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104th Congress (1995-1996)

House Report 104-299

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AMTRAK REFORM AND PRIVATIZATION ACT OF 1995

104TH CONGRESS

REPORT

HOUSE OF REPRESENTATIVES

1st Session

104-299
AMTRAK REFORM AND PRIVATIZATION ACT OF 1995

OCTOBER 30, 1995- Committed to the Committee of the Whole House on the State of the Union and ordered to be printed
Mr. SHUSTER, from the Committee on Transportation and Infrastructure, submitted the following
R E P O R T
together with
MINORITY VIEWS
[To accompany H.R. 1788]
[Including cost estimate of the Congressional Budget Office]

SECTION 1. SHORT TITLE.

TITLE I--PROCUREMENT REFORMS

SEC. 101. CONTRACTING OUT.

SEC. 102. CONTRACTING PRACTICES.

SEC. 103. FREEDOM OF INFORMATION ACT.

TITLE II--OPERATIONAL REFORMS

SEC. 201. BASIC SYSTEM.

SEC. 202. MAIL, EXPRESS, AND AUTO-FERRY TRANSPORTATION.

SEC. 203. ROUTE AND SERVICE CRITERIA.

SEC. 204. ADDITIONAL QUALIFYING ROUTES.

SEC. 205. TRANSPORTATION REQUESTED BY STATES, AUTHORITIES, AND OTHER PERSONS.

SEC. 206. AMTRAK COMMUTER.

SEC. 207. COMMUTER COST SHARING ON THE NORTHEAST CORRIDOR.

SEC. 208. ACCESS TO RECORDS AND ACCOUNTS.

TITLE III--COLLECTIVE BARGAINING REFORMS

SEC. 301. RAILWAY LABOR ACT PROCEDURES.

SEC. 302. SERVICE DISCONTINUANCE.

TITLE IV--USE OF RAILROAD FACILITIES

SEC. 401. LIABILITY LIMITATION.

`Sec. 28103. Limitations on rail passenger transportation liability

`28103. Limitations on rail passenger transportation liability.'.

TITLE V--FINANCIAL REFORMS

SEC. 501. FINANCIAL POWERS.

`Sec. 24304. Employee stock ownership plans

`24304. Employee stock ownership plans.'.

SEC. 502. DISBURSEMENT OF FEDERAL FUNDS.

SEC. 503. BOARD OF DIRECTORS.

`Sec. 24302. Board of Directors

SEC. 504. REPORTS AND AUDITS.

SEC. 505. OFFICERS' PAY.

SEC. 506. EXEMPTION FROM TAXES.

TITLE VI--MISCELLANEOUS

SEC. 601. TEMPORARY RAIL ADVISORY COUNCIL.

SEC. 602. PRINCIPAL OFFICE AND PLACE OF BUSINESS.

SEC. 603. STATUS AND APPLICABLE LAWS.

SEC. 604. WASTE DISPOSAL.

SEC. 605. ASSISTANCE FOR UPGRADING FACILITIES.

SEC. 606. RAIL SAFETY SYSTEM PROGRAM.

SEC. 607. DEMONSTRATION OF NEW TECHNOLOGY.

SEC. 608. PROGRAM MASTER PLAN FOR BOSTON-NEW YORK MAIN LINE.

SEC. 609. BOSTON-NEW HAVEN ELECTRIFICATION PROJECT.

SEC. 610. AMERICANS WITH DISABILITIES ACT OF 1990.

SEC. 611. DEFINITIONS.

SEC. 612. NORTHEAST CORRIDOR COST DISPUTE.

SEC. 613. INSPECTOR GENERAL ACT OF 1978 AMENDMENT.

SEC. 614. CONSOLIDATED RAIL CORPORATION.

SEC. 615. INTERSTATE RAIL COMPACTS.

SEC. 616. CONFORMING AMENDMENT.

TITLE VII--AUTHORIZATION OF APPROPRIATIONS

SEC. 701. AUTHORIZATION OF APPROPRIATIONS.

PURPOSE AND SUMMARY

On June 8, 1995, H.R. 1788, the Amtrak Reauthorization and Privatization Act of 1995 was introduced. Amtrak's previous authorization expired on September 30, 1994. H.R. 1788 authorizes appropriations totaling $3.58 billion over the fiscal years 1996-1999 for Amtrak and represents a thorough overhaul of Amtrak's authorizing statutes, aimed at reducing costs and eliminating Federal micromanagement of Amtrak's operations.

H.R. 1788 provides Amtrak with far greater flexibility in managing its work force. H.R. 1788 calls for an accelerated bargaining process on the issue of contracting out work and on the issue of labor protection. At the end of the bargaining process (254 days in total), both Amtrak's statutory ban on contracting out work other than food and beverage service and pre-enactment contract terms that implement that ban, as well as all statutory and contract terms relating to labor protection, would lapse. At that point, labor and management could employ `self-help' measures under the Railway Labor Act. Any union with a current contract moratorium in force at the date of enactment would begin negotiations when the moratorium expires.

Also, H.R. 1788 provides that ICC (`New York Dock') labor protection standards do not apply in the event of an Amtrak bankruptcy and revises the Northeast Rail Service Act to restrict but not eliminate `flowback' labor protection rights for employees who joined Amtrak from Conrail or its predecessor railroads.

The bill also provides Amtrak with flexibility in designing and managing its route system. H.R. 1788 repeals Amtrak's current obligation to operate the `basic system' of routes (consisting primarily of routes inherited from private railroads in 1971), unless excused by financial emergency or insufficient funding. Under the legislation, Amtrak would decide the merits of various routes according to commercial potential, not arbitrary statutory preference. Further, the bill eliminates current statutory criteria for evaluating routes and services, and the statutory matching formula that currently applies to State-requested service. To assist the States in contributing to continued rail service in cases where Amtrak is no longer able to offer service entirely on its own, the bill provides for interstate compact pre-approval, allowing the States to enter into long-term agreements with each other that ensure stability in the provision of rail service.

H.R. 1788 establishes a new procedure by which commuter authorities on the Northeast Corridor would compensate Amtrak for their use of the Corridor. Under the current practice, commuter authorities pay Amtrak only for the incremental costs of their use of the Corridor, but not for the shared capital costs. Outside the Northeast Corridor, commuter authorities simply negotiate the terms of their use of right-of-way with the owner of the property, whether a State entity or a private freight railroad. H.R. 1788 would place Northeast Corridor commuter operators on the same footing as their off-Corridor counterparts by repealing the statutory formula by which commuters reimburse Amtrak. Henceforward, Amtrak and the commuter authorities would negotiate the terms for reimbursement according to standard business practices. Any disputes that could not be resolved by the parties would be submitted to binding arbitration, with the Interstate Commerce Commission available as an arbitrator if chosen by the parties.

Further, H.R. 1788 contains dramatic financial reforms that will afford Amtrak many more options in obtaining private financing. The bill calls for Amtrak to redeem all of its common stock (now held with one exception by freight railroads), and removes the voting rights and liquidation preference of the preferred stock now held exclusively by the Department of Transportation. DOT's note and mortgage on the Northeast Corridor are extinguished as well. This would have the benefit of removing DOT as a preferred creditor who stands ahead of other potential commercial lenders in all Amtrak financial transactions.

H.R. 1788 also provides for new leadership at Amtrak to deal with Amtrak's financial crisis. Sixty days after enactment, the existing board of directors would be removed, to be replaced by a 4-year emergency reform board to be appointed by the President in consultation with the Congressional leadership. All new board members would be required to have background and expertise in transportation and business management and would be confirmed by the Senate.

The bill also resolves an issue of longstanding concern to Amtrak and to the freight railroads over which Amtrak operates and removes a major barrier to the expansion of passenger rail service--exposure to tort liability from passenger train accidents. This exposure results from the usually involuntary participation of the freight railroad as a provider of facilities and infrastructure. H.R. 1788 establishes two limits on tort liability exposure of freight and passenger carriers who operate or provide facilities for rail passenger service: (1) a cap of $250,000 or three times noneconomic damages, whichever is greater, on punitive or exemplary damages, and (2) a cap of $250,000 above economic losses per claimant on noneconomic damages. The bill also affirms that indemnity contracts between a passenger rail operator and any other party are fully enforceable without regard to any other law or public policy.

Finally, to assist Amtrak's efforts to reach financial stability and eventual removal from dependence on Federal assistance, H.R. 1788 calls for the establishment of a 7-member advisory council of business experts who have no affiliation with the railroad industry, Amtrak, or the United States Government. Called the Temporary Rail Advisory Council (TRAC), this expert body is to submit an interim report within 120 days of enactment and a final report within 270 days of enactment. The reports are to evaluate Amtrak's performance, business plan, cost-containment and productivity-improvement strategies, and cost and accounting procedures and recommend actions Amtrak can take to reduce Federal subsidies to achieve a complete or partial privatization.

BACKGROUND AND NEED FOR LEGISLATION

A February 1995 General Accounting Office report, entitled `Intercity Passenger Rail: Financial and Operating Conditions Threaten Amtrak's Long-Term Viability,' found that:

Unfortunately, given Federal budget pressures, a major increase in Amtrak funding is not on the horizon. The House 1996 Budget Resolution eliminated Federal capital and operating subsidies for Amtrak by the year 2002, and the Senate 1996 Budget Resolution provided for substantially reduced subsidies over the 7 years. Further, the FY 1996 Transportation and Related Agencies Appropriations Act is likely to provide a substantial decrease in FY 1996 Amtrak funding compared to FY 1995. (A decrease of approximately 25 percent in total funding is likely, given the current conference funding level.) Dramatic restructuring of Amtrak's operations that questions all of the basic assumptions upon which Amtrak was originally formed is a vital necessity. H.R. 1788 represents a thorough overhaul of Amtrak's corporate structure and labor requirements aimed at rescuing Amtrak from potential liquidation and preserving intercity passenger rail service in this country.

Amtrak has already begun to address its financial crisis. In December 1994, Amtrak officials announced that without immediate economy moves, Amtrak would run short of FY 1995 funds by June 1995, with a cash shortfall of almost $200 million. Amtrak has initiated an aggressive 5-year business plan aimed at reducing costs and increasing productivity. In FY 1995 routes have been eliminated and service reduced to lower costs to bring Amtrak's budget into balance by the end of the fiscal year. These cuts amount to 20 percent of Amtrak's annual train-miles and affect 41 States. In addition, 1,500 employees have been laid off. Additional plans include retiring Amtrak's oldest cars, replacing Amtrak's non-diner, non-specialty cars with modern cars, and continued reductions in employment.

To date, Amtrak has been successful in its cost reduction efforts and is currently ahead of schedule in meeting the targets set forth in its business plan. Amtrak had assumed that it needed to generate $36 million in bottom-line improvements by April, yet the most recent GAO reports show that Amtrak had already generated $58 million in savings at that time. Even more encouraging, Amtrak's revenues are higher than anticipated, thus supporting Amtrak's assumption that it could reduce frequency without incurring a proportionate reduction in ridership. The Committee commends Amtrak for its efforts in taking actions required to complete the fiscal year with a balanced budget.

Unfortunately, however, Amtrak's financial woes are not limited to a potential operating shortfall in FY 1995. The GAO has reported that underinvestment in Amtrak's physical assets over the last decade has produced a substantial backlog in unmet capital needs, for which a total of between $4 billion and $5 billion is required. Major investments are required to purchase new equipment, conduct equipment overhauls, modernize maintenance facilities, and return the Northeast Corridor to a decent state of repair. If these investments are not made, Amtrak's service quality will continue to deteriorate, leading to a decline in ridership and increased operating costs. In the long term, without major reforms and dramatic restructuring, this will mean the end of Amtrak.

LABOR REFORMS

The Committee recognizes that, if Amtrak is to survive, sacrifices will have to be made by all present beneficiaries of Federal spending on Amtrak, including Amtrak's employees. Gone are the days when Amtrak employees could enjoy exceptionally generous severance benefits and outsourcing restrictions that far surpass the standards for other U.S. passenger carriers. The Committee believes that, since Amtrak is a taxpayer-funded corporation, it should be operated as efficiently as possible to give the taxpayers the greatest return for their investment.

Labor protection.--Currently, Amtrak is subject to statutory labor protection provisions for its own employees, commonly referred to as `C-2,' after the 1973 appendix to Amtrak's operating agreements that specified the benefit package. The agreement was entered into under a statutory mandate, now recodified as 49 U.S.C. 24706(c), that Amtrak provide `fair and equitable arrangements' to protect employees whose jobs are affected by service discontinuances. Under the same statutory mandate, Amtrak was required to make labor protection agreements covering former private railroad employees who transferred to Amtrak; these arrangements are known as the `C-1' appendix.

The C-2 agreement provides for one year of wage continuation for each year of prior service (up to a maximum of 6 years' pay) to each employee whose job is terminated or pay and benefits reduced due to a route elimination or frequency reduction below three trains weekly. In a departure from all previous (and subsequent) mandated labor protection arrangements for other railroads, the C-2 agreement applies to management employees of Amtrak, in addition to employees subject to collective bargaining agreements. Thus, Amtrak is unique in having each white-collar management employee eligible for up to 6 years of salary continuation if he can establish that the abolition of his position (or adverse effect on salary and benefits) was due to a service discontinuance or frequency reduction below three times weekly.

A second unique feature of the Amtrak labor protection package, without counterpart in freight railroad labor-protection agreements, is the `30-mile rule.' This provision stipulates that a covered employee can invoke the full wage-continuation and severance benefits if Amtrak seeks to move his work location 30 miles or more. Actually, if the employee already lives 30 or more miles from his work location, any transfer (1 mile, 5 miles, etc.) can trigger the option to take labor protection benefits in lieu of the transfer. In some cases the `30-mile rule' has been altered by subsequent contract.

