shall be paid in cash when and to the extent that there is "cash available for restricted cash payments," as that term is defined in the final system plan.
(3) After the Association calls for redemption of the certificates of value, no shares of series A preferred stock of the Corporation shall be issued in lieu of interest on the debentures of the Corporation and. to the extent such interest is not payable in cash by reason of the absence of sufficient "cash available for restricted cash payment." the Corporation shall deliver to the holders of the debentures contingent interest notes in a face
amount equal to such unpaid interest.
(4) If the Board of Directors of the Association and the
Finance Committee. acting jointly, modify the terms or conditions governing the purchase of debentures or series A preferred stock of the Corporation pursuant to subsection (e) (1) of this section, or if the Finance Committee waives compliance with any term. condition, provision, or covenant of such securities pursuant to subsection (e) (2) of this section, the Finance Committee may require the Corporation to issue contingent interest notes in such amount as, in the determination of the Finance Committee. will provide protection for the United States, in the event of bankruptcy. reorganization. or receivership of the Corporation, equal to the protection the United States would have
had in the absence of such modification or waiver.
(5) The contingent interest notes issued pursuant to this section shall bear interest compounded annually at the rate of 8 percent per annum and such notes and the accumulated interest thereon shall be payable only in the event of bankruptcy, reorganization, or receivership of thie Corporation occurrin~r prior to the repayment and redemption of all outstanding debentures and accumulated series A preferred stock of the Corporation. The contingent interest notes and the accumulated interest thereon shall have the same priority in bankruptcy, reorganization,, or receivership as the debentures of the Corporation. The other terms and conditions of the contingent interest notes shall be as set forth in an agreement to be entered into bet-ween, the Association and the Corporation prior to issuance of any debentures.
(e) MNODIFICATIONS, WAIVE-RS. AND Co.NvFsoNs.-(1) The Board of Directors of the Association and the Finance Committee, acting jointly, may- agree with the Corporation to modify any of the terms and conditions governing the purchase by the Association of securities of the Corporation, upon a finding that such action is necessary or appropriate to achieve the purposes of this Act or the goals of the final system plan.
(2) The Finance Committee may, in its discretion and upon a finding that such action is necessary or appropriate to achieve the purposes of this Act or the goals of the final system plan, waive






44

compliance with any term, condition, provision, or covenant of the securities of the Corporation held by the Association, including any provision of such securities with respect to redemption of principal or issuance price, payment of interest or dividends, or any term or condit on governing the purchase of such securities.
(3) Notwithstanding any provision of State law, there shall be no conversion of the debentures of the Corporation into series A preferred stock of the Corporation, as provided in the terms and conditions of the debentures and pursuant to the final system plan, unless the Board of I)irectors of the Association and the Finance Committee jointly determine to effect such conversion.
(f) (1) IlThe Associtation shall not invest the final $345.00),000 of the additi onal investment in the Corporation authorized by the Regional Rail Reoriganization Act Amendments of 1978 unless and until (A) the Corporation has in effect an employee stock ownership plan which satisfies the requirements of paragraphs (2) and (3). aind (B) the requirements of the other paragraphs of this subsection have been sat isfied.
(2) The employee stock ownership plan shall:
(A) provide:
(i) for a transfer to the plan and allocation to the accounts
of plan participants in periodic installments of Series A preferred stock of the Corporation with a stated redemption value of at least $345,000,000 or any other securities in an amount determined by the Association, with the concurrence of the Finance Committee, as constituting a meaningful interest in the Corporation, or any combination thereof so determined by the Association, with the concurrence of the Finllance Conmmittee. The use of Series A preferred stock to fund the Employee Stock Ownership Plan shall not e inteir, preted to relieve ConRail of the responsibility for repl)avil in ftl l to thle United S states Railway Association its indebtedness s represened by all shares originalvly issued under Public La a
94-210 and this Act;
(ii) for immediate vesting of the rights of participants to
such securities upon allocation, subject to defeasan ce as a result of the plan's termination which terinaimtion slall occur in the event that, by the end of thle 120th month beginiine after thle month in which securities or intercs' s therein are first allocated to part icipants' accounts, tl he ('Corporation has not attainiied for two consecuti e quarters positive net income and ai freight labor cost to freight revenue ratio equal to the average 1 ratio for all Class I railroads in 1977 as determined pursuant to procedures adopted by the Corporation puuan,' t to regiilations proitlgated by the Association with the concliflrence of I e Fiance Co 0111111 ittee
(1) I) an em ployee benefit plan which is designed to invest
n-ilt l i I y i lln employer sell cities;
( ) meets Sic i other requirements (smililar to requirements
applicable to (employee slockl ownership) plans as defined in seet ion 49:175 (e ) 7) of tihe Internal Revenue (' de of 1954!) as the
MPci', Ha0v of tfle Treastry or hi de'letate ma describe






45

(D) have been approved by the Board of Directors of the
Corporation to the extent and in the manner which may be required by the Corporation's articles of incorporation and bylaws
then in effect; and
(E) have been prepared in consultation with, and been
approved by, the Association and the Finance Committee.
(3) Notwithstanding any other provision of law, if a plan does not meet the requirements of section 401 of the Internal Revenue Code of 1954
(A) stock transferred under paragraph (2) and allocated to
the account of any participant under paragraph (2) shall not be considered income of the participant or his beneficiary under the Internal Revenue Code of 1954 until such stock or dividends are actually distributed or made available to the participant or his beneficiary and, at such time., shall be taxable under section 72 of the Internal Revenue Code of 1954 (treating the participant or his
beneficiary as having a basis of 0 in the stock) ;
(B) no amount shall be allocated to any participant tinder the
plan in excess of the amount which might be allocated if the plan met the requirements of section 401 of the Internal Revenue
Code of 1954; and
(C) the plan must meet the requirements of sections 410 and
415 of the Internal Revenue Code of 1954.
(4) The Corporation shall adopt such terms and conditions governing the securities or interests therein to be transferred to the plan (including limitations on voting rights) as the Association, with the concurrence of the Finance Committee,, determines are, necessary to protect reasonably the interests of the United States in the litiPration pursuant to section 303 (c) of this Act and in the event of any action to further reorganize or restructure the Corporation's assets or capital structure.
(5) The Corporation, the Association, and a representative appointed by the Chairman of the Railway Labor Executives' Association as representative of all the classes or crafts of employees of the Corporation shall engage in negotiations to agree upon -a plan in accordance with the provisions of this subsection. The parties shall incorporate their agreement into a written plan instrument specifying the terms and conditions set forth in this subsection and such other terms and conditions as they may decide. iipon, with the. concurrence of the Finance Committee, unless the parties are unable to reach on an agreement on the plan following the exertion of every reasonable effort to do so, in accordance with the Railway Labor,.,kct, in whicli event, the Corporation and the Association, with the concurrence of the Finance Committee, shall establish a written plan with such terms and conditions as they may agree upon in accordance, with this subsection. Within one year after the effective date of this subsection, the Corporation shall transmit -a draft of such plan to the Congress and shall report on its progress in establishing and administering the, plan. The report shall include recommendations of contraettial and stattitory provisions necessary to reasonably (A) exeitipt any Trustee of the plan, the Corporation, the Association, a-nv member of the Finance Committee, and any other person from any fid-ti.clary diity, responsi36-573 0 79 4






46

bilitv or liability for tie acquisition of, investment in, or retention of
,/ thelil of inten in, orol
:mny vecuritv or interest therein of tie (orporation or for any other tralnsaltion colintemplated by this sibsect ion and (B) provide for the United States to indemnify, defend, and hold harmless such persons agailt any andl all liabilities, claims, actions, judgments, amounts )aid in set lenient. and costs and expenses actually incurred in conlieCtion with any matter so exempted in which it is determined that >ucli persons were acting in gool faith and in a manner they believed to lnot be opposed to the best interests of the plan.
(6) W iin fourteen months of the effective date of this subsection, the Association shall report to the (Congress on the draft plan aind )I any legal obstacle to the ability of the Corporation to effectuate and ilIplelient an employee stock ownership plan of the nature contemplated by this subl)section, including specific recoun imendations on amienidments to this subsection and other relevant laws which would harmonize the re(ireiients of this subsection with those other laws. The I )epartimient of Transportation and the department of the Treastiry, as each finds appropriate, shall provide separate coniients to the Association for inclusion with such report.
(7) For the purposes of this subsection, the officers of each duly authorized representative of the crafts or classes of the employees of the Corporation who have been given leaves of absence by the Corporation to serve as such officers, are to be eligible to participate in such plan on the same basis as are employees whose employment is governed by a collective bargaining agreement with the Corporation.
(g) AI "eoPRm .,ioN.--There is authorized to be appropriated to the Association $3,300,000,000 to be used for the purchase of securities of the Corporation in accordance with this section. All sums received by the Association on account of the holding or disposition of any such securities shall be deposited in the general fund of the Treasury.

TITLE III-CONSOLIDATED RAIL CORPORATION

FORMATION AND STRUCTURE
Se;. 301. (a) ESTABLISHMlNT.-There shall be established within 300 days after the date of enactment of this Act, in accordance with tlie provisions of this section, a corporation to be known as the Consolidated Rail Corporation or such other corporate name as may be duly adopted by the Corporation.
(b) SiATts.-The Corporation shall be a for-profit corporation establishment under the laws of a State and shall not be an agency or instrumentality of the Federal (Governmient. The Corporation shall be deemed a common carrier by railroad under section 1(3) of the Interstate Conmmerce Act (49 U.S.C. 1(3)), shall be subject to the provisions of this Act and, to the extent not inconsistent with such Acts, shall be sul)ject to applicable State law. The principal office of the (Corporat ion or of its principal railroad operating subsidiary shall be located in Philadelphia in the Commonwealth of Pennsylvania.
(c) INcOurnRATORS.-(1) The members of the executive committee of the Association shall be the incorporators of the Corporation and shall take whatever steps are necessary to establish the Corporation, including the filing of articles of incorporation.






47

(2) Notwithstanding any provision of State law, after the date of enactment of this paragraph, the members of the executive committee of the Association (including duly authorized representatives of members who are authorized by this Act to be represented) and the chief executive officer and chief operating officer of the Corporation shall adopt the bylaws of the Corporation and serve as the Board of Directors of the Corporation until all members of the Board of Directors of the Corporation have been selected in accordance with subsection (d) of this section. The chief executive officer shall serve as chairman of such Board until a chairman thereof is selected pursuant to subsection (d) of this section, after which time such chairman shall serve at the pleasure of such Board.
(d) BOARD or DTRECTORS.-(1) Notwithstan ding any provision of State law, the articles of incorporation and bylaws of the Corporation shall provide that the Board of Directors of the Corporation shall consist of 13 members selected in accordance with the articles and bylaws of the Corporation, as follows:
(A) six individuals selected by the holders of the Corporation's
debentures and series A preferred stock voting as one class, with every $100 principal amount of debentures, and every $100 liquidation amount of series A preferred stock each receiving one vote for
directors;
(B) three individuals selected by the holders of the Corporationis series B preferred stock; and
(C) two individuals selected by the holders of the Corporationis common stock.
(2) The chief executive officerand the chief operating officer of the Corporation shall also serve on the Board, but the chief executive officer and chief operating officer of the Corporation shall not be entitled to vote on the election or removal of either. Tn the event a vacancy occurs on the Board of Directors due to death, disability, or resignation of a director (other than resignations pursuant to this subsection), such vacancy shall be filled only by a vote of the holders of the class of securities that initially elected such director. Two members of the Board selected by the holders of the Corporation's debentures and series A preferred stock shall resign when the total of the principal amount of the outstanding debentures and the amount of the liquidation amount of the outstanding series A preferred stock, once having exceeded $1,500,000,000, has been reduced below that amount; two additional members of the Board selected by the holders of the Corporation's debentures and series A p referred stock of the Corporation shall resign when the total of the principal amount of the outstanding debentures and the amount of the liquidation amount of the outstanding series A preferred stock, once having exceeded $1,500,000,000, has been reduced below $750,000,000. The two remaining members of the Board selected by the holders of the Corporation's debentures and series A preferred stock shall resign when all the debentures and series A preferred stock have been redeemed by the Corporation. As directors resign in accordance with the foregoing provisions, the election of corporate directors to fill the vacancies created by their resignations shall be governed by applicable State law and the articles and bylaws of the Corporation.






48

(e) INITIAL CAPITALIZATION.-(1) In order to carry out the final system plan, the Corporation is authorized to issue debentures, series A preferred stock, series B preferred stock. common stock, contingent interest notes, and other securities.
(2) Debentures and series A preferred stock shall be issued initially to the Association. Series B preferred stock and common stock shall be issued initially to the estates of railroads in reorganization in the region, to railroads leased, operated, and controlled by railroads in reorganization in the region, and to other persons leased, operated or controlled by a railroad in reorganization who are transferors of rail properties in exchange for rail properties transferred to the Corporation pursuant to the final system plan. Notwithstanding any other provisions of State or Federal law, the series B preferred stock and common stock shall have terms and conditions not inconsistent with tlhe final system plan. As a condition of its investment in the Corporation, the Association may require tlat the Corporation adopt limitations consistent with the final system plan on the circumstances under which dividends on thile series B preferred stock and common stock are payable so long as any of the debentures or series A preferred stock are outstanding. Notwithstanding anything to the contrary in the final system plan, the initial authorized number of shares of series B preferred stock may be 35,000,000, and the Corporation may issue initially for the purpose of the deposit required under section 303
(a) (1) of this Act such numbers of shares of series B preferred and common stock as the Association shall certify to the Special Court pursuant to section 209(c) (1) (3) of this Act, including any modifications in such numbers of shares as may be ordered by the Special Court for the purpose of, and in connection with, such deposit and certification.
(f) OFFICERS.-The officers of the Corporation shall include a chief executive officer and a chief operating officer, who shall be appointed by the Board of I)irectors and who shall serve as the pleasure of the Board: and such other officers as shall be provided for in the bylaws of thle Corporation.
(g) V'OrING TIR1USTEES.-For and during the period between the deposit of securities of the Corporation with the special court, in accord(lance with section 303(a) of this title, and the distribution of sulh securities in accordance with section 303(c) of this title, the special court shall. within 30 days after the date of conveyance purslant to section 303(b) (1) of this Act, appoint one or more voting triistees for each class of securities wAlichl is so deposited. Such voting trustees shall, on behalf of thile d(listributees, exercise the rights of the holders of suc] securities as their interests may appear. Within 30 dvs after sc(hi al)pointmnent. such voting trustees shall select memhers of the Boar d of )irectors of thle Corporation on behalf of the holder s of the ass of securities whose rights they exercise pursuant to this subsection.
(1) A NNTr.ir. TioT:vr.- -The Corl)p~ration shall transmit to the Conrr(ess and the Pre ident. not biter than 90 days after the end( of each ieal or. a, C)( lprelhelnsive and mle ailed re)or on all activities and cenafl)1 lisb lw ( f file Corp)oration (lurin t pre ) ce(lill fiscal year.
(I) 1.1PAIULITV OF1 BI R(Tms.--No directorr of Ithe Corioration shall 1w lille. for mo10ey (dllal~es or oot ierwise. to any party )by reason of






49

the fact that such person is or was a director, if, with respect to the subject matter of the action, suit, or proceeding, such person was fulfilling a duty which he in good f aith reasonably believed to be required by law or vested in him in his capacity as a director of the Association or as an officer of the United States. The United States shall indemnify such person against all judgments, amounts paid in settlement, and costs and expenses (including fees of accountants, experts, and attorneys), actually and reasonably incurred in connection with any such action, suit, or proceeding in which such person is determined to have met such standard of conduct. This subsection shall not be construed to grant any immunity from any criminal law of the United States.
(j) CORPORATE S131PLIFICATION.-In the interest of corporate. simplification, the Corporation, in implementing the final system plan, shall undertake, as soon as possible and pursuant to financial assistance provided by the Railroad Revitalization and Regulatory Reforni Act of 1976, to acquire all interests in rail lines and related rail properties otherwise conveyed to the Corporation, upon the tender otsueb interests to it, so as to eliminate any remaining intermediate layers of ownership or interest, such as leaseholds, owned or held by persons who are neither a railroad, a railroad in reorganization, nor controlled by a railroad in reorganization. Any option conditions regarding the purchase price for such interests, in existence since prior to January 2, 1974, shall be deemed to be conclusive of fair and equitable value.
POWERS AND DUTIES OF THE CORPORATION
SEC. 302. The Corporation shall have all of the powers and is subject to all of the duties vested in it under this Act. in addition to the powers conferred upon it under the laws of the State or States in which it is incorporated and the powers of a railroad in any State in which it operate's. The Corporation is authorized and directed to(a) acquire rail properties designated in the final system plan
to be transferred or conveyed to it;
(b) operate rail service over such rail properties except as provided under sections 304 (e) and 601 (d) (3) of this Act;
(c) rehabilitate, improve, and modernize such rail properties;
and
(d) maintain adequate and efficient rail services.
So long as 50 per centum or more, as determined by the Secretary of the Treasury, of the outstanding indebtedness of the Corporation consists of obligations of the Association or other debts owing to or guaranteed by the United States, the Corporation shall not engage in activities which are not related to transportation.
VALUATION AND CONVEYANCE OF RAIL PROPERTIES
SEC. 303. (a) DEPOSIT WITH COURT.-Within 10 days after delivery of a certified copy of a final system plan pursuant to section 209(c) of this Act(1) the Corporation, in exchange for the rail properties of the
railroads in reorganization in the region and of railroads leased, operated, or controlled by railroads in reorganization in the region to be transferred to the Corporation, shall deposit with the special






