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    "title": "1976/02/05 S2718 Railroad Revitalization and Regulatory Reform Act of 1976 (1)",
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    "ocrText": "The original documents are located in Box 39, folder \"2/5/76 S2718 Railroad Revitalization\nand Regulatory Reform Act of 1976 (1)\" of the White House Records Office: Legislation\nCase Files at the Gerald R. Ford Presidential Library.\nCopyright Notice\nThe copyright law of the United States (Title 17, United States Code) governs the making of\nphotocopies or other reproductions of copyrighted material. Gerald R. Ford donated to the United\nStates of America his copyrights in all of his unpublished writings in National Archives collections.\nWorks prepared by U.S. Government employees as part of their official duties are in the public\ndomain. The copyrights to materials written by other individuals or organizations are presumed to\nremain with them. If you think any of the information displayed in the PDF is subject to a valid\ncopyright claim, please contact the Gerald R. Ford Presidential Library.\nExact duplicates within this folder were not digitized.\nDigitized from Box 39 of the White House Records Office Legislation Case Files at the Gerald R. Ford Presidential Library\nAPPROVED FEB 5-\nTHE WHITE HOUSE\nACTION\nWASHINGTON\nLast Day: February 9\nFebruary 5, 1976\nGERALD\nok\nR\nFORD\nMEMORANDUM FOR\nTHE PRESIDENT\nEast\nFROM:\nJIM CANNON W\nLIBRARY\nJo archives\nSUBJECT:\nEnrolled Bill S. 2718 - Railroad\nRevitalization and Regulatory\n2/5/76\nReform Act of 1976\nAttached for your consideration is S. 2718, sponsored\nby Senator Hartke, which authorizes $6.4 billion in\nappropriations and loan guarantees in order to:\n-- implement the final system plan for the bankrupt\nrailroads in the Northeast and Midwest,\n-- improve rail passenger service in the Northeast\nCorridor,\n-- improve the Nation's rail system through\nfinancial assistance, and\n-- provide for rail regulatory reform.\nA detailed discussion of the provisions of the enrolled\nbill is provided in OMB's enrolled bill report at Tab A.\nOMB, Jack Marsh, Max Friedersdorf, Counsel's Office\n(Lazarus), Bill Seidman and I recommend approval of\nthe enrolled bill and the proposed signing statement\nwhich has been cleared by Bob Hartmann.\nRECOMMENDATION\nThat you sign S. 2718 at Tab C. ( IN SIGNING CEREMONY)\nThat you approve the signing statement at Tab B.\nApprove WR7\nDisapprove\nOF The\nTHE\nPRESIDENT\nand\nEXECUTIVE OFFICE OF THE PRESIDENT\nOF\nORIGING\nOFFICE OF MANAGEMENT AND BUDGET\nSENTIVE\nSTATE\nWASHINGTON, D.C. 20503\nFEB 4 1976\nMEMORANDUM FOR THE PRESIDENT\nSubject: Enrolled Bill S. 2718 - Railroad Revitalization and\nRegulatory Reform Act of 1976\nSponsor - Sen. Hartke (D) Indiana\nLast Day for Action\nFebruary 13, 1976 - Friday\nPurpose\nAuthorizes $6.4 billion in appropriations and loan guarantees\nin order to: implement the final system plan for the bankrupt\nrailroads in the Northeast and Midwest, improve rail passenger\nservice in the Northeast Corridor, improve the nation's rail\nsystem through financial assistance, and provide for rail\nregulatory reform.\nAgency Recommendations\nOffice of Management and Budget\nApproval\nDepartment of Transportation\nApproval\nInterstate Commerce Commission\nApproval\nDepartment of Justice\nApproval\nUnited States Railway Association\nApproval\nNational Railroad Passenger\nCorporation (AMTRAK)\nApproval\nCouncil of Economic Advisers\nApproval\nCouncil on Wage and Price Stability\nApproval\nDepartment of the Interior\nApproval (Sections\n809-810 only)\nDepartment of the Treasury\nNo objection\nOffice of Telecommunications Policy\nNo objection\nDepartment of Labor\nNo objection\n2\nDiscussion\nThis bill is a revised product of the Senate-House conference\non the subject, resulting from negotiations between the De-\npartment of Transportation and congressional representatives.\nIt would implement the final system plan proposed by the U.S.\nRailway Association (USRA) to reorganize the bankrupt railroads\nin the Northeast and Midwest, provide financing for improved\nrail passenger service in the Northeast Corridor and for rail\nimprovements nationwide, and revise the rail regulatory powers\nof the Interstate Commerce Commission (ICC), although not to\nthe extent proposed by the Administration.\nThe bill's major provisions are summarized below.\nFinancing\nS. 2718 would authorize $6.4 billion ($5.1 billion in appro-\npriations and $1.3 billion in loan guarantees) for financing\nthe Northeast and Midwest railroad reorganization, providing\nassistance to railroads throughout the country for rail\nrehabilitation and branch line subsidies, and for upgrading\nrail passenger service in the Northeast Corridor. The Admin-\nistration had proposed a total of $5.6 billion ($3.6 billion\nin appropriations and $2.0 billion in loan guarantees) for\nthese programs. While these figures represent a difference\nnot only in levels but also of mix, they represent a consider-\nable compromise from the initial conference committee version\nof $7.6 billion. Attached is a table which shows the financ-\ning authorizations by major category and compares them to the\ninitial Administration proposal and the original conference\ncommittee version.\nControl over Financing and Conditions\nThis is the area of greatest compromise by the Congress. The\ninitial conference version would have given total control of\nmost of the funds authorized by the bill to USRA. The enrolled\nbill would place most of the control of ConRail funding in the\nFinance Committee of the USRA Board of Directors, composed of\nthe Secretary of Transportation, the Secretary of the Treasury,\nand the USRA Board Chairman. All other funds would be under\nthe control of the Secretary of Transportation. The Finance\nCommittee and its composition were Administration recommendations.\nThe bill provides that funds would be made available as\nrequested by ConRail unless the Finance Committee found that\nConRail (1) had not met its agreements with USRA; (2) had\n3\nfailed substantially to meet the financial goals set for it\nin the final system plan (as set by USRA) ; or (3) would need\nsubstantially more funds to become financially self-sufficient\nthan the $2.1 billion authorized in this bill. If any of\nthese three findings are made, the Finance Committee could\neither set a limit on future USRA purchases of ConRail secu-\nrities or terminate such purchases. Although this would give\nthe Executive a strong measure of control, it is tempered by\nthe fact that all such findings would be subject to a consti-\ntutionally objectionable one-House congressional veto within\n30 legislative days.\nUSRA would have control over the initial terms and conditions\nof its purchase of ConRail securities and of the terms and\nconditions of those securities themselves; the Administration\nhad proposed that this responsibility be shared jointly with\nthe Finance Committee. However, the bill does provide that\njoint USRA - Finance Committee approval would be needed in\nthe future to change those terms or conditions. Additionally,\nthe Finance Committee alone would have authority to waive any\nof those terms or conditions, including complete forgiveness\nof repayment of the loans.\nBankrupt Railroad Reorganization Financing\nS. 2718 would provide for Federal financing of the reorganiza-\ntion of the bankrupt Northeast and Midwest railroads by author-\nizing USRA to purchase up to $2.1 billion in ConRail securities\n(consisting of $1 billion in debentures and $1.1 billion in\nseries A preferred stock). This coincides with what the\nAdministration had recommended, with the exception that it had\nproposed that $250 million of the preferred stock funds be set\naside as a contingency fund under the control of the Finance\nCommittee rather than USRA's Board.