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REFERENCES IN TEXT

The Second Liberty Bond Act, as amended, referred to in subsec (f), is act Sept. 24, 1917, ch. 56, 40 Stat. 288, as amended, which is classified to section 745, former section 747, sections 752, 752a, 753, 754, 754a, 754b, 757, 757b, and 757c, former section 757c-1, sections 757c-2, 757c-3, 757c-4, 757d, 757e, 758, 760, and 764, former section 765, and sections 766, 769, 771, 773, 774, and 801 of Title 31, Money and Finance.

AMENDMENTS

1973-Subsec. (a). Pub. L. 93-146, § 13(1), added provisions requiring the approval of the Secretary of the Treasury.

Subsec. (d). Pub. L. 93–146, § 13(2), raised to "$500,000,000" the allowable aggregate unpaid principal amount of securities, obligations, and loans outstanding at any one time which are guaranteed by the Secretary.

Subsec. (g). Pub. L. 93-146, § 13(3), added subsec. (g). 1972 Subsec. (a). Pub. L. 92-316 incorporated existing provisions of first and part of second sentences in provisions designated as subsec. (a), authorized refinancing guarantees, and substituted provision specifying guarantee of loans for "reservation systems, switch and signal systems, and other capital equipment and facilities necessary for the improvement of rail passenger service" for prior guarantee of loans "for other corporate purposes". Subsecs. (b), (c). Pub. L. 92-316 added subsecs. (b) and (c).

Subsec. (d). Pub. L. 92-316 substituted first sentence limitation of aggregate unpaid principal amount of securities, obligations, or loans outstanding at any one time which are guaranteed by the Secretary to $150,000,000 before July 1, 1973, and to $200,000,000 after June 30, 1973, for prior second sentence limitation of amount of guaranteed loans outstanding at any one time to $100,000,000 and deleted phrase "from the lending institution" following "prescribe and collect".

Subsec. (e). Pub. L. 92-316 incorporated existing fourth sentence provisions in provisions designated as subsec. (e), provided expressly for appropriation to the Secretary" and that amount be available until expended, substituted text respecting amount "necessary to discharge all his responsibilities under this section" for amount "necessary to carry out this section", and deleted $100,000,000 restriction on amount of authorization.

Subsec. (f). Pub. L. 92–316 added subsec. (f).

EFFECTIVE DATE OF 1972 AMENDMENT

Amendment by Pub. L. 92-316 effective June 22, 1972, see section 13 of Pub. L. 92-316, set out as a note under section 543 of this title.

PROVISIONS APPLICABLE TO GUARANTEE OF LOANS BEFORE JUNE 22, 1972

Section 10(b) of Pub. L. 92-316 provided that: "Section 602 (b), (c), (d), (e), and (f) of the Rail Passenger Service Act of 1970, as amended by subsection (a) of this section [subsecs. (b), (c), (d), (e), and (f) of this section] shall also apply to guarantees made by the Secretary prior to the enactment of this Act [June 22, 1972]. The amendment of section 602 (a) [subsec. (a) of this section] shall not affect the legality of guarantees made by the Secretary prior to the enactment of this Act [June 22, 1972], but such guarantees shall continue in effect until discharged by payment of the loan guaranteed, together with interest, after such date [June 22, 1972]."

SUBCHAPTER VIII.—MISCELLANEOUS

PROVISIONS

§ 641. Adequacy of service.

(a) The Commission shall promulgate, within 60 days from November 3, 1973, and shall from time to time revise, such regulations as it considers necessary to provide adequate service, equipment, tracks, and other facilities for quality intercity rail passenger service. The Corporation may contract with railroads or with regional transportation agencies for the improvement of service, equipment, tracks and

other facilities necessary to meet such regulations promulgated by the Commission. In the event of a failure to agree, the Commission shall by rule establish procedures for allocating between the Corporation and a railroad any costs required to be incurred to meet the regulations establishing adequate service, equipment, tracks, and other facilities.

(b) Any person who violates a regulation issued under this section shall be subject to a civil penalty of not to exceed $500 for each violation. Each day a violation continues shall constitute a separate offense. (As amended Pub. L. 93-146, § 14, Nov. 3, 1973, 87 Stat. 554.)