50

court all of the stock and other securities of the Corporation or any subsidiary thereof and certificates of value issued by the
Association designated in the final system plan to be exchanged
for such rail properties;
(2) each profitable railroad operating in the region and each
State or responsible person (including a government entity) purchasing rail properties from a railroad in reorganization in the region, or from a railroad leased, operated, or controlled by a railroad in reorganization in the region, as provided in the final system plan shall deposit with the special court the compensation
to be paid for such rail properties.
(b) CONVEYANCE OF RAIL PROPiERIIES.-(1) The special court shall, within 10 days after deposit under subsection (a) of this section of the securities of the Corporation, certificates of value issued by the Association, and compensation from the profitable railroads opearting in the region, States, and responsible persons order the trustee or trustees of each railroad in reorganization in the region to convey forthwith to the Corporation or any subsidiary thereof, the respective profitable railroads operating in the region, States, and responsible persons, all right, title, and interest in the rail properties of such railroad in reorganization and shall itself order the conveyance of all right, title, and interest in the rail properties of any person leased, operated, or controlled by such railroad in reorganization that are to be conveyed to then under the final system plan as certified to such court under section 209(d) of this Act. In any case where the special court orders the trustee or trustees of a railroad in reorganization in the region to execute and deliver deeds or other instruments conveying rail properties to the Corporation or a subsidiary thereof or to a profitable railroad operating in the region or a State or responsible person, those deeds or other instruments may be executed, acknowledged, and delivered on behalf of the trustee or trustees by any person or persons who have been duly authorized to perform such acts on behalf of the trustee or trustees by the district court of the United States or any other court having jurisdiction over the respective railroad in reoriaIization in the region. Notwithstanding any provision of State or loral law, in any case where deeds or other instruments have been executed(, acknowledged, or delivered by a representative of the trustee or trustees of a railroad in reorganization in the region in accordance with the previous sentence, such execution, acknowledgment, and dlivery. and the deeds or other instruments to which they pertain, .shall have the same legal effect as they would have had if the trustee or tr (2) All rail properties conveyed to the Corporation or any subidiarv thereof, the respective profitable railroads operating in the Vegion. States. and responsible persons under this section shall be conveyed free and clear of any lieis or encumbrances, but subject to .< 1 leases ai1d( ag1reements as shall hrave previmsly burdened such properties or )~oind t he owner or operator the reof in pursuance of an arraiigemetnt with any State, or local or regional transportation authority under which financial support from such State, or local or regional transportation authority was bein g provided at the time of ennIctment of this Act for the count inuan(ce of rail passenger service






51

or any lien or encumbrance of no greater than 5 years' duration which is necessary for the contractual performance by any person of duties related to public health or sanitation. Such conveyances shall not be restrained or enjoined by any court.
(3) (A) (i) Notwithstanaing any other provision of this Act. if an interest in railroad rolling stock is included in the rail properties conveyed pursuant to subsection (b) (1) of this section, and if such conveyance is in accordance with the requirements of clause (ii) of this subparagraph, the conveyance of such properties shall be deemed an assignment. Any such assignment shall relieve the assignor of liability for any breach which occurs after the date of such conveyance, except that such assignor shall remain liable for any breach, event of default, or violation of covenant which occurred (and any charges or obligations which accrued) prior to the date of such conveyance, regardless of whether the assignee thereof assumes such liabilities, charges or obligations. If any such liabilities, charges, or obligations (accrued prior to the date of such conveyance) are paid by or on behalf of any person or entity other than such assignor, such person or entity shall have a claim to direct reimbursement, as a current expense of administration, from such assignor, together with interest on the amount so paid.
(ii) A conveyance referred to in clause (i) of this subparagraph may be effected only if(1) the Corporation or a subsidiary thereof, the profitable railroad operating in the region, or the State or responsible person to whom such conveyance is made assumes all of the oblicrations under any applicable conditional sale agreement, equipment trust agreement, or lease with respect to such rolling stock (including any obligations which accrued prior to the date on which such
properties are conveyed), and
(II) such conveyance is made subject to such obligations. As used in this subparagraph, the term railroad rolling stock means assets which could be carried in Interstate Commerce Commission account numbers 52,53, 54, and 57.
(B) Subject to the provisions of this paragraph, the provisions of this Act shall not affect the title and interests of any lessor, equipment trust trustee, or conditional sale vendor under any conditional sale agreement, equipment trust agreement, or lease under section 77(j) of the Bankruptcy Act (11 U.S.C. 205(j)). A profitable railroad operating in the re ion, the Corporation or a subsidiary thereof, or a S.tate or responsible person, to whom such a conveyance is made as assignee or as lessee, shall assume all liability under such conditional sale agreement, equipment trust agreement, or lease. Siieh an assignment or conveyance to. and such an assiimption of liability by, sucl a profitable railroad, Corporation, subsidiary, State, or responsible person shall not be deemed a breach, an event of default, or a violation of any covenant of any such conditional sale agreement, equipment trust agreement, or lease so assigned or conveyed, notwithstanding any provisions of any such agreement or lease.
(4) Notwithstanding anytfiing to the contrary contained in this Act if a railroad in reorganization has ]eased rail properties from a lessor that is neither a railroad nor controlled by or affiliated with a railroad, and such lease has been approved by the lessee railroad's reorganization court prior to the date of enactment of this Act, con-






52

vevance of such lease may only be effected if the Corporation, profitable railroad. State. or responsible person to whom the conveyance is made assumes all future liability under such lease and all of the terms and conditions specified in the lease, including the obligation to pay the specified rent to the non-railroad lessor.
(5) Notwithstanding any covenant. und(lertaking. cond(lition, or provision of any sort in any lease. agreement, or contract, the conveyance. transfer, assignment. or other disposition of such lease, agreement. or contract or of any interest therein to. or the assumption by, the Corporation or any subsidiary thereof, or a profitable railroad of obligations thereunder. shall not be deemed a breach, an event of default, or a violation of any covenant of such lease, agreement, or contract.
( ( A) Notwith-standin anything to the contrary contained in this Act or any other provision of law, the special court shall include in its order Suc fllurther directions as may be neces-ary to assure (i) that the operation and administration of the employee pension benefit plans described in section 505(a) of this Act shall be continued, without termination or interruption, by the Corporation until such time as the Corporation elects to amend or terminate any such plan, in whole or in )part: and ( ii) that appropriate transfers and assignments with respect to all rights and obligations relating to such plans shall be made to the Corporation for such purposes, without prejudice to payment of consideration for whatever rights any railroad in reorganization may have inll any residual assets under any such employee pension benefit plan. No court shall enter any judgment against the Corporation with respect to any such rights, except that the special court may enter such a judgment in an order issued by it pursuant to subsection (c) of this section. after taking into consideration the rights and obligations transferred pursuant to this paragraph. All liabilities as an employer shall be imposed solely upon the railroad in reorganization in the event such plan is terminated, in whole or in part, by the Corporation within 1 year after the date of such transfer or assignment (except liabilities as an employer under the Employee Retirement Income Security Act of 1974 for benefits accruing during such period)., except that in any case in whichll the Corporation. on or after the date of transfer or assignment as provided by this paragraph, terminates in whole or in part any such plan. thile benefits under which are not guaranlteed under title IV of the Eminployee Retirement Income Security Act of 1974. the Corporation shall guarantee the payment when due of the aC(crued pension benefits provided for thereunder at the time of termination. The corporation n shall be entitled to a loan pursuant to
-ection 211hI of th'is Act in an amount required for the adequate funding of accrued pension benefits under all plans transferred or asiElled to t lie Corporation in accordance with this paI'aragraph I Wilet 1er(1O' 1ot Teillillat ed lv the Corporat ion ). For purposes of such1 section 2111h) and notwithstanding any other provision of Federal or Sta-te law. lail llts rellire1 fo r slh 1tde( uate fundinIg shall be dceI (Id to I e e tehies f admin istrat ion of ll ce resoe ct ive estates of the railr ads in reorLmization. dute and paalle as of tlhe date of transfer
: ssi ~n11IIt of t1e plan111> to the CorporatlioLn.






53

(B) The Corporation shall make such premium payments as may be necessary to maintain in effect any medical or life insurance policy which was maintained by a railroad in reorganizaton immediately prior to April 1. 1976. and which provides insurance benefits to individuals who retired. prior to April 1.1976. from service with such a railroad. With respect to any such individual whose medical or life insurance coverage lapsed after April 1. 1976. due to nonpayment of premiums, the Corporation shall(i) through the purchase of insurance or otherwise, provide
medical or life insurance benefits of the same type and at the same or approximately the same level as were provided by the employer railroad in reorganization and in effect with respect to such individual immediately prior to April 1. 1976: and
(ii) assume and pay any claim for such individual (or his
personal representative) for any such insurance benefits. if(I) such claim arose during the period beginning April 1.
1976. and ending on the date insurance coverage is provided
pursuant to clause (i) of this subparagraph: and
(II) such benefits were not paid by an insurer solely
because of the lapse of the insurance coverage during such
period.
The Corporation shall be entitled to a loan pursuant to section 211 (h) of this Act in an amount required for the payment of insurance premiums and benefits described in this subparagraph. For purposes of section 211(h) (4) (A) (iii). amounts required for the payment of such premiums and benefits shall be deemed to be valid administrative claims against the respective estates of the railroads in reorganization. due and payable as of April 1. 1976. or. in the case of a railroad in reorganization which is not subject to a bankruptcy proceeding. such amounts shall be deemed to be obligations of such railroad, due and payable as of such date. and shall be reimburs;able in accordance with the procedures set forth in paragraphs (4) and (5) of such section 211(h). As used in this subparangraph. the term railroadd in reorganization" includes any railroad which is controlled by a railroad in reorganization but is not itself subject to a bankruptcy proceeding, if such railroad conveyed substantially all of its rail properties to the Corporation pursuant to paragraph (1) of this subsection and conducted operations over such rail properties prior to the date of such conveyance.
(c) FINDINGS AND DISTRIBUTIoxN.-(1) After the rail pronerties have been conveyed to the Corporation or any subsidiary thereof. profitable railroads operating in the region. States. and responsible persons under subsection (b) of this section, the special court. giving due consideration to the findings contained in the final system plan. shall decide(A) whether the transfers or conveyances(i) of rail properties of each railroad in reorganization.
or of each railroad leased. operated, or controlled by a railroad in reorganization, to the Corporation or any subsidiary thereof in exchange for the securities, certificates of value and the other benefits accruing to such railroad as a result of such exchange (taking into consideration compensable unconstitutional erosion. if any. which the special court finds






54

to have occurred in the estate of each such railroad, during the bankruptcy proceeding with respect to such railroad),
as provided in the final systen plan and this Act. and
(ii) of rail properties of each railroad in reorganization,
or of eachli railroad(l leased, operated. or controlled by a railroad in reorganization, to a profitable railroad operating in the region. State. or responsible person in exchange for coml)en nation and other benefits accruing to such transferor as a result of such exchange takingr into consideration compensable unconstitutional erosion, if any, which the spl)ecial court finds to have occurred in the estate of each such railroad. (durinlr the bankruptcy proceeding with respect to
such railroad) in accordance with the final system plan.
are in the publ c interest and are fair and equitable to the estate of each railroad in reorganization in accordance with the standard of fairness and equity applicable to the approval of a plan of reorganization or a step in such a plan under section 77 of the Bankruptcy Act (11 I.S.('. 205), or fair and equitable to a railroad that is not itself in reorganization but which is leased, operated. or controlled by a railroad in reorganization:
(B) whether the transfers or conveyances are more fair and
equitable than is required as a constitutional minimum;: and
(C) what portion of the proceeds received by a railroad in
reorganization from an entity other than the Corporation or any subsidiary thereof for the sale. lease, or transfer of property subject to an agreement under section 213 or section 215 (a) (1) or (2) of this Act reflects value attributable to the maintenance
or improvement provided pursuant to the agreement.
(2) If the special (court finds that the terms of one or more exchanges for securities. certificates of value and other benefits are not fair and equital)le to an estate of a railroad in reorganization, or to a railroad leased, operated, or controlled by a railroad in reorganization (taking into consideration com pensable unconstitutional erosion, if any, which the special court finds to have occurred in the estate of each such railroad, during the bankruptcy proceeding with respect to such railroad), which has trlnsferredl rail I)roperties pursuanlt to the final system plan, it may(A) enter a judgment reallocating the securities and certificates
of value in a fair and equitable manner if they have not been fairly allocated amonc the railroads transferring rail properties to the (Corporation or any subsidiary thereof, ex(cep)t that at least one share of series lI preferred stock and one certilhcate of value
shall ie allocate(1 to eac such railroad: and
(B13) if the lack of fairness and equity cannot be completely
( ,1red )v a reallocal ion of the secu n1 cities ad cert it icates of value, order the ( or)orationl to provide for the transfer to the railroad of other secn ities of t le Corporation or cert ificates of value issuend hv the Association as designated in the final system plan in su11 iatlln a1(d am111ounts as would lake the .exchanges fair and
("(liitable : and
(C() ent,er a judgment against the Corporation if the judgment
woul not e 11 *Ier the vi l ii t v or solvelncy of to e Corporation.
(3) If the special court finds tlat thile terms of one or more con-






55

veyances of rail properties to a profitable railroad operating in the region, State, or responsible person in accordance with the final system plan are not fair and equitable, it shall enter a judgment against such profitable railroad, State, or responsible person. If the special court finds that the terms of one or more conveyances or exchanges for securities or other benefits are fairer and more equitable than is required as a constitutional minimum, then it shall order the return of any excess securities, certificates of value, or compensation to the Corporation or a profitable railroad. State. or responsible person so as not to exceed the constitutional minimum standard of fairness and equity. The special court shall also find the amount of the payments. if any. which each profitable railroad has made on behalf of a transferor railroad in reorganization in accordance with section 211(h) of this Act, for which payment the profitable railroad has not been reimbursed, as provided in section 211 (h). Notwithstanding any other provision of this paragraph or of paragraph (4). the special court shall order the return to any such profitable railroad from compensation deposited by such profitable railroad pursuant to subsection (a) (2) of this section. of any such amount so found together with interest at the rate provided in section 211 (h). In making any finding under this paragraph. the special court shall take into-consideration compensable unconstitutional erosion, if any, which it finds to have occurred in the estate of a railroad in reorganization in the region. or of a railroad ]eased. operated, or controlled by such a railroad, during the bankruptcy proceeding with respect to such railroad.
(4) Upon making the findings referred to in this subsection. the special court shall order distribution of the securities, certificates of value, and compensation deposited with it under subsection (a) of this section to the trustee or trustees of each railroad in reorganization in the region and to persons leased, operated. or controlled by such railroads who so transferred or conveyed rail properties, who conveyed right, title, and interest in rail properties to the Corporation and the respective profitable railroads, States, and responsible persons under such subsection.
(5) Whenever the special court, pursuant to section 303(b) (1) of this title, orders the transfer or conveyance of rail ,roperties(A) designated under section"206(c) (1) (C) or (D) of this
Act, to the Corporation or any subsidiary thereof, the United States shall indemnify the Corporation against any costs or liabilities imposed on the Corporation as the result of any judgment entered against the Corporation. with respect to such properties.
under paragraph (2) of this subsection; and
(B) to the National Railroad Passenger Corporation a profitable railroad operating in the region, a State. or any other resronsible person (including a governmental entity), the Tnited States shall indemnify such Corporation. railroad. State. or nerson against any costs or liabilities imposed thereon as the result of any judgment entered against such Corporation. railroad. State.
or person under paragraph (3) of this subsection:
plus interest on the amount of such judgment at sulch rate as is constitutionally required. The United States may. in its disc-etion. represent the Corporation or the National Railroad Passenger Corporation. such profitable railroad. State or responsible person, in any proceedings be-