\nUnder S. 2718, dividends on the Federal investment in ConRail\npreferred stock would be automatically forgiven until ConRail\nretained earnings in excess of $500 million and at that time\nwould apply only to those earnings in excess of $500 million,\nthus resulting in a substantial subsidy. The Administration\nhad proposed that interest and dividends accumulate on the\nFederal investment but not be payable in cash until ConRail\nhad retained earnings of $500 million. In this way, the\ngovernment would receive interest for the full period of its\ninvestment, but not actually be paid until ConRail was strong\nenough financially to bear the burden. However, the enrolled\n4\nbill is an improvement over the original conference version\nwhich would have applied the forgiveness of interest and\ndividends to both the debentures and preferred stock instead\nof only to preferred stock, an alternative which the Admin-\nistration had earlier agreed to in the House-passed version\nof the bill.\nNortheast Corridor Passenger Service\nS. 2718 would authorize $1.75 billion for grants by DOT to\nthe National Railroad Passenger Corporation (AMTRAK) to\nupgrade rail passenger service in the Northeast Corridor\nbetween Washington, D.C., New York and Boston, and $85\nmillion for AMTRAK to acquire the Corridor rail properties\nby lease or purchase. The upgrading would be a 5-year program\ndesigned to provide travel time of 3 hours, 40 minutes between\nBoston and New York and 2 hours, 40 minutes between New York\nand Washington. Two years after enactment of the bill, DOT\nwould be required to submit a report to Congress on the future\nfeasibility of establishing a 3-hour Boston-New York service\nand 2 1/2-hour New York-Washington service. Part of the\n$1.75 billion would be used for a joint Federal-State program\nof refurbishing stations and other nonoperational facilities.\nThe Administration had proposed a $1.1 billion grant program\ndesigned to ensure travel times of 4 hours between Boston and\nNew York and 3 hours between New York and Washington. The\nenrolled version is, however, a major improvement over the\ninitial conference committee version, which would have autho-\nrized a $2.4 billion program, with control in USRA rather than\nDOT, and with goals of 3-hour service between Boston and New\nYork and 2 1/2 hours between New York and Washington.\nRegulatory Reform\nThe enrolled bill would provide a measure of regulatory reform\nin ICC's authority over railroads, the first lessening of ICC\ncontrols since 1887. The bill leaves the ICC more discretion\nin certain areas than the Administration's bill would have\nprovided. Accordingly, the success of the reform measures\nrelies to some degree on the way in which the ICC chooses to\nadminister them.\nS. 2718 would facilitate railroad price flexibility by limiting\nICC's authority to suspend rates, by permitting use of incen-\ntive rates for new services and seasonal demand pricing, and\nby authorizing a 2-year experiment with rate flexibility.\nThe experiment provides that rates which were increased or\ndecreased by no more than 7% over the rate in effect on\nJanuary 1 of a year could not be suspended by the ICC except\n5\nunder limited conditions. While these changes are an improve-\nment over current conditions, they do not provide permanent\nrate flexibility authority as did the Administration's proposal.\nS. 2718 would also lessen the authority of railroad rate\nbureaus to engage in price fixing activities, although the\nICC retains authority to grant antitrust immunity and may\nexercise considerable discretion in the use of this power.\nThe Administration had proposed placing stricter limitations\non rate bureau activities and would have restricted their\nantitrust immunity.\nThe bill would provide for improved ICC procedures in other\nmatters, such as setting time limits for ICC decisions. In\naddition, it would require ICC to study its rules and make\nchanges based on the study within one year of enactment of\nthis bill. The bill would also, however, authorize a one-\nHouse veto of such proposed rule changes.\nYou have proposed similar reforms in the aviation and motor\ncarrier industries. This enrolled bill may generate renewed\ninterest in these proposals.\nOther Desirable Provisions\nThe bill would also make a number of other changes in current\nlaw which are desirable, including:\n(1) Prohibiting State taxes which discriminate against\nrailroads,\n(2) Providing for ICC action on intrastate rail rates\nif the State fails to act within 120 days,\n(3) Improving procedures for abandonment of rail lines,\nand\n(4) Providing incentives for innovative capital invest-\nments by easing rate adjustments.\nOther Undesirable Provisions\nBranch Line Subsidies. S. 2718 would authorize appropriations\nof $360 million for a nationwide program, in addition to an\nexisting authorization of $180 million for the Northeast/\nMidwest railroads, to provide a five-year Federal subsidy\nprogram for light density rail freight lines which would be\n6\neligible for service discontinuance. The Regional Rail\nReorganization Act of 1973 (P.L. 93-236) envisioned that\nStates and localities in the Northeast region would make\ndecisions as to whether such rail lines were important to\nthem and if so would agree to subsidize the net loss which\nthe rail line was experiencing in order to maintain its\nservice. S. 2718 largely abandons this principle, both in\nthe region and nationwide, authorizing 100% Federal financing\nin the first year, 90% the second year and, in the nationwide\nprogram, 80% the third year, and 70% in the fourth and fifth\nyears.\nFossil Fuel Rail Bank. S. 2718 would authorize $6 million\nfor DOT to acquire, by purchase or lease, rail track and\nproperties which are not included in the USRA's final system\nplan for the Northeast and which would provide access to\nareas of fossil fuel natural resources or agricultural pro-\nduction. The Administration opposed this proposal because\nof the precedent it would set for Federal ownership of\nrail lines.\nICC Budget and Legislation. S. 2718 would require the sub-\nmission to Congress of all ICC budget or legislative recom-\nmendations at the same time they are submitted to the President\nor OMB. The Administration has opposed such provisions because\nof the limits they place on the Executive's ability to present\ncoordinated budget and legislative programs to the Congress.\nIt should be noted, however, that the ICC has never submitted\nits proposed legislation for review through the legislative\nclearance process.\n******\nThe enrolled bill is the product of extended negotiations\nbetween the Administration and the Congress. While its pro-\nvisions depart from the Administration's initial recommenda-\ntions in some instances and while it still contains, as noted\nabove, some undesirable features, it is an acceptable resolu-\ntion of a complex and important set of issues.\n7\nFinally, it should be noted that the Commerce Committees\nwere advised that the amount and rate of appropriations\nto implement the bill would be handled separately and that\nagreement to the authorized levels in S. 2718 did not imply\na commitment for full funding. It is likely, however, that\nsome supplemental appropriations (for which modest contin-\ngency allowances were made) might be proposed in the coming\nweeks or months.\nA proposed signing statement, which was worked on by DOT,\nOMB and White House staff, has been submitted separately\nfor your consideration.