The current labor protection mandates affect Amtrak's operations in a wide variety of scenarios, ranging from service discon- tinuations (i.e., eliminating routes or reducing service below 3 trains per week) to partial or complete liquidation of Amtrak. For the extreme situation involving complete liquidation, the GAO has estimated that the total labor protection obligation of Amtrak would cost between $2.1 billion and $5.2 billion-- up to more than five times the total annual Federal funding for Amtrak.

Even if liquidation options are not considered, the current requirements impose major operational handicaps on Amtrak. The 30-mile rule seriously reduces, and could virtually eliminate, Amtrak's ability to redeploy its work force from the least promising routes to those with the most revenue potential. And in redesigning its route system to reduce costs, Amtrak has had to rely on frequency reductions (as distinguished from closure or relocation of routes) in many cases simply to avoid triggering C-2 payments.

The Committee notes that the actual payout of labor protection benefits--generally rather small up to now--is not the critical problem. Rather, it is the large and potentially debilitating opportunity cost that the C-2 requirements impose on any attempts by Amtrak to streamline and redeploy its work force. In short, the real costs of statutorily mandated labor protection lie not in the actual payments to employees, but in the other continuing costs imposed on Amtrak by depriving it of the ability to make normal business decisions about redeployment of its personnel and equipment to match changing market conditions.

Contracting out.--Congress has also imposed restrictions on Amtrak's ability to contract out work. Currently, Amtrak is subject to a statutory ban on all contracting out work other than food and beverage service if the contracting results in the layoff of a single employee in a bargaining unit. Thus, by the terms of the statute, an adverse effect on a single employee forecloses any contracting out, irrespective of cost savings or efficiency gains.

This ban is particularly onerous in light of Amtrak's tremendous backlog of unmet capital needs. Although usually considered to provide primarily operating savings through reduced labor costs, the ability to contract out for Amtrak is actually more important as a means to provide desperately needed capital savings. For example, Amtrak's maintenance facilities were built, in some cases, in the 19th century and are in a state of extreme disrepair. GAO's February 1992 report noted that at one major facility, Amtrak's newest diesel locomotives are too large to fit inside the locomotive shop building. Standing derailments are common at these facilities, and seats are stored outdoors because there is insufficient indoor storage space. The GAO has estimated that $262 million is required to repair and modernize Amtrak's principal facilities.

The ability to contract out would permit Amtrak to hire elsewhere for this work, saving the taxpayers $262 million that could be spent to retain rail service or make improvements to service quality. Other railroads and suppliers to the railroad industry have the facilities to provide maintenance and other services to Amtrak without Amtrak's having to bear the very large cost of constructing (or replacing) and maintaining very expensive in-house facilities. In other words, even if the ability to contract out produced no labor cost savings at all, it would still be a vital necessity for Amtrak to obtain the use of adequate capital resources needed to provide continued rail passenger service.

PRIVATIZATION

When Congress created Amtrak in 1970, it established Amtrak as a corporation--not a Federal agency--under the laws of the District of Columbia. However, Amtrak's corporate structure contains a number of public features. For example, the Department of Transportation is the sole holder of preferred stock, which gives the Federal Government a preference over common stockholders in claiming any Amtrak assets in the event of a liquidation. (Amtrak also has common stock--generally considered to have no market value, but carried on Amtrak's books at about $93 million--which was issued to certain freight railroads at their option instead of a tax credit for the private railroads' cash or equipment `buy-ins' that helped provide Amtrak with its initial capital.) DOT also holds a 999-year lien on the Northeast Corridor, which means that title to the Northeast Corridor would revert to DOT if Amtrak were to shut down. Further, Amtrak's board of directors is appointed by the President and the Secretary of Transportation, and the Secretary of Transportation is an ex officio member of the board of directors.

H.R. 1788 goes a long way toward clarifying Amtrak's status as a private entity. First, Amtrak is required to redeem its common stock at fair market value. Second, DOT's liquidation preference and voting rights that attach to its preferred stock are extinguished. Also, DOT's note and mortgage on the Northeast Corridor are relinquished. These steps will free Amtrak to enter into commercial financing arrangements that maximize the utility of Amtrak's assets, including its real estate holdings, without first having to obtain a DOT waiver. The bill encourages Amtrak to include employee stock ownership plans as part of any new stock issuances.

A key feature of H.R. 1788 is its change in the structure of the board of directors. Currently, the 9-member board of directors is appointed by the President and the Secretary of Transportation. In some cases, members must by law be selected from lists provided by certain interest groups pursuant to specific statutory recognition of the groups. The Committee is aware that some legal analysts consider the existing board to be a violation of the Appointments Clause of the Constitution, because some of the President's appointments are restricted to names from lists provided by outside groups.

H.R. 1788 would establish a new 4-year temporary emergency reform board of directors. This new board would establish the bylaws under which future boards of directors would be appointed, just as other private companies determine who sits on their boards. The only requirement imposed by H.R. 1788 for such future boards is that they include employee representation.

The temporary emergency reform board would be a 7-member board appointed by the President in consultation with the Congressional leadership. All members would be Senate-confirmed. If the temporary board is not in place 60 days after enactment, the special rail court established under the Regional Rail Reorganization Act of 1973 would appoint a `director general' to exercise the powers of the board until the new board of directors is appointed. The main task of the temporary emergency reform board would be to usher Amtrak through its current fiscal crisis and to establish procedures for future boards to be selected.

LIABILITY REFORM

Reforms to Amtrak's liability arrangements with the freight railroads are tied directly to Amtrak's budget situation. The current liability arrangement leaves the freight railroads, over whose tracks Amtrak operates by law, potentially exposed to the full cost of a passenger rail accident. This raises Amtrak costs, since the fees that Amtrak pays to the freight railroads include the cost of that liability, including insurance--if available--that freight railroads have to purchase to cover their liability exposure.

The current liability arrangement between Amtrak and the freight railroads is tied to Amtrak's compulsory access to the freight railroads' rights-of-way. Outside the Northeast Corridor, Amtrak operates over the freight railroads' rights-of-way (except for two segments owned by Amtrak in upstate New York and in Michigan). Amtrak's access to freight railroad tracks and facilities is guaranteed by Federal law, so the freight railroads cannot refuse Amtrak access, but are entitled to compensation on an incremental cost basis. If Amtrak and the freight railroads cannot reach a voluntary agreement on the terms and conditions of access, the Interstate Commerce Commission sets the terms, including the level of compensation. Payments by Amtrak for use of the freight railroad facilities total between $90 million and $100 million annually.

Amtrak's access and payments to the freight railroads are governed by 25-year access agreements signed in 1971 when Amtrak began operations. These expire in April 1996. Virtually all the existing agreements contain a `no-fault' indemnity provision stating that, regardless of fault, the freight railroad will bear all property and injury losses to its own equipment and personnel, and Amtrak will do the same for its equipment and personnel, including passengers.

However, after the 1987 Chase, Maryland, accident involving the collision of an Amtrak train and a Conrail freight locomotive, the U.S. District Court for the District of Columbia ruled that enforcement of the indemnification agreement between Amtrak and Conrail would violate public policy since gross negligence on the part of the Conrail locomotive engineer was alleged as the cause of the accident. This avoided a large taxpayer-funded expense in the short term, but in the long run convinced the entire freight industry that the indemnity agreements offered no real legal protection.

Since all access agreements expire in 1996, failure by Congress to provide any containment of rail passenger liability will mean that the incremental costs charged to Amtrak are likely to include a substantially increased component to cover the liability exposure (whether insured or not). This could make the price of access prohibitively expensive for Amtrak and thus curtail or prevent rail passenger operations. Amtrak is already reserving nearly $200 million on its books to cover liability exposure (including employee claims under the Federal Employers' Liability Act, which are unaffected by H.R. 1788). With the threat of runaway jury verdicts, Amtrak's liability, litigation, and insurance costs are likely only to increase, thus imposing added costs on the taxpayers.

It should be noted that there is precedent for limitations on liability in domestic transportation due to the taxpayer-funded nature of the activity. A number of State laws and court decisions have served to limit liability in taxpayer-funded transportation, including in New York (the Long Island Railroad), Pennsylvania (Southeastern Pennsylvania Transportation Authority), New Jersey (New Jersey Transit) and Illinois (Chicago Transit). In addition, a 1990 Federal law limits the liability exposure of the Virginia Railway Express commuter authority. In general, the rationale for imposing limitations on liability in public transportation is to encourage certain activities that yield substantial social benefits that otherwise would not be undertaken due to the exposure to liability, and to protect the taxpayers who ultimately bear the costs of tort liability incurred in providing the public transportation.

The Committee rejects the contention that restrictions on liability will adversely impact rail safety. This allegation ignores the fact that there are significant incentives in place outside of tort liability for railroads to continue sound safety practices. Railroad safety is subject to regulation by the Federal Railroad Administration. Under current law, any single violation of a Federal safety law or regulation can subject an individual or a company to a fine from $500 to $10,000--with the maximum increase to $20,000 for willful violations. (There is a separate schedule for violations of the Hours of Service Act.) Total civil penalties collected by the Federal Railroad Administration in FY 1994 were $7.94 million.

In addition, in the wake of the 1987 Chase, Maryland, accident, in which the locomotive engineer who caused the accident was found to have been drug-impaired, Congress amended the Federal Railroad Safety Act to grant direct personal jurisdiction over railroad employees in safety-sensitive positions. (Previously, only the rail carrier itself had been subject to Federal regulation, penalties, and discipline.) Also, mandatory random drug testing, alcohol testing, and pre-employment drug testing became standard features of the Federal railroad safety program. In addition, Federal rail safety laws were amended to require Federal certification of engineers, using mandatory training standards and procedures analogous to FAA standards for pilots. It should also be noted that the locomotive engineer involved in the Chase, Maryland, accident was convicted on criminal manslaughter charges and was sent to prison. In short, it is clear that adequate incentives remain in place to ensure the continued safe operation of the nation's rail system.

The Committee believes that a crucial feature of the liability reform provision is the affirmation of the right of owners of rights-of-way and passenger operators to indemnify by contract. Because of the court ruling in the wake of the Chase, Maryland, accident, existing contractual indemnity arrangements do not afford a reliable allocation of risk among the contracting parties. Without the confirmation that indemnity agreements will be upheld in court, future passenger operations, whether commuter, high-speed rail, or intercity rail, will be placed in jeopardy as freight railroads resist taking on what is increasingly viewed as an unacceptable and uncompensated liability exposure.

STATE PARTICIPATION

One of the greatest changes at Amtrak during the last year is the increased participation on the part of the States in funding Amtrak service. The Committee is pleased that the States have exhibited such strong support for Amtrak service and encourages their continued participation in preserving intercity rail service. Several features of H.R. 1788 are designed to assist the States in this endeavor.

From Amtrak's beginning in 1971 until this year, it has been unique among passenger transportation services in that its public funding came almost entirely from the Federal government. Both the highways and mass transit programs require a State match for Federal funds, and States and local entities contribute substantially to construction of airports. Until recently, however, outside of service that Amtrak initiated at State request, Amtrak service has been funded solely through farebox revenues and Federal subsidies.

With Amtrak's announcement of substantial route and service cutbacks early this year, the States have shown strong support for Amtrak service and begun to contribute significantly toward continuing Amtrak service that would otherwise have to be eliminated due to the funding shortage. Of the 8.8 million train-miles that Amtrak originally planned to terminate as part of its strategic business plan, the States have `bought back' 1.1 million train-miles at a total cost to them of $14.5 million on an annualized basis.

This increased State participation in Amtrak service has raised a number of issues that are addressed in H.R. 1788. For example, one concern that States have had is what to do when service being threatened with elimination crosses State lines, and coordination between several States is required to preserve the service. H.R. 1788 establishes Congressional advance consent to multi-State agreements providing for State cooperation to support intercity rail service. This is meant to promote stable, long-term relationships among States who wish to enter joint ventures to retain or expand rail passenger service to supplement Amtrak's own operations. These interstate compacts could include agreements to retain existing service, commence new service, assemble rights-of-way, and perform capital improvements. The compacts could also provide for the States to borrow money on a short-term basis and to issue notes for borrowing. H.R. 1788 also requires longer advance notice to States of service discontinuances, to allow time to make alternative arrangements.

The States have also expressed an interest in having authority to contract for the provision of passenger rail service. H.R. 1788 would facilitate this in a number of ways. First, because Amtrak's prohibition on contracting out is repealed 254 days after enactment, States would be eligible to hire a contractor under Amtrak auspices to operate intercity passenger service. In fact, H.R. 1788 permits Amtrak to contract for the operation of trains only with States or State authorities. Second, Amtrak's right of first refusal on intercity routes is eliminated, which means a State (or private) entity would be free to initiate intercity rail passenger service without first obtaining Amtrak's consent.

A number of States have complained that Amtrak has taken an autocratic approach in its dealings with the states, and has exhibited an unwillingness to consider new marketing approaches and to share cost information. The Committee urges Amtrak to adopt a more cooperative approach with the States. As partners in the financing of intercity rail service they should participate in determining the type of service that is to be delivered. In addition, the Committee wants to ensure that Amtrak's cost information is made available to the States. To that end, H.R. 1788 requires that States have access to Amtrak's records, accounts and other necessary documents used to determine the amount a State is asked to reimburse Amtrak for rail service.

CONCLUSION

H.R. 1788 is designed to set Amtrak on a course to financial stability and preserve intercity passenger rail in this country. Many factors have contributed to Amtrak's problems, some going back to the legislation that created Amtrak in 1970. At that time, Amtrak was assigned the virtually impossible task of becoming a profit-making entity while being shackled by onerous cost and operational burdens that have no counterpart in private enterprise.