AMENDMENTS

1973-Pub. L. 93-146 designated existing provisions covering the penalty for violation of regulations as subsec. (b), struck out existing provisions under which the Commission had been authorized to prescribe such regulations as it considered necessary to provide safe and adequate service, equipment, and facilities for intercity rail passenger service, and added subsec. (a).

§ 644. Records and audit of the Corporation and certain railroads.

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(2) (A)

(B) To the extent the Comptroller General deems necessary in connection with audits as he may make of the financial transactions of the Corporation pursuant to paragraph (A) of this subsection, his representatives shall have access to all books, accounts, records, reports, files, and other papers, things, or property belonging to or in use by any railroad with which the Corporation has entered into a contract for the performance of intercity rail passenger service, pertaining to such railroad's financial transactions and necessary to facilitate the audit, and such representatives shall be afforded full facilities for verifying transactions with the balances or securities held by depositories, fiscal agents, and custodians. All such books, accounts, records, reports, files, papers, and property of such railroad shall remain in the possession and custody of the railroad.

(C) A report of each such audit shall be made by the Comptroller General to the Congress. The report to the Congress shall contain such comments and information as the Comptroller General may deem necessary to inform Congress of the financial operations and condition of the Corporation, together with such recommendations with respect thereto as he may deem advisable. The report shall also show specifically any program, expenditure, or other financial transaction or undertaking observed in the course of the audit, which, in the opinion of the Comptroller General, has been carried on or made without authority of law. A copy of each report shall be furnished to the President, to the Secretary, and to the Corporation at the time submitted to the Congress. (As amended Pub. L. 92-316, § 11, June 22, 1972, 86 Stat. 233.)

AMENDMENTS

1972-Pub. L. 92-316, § 11(1), provided, in section heading, for the records and audit of certain railroads. Subsec. (2) (B). Pub. L. 92–316, § 11(2), added par. (B). Former par (B) redesignated (C).

Subsec. (2) (C). Pub. L. 92-316, § 11(2), redesignated former par. (B) as (C).

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EFFECTIVE DATE OF 1972 AMENDMENT Amendment by Pub. L. 92-316 effective June 22, 1972, see section 13 of Pub. L. 92-316, set out as a note under section 543 of this title.

§ 645. Report by Secretary of Transportation.

(a) The Secretary shall, on or before March 15, 1973, transmit to the Congress a comprehensive report on the effectiveness of this chapter in achieving and promoting intercity rail passenger service and on the effectiveness of the Corporation in implementing the purposes of this chapter. Such report shall include an evaluation by the Secretary of the intercity rail passenger service operations assumed by the Corporation including, but not limited to, adequacy and effectiveness of services, on-time performance, reservations and ticketing, scheduling, equipment, fare structures, routes, and immediate and long-term financial needs.

(b) In addition to the general evaluation and assessment required under subsection (a) of this section, the report by the Secretary shall include

(1) recommendations for the orderly assumption by the Corporation of the operation and control of all aspects of its intercity rail passenger service, including the performance by the Corporation of all full-time functions solely related to the intercity rail passenger service provided by it under this chapter;

(2) an assessment of whether the board of directors of the Corporation adequately and fairly represents the members of the public who utilize intercity rail passenger services and, if necessary, recommendations for appropriate changes in the composition of such board of directors;

(3) estimates of potential revenues for the Corporation from the transportation of mail and express on intercity passenger trains;

(4) a detailed analysis of the on-time performance of intercity rail passenger service operations assumed by the Corporation, together with such recommendations as the Secretary may deem advisable to eliminate delays in such intercity rail passenger service operations caused by freight train operations;

(5) recommendations with respect to the establishment of the optimum intercity rail passenger service system as soon as possible after July 1, 1973, taking into account economic feasibility, requirements as to public convenience and necessity, and the ability of the Corporation to provide adequate service over the total system, which optimum system shall include recommended routes and discontinuances; and

(6) recommendations with respect to the improvement of tracks and roadbeds on routes over which the Corporation operates intercity passenger trains.

(c) Such report shall contain such additional recommendations as the Secretary may deem advisable to assist the Corporation in carrying out the purposes of this chapter, including recommendations for legislative enactments or administrative actions which would enable the Corporation, after July 1, 1973, to discontinue more rapidly and efficiently

those routes which do not meet the criteria recommended by the Secretary for the establishment of the optimum intercity rail passenger service system.