\nJames James T. Lynn L.Rg\nDirector\nEnclosures\nAttachment\nCOMPARISON OF AUTHORIZATIONS\n(Dollars in Millions)\n1/\nOriginal\nOriginal\nAdministration\nConference\nEnrolled\nProposal\nBill\nS. 2718\nI. ConRail\nPurchase of securities\n$1,850\n$2,100\n$2,100\nContingency Fund\n250\n--\n--\nElectrification (loan\n2/\nguarantees)\n--\n--\n--\nPre-conveyance claims\n(loan guarantees)\n--\n400\n275\nII. Rail Passenger\nNortheast Corridor\nProject\n1,080\n2,400\n1,750\nPassenger improvements\nnationwide\n--\n200\n--\nAcquisition of Northeast\nCorridor by AMTRAK\n--\n85\n85\nAcquisition of other\ncorridors by AMTRAK\n--\n20\n20\nOther related expenses\n--\n151\n11\nIII. Nationwide Rail Freight\nLoan guarantees\n2,000\n800\n1,000\nLoans/grants/redeemable\npreference shares\n--\n600\n600\nIV. Continuation Subsidies\nBranchline\n--\n400\n360\nRight-of-way for\nrecreation\n--\n75\n20\nFossil Fuel Rail Bank\n--\n6\n6\nCommuter\n--\n125\n125\nV. Other\nControlled Transfer\nAssistance\n400\n--\n--\nMiscellaneous\n--\n29\n20\nTOTAL AUTHORIZATIONS\n$5,580\n$7,591\n$6,372\n1/ Passed by both Houses - Dec. 19, 1975\n2/ Included under other accounts\nSTATEMENT BY THE PRESIDENT\nI am pleased today to sign the Railroad Revitalization\nand Regulatory Reform Act of 1976. For more than a century,\nthe railroads have been the backbone of our American transpor-\ntation system. However, our rail system has recently been\nthrough troubled times. Now, this historic legislation will\nhelp restore the health and vitality of our Nation's private\nrailroad system in a number of ways: First, this legislation\nencourages revitalization of our deteriorating rail freight\nsystem both in the Northeast and Nationwide. Second, it will\nprovide substantial improvements in rail passenger service in\nthe densely populated Northeastern United States. And finally,\nit will remove many unnecessary regulatory restrictions which\nfor too long have hindered the ability of our railroads to\noperate efficiently and competitively. The actions set in\nmotion by this legislation will make a significant contribution\nto our objectives of economic growth through private job creation,\nenergy independence and a strong private transportation system.\nThe task of revitalizing the Nation's rail freight system\nwill not be easy. ConRail, the new corporation established\nto operate the properties of the bankrupt railroads in the\nNortheast and Midwest, certainly does not have a smooth road\nahead. Nevertheless, I believe that this legislation provides\nthe tools to make the reorganization of the bankrupt railroads\na success. We expect that within 5 years ConRail will overcome\nthe unprofitable legacy of the bankrupt lines. If ConRail is\nto succeed, however, the continued cooperation of all of you\nwho have made this legislation possible is absolutely essential.\nThe bill also provides needed financial assistance to\nhelp the railroads improve their physical plant and encourages\ndesirable restructuring of rail services both in the Northeast\n2\nand Nationwide. The bill explicitly provides $1.6 billion\nto rehabilitate and improve worn out plant facilities and\ndirects the Secretary of Transportation to provide the\nnecessary leadership in making our Nation's rail system\nmore efficient. It may be that the reorganization of the\nbankrupt railroads in the Northeast and Midwest can be\nfinally successful only as part of a further restructuring\nof the rail industry through private sector initiative.\nThis Act also permits us to begin a program of overdue\nimprovements in rail passenger service in the densely\npopulated Northeast Corridor. Passenger service between\nWashington, New York and Boston will be made both reliable\nand comfortable, with trains traveling at speeds which are\nas high as technologically feasible and financially realistic.\nWithin 5 years, we should have trains traveling at speeds\nof up to 120 miles per hour. In addition, through a joint\neffort by the Federal Government and the States and local\ncommunities involved, we will refurbish the stations along\nthe way to make train travel more attractive and convenient.\nAll of the work done as part of this program will provide a\nbase for further improvements and developments. I have asked\nSecretary Coleman to make the implementation of improvements\nto the Northeast Corridor a high priority.\nIn addition to providing short-term financial assistance,\nCongress in approving this legislation has taken a fundamental\nstep to restore the long-term economic health of this vital\nAmerican industry. The regulatory reform provisions in this\nbill are long overdue and I commend the Congress for this\nfarsighted and necessary action.\nThis kind of fundamental change in Government policy takes\ntime. Every President since Harry S Truman has called in vain\nfor increased competition and reform of our regulated industries.\n3\nFor example, the Landis Report commissioned by President-\nelect Kennedy in 1960 recommended major policy revisions\nin transportation regulation. But for more than a quarter\nof a century, the Nation has had no results. In contrast,\nthe Railroad Revitalization and Regulatory Reform Act is\nthe first significant reform of transportation regulation\nby any Administration -- or Congress.\nAn equally important task facing us now is to extend\nthe principles of reform embodied in this legislation to\nthe aviation and motor carrier industries. In these indus-\ntries, we must strive to create a regulatory climate which\nrelies on competitive forces, rather than on inflexible and\nbureaucratic directives of Federal agencies, to determine\nwhich firm will provide the desired transportation services\nand at what price. The time has come to place greater\nreliance on market competition.\nI would also emphasize that the ultimate success of this\nlegislation depends on more than the actions that have been\ntaken by the Congress or this Administration. We have merely\nprovided the tools which can be used to rebuild our railroads.\nI am confident that the Interstate Commerce Commission, ConRail\nand United States Railway Association will use these tools\nwisely for the purposes intended by the Congress and the\nExecutive. A major responsibility for achieving a viable\nprivate sector railway system and, as stated in the legislation,\n\"to provide energy efficient, ecologically compatible trans-\nportation services with greater efficiency, effectiveness and\neconomy\" rests with them.\nWe are embarking today on an historic endeavor to improve\ntransportation in this country. I want to thank the members\nof Congress, Secretary Coleman, the fine people at the Depart-\nment of Transportation and the representatives of industry and\nlabor for their help. I ask them to continue their efforts to\nstrengthen our private transportation system and to make it\nthe finest in the world.\nTHE WHITE HOUSE\nACTION MEMORANDUM\nWASHINGTON\nLOG NO.:\nDate: February 4\nTime: 700pm\nFOR ACTION: Robert Hartmann\nCC (for information): Jim Cavanaugh\nJack Marsh\nMax Friedersdorf\nKen Lazarus\nJudy Hope\nPaul Leach\nBill Seidman\nFROM THE STAFF SECRETARY\nDUE: Date: February 5\nTime: 1030am\nSUBJECT:\nS. 2718 - Railroad Revitalization and Regulatory\nReform Act of 1976\nGERALD\nwith proposed signing statement\nNETOR\nACTION REQUESTED:\nFor Necessary Action\nFor Your Recommendations\nPrepare Agenda and Brief\nDraft Reply\nX For Your Comments\nDraft Remarks\nREMARKS:\nThe extremely short deadline is because of the scheduled\nsigning ceremony tomorrow.\nPlease return to Judy Johnston, Ground Floor West Wing\nPLEASE ATTACH THIS COPY TO MATERIAL SUBMITTED.