56

fore the -;pecial com-t, tivit emild result in siicli a judgment acrainst the
oi-poration mider paracrr:iph (2) of this siibsectioii oi- against the NAlom-il M.Allrofid Pas -viigei ("orporatliOll, -IlCli pt-ofital)le raili oa(l, Stak, ()I- respoiisll,& person, undet- pai-agi-apll (3) of this slibsert 1011. 'flie Corpoi-atimi. the '.Vatioiml Raili-wid 1 ):t- sencrer Corporat,1011. 1,111N, profihlbh, raill'o-ad. Shtte 01. respollsilfl(,- pel.- (M, NvIlich is rep re e lite d I)v the United States of America sliall cooPerate dill(viitlv in NvliatOver inamier the T-nited States sliall, retisonablv re(mest, of it in conilection with sitch proceedings. Neither flie Corporation or its subsidial-ies, iior the National Railroad Pa,: (6) Whenever the Corporation exercises ,in option to acquire, or .IC(Itures. intei-ests in rall. marine freight, floatill(r ( qjliptnent pursuant to the recomi iiendations of the final system plan. and the Corporation thereafter makes such floating equipment available to a profitable railroad operatilly ill t-he regloll, a State. or -,I responsible pei son im.-bidin(r a crovermlient entity), the United States shall indemnify
(A-) flie Corporation against any costs or liabilities inlp sed
oil the Corporation as the result, of anv jud(rinent entered a(rainst it. with respect, to such equipment, under paragraph (2) of this
subsectimi ; and
(13) stich profitable railroad, State, or responsible person
ag, inst any costs or liabilities imposed fliereon as the resist of ,mv judgment, entei-ed against, such profitable railroads, State, or
responsiNe person under paragraph (3) of this subsection,
plus interest, on the ailiount, of such judgment at such I-ate as is constittitionally required.
(d) A-iP_ki-,.-_.X finding or deterininatioii eiitered I)v the s1l"Cial court pill-silant, to slibsection (C) of this section or section 306 Of this title may be appealed directly to the Supreme Court of the United States in the s(1111v 111almer that an injimchoii order m.-ii- be appeale(l. under section 12.5i)) of title 28. United States Co(le: Prm.,iVed, That, sticIll, appeal, is exchisive and -.,litlll be filed ill the Supreme Court- not moro tli(an 20 days after such fin(ling or (leterillillation is entered by t1le special court. 'I'lle SlIprelile Cmirt sh'all t11111 Such appeal NvIthin 7 (lays tifter the entry of such -(in appeal if it determines that 1-."ItCh an appeal Avoilld not be in the iliterest, of all expeditious coilof tll(- pl-ocee(I'll(rs Sll,,,Ill L,rallt, t1le Jjl(rlj(,.,t 1)1-i()I-ItV to the (let t'l-1111111.1tioll of 1111Y sliCh appeal' AvIlicli it deterlillnes ]lot to
(e) xNm) OTHERTkXESAND RFCORDI.GFf.Fs.-All transfen-, (.)I. coll vey all ces of I-Ilil properties wlietlier re(al, personal, or Illixed) AN-11P.11 a1v Illade lender t1lis Act (111(.111(fincr trzill'-"fers and coilvevances which are made in .1ccordance with a uppleiilelital trans'Iction pinsimia, to the section 3().) of this tifle oi- NvIiich r ao. at '111v time to carlv mit the pill-tw<('s of title. 1-11 of tlie Railroad I'veVitalizatioll alld Ik)v(r1tlatorN- Reform Act of lf )710 or of -ection 601(d) of t Act ) llall I)e exellipt fl-oill aliv taxes, imposts, ol. 1(wies ilow or liciva 1*tvl im pose(l. 1) v t Ile I'll It v(I States oI- by a Ily t :Itc 01.,l ]I\- polit Ic"ll sill)(11visloll of (a State. (m or M (1011110choll witli sll(.Il t or (.oilVOVIIHICOS m. mt Ole ncordill(r of (leeds, bills of Sale, 11011: (111CUllibi-allces






57

or other instruments evidencing, effectuating, or incident to any such transfers or conveyances, whether imposed on the transferor or on the transferee. Such transferors and transferees shall be entitled to record any such deeds, bills of sale, liens, encumbrances, or other instruments and, consistent with the. designations and applicable principles in the final system plan, to record the release or removal of any pre-existing liens or encumbrances of record with respect to properties so transferred or conveyed, upon payment of any appropriate and generally applicable charges to compensate for the cost of the service perf ormed.
TERMINATION AND CONTINUATION OF RAIL SERVICES
SEC. 304. (a) DiscoNTLNUANCE.-(1) Except -as provided in subsections (c) and (f) of this section, rail service on rail properties of a railroad in reorganization in the region, or of a person leased, operated, or controlled by such a railroad, which transfers to the Corporation or to profitable railroads operating in the region all or substantially all of its rail properties designated for such conveyance in the final system plan, and rail service on rail properties of a profitable railroad operating in the region which transfers substantially all of its rail properties to the Corporation or to other railroads pursuant to the final system plan, may be discontinued, to the extent such discontinuance is not precluded by the terms of the leases and agreements referred to in section 303 (b) (2) of this title, if(A) the final system plan does not designate rail service to be
operated over such rail properties;
(B) not sooner than 30 days following the effective date of the
final system plan, the trustee or trustees of the applicable railroad in reorganization or a profitable railroad give notice in writing of intent to discontinue such service on a date certain wliieli is not less than 60 days after the date of such notice or on the date of any conveyance ordered by the special court pursuant to section 303(b) (1) of this title, whichever is later; and
(C) the notice required by subparagraph (B) of this paragraph is sent by certified mail to the Commission; to the chief executive officer, the transportation agencies, and the government of each political subdivision of each State in which such rail properties are located; and to each shipper who has used such rail
service during the previous 12 months.
(2) (A) If rail properties are not,. in accordance with the designations in the finaf system plan, required to be operated, as a consequence of a recommended arrangement for joint use or operation of rail properties (under section 206(g) of this Act) or as part of a coordination project (under sections 206 (c) and (g) of this Act), rail service on such properties may be discontinued, subsequent to the date of conveyance of rail properties pursuant to such section 303 (b) (1), if the Commission determines that such rail service on such rail properties is not compensatory and if(i) the petitioner and any other railroad involved in such
arrangement or coordination project have, prior to filing an application for such discontinuance, entered into a binding agreement (effective on or before the effective date of such discontinuance)
to carry out such arrangement or project;






58

(ii) such application is filed with the Commission not later
than 1 year after the effective d(late of the final system plan; and
(iii) such discontinuance is not precluded by the terms of the
leases and agreements referred to in such section 303(b) (2).
(B) For purposes of this paragraph, rail service on rail properties is compensatory if the revenue attributable to such properties from such service equals or exceeds the sum of the avoidable costs of providing such service on such properties plus a reasonable return on the value of such rail properties, as determined in accordance with the standards developed pursuant to section 205(d) (6) of this Act.
(C) The Commission shall make its final determination, with respect to any discontinuance re(Iuested under this paragraph, not later than 120 days after the date of filing of an application therefor. The applicant shall have the burden of proving that the service involved is not compensatory. If the Commission fails to make a final determination within such time, the application shall be deemed to be granted.
(D) The Conmmission may issue such rules, regulations, and procedures as it deems necessary for the conduct of its functions under this paragraph.
(b) ABANDOx NENT.- (1) Except as provided in subsections (c) and
(f) of this section, rail properties over which rail service has been discontinued under subsection (a) of this section may not be abandloned sooner than 120 days after the effective date of the discontinuance. Thereafter. except as provided in subsection (c) of this section, such rail properties may be abandoned upon 30 days' notice in writing to any person (including a government entity) required to receive notice under subsection (a) (1) (C) of this section.
(2) In any case in which rail properties proposed to be abandoned under this section are designated by the final system plan as rail properties which are suitable for use for other public purposes (including roads or highways, other forms of mass transportation. conservation, and recreation). such rail properties shall not be sold, leased, exchanged, or otherwise disposed of during the 240-day period beginning on the d(late of notice of proposed abandonment under this section unless such rail properties have first been offered, upon reasonable ferms. for acquisition for public purposes.
(3) Rail service may be discontinued, under subsection (a) of this section, and rail properties may be abandoned. under this section, notvithtandinp any provision of the Interstate Conunerce Act, thie constit iuion or law of any State. or the decision of any court of administrativ e agency of the IUnited States or of any State.
(c) CoTIxnUaTIOxN oF oRATL SEnRVICES.-No 'ail service may be disontit 1nued and nio rail properties may he abandoned. pursuant to this Sect ion-(1) in the case of service and properties referred to in subsections (a) (1) and (b) (1) of this section, after 2 years from the effective date of the final system plan or more than 2 years after the date on whlichl the final rail service continuation payment is
received. whichever is later: or
(2) if a financially responsible person (including a government ent ity offers
(A) to provide a rail service continuation payment which
is designed to cover the difference between the revenue attrib-






59

utable to such rail properties and the avoidable costs of providing rail service on such properties, together with a reasonable return on the value of such properties;
(B) to provide a rail service continuation payment which
is payable pursuant to a lease or agreement with a State or with a local or regional transportation authority under which financial support was being provided on January 2, 1974 for
the continuation of rail passenger service; or
(C) to purchase, pursuant to subsection (f) of this section, such rail properties in order to operate rail services
thereon.
If a rail service continuation payment is offered, pursuant to paragraph (2) (A) of this subsection, for both freight and passenger service on the same rail properties, the owner of such properties may not be entitled to more than one payment of a reasonable return on the value of such properties.
(d) RAIL FREIGHT SERICE.- (1) If a rail service continuation payment is offered, pursuant to subsection (c) (2) (A) of this section, for rail freight service, the person offering such payment shall designate the operator of such service and enter into an operating agreement with such operator. The person offering such payment shall designate as the operator of such service(A) the Corporation, if rail properties of the Corporation connect with the line of railroad involved, unless the Commission determines that such rail service continuation could be performed
more efficiently and economically by another railroad;
(B) any other railroad whose rail properties connect with such
line, if the Corporation's rail properties do not so connect or if the Commission makes a determination in accordance with subparagraph (A) of this paragraph; or
(C) any responsible person (including a government entity)
which is willing to operate rail service over such rail properties. A designated railroad may refuse to enter into such an operating agreement only if the Commission determines, on petition by any affected party that the agreement would substantially impair such railroad's ability to serve adequately its own patrons or to meet its outstanding common carrier obligations. The designated operator shall, pursuant to each such operating" agreement (i) be obligated to operate rail freight service on such rail properties, and (ii) be entitled to receive, from the person offering such payment, the difference between the revenue attributable to such properties and the avoidable costs of providing service on such rail properties. together with a reasonable management fee. as determined by the Office.
(2) The trustees of a railroad in reorganization shall permit rail service to be continued on any rail properties with respect to which a rail service continuation payment operating agreement has been entered into under this subsection. Such trustees shall receive a reasonable return on the values of such properties, as determined in accordance with the standards developed pursuant to section 205(d) (6) of this Act.
(3) If necessary to prevent any disruption or loss of rail service, at any time after'the date of conveyance, pursuant to section 303(b)
(1) of this title, the Commission-






60

(A) shall take such action as may be appropriate under its
existing authority (including the enforcement of common carrier requirements applicable to railroads in reorganization in the region) to ensure compliance with obligations imposed under this
subsection: and
(B) shall have authority, in accordance with the provisions of
section 1 (16) (b) of the Interstate Commerce Act (49 U.S.C.
1 (16) (b)), to direct rail service to be provided by any designated railroad or by the trustees of a railroad in reorganization in the region, if a rail service continuation payment has been offered but
an applicable operating or lease agreement is not in effect.
For purposes of the preceding sentence, any compensation required as a result of such directed service shall be determined in accordance with the standards developed pursuant to section 205(d) (6) of this Act. The district courts of the United States shall have jurisdiction, upon petition by the Commission or any interested person (including a government entity), to enforce any order of the Commission issued pursuant to the exercise of its authority under this subsection, or to enjoin any designated entity or the trustees of a railroad in reorganization in the region from refusing to comply with the provisions of this subsection.
(4) No determination of reasonable payment for the use of rail properties of a railroad in reorganization in the region, and no determination of value, of rail properties of such a railroad (including suliporting or related documents or reports of any kind) which is made in connection with any lease agreement., contract of sale, or other agreement or understanding which is entered into after the date of enactment of the Rail Transportation Improvement Act(A) pursuant to this section; or
(B) pursuant to section 402 of this Act or section 17 of the
Urban Mass Transportation Act of 1964 (49 U.S.C. 1613),
shtall b-e admitted as evidence, or used for any other purpose. in any civil action, or any other proceeding for damages or compensation, arisig under this Act.
(e) RAIL PASSENGER SERVICE.-(1) The Corporation (or a profitable railroad) shall provide rail passenger service for a period of 180 days immediately following the date of conveyance (pursuant to section 303(b) (1) of this title), with respect to any rail properties over which a railroad in reorganization in the region, or a person leased, operated, or controlled by such a railroad, was providing rail passenger service immediately prior to such date of conveyance. Such service shall be provided on such properties regardless of whether or not such properties are designated in the final system plan as rail properties over which rail service is required to be operated, except with respect to properties over which such service is provided by the National Railroad Passener Corporation.
(2) If a State (or a local or regional transportation authority) was providing financial assistance to support the operation, of rail passent$rer service, pursuant to a lease or agreement which was in effect inm11ediately prior to the date of conveyance (pursuant to such section 303(b) (1)), the Corporation (or a profitable railroad) shall be 1)o11(1 1y the service provisions of such lease or agreement for the (1Inration of the 180-day mandatory operation period specified in para-






61

graph (1) of this subsection. If a State or such an authority was providing financial assistance for the continuation of rail passenger service on rail properties immediately prior to such date of conveyance, it shall provide the same level of financial assistance during such 180day mandatory operation period. If no such financial assistance was being provided or if no such lease or agreement was in effect immediately prior to such date of conveyance, with respect to any such rail properties, the Corporation (or a profitable railroad) shall provide the same level of rail passenger service, for the duration of such 180-day mandatory operation period, that was provided prior to such date by the applicable railroad. If(A) such financial assistance is not provided;
(B) a State (or a local or regional transportation authority)
has not, by the end of such 180-day mandatory operation period, offered a rail service continuation payment pursuant to subsection
(c) (2) (A) of this section;
(C) an applicable rail service continuation payment pursuant
to such subsection (c) (2) (A) is not paid when it is due; or
(D) a payment required under a lease or agreement, pursuant
to section 303 (b) (2) of this title or subsection (c) (2) (B) of this
section, is not paid when it is due,
the Corporation (or, where applicable, the National Railroad Passenger Corporation, a profitable railroad, or the trustee or trustees of a railroad in reorganization in the region) may (i) discontinue such rail passenger service, and (ii) with respect to rail properties not designated for inclusion in the final system plan, abandon such properties pursuant to subsections (a) and (b) of this section.
(3) Nothing in this subsection shall be construed to affect the obligation of the Corporation (or a profitable railroad), or of the trustees of the railroads in reorganization in the region, to provide rail passenger service pursuant to section 303 (b) (2) of this title or subsection
(c) (2) (B) of this section.
(4) If a State (or a local or regional transportation authority)(A) offers a rail service continuation payment, pursuant to
subsection (c) (2) (A) of the section and under regulations issued by the Office pursuant to section 205 (d) (5) of this Act for the operation of rail passenger service after the 180-day
mandatory operation period, and
(B) provides compensation, pursuant to paragraph (2) of this
subsection, for operations conducted during the 180-day mandatory operation period; or
(C) offers a rail service continuation payment, pursuant to
subsection (e) (2) (A) of this Section. and regulations issued by the Office pursuant to section 205 (d) (5) of this Act, for the operation of rail passenger service provided under an acyreeinent or lease pursuant to section 303 (b) (2) of this title or subsection (c) (2) (B) of this section where such offer is made for the continuation of the service beyond the period required by such agreement or lease, except that such services shall not be eligible for assistance under section 17 (a) (2) of the Urban -,Nlass Transportation Act of 1964 (49 U.S.C. 1613 (a) (2) ),
the Corporation (or a profitable railroad) shall continue to provide such service after the end of such period, except as otherwise provided in this subsection.