(d) In carrying out the provisions of this section, the Secretary may use available services and facilities of other departments, agencies, and instrumentalities of the Federal Government with their consent and on a reimbursable basis.

(e) Departments, agencies, and instrumentalities of the Federal Government shall exercise their powers, duties, and functions in such manner as will assist in carrying out the provisions of this section. (Pub. L. 91-518, title VIII, § 806, as added Pub. L. 92-316, § 12, June 22, 1972, 86 Stat. 233.)

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SUBCHAPTER I.-GENERAL PROVISIONS

§ 701. Congressional declaration of policy.

(a) Findings.

The Congress finds and declares that

(1) Essential rail service in the midwest and northeast region of the United States is provided by railroads which are today insolvent and attempting to undergo reorganization under the Bankruptcy Act.

(2) This essential rail service is threatened with cessation or significant curtailment because of the inability of the trustees of such railroads to formulate acceptable plans of reorganization. This rail service is operated over rail properties which were acquired for a public use, but which have been permitted to deteriorate and now require extensive rehabilitation and modernization.

(3) The public convenience and necessity require adequate and efficient rail service in this region and throughout the Nation to meet the needs of commerce, the national defense, the environment, and the service requirements of passengers, United States mail, shippers, States and their political subdivisions, and consumers.

(4) Continuation and improvement of essential rail service in this region is also necessary to preserve and maintain adequate national rail services and an efficient national rail transportation system.

(5) Rail service and rail transportation offer economic and environmental advantages with respect to land use, air pollution, noise levels, energy efficiency and conservation, resource allocation, safety, and cost per ton-mile of movement to such extent that the preservation and maintenance of adequate and efficient rail service is in the national interest.

(6) These needs cannot be met without substantial action by the Federal Government. (b) Purposes.

It is therefore declared to be the purpose of Congress in this chapter to provide for—

(1) the identification of a rail service system in the midwest and northeast region which is adequate to meet the needs and service requirements of this region and of the national rail transportation system;

(2) the reorganization of railroads in this region into an economically viable system capable of providing adequate and efficient rail service to the region;

(3) the establishment of the United States Railway Association, with enumerated powers and responsibilities;

(4) the establishment of the Consolidated Rail Corporation, with enumerated powers and responsibilities;

(5) assistance to States and local and regional transportation authorities for continuation of local rail services threatened with cessation; and (6) necessary Federal financial assistance at the lowest possible cost to the general taxpayer. (Pub. L. 93-236, title I, § 101, Jan. 2, 1974, 87 Stat. 986.)

REFERENCES IN TEXT

The Bankruptcy Act, referred to in par. (1), is classified to section 1 et seq. of Title 11, Bankruptcy.

SHORT TITLE

Section 1 of Pub. L. 93-236 provided in part that Pub. L. 93-236 [which enacted this chapter and amended section 856 of Title 31, and section 1(16) of Title 49], may be cited as the "Regional Rail Reorganization Act of 1973." SEPARABILITY OF PROVISIONS

Section 604 of Pub. L. 93-236 provided that: "If any provision of this Act [which enacted this chapter and amended section 856 of Title 31, and section 1(16) of Title 49,] or the application thereof to any person or circumstances is held invalid, the remainder of this Act and the application of such provision to other persons or circumstances shall not be affected thereby."

§ 702. Definitions.

As used in this chapter, unless the context otherwise requires

(1) "Association" means the United States Railway Association, established under section 711 of this title;

(2) "Commission" means the Interstate Commerce Commission;

(3) "Corporation" means the Consolidated Rail Corporation required to be established under section 741 of this title;

(4) "effective date of the final system plan" means the date on which the final system plan or any revised final system plan is deemed approved by Congress, in accordance with section 718 of this title;

(5) "employee stock ownership plan" means a technique of corporate finance that uses a stock bonus trust or a company stock money purchase pension trust which qualifies under section 401 (a) of Title 26 in connection with the financing of corporate improvements, transfers in the ownership of corporate assets, and other capital requirements of a corporation and which is designed to build beneficial equity ownership of shares in the employer corporation into its employees substantially in proportion to their relative incomes, without requiring any cash outlay, any reduction in pay or other employee benefits, or the surrender of any other rights on the part of such employees.