\nIf you have any questions or if you anticipate a\ndelay in submitting the required material, please\nK. R. COLE, JR.\ntelephone the Staff Secretary immediately.\nFor the President\nDEPARTMENT OF TRANSPORTATION\nTHE SECRETARY OF TRANSPORTATION\n*\nWASHINGTON, D.C. 20590\nUNITED STATES OF AMERICA\nFebruary 5, 1976\nHonorable James T. Lynn\nDirector, Office of Management\nand Budget\nWashington, D. C. 20503\nDear Mr. Lynn:\nI have just discussed the Department's letter concerning S. 2718\nwith my General Counsel, and we are agreed that the last two\nsentences on page 24 thereof should be changed to read as follows:\nThe chance that the creditors will succeed in their\nextravagent claims for a \"reproduction cost less\ndepreciation\" measure are slight. There is, however,\nsome chance in light of the confused and conflicting\nstate of the law here that the courts will settle on some\ntheory that compromises, probably closer to our\ntheory, between the theory we are asserting and that\nthe creditors are asserting. We seriously doubt, however,\nthere will be massive liability. In any event, whatever\ndanger does exist is not the creation of this bill, but\nhas existed since the passage of the RRRA: the risk\nis one that is a necessary concommitant of a desire\nto create a ConRail.\nSincerely,\nBuy\nWilliam T. Coleman, Jr.\n2/5\nJudy-\nPlease nate\nXT\nOF\nDEPARTMENT\nTHE SECRETARY OF TRANSPORTATION\n*\nWASHINGTON, D.C. 20590\nUNITED STATES OF AMERICA\nFEB\n4 1976\nHonorable James T. Lynn\nDirector\nOffice of Management and Budget\nNew Executive Office Building\nWashington, D. C. 20503\nDear Mr. Lynn:\nThis is in response to your request for the views of the\nDepartment on S. .2718, an enrolled bill:\nTo improve the quality of rail services in the\nUnited States through regulatory reform,\ncoordination of rail services and facilities,\nand rehabilitation and improvement financing,\nand for other purposes.\nGENERAL\nThe basic purposes of S.2718 are (1) to establish a financing\nmechanism and other procedures applicable to the transfer\nand rehabilitation of rail properties under the Final System\nPlan adopted under the Regional Rail Reorganization Act of\n1973, as amended (RRRA); (2) to establish a program for\nupgrading rail passenger service in the Northeast Corridor;\n(3) to modernize various provisions of the Interstate Commerce\nAct as they apply to the economic regulation of railroads;\n(4) to establish a program of financial aid for the railroads; and\n(5) to provide for the continuation through subsidy of rail service\nthat would otherwise be discontinued in the Northeast and\nMidwest Region and in other parts of the country.\nThe various provisions of the bill designed to carry out these\nbasic purposes are discussed below. In each case, there is\na discussion of the chief differences between those provisions\n2\nand the provisions of the following four Administration or\nAdministration-backed bills on these subjects submitted to the\nCongress during 1975: (1) the proposed Second Regional Rail\nReorganization Act Amendments of 1975 (jointly prepared by\nUSRA and the Department and submitted to the Congress by\nUSRA in September 1975); (2) the proposed Departmental bill\nsubmitted to the Congress in November 1975 providing for the\nimprovement of intercity rail passenger service in the Northeast\nCorridor; (3) the proposed Railroad Revitalization Act submitted\nto the Congress by the President in May 1975; and (4) the\nproposed Local Rail Service Amendments of 1975 submitted to\nthe Congress by the Department in October 1975.\nIMPLEMENTATION OF THE FINAL SYSTEM PLAN\nTitle VI of the enrolled bill amends the RRRA (1) by establishing\nrevised funding levels and procedures pertaining to the Federal\ninvestment in ConRail; (2) by authorizing conveyances of rail\nproperties in a manner supplementary to the final system plan;\nand (3) by revising provisions pertaining to the compensation for\nrail property transferred under the RRRA.\nFunding Levels\nThe enrolled bill authorizes the appropriation of $2. 1 billion to\nUSRA to enable USRA to purchase $1 billion of ConRail debentures\nand, after the acquisition of those debentures, up to $1. 1 billion\nof the series A preferred stock of ConRail. It also authorizes\nthe Secretary to guarantee in conjunction with the loan guarantee\nauthority in title V of the bill up to $200 million of ConRail obliga-\ntions for the purpose of electrifying high-density mainline routes.\nConsonant with that funding, the obligational authority available to\nUSRA under section 210(b) of the RRRA is reduced from $1.5\nbillion to $275 million. The funding authority in section 210(b) would\nbe used to provide startup money to ConRail and otherwise enable\nConRail to purchase inventories prior to the availability of funds\nfrom the sale of their securities in order to permit orderly and\nefficient implementation of the final system plan (section 211(g));\nto provide loans to ConRail, Amtrak, or profitable railroads\n3\nto permit those loan recipients to meet obligations of bankrupt\nrailroads which should be paid to avoid disruptions in ordinary\nbusiness relationships (not more than $230 million of the $275\nmillion could be used for this purpose) (section 211(h)); and to\ncover other loans or loan commitments, existing or potential,\nmade or applied for under section 211 of the RRRA prior to\nJanuary 1, 1976. Any loans to ConRail for the purchase of\ninventories would be made on the condition they be refinanced by\nthe issuance of debentures to USRA.\nThe Administration also proposed that USRA's authority to acquire\nConRail securities be limited to $2. 1 billion ($1 billion of\ndebentures and $1. 1 billion of series A preferred stock). However,\nthe Administration proposed that the $1. 1 billion authorization\nfor the purchase of series A preferred stock be separated into\nan $850 million fund under the control of the USRA Board and\na separate $250 million contingency fund controlled by a Govern-\nment Investment Committee which would be established as a\nCommittee of the USRA Board. No proposal was made by the\nAdministration for Federal financial aid for the electrification\nof ConRail lines. The Department originally proposed a more\nsevere reduction in the obligational authority available to USRA\nunder section 210(b) of the RRRA, but later indicated that the\nfunding level of $275 million would be appropriate to cover the\nvarious purposes stated above.\nIn summary, the overall funding in title VI of the enrolled bill\nis reasonably close to the level proposed by the Administration.\nThe total dollar level applicable to the purchase of ConRail\nsecurities is right on the mark. The $200 million authorization\nfor the electrification of ConRail lines is not appropriate at this\ntime. However, the $200 million in loan guarantees is in the\ncontrol of the Secretary and counts against the $1 billion ceiling\nplaced upon loan guarantees made available under section 511 of\nthe bill. As indicated above, the new dollar limit placed on the\nobligational authority available to USRA under section 210(b) of\nthe RRRA is satisfactory. It also should be noted that the enrolled\nbill does not contain a specific authorization of funds to help\nfinance supplemental transactions. The joint USRA-DOT legislation\nauthorized $400 million for this purpose. It appears, however, that\nfinancial assistance available under title V of the enrolled bill\n4\ncan be used by the Secretary to facilitate supplemental transactions.