3S-573 0 79 5






62

(,5) (A) The Secretary sh:ill relitiburse the Corporation (or a profitable milroa(l) for lany Joss whielt is iiictirrc d by it durin(y the 180-d(ay 111,111datol-V operation period -- Iwclfivd ill (1) of this :llbseo"timi which is not conilwn ti-an._T()L-t:it1()ii authority). The anio-milit of such rvilllbur: ('Ilwnt shall 1w d('1et-111illed pursualit to S(,(.tloll 17(a) (1) of the TA-ball 'Mas--, Transporttttlon -k(,t, of 1(.')(;4 mid under regulations issued by the Oflice purstuint to sect imi, 2W (d) (.5) of this Act.
(B) Tile, Secretarv shall reimburse States, local public bodies, and a(r(,n( 1(-, thereof fol additional costs iiicurred bv such States, 'Ind for r(III service Coll titillation pavillents for rail passencrer
s01*VV(1 pursivult to section 1' (a) (2) of tli(-- Urban Mass Transportation kct of 1964 aud 1111(jer re(rIllatimis issued by the Office pursuant to s,,ct loll 20,5 (d) (I,-)) Of tli is Act.
Im- purpose,-; ()f the obilaation of the Se(-r(,hii-v to reimburse t1w Corponation (or ft profitflbh railroad) or ;tates, local public bodies. aild "icrelicles thereof under subp(aragraplis (, Nj and (B) of t1liS tile JeN-el of i-1111 passenger service shall be determined
on tile basis of traUl miles, car miles, or some other appropriate indicia of scheduled tnlin movements. Progri-linis to correct, (leforred mainte11('111CO, Oil 1-oflill(r stoek, I i(rjlt-of-way and other facilities which are desigile(I to 111"'I lilt all) meet on-time performance, and niallitain
reasomible degree Of jm, COjjjfOlt (aiid costs I I ICII MV( I incident then'tol S11:111 be illchide(I Within Ole 111(lailill(r of the term "loss" as
("N) Of t-JljS ptIl-,1(rraph aiid within the ineaning of the terill ""Id(ilt-1011"ll (-()4 ;- ,Is iised ill subparacri-aph (B) of this
and Section IT (,I) (--)) of tile, 1-t-bfin '.\Liss 1"ralisportation
Of 19('14 (49 1 (Il 3 ((a) (2)
(D) If a dispute arises with respect to the application of any such
the J)"ll-Iles to such dispute l1lay submit such dispute to (irbiti :ition bY (I third party. If the parties :uv un.,ible to agree upon t1w selectimi of all tirbitnItor. the. Chairman of the Commis -ion sliall
in that capacity (except as to emitters required to be deci(led by t1le Colilmissioll. Pursivii-it to sectloil 402(a) of the Rail Passenger
-4erN-ico-, Act (J.- TT.S.C. .56-2. (a)
(0) Not-withstandiw-r any other provisimi of this subsection, the ('Olpol-Itioll 'S; ljot to provide rall p1issengrer service oil rail
propel-ties if 1-1 St :Ite (ol' a 10c:il or recrion111 transportation authority cont]'Icts for slich sel-vico, to #1)v provided oil sueh properties by an operator w1wi-t-finil the Corporatimiexcept thtif the Corporation shall. where, appropriate, provide such oper"Itor with access to Such properfle- for -slwh
(7) (A) If a State (or a, local or rel-riollfil trall"port.'Ition alltllority)
ill the lvcrjoll offers to provide payment for the provisioll of f 1 (.1 (1 it ion'1 I rall sel'VRT. tile Corporation sliall undertake to provide such
service pursuant to this sub Octioll (inchulilig the discolitillil"Illce proof panlcrraph (2) of this Subsection). X11 offer to provide Payiiwnf for the provision of a(Mitiond rall I)assell('rer s0rVI( 11,111 be, 111111(k., Ill "ICC01'(1:111ce with sill)Sect loll (c) (2) (A) of this "('('t 1011 alid 1111(ler re (rul"It iolis i! Iled I)v tll(, Off ice pursimilt 10 sectloll 20,7) (d) Of ihis Act. :iwl sliill be (jo',simied to avoid :my a(lolitiolvil c()st".: to tile Corpow-flioll flri'- illfr from tile construction oil 1110(lific'.1tioll Of C:Ipltal fac.1litles or froi-Ii any additimial operatimy delays or costs arisma froln






63

the absence of such construction or modification. The State (or local or regional transportation authority) shall demonstrate that it has acquired, leased, or otherwise obtained access to all rail properties, other than those designated for conveyance to the National RailroaId Passenger Corporation pursuant to sections 206 (c) (1) (C) and 206 (c)
(1) (D) of this Act and to the Corporation pursuant to section 303 (b)
(1) of this title, necessary to provide the additional rail passenger service and that it has completed, or will complete prior to the inception of the additional rail service, all capital improvements necessary to avoid significant costs which cannot be avoided by improved scheduling or other means on other existing rail services (including rail freight service) and to assure that the additional service will not detract from the level and quality of existing rail passenger and freight service.
(B) As used in this paragraph. the term "additional rail passenger service" means rail passenger service (other than rail passenger service provided pursuant to the provisions of paragraphs (2) and (4) of this subsection), including extended or expanded service and modified routings, which is to be provided over rail properties conveyed to the Corporation pursuant to section 303 (b) (1) of this title, or over (i) rail properties contiguous thereto conveyed to the National Railroad Passenger Corporation pursuant to this Act. or (ii) any other rail properties contiguous thereto to which a State (or local or regional transportation authority) has obtained access.
(C) Notwithstanding any other provision of this paragraph. the Corporation shall not be required to operate additional rail passenger service over rail properties leased or acquired from or owned or leased by a profitable railroad in the region.
(8) The Secretary shall, in consultation with the Association. conduct a study to determine the best means of compensating the Corporation for liabilities which it may incur for damages to persons or property. resulting from the operation of rail passenger service required to be operated pursuant to this subsection or section 303
(b) (2) of this title, which are not underwritten by private insurance carriers or are not indemnified by a State (or local or regional transportation authority). Such study shall identify the nature of the risks to the Corporation, the probable degree of uninsurabilitv of such risks. and the desirability and feasibility of \,arious indemnification programs, including subsidy offers made pursuant to this section, selfinsurance through a passenger tax or other mechanism, or government indemnification for such liabilities. Within one year after the date of enactment of this paragraph, the Secretary siall'prepaire a report with appropriate recommendations and shall submit such report to the Congress. Such report shall specify the most appropriate means of indemnify.ing the Corporation for such liabilities in a manner which shall prevent the cross-silbsidlization of na;sen.'er -e 'vie with re-venues from freight services operated by the Corporation.
(f) PUnCmIAS.-If an offer to purchase is made under subsection
(c) (2) (C) of this section. such offer shall be accompanied by an offer of a rail service continuation payment. Such payment shall continue until the purchase transaction is completed, unless a railroad assumes operations over such rail properties of its own account pursuant to an







64
Whenever a railroad in
_f t' e Comm, or. I
e, :7 -'j r. I- t rez- -)n Gr a pro:-it b. I S
ra a i 2, v e -- notice of
- t t Z C) 7 7 e P T"Z
-t a of th'c zzeit on.
M bQe, *on
o-.n he r 1' : e z T t -riyone appan ritlv (1,,alified to aT- 7 a:z e (-,,r o r G'%-, (i e a 'r a i I -ervice continueLit ion paN
74 L r n (- :. t re,-,er t reports on the physical
i e 11 W'trl trail-ic a-nd revenue data
in (I e 7 Z 11 b,_)a r 13 o i part 1121 of chapter X of
T IF 'e r,-) I FL e Lm I a r.' n ri s anci s-cch other data as are
i ing service over
a, 5: 7 a v cl, I a I,'- e (-oEts of Prov'd'
r3l:i T'ropertlez.
T BY C(,Pp -,P.-AT-Itl-!---.--kfier the rail system to be
,pora' o" (-.r a thereof under the final
_0 i -ion mav
C 7, 0 T I On vearz:. tne comm'sc'
G o J a z L z:, a r,,.- tllt _reof to abandon an-v ral
C) W et r r, r. t h -I r "I iCC, O' *El )rop11.", L ;e '011' n.erice nd nece;z.Sit the
-1 r e cj c. an hat no :-,iate (or
r) I- z n rr t o o f"Te r a rail
r i'S'd n i t Ci (C) Of -L"Ils se(7Z: r n y. a any t e a t e r t' e e f! I T ect ve date of
Z:
7: 1 1 z e i-ai se rv, c e i n the recrion
rT (Dr a: 7 T' -r-'es wlll h are riot beino,
'j o r _Jiarv or aMl'. ite thereof or
C) L -a t r) T) z '_)V t 1, e 0 rn rn, C Z; o n under thic:
Z'. 0!- _;z Of the

TN-77-r-,,f A 7, '1 T -T.-A '1 r t C- r,f T-...-,ctm.ent of this
.e (p'Irziiarit to
r "r t e c, a IL 'p r z-ection P
C) T' o r a ra, d re n the region may
"r n a -1 other than
fj 11 a line of r I rotq in
T-, C 7 z:' r) f _-.:z Ac z: 5 (1 i i t is aiith( 1
A_(or local or C 1, C'
Te rI Z,-, rl 5 C, F) P
r?. a- T- C, F --k P r th pc)n;zt tuc- r 0 t. r)!
J __iz:on 07 (D r "I pen(lencv
41 Tn r yp
F e 7 a o r S t: a t e r anncy. or

r)FDF ZTr- N A 7V_ railroarl in
riT
r) operate (-)r cona-. r r,,- ( 'n:-".'.r'-Irrr, or otl)( rw i ,e
r "rr! T]
fi-'J' T j
T 1) ) of 01 t'tle.
0.
r v sale.
T_ F. 0 L L I f o La T
TT
r,,, r:,r ri t 0
z t r, 'AL ''Illy c-on-t- -T- ry
f 'T- 1- 11 r (-),r j L, 1 r r, P, f V i -j 1
I 17rttIOTI
r
1 1,;
C ('a I I v -I P
ri I r)n
;'Zd; ot
7 1 1 r.r, r, T"'(' "','I T ZI 1 Orl 11 n(ler
A, T S. C. i C) r






65

(3) following certification to the z:pecial coll.rt. pursuant to
section 209(c) of the Rezional Rail Reorcranizatnn Act of 1973.
of any such rail propert.ez not previnliz1v ZO -I fled.
;z rr r
(D (A') Ext rt as
(B of this pmacrraph. no p-,-iblic brAv W, n
zz r
tran- portarion bv ra'I. and
IntenState Commen.e Ac sIla11. with to t',-e
Z
service s. be ;,,LIb ec't to the Interstate Ct A, r or to r:
nations. and orders promulgated tinder Act. iff -he inter5l'T-- 1 "I'l
or the ability to apply to the lnter :rare CominiSzion fur
changes thereto. of 4Such local I)I-Id-v L; tC, -apT)roj-aj
disapproval I-)v a Gc)vernor of anv in wI-Ji,- --'T Zer,
B ) Any local public bocIv of
para zraph sliall continue zo I[-,-, training to (i -af(-Tv. (ii) t" e
Poses of barzainii.z. iii)
annuity. and tine mplo vi-i-.eilt or any other Cr
to dealings between employees a:id employers.
(2) For pil-TozeS of thi ; subse,,-tion. the term
"local public body" hazz tTlp_ meaning prescribed f or ;Such
term in section 12 (c) t 2) of z' T i T t a t i o r A t
(49 C. I C, 2) ) a n d
contracrS w ti-i -i lo,-al Public
ices: and
(B --mas- rrarm pori Szervi( esices desciil)ed In section 11 --) c of Ui, -----tion Act (4 --) U.* ,.C. .0 75) aie

CON-TI-NUING M-1 -r(T A -N I ZATION SUPPLE"HENTAL TRANSACTHYNS
SEC. 305. (a i Przopi. SALS.-If the S L -LI YV r the -ks n ertidnes that. part of (onunuincr incr of rail properties in tIie I'e,71011 to the final. s%-4Stei,,i plan -----tion of a fnaTicialiv rall. ;-ervice l
adequate to nleet th e r. (-I i -1
ti-e ol, 1,-.e
tion. 'I'S tile ( ,ISe mav [-,(?. 111'aV Iev lop j(D!- 'S 11c I I transactions aS are or to i7l- PI needed
rezstructurin r. Transfers of mil m- I -I in rrop
-le*; incl,, c. developed by the Assr ciat-,on shal' Ii-Mited to
NvIlich. would have foi dc s,,-, ation z 1 i
(A) oi ihis Act but 17 lich I'vere 0 r L 01'
final -Iv-Srem and which th,
to _0
the C111clent oj)e:',IrIOns Of th-1, Co, 1) -L I 'I t
1'11; tellt With 1110 fln'll Svstem o i ''a", i, op i, i i S 1,1o7- th.e tion, to a 1-11 )Sidiarv i o t lit', r r -i i a P 0 "1
developed I-)y the m i t t e d i n to _Ie
') () Y) -);,
Association and Shall stut an(l 0 L)k n -v tr ,,,-ZactionF
the rail properties involVe"I. 11(le 6,11 'ITI(I Oriler terr-z of S11c"I L- I - L r.,,e -A-cr
the a(-)al.s of the 11-liial Sy-zziem plail 11.iiell(led to ( e I y tranSactions. and such
A;z,- -oclation iiiav prescl.,I, )e. Within !I--, Jtftv-,mz I 10 1, 7,)r oi a p 0 developed by tfie and uv ()Jj t"',e TI: 0 a rr"T






66

developed by the Association, the Association shall publish a summary of such proposal in the Federal Register. and shall afford interested persons (including the (Corporation when property is to be transferred to or from the Corporation) an opportunity to comment thereon.
(b) EVA .LVATION BY ASSO &IvrI .( -The Association shall analyze each proposal containing one or more supplemental transactions, taking into account the comments of interested persons and statements and exhibits subnlitted at any public hearings which may have been held. The Association shall, within 120 (lays after the publication of a summary thereof under subsection (a) of this section, publish in the Federal Register a report evaluating such proposal. Such evaluation shall state whether the sul)pplemnental transactions contained in such proposal, considered in their entirety, are (1) in the public interest and consistent with the purposes of this Act and the goals of the final system plan, and (2) fair and equitable. If the (Corporation opposes, or seeks modification of, any such proposed transfer, its written comments shall be given due consideration by the Association and shall be published as part of the evaluation. Within 30 days after the Association publishes its report, each proposed transferor or transferee shall notify the Association in writing as to whether any proposed supplemental transaction requiring the transfer of any property from or to such transferor or transferee is acceptable to such proposed transferor or transferee. If any such proposed transferor (other than the Corporation) or transferee fails to notify the Association that any proposed sul)pplemental transaction requiring the transfer of any property from such transferor or to such transferee is acceptable to it, no further administrative or judicial proceedings shall be conducted with respect to such proposed supplemental transaction.
(c) REVIEW BY TIHE (OM3ISSION.-Within 90 (lays after tlhe pilblication in the Federal Register of each report referred to in subsection
(b) of this section, the Commission shall determine whether the supplemental transactions referred to in the report, considered in their entirety, would be in the public interest and consistent with thle purposes of this Act and the goals of thle final system plan. In making such determination, the Commission shall give due consideration to the views received by it, within 30) days after the publication of the applicable rel)ort, from the ('orl)poration and the Secretary. The ('omMission may condition its approval of such supplemental transactions on such reasonable ter ins and conditions as it iuav deem necessary" in the public interest. The alpp-oval 1yv the (Co isson of such supplementall transactions shall not he a prerequisite to tle consuniunation of suCh transactions, but any determination of the ('omnuission modifying,, approving, or (disal)>rovinl any proposed supplemental transactions shall be driven ldue weight and consideration bw the special court in the proceedings prescribed in subsectionl (d) of this section. If the (Coninission fails to act within the time period provided in this subsection, thle supplemental transactions involved shall be deemed to have been approved by the ('onmnission. T"e ('on ission may prescribe such regulations as may be necessary for the administration of this section.
(d) SPECIAL ('nr Pmown:t:m;vw(;s.-(1) If the Association has tade the determination pursuant to slbsection (1)) of this section that a proposal for supplemental transusa.tions is in the p1)nb)lic interest and consistent witl thle purposes of this Act and the goals of the






67

final system plan, and is fair and equitable, the Association shall, within 40 clays after the date of the Commission's determination under subsection (c) of this section, or after the expiration of the 90-day period referred to in such subsection (c), whichever is applicable, petition the special court for ani order of such court finding that such proposal for supplemental transactions is in the public interest and consistent with the purposes of this Act and the goals of the final system plan, and is fair and equitable, and directing the Corporationl to carry out the supplemental transactions specified in such proposal. If the Association has determined, pursuant to subsection (b) of this section that a proposal m-rade, by the Secretary is not in the public interest or is not consistent with the purposes of this Act and the goals of the final system plan or is not fair and equitable, the Secretary may, if hie determines that such proposal is in the public interest and consistent with the purposes of this Act and the goals of the final system plan andl is fair and equitable, petition the special court for an order of such court finding that such proposal for supplemental transactions is in the public interest and consistent with the purposes of this Act and the goals of the final system plan and is fair and equitable, and directing the Corporation to carry out any supplemental transactions specified in such proposal. Such a petition shall be submitted to the special court within 90 days after the (late of the Commission's determination under such subsection (c), or after the expiration of the 90-day per'iodl referred to in such subsection (c), whichever is applicable.
(2) Within 180 days after the filing of a petition under paragraph
(1) of this subsection, the special court shall decide, after a hearing, whether the proposed supplemental transactions contained in such petition, considered in their entirety, are in the public interest and consistent with the purposes of this Act and the goals of the final system plan and are fair and equitable. If the special court determines that such proposed supplemental transactions, considered in their entirety, are in the public interest and consistent with the purposes of this Act and the goals of the final system plan and are fair and equitable, it shall, upon making such determination, issue such orders as may be necessary to direct the Corporation to consummate the transactions. If the special court determines that such proposed supplemental transactions, considered in their entirety, are not in the public interest or not consistent with the purposes of this Act and the goals of the final system plan, or are not fair and equitable, it shall file an opinion1 stating its conclusion and the reasons therefor. In such event the Association (in the case of a proposal developed by the Association) or the Secretary (in the case of a proposal developed by the Secretary) may, within 120 days after the filing of such opinion, certify to the special court that -the terms and conditions of the proposal have been modified consistent with the opinion of the court and are acceptable to each proposed transferor (other than the Corporation) or transferee, and may petition the special court for reconsideration of the proposal as so modified. Within 90 days after the filing of such petition, the special court shall decide, after a hearing, whether the proposal as modified by the certification is in the public interest and consistent with the purposes of this Act and the goals





is n
00

of the final system plan and is f air and equitable, and shall enter such further orders as are consistent with its determination.
(3) The Corporation is authorized to petition the special court and to be represented regarding any proposed supplemental transaction, contained in a proposal developed by either the Association or the Secretary, which involves the properties of the Corporation.
(4) In proceedings tinder this subsection, the special court is authorized to exercise the powers of a judge of a United States district court with respect to such proceedings and such powers shall include those of a reorganization court.
(5) Any evaluation by the Association, the Secretary, or the Commission shall not be reviewable in any court except the special court in accordance with the provisions of this section. The supplemental transactions shall not be restrained or enjoined by any court nor shall they be otherwise reviewable by any court other than by the special court to the extent provided in this section.
(6) 'Notwitlistanding any other provision of this Act, no findings, determinations, or proceedings shall be required with respect to any proposal for supplemental transactions other than as expressly set forth in this section.
(7) Any supplemental transaction under this section shall subject the transferor and transferee, in each such supplemental transaction, to the requirements and other provisions of title V of this Act, except that the term "effective date of this Act" contained in such title V shall be applied to such supplemental transaction as if it read "effective date of the supplemental transaction".
(8) A final order or judgment of the special court entering or denying an order pursuant to this subsection shall be reviewable in the same manner as provided in section 209(e) (3) of this Act.
(e) DEFINITION.-As used in this section, the term "fair and equitable" means fair and equitable, in accordance with the standards applicable to the approval of a plan of reorganization (or a step in such plan) under section 77 of the Bankruptcy Act (11 U.S.C. 205) to
(1) the estates of railroads in reorganization in the recrion and
persons leased, operated, or controlled by such railroads who have conveyed rail properties, tinder section 303 (b) (1) of this title, in exchange for securities of the Corporation, the Association, or profitable railroads and other benefits provided as a consequence of this Act and to any subsequent holders of such securities at the
time of the supplemental transaction involved; and
(2) the holders of other securities of the Corporation.
Whenever any property or securities of the Corporation are required to be valued in order to determine whether the terms of a supplemental transaction are fair and equitable, the special coiirt shall give proper recognition to the contributions to the Corporation by all classes of security holders, except that such court shall not assign to the series B preferred stock or the common stock of the Corporation any values added to those securities, by reason of investment by the Association in debentures and series A preferred stock of the Corporation, in excess of any value required by constitutional principles applicable to a reorganization process.