H.R. 1788 will go a long way toward freeing Amtrak from these impediments and allowing it to follow sound business practices, while providing for fair and equitable treatment of Amtrak's employees. The negotiated procedures for determining Amtrak's new labor protection requirements and terms for contracting out should produce standards that make more sense for a taxpayer-funded operation, while permitting Amtrak's employees to have a role in the determination of new terms. The clarification of Amtrak's status as a private enterprise will allow for more commercial financing alternatives, permitting Amtrak to achieve the maximum benefit from its assets. The new temporary reform board, whose members will be required to have expertise in intercity common carrier transportation and corporate management, will bring fresh ideas and a new start for Amtrak. Liability reform will allow for a smooth renegotiation of Amtrak's operating agreements with the freight railroads and will lower the costs Amtrak is required to pay to the freight railroads for the use of their rights-of-way.

The Committee believes that enactment of H.R. 1788 is critical to Amtrak's survival. Without substantial reforms, Amtrak's very existence is threatened. Congress has signaled its intent to remove Amtrak from dependence on Federal operating subsidies over the next seven years. The Clinton Administration also has proposed declining subsidies for Amtrak. Dramatic changes must be made if Amtrak is to achieve the cost savings that will be required to meet these lower funding levels while improving service quality and achieving financial stability.

HEARINGS

The Subcommittee on Railroads held three hearings on Amtrak. On February 7, 1995, the Subcommittee held a hearing on Amtrak's fiscal crisis. Testimony was received from the following witnesses: The Honorable Jolene Molitoris, Administrator, Federal Railroad Administration, Department of Transportation; Mr. Kenneth Mead, Director, Transportation Issues, General Accounting Office; Mr. Tom Downs, President and Chairman of the Board, National Railroad Passenger Corporation. Additional material was submitted for the record by Mr. Downs, Mr. Mead, Ms. Molitoris, and the Railroad Retirement Board.

The Subcommittee held a second hearing on February 10, 1995, on the concerns of Members of Congress regarding Amtrak issues. Testimony was received from the following Members: Mr. Thomas M. Barrett of Wisconsin, Mr. Joe Barton of Texas, Mr. Charles Bass of New Hampshire, Senator Joseph R. Biden of Delaware, Mr. Peter Blute of Massachusetts, Mr. Michael N. Castle of Delaware, Ms. Eva Clayton of North Carolina, Mr. Vernon Ehlers of Michigan, Mr. Sam Gejdenson of Connecticut, Mr. George Gekas of Pennsylvania, Mr. Joel Hefley of Colorado, Mr. Earl Hilliard of Alabama, Mr. Peter Hoekstra of Michigan, Mr. Andrew Jacobs, Jr. of Indiana, Mr. Joseph Moakley of Massachusetts, Mr. Sonny Montgomery of Mississippi (with Mr. John Robert Smith, Mayor of Meridian, Mississippi), Mr. Richard Neal of Massachusetts, Mr. Earl Pomeroy of North Dakota, and Mr. Peter Torkildsen of Massachusetts. Additional material was submitted for the record by the following Members: Mr. Spencer Bachus of Alabama, Mr. Nathan Deal of Georgia, Mr. Barney Frank of Massachusetts, Mr. Charlie Rose of North Carolina, and Mr. Frank R. Wolf of Virginia.

A third hearing was held of February 13, 1995, on Amtrak's statutory mandates. Testimony was received from the following witnesses: The Honorable James H. Burnley, former Secretary of Transportation, Winston & Strawn; Mr. Edwin Harper, President and Chief Executive Office, Association of American Railroads; Mr. Greg Lawler, General Counsel, Safe Transit and Rail Transportation; Mr. Tom Downs, President and Chairman of the Board, National Railroad Passenger Corporation; Mr. Ross Capon, Executive Director, National Association of Railroad Passengers; and Mr. Ted Knappen, Greyhound Corporation. Additional material was submitted for the record by: Hon. Gilbert H. Carmichael, former Federal Railroad Administrator; Mr. A.R. Carpenter, President and CEO, CSX Transportation, Inc.; Mr. Barry T. Hill, Associate Director, Transportation Issues, General Accounting Office, Mr. David R. Horth, Chairman, National Railroad Construction and Maintenance Association, Inc.; and Mr. Paul Reistrup, Chairman Emeritus, High Speed Rail/Maglev Association.

COMMITTEE CONSIDERATION

On May 25, 1995, the Subcommittee on Railroads met in open session and ordered reported the staff draft of the Amtrak Reauthorization and Privatization Act of 1995, as amended, by a recorded vote of 11 to 5, a quorum being present. On September 21, 1995, the Committee met in open session and approved an amendment in the nature of a substitute offered by Chairman Shuster and ordered reported the bill H.R. 1788 as amended, by a voice vote, a quorum being present.

Clause 2(l)(2)(B) of rule XI requires each committee report to include the total number of votes cast for and against on each rollcall vote on a motion to report and on any amendment offered to the measure or matter, and the names of those members voting for and against.

NO. 1. MOLINARI AMENDMENT: LABOR PROTECTION

This amendment would impose a 6-month cap on any wage continuation or severance benefits that accrue to an employee whose job is eliminated as a result of a service discontinuance (defined as terminating service or reducing frequency below 3 times weekly) as long as Amtrak is receiving Federal operating subsidies.

Amendment failed 21-36

Ayes: Shuster, Baker, Bateman, Blute, Coble, Ehlers, Ewing, Fowler, Gilchrest, Horn, Hutchinson, Kelly, Kim, LaHood, Latham, Molinari, Parker, Seastrand, Wamp, Weller, and Zeliff.

Nays: Bachus, Barcia, Boehlert, Borski, Brewster, Brown, Clement, Clyburn, Collins, Costello, Cramer, Danner, DeFazio, Filner, Franks, Hayes, Johnson, LaTourette, Laughlin, Lipinski, McCarthy, Martini, Menendez, Mica, Nadler, Norton, Oberstar, Petri, Poshard, Quinn, Rahall, Tate, Traficant, Tucker, Wise, and Young.

NO. 2. OBERSTAR 2D DEGREE AMENDMENT TO HUTCHISON AMENDMENT ON ADA COMPLIANCE

This amendment would provide Amtrak with a one year deferral on complying with the requirements of the Americans with Disabilities Act that apply to rolling stock.

Amendment failed 21-34

Ayes: Barcia, Borski, Clement, Clyburn, Collins, Costello, Danner, DeFazio, Filner, Johnson, Lipinski, McCarthy, Menendez, Nadler, Norton, Oberstar, Poshard, Rahall, Traficant, Tucker, and Wise.

Nays: Shuster, Bachus, Baker, Bateman, Blute, Boehlert, Brewster, Brown, Coble, Cramer, Fowler, Franks, Gilchrest, Hayes, Horn, Hutchinson, Kelly, Kim, LaHood, Latham, LaTourette, Laughlin, Martini, Mica, Molinari, Parker, Petri, Quinn, Seastrand, Tate, Wamp, Weller, Young, and Zeliff.

NO. 3 HUTCHINSON AMENDMENT: ADA COMPLIANCE

This amendment would provide Amtrak with a 3-year deferral on meeting the requirements of the Americans with Disabilities Act that apply to rolling stock and stations and facilities.

Amendment agreed to 35-17

Ayes: Shuster, Bachus, Barcia, Bateman, Blute, Boehlert, Brewster, Clement, Clinger, Coble, Cramer, Duncan, Ewing, Fowler, Franks, Gilchrest, Hutchinson, Kelly, Kim, LaHood, Latham, LaTourette, Laughlin, Martini, Mica, Molinari, Parker, Petri, Quinn, Seastrand , Tate, Wamp, Weller, Young, and Zeliff.

Nays: Baker, Borski, Clyburn, Collins, Costello, Danner, DeFazio, Lipinski, McCarthy, Nadler, Norton, Oberstar, Poshard, Rahall, Traficant, Tucker, and Wise.

NO. 4 BAKER SUBSTITUTE FOR QUINN AMENDMENT ON CONTRACTING OUT

This amendment would prevent Amtrak from agreeing to any restrictions to its ability to contract out work as long as Amtrak receives appropriated Federal funds.

Substitute failed 5-55

Ayes: Baker, Hutchinson, Mica, Parker, and Seastrand.

Nays: Shuster, Bachus, Barcia, Blute, Boehlert, Borski, Brewster, Brown, Clement, Clinger, Clyburn, Coble, Collins, Costello, Cramer, Danner, DeFazio, Duncan, Ehlers, Emerson, Ewing, Filner, Fowler, Franks, Gilchrest, Hayes, Horn, Johnson, Kelly, Kim, LaHood, Latham, LaTourette, Laughlin, Lipinski, McCarthy, Martini, Menendez, Mineta, Molinari, Nadler, Norton, Oberstar, Petri, Poshard, Quinn, Rahall, Tate, Traficant, Tucker, Wamp, Weller, Wise, Young, and Zeliff.

NO. 5 QUINN AMENDMENT ON CONTRACTING OUT

This amendment would make the existing statutory labor protection requirements part of all Amtrak labor contracts and establish a 270-day Railway Labor Act bargaining process for Amtrak and its unions to negotiate terms on the issue of contracting out.

Amendment agreed to 38-22

Ayes: Barcia, Blute, Boehlert, Borski, Brewster, Brown, Clement, Clyburn, Collins, Costello, Cramer, Danner, DeFazio, Filner, Hayes, Horn, Johnson, LaHood, LaTourette, Laughlin, Lipinski, McCarthy, Martini, Menendez, Mineta, Nadler, Norton, Oberstar, Poshard, Quinn, Rahall, Tate, Traficant, Tucker, Wamp, Weller, Wise, and Young.

Nays: Shuster, Bachus, Baker, Bateman, Clinger, Coble, Ehlers, Emerson, Ewing, Fowler, Franks, Gilchrest, Hutchinson, Kelly, Kim, Latham, Mica, Molinari, Parker, Petri, Seastrand, and Zeliff.

NO. 6 BORSKI AMENDMENT: COMMUTER REIMBURSEMENT ON NORTHEAST CORRIDOR

This amendment would delete a provision that would have required commuter authorities to reimburse Amtrak for the fully allocated costs of their use of the Northeast Corridor.

Amendment agreed to 29-25

Ayes: Barcia, Blute, Borski, Brewster, Brown, Clinger, Clyburn, Collins, Costello, Cramer, DeFazio, Filner, Franks, Gilchrest, Johnson, Laughlin, Lipinski, McCarthy, Martini, Menendez, Mineta, Nadler, Oberstar, Parker, Poshard, Rahall, Traficant, Tucker, and Wise.

Nays: Shuster, Bachus, Baker, Clement, Coble, Danner, Duncan, Emerson, Ewing, Horn, Kelly, Kim, LaHood, Latham, LaTourette, Mica, Molinari, Petri, Quinn, Seastrand, Tate, Wamp, Weller, Young, and Zeliff.

COMMITTEE OVERSIGHT FINDINGS

Pursuant to clause 2(l)(3)(A) of rule XI of the Rules of the House of Representatives, oversight findings and recommendations have been made by the Committee as reflected in this report.

COMMITTEE ON GOVERNMENT OPERATIONS

Pursuant to clause 2(l)(3)(D) of rule XI of the Rules of the House of Representatives, no oversight findings have been submitted to the Committee by the Committee on Government Operations.

COMMITTEE COST ESTIMATE

In compliance with clause 7(a) of rule XIII of the Rules of the House of Representatives, the Committee believes that the cost of administering H.R. 1788 would be no more than the amounts described in the estimate provided by the Congressional Budget Office that accompanies this report:

U.S. Congress,

Congressional Budget Office,

Washington, DC, September 29, 1995.

Hon. BUD SHUSTER,
Chairman, Committee on Transportation and Infrastructure,
House of Representatives, Washington, DC.

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for H.R. 1788, the Amtrak Reform and Privatization Act of 1995.

Enacting H.R. 1788 would affect direct spending and receipts. Therefore, pay-as-you-go procedures would apply to the bill.

If you wish further details on this estimate, we will be pleased to provide them.

Sincerely,

James L. Blum

(For June E. O'Neill).

CONGRESSIONAL BUDGET OFFICE COST ESTIMATE

1. Bill Number: H.R. 1788.

2. Bill Title: Amtrak Reform and Privatization Act of 1995.

3. Bill Status: As ordered reported by the House Committee on Transportation and Infrastructure on September 21, 1995.

4. Bill Purpose: In General, H.R. 1788 would restructure Amtrak's operations and reauthorize federal subsidies for Amtrak. Specifically, the bill would try to decrease Amtrak's reliance on federal operating subsidies by decreasing its costs and increasing its revenue. This goal would be supported by several provisions:

The bill contains other provisions that would affect federal outlays. These provisions would:

In addition, the bill would remove the liquidation preference currently granted to the Amtrak preferred stock owned by the federal government. The federal government's lien on the Northeast Corridor right-of--way would also be eliminated.

Finally, the bill contains tax provisions that would exempt certain sources of funds from Amtrak's gross income for federal tax purposes.

5. Estimated cost to the Federal Government: The following table summarizes the impact this bill would have on Federal spending. The revenue estimates will be provided by the Joint Committee on Taxation. H.R. 1788 would shift $121 million of federal spending that would have occurred under current law in fiscal year 1997 to fiscal year 1996. In addition, the bill would authorize appropriations totaling $3.6 billion. 