(6) "final system plan" means the plan of reorganization for the restructure, rehabilitation, and modernization of railroads in reorganization prepared pursuant to section 716 of this title and approved pursuant to section 718 of this title;

(7) "includes" and variants thereof should be read as if the phrase "but is not limited to" were also set forth;

(8) "Office" means the Rail Services Planning Office established under section 715 of this title;

(9) "profitable railroad" means a railroad which is not a railroad in reorganization. The term does not include the Corporation, the National Railroad Passenger Corporation, or a railroad leased. operated, or controlled by a railroad in reorganization in the region;

(10) "rail properties" means assets or rights owned, leased, or otherwise controlled by a railroad which are used or useful in rail transportation service; except that the term, when used in

conjunction with the phase 1"railroads leased, operated, or controlled by a railroad in reorganization", shall not include assets or rights owned, leased, or otherwise controlled by a Class I railroad which is not wholly owned, operated, or leased by a railroad in reorganization but is controlled by a railroad in reorganization;

(11) "railroad" means a common carrier by railroad as defined in section 1(3) of Title 49. The term includes the Corporation and the National Railroad Passenger Corporation;

(12) "railroad in reorganization" means a railroad which is subject to a bankruptcy proceeding and which has not been determined by a court to be reorganizable or not subject to reorganization pursuant to this chapter as prescribed in section 717(b) of this title. A "bankruptcy proceeding" includes a proceeding pursuant to section 205 of Title 11 and an equity receivership or equivalent proceeding;

(13) "Region" means the States of Maine, New Hampshire, Vermont, Massachusetts, Connecticut, Rhode Island, New York, New Jersey, Pennsylvania, Delaware, Maryland, Virginia, West Virginia, Ohio, Indiana, Michigan, and Illinois; the District of Columbia; and those portions of contiguous States in which are located rail properties owned or operated by railroads doing business primarily in the aforementioned jurisdictions (as determined by the Commission by order);

(14) "Secretary" means the Secretary of Transportation or his delegate, unless the context indicates otherwise; and

(15) "State" means any State or the District of Columbia.

(Pub. L. 93-236, title I, § 102, Jan. 2, 1974, 87 Stat. 986.)

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ployees of the Federal Government. The Association shall have succession until dissolved by Act of Congress, shall maintain its principal office in the District of Columbia, and shall be deemed to be a resident of the District of Columbia with respect to venue in any legal proceeding.

(d) Board of Directors.

The Board of Directors of the Association shall consist of 11 individuals, as follows:

(1) the Chairman, a qualified individual who shall be appointed by the President, by and with the advice and consent of the Senate;

(2) three Government members, who shall be the Secretary, the Chairman of the Commission, and the Secretary of the Treasury, or their duly authorized representatives; and

(3) seven nongovernment members, who shall be appointed by the President, by and with the advice and consent of the Senate, on the following basis

(A) one to be selected from a list of qualified individuals recommended by the Association of American Railroads or its successor who are representatives of profitable railroads;

(B) one to be selected from a list of qualified individuals recommended by the American Federation of Labor and Congress of Industrial Organizations or its successor who are representative of railroad labor;

(C) one to be selected from a list of qualified individuals recommended by the National Governors Conference;

(D) one to be selected from a list of qualified individuals recommended by the National League of Cities and Conference of Mayors;

(E) two to be selected from lists of qualified individuals recommended by shippers and organizations representative of significant shipping interests including small shippers;

(F) one to be selected from lists of qualified individuals recommended by financial institutions, the financial community, and recognized financial leaders.

As used in this paragraph, a list of qualified individuals shall consist of not less than three individuals.

Except for the members appointed under paragraphs (1) and (3) (A), (B), (E), and (F), no member of the Board may have any employment or other direct financial relationship with any railroad. A member of the Board who is not otherwise an employee of the Federal Government may receive $300 per diem when engaged in the actual performance of his duties plus reimbursement for travel, subsistence, and other necessary expenses incurred in the performance of such duties.

(e) Terms of office.

The terms of office of the nongovernment members of the Board of Directors of the Association first taking office shall expire as designated by the President at the time of nomination-two at the end of the second year; two at the end of the fourth year; and three at the end of the sixth year. The term of office of the Chairman of such Board shall be 6 years. Successors to members of such Board shall be appointed in the same manner as the original members and,

except in the case of government members, shall have terms of office expiring 6 years from the date of expiration of the terms for which their predecessors were appointed. Any individual appointed to fill a vacancy occurring prior to the expiration of any term of office shall be appointed for the remainder of that term.