69

CERTIFICATES OF VALUE
SEC. 306. (a) GEINERAL.-On the date when the Corporation is required to deposit securities with the special court pursuant to section 303(a) (1) of this title, the Association shall deposit with the special court the certificates of value of the Association requiredl by this section. The Secretary shall guarantee the payment of all certificates of value delivered in accordance with this title. All guarantees entered by the Secretary under this section shall constitute general obligations of the United States of America for the payment or redemption of which its full faith and credit are pledged. Such guarantees shall be valid and incontestable except as to mutual mistake of fact or as to fraud or material misrepresentation by the holder of such certificates or the transferor of rail properties to which certificates of value of any series so guaranteed are issued.
(b) MTMNBER AND DisTRIBLTION.-A separate series of certificates of value shall be issued to each railroad in reorganization in the region and each person leased, operated, or control led by such a railroad that transfers rail properties to the C orporation or a subsidiary thereof. The number of certificates of value of each series to be deposited pursuant to subsection (a) shall be equal to the number of shares of series B3 preferred stock of the Corporation which are required to be depositedi by the Corporation) with the special court, pursuant to section 303 (a) (1) of this title in exchange for the rail properties transferred to the Corporation or a subsidiary thereof by such transferor. Certificates of value of the appropriate series shall be distributed by the special court, pursuant to section 303 (c) (4) of this title, at thle same time to the same transferors, and in the same numbers of units as shares of such series B preferred stock are distributed to such transferor.
(c) REDE1vrION.- (1) Certificates of value, of any series, shall be redeemed by the Association on December 31. 1987, or on such earlier date as the Board of Directors of the Association and the Finance Committee jointly may determine and specify.
(2) Each certificate of value of each series shall be redeemable for an amount, payable in cash, equal to its base value on the redemption (late, minus(A) the sum of the fair market value of the series B preferred
stock applicable to such certificate, the fair market value of the common stock applicable to such certificate, and all cash dividends theretofore paid on any such series B preferred stock and on any
such common stock; and
(B) any sums paid to a transferor of rail properties to whom
such series of certificates of value was issued resulting from sales or leases by the Corporation of properties transferred to it by such transferor divided by the number of certificates of value distributed to such transferor.
(3) The number of shares of series B preferred stock and common stock applicable to each certificate of value of any series, pursuant to paragraph (2) of this subsection, shall be(A) one share of series B preferred stock (adjusted to reflect
any stock splits, stock combinations,, reclassification s or similar transactions affecting the number of Ishares of outstanding series
Preferred stock following the date of distribution usatt
section 303 (c) (4) of this title) ; and






70

(B) the number of shares of common stock determined by dividingr the total number of shares of common stock distributed puirsuant to section 303 (c) (4) of this Act to the transferor receiving such series of certificates of value (adjusted to reflect any stock splits, stock combinations, recl assifications, or similar transactions affecting the number of shares of outstanding common stock following the date of distribution pursuant to section 303 (c) (4) of this title) by the total number of certificates of value
in the series so distributed to such transferor.
(4) The base value of each certificate of value of any series shall be the value obtained by (A) taking the net liquidation value, as determined by the special court, to which the transferor to whom such series of certificates of value is issued is entitled by virtue of transfers of rail properties, under section 303(b) (1) of this title to the Corporation or a subsidiary thereof;- (B) subtracting the value of other benefits provided under this Act, as determined by the special court;
(C) adding such amount, if any, as the special court may determine shall be required after taking into consideration compensable unconstitutional erosion, if any, in the estate of a railroad in reorganization, or of a railroad leased, operated, or' controlled by such a railroad, which the special court finds to have occurred during any bankruptcy proceeding with respect to such railroad; (D) adding interest from the transfer date to the redemption date to be compounded annually at a rate of 8 percent per annum; and (E) dividing the resulting value by the number of certificates of value of such series distributed to such transferor. In determining such base value, the special court shall give due weight and consideration to the finding of the Association as to the net liquidation value to which each transferor is entitled by virtue of conveyances of rail properties under section 303
(b) (1) of this title. For purposes of this paragraph, the term raill properties" includes all rights with respect to employee benefit plans transferred and assigned to the Corporation pursuant to section 3103
(b) (6) of this title. 'Net liquidation v% alue with respect to such rights shall be determined after taking into account all obligations finally transferred or assigned to the Corporation pursuant to such section.
(5) The fair market value of series B preferred stock and of common stock of the Corporation shall be determined in accordance with regulations prescribed by the Association, on the basis of the average price of each such security in the primary established market in which such securities are traded over a period of 120 consecutive trading days ending not less than 20 nor more than 40 trading days preceding the redemption date, or, in the case of a security for which there is not an established trading market, on the basis of the fair market value thereof as determined by the'majority vote of three experts in thie valuation of securities, one to be selected by the Association, one f o be selected by the directors of the Corporation elected by the holders of thie security to be valued, and one to be selected by the two first sel ected.
(d) AUTHTORIZATION F~On APPIRopRIAnrONs.-There are authorized to be, appropriated to the Secret ary such sums as are necessary to discharge the obligations of the U~nited States arising under this section.






71

PROTECTION OF FEDERAL FUNDS
SEC. 307. (a) AUDIT.- (1) The Comptroller General of the United States is authorized to audit the programs, activities, and financial operations of the Corporation for any period during which (A) Federal funds provided pursuant to this Act are being used to finance any portion of its operations, or (B) Federal funds have been invested therein pursuant to this Act. Any such audit may be conducted under such rules and regulations as the Comptroller General may prescribe. The Comptroller General shall report to the Congress at such times and to such extent as he considers necessary to keep the Congress informed on the security of such Federal funds and guarantees and, to the extent appropriate, make recommendations for achieving greater economy, efficiency, and effectiveness in such programs, activities, and operations.
(2) For the purpose of any audit conducted pursuant to subsection
(a) of this section, the Comptroller General, or a designated representative of the Comptroller General, shall have access to and the right to examine all books, accounts, records, reports, files, and other papers, items, or property belonging to or in use by the Corporation.
(b) IREPORT.-The Association shall prepare and submit an annual report to Congress on the performance of the Corporation in order to keep the Congress informed as to matters which may affect the quality of rail services in the region and which may affect the security of Federal funds referred to in subsection (a) of this section. Each such report shall be submitted within 150 days after the end of the fiscal year of the Corporation. Each such report shall include an evaluation of
(1) the degree to which the goals of section 206 (a) of this Act
are being met;
(2) the amounts and causes of deviations, if any, from the
financial projections of the final system plan;
(3) the amount of Federal funds made available to the Corporation and a clear description of the uses of such funds;
(4) the projected financial needs of the Corporation;
(5) the projected sources from which such financial needs are
likely to be met; and
(6) the ability of the Corporation to become financially selfsustaining without requiring Federal f unds in excess of those
authorized by section 216(f) of this Act.
(C) MONITORING OF THE CORPORATION.-(1) The Association shall also report to the Congress, in accordance with this subsection, on the policies of the Corporation and the results of such policies with respect to operations, cost containment, and marketing.
(2) Within 90 da-ys after the date of enactment of this subsection, the Association shall (A) subdivide each such policy area into constituent parts or groups Of p~arts whicht are specific and siifican~t,
(B) identify the mnost-' appropriate indicia to reflect accurately such parts or groups of parts, andi (C) (i) determine. any and all deficiencies in data used to compute the values of such indicia including consistency and clarity of definitions, timeliness of data entry, editing and validation of input data, and processing, andi (ii) outline the efforts of the Association and Corporation to correct the deficiencies and the






72

res;iits of such efforts. On or before the end of such 90-day period. tlie Association shall subi)lit to the ('oligress siilh letlodological information and additional information which the Association deems necessary or appropriate to fliirtlher the purpose of this title.
(3) Using such indicia, the Association shall report on (A) the relate onship of each constituent part or groups of parts to the Corporaionl s revenue anod C')il ,ue'itiv
tos revenue d capita"ll lld operationg expenses. (B) the extent to which su1ch parts or group of parts coiitributes to profits or losses,
(C) the efforts of management to contain or reduce the contribution of such part or group of parts to losses, (D) the results of such efforts. and (E) such other information as the Association deems necessary or appropriate.
(4) The Association shall (A) transmit to the Congress the first such monitoring report pursuant to paragraph (3) at the end of the first calendar quarter which begiiins after t lhe end of the 90-day period for preparation and submission of the methodological information pursuant to paragraph (2) (B) report such monitoring information to the Congress at the end of the first quarter of each calendar year t hereafter. (C) update methodological and monitoring information periodically as the Association dleenss necessary or appropriate, but in no ease less frequently than once a year, and (D) where the results of s ll uIld)latnin a re statist icallyv significant or relevant to Congressional policymaking, report them and the reasons for their significance at the end of the calendar quarter iii which the updating occurred.
TITLE IV-LOCAL RAIL SERVICES

[Title IV was repealed by section 806 of the Railroad Revitalization and Regulatory Reform Act of 1976, effective April 1, 1978.]
FINDINGS AND PURPOSE
SEC. 401. (a) FIND NGS.-The Congress finds and declares that-(1) The Nation is facing an energy shortage of acute proportions in the next decade.
(2) Railroads are one of the most energy-efficient modes of
transportation for the movement of passengers and freight and
cause the least amount of pollution.
(3) Abandonment, termination, or substantial reduction of rail
service in any locality will adversely affect the Nation's long-term and immediate goals with respect to energy conservation and
environmental protection.
(4) IUnder certain circumstances the cost to the taxpayers of
rail service continuation subsidies would be less than the cost of ohabndoiwment of rail service in terms of lost jobs, energy shortages,
and degradation of the environment.
(b) P. -Therefore, it is declared to be the purpose of the (Congress to authorize the Secretary to maintain a program of rail sV'Vice coltinu0ation subsidies.
RAIL SERVI( CONTIINUAIION ASSISTANCE
SEC. 4102. (a) GIvmiA-. in.. (1) The Secretary sall provide finanial assistant '~ ln n ectrd





73

future rail service, the construction or improvement of facilities necessary to accommodate the transportation of freight previously moved by rail service, and the cost of operating and maintaining rail service facilities such as yards, shops, docks, or other facilities useful in facilitating and maintaining main line or local rail service. The Federal share of the costs of any such assistance shall be as follows.
(A) 100 percent for the 12-month period following the date that rail properties are conveyed pursuant to section 303(b) (1) of this Act; and (B) 90 percent f or the succeeding 12-month period.
(2) The Secretary shall, within one year after the date of enactment of the Railroad Revitalization and Regulatory Reform Act of 1976, promulgate standards and procedures under which the State share of such cost may be~ provided through in-kind benefits such as forgiveness of taxes, trackage rights, and facilities which would not otherwise be provided.
(3) The Secretary, in cooperation with the Secretary of Labor, the Association, and the Commission, shall assist States and local or regional transportation authorities in negotiating initial operating or lease agreements and shall report to the Congress not later than 30 days af ter the date of enactment of the Railroad Revitalization and Regulatory Reform Act of 1976 on the progress of such negotiations. The Secretary may, with the concurrence of a State., enter directly into
opertingor lease agreements with railroads designatedtprve
serve ndersecion 304(d) of this Act, and with the trustees of railroads in reorganization in the region over whose rail properties such service will be prov~xided, to assure the uninterrupted continuation of rail service af ter such date of conveyance. Such agreements may be entered into only during the period when the F ederal share is 100 percent. Payments shall be made f rom the f unds to which a State would otherwise be entitled under this section.
(b) ENn'TLEENT.- (1) Each State in the region which is, pursuant to subsection (c) of this section, eligible to receive rail service continuation assistance is entitled to an amount equal to the total amount authorized and appropriated for such purpose multiplied by a fraction whose numerator is the rail mileage in such State which is eligible for rail service continuation assistance under this section and whose denominator is the rail mileage in all of the States in the region -which are eligible for rail service continuation assistance under this sect ion. Notwithstan ding tho~ preceding sentence, the entitlement of each State shall not be less than 3 percent of the funds appropriated. Not more than 5 percent of a State's entitlement may be used for rail planning activities. For purposes of this subsection, rail mileage shall be measured by the Secretary in consultation with the Interstate Commerce Commission. Any portion of the entitlement of any State which is withheld, in accordance with this section, and any such sums which are not used or comteIyaSaesalb reallocated immediately, to the extent practicable, among the other States in accordance with the formula set forth in this subsection. In addition to amounts provided 'pursuant to such rail mileage formula, funds shall also be made available to ea,,ch State for the cost of operating and maintaining rail service facilities such ais yards, shops, and docks which are useful in facilitating and maintaining mainline or local rail services and which are contained in each State's rail plan, except that (A) any such assistance shall extend for a period of only






74

12 months following the date rail properties are conveyed under section 303(b) (1) of this Act, and (B) no railroad shall be required to operate such facilities. With respect to the limitation on assistance for rail service facilities under the preceding sentence, the Secretary shall, not later than 90 days prior to the end of such 12-month period, submit a report to the Congress in conjunction with a designated State agency, recommending future action with respect to such facilities.
(2) For a, period of not more than 1 year following the date rail properties are conveyed pursuant to section 303(b) (1) of this Act, the Secretary is authorized to provide financial assistance, from the funds to which a State would otherwise be entitled under this section for the continuation of local rail services, to any person determined by the Secretary to be financially responsible who will enter into any operating and lease agreements with railroads designated to provide service under section 304(d) of this Act, regardless of the eligibilty of the State. where the applicable rail Iproperties are located, to receive assistance under subsection (c) of this section. In any case in which a State is eligible to receive rail service continuation assistance under subsection (c) of this section, States shall have priority to receive such payments over any other person eligible under this paragraph and no other person eligible under this paragraph shall receive such paymients unless his application therefor has been approved by the State agency designated under subsection (c) to administer the State plan.
(c) ELmnarrTY.-(1) A State in the region is eligible to receive financial assistance pursuant to subsection (b) of this section if. in any fiscal year(A) the State has established a State plan for rail transportation and local rail services (herein referred to as the "State rail plan") which is administered or coordinated by a designated State agency and such plan includes a suitable process for updating, revising, and amending such plan and provides for the equitable distribution of such financial assistance among State, local, and
regional transportation authorities:
(B) the State agency (i) has authority and administrative
jurisdiction to develop, promote, supervise, and support safe, adequate, and efficient rail services, (ii) employs or will employ, directly or indirectly, sufficient trained and qualified personnel.
and (iii) maintains or will maintain adequate programs of investigation, research, promotion, and development with provision
for public participation;
(C) the State provides satisfactory assurance that such fiscal
control and fund accounting procedures will be adopted as may be necessary to assure proper disbursement of, and accounting
for, Federal funds paid under this title to the State; and
(1)) the State complies with the regulations of the Secretary
issued under this section.
(2) The rail freighlt services whiich are eligible for rail service continuation assistance lpursuant to this section are-(A) those rail services of railroads in reorganization in the
region, 0r )ersons lease, opIeratedl. or controlled by any such railroad, which the final system plan does not designate to be
contilnuedi;
(B) those rail services on rail proI)erties referred to in section
301(a) (2) of this Act:






75

(C) those rail services in the region which have been, at any
time during the 5-year period prior to the date of enactment of this Act. ori which, are subsequent to the date of enactment of this Act, owned, leased, or operated by a State agency or by a local or regional transportation authority, or with respect to which a State, a political subdivision thereof, or a local or regional transportation authority has invested (at any time during the 5-year period prior to the date of enactment of this Act). or invests (subsequent to the date of enactment of this Act), substantial
sums for improvement or maintenance of rail service: or
(D) those rail services in the region with respect to which the
Commission authorizes the discontinuance of rail services or the abandonment of rail properties, effective on or after the date of
enactment of this Act.
(3) The rail freight properties which are eligible to be acquired or modernized with financial a -istance p)ursuant to subsection (b) of this section are those rail properties which are used for services eligible for rail service continuation as instance. puruant to pargraph (2) of this subsection. including those properties which are identified, in the applicable State rail plan as having potential for future use for rail freight service.
(4) The facilities which are eligible to be constructed or improved with financial assistance pursuant to subsection (b) of this section are those facilities in the region (including intermodal terminals and highways or bridges) which are needed in order to provide rail freight service which will no longer be available because of the discontinuance of rail freight service under section 304 of this Act or other lawful authority. No funds provided under this paragraph may be used to pay the State share of any highway projects under title 23, United States Code.
(5) Rail properties are eligible to be acquired with financial assistance pursuant to subsection (h) of this section if (A) they are to be used for intercity or commuter rail passenger service, and (B) they pertain to a line in the region (other than rail properties designated in accordance with section 206(c) (1) (C) of this Act) which, if so acquired (i) would( enable the National Railroad Passengner Corporation to serve, more efficiently. a route which it operated on November 1, 19715 (ii) would provide intercity rail passenger service designated by the Secretary under title II of the Rail Paszenger Service Act, or (iii) would provide such service over a route designated for service pursuant to section 403(c) of the Rail Passenger Service Act (45 U.S.C. 563(c)).
(d) REG.LA.TIONs.-Within 90 days after the date of enactment of this Act, the Secretary shall issue. and may from time to time amend, regulations with respect to the provision of financial assistance under this title.
(e) PAYMENT.-The Secretary shall pay to each eligible State in the region an amount equal to its entitlement under subsection (b) of this section.
(f) RECORDS, ArDIT, AND EXAMINATIO.-(1) Each recipient of financial assistance under this section, whether in the form of grants, subgrants, contracts, subcontracts, or other arrangements, shall keep such records as the Secretary shall prescribe, including records which






76

fully disclose the amount and disposition by such recipient of the proceeds of such assistance, the total cost of the project or undertaking in connection with which such assistance was given or used, the amount of that portion of the cost of the project supplied by other sources, and such other records as will facilitate an effective audit. Such records shall be maintained for 3 years after the completion of such a project or undertaking.
(2) The Secretary and the Comptroller General of the United States, or any of their duly authorized representatives, shall have access for the purpose of audit and examination to any books, documents, papers, and records of such receipts which in the opinion of the Secretary or the Comptroller General may be related or pertinent to the grants, contracts, or other arrangements referred to in such paragraph.
(g) WITIIIIOLDING.-If the Secretary, after reasonable notice and an opportunity for a hearing to any State agency, finds that a State is not eligible for financial assistance under subsections (c) and (d) of this section, payment to such State shall not be made until there is no longer any failure to comply.
(h) AUTHORIZATION OF APPROPRIATIONs.-There is authorized to be appropriated to the Secretary to carry out the purposes of this section an amount not to exceed $180,000,000 without fiscal year limitation. Such sums as are appropriated shall remain available until expended.
(i) DEFINITION.-As used in this section, the term "rail service continuation assistance" includes expenditures made by a State (or a local or regional transportation authority), at any time during a 1-year period preceding the date of enactment of this Act, or subsequent to the date of enactment of this Act, for acquisition, rehabilitation, or modernization of rail facilities on which rail freight services would have been curtailed or abandoned but for such expenditures.
ACQUISITION AND MODERNIZATION LOANS
SEC. 403. (a) AcQuisITiON.--If a State which is eligible for assistance under section 402(c) of this title or a local or regional transI)oItation authority has made an offer to purchase any rail properties of a railroad pursuant to section 304(c) (2) (C) of this Act or other lawful authority, the Secretary is authorized to direct the Association to provide loans to such State or local or regional transportation authority not to exceed 70 per centum of the purchase price.
(b) MODERIzAx'IO.-Tn addition to such acquisition loans, the Secretary is authorized to direct the Association to provide additional assistance not to exceed 70 per centunm of the cost of restoring or repairing such rail properties to such condition as will enable safe and efficient rail transportation operations over such rail properties. Such financial assistance may be in the form of a loan (er the guarantee of a loan. The Association shall provide such financial assistance as the Secretary may direct mnder this section and shall adopt regulations describing its procedures for sulch assistance. Notwithstanding any other provision of this title, a State may expend sums received by it under paragraphs (1) and (2) of section 402(b) of this title for
-acquisition and modernization pursuan.t to this section, or for any project designated pursuant to a State rail plan.






77

TITLE V-EMPLOYEE PROTECTION
DEMNITIONS
SEC. 501. As used in this title unless the context otherwise requires(1) "acquiring railroad" means a railroad, except the Corporation or any subsidiary thereof, which seeks to acquire or has acquired, pursuant to the provisions of this Act, all or a part of the rail properties of one or more of the railroads in reorganization, the Corporation or any subsidiary thereof, or a profitable railroad;
(2) "employee of a railroad in reorganization" means a person who, on the effective date of a conveyance of rail properties of a railroad in reorganization to the Corporation or any subsidiary thereof, to the National Railroad Passenger Corporation, to an acquiring railroad, or to a State pursuant to section 208 (d) (2) of this Act has an employment relationship with either said railroad in reorganization or any carrier (as defined *in parts I and II of the Interstate Cominerce Act) which is leased, controlled, or operated by the railroad in reorganization (except a Class I railroad which is not wholly owned, operated, or leased by a railroad in reorganization but is controlled by a railroad in reorganizationn, but does not include a president, vice president, treasurer, secretary, comptroller, and any other person who performs functions corresponding to those performed by the foregoing officers;
(3) "protected employee" means any employee of(A) -an acquiring or selling railroad who isadversely affected
by -a transaction;
(B) the Corporation who, immediately preceding such employment by the Corporation, was employed by a selling railroad and who is adversely affected by the sale of rail properties to -the Corporation pursuant to -an offer designated under section
206 (c) (2) of this Act;
(C) a railroad in reorganization in the region; and
(D) a railroad who is adversely affected by a supplemental transaction under section 305 of this Act or by a project
recommended under section 206(g) of this Act;
who, in any such case, has not reached age 65 on the effective date of this Act;
(4) "class or craft of employees" means a group of employees, receq and treated as a unit for purposes of collective bargaining, ofhiiczh is represented by a labor organization that has been duly authorized or recognized pursuant to the Railway Labor Act as its representative for purposes of collective bargaining;
(5) "representative of a class or craft of employees" means a labor organization which has been duly authorized or recoornized as the collective bargaining representative of a class or craft of employees pursuant to the Railway Labor Act;
(6) "deprived of employment" means the inability of a protected employee to obtain a position by the normal exercise of his seniority rights with the Corporation or any subsidiary thereof af ter properly electing to accept employment therewith or, the subsequent loss of a position and inability, by the normal exercise of his seniority rights




36-573 0 79 6






78

under the applicable collective bargaining agreements, to obtain another position with the Corporation or any subsidiary thereof: Proided, hAmweer, That provisions in existing collective bargaining agreements of a railroad in reorganization, which do not require a protected employee, in the normal exercise of seniority rights, to make a change in residence, in order to maintain his protection, will be preserved and will also be extended and be applicable to all other protected employees of that same craft or class. It shall not, however, include any deprivation of employment by reason of death, retirement, resignation, dismissal or disciplinary suspension for cause, failure to work due to illness or disability, nor any severance of employment covered by subsections (d) and (e) of section 505 of this title;
(7) "employee adversely affected with respect to his compensation" means a protected employee who suffers a reduction in compensation;
(8) "transaction" means actions taken pursuant to the provisions of this Act. including section 305 thereof, or the results thereof;
(9) "change in residence" means transfer to a work location which is located either (A) outside a radius of 30 miles of the employee's former work location and farther from his residence than was his former work location or (B) is located more than 30 normal highway route miles from his residence and also farther from his residence than was hii former wor k location:
(10) "selling railroad" means a railroad which sells rail properties pursuant to an offer designated under section 206(c)(2) of this Act: and
(11 ) replacement operator means--(A) a State which has aconuired all or part of the rail pro)erties of any railroad in reorganization in the region and which intends to replhee any class I railroad as the operator of rail servce over such rail properties : or
(B) an y class I railroad which is designated. byv a State which
has a'cOnired such rail properties, to replace the State or any other class I railroad as the operator of rail service over such rail
properties.
EMfPLOYMENT OFFERS
SEc. 502. (a) APPLMICABLE LAw.-The Corporation and. where applicable, the Association shall be subject to the provisions of the Rilway Labor Act and shall be considered employers for purposes of the Railroad Retirement Act, Railroad Retirement Tax Act. and the Railroad UTnemiployment Insurance Act. The Corporation, in addition, shall, except as otherwise specifically provided by this Act. be subject to all Federal and State laws and regulations applicable to carriers by railroad. As used in this subsection, the term "where applicable" refers to the relation of the Association. as an employer (A) to employees of the Association who before the (late of conveyance, under section 303(b)
(1) of this Act, had creditable service under the relevant statute and who were offered and accepted coverage under such statute, and (B) to former employees of railroads in reorganization in the region, after the date of such conveyance.
(b) MAN ATORY OFE-n.-The Corporation shall offer employment. to be effective as of the (late of a conveyance or discontinuance of service under the provisions of this Act, to each employee of a railroad in






79

reorganization in the region who has not already accepted an offer of employment by the Association (where applicable), an acquiring railroad, or the Corporation. Such offers of employment to employees represented by !abor organizations shall be confined to their same craft and class. The Corporation shall apply to such employees the protective provisions of this title.
(c) AsSocIATIOx.-After the transfer of rail properties pursuant to section 303, the Association, in employing any additional employees, shall give priority consideration to employees of a railroad in reorganization and the provisions of this title shall apply to any such employees employed by the Association as if they were employees of the Corporation.
ASSIGNMENT OF WORK
SEC. 503. The Corporation shall have the right to assign. allocate. reassign, reallocate, and consolidate work formerly performed on the rail properties acquired pursuant to the provisions of this Act from a railroad in reorganization to any location, facility, or position on its system provided it does not remove said work from coverage of a collective-bargaining agreement and does not infringe upon the existing classification of work rights of any craft or class of employees at the location or facility to which said work is assigned, allocated, reassigned, reallocated, or consolidated and shall have the right to transfer to an acquiring railroad the work incident to the rail properties or facilities acquired by said acquiring railroad pursuant to this Act, subject, however, to the provisions of section 508 of this title.
COLLECTIVE-BARGAI.NING AGREEMENTS
SEC. 504. (a) I.NTRaIr APPLICATIO.--Tntil completion of the agreements provided for under subsection (d) of this section, the Corporation shall, as though an original party thereto, assume and apply on the particular lines, properties, or facilities acquired all obligations under existing collective-bargaining agreements covering all crafts and classes employed thereon, except that the Agreement of May 1936. Washington, D.C. and provisions in other existing job stabilization agreements shall not be applicable to transactions effected pursuant to this Act with respect to which the provisions of section 505 of this title shall be superseding and controlling. During this period, employees of a railroad in reorganization who have seniority on the lines, properties, or facilities acquired by the Corporation pursuant to this Act shall have prior seniority roster rights on such acquired lines, properties, or facilities.
(b) SIN\G LE IMNPLEMIENTIN-G AGREEM\ENT.-On Or before the date of the adoption of the final system plan bv the Board of Directors of the Association as provided in section 207(e) of this Act. the representatives of the various classes or crafts of the employees of a railroad in reorganization involved in a conveyance pursuant to this Act and representatives of the Corporation shall commence negotiation of a single implementing agreement for each class and craft of employees affected providing (1) the identification of the specific employees of the railroad in reorganization to whom the Corporation offers employment; (2) the procedure by which those employees of






oA
80

the railroad in reorganization may elect to accept employment with the Corporation; (3) the procedure for acceptance of such employees into the Corporation's employment and their assignment to positions on the Corporation's system; (4) the procedure for determining the seniority of such employees in their respective crafts or classes on the Corporation's system which shall, to the extent possible, preserve their prior seniority rights: and (5) the procedure for determining equitable adjustment in rates of comparable positions. If no agreement with respect to the matters referred to in this subsection is reached by the end of 30 days after the commencement of negotiations. the parties shall within an additional 1() days select a neutral referee and, in the event they are unable to agree upon the selection of such referee, then the National Mediation Board shall immediately appoint a referee. After a referee has been designated, a hearing on the dispute shall commence as soon as practicable. Not less than 10 days prior to the effective date of any conveyance pursuant to the provisions of this Act. the referee shall resolve and decide all matters in dispute with respect to the negotiation of said implenientiner agreement or neree ients and shall render a decision wih shall be final and hindine and shall constitute the implementing agreement or areements between the parties with respect to the transaction involved. The salary and expenses of the referee shall be paid pursuant to the provisions of the Railway Labor Act.
(c) Rir.max)Ir To Oi:n Pnonsioxs.-otwithstanding failure for any reason to complete implenenting agreement provided for in sb11)sertion (b) of this section. the Corporation may proceed with a conveyance of properties. facilities, and equipment pursuant to the provisions of this Act and effetuIntO saild tlainSetinn:y Pr d. That all protcte'(1 employees shall be entitled to all of the provisions of such agcreeiients. as finally determined. from the time they are adverlx affected as a reSut111 of anv sich conveyance.
(1) NEW COTi L~TWTIVE-B1RGAINING A(REEMENTS.- Ot later than 0 da a fter fi1 effective dt1ie of any conveyance pursuant to the provisions of this Act, the representatives of the various classes of crafts of te employeeUs of a ra1lilroaId in reor1anizatiOn involved in a conve11ance anld of the Corporation shall Commence negotiations of new collective-bargainig agreements for each class and craft of employees coNvering the rate of pay. rules. and working conditions of employees who are employees of the Corporation, which collective-haronin agreements shall include appropriate )roxisions concerning rates of pay. rules. anld working conditions but shall not include any provi15n for ob >tabilization resulting from any transCot ion effected pursuant to this Act -which may exceed or conflict with t hiom tahl ishl Or prescribed herein.
(0) LuxBur.IrY mu IEivetoyrr CLxr.s.-Tn all cases of claims by MilploySee. 11aisint 1u11er the collective l)argainnr agrTeements of the Si 1 mo:14s ill rcoreallizat 0io in 1 01 egiOn, and subject to section 3 of the Uijlway Ehuor Act (15 IU.S.C. 153). the Corporation. the National il'r:od IF: lyePr (l'1foriltion, or an acquirigcll arier, as the Case illV lw, s1)1 1 nssn1111o10 Ois i liy for thle process ng of anv 0uch 'a0:1111-'W, al pa VT1ilt of Io10e0 li W i are sustained or settled on or '.lh-nent to the late of conveyance inder section 303(b) (1) of th' At an shall be elititled to direct reimbursement from the Asso-






81

ciation pursuant to section 211(h) of this Act. to the extent that such claims are determined bv the Association to be the obligation of a railroad in reorganization in the recrion. Anv liabilitv of an estate of a railroad in reorcanization to its employees which is assumed. processed, and paid, pursuant to this subsection, by the Corporation. the National Railroad Passenger Corporation, or an acquiring carrier shall remain the preconvevance obligation of the estate of such railroad for purposes of section 211(h ) (1) of this Act. The Corporation. the Natioial Railroad Passenger Corporation. an acquiring carrier, or the Association. as the case may be, shall be, entitled to a direct claim as a current expense of administration, in accordance with the provisions of section 211(h) of this Act (other than paragraph (4) (A) thereof). for reimbursement (including costs and expenses of processing such claims) from the estate of the railroad in reorganization on whose behalf such obligations are discharged or paid. In those cases in which claims for employees were siistained or settled prior to such date of conveyance, it shall be the obligation of the employees to seek satisfaction against the estate of the railroads in reorganization which were their former employers.
(f) TRANSFER, OF EiPLOYEES TO THE NATIONAL RAILROAD PASSENGER CORPORATION OR ACQUIRING RAILROADS.-Notwithstanding any otherwise applicable provisions of this title. protected employees to whom the Corporation has made offers of employment may be transferred to the National Railroad Passenger Corporation in accordance with the following procedure:
(1) Not later than 90 days after the date of completion of
the transaction required by section 206(c) of this Act. implementing agreement negotiations between representatives of the various crafts or classes of employees associated with the involved properties, the Corporation. ani the National Railroad Passenger Corporation shall commence. These negotiations shall(A) identify the specific employees of the Corporation
to whom the National Railroad Passenger Corporation offers
employment;
(B) the procedure by which those employees of the Corporation may elect to accept employment with the National
Railroad Passenger Corporation;
(C) the procedure for acceptance of suh employees into
the National Railroad Passenger Corporation's employment;
and
(D) the procedure for determining the seniority of such
employees in their respective crafts or classes on the National Railroad Passenger Corporation's system which shall, to the
extent possible, preserve their prior seniority rights.
If no agreement regarding the matters referred to in this subsection is reached by the end of 60 days after the date of commencement of negotiations (which shall also be a date which is at least 90 days after the transaction contemplated by section 601 (d) of this Act), upon notice of any party, all parties thereto shall within an additional 10 days select a neutral referee. If such parties are unable to agree upon the selection of such a referee, the National Mediation Board shall promptly appoint a referee.
Hearings shall commence not later than 30 days after the date