[By fiscal year, in millions of dollars]


-----------------------------------------------------------------------


                                    1995  1996  1997  1998  1999  2000 


-----------------------------------------------------------------------


REVENUES                                                               


Tax provisions                     ( 1 ) ( 1 ) ( 1 ) ( 1 ) ( 1 ) ( 1 ) 


DIRECT SPENDING                                                        


Estimated budget authority:                                            


Northeast Corridor transfer           --    --    --    --    --    -- 


Amtrak grant transfer                 --    --    --    --    --    -- 


Total                                 --    --    --    --    --    -- 


Estimated outlays:                                                     


Northeast Corridor transfer           --    60   -60    --    --    -- 


Amtrak grant transfer                 --    61   -61    --    --    -- 


Total                                 --   121  -121    --    --    -- 


SPENDING SUBJECT TO APPROPRIATIONS                                     


Spending under current law:                                            


Budget authority 2                   994    --    --    --    --    -- 


Estimated outlays                    965   370   206    53    30    10 


Proposed changes:                                                      


Authorization level                   --   972   972   972   663    -- 


Estimated outlays                     --   952   965   972   663    -- 


Spending under this bill:                                              


Authorization level 2                994   972   972   972   663    -- 


Estimated outlays                    965 1,322 1,171 1,025   693    10 


-----------------------------------------------------------------------


The costs of this bill fall within budget function 400.

6. Basis of estimate:

Revenues.--Tax estimates will be provided by the Joint Committee on Taxation.

Direct spending.--Under current law, CBO estimates the unexpended balance at the end of fiscal year 1995 for funds appropriated to Amtrak in 1995 will be $307 million; these funds will be transferred to Amtrak as bills come due. This bill would transfer these balances to Amtrak upon enactment so that Amtrak can earn interest on the funds until they are expended. The transfer would not increase outlays over time but would cause outlays to occur earlier than they would have otherwise. CBO estimates that $121 million of the unexpended balances would have expended in 1997 under current law but would be expended in 1996 if this bill is enacted.

Authorization of appropriations.--For purposes of this estimate, CBO assumes that the full amounts authorized would be appropriated at the start of each fiscal year. If this bill is enacted, the outlay rates for Amtrak, Northeast Corridor, and Pennsylvania Station grants would increase to 100 percent because the bill would allow Amtrak to receive all the funds up front in order to earn interest on them.

The bill would authorize appropriations of $50 million each year for fiscal years 1996 through 1999 for the cost of guaranteeing loans to Amtrak. Based on information provided by Amtrak, CBO projects that the loans to Amtrak guaranteed by the federal government would be disbursed over three years. The amount of loan guarantees that $50 million of subsidy funds would support is very uncertain for Amtrak. Because Amtrak is in financial trouble and these guaranteed loans would likely be subordinated to existing debt, the probability of default would be very high. However, the bill would allow Amtrak to use the Northeast Corridor as collateral, which would decrease the probability of default.

CBO estimates that the operations of the Temporary Rail Advisory Council would cost the federal government less than $500,000 in 1996. Finally, the modifications to the conditions under which loan guarantees would be given to railroads would decrease the federal government's protection against defaults and increase the cost to the federal government if loans guarantees are provided in the future.

Preferred stock and lien on Northeast Corridor.--H.R. 1788 would eliminate the liquidation preference granted to the Amtrak preferred stock owned by the federal government and the lien on the Northeast Corridor held by the federal government. These two provisions do not have a direct impact on the federal budget. However, if Amtrak were to enter into bankruptcy, these provisions could result in a loss of receipts to the federal government that might accrue as a result of selling Amtrak assets such as the Northeast Corridor right-of-way.

7. Pay-as-you-go considerations: Section 252 of the Balanced Budget and Emergency Deficit Control Act of 1985 sets up pay-as-you-go procedures for legislation affecting direct spending or receipts through 1998. CBO estimates that enacting this bill would affect direct spending by transferring unexpended funds to Amtrak, resulting in a shift in the timing of outlays. The following table summarizes CBO's estimate of the bill's pay-as-you-go effect.





[By fiscal year, in millions of dollars]


---------------------------------------


                   1995 1996 1997 1998 


---------------------------------------


Change in outlays    --  121 -121   -- 


Change in receipts  (1)  (1)  (1)  (1) 


---------------------------------------


In addition, if this bill is enacted after the 1996 transportation bill, additional direct spending will occur. If the appropriations bill is enacted first, this bill would increase the outlay rates for Amtrak, Pennsylvania Station, and Northeast Corridor Grants.

8. Estimated cost to State and local governments: The bill would not impose any new enforceable duties on state and local governments; however, most sections affecting state and local governments (primarily commuter transit authorities) would make it more expensive for them to provide rail service within their jurisdictions. To the extent that state governments and transit authorities choose to maintain current levels of service, these provisions would shift costs from Amtrak to local authorities. CBO is unable to predict the likelihood or magnitude of any resulting costs at this time. The bill would also preempt local and state governments from collecting sales taxes on either intrastate or interstate services provided by Amtrak. This change would preempt existing sales taxes in three states, but the revenue loss would be minimal. Finally, the bill would place a cap on the liability of states and commuter authorities in the event of a passenger train accident and might lower the cost of operating passenger trains over freight rail right-of-ways.

Section 102 of the bill would prohibit Amtrak from submitting below-cost bids to provide certain services for local governments and commuter authorities. There is no such prohibition in current law. To the extent that Amtrak would have made below-cost bids on future contracts, state and local transportation authorities would have to pay more for contracted services. The type of contracts affected by this provision account for a small portion of Amtrak's revenues (less than five percent in fiscal year 1994). Because it is unclear whether Amtrak actually does bid below cost on contracts, CBO cannot estimate the effect this change would have on commuter authorities.

Section 201 of the bill would make it easier for Amtrak to discontinue routes, but it would require Amtrak to give earlier notice to state and local governments of its decision to do so. The section would end the requirement that Amtrak operate a specified `basic system' of routes, which current law requires Amtrak to provide unless it is financially unable to do so.

It would also end the requirement that Amtrak continue to provide special commuter transportation provided under section 403(d) of the Rail Passenger Service Act. Under current law, Amtrak must provide this service as long as the short-term avoidable loss on a route does not exceed a specific threshold. According to Amtrak officials, all 403(d) services currently run by Amtrak either cover their short-term avoidable losses or are already fully supported by states. Therefore, this change would not shift any costs to state or local governments. Finally, the section would require Amtrak to notify state and local governments at least 180 days before a discontinuance, whereas current law requires only 90 days of advance warning.

Sections 203 and 204 of the bill would end Congressional review of changes to Amtrak's route and service criteria and end additional route requirements. State and local governments would face higher costs if they decided to pay for the provision of any services that Amtrak discontinued as a result of these changes. We currently have no information on which routes, if any, Amtrak would discontinue if these changes were to become law. Furthermore, we cannot estimate how states and local governments would respond to Amtrak's decisions. Therefore, CBO cannot estimate the budgetary impact of these changes.

Section 205 of the bill would end the requirement that Amtrak consider applications from state and local governments to provide or continue to provide services under section 403(b) of the Rail Passenger Service Act. Currently, Amtrak may approve such applications if the applicants agree to pay a certain share of short-term avoidable losses or capital costs that Amtrak incurs by providing the services. This section also would allow Amtrak to end agreements reached prior to the enactment of this change. In fiscal year 1993, Amtrak absorbed approximately $82 million in losses on services of this kind. Amtrak officials say that losses have been smaller since then, because some state and local governments have agreed to bear a larger share of the costs. If Amtrak renegotiated all agreements that are currently generating losses, the costs shifted to state and local governments would be somewhat less than $82 million annually. State and local governments would not be compelled to continue these services, however.

Section 207 of the bill would affect the way Amtrak charges other carriers and commuter authorities for services it provides on its Northeast Corridor right-of-way. Amtrak estimates that, in total, this change would increase commuter authority payments from about $60 million to about $90 million annually. In discussions with CBO, officials of commuter authorities noted that the actual increase in payments could be substantially different from this estimate, because it would be determined by separate negotiations with each of the commuter authorities.

Section 401 would limit the punitive damages and non-economic losses that passengers could recover from rail carriers in the event of an accident. These limits would place a cap on the potential liability of commuter authorities and states. With such caps in place, commuter authorities would probably pay less to operate on freight lines and might pay less for liability insurance.

This section would also reaffirm the right of rail passenger operators and owners of rights-of-way and other facilities to indemnify each other contractually for liability arising out of rail passenger accidents. A court settlement pertaining to a 1987 collision of an Amtrak and a Conrail train has increased the concern of freight railroads that they are not receiving adequate compensation for their potential liability in accidents involving passenger trains. This section would clarify the extent to which freight railroads are liable for damages. In the absence of enactment of this section, freight rail owners would likely press for higher compensation from Amtrak and commuter rail authorities when current operating agreements come up for renegotiation. CBO is unable to estimate how much more commuter authorities would have to pay for the use of freight rail tracks in the absence of this legislation.

Section 506 of the bill would exempt passengers and customers of Amtrak and its subsidiaries from most state and local taxes, fees, or charges, whereas current law exempts only Amtrak and its subsidiaries. This section would override existing sales taxes on intrastate travel provided by Amtrak in Georgia, Wyoming, and Utah. Because there is little intrastate travel on Amtrak in these states, however, the loss in existing revenues would be minimal. This section would also prohibit new state or local taxes of any kind on Amtrak services. An April 1995 Supreme Court ruling upheld the right of states to place unapportioned sales taxes on interstate bus tickets. This ruling could be used to justify state taxes on Amtrak's interstate passenger tickets and possibly on its interstate mail or freight  transportation services. Therefore, this change would preempt state and local taxing authority and would foreclose a potential source of state and local revenues.  In fiscal year 1994. Amtrak collected about $830 million from ticket sales and about $60 million from mail and express services.

Section 615 would allow states to enter into interstate compacts to retain existing intercity passenger rail services or create new services. These compacts could finance their activities by issuing notes or bonds. This change would make it easier for states to provide any services discontinued by Amtrak.

9. Estimate comparison: None.

10. Previous CBO estimate:  On September 20, 1995, CBO transmitted a cost estimate of the Amtrak and Local Rail Revitalization Act of 1995 as ordered reported by the Senate Committee on Commerce, Science, and Transportation on July 20, 1995. This bill and the Senate bill are very similar. However, the Senate bill includes several provisions not contained in H.R. 1788, including provisions that:







Finally, H.R. 1788 authorizes appropriations for capital improvements in the vicinity of New York City's Pennsylvania Station while the Senate bill does not.

11. Estimate prepared by: Federal Cost Estimate: John Patterson. State and Local Cost Estimate: Pepper Santalucia.

12. Estimate approved by: Paul N. Van de Water, Assistant Director for Budget Analysis.

INFLATIONARY IMPACT STATEMENT


Pursuant to clause 2(l)(4) of rule XI of the Rules of the House of Representatives, the Committee believes that the bill will not have any inflationary impact on the prices and costs in the operation of the national economy. The bill is designed to lower Amtrak's costs and allow it to operate more efficiently, thus preserving jobs and alternatives to highway and air travel. These factors should contribute to lowering the costs of travel, and thus have an anti-inflationary impact.

SECTION-BY-SECTION ANALYSIS AND DISCUSSION


Section 1. Short title

This section provides that the bill may be cited as the `Amtrak Reform and Privatization Act of 1995.'

TITLE I--PROCUREMENT REFORMS


This title amends the Rail Passenger Service Act, recodified as 49 U.S.C. 24101 et seq. Each section is discussed below.

Section 101. Contracting out

This section repeals the current subsection that prohibits Amtrak from contracting out any work (other than food and beverage service) that affects one or more employees in a bargaining unit. It also overrides existing collective bargaining agreements. New terms and conditions for contracting out work will be established under a negotiated bargaining process contained in Title III.

Subsection (a) encourages Amtrak to use other rail carriers when contracting out and restricts Amtrak to entering into contracts for the operation of trains with States or State authorities. It also confirms that if Amtrak enters into a contract for the operation of trains, Amtrak will not be relieved of any contractual obligations it has entered into with other entities for the use of their facilities and that any contract operation shall be subject to operating and safety restrictions required by preexisting contractual arrangements. In short, Amtrak will not be able to waive the contractual rights of a third party under a prior access agreement in order to grant access to a contract operator. The subsection also clarifies that it does not restrict Amtrak's authority to enter into contracts for access to or use of tracks or facilities for the operation of trains.

Subsection (b) states that subsection (A) shall take effect 254 days after enactment.

Section 102. Contracting practices

This section prohibits Amtrak from engaging in below-cost bidding for any activity other than providing commuter and intercity service. It responds to complaints from private-sector businesses (including bus companies and providers of rail support services) that Amtrak has engaged in below-cost bidding to win sources of revenue. The section provides judicial remedies in Federal court for contract bidders who believe themselves to be the objects of below-cost competition by Amtrak. This section also addresses Amtrak's practices in arranging for connecting bus service, clarifying that such service must be truly supplemental to Amtrak rail service, and not an indirect Federal subsidy of competition with private-sector regular-route bus service.

Subsection (a) prohibits Amtrak from submitting a bid for contract work other than providing intercity rail transportation, commuter rail transportation, or mail or express transportation, at a price that is below Amtrak's cost for performing the service. Generally accepted accounting principles are to be used in calculating Amtrak's costs. In addition, subsection (a) provides that any aggrieved individual may commence a civil action against Amtrak for violation of this requirement in the United States district courts. The court is authorized to award bid preparation costs, anticipated profits, and litigation costs to any prevailing or substantially prevailing party. The subsection is only effective as long as Amtrak is receiving Federal operating subsidies.