(f) Quorum.

Beginning 45 days after the date of incorporation of the Association, six members of the Board, including three of the nongovernment members, shall constitute a quorum for the transaction of any function of the Association.

(g) President.

The Board of Directors of the Association, upon the recommendation of the Secretary, shall appoint a qualified individual to serve as the President of the Association at the pleasure of the Board. The President of the Association, subject to the direction of the Board, shall manage and supervise the affairs of the Association.

(h) Executive Committee.

The Board of Directors of the Association shall have an executive committee which shall consist of the Chairman of the Board, the Secretary, the Chairman of the Commission, and two other members who shall be selected by the members of the Board. (i) Miscellaneous.

(1) The Association shall have a seal which shall be judicially recognized.

(2) The Administrator of General Services shall furnish the Association with such offices, equipment, supplies, and services as he is authorized to furnish to any other agency or instrumentality of the United States.

(3) The Secretary is authorized to transfer to the Association or the Corporation rights in intellectual property which are directly related to the conduct of the functions of the Association or the Corporation, to the extent that the Federal Government has such rights and to the extent that transfer is necessary to carry out the purposes of this chapter. (j) Use of names.

No person, except the Association, shall hereafter use the words "United States Railway Association" as a name for any business purpose. No person, except the corporation directed to be established under section 741 of this title, shall hereafter use the words "Consolidated Rail Corporation" as a name for any business purpose. Violations of these provisions may be enjoined by any court of general jurisdiction in an action commenced by the Association or the Corporation. In any such action, the Association or the Corporation may recover any actual damages flowing from such violation, and, in addition, shall be entitled to punitive damages (regardless of the existence or nonexistence of actual damage) in an amount not to exceed $100 for each day during which such violation was committed. The district courts of the United States shall have jurisdiction over actions brought under this subsection, without regard to the amount in controversy or the citizenship of the parties. (Pub. L. 93-236, title II, § 201, Jan. 2, 1974, 87 Stat. 988.)

SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in section 702 of this title.

§ 712. General powers and duties of the Association.
(a) General.

To carry out the purposes of this chapter, the Association is authorized to

(1) engage in the preparation and implementation of the final system plan;

(2) issue obligations under section 720 of this title and make loans under section 721 of this title;

(3) provide assistance to States and local or regional transportation authorities in accordance with section 763 of this title;

(4) sue and be sued, complain and defend, in the name of the Association and through its own attorneys; adopt, amend, and repeal bylaws governing the operation of the Association and such rules and regulations as are necessary to carry out the authority granted under this chapter; conduct its affairs, carry on operations, and maintain offices;

(5) appoint, fix the compensation, and assign the duties of such attorneys, agents, consultants, and other full- and part-time employees as it deems necessary or appropriate; except that (1) no officer of the Association, including the Chairman, may receive compensation at a rate in excess of that prescribed for level I of the Executive Schedule under section 5312 of Title 5, and (2) no individual may hold a position in violation of regulations which the Secretary shall establish to avoid conflicts of interest and to protect the interests of the public;

(6) acquire and hold such real and personal property as it deems necessary or appropriate in the exercise of its responsibilities under this chapter, and to dispose of any such property held by it; (7) consult with the Secretary of the Army and the Chief of Engineers and request the assistance of the Corps of Engineers, and the Secretary of the Army may direct the Corps of Engineers to cooperate fully with the Association, the Corporation, or any entity designated in accordance with section 716(c) (1) (C) of this title in order to carry out the purposes of this chapter;

(8) consult on an ongoing basis with the Chairman of the Federal Trade Commission and the Attorney General to assess the possible anticompetitive effects of various proposals and to negotiate provisions which would, to the greatest extent practicable in accordance with the purposes of this chapter and the goal set forth in section 716(a) (5) of this title, alleviate any such anticompetitive effects;

(9) consult with representatives of science, industry, agriculture, labor, environmental protection and consumer organizations, and other groups, as it deems advisable; and

(10) enter into, without regard to section 5 of Title 41, such contracts, leases, cooperative agreements, or other transactions as may be necessary in the conduct of its functions and duties with any person (including a government entity).

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