82

of selection or appointment of such referee, and a decision shall be rendered by such referee within 60 days after the date of commencenent of the hearings. The referee shall resolve and decide all matters in dispute regarding the negotiation of the implementing agreement or agreements. All parties may participate but the referee shall have the only vote. The referee's decision shall be final and binding and shall constitute the implementing agreement or agreements between the parties. The salary and expenses of the referee shall be paid pursuant to the provision
of the Railway Labor Act.
(2) Prior to implementation of and agrreemnent or agreemnlents
pursuant to paragraph (1) of this subsection, the representatives of the various crafts or classes of employees designated to be transferred to the National Railroad Passenger Corporation shall meet with representatives of the National Railroad Passenger (Corporation for the purposes of negotiating agreements regarding rates of pay, rules, and working conditions, If. 60 days after the date of commencement of such negotiations. no agreement has been reached, the har 'ainung agreement in existence on the rail properties from which the employees are to be transferred and which is applicable to the craft or class of employees being transferred will apply and such implementing agreement will be
put into effect.
(3) An employee of the Corporation who is entitled to protection and who is transferred as a result of an acquisition pursuant to this Act. or as a result of the designation a replacement operator. shall, upon transfer to the National Railroad Passenger Corporation, an a'uirij(Y railroa(. or a rep placement operator.
carry with him his protected status. The National Railroad Passenger Corporal ion. an acquiring railroad, or a replacement opelrator. as new eniployers. shall be responsible for payment of protective bellefits anid shall be entitled to reimibursemnent pursuant
to section ;09 of this title.
(4) The National Railroad Passenger Corporation may prior
to completion of any of the agreements referred to in this section.
offer employment to any noncontract employee. Noncontract employees accepting employment with thie National Railroad Passenger Corporation shall carry with them all rights and benefits
accorded to them under this title.
(g) ASSrUrMPTION OF PERSONAL INJURY CrL. mrs.-All cases or claims by employees or their personal representatives for personal injuries or death aainst a railroad in reorganization in the region arising prior to the date of conveyance of rail properties. pursuant to section 30, of this Act. shall be assumed by the Corporation or an acquiring railroad, as the case may be. The Corporation or the acquiring railroad .lall process and pay any such claims that are sustained or settled. and slhall be entitled( to diirect reimbursement from the Association )111rsI1: ( >( ion 211 (I) of t( is A.ct, to te extent that such claims arc ( (hncrinci b tbhe As ci ION to be tlie oblientionl of such railroad. A y I lii ii V of :In taIlet ( f a railroad II I 0aIa1111:t1o which is as11111c (, ( S<'(L. ,111( pail. pilr:1111t t 1iis subsection. ly the Corpora11011 Or :11 :i i 0 lirillg ra'I1 0 l Ili> ll rel 11 t n e pfrecot1Yvevance obiit ( ion otf tle slate of such iiirollad for plurposes of section 211(h) (1)






83

of this Act. The Corporation, an acquiring railroad, or the, Assocation. as the case may be. shall be entitled to a direct claim as a current expense of administration, in accordance with the provisions of section 211(h) of this Act (other than paragraph (4) (A) thereof), for reimbursement (including costs and expenses of processing such claims) from the estate of the railroad in reorganization on whose behalf such obligations are discharged or paid.

EMPLOY PROTECTION
SEC. 505. (a) EQUIVALENT POSITION.-A protected employee whose employment is governed by a collective-bargaining agreement will not, except as explicitly provided in this title, during the period in which he is entitled to protection, be placed in a worse position with respect to compensation, fringe benefits, rules, working conditions, and rights and privileges pertaining thereto, including benefits under any employee pension benefit plan in effect on December 1, 1975, other than a plan maintained primarily for the purpose of providing deferred compensation for a select group of management personnel or other highly compensated employees. For purposes of protecting employee pension benefits under this title, the term "protected employee whose employment is governed by a collective-bargaining agreement" ineludes any beneficiary of. and any participant in. such plan, including noncontract employees. The protected benefits of such beneficiary or participant, accrued as of the date of conveyance, may be limited to the amount guaranteed under terminated plans pursuant to title IV of the Employee Retirement Income Security Act of 1974. Pension benefits shall not be paid to any beneficiary of a terminated plan whose benefits are guaranteed by such Act.
(b) -ONT.TLY DISPLACE-MENT ALLOWANCE.-A protected employee, who has been deprived of employment or adversely affected with respect to his compensation shall be entitled to a monthly displacement allowance computed as follows:
(1) Said allowance shall be determined by computing the total
compensation received by the employee, including vacation allowances and monthly compensation guarantees, and his total time paid for during the 12 full calendar months immediately preceding January 1, 1975, or in the case of a supplementary transaction, the 12 full calendar months immediately preceding the effective date of such transaction in which he performed compensated service more than 50 per centum of each of such months.
based upon his normal work schedule, and by dividing separately the total compensation and the total time paid for by 12, thereby producing the average monthly compensation and average
monthly time paid for: and, if an employee's compensation in his current position is less in any month in which he performs work than the aforesaid average 'compensation, he shall be paid the difference, less any time lost on account of voluntary absences other than vacations, but said protected employee shall be coMpensated in addition thereto at the rate of the position filled for any time worked in excess of his average monthly time, Provided,
however, That(A) in determining compensation in his current employment the protected employee shall be treated as occupying the






84

position, 1)roducingr the, highest rate of pay to wich is qulahificat itns UW seniority eiititle hii under the appjlicable collective bar,(aining arrecinent, an(1 whichI does not require a
chiancre iii t'c1 de lice
(B withi respect to a protected employee who has been de1)rived of Is emlployiit, the said monthly (lisIplacenlent
allowance shall be redtitc(I b1tetl)atotto anyUl
employment comnpensationl b~enef its received l)V thle protectedi eniIpl oyee land shall I e reduced by anl amon t equivalent to any eariTS of sai(1 l)Votected einlloyee in ally ein)loyment subject to the Rail rotd iRetirement Act and 50 per centuin of any earitits im any cipin not ssibee to the Railr'oad
IRetiremeni. Act;
(I) a pr'otected empiIl oyee's ave rare monthly compensation
shall be adjusted from timec to time thereafter to reflect sulbse(Iuelt general wage increases;
(D) Should ft p'Ot('Cte(i einployee's service total less than 12
mouthis in whlich hie performs more than .50 p er centum comnpensated service, based upon his normal work schedule in each of saidl months, his average monthly compensation shall be determined by dividincr separately the total comp1Ienisat ion received by the employee and the total time for wichl het was paid by the num11ber Of nTthls III -which lie PerfOritie0d more than .50 per centumii compilensated service based uponi his
niormial work schied le : and
(E) the monthly (lisp] acemeut allowance provided by this
section shall in no0 event exceed the sum of 1.-,' )500 in an11y mnonthi except that such amount shall be ad jiisted to reflect
subsequent general wage increases.
(2) A protected employee's avera~re mionthily coipensat ion kinder this section shall be based upon. thie rate of pay'17 aimlicable to his employment andl shall include increase, es in rates of pay not in fact paid hbut which were'( provided for in national railroad labor a( rreements grene ral a applicable, durincr tlie PeriodJ involved.
(3) If a protected employee whio is entitledI to a monthly displacement allowance served as anl a cent or a representative of a class or craft Of employees Oil either, a fuill- or part-tune basis in the 12 months immediately preceding .Iamiary 1, 1975, o1' the effective (late, of the, supplemental t r, nsact ion. aIS he0 case0 may be, his mIonthly (Iis 1)1aCement il lowaneIC( S11811 be icCOI1 t ud Iw taking the average of the average monthly COUmpensatiOn and'averagye nltly timeIQ paid for of the prtected employees imnmedliately above a11(1 Ibelow him on thle samfe, seniority roster or his own mon(tlf I l (I iS_)laCCeMrent (10allowaC0 nec wiChleVer is (Yreater.
(4) If a noncontract empJlovee exercises, sen iority rights in a cra ft or c-lass of employes proteted~ under this Act, then, duriingr the j )rimd sm-ch seniorityv is exercised,. SuIch noncontract em,1ployee Shall Io enttitled to til e sait i protect ion o Ilered under this Act to (emnplo~yees ill tle craflft or class Ill which suc(h seniority is ('X01"CiSNIl 110ANTever, inl cor put in thrfie monthly (isplacement aliova ne, the last4 12 months prior to JaIII"r nu 11 1 975, duriin~r w ie] uh oncouiti-act ellovee e performed Uevcetnder a, c0lle.,fiv-ba~ranin a(rIeemnt, sbla 1 Ve used. Tb is pairagra'mh shall






85

not apply to any noncontract employee whose noncontract position has been abolished.
(5) An employee and his representative shall be furnished with
a protected employee's average monthly compensation and average monthly time paid for, computed in accordance -with the terms of this subsection, together with the data upon which such computations are based, within 30 days after the protected employee notifies the Corporation in writing that he has been deprived of employment or adversely affected with respect to his compensation.
(c) DURATION oF DispLACEMENTALLOWANcE.-The monthly displacement allowance provided for in stibsection (b) of this section shall continue until the attainment of acre 65 by a protected employee with 5 or more years of service on the effective date of this Act and, in the case of a protected employee who has less than 5 years service on such date, shall continue for a period equal to his total prior years of service: Provided, That such monthly displacement allowance shall terminate upon the protected employee's death, retirement, resignation, or dismissal for cause; and shall be suspended for the period of disciplinary suspension for cause, failure to work due to illness or disability, voluntary furlough or failure to retain or obtain a position available to him bv the exercise of his seniority rights in accordance with the provisions of this section.
(d) TP-ANSFER.-(1) A protected employee who has been deprived of employment may be required by the Corporation, in inverse seniority order and upon reasonable notice, to transfer to any bona fide vacancy for which lie is qualified in his same class or craft of employee on any part of the Corporation's system and shall then be governed by the collective -bargaining agreement applicable on the seniority district to which transferred. If such transfer requires a change in residence, any such protected employee may choose (A) to voluntarily furlough himself at his home location and have his monthly displacement allowance suspended during the period of voluntary furlough, or (B) to be severed from employment upon payment to him of a separation allowance computed as provided in subsections (e) and (f) of this section, which separation allowance shall be in lieu of all other benefits provided by this title.
(2) Such protected employee shall not be required to transfer to a location requiring a change in residence unless there is a bona fide need for his services at such location. Such bona fide need for services contemplates that the transfer be to a position which has not and cannot be filled by employees who are not required to make a change in residence in the seniority district involved and which. in the absence of this section, would have required the employment of a new employee.
(3) Such protected employee who, at the request of the Corporation, has once accepted and made a transfer to a location requiring a change in residence shall not be required again to so transfer for a period of
3 years.
(4) Transfers to vacancies requiring a change in residence shall be subject to the following:
(A) The vacancy shall be first offered to the junior qualified
protected employee deprived of employment in the seniority district where the vacancy exists, and each such employee shall have






86

20 days to elect one of the options set forth in paragraph (1) of this subsect ion. If that employee elects not to accept the transfer, it will then be offered in inverse seniority order to the remaining (pialified. protected employees deprived of employment on the seniority district, who will each have 20 days to elect one of the
options set forth in paragraph (1) of this subsection.
( ) If the vacancy is not filled by the procedure in paragraph
(4) (A) of this subsection, the vacancy will then be offered in the ifverse order of seniority to the qualified protected employees deprived of employment on the system and each of such employees will be afforded 30 days to elect one of the options set forth in
paraI~ra lph (1) of this subsection.
((') Tlie provisions of this paragraph shall not prevent the
adoption of other procedures pursuant to an agreement made by the Corporation and representative of the class or craft of employees involved.
(e) SE.PARATI)N AL,OW. NC.c-A protected employee who is tendered alid accpts a, iI offer b)y tlle Corpo)()ratioll to r il anlld sever his employment relationship in consideration of payment to him of a separation allowance, and any protected employee whose employment relationship is severed in accordance with subsection (d) of this section, shall be entitled to receive a lumip-sum separation allowance not to exceed $20,000 in lieu of all other benefits provided by this title. Said lump-sum separation allowance, in the case of a protected employee who had not less than 3 nor more than 5 years of service as of the date of this Act, shall amount to 270 days' pay at the rate of the position last held and, in the case of a protected employee having had 5 or more years' service, shall amount to the number of days' pay indicated below at the rate of the position last held dependent upon the age of the protected employee at the time of such termination of employment: 60 or under -----------------------------------------360 days' pay
61 ------------------------------------------------------- 300 days' pay
62 ------------------------------------------------240 days' pay
63 ------------------------------------------------180 days' pay
64 ---- ----- ---------------------------------------120 days' pay
(f) TERMINATIOx ALLOWANCE.-The Corporation may terminate the employment of an employee of a railroad in reorganization who has less than 3 years' service with such railroad, as of the date of enact ment of this Act. The Corporation's right to terminate an employee must be exercised within a period of 1 year from the date of conveyance, pursuant to section 303 of this Act. Upon notification to the employee of the Corporation's intent to terminate his services, the employee shall have the option of accepting the termination allowance or of accepting a voluntary furlough without pay. If the employee entitled to receive a lump sum separation allowance accepts such an allowance, the amount shall be determined as follows:
2 to 3 years' service_ 10-------------ISO days' pay at the rate of the position
last held.
1 to 2 years' service--------------- 90 days pay at the rate of the position
last held.
Less than 1 year's service ----------5 days' pay at the rate of the position last held for each month of service.






87

(g) MOVING EXPENSE BENEFITS.-AIIV protected employee who is required to make a change of residence as the result of a transaction shall be entitled to the following benefits(1) Reimbursement for all expenses of moving his household
and other personal effects, for the traveling expense of himself and members of his family, including living expenses for himself and his family, and for his own actual wage loss, not to exceed 10 working da-ys. Provided, That the Corporation or acquiring railroad shall, to the same extent provided above, assume said expenses for anv em-ployee furloughed -within 3 years after changing his point of employment as a result of a transaction, who elects to move his place of residence back to his original point of employment. No claim for reimbursement shall be paid under the provisions of this section unless Such claim is presented to the Corporation or acquiring railroad within 90 days after the date
on which the expenses were incurred.
(2) (A) (i) If the protected employee owns, or is under a contract to purchase, his own home in the locality from which he is required to move and elects to sell said home. he shall be reimbursed for any loss suffered in the sale of his home for less than its fair market value. In each case the fair market value of the home in question shall be determined as of a (late sufficiently prior to the (late of the transaction so as to be unaffected thiereby. The Corporation or an acquiring railroad shall in each instance be afforded an opportunity to purchase the home at such fair market
value before it is sold by the employee to any otlier person: so
(ii) A protected emploe ma ectowaive the provilsiof
paragraph (2) (A) (i) of this subsection and to receive. in lieu thereof, an amount equal to his closing costs which are ordinarily paid for and cassumied by a, seller of real es tate ii the jurisdiction in which the residence is located. Such costs :--hall include a real estate commission paid to a licensed realtor (not to exceed $3,000 or 6 per centum of sale price, whichever is less). and any prepayment penalty required by the institution holding the nmortgage: such costs shall not include the payment of any "points" by the
seller.
(B) If the protected employee holds an unexpired lease on a
dwelling occupied by him as his home, hie shall be protected from
allI loss and cost in securin-r the cancell ation of said lease.
(C) No claim for costs or loss shall be paid under the provisions, of this paragraph unless the claim is presented to the Corporation or an acquiring railroad within 90 days after such costs
or loss are incurred.
(D) Should a, controversy arise with respect to the value of
the home. the costs or loss sustained in its sale, the costs or loss under a contract for purchase, loss or cost in secUrin~r termination of a lease, or any other question in connection -with these matters.
it shall be decided through joint conference between the employee.
or his re presentative. and the Corporation or an acq-uiring railroad. In the event they are unable to agree. the dispute or controversv may be referred by either party to a b-oard of competent real estate appraisers,, selected in thie following manner: One to be selected by the employee or his representative and one by the