The Committee has received a number of complaints from companies that compete with Amtrak for contract work, such has track maintenance, on the ground that they are being underbid by Amtrak. They contend that Amtrak is taking advantage of its Federal subsidy to bid below its costs in order to generate short-term revenues. The Committee is concerned about these allegations for two reasons. One is fairness. It is not the intent of Congress that Amtrak use its Federal grants to undercut private companies, who presumably earn a profit and pay taxes. The other is that below-cost bidding, while possibly generating increased revenues for Amtrak in the short-term, will produce losses in the long-term that could only serve to increase Amtrak's need for Federal subsidies. The problem is exacerbated by what many contend are Amtrak's unorthodox accounting procedures, which make it difficult to determine the true costs of a particular job. H.R. 1788 calls for Amtrak to employ generally accepted accounting principles so that the costs of Amtrak's activities can be more accurately measured.

Subsection (b) prohibits Amtrak from making contractual arrangements with charter bus operators to carry both Amtrak and non-rail passengers. Future charter bus contracts will be for carrying only passengers who have had a prior movement by rail, or will have a subsequent movement by rail. The subsection specifically disclaims any effect on State or local government-funded bus operations connecting with Amtrak service or motor carriers receiving Federal assistance under Section 18 of the Federal Transit Act or to ticket selling agreements. Subsection (b) also authorizes consultation between Amtrak and other passenger carriers under the `pooling' provisions of the Interstate Commerce Act.

The Committee is concerned that some of the charter bus operations, which Amtrak enters into to provide connecting feeder bus service to its intercity rail network, may be diverting non-rail passengers who otherwise would ride the regular common carrier bus operating on that route. The Committee believes that Amtrak's charter bus service should be available for Amtrak passengers only. A recent GAO report found that Federal funds are not used to subsidize Amtrak's thruway bus operations, and that, in fact, Amtrak's operating subsidy would increase in the absence of its thruway bus operations. The Committee therefore encourages Amtrak to continue its charter bus service. Subsection (b) is designed to ensure that regular common carrier bus companies are not subjected to unfair competition from Amtrak, while not affecting bus service that is funded by State and local governments or from Section 18 Federal Transit Act funds.

Section 103. Freedom of Information Act

This section repeals the current provision making Amtrak subject to FOIA. As a corporation, not an agency, Amtrak would not subject to FOIA absent specific legislation to the contrary. This responds to complaints from Amtrak and others that public access to Amtrak commercial information allows businesses bidding on Amtrak services to obtain access to competitor's information that would not be available in the normal course of business. This change does not affect Congressional access to Amtrak's records, including GAO audits.

TITLE II--OPERATIONAL REFORMS


Section 201. Basic system

This section relieves Amtrak of the obligation to operate the basic system of routes that was largely inherited from the private railroads when Amtrak began operations in 1971.

Subsection (a) repeals the current provision that requires Amtrak to provide intercity rail passenger transportation within the basic system unless excused by financial emergency. Also repealed is Amtrak's right of first refusal, which provides that no person can operate intercity rail passenger transportation over an Amtrak route without Amtrak's consent.

Subsection (b) repeals the current statutory directive to prepare a route-structure and to operate the `basic system' described above. It also repeals a requirement that Amtrak evaluate routes connecting various corridors for economic promise; this requirement is considered surplusage in light of the overall intent to let Amtrak management make operational decisions with as little micromanagement by Congress as possible.

Subsection (c) lengthens from 90 days to 180 days the current requirement that Amtrak give advance notice of service discontinuances, but eliminates the statutory requirement concerning discontinuances of service due to a lack of funds. The increased advance notice of proposed discontinuances should afford affected State and local governments a better opportunity to make alternative arrangements, including other forms of rail passenger service.

Subsection (d) eliminates annual reporting requirements keyed to the operation of the `basic system' of routes.

Subsection (e) repeals the obligation of Amtrak to operate what were formerly known as `Section 403(d) trains,' which were commuter operations frozen as of 1981.

Subsection (f) makes a conforming technical amendment.

The Committee believes that, as part of its efforts to reduce costs and wean itself from dependence on Federal subsidies, Amtrak should have the flexibility to operate like a business. By freeing Amtrak of obligations to operate a system that has, for the most part, remained static since 1971, the Committee intends for Amtrak to evaluate its route system and make alterations according to commercial potential, rather than arbitrary statutory criteria.

Some potential market opportunities have come to the attention of the Committee and Amtrak is urged to evaluate these options for commercial viability. In southern California, the San Bernardino Associated Governments and the Riverside County Transportation Commission have proposed to initiate passenger rail service between Indio and Palm Springs to Riverside, and continuing into Ontario and Los Angeles. The Committee believes that this service deserves consideration and encourages Amtrak to undertake a cost-benefit analysis of the proposed route.

In addition, the Committee understands that Amtrak's West Coast Strategic Business Unit is conducting a prototype demonstration on its Seattle-Portland-Eugene route, modifying existing coach baggage cars to accommodate bicycles. The Committee supports this demonstration, and requests that Amtrak report back to the Committee on Transportation and Infrastructure in the House, and the Committee on Commerce, Science and Transportation in the Senate, on the results of this demonstration, by September 30, 1996.

During the demonstration period, the Committee encourages Amtrak to take full advantage of the opportunity to increase ridership and revenues on all its routes by better serving the bicycling market. The Committee urges Amtrak to collaborate with bicycle, rail passenger, and other organizations to test different approaches to accommodate bicyclists, including improvements in baggage car accommodations, design accommodations on new and retrofitted passenger coach railcars, and station bicycle parking. The Committee also urges Amtrak to use this collaborative process to develop guidelines for when and how to better accommodate bicyclists and to reference these guidelines when purchasing new passenger coach railcars or undertaking heavy interior overhauls of existing passenger coach railcars.

Section 202. Mail, express, and auto-ferry transportation

Subsection (a) repeals Amtrak's special status as a carrier of mail and express, and eliminates the presumed monopoly rights of Amtrak over auto-ferry service.

Subsection (b) preserves Amtrak's immunity from State law requirements on these subjects.

Section 203. Route and service criteria

This section repeals the statutory criteria for evaluating routes and service, as well as procedures for obtaining Congressional approval for changes in such criteria.

Section 204. Additional qualifying routes

This section repeals provisions governing possible additional routes suggested for Amtrak operation by the Secretary of Transportation.

Section 205. Transportation requested by States, authorities, and other persons

Subsection (a) repeals the procedure governing Amtrak operation of State-assisted `Section 403(b)' trains. The current matching formula governing this service, according to the General Accounting Office, causes Amtrak to lose more than four dollars for every dollar appropriations for these operations. In practice, the financial losses inflicted by this formula have led Amtrak to announce recently the termination of all fund-matching arrangements and to insist upon full-cost-recovery contracts with States wishing to have Amtrak operate State-requested service. Therefore, this provision merely conforms the statute to current financial realities and Amtrak practice.

Section (b) frees Amtrak from any obligations under `Section 403(b)' entered into prior to enactment.

Subsection (c) amends the policy goal pertaining to State and local cooperation with Amtrak to emphasize the options of collective arrangements involving multiple States and other governmental units.

Subsection (d) makes a conforming technical amendment.

While the Committee wants to ensure that Amtrak has flexibility in designing its route system according to market potential, the Committee is also interested in ensuring that States that wish to provide for continued rail service that has been targeted for elimination are given an adequate opportunity to do so. The Committee is aware that, in some cases, a State may be unable to produce the funding for continue rail service in the short   term due to the timing of a State budget cycle or other temporary cash flow obstacle. The Committee urges Amtrak to accommodate the needs of these States and, where possible, preserve service that would otherwise be eliminated until such time that the States are able fully to fund the service. The changes made by H.R. 1788 to the notification procedures for service discontinuances are also intended to afford an opportunity for timely State action.

Section 205. Amtrak Commuter

This section repeals the subchapter of the Rail Passenger Service Act that authorized a separate subsidiary known as `Amtrak Commuter,' which was never created. The section preserves certain provisions reaffirming Amtrak's commuter authorities' existing trackage rights.

Section 207. Commuter cost sharing on the Northeast Corridor

This section replaces the current method of arriving at cost-sharing agreements between Amtrak and commuter operators on the Northeast Corridor with a negotiation and arbitration process. The current practice is based on statutory provisions and a 1983 decision by the Interstate Commerce Commission that established that commuter railroads on the Corridor pay trackage right fees based on the principle of `avoidable costs.' Under this approach, the commuter railroads pay a fee to Amtrak that represents the costs incurred by Amtrak resulting from commuter use of the Corridor which Amtrak would not otherwise incur. This allows Amtrak to receive reimbursement for the incremental costs of commuter use of the Corridor, but not for shared capital costs.

Under the new approach established in this section, Amtrak and the commuters will negotiate the terms and costs of commuter use of the Corridor without Federal statutory dictates. (During consideration of the bill, the Committee rejected replacement of the existing mandate with a fully allocated cost mandate.) Any disputes that cannot be resolved by the parties are to be submitted to binding arbitration, with the Interstate Commerce Commission available as an arbitrator at the discretion of the parties.

Subsection (a) clarifies that Amtrak and commuter authorities will set the terms of commuters' reimbursement to Amtrak without Federal statutory dictates.

Subsection (b) establishes the Interstate Commerce Commission as a potential arbitrator of unresolved disputes at the discretion of the parties.

Subsection (c) adds privatization to Amtrak's policy goals.

The Committee is aware that some commuter operators on the Northeast Corridor have multi-year operating agreements with Amtrak that are still in effect. The Committee intends that these agreements should be honored. Any new terms would only go into effect after the expiration date of existing agreements. In addition, nothing in this section is meant to be interpreted as disallowing the current terms of reimbursement to be reemployed when agreements are negotiated. The section is intended to avoid having the outcome of these negotiations be predetermined by Federal statute. To ensure that commuter operators have access to all necessary information in the negotiation process. The Committee urges Amtrak to make available to commuter operators an accounting of all funds spent on the facilities that they utilize. The Committee does not intend for Amtrak to include in its reimbursement price any extraneous costs beyond those imposed by the commuter operations. In fact, as noted below, Section 208 of H.R. 1788 requires that States have access to any Amtrak records used to determine the amount of any payment required by Amtrak, in order to ensure open and fair accounting of these costs.

Section 208. Access to records and accounts

This section assures GAO access to Amtrak's financial records and accounts, and provides States with access to all financial materials relating to charges that Amtrak requires be paid by those States.

TITLE III--COLLECTIVE BARGAINING REFORMS


Section 301. Railway Labor Act procedures

This section establishes an accelerated 164-day Railway Labor Act bargaining process on labor protection and contracting out issues.

Subsection (a) requires that `section 6 notices' on labor protection and contracting out are deemed to have been served and effective 90 days after enactment. (These notices are the means for initiating collective-bargaining negotiations, as provided in Section 6 of the Railway Labor Act.) Amtrak and the labor unions are required to supply specific information and proposals regarding each notice. The notices will have no effect on provisions defining the scope or classification or work performed by Amtrak employees. For any labor contract that contains a moratorium on new negotiations in effect 90 days after enactment, section 6 notices will be deemed served and effective on the expiration date of the moratorium.

Subsection (b) requires that all National Mediation Board mediation efforts be completed 180 days after enactment.

Subsection (c) allows the parties to request voluntary arbitration for unresolved disputes and requires any award to be retroactive to 180 days after enactment.

Subsection (d) establishes a procedure for resolving outstanding disputes. For any unresolved dispute 180 days after enactment, Amtrak and the labor union are required each to select an individual from the National Mediation Board's roster of arbitrators. Within 194 days after enactment, these individuals will jointly select one individual to make recommendations regarding the unresolved dispute. Individuals who have a pecuniary or other interest in an organization of employees or a railroad are not eligible to be selected. The subsection provides for compensation for the individuals to be fixed by the National Mediation Board. The neutral selected by the parties is required to make recommendations regarding any unresolved dispute within 224 days after enactment. There is a 30-day cooling-off period after the recommendations are made, during which no changes can be made by the parties to the dispute. If this entire process produces no agreement, both labor and management are legally free to employ `self-help' (including strikes and unilateral management action) under the Railway Labor Act.

Section 302. Service discontinuance

Subsection (a) repeals Amtrak's statutory labor protection requirement. In addition, Amtrak contractual obligations relating to labor protection, including all provisions of Appendix C-2 to the National Railroad Passenger Corporation Agreement signed July 5, 1973, and all contract terms relating to contracting out are extinguished 254 days after enactment. Subsection (a) also provides that ICC (`New York Dock') labor protection standards do not apply in the event of a bankruptcy. Finally, subsection (a) revises the Northeast Rail Service Act provisions to reflect a Conrail-labor agreement on restricting but not eliminating `flowback' labor protection rights for employees who joined Amtrak from Conrail or its predecessor railroads.

The Committee is aware of considerable attention focused on the possible effect of this amendment on labor protection provided to employees of private railroads and public transit authorities. This issue arises because of the explicit cross-reference and consequent interdependence of the respective Federal statutes governing labor protection for Amtrak, freight railroads, and transit.

The oldest of these Federal mandates is the required payment of labor protection (salary continuation and wage-protection) benefits to employees adversely affected by railroad mergers and abandonments regulated by the Interstate Commerce Commission. Begun by the ICC as a matter of administrative discretion in the late 1930s, labor protection in mergers and related inter-carrier transactions was statutorily mandated by the Transportation Act of 1940, and has been required ever since. Similarly, later amendments to the Interstate Commerce Act extended this mandate to railroad abandonments. The ICC established the actual level of such protections at a maximum of 4 years' pay (one year for each year of prior service).