\nFunding Controls and Conditions\nAmong the most important provisions of the enrolled bill are\nthose outlining the circumstances and conditions under which\nfunding may be provided to ConRail. These provisions were\nalso among the most controversial parts of the bill and remained\na substantial roadblock to obtaining an acceptable bill until the\nadoption by the Conference Committee of its second recommended\nbill. Under the enrolled bill USRA would be empowered to\npurchase up to $1 billion in ConRail debentures and, after the\nacquisition of such debentures, up to $1. 1 billion of ConRail\nseries A preferred stock. Purchases would be made as required\nand requested by ConRail unless the Finance Committee of the\nUSRA Board of Directors (composed of the USRA Board Chairman\nand the Secretaries of Transportation and the Treasury) found\nthat ConRail (1) had breached its covenants to USRA; (2) had\nfailed substantially (as determined by performance within margins\nprescribed by the USRA Board) to meet financial results projected\nfor ConRail in the Final System Plan; or (3) would need funds\nsubstantially in excess of $2.1 billion in order to become financially\nself-sustaining. Upon making any such finding, the Finance\nCommittee could direct USRA to refrain from purchasing any\nfurther securities of the Corporation or to refrain from purchasing\nadditional securities in amounts in excess of, or upon terms and\nconditions contrary to, those specified by the Finance Committee.\nThe bill also provides, however, for Congressional review of anysuch\naffirmative finding by the Finance Committee. Within ten days\nafter an affirmative finding by the Finance Committee, the USRA\nBoard would be required to forward to the Congress a copy of\nthe finding and recommendations thereon of the Board, The\nfinding would stand if 30 legislative days elapsed and neither the\nHouse nor Senate disapproved the finding. (USRA would continue\nnecessary funding pending Congressional action.)\nThe enrolled bill empowers USRA to establish the terms and\nconditions governing USRA's purchase of ConRail securities as\nwell as the terms and conditions of the debentures and series A\npreferred stock themselves. The bill specifically provides, however,\nthat dividends payable on series A preferred stock shall not be\ncumulative and shall be paid in cash when and to the extent that\nthere is \"cash available for restricted cash payments\" as that\n5\nterm is defined in the Final System Plan. After USRA calls\nfor redemption of the certificates of value, no shares would be\nissued in lieu of interest on ConRail's debentures and to the\nextent such interest is not payable in cash because of the\nabsence of sufficient cash, ConRail is to deliver to debenture\nholders contingent interest notes in a face value amount equal\nto the unpaid interest. The USRA Board and the Finance\nCommittee would act jointly in modifying any terms or conditions\ngoverning USRA's purchase of ConRail securities. The Finance\nCommittee alone would be empowered to waive compliance with\nthe terms and conditions of the securities, including those\napplicable to redemption of principal or issuance price or the\npayment of interest or dividends.\nThe above-mentioned provisions of the enrolled bill contain many\nfeatures proposed in the USRA-DOT bill. However, they do not\ngo as far as the Administration proposal with respect to enabling\nthe Executive Branch to protect the Federal investment in the\nCorporation. The composition of the Finance Committee (the\nUSRA Board Chairman and the Secretaries of Transportation and\nof the Treasury) is the same as proposed by the Administration\nand the three crucial findings that may be made by the Committee\nare nearly the same as those in the USRA-DOT bill. In addition,\nthe enrolled bill adopted the Administration's proposal that the\nCommittee alone be empowered to waive compliance with terms\nand conditions of ConRail securities held by USRA. In contrast,\nthe enrolled bill permits USRA to act independently of the Committee\nin prescribing the terms and conditions governing purchases of\nConRail securities by USRA and determining the margins with\nrespect to ConRail's attainment of the overall operating and\nfinancial results projected in the Final System Plan. (As a\npractical matter, the margins have already been established by\nUSRA with our concurrence.) In addition, it injects the Congress\ndirectly and immediately into the decision-making respecting any\ncutoff of USRA's purchase of ConRail securities or any change to\nthe terms and conditions of such purchase. The section providing\nthat dividends on ConRail series A preferred stock shall not be\ncumulative also reduces somewhat both the protection and the\nfinancial return provided the Government by the USRA-DOT bill.\n6\nOn balance, we believe that the protective provisions contained\nin the enrolled bill are satisfactory. Earlier versions of the\nbill threatened to provide USRA sole authority to control the\nflow of Federal funds to ConRail and to forgive any part or all\nof ConRail's payments of interest, dividends or principal. Such\nan arrangement clearly would have been contrary to the interests\nof the taxpayer and fortunately it was avoided.\nSUPPLEMENTAL TRANSACTIONS\nTitle VI of the enrolled bill establishes a procedure for effecting\ntransfers of rail properties in the Midwest and Northeast Regions\nsupplementary to those prescribed by the final system plan. Such\ntransactions could be proposed by the Secretary or USRA at any\ntime within six years after the date on which rail properties\nare initially conveyed under the RRRA. The Secretary would\nsubmit such proposals to USRA. Such proposals, and those\nproposed by USRA itself, would be evaluated by USRA after\naffording an opportunity for public comment, and USRA would\nmake findings as to whether the transactions are (1) in the public\ninterest and consistent with the purposes of the RRRA and the\ngoals of the final system plan, and (2) fair and equitable. At\nthis point, however, all further administrative and judicial\nproceedings regarding the proposal would be terminated if any\nproposed transferor (other than ConRail) or transferee of rail\nproperties failed to indicate to USRA that the proposal was\nacceptable to it. If acceptable, the proposals would be sent to\nthe ICC for review and approval. However, the ICC's disapproval\nof a proposal would not automatically block a proposal. Instead,\nthe ICC's determination would be forwarded to the Special Court\nfor consideration. Following the aforementioned proceedings\nconducted by USRA and the ICC, USRA would petition the Special\nCourt for review of any proposal USRA found to be in the public\ninterest. In a case where USRA found a DOT proposal not to\nbe in the public interest, the Secretary could file such a petition.\nIf the Special Court found a proposal to be in the public interest\nand fair and equitable, it would direct ConRail to consummate\nthe transactions. If the findings of the Special Court are negative,\nprovision is made for the modification of proposals and their\nresubmission to the Court for review.\n7\nAs mentioned above, there is no provision in title VI of the\nbill specifically designed to provide financial assistance for\nthe purpose of facilitating the implementation of a supplemental\ntransaction. However, it appears that the Secretary could make\nsuch assistance available under the financial aid provisions in\ntitle V of the bill.\nThe bill to implement the final system plan jointly prepared by\nUSRA and DOT contained procedures for processing supplemental\ntransactions similar to those in the enrolled bill. In addition,\nit authorized the appropriation to the Secretary of $400 million,\namong other things, to facilitate the implementation of supplemental\ntransactions. Unlike the enrolled bill, the USRA-DOT bill\npermitted the ICC to propose supplemental transactions, but did\nnot provide for any ICC review of these transactions.