88
Corporation or acquiring railroad and these two, if unable to agree upon a valuation within 30 days, shall endeavor by argument within 10 days thereater to select a third appraiser. or to agree to a method by which a third appraiser shall be selected, and, failing such agreement, either party may request the National Mediation Board to designate within 10 days a third qualified real estate appraiser whose designation will be binding upon the parties. A decision of a majority of the appraisers shall be required and said decision shall be final and conclusive. The salary and expenses of the third or neutral appraiser, including the expenses of the appraisal board, shall be borne equally by the parties to the proceedin gs. All other expenses shall be paid by the party incurring them. including the compensation of the
appraiser selected by such party.
(h) ArPPLICATON OF TiT i:.-Should a railroad rearrange or adjust its forces in anticipation of a transaction with the purpose or effect of depriving a protected employee of benefits to which he otherwise would have become entitled under this title, the provisions of this title will apply to such employee. Provisions of this title shall be applied, upon a conveyance or discontinuance of service, to employees who are otherwise entitled to protective benefits and who were placed in furlough status on or after February 26, 1975.
(i) NONXCONTrACT EiPLO-YE.-Compensation, severance, termination, and moving expense benefits for employees not governed by a collective-bargaining agrreement shall be consistent with subsections
(b), (c), (e), (f), and (g) of this section and shall be in accordance with the following provisions:
(1) A protected employee, whose employment is not governed
by the terms of a collective-bargaining agreement, may be required by the Corporation. upon reasonable notice, to transfer to any position on the Corporation's system. If such transfer reqmuires a change in residence. the employee may either voluntarily suspend his employment at his home location in lieu of protective benefits, or he may sever his employment and receive a benefit computed in accordance with subsection fe) or (f) of this seetion.
These provisions supersede all provisions or conditions in subsection (d) of this section.
(2) If any dispute arises between the Corporation and a noncontract employee regarding the interpretation or application of any provision of this title, the Corporation shall establish a resolution lpro'edure with a rhitration as the final step. Such resolution procedure shall he the exclusive means rvailalle to the parties for resolving such disn te. and any a rlitration decision rendered slIall Ne final anid hindin on all parties. Either party mn v ret 0et aIrhitratioiln a i td Ih n expenses of suilh arbitration shanll le shared equallv by the parties.
(,) xcept. Is otl erwise porovided in t4his title, a protected
('m1IlMee w0 1oe eT iplovment is not !!OVern'1 bv i le term of a C l lc I iP 1)1ha li lr lln a&i~' lll it lu ( w ol 10 14 :em 1 1e tde pie of 0110ofle il ill il10 .(1TT 111 d AN10 Illn4 Wlp iv~ of1 1 8 1
'llll1lofllt i shll not-,iiin the period ini whiich he( is- e ntitled
to }) Fterti Oll. 1)o pl 11 Ied ill nt Wo0se )t 1Si 11011 Witi r01)'P 0et fo 0anY Vo)l i1t111 a iy Pc e f p1 a ill) 'l1 loi 4s or pere feti lle li 4 11cii s provided 1dlei alillV Iif or m i c alcll S111a11c:111 1 111. except th iat the level






89

of benefits to which such an employee is entitled under this paragraph, shall not exceed the level of benefits which is afforded to the Corporation's active noncontract employees of comparable
age, position, and level of compensation.
CONTRACTING OUT
SEC. 506. All work in connection with the operation or services provided by the Corporation on the rail lines, properties, equipment, or facilities acquired pursuant to the provisions of this Act and the maintenance, repair, rehabilitation, or modernization of such lines, properties, equipment, or facilities which has been performed by practice or agreement in accordance with provisions of the existing contracts in effect with the representatives of the employees of the classes or crafts involved shall continue to be performed by said Corporation's employees, including employees on furlough. Should the Corporation lack a sufficient number of employees, including employees on furlough, and be unable to hire additional employees, to perform the work required, it shall be permitted to subcontract that part of such worl which cannot be performed by its employees, including those on furlough, except where agreement by the representatives of the employees of the classes or crafts involved is required by applicable collective-bargaining agreements. The term "unable to hire additional employees" as used in this section contemplates establishment and maintenance by the Corporation of an apprenticeship, training, or recruitment program to provide an adequate number of skilled employees to perform the work.
ARBITRATION
SEC. 507. Any dispute or controversy with respect to the interpretation, application, or enforcement of the provisions of this title, except section 504 (d) and those disputes or controversies provided for in subsection (g) (2) (D) of section 50- and subsection (b) of section 504 which have not been resolved within 90 days, may be submitted by either party to an Adjustment Board for a final and binding decision thereon as provided in section 3 Second, of the Railway Labor Act, in which event the burden of proof on all issues so presented shall be upon the Corporation or, where applicable, the Association.

DUTIES OF ACQUIRING AND SELLING RAILROADS
SEC. 508. (a) AcQurRINGRAILROADS.-(l) An acquiring railroad shall offer such employment, subject to such rules and working conditions, and afford such employment protection to employees of a railroad from which it acquires properties or facilities (including operating rights) pursuant to this Act, and shall afford such protection to its own employees who are adversely affected by such acquisition, as shall be agreed upon between such acquiring railroad and the representatives o'-'f such employees prior to such acquisition, except that the protection and benefits (except as to rules and working con itions) provided for protected employees in such agreements shall be the same as those specified in section 505 of this title. Unless and until such agreements are reached, the acquiring railroad shall not






90

enter into purchase agreements pursuant to section 206(d) (4) of this Act. For purposes of this subsection, the National Railroad Passenger Corporation shall be deemed to be an acquiring railroad, with respect to employees described in section 501(3) of this title.
(2) If the National Railroad Passenger Corporation acquires rail properties of a railroad in reorganization in tilhe region, prior to the date of conveyance of rail properties to the Corporation pursuant to section 303(b) (1) of this Act but after the publication of the preliminary system plan, it shall offer such employment and afford such employment protection to employees of a railroad from which it acquires rail properties and shall further protect its own employees who may be adversely affected by such acquisition, as shall be agreed upon between the National Railroad Passenger Corporation and the representatives of such employees prior to such acquisitions. The protection and benefits provided for employees in such agreements shall be the same as those specified in section 505 of this title, and such protection and benefits shall supersede conflicting provisions in any previously applicable job stabilization agreements or agreements implementing such stabilization agreements, and the National Railroad Passenger Corporation shall be reimbursed for expenses incurred as a result of any such acquisition, as provided in section 509 of this title.
(b) SELLING RAILROADS.-A selling railroad shall offer such employment and shall provide such employment protection to each of its employees who are adversely affected by such sale, pursuant to agreements to be entered into between it and the representatives of such employees prior to said sale: Provided, That (1) the protection and benefits provided for protected employees in such agreements shall be the same as those specified in section 505 of this title, and (2) unless and until such agreements are reached, the selling railroad shall not enter into selling agreements pursuant to section 206(d) of this Act.
PAYMENT OF BENEFITS
STEc. 509. The Corporation, the Association (where applicable). replacement operators, and acquiring railroads, as the case may be. shall he responsible for the actual payment of all allowances. expenses, and costs provided protected employees pursuant to the provisions of this title. The Corporation, tlhe Association (where applicable),. replacement operators, and acquiring railroads shall then be reimbursed for the actual amounts paid to. or for the benefit of. protected employees, pursuant to the provisions of this title, other than provisions with respect to employee pension benefits, not to exceed the aggre(rate sum of $2.50.000,000, by the Railroad Retirement Board, upon certification to suchl Board, by the Corporation, the Association (where appliae), reph aceinent operators, and acquiring railroads, of the amounts paid such employees. Such reimbursement shall be made froimi a s separate acounit inintained in the Treasury of the United States to !)(, known as the Regional Rail Transportation Protective Aou,(Ilnt. N( itlr IHiem lReionnl1 Rail 'Trangorta't till P1lot ctivye Accoulit 11m1' 1ie ( orpolatlOil 0 011 1 I'cphcellilDt Opertl' P o101r ani a(lllirill,1* ail1rota SFhll be (h11arged1 for ly a11io1ts 1 l)'ene1its paid( to a protectedd employee under the provisions of the Railroad Unem-






91

ployrnent Insurance Act or any other income protection law or regulation. There is authorized to be appropriated to the Regional Rail Transportation Protective Account annually such sums as may be required to meet the obligations payable hereunder, not to exceed the aggregate sum of $250,000,000. There is further authorized to be appropriated to the Railroad Retirement Board annually such sums as may be necessary to provide for additional administrative expenses to be incurred by the Board in the peformance of its functions under this section.

TITLE VI-MISCELLANEOUS PROVISIONS
RELATIONSHIP TO OTHER LAWS
SEc. 601. (a) ANTITRUST.- (1) Except as specifically provided in paragraph (2) of this subsection, no provision of this Act shall be deemed to convey to any railroad or employee or director thereof any immunity from civil or criminal liability, or to create defenses to actions, under the antitrust laws.
(2) The antitrust laws are inapplicable with respect to any action taken to formulate or implement the final system plan where such action was in compliance with the requirements of such plan and with respect to any action taken to formulate or implement any supplemental transaction.
(3) As used in this subsection, "antitrust laws" includes the Act of July 2, 1890 (ch. 647, 26 Stat. 209), as amended; the Act of October 15, 1914 (ch. 323, 38 Stat. 730), as amended; the Federal Trade Commission Act (38 Stat. 717), as amended; sections 73 and 74 of the Act of August 27, 1894 (28 Stat. 570) as amended; the Act of June 19, 1936 (ch. 592, 49 Stat. 1526), as amended; and the antitrust laws of any State or subdivision thereof.
(b) COMMERCE, SECURITIES AND BANKRUP'CY.-(1) The provisions of the Interstate Commerce Act (49 U.S.C. 1 et seq.) and the Bankruptcy Act (11 U.S.C. 205 et seq.) are inapplicable (A) to actions taken under this Act to formulate and implement the final system plan which such action was in compliance with the requirements of such plan, and (B) to actions taken under this Act to formulate or implement any supplemental transaction.
(2) All securities of the Corporation which are issued to the Association as the initial holder, or which are issued in connection with the transfer to the Corporation or a subsidiary thereof -of rail properties under this Act, shall be deemed for all purposes to have been issued subject to and authorized pursuant to section 20a of the Interstate Commerce Act (49 U.S.C. 20a).
(3) The provisions of section 5 of the Securities Act of 1933 (15 U.S.C. 77e), shall not apply to transactions involving the issuance of any security of the Corporation to the Association, transactions involving the issuance of any security of the Corporation that is deposited with the special court pursuant to section 303 (a) of this Act, or transaictions involving the issuance or distribution of any security of the Corporation., where the terms and conditions of such issuaince or distribution are approved by the special court pursuant to section 303 (c) of this Act.






92

(4) The powers and duties of the Commission under section 77 of the Bankruptcy Act (11 U.S.C. 205), with respect to a railroad in reo1,anlzation in the region which conveys all or substantially all of its d(lesignated rail properties to the Corporation or a subsidiary thereof, or to profit able railroads in the region, pursuant to the final system plan, and the requirement that plans of reorganization be filed with the Coniission, shall cease upon the date of such conveyance. The powers and duties of the Commission under section 77 of the Bankruptcy Act shall also so terminate, as of the date of enactment of this paragraph, with respect to any railroad reorganization mider such section 77 but not subject to this Act which (1) does not operate any line of railroad, and (2) has transferred all or substantially all of its rail properties to a railroad in reorganization in the region which was subject to this Act prior to the date of enactment of this paragraph. Thereafter, such powers and duties of the Commission shall be vested in the district court of the United States which has jurisdiction of the estate of any such railroad in reorganization at the time of such conveyance. Such court shall proceed to reorganize or liquidate such railroad in reorganization pursuant to such section 77 on such terms as the court deems just and reasonable, or pursuant to any other provisions of the Bankruptcy Act, if the court finds that such action would be in the best interests of such estate. This paragraph does not affect any obligation of any carrier by railroad subject to regulation under the Interstate Commerce Act. The powers and duties of the Commission under section 77 of the Bankruptcy Act shall continue in effect only to the extent that the railroad in reorganization continues to operate any line of railroad.
(c) ENVIRONMENT.-The provisions of section 102(2) (C) of the National Environmental Policy Act of 1969 (42 U.S.C. 4332(2) (C)) shall not apply with respect to any action taken under authority of this Act before, and including, the conveyance of rail properties ordered by the special court under section 303(b) (1) of this Act, and shall not apply thereafter to any action taken in compliance with the requirements of the final system plan.
(d) NORTHEmAST CORRnDOnR.-(1) Rail properties designated in accordance with sect ion 206(c) (1) (C) of this Act shall be purchased or leas(d hv the National Railroad Passenger Corporation. The Corporation shall negotiate an appropriate sale or lease agreement with the National Railroad Passenger Corporation for the properties designated( for transfer pursuant to section 206(c) (1) (C) of this Act (45 T.S.C. 716 (c) (1) (C)), which shall take effect on the date of conveyance of such properties to the Corporation.
(2) Properties acquired by purchase. lease, or otherwise pursuant to this subsection shall be improved in ord(ler to meet the goal set forth in section 206(a) (3) of this Act. relating to improved high-speed passenger service, bvy the earliest practicable date after the d(late of enactmnient of this Act.
(3) The Secretary shall begin the necessary engineering studies and impnrovenients upon enactment.
(4) The final sysemi plan shall provi(lde for any necessary coordinaionT ith freilt or cOnmnut er services of use of the facilities designatIed( in section 206(c) (1) (C) of this Act. Such coord(lination may be






W

effectuated through a single operating entity, designated in the final system plan, or as mutually agreed upon by the interested parties.
(5) Construction or improvements made pursuant to this subsection may be made in consultation with the Corps of Engineers.
(e) EMERGENCY SERVICE.-Section 1(16) of the Interstate Commerce Act (49 U. S.C. 1 (16) ) is amended by inserting (a) before the word "Whenever" in the first sentence and adding the following new paragraph:
"(b) Whenever any carrier by railroad is unable to transport the traffic offered it because"(1) its cash position makes its continuing operation impossible;
(2) it has been ordered to discontinue any service by a court;
or

44 (3) it has abandoned service without obtaining a certificate
from the Commission pursuant to this section;
the Commission may, upon the same procedure as provided in paragraph (15) of this section, make such just and reasonable directions with respect to the handling, routing, and movement of the traffic available to such carrier and its distribution over such carrier's lines, as in the opinion of the Commission will best promote the service in the interest of the public and the commerce of the people subject to the following conditions:
"(A) Such direction shall be effective for no longer than 60 days unless extended by the Commission for cause shown for an additional designated period not to exceed 180 days.
(B) No such directions shall be issued that would cause a carrier to operate in violation of the Federal Railroad Safety Act of 1970 (45 U.S.C. 421) or that would substantially impair the ability of the carrier so directed to serve adequately its own patrons or to meet its outstanding common carrier obligations.
(C) The directed carrier shall not, by reason of such Commission direction, be deemed to have assumed or to become responsible for the debts of the other carrier.
(D) The directed carrier shall hire employees of the other carrier to the extent such employees had previously performed the directed service for the other carrier, and, as to such employees as shall be so hired, the directed carrier shall be deemed to have assumed all existing employment obligations and practices of the other carrier relating thereto, including, but not limited to, agreements governing rate of pay, rules and working conditions, and all employee protective conditions commencing with and for the duration of the direction.
(E) Any order of the Commission entered pursuant to this paragraph shall provide that if, for the period of its effectiveness, the cost, as liereinafter defined, of handling, routing, and moving the traffic of another carrier over the other carrier's lines of road shall exceed the direct revenues therefor, then upon request, payment shall be made to the directed carrier, in the manner hereinafter provided and within 90 days af ter expiration of such order, of a sum equal to the amount by which such cost has exceeded said revenues. The term "cost" shall mean those expenditures made or incurred in or attributable to the operations as directed, including the rental or lease of necessary equipinent, plus an appropriate allocation of common expenses, overheads,



36-573 0 79 7






94
and a reasonable profit. Such cost shall be then currently recorded by the carrier or carriers in such manner and on sucli forms as by general order may be proscribed by the Commission and shall be submitted to and subject to audit by the Commission. The Commission shall certify promptly to the Secretary of the Treasury the amount of payment to be ma(le to said carrier or carriers under the provisions of this para('rraph. Payments required to be made to a carrier under the provisiolis of this paragraph shall be made by the Secretary of the Treasury f rom f unds hereby authorized to be appropriated in such amounts as may be necessary for the purposes of carrying out the provisions bereof.".
ANNUAL EVALUATION BY THE SECRETARY
SEC. 602. As part of his annual report each year, the Secretary shall transmit to Congress each year a comprehensive report on the effectiveness of the Association and the Corporation in implementing the purposes of this Act, tog ether with any recommendations for additional legislative or other action.

FREIGHT RATES FOR RECYCLABLES
SEC. 603. The Commission shall, by expedited proceedings, adopt appropriate rules under the Interstate Commerce Act (49 U.S.C. 1 et seq.) vhich will eliminate discrimination against the shipment of recyclable materials in rate structures and in other Commission practices which such discrimination exists.

SEPARABILITY
SEC. 604. If any provision of this Act or the application thereof to any person or circumstances is held invalid, the remainder of this Act an4 the application of such provision to other persons or circumstances shall not be affected thereby.
TAX PAYMENTS TO STATES
SEC. 605. (a) Notwithstanding any other provision of law, no railroad in reorganization shall withhold from any State, or any political subdivision thereof, the payment of the portion of any tax owed by such railroad to such State or subdivision, which portion has been collected by such railroad from any tenant thereof.
(b) Any railroad which violates the provisions of subsection (a) of this section by withholding any portion of a tax referred to in such subsection shall be fined not more than $10,000 for each such violation.