In 1964, with the enactment of the Urban Mass Transit Act (now the Federal Transit Act), employees of transit systems affected by the reorganizations and consolidations resulting from receipt of Federal transit grants were required to be protected at the same level as ICC merger and abandonment protection--4 years. (This level was established by the regulations of the implementing agency, the Department of Labor.) Receipt of Federal transit assistance is conditioned upon such protective arrangements being in place. This is known, from its original statute, as `Section 13(c)' labor protection, now recodified as 49 U.S.C. 5333(b). Transit labor protection arrangements must `provide benefits at least equal to benefits established under section 11347 [the ICC merger and abandonment protection standard].' 49 U.S.C. 5333(b)(3) (emphasis added).

When Amtrak was established by the Rail Passenger Service Act, Congress required in Section 405(a)-(c) that `fair and equitable arrangements' be made for employees adversely affected by service discontinuances. When the implementing agreements were negotiated between Amtrak and its labor unions, the maximum level of protection was set at 6 years' pay, a 50 per cent increase over the existing freight rail and transit protection.

In 1976, the Railroad Revitalization and Regulatory Reform (`4R') Act explicitly linked freight (and derivatively transit) labor protection to the level required to be paid by Amtrak. The amended Interstate Commerce Act provision, now recodified as 49 U.S.C. 11347, requires the ICC to provide `a fair arrangement at least as protective * * * as the terms imposed under this section [before enactment of the 4R Act] and the terms imposed under * * * section 24706(c) [the Amtrak labor protection mandate] (emphasis added)'. As a result of this 1976 change, the ICC was required to increase maximum merger and abandonment labor protection levels from 4 years to 6 years pay; this was accomplished by the Commission in New York Dock Railway--Control--Brooklyn Eastern District, 360 I.C.C. 60 (1979). Because the ICC standard increased from 4 to 6 years, the cross-reference in the transit laws also required the Department of Labor to mandate a correlative increase in `section 13(c)' transit protection. See 29 C.F.R. Part 215, 43 Fed. Reg. 13558 (March 31, 1978).

It is clear from this legislative and regulatory history of the related provisions that the Amtrak labor protection mandate was used to force both freight railroad and transit labor protection maximums up by 50 per cent through the applicable statutory cross-references. H.R. 1788 repeals the Amtrak mandate at the end of the 254-day bargaining process. Therefore, the question presented is: what effect, if any, does the repeal of the Amtrak labor protection mandate have upon existing freight railroad and transit labor protection standards?

The freight standards are the key component of the analysis, because they control (directly) the level of protection required in ICC-regulated mergers and abandonments and they control (indirectly, by virtue of the cross-reference in 49 U.S.C. 5333(b)) the level of required transit protection. Looking at the plain language of 49 U.S.C. 11347 as it would be amended by H.R. 1788, the ICC statute would then require that merger and abandonment protection levels be `at least as protective as * * * the terms imposed under this section before February 5, 1976 [the 4R Act] and the terms established under section 24706(c) of this title [the Amtrak standard].' See H.R. 1788, Section 302 (a) and (c). Under Section 302(a)(4) of the bill, repeal of the Amtrak mandate takes effect 254 days after enactment.

The plain language of a statute is the most basic and reliable guide to its interpretation. The post-enactment language of 49 U.S.C. 11347 would require that the ICC merger and abandonment protection levels be `at least as protective' as the 4-year pre-4R Act level and the Amtrak mandate level. Once the Amtrak mandate has been repealed, what is the status of the New York Dock ICC standard? Clearly it is not automatically superseded; just as the ICC had to implement the 1976 amendments administratively in the New York Dock case, so too the ICC (or its soon-to-be-selected successor) will have to deal with the effects of the Amtrak repeal.

It is worth noting that because of the `at least' nature of the cross-reference, the standard selected by the ICC after the 1976 amendments could have been greater than 6 years, because a 7-year level, for example, would have been `at least' equal to the 6-year Amtrak standard. This was confirmed by the court reviewing the ICC's New York Dock decision in the New York Dock Railway v. United States, 609 F.2d 83, 92 (2d Cir. 1979), citing Railway Labor Executives Assn. v. United States, 339 U.S. 142 (1950).

Correlatively, after enactment of H.R. 1788, the current 6-year New York Dock standard will still be `at least' as protective as the 4-year pre-4R Act level. Any modification of the present labor protection standards for freight railroad mergers and abandonments will require administrative action by the ICC or its successor. This is reaffirmed by the changes made to Section 302 of H.R. 1788, which as originally drafted would have immediately and automatically reduced the freight railroad standard of 49 U.S.C. 11347 to a 4-year maximum by operation of law. The version approved by the Committee, however, contains the more limited repeal described above.

In light of the plain language of the existing statute and the amendments made by H.R. 1788, as well as the evolution of the language of the Committee-reported version of the bill, it is clear that administrative action by the ICC is the only means by which a lowering of the current New York Dock 6-year maximum could be effected. There is however, a contrary school of thought, represented by the views of the Federal Railroad Administration's chief counsel, solicited by the minority at the time of the Committee's markup of H.R. 1788.

The chief counsel places very heavy reliance upon two points. First, H.R. 1788 does not extinguish the freight-employee (Appendix C-1) agreements of Amtrak as it does with the C-2 agreements as part of the accelerated bargaining process. The actual language of Section 302 states that the terms extinguished at the end of the 254-day accelerated bargaining period include `any provision of a contract, entered into before the date of enactment of this Act between Amtrak and a labor organization representing Amtrak employees, relating to * * * employee protective arrangements and severance benefits, including all provisions of Appendix C-2' (emphasis added). Moreover, the FRA analysis does not address the core legal issue--the complete repeal of the entire Amtrak statutory mandate for labor protection--the section 24706(c) explicitly cross-referenced as the applicable benchmark in the ICC statute for all labor protection, whether granted pursuant to the C-1 appendix or the C-2 appendix. (We also note as to the distinction between pre-1976 freight protection and both C-1 and C-2 Amtrak protection, the key change was from a 4-year maximum to a 6-year maximum benefit. Therefore, the `terms established' by Amtrak pursuant to its statutory mandate are essentially the same on this key point.)

In any event, whether a particular Amtrak agreements remains in effect does not determine the regulatory authority and discretion of the ICC to revise its New York Dock standards in light of an intervening change in the law. After all, there were presumably contracts in effect governing both freight-railroad and transit employees in 1976 when the 4R Act forced the ICC and the Department of Labor to amend (and increase the level of) their existing labor protection standards and regulations.

The second pillar of the FRA analysis is that H.R. 1788 does not alter the language in 49 U.S.C. 11347 requiring that the protection applicable in rail mergers and abandonments must be `at least as protective * * * as the terms established under section 24706(c).' Since Section 24706(c) will be repealed 254 days after enactment, the statute would literally require equaling or exceeding a standard with no substantive content. FRA attempts to avoid this conclusion by seizing upon the fact that H.R. 1788 strikes two other statutory references in 49 U.S.C. 11347, but not the reference to section 24706(c). This reflects a misapprehension of the purpose of the provision, Section 302(c) of the bill, that makes this change.

Section 302(c) strikes references to sections 24307(c) and 24312 as technical amendment. This correction is necessary because of an oversight in the recodification of the relevant parts of title 49 last year. See Pub. L. 103-272, Sec. 5(l)(31), 108 Stat. 745, 1378 (July 5, 1994). The recodification replaced the previous reference in 49 U.S.C. 11347 to `Section 405 of the Rail Passenger Service Act' with references to three newly recodified sections of title 49. However, two of the three deal with subjects entirely separate from labor protection and therefore are irrelevant to the subject-matter of 49 U.S.C. 11347. It should have been clear to the recodifiers that the prior reference to the labor protection `arrangements' and `terms established under Section 405 of the Rail Passenger Service Act' meant that only the successor recodified provision relevant to labor protection should be cross-referenced. That was not done. Therefore, H.R. 1788 corrects this mistake. Thus, contrary to FRA's interpretation, there is no basis for any inference that repealing the two improperly referenced sections while not repealing the mention of section 24706(c) has any significance for the issue presented here.

This leaves the FRA analysis based solely on the fact that the phrase `terms established' uses the past tense. According to FRA, that gives the New York Dock standards the status of a one-time-only agency action, which cannot be revised or superseded to reflect a subsequent change in the law--the proposed repeal of section 24706(c)--that is explicitly cross-referenced. According to FRA, the one-time determinant of the level of New York Dock protection is the 1973 Amtrak agreement governing freight employees (the C-1 Appendix). This contention cannot withstand scrutiny.

Under the FRA interpretation, Amtrak's 1973 contract determines--and permanently freezes--the existing 6-year ICC New York Dock standards, regardless of any subsequent changes in the Amtrak agreement. This line of reasoning ignores the distinction drawn in Section 11347 itself between a time-limited standard and a changeable or floating standard. The first cross-reference in Section 11347--to `the terms imposed under this section prior to February 5, 1976'--is clearly time-limited: it cannot change because of subsequent events or administrative decisions. (Prior to its 1978 recodification, the freight cross-reference said `terms heretofore imposed.' See New York Dock Railway v. United States,  609 F.2d 83, 90 n.3 (2d Cir. 1979).)

There is no such limitation as to time concerning the second cross-reference, the one that incorporates the Amtrak standard--`terms established under * * * section 24706(c) of this title.' Presumably, if Congress had intended the Amtrak standard to be forever frozen by the 1973 agreements, it could and would have specified the Amtrak terms applicable as of a date certain as it did for the referenced freight protection standard; the Congress did not. Instead, it made the reference to Amtrak's labor protection arrangements generic, and presumably flexible, to allow for subsequent modifications of Amtrak's arrangements. Notwithstanding FRA's reliance on the past tense of `established,' we note that `established' is not equivalent to `established only prior to enactment of this statute.' Moreover, this line of reasoning runs squarely in the face of the plain language of the statute as amended by H.R. 1788--that the freight standard must be `at least' equal to the 1976 pre-4R-Act standards and the Amtrak standards. Surely the `at least' phrase, to have any meaning at all, must confer on the ICC the authority to exercise discretion to alter or modernize its standards (including possibly keeping the freight labor protection standards higher than legally required) as long as the new standards meet the applicable legal minimums, including the cross-referenced statutes, in effect at the time of the ICC's revision.

The Committee also notes that removing the reference to section 24706(c) from section 11347 could have been misconstrued as contradicting the basic design of the accelerated bargaining process provided for in H.R. 1788--to delay repeal of the Amtrak labor protection mandate until the end of the accelerated bargaining process. Prior to that date, the current statutory obligations apply to Amtrak--and derivatively to the ICC's standards.

Based upon the plain language of the existing statute and the amendments contained in H.R. 1788, the ICC or its successor would have the administrative discretion to revise its existing New York Dock standards to reflect the repeal of 49 U.S.C. 24706(c).

As noted earlier, however, because of the `at least' language in the ICC statute, the agency would not be required to lower the existing standards solely because of the changes contained in H.R. 1788. A necessary corollary of the ICC's administrative authority to revisit the New York Dock standards is that, if the ICC were to revise those standards, the Department of Labor would have a corresponding duty to re-examine transit labor protection, due to the explicit linkage and cross-reference of its labor protection statute (49 U.S.C. 5333(b)), requiring DOL to maintain standards `at least equal' to the ICC level of protection required under 49 U.S.C. 11347.

TITLE IV--USE OF RAILROAD FACILITIES


Section 401. Liability limitation

This section imposes limits on tort liability in the event of a rail passenger accident and confirms the right of rail passenger operators and owners of rights-of-way to contractually indemnify each other for liability arising out of rail passenger accidents.

Subsection (a) places the following caps in claims for personal injury, death or damage to property arising from rail passenger accidents: punitive damages limited to three times economic loss or $250,000, whichever is greater; noneconomic loss limited to $250,000 greater than economic loss. Limits apply on a per person, per accident basis. The subsection provides that, in any place where the law provides only for punitive damages for an event result in death, a claimant would be eligible to receive both noneconomic and economic damages, subject to the limits described above.

Subsection (a) also reaffirms the powers of passenger rail operators and entities providing facilities and infrastructure to enter into contractual indemnity arrangements to allocate the cost of liability incurred under the limits described above. These indemnification agreements are essential to facilitating passenger, commuter, and excursion rail service, especially in light of the absence of an arm's length economic relationship between these carriers and the freight railroads whose facilities are required for their operation, since the indemnification agreements are part of the contractual consideration. The uncertainty of enforcement of such agreements has become a major barrier to the expansion of commuter and passenger service and an outright obstacle to high-speed rail service since the decision in National Railroad Passenger Corp. v. Consolidated Rail Corp., 698 F. Supp. 951 (D.D.C. 1988). The Committee believes that the public interest is best served by facilitating rail passenger service through legislation providing that once rail passenger transportation indemnification agreements are negotiated, they will be enforced. Accordingly, the Committee is overruling the National Railroad Passenger Corporation case in order to restore indemnitees' confidence in the enforceability of their indemnification agreements. No inference is to be drawn from the inclusion of this provision about the enforceability of any rail passenger transportation indemnification agreement for any obligation arising before the effective date of this provision.

TITLE V--FINANCIAL REFORMS


Section 501. Financial powers

Subsection (a) repeals the statutory requirements relating to stock issuances (preferred and common). The subsection is replaced with an encouragement that Amtrak use employee stock ownership plans (ESOPs) in any future stock issuances.

Subsection (b) requires Amtrak to redeem all of its common stock for fair market value within 2 months of the date of enactment. This stock was issued to private railroads in exchange for donations of start-up equipment when Amtrak was formed. The liability reform provision will not apply to rail carriers who do not relinquish their common stock within the 2-month deadline. In addition, Amtrak is required to utilize its condemnation powers to redeem any stock still outstanding after the 2-month deadline.