\nThe important features sought by the Department are contained\nin the enrolled bill. First, ConRail is not permitted to veto\nproposals for the transfer of its properties to other railroads.\nThis is important to keeping open the option for additional\nrestructuring which will promote the establishment of a financially\nself-sustaining rail service system in the Midwest and Northeast\nRegion adequate to meet the needs of the Region. Secondly,\nthe ICC cannot veto any such proposals. We would have preferred\nthat the ICC review function be more severely limited, however.\nNotwithstanding a negative ICC stand on a Departmental proposal,\nthe Secretary can still petition the Special Court for a favorable\nruling with respect to one of his proposals but the Court will\nalso have before it for consideration the negative ICC determination.\nFinally, USRA cannot block a proposal advanced by the Secretary.\nAgain, the bill permits the Secretary to petition the Special Court\nfor a favorable ruling on one of his proposals despite a negative\nUSRA determination.\nNORTHEAST CORRIDOR IMPROVEMENTS\nTitle VII of the enrolled bill mandates the execution of a program\nfor upgrading intercity rail passenger service in the Northeast\nCorridor. On the date of the conveyance of rail properties under\nsection 303 of the RRRA, ConRail would be required to transfer\n8\nby purchase or lease to the National Railroad Passenger Corporation\n(Amtrak) the rail properties designated in the final system plan for\nimproved Corridor operations and, within 180 days after the date\nof enactment of the bill, agreements would have to be executed\nproviding for the assumption by Amtrak of all operational responsibility\nfor intercity services along the Corridor and of the responsibility\nfor control and maintenance of the transferred properties. The\nbill requires the establishment within five years after the date of\nenactment of the bill of regularly scheduled, dependable service\nbetween Boston and New York operating on a three-hour and 40-minute\nschedule, including stops, and between New York and Washington\non a two-hour and 40-minute schedule, including stops. Amtrak\nwould make improvements at its option and in accordance with\nroute criteria approved by the Congress to service on routes to\nHarrisburg and to Albany from the Corridor main line, and from\nNew Haven to Boston via Springfield.\nThe bill authorizes appropriations to the Secretary of $1. 6 billion to\neffectuate the goals for improvement of Corridor service. (Funds\nwould not be available for improvement of the off-mainline routes\nmentioned above until after the five-year goals for the mainline\nhave been achieved.) In addition, the bill authorizes $150 million\nfor the improvement of nonoperational portions of stations, related\nfacilities, and fencing. Fifty percent of the cost of those improve-\nments would be borne by the States or by local or regional trans-\nportation authorities. Approximately $96 million is authorized to cover\nAmtrak's startup costs, the cost of acquiring the Corridor properties,\nand the cost of developing and utilizing mobile radio frequencies for\nrail passenger radio telephone service. Another $20 million is\nauthorized for the acquisition and improvement of passenger lines\noutside of the Corridor.\nThe Secretary is required to coordinate all transportation programs\nrelated to the Corridor so that they are integrated and consistent with\nimplementation of the Corridor project. The Secretary may deny\nfunding if he finds any significant noncompliance with the implementation\nof the goals for the Corridor. The bill provides, however, that\nAmtrak will acquire the properties by purchase or lease and it\nauthorizes Amtrak to enter into appropriate agreements with other\nrailroads and commuter agencies for the provision of freight and\ncommuter service over the rights-of-way. A five-member Operations\nReview Panel would be established to resolve differences of opinion\n9\nconcerning operations between Amtrak and such other railroads and\ncommuter agencies. The Panel would be comprised of one member\nselected by Amtrak, one selected by commuter authorities, one\nselected by ConRail, and two selected by the Chairman of the National\nMediation Board.\nWithin two years after the enactment of the bill, the Secretary is\nrequired to report to Congress on the results of the passenger\nservice established in the Corridor under the bill and on the\nfeasibility of establishing regularly scheduled intercity rail passenger\nservice between Boston and New York on a three-hour schedule\nand between New York and Washington on a two and one-half hour\nschedule.\nThe Department's bill for upgrading service along the Northeast\nCorridor proposed a $1. 2 billion program in which the Federal\nshare was 90 percent ($1. 08 billion) and the share of the States\nalong the Corridor was 10 percent ($120 million). An additional\n$200 million in local station improvements not essential to train\noperations would have been assumed by the appropriate State and\nlocal governments. The goal of that program was to provide\nreliable trip times (with stops) of four hours between Boston and\nNew York and three hours between New York and Washington.\nTitle VII of the bill represents a compromise between the\nDepartment's proposal and a proposal in the bill first reported\nby the Conference Committee, which established a $2. 4 billion,\nfour-year Corridor improvement program calling for a three-hour\nschedule between Boston and New York and a two and one-half\nhour schedule between New York and Washington. The crucial\nchange to the Corridor provisions in the first bill reported by the\nConferees is the establishment of initial service levels similar to\nthose proposed by the Administration. It appears at this point\nthat achievement of the higher service levels originally sought by\nthe Conferees (and included in the bill as a prospective second step\nin Corridor improvements) would have cost nearly $4. 5 billion.\nWe believe the authorizations in the enrolled bill are higher than\nnecessary but nevertheless they represent a substantial reduction\nfrom the earlier levels.\nThe enrolled bill contains other improvements over the previous\nbill reported by the Conferees in that it authorizes the appropriation\n10\nof funds to the Secretary, rather than to USRA, and places in\nan optional category the improvement of lines which join the\nmain Corridor route. Moreover, the Secretary is charged with\nthe responsibility for implementing the improvement project\nin order to achieve the goals of title VII. However, a number\nof negative features remain in title VII. For example, there\nis no flexibility with respect to who should acquire the Corridor\nproperties or the timing of that acquisition. Amtrak will acquire\nthe properties by purchase or lease on the date that properties\nare transferred to ConRail under the RRRA. In addition, Amtrak\nwill have the authority to operate under contract freight and commuter\nservice on the Corridor. Also, we would have preferred a delay\nin providing the authorizations to Amtrak for functions other than\nupgrading the Corridor. It would have been preferable if authorizations\nfor Amtrak operations could be considered in the context of the\nnormal budget process for Amtrak. Also, the separate $20 million\nauthorization for the acquisition and improvement of rail properties\noutside of the Corridor cannot be justified in the light of (1) competing\nneeds for the improvement of rail services, and (2) the existence\nof the extensive rail service continuation subsidy program contained\nin title VIII.