Subsection (c) eliminates the liquidation preference of DOT's preferred stock effective 90 days after enactment. The Secretary's voting rights are also extinguished 60 days after enactment.

Subsection (d) eliminates DOT's note and mortgage on the Northeast Corridor.

Subsection (e) removes Amtrak from the Government Corporations Act and the Inspector General Act.

Section 502. Disbursement of Federal funds

This section provides that Amtrak is to receive all appropriated funds for a fiscal year upon request, and that these funds shall not be includible in Amtrak's gross income for Federal tax purposes.

Section 503. Board of directors

This section calls for the appointment of a new 7-member board of directors, called the Emergency Reform Board, who will be charged with setting Amtrak on a course to financial stability during the board's 4-year tenure. The new board will develop bylaws under which future boards of directors are to be selected.

Section (a) repeals the current statutory structure for Amtrak's board of directors and requires the Emergency Reform Board to assume its responsibilities 60 days after enactment. Successor boards are required to include employee representation. The Emergency Reform Board is to be appointed by the President as follows: 2 members each in consultation with the Speaker of the House of Representatives and the Majority Leader of the Senate; 1 member each in consultation with the Minority Leader of the House of Representatives and the Minority Leader of the Senate; 1 member appointed by the President. All members are required to have background and expertise in transportation and corporate management, and to be confirmed by the Senate. Employees of Amtrak, the United States Government, and representative of rail labor or rail management are eligible.

The subsection provides that if the Emergency Reform Board is not sufficiently constituted to function as a board of directors 60 days after enactment, the `special court'--a 5-member Federal court created under section 209(b) of the Regional Rail Reorganization Act of 1973 to oversee railroad bankruptcies in the Northeast--will appoint a temporary `director general' to exercise board powers until the new board takes office.

Subsection (b) requires that if the Emergency Reform Board is not in place by March 15, 1996, Amtrak funding authorizations beyond Fiscal Year 1996 will lapse.

Section 504. Reports and audits

This section repeals Amtrak's obligation to submit a route-by-route annual performance report to Congress and the obligation of the Secretary of Transportation to submit a report to Congress evaluating Amtrak's report. H.R. 1788 would retain Amtrak's obligation to submit an annual report and legislative agenda to Congress, as well as the requirement that Amtrak have an annual independent audit of its financial statements. In addition, the General Accounting Office maintains its rights of access to any relevant Amtrak records needed to conduct an audit.

Section 505. Officers' pay

This section provides that the current salary cap for Amtrak executives will lapse in the first year after a fiscal year when Amtrak does not receive Federal operating subsidies.

Section 506. Exemption from taxes

This section clarifies that Amtrak's current tax exemption from State and local taxes includes sales or other passenger taxes on tickets or services. This is in response to a recent Supreme Court decision that could be construed to authorize such taxes. The section also ends local exceptions to tax exemptions that were provided in prior statutes. The provision is not intended to confer a tax exemption on individuals or companies selling goods or services to Amtrak.

TITLE VI--MISCELLANEOUS


Section 601. Temporary Rail Advisory Council

This section establishes a special expert body to review Amtrak's business methods and accounting procedures.

Subsection (a) requires that the Temporary Rail Advisory Council (TRAC) be appointed within 30 days after enactment.

Subsection (b) establishes the duties of TRAC, including an analysis of Amtrak's business plan and recommendations for further cost containment aimed at an eventual privatization of Amtrak.

Subsection (c) establishes the procedure for appointment of TRAC members. The seven members are to be appointed as follows: 2 members by the Speaker of the House of Representatives; 1 member by the Minority Leader of the House of Representatives; 2 members by the Majority Leader of the Senate; one member by the Minority Leader of the Senate; one member by the President. Members are required to have expertise and professional standing in transportation and corporate management. Employees of Amtrak, the United States Government, and representatives of rail labor or rail management are ineligible.

Subsection (d) allows TRAC members to receive compensation for per diem expenditures.

Subsection (e) requires the Secretary of Transportation to provide administrative support for the TRAC.

Subsection (f) requires Amtrak to provide the TRAC with access to any records that it needs to carry out its duties. The TRAC is required to keep confidential any items that could place Amtrak at a competitive disadvantage if disclosed.

Subsection (g) requires that the TRAC submit to the Amtrak board of directors and to the Congress an interim report within 120 days of enactment, and a final report within 270 days of enactment.

Subsection (h) exempts the TRAC from the Federal Advisory Committee Act and the Freedom of Information Act.

Section 602. Principal office and place of business

This section repeals the current requirement that Amtrak be headquartered in the District of Columbia. This is in keeping with the general thrust of the legislation to allow Amtrak to operate like a private business, which includes selecting the most appropriate location for its headquarters without Federal intervention.

Section 603. Status and applicable laws

This section amends the current provision concerning Interstate Commerce Committee jurisdiction of Amtrak to clarify that only limited provisions of the Interstate Commerce Act apply to Amtrak: access to terminal facilities, pooling agreements, protection against double State income taxation of employees, and liability standards for damage to shipments in transit. The section explicitly disclaims any effect on Amtrak's status as an employer under the Railroad Retirement Act and the Railroad Unemployment Insurance Act.

Section 604. Waste disposal

This section defers Amtrak's statutory deadlines for full compliance with retention-toilet retrofit requirements to 2001 in lieu of 1996, to allow for retirement of older cars and avoid costly retrofitting of cars about to be retired.

Section 605. Assistance for upgrading facilities

This section repeals obsolete and executed provisions about safety-related repairs to Amtrak stations.

Section 606. Rail safety system program

This section repeals a provision specifying the contents of Amtrak's internal safety program.

Section 607. Demonstration of new technology

This section repeals a redundant provision on Amtrak use of high-speed rail technology. This matter has been addressed in recent high-speed rail legislation conferring authority on the Federal Railroad Administration in this field.

Section 608. Program master plan for Boston-New York main line

Subsection (a) repeals an obsolete provision on planning for upgrade of the northern segment of the Northeast Corridor.

Subsection (b) makes a technical conforming amendment.

Section 609. Boston-New Haven electrification project

This section requires Amtrak to design and construct its electrification project between New Haven, Connecticut, and Boston, Massachusetts, to accommodate the installation of a third mainline track between Davisville and Central Falls, Rhode Island. In addition, if funds are provided, Amtrak is to make clearance improvements on the existing main line tracks to permit double-stack service on this line.

The Committee intends this section as a clarification of Amtrak's responsibilities vis-a-vis a proposed freight rail infrastructure project in Rhode Island. Amtrak's electrification project is to be designed so as not to prejudice the possibility of the installation of a third track between Davisville and Central Falls, Rhode Island. However, Amtrak is in no way obligated to provide funds for this project, which is being undertaken for the exclusive benefit of local freight rail and shipping interests.

Section 610. Americans With Disabilities Act

Subsection (a) defers Amtrak's statutory deadlines under the Americans With Disabilities Act (ADA) for passenger cars, station, and facility modifications to 1998. This section has no effect on ADA requirements for procurement of new rail cars.

Subsection (b) makes a technical, conforming amendment.

Section 611. Definitions

This section adds a new definition of `rail passenger transportation,' to the recodified Rail Passenger Service Act, a term which had been previously undefined. It also clarifies that a unit of State or local government, but not necessarily such a government's contractor, can be included under the definition of rail carrier.

Section 612. Northeast Corridor cost dispute

This section repeals an executed and obsolete provision directing the Interstate Commerce Commission to settle a specific dispute.

Section 613. Inspector General Act

Subsection (a) removes Amtrak from coverage under the Inspector General Act on the ground that Amtrak is not a government agency.

Subsection (b) clarifies that Amtrak shall not be considered a Federal entity for purposes of the Inspector General Act of 1978.

Section 614. Consolidated Rail Corporation

This section repeals an obsolete provision enacted prior to Conrail's privatization specifying the composition of Conrail's board of directors.

Section 615. Interstate rail compacts

Subsection (a) provides for advance consent by Congress to multi-state agreements to support and fund intercity rail passenger service and related facilities. This avoids the need for individual Congressional consent legislation each time such a compact is negotiated.

Subsection (b) establishes the financial arrangements that an interstate compact may provide for including borrowing money on a short-term basis and issuing bonds.

While the interstate impact provision is designed to ease the way for agreements between States, the Committee is aware that it does not provide a remedy for rail lines that cross an international border, such as the Pacific Northwest Corridor that stretches from Eugene, Oregon, through Seattle, Washington, to Vancouver, British Columbia, Canada. In order to ease the way for rail routes that cross international borders, a treaty is needed similar to the `Open Skies' agreement that the United States and Canada have signed to enhance air travel. Such a treaty would provide opportunities for bilateral international cooperation and investment in improved rail passenger service. While legislative treatment of this issue is beyond the scope of H.R. 1788, the Committee urges the Administration to negotiate such agreements as may be necessary to enable the United States and Canadian Federal, State or provincial, and local government funds to be used in compacts between the United States and Canadian provinces comparable to the interstate rail compacts authorized in this section.

Section 616. Conforming amendment

This section repeals an obsolete provision of the Interstate Commerce Act directing the ICC to maintain standards for compensation of Amtrak for commuter and freight use of Amtrak and facilities.

TITLE VII--AUTHORIZATION OF APPROPRIATIONS


Section 701. Authorization of appropriations

Subsection (a) authorizes funds for Amtrak capital and operating expenses, including payments to the Railroad Retirement Board, in the amount of:











Subsection (b) authorizes funds for Amtrak capital expenditures for Northeast Corridor improvements in the amount of:























Subsection (c) makes a technical conforming amendment.

Subsection (d) authorizes funds for guaranteeing  obligations of Amtrak under Section 511 of the Railroad Revitalization and Regulatory Reform Act of 1976 in the amount of:











Subsection (e) amends Section 511 program requirements to overturn the current DOT policy requiring that the Federal guarantor come ahead of even pre-existing creditors as a condition of making any guaranteed loan.

CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED




TITLE 49, UNITED STATES CODE


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SUBTITLE IV--INTERSTATE COMMERCE


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CHAPTER 103--INTERSTATE COMMERCE COMMISSION


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SUBCHAPTER IV--RAIL SERVICES PLANNING OFFICE


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Sec. 10362. Duties








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CHAPTER 113--FINANCE


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SUBCHAPTER III--COMBINATIONS


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Sec. 11347. Employee protective arrangements in transactions involving rail carriers




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SUBTITLE V--RAIL PROGRAMS


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PART A--SAFETY

CHAPTER

Sec.

* * * * * * *

PART C--PASSENGER TRANSPORTATION

241. GENERAL
24101


* * * * * * *

 [Struck out->][ 245. AMTRAK COMMUTER ][<-Struck out] 
24501


* * * * * * *



PART C--PASSENGER TRANSPORTATION


CHAPTER 241--GENERAL


* * * * * * *

Sec. 24101. Findings, purpose, and goals




* * * * * * *







* * * * * * *





Sec. 24102. Definitions




























* * * * * * *

Sec. 24104. Authorization of appropriations














































































* * * * * * *











* * * * * * *

CHAPTER 243--AMTRAK




Sec.

24301. Status and applicable laws.

24302. Board of directors.

* * * * * * *

 [Struck out->][ 24304. Capitalization. ][<-Struck out] 

24304. Employee stock ownership plans.

* * * * * * *

 [Struck out->][ 24306. Mail, express, and auto-ferry transportation. ][<-Struck out] 

* * * * * * *

 [Struck out->][ 24310. Assistance for upgrading facilities. ][<-Struck out] 

* * * * * * *

 [Struck out->][ 24313. Rail safety system program. ][<-Struck out] 

 [Struck out->][ 24314. Demonstration of new technology. ][<-Struck out] 

* * * * * * *



Sec. 24301. Status and applicable laws






* * * * * * *

























* * * * * * *







* * * * * * *



* * * * * * *





* * * * * * *



 [Struck out->][ Sec. 24302. Board of directors ][<-Struck out]
















































Sec. 24302. Board of Directors




























Sec. 24303. Officers






* * * * * * *

 [Struck out->][ Sec. 24304. Capitalization ][<-Struck out]








































Sec. 24304. Employee stock ownership plans




Sec. 24305. General authority




* * * * * * *































* * * * * * *



* * * * * * *



* * * * * * *

 [Struck out->][ Sec. 24306. Mail, express, and auto-ferry transportation ][<-Struck out]














Sec. 24307. Special transportation




















* * * * * * *

 [Struck out->][ Sec. 24310. Assistance for upgrading facilities ][<-Struck out]














* * * * * * *

Sec. 24312. Labor standards




















 [Struck out->][ Sec. 24313. Rail safety system program ][<-Struck out]
















 [Struck out->][ Sec. 24314. Demonstration of new technology ][<-Struck out]








Sec. 24315. Reports and audits


















































* * * * * * *

 [Struck out->][ CHAPTER 245--AMTRAK COMMUTER ][<-Struck out] 




 [Struck out->][ Sec. ][<-Struck out] 

 [Struck out->][ 24501. Status and applicable laws. ][<-Struck out] 

 [Struck out->][ 24502. Board of directors. ][<-Struck out] 

 [Struck out->][ 24503. Officers. ][<-Struck out] 

 [Struck out->][ 24504. General authority. ][<-Struck out] 

 [Struck out->][ 24505. Commuter rail passenger transportation. ][<-Struck out] 

 [Struck out->][ 24506. Certain duties and powers unaffected. ][<-Struck out] 



 [Struck out->][ Sec. 24501. Status and applicable laws ][<-Struck out]




































 [Struck out->][ Sec. 24502. Board of directors ][<-Struck out]






















 [Struck out->][ Sec. 24503. Officers ][<-Struck out]








 [Struck out->][ Sec. 24504. General authority ][<-Struck out]














 [Struck out->][ Sec. 24505. Commuter rail passenger transportation ][<-Struck out]




































 [Struck out->][ Sec. 24506. Certain duties and powers unaffected ][<-Struck out]




CHAPTER 247--AMTRAK ROUTE SYSTEM




Sec.

 [Struck out->][ 24701. Operation of basic system. ][<-Struck out] 

 [Struck out->][ 24702. Improving rail passenger transportation. ][<-Struck out] 

 [Struck out->][ 24703. Route and service criteria. ][<-Struck out] 

 [Struck out->][ 24704. Transportation requested by States, authorities, and other persons. ][<-Struck out] 

 [Struck out->][ 24705. Additional qualifying routes. ][<-Struck out] 

* * * * * * *

 [Struck out->][ 24707. Cost and performance review. ][<-Struck out] 

 [Struck out->][ 24708. Special commuter transportation. ][<-Struck out] 



* * * * * * *

 [Struck out->][ Sec. 24701. Operation of basic system ][<-Struck out]










 [Struck out->][ Sec. 24702. Improving rail passenger transportation ][<-Struck out]




































 [Struck out->][ Sec. 24703. Route and service criteria ][<-Struck out]
























 [Struck out->][ Sec. 24704. Transportation requested by States, authorities, and other persons ][<-Struck out]








































 [Struck out->][ Sec. 24705. Additional qualifying routes ][<-Struck out]


















Sec. 24706. Discontinuance




































 [Struck out->][ Sec. 24707. Cost and performance review ][<-Struck out]




















 [Struck out->][ Sec. 24708. Special commuter transportation ][<-Struck out]






* * * * * * *

CHAPTER 249--NORTHEAST CORRIDOR IMPROVEMENT PROGRAM




Sec.

24901. Definitions.

* * * * * * *

 [Struck out->][ 24903. Program master plan for Boston-New York main line. ][<-Struck out] 

* * * * * * *

 [Struck out->][ 24907. Note and mortgage. ][<-Struck out] 

* * * * * * *

 [Struck out->][ 24909. Authorization of appropriations. ][<-Struck out] 

* * * * * * *



Sec. 24902. Goals and requirements










* * * * * * *





* * * * * * *

 [Struck out->][ Sec. 24903. Program master plan for Boston-New York main line ][<-Struck out]






















Sec. 24904. General authority
















* * * * * * *

 [Struck out->][ Sec. 24907. Note and mortgage ][<-Struck out]








* * * * * * *

 [Struck out->][ Sec. 24909. Authorization of appropriations ][<-Struck out]
























































































* * * * * * *

PART E--MISCELLANEOUS


CHAPTER 281--LAW ENFORCEMENT




Sec.

28101. Rail police officers.

28102. Limit on certain accident or incident liability.

28103. Limitations on rail passenger transportation liability.

* * * * * * *



Sec. 28103. Limitations on rail passenger transportation liability




































* * * * * * *

-

NORTHEAST RAIL SERVICE ACT OF 1981


* * * * * * *

PART 6--MISCELLANEOUS PROVISIONS


* * * * * * *

 [Struck out->][ NORTHEAST CORRIDOR COST DISPUTE ][<-Struck out]












* * * * * * *

INTERCITY PASSENGER SERVICE EMPLOYEES






* * * * * * *

-

SECTION 9101 OF TITLE 31, UNITED STATES CODE


Sec. 9101. Definitions


































* * * * * * *

-

SECTION 8G OF THE INSPECTOR GENERAL ACT OF 1978


REQUIREMENTS FOR FEDERAL ENTITIES AND DESIGNATED FEDERAL ENTITIES








* * * * * * *

-

CONRAIL PRIVATIZATION ACT


* * * * * * *

SEC. 4001. SHORT TITLE; TABLE OF CONTENTS OF SUBTITLE.








Part 1--GENERAL PROVISIONS

Sec. 4001. Short title; table of contents of subtitle.

* * * * * * *

Part 2--CONRAIL

subpart a--sale of conrail

* * * * * * *

subpart b--other matters relating to the sale

Sec. 4021. Rail service obligations.

Sec. 4022. Ownership limitations.

 [Struck out->][ Sec. 4023. Board of Directors. ][<-Struck out] 

* * * * * * *



PART 2--CONRAIL


* * * * * * *

Subpart B--Other Matters Relating to the Sale


* * * * * * *

 [Struck out->][ SEC. 4023. BOARD OF DIRECTORS. ][<-Struck out]




























































* * * * * * *

-

SECTION 511 OF THE RAILROAD REVITALIZATION AND REGULATORY REFORM ACT OF 1976


GUARANTEE OF OBLIGATIONS




* * * * * * *



* * * * * * *



* * * * * * *

MINORITY VIEWS


The report includes a lengthy theoretical discussion of whether some of the provisions of the reported bill, which deal with employee protection for Amtrak employees, might lead to changes in employee protection established under other laws for employees of freight railroads and mass transit systems. The laws governing protection for employees of freight railroads and urban mass transit include the Interstate Commerce Act and the Federal Transit Act. These laws were not amended by the reported bill. We do not believe that discussion of these other laws, which were not before the Committee in this bill, should be given weight as legislative history affecting these laws.

It should also be clearly understood that we do not agree with any implication in this report that labor protection for employees of freight railroad and mass transit systems should be reduced. In addition, we disagree with the report's criticisms of the Opinion of the Chief Counsel of the Federal Railroad Administration on these issues. The chief Counsel concluded that `the labor protection accorded freight railroad employees * * * would not be affected by the passage of the (reported) bill.'

A copy of the Chief Counsel's opinion follows:

Office of Chief Counsel,


U.S. Department of Transportation,


Federal Railroad Administration,


Washington, DC.


Date: September 20, 1995.

From S. Mark Lindsey, Chief Counsel.

To: Jolene Molitoris, Administrator.

Subject: Effect of repealing 49 U.S.C. Sec. 24706(c) and extinguishing Appendix C-2 agreement.

ISSUE


The House Transportation and Infrastructure Committee's draft Amtrak reauthorization bill (`House bill') authorizes Amtrak and its unions to negotiate new labor protection terms. 1

 [Footnote]  The House bill also eliminates the existing labor protection afforded Amtrak employees under 49 U.S.C. Sec. 24706(c), 2

 [Footnote]  and the Amtrak collective bargaining agreement implementing the section (referred to as Appendix C-2). 3

 [Footnote]  We have been asked whether the House bill affects the labor protection accorded freight railroad employees under the Interstate Commerce Act and the agreement (referred to as Appendix C-1) negotiated under Sec. 24706(c) to protect freight railroad employees in the event of a discontinuance of intercity rail passenger service.

[Footnote 1: Whenever term `labor protection' appears, it refers to all forms of labor protection, including severance benefits.]

[Footnote 2: Unless otherwise indicated all section references will be to Title 49 of the United States Code.]

[Footnote 3: Section 24706(c) was originally 45 U.S.C. Sec. 565(a)-(c), before being recodified in 1994. It requires Amtrak, and any freight railroads furnishing services or facilities to Amtrak, to provide fair and equitable arrangements to protect the interests of employees whose jobs are abolished or adversely affected by a discontinuance of intercity rail passenger service, including a modification or termination of a facilities or service agreement between a freight railroad and Amtrak or by Amtrak's taking over operation of a passenger service from a freight railroad. Implementing labor protection contracts were required to be approved by the Secretary of Labor, who had to certify that the contracts afforded affected employees fair and equitable protection. 45 U.S.C. 565 (b) and (c). Acting pursuant to this statutory mandate, the Secretary in 1971 approved a labor protection arrangement for the freight railroad employees (Appendix C-1 to the agreements between Amtrak and the freight railroads) and in 1973 for Amtrak employees (Appendix C-2 to these agreements), that provide one year of salary protection for each year of prior service up to a maximum of 6 years' pay for affected employees. The Secretary's 1971 certification was upheld as proper in Congress of Railway Unions v. Hodgson, 325 F.Supp. 68 (1971). Given the establishment of the necessary implementing labor protection agreements, Congress dropped as surplus, the approval procedure specified in 45 U.S.C. 565 when the section was recodified. In taking this action, Congress made clear that it did not intend to make any substantive change in the section even through the recodification makes minor changes in the statutory language. See Pub. L. No. 103-272, 6(a), 108 Stat. 1378; H.R. Rep. No. 180, 103d Cong., 1st Sess. 1-5 (1993).]

CONCLUSION


It is my opinion that the labor protection accorded freight railroad employees under the Interstate Commerce Act and Appendix C-1 would not be affected by the House bill for two reasons. First, while the House Bill would repeal Sec. 24706(c), and extinguish the Appendix C-2 agreement (pertaining to Amtrak employees), the House bill does not similarly extinguish the Appendix C-1 agreement (pertaining to freight railroad employees). The Appendix C-1 agreement therefore would remain in place unaltered. Second, the labor protection afforded freight railroad employees under 11347 of the Interstate Commerce Act is required to be at least as protective as that established under 24706(c)--namely the Appendix C-1 terms. Significantly, while the House bill amends 11347, it leaves unaltered the language requiring the imposition of labor protection terms no less than those established under 24706(c).

DISCUSSION


Section 301 of the House bill provides for an expedited collective bargaining process between Amtrak and its unions to establish new labor protection arrangements to replace the terms contained in Sec. 24706(c) and the Appendix C-2 agreement; existing labor protections for Amtrak employees would stay in place for a period of 254 days to allow the parties time to reach an agreement. Effective 254 days after date of enactment, 24706(c) would be repealed, and any provision in any pre-Act Amtrak labor contract relating to labor protection, including all provisions of the Appendix C-2 agreement, would be extinguished. Subsection 302(a) of the House bill. Section 302 of the House bill does not similarly extinguish the Appendix C-1 agreement, which protects freight railroad employees in the event of a discontinuance of intercity rail passenger service. Appendix C-1 agreement would, therefore, not be affected by the House bill.

The Appendix C-1 agreement establishes the floor on labor protection that the Interstate Commerce Commission (ICC) must impose in approving various transactions involving the freight railroads. Under the Interstate Commerce Act, the ICC is required to impose labor protection under Sec. 11347, 4

 [Footnote]  in approving the following transactions involving freight railroad carriers:

[Footnote 4: Originally Sec. 5(2)(f) before being recodified as 11347 in 1978 (Pub. L. No. 95-473).]







Prior to the passage of the Railroad Revitalization and Regulatory Reform Act of 1976 (4R Act), the minimum level of labor protection that was imposed by the ICC under Sec. 11347 was 4 years of salary protection. 5

 [Footnote]  In the 4R Act, Congress modified Sec. 11347 to link the freight carriers' labor protection obligations to those established under 45 U.S.C. 565 (now 24706(c)). Pub. L. No. 94-210; section 402(a). As amended, 11347 provides that the ICC--

[Footnote 5: In 1944, the ICC adopted the `Oklahoma' conditions (dismissed employees receive 100% of prior earnings up to 4 years, with protection to commence on the date of ICC approval of the transaction). Later that year, the ICC adopted the `Burlington' conditions (extended protection to abandonments). In 1952, the ICC adopted the `New Orleans' conditions (protection begins from the date an employee is adversely affected rather than from the date of the ICC order). See New York Dock Ry. v. United States, 609 F.2d 83 (2d Cir. 1979), for a discussion of the types of labor protection by the ICC prior to the enactment of the 4R Act.]



In 1979, the ICC implemented the 4R Act change to Sec. 11347 by requiring up to 6 years of salary protection for freight railroad employees (commonly referred to as `New York Dock' benefits). New York Dock Railway--Control--Brooklyn Eastern District, 360 I.C.C. 60 (1979). The ICC's decision was upheld by the Second Circuit; the court ruled that the reference in 11347 to terms established under 45 U.S.C. 565 (now 24706(c)) `means the Appendix C-1 conditions.' New York Dock Ry. v. United States, Id. at 94.

Subsection 302(c) of the House bill amends Sec. 11347 by striking the requirement that the labor protection imposed by the ICC must be at least as protective as terms established under 24307(c) and 24312. Significantly, however, subsection 302(c) of the House bill does not strike the requirement that the labor protection afforded freight railroad employees be at least as protective as the terms `established [past tense] under section 24706(c) of this title.' Appendix C-1 contains the terms established under 24706(c).

In summation, Congress established a one-time process for the development of labor protection terms to protect freight railroad employees in the event of a discontinuance of intercity rail passenger service. This process provided for collective bargaining and review and approval of the resulting contract (Appendix C-1) by the Secretary of Labor. This process is complete and Appendix C-1 is in place. Nothing in the House bill extinguishes Appendix C-1, and it remains in place unaltered. The labor protection afforded freight railroad employees under Sec. 11347 of the Interstate Commerce Act is required to be at least as protective as that established under 24706(c)--namely, the Appendix C-1 terms. The House bill amends 11347, but does not alter the requirement that labor protection imposed by the ICC not drop below the levels established under 24706(c). It is clear then that the labor protection accorded freight railroad employees under 11347 and Appendix C-1 would not be affected by the passage of the House bill.

James L. Oberstar.

Robert A. Borski.

Jerry F. Costello.

Pat Danner.

Jerrold Nadler.

James E. Clyburn.

Frank Mascara.

William O. Lipinski.

Nick Rahall.

Peter A. DeFazio.

Corrine Brown.

Glenn Poshard.

Bob Filner.







 




 
  
     

        
 
          


          


          

         

      		
    





  
     

       

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