\nTo complete the funding picture with respect to intercity rail\npassenger service, it should be noted that under title V, the\nSecretary can provide up to $150 million in loan guarantees for\nthe rehabilitation of Northeast Corridor properties. In addition,\n$200 million may be made available under title V to improve\nintercity rail passenger services outside of the Northeast Corridor.\nThe relationship of this funding to the title V program for financial\naid is discussed further below.\nREGULATORY REFORM\nPricing Flexibility\nSection 202 of the enrolled bill provides significant pricing flexibility,\nboth with respect to increases and decreases. It also prohibits\numbrella ratemaking. Specifically, with respect to minimum ratemaking\nthe bill provides that no rate can be found to be too low if it\ncontributes to the going concern value of the proponent carrier. A\nrate which equals or exceeds variable costs is presumed, unless\nrebutted by \"clear and convincing evidence\", to contribute to the\ngoing concern value. At the suggestion of the Administration, the\n11\nbill directs the Commission in determining variable costs to look\nonly to the variable costs of the carrier in question. Average and\nindustry costs cannot be used unless the carrier so requests\nand the specific data is not available. Also at the suggestion\nof the Administration, certain language was inserted in the\nconference report to clarify the meaning of \"going concern value\".\nThis language indicates that in determining such value the\nCommission is to inquire whether the rate change improves the\ngoing concern value of the carrier as compared to what it would\nhave been had the rate not been changed. In other words the\ncarrier need not prove that the rate change resulted in a net\nincrease in the going concern value. Such a showing would not\nbe possible where the carrier is decreasing his rate to counter\na rate decrease of a competitor. The conference language is\nhelpful in clarifying this ambiguous area.\nWith respect to maximum rates, the bill provides that the\nCommission may not find a rate unlawful on the ground that it\nexceeds a just and reasonable maximum unless it has found that\na carrier has market dominance over the service rendered under\nsuch rate. Market dominance is defined in the bill simply as the\nabsence of effective competition from other carriers or modes\nof transportation. The earlier presumptions of market dominance\ncontained in the House and Senate bill, which were confusing,\nwere deleted in the final bill. The bill also provides that carriers\nmay raise their below-cost rates to a level equal to their\n\"incremental costs\". This term is not defined in the bill, but\nthe legislative history indicates it refers to the carrier's specific\nout-of-pocket costs. This term was used inplace of \"variable\ncost\" because in the earlier drafts of the bill the term variable\ncost was not restricted to a particular carrier's cost and industry\naverages could have been used. With the Administration's suggested\nlanguage added to the definition of variable cost in the final bill as\nreferred to above, incremental and variable costs are substantially\nthe same.\nThe bill makes many procedural changes which also greatly add to\npricing flexibility. The Commission must make a final determination\nof rate cases within seven months of the date the rate was scheduled\nto go into effect, unless the Commission makes a report to Congress.\nIn that event, the time period is extended to 10 months.\n12\nAt the end of the applicable time period the rate must go into\neffect regardless of whether the Commission has reached a\ndecision. Pending completion of an investigation in a rate case,\nthe Commission may suspend a rate for a period of seven months,\nor 10 months if a report is given to Congress. However, the\nsuspension powers of the Commission have been drastically curtailed\nin several ways. First, all suspensions may be made only upon\na verified complaint that \"(i) without the suspension the proposed\nrate change will cause substantial injury to the complainant or the\nparty represented by such complainant; and (ii) it is likely that\nsuch complainant will prevail on the merits. \" The burden of\nproof is upon the complainant to establish the matters set forth\nin clauses (i) and (ii). Such a burden is a very significant change\nfrom the present standard of the Commission, which in effect requires\nthe complainant only to show that there are reasonable grounds\nfor believing the rate to be unlawful. In addition, present practice\nin law does not require a showing of \"substantial injury\".\nSecond, the bill does provide for a limited two-year no suspend\nzone. In the two years following the adoption of the bill carriers\nmay raise or lower their rates 7 percent each year without\nsuspension within certain limits. The two-year no suspend zone\nsets a good precedent, but it is somewhat redundant in light of the\nvery significant limitations that were made upon the Commission's\ngeneral suspension power.\nThe bill also provides for an escrow provision for rate increases\nwhich are investigated but not suspended.\nFinally, the Secretary and the Commission are each to study the\neffects of the ratemaking amendments and to separately report\nto Congress within 20 months of the enactment of the bill.\nIn the area of umbrella ratemaking, section 205 of the bill coupled\nwith the earlier referenced amendments to section 202 remove the\npower of the Commission to engage in umbrella ratemaking. Section\n205 then goes on to describe a new standard for adequacy of revenue\nfor the railroads, and then reconfirms that the Commission is not\nto engage in umbrella ratemaking by specifically stating that the\nrates of a railroad may not be held up to protect the traffic of\n13\nanother carrier unless the Commission finds that the railroad\nrate reduces the going concern value of the railroad, i.e., the\nrate is not compensatory.\nThe enrolled bill also adopted almost word for word the\nAdministration's \"Big John\" proposal, which provided expedited\nand special procedures for large capital investments and the\nAdministration's intrastate rate provisions. Provisions relating\nto per diem and demurrage, which are really hortatory in nature,\nwere also adopted.\nThe Administration's bill provided much of the language and\nideas for the rate flexibility sections of the enrolled bill. The\nAdministration proposed that rates above variable cost could not\nbe found by the Commission to be unreasonable on the basis\nthat they were too low and that carriers could increase rates\nthat were below cost to the variable cost level. Furthermore,\nthe Administration bill prohibited umbrella ratemaking.\nThe Administration proposed a permanent no suspend zone which\nwould be phased in over a period of three years allowing 7 percent,\n12 percent, and 15 percent changes, respectively, in those years.\nStarting with the fourth year and thereafter carriers would be allowed\nto increase their rates 15 percent without fear of suspension. There\nwould have been no suspension for rate decreases. The\nAdministration's bill would also have required that in all suspension\ncases there would have to be a finding of substantial injury and\na likelihood of success. Finally, time limits would have been\nplaced on Commission decisions concerning the ultimate legality\nof rates.\nThe enrolled bill differs in form from the Administration's\nproposal, but the effect of the two bills is much the same. In\nboth bills carriers may reduce their rates to levelswhich\nessentially cover their own costs. The enrolled bill uses a\n\"going concern value\" approach, but \"going concern value\" is closely\ntied to variable costs by the specific presumption in the enrolled\nbill. Both bills definitely prohibit umbrella ratemaking. In\naddition both put very stringent limitations upon the Commission's\npower to suspend rates. The enrolled bill has a very limited\nno suspend zone, but this is mostly a symbolic defect in light of\nthe very broad restrictions on the general suspension power of the\nCommission.\n14\nThe bill's use of the market dominance test was not proposed\nby the Administration but it is consistent with our general rate\nflexibility philosophy. Both bills place time limits on ICC\nratemaking decisions. The only question in the rate flexibility\nsections of the enrolled bill is the language in subsection (f) of\nsection 202 which preserves the Commission's ability to defend\nagainst so-called \"predatory\" rates and to engage in certain\nactivities with respect to ports. That subsection (f) provides\na general proviso to the ratemaking section that states that\nnothing in section 202 is to be construed (1) to modify the\napplication of sections 2, 3, or 4 of the Interstate Commerce\nAct in rate cases; (2) to make lawful any competitive practice\nwhich is unfair, destructive, predatory or otherwise undermines\ncompetition; (3) to affect existing law or authority of the\nCommission with respect to rate relationships between ports; or\n(4) to affect the authority and responsibility of the Commission\n\"to guarantee the equalization of rates within the same port\".\nThis language would be troublesome were it not for the strong\nlanguage in the Senate and House reports which indicates that\npredatory conduct is to be equated with below-cost ratemaking\nexcept in exceptional cases. The reports also indicate that\nthe language relating to the \"rate relations between ports\"\npreserves existing authority of the ICC but does not grant new\nauthority. It is only with respect to rates within the same port\nthat the Commission may have obtained new authority. A\nsomewhat similar problem was raised by language in the last\npart of section 202(e) which required the Commission to consider\nif any rate change had a \"significantly adverse effect\" on the\ncompetitive posture of shippers. This language raised the question\nof whether new authority had been given to the Commission to\nadjust rates artificially, but the enrolled bill clarified this by\ninserting the language \"(in violation of section 2 or 3 of this\npart)\"' directly after the language quoted above. This insertion\nmakes clear that new authority is not being given to the\nCommission, but rather the Commission is being reminded of\nan existing duty.\nIn summary the enrolled bill accomplishes most of the reform\nsought by the Administration in the area of pricing flexibility.\n15\nTariff Modification\nSection 203 of the enrolled bill made certain minimal changes to\nsection 15(3) of the Interstate Commerce Act. In addition the\noriginal Conference bill proposed an ambiguous change to section\n15a, which raised questions whether increased standing was being\ngranted to certain shippers. It also raised questions of whether\nthe substantive power of the ICC was being enlarged. In the\nenrolled bill language was inserted to ensure that new standing\nwas not being included. In addition the final Conference Report\nspecifically states that the amendment to section 15a \"is intended\nto deal with a procedural problem. it does not expand existing\nICC jurisdiction, but rather assures that the ICC will consider,\nat the time a rate is proposed, allegations regarding the effects\nof the proposed rate change\".\nThe Administration did not propose any changes similar to those\nmade by section 203. The previous version of section 203 was\nambiguous but in light of the changes made in the final bill and\nthe language in the final Conference Report, the problem should\nbe minimal.\nRate Bureaus\nThe enrolled bill contains a great deal of language concerning\nrate bureaus. However, only minimal changes have been effected.\nThe bill prohibits agreements and voting for single line rates and\nalso with respect to non-participants in joint line rates. However,\nthe bill also provides that these prohibitions do not apply to\ngeneral rate increases and \"broad tariff changes\". The bill does\nprohibit rate bureaus from protesting independent action of their\nown mode.\nThe Administration proposed changes of much greater significance.\nOur bill would have prohibited discussions, agreements and voting\nwith respect to single line rates and for all joint line rates. After\nthree years, similar prohibitions would have been applied to all\ngeneral rate increases, except those relating solely to labor and\nfuel increases. Rate bureau protests of any action, regardless\nof mode, would have been prohibited.\nClearly, in the regulatory reform area, the least progress was\nTORO\n16\nmade with respect to rate bureaus. The provisions of section 208\nare not a step backwards, but they advance the needed reform\nvery little. There will be cost constraints placed upon single and\njoint line rates, but general rate increases and group rates will\nnot be affected.\nREFORM OF THE ICC\nTitle III of the enrolled bill makes many significant and beneficial\nchanges in the procedures and practices to be followed by the\nCommission in the processing of cases. The specific provisions\nincluded in the bill relating to procedure were not submitted by\nthe Administration, but they do serve the Administration's goal\nof expediting Commission proceedings and make them more\nintelligible to the public.\nIn addition Title III substantially incorporates the Administration's\nproposal with respect to prohibiting discriminatory State taxes\non railroads. We note that the Senate proviso which would have\ngrandfathered certain States from the effect of this prohibition\nwas not included in the enrolled bill. Title III also contains for\nthe most part the Administration's proposal for a new uniform\ncost and revenue accounting system. Unfortunately the bill gives\nthis responsibility solely to the Commission and does not include\nthe Department, but we believe the direction of section 307 to the\nCommission is quite clear.\nSection 310 of the bill was not introduced by the Administration,\nbut this section would facilitate the use of unit train service, a\ncost in energy efficient type of service, and we would support\nsection 310.\nOn the negative side, section 304 would establish an office of\nRail Public Counsel, with a director appointed by the President,\nby and with the advice and consent of the Senate. We recommended\nagainst the establishment of such an office, for we consider it\nan unnecessary layer of bureaucracy. The same comment applies\nto the establishing on a permanent basis of the Rail Services\nPlanning Office, as provided in section 309. Although we view section\n304 and 309 as objectionable, we believe that the problems they\ncause are outweighed by the other beneficial parts of Titles II and\nIII.\n?\nFORD\n17\nMERGERS\nThe Administration proposed very significant changes with respect\nto the present merger standards and procedures used by the\nCommission. In particular, the Administration proposed a new\nprocedure involving the participation of the Secretary of Transportation\nand the Attorney General. In addition very stringent time limits\nwere placed upon ICC decisions relating to mergers. Our proposal\nprovided that if the Commission failed to meet these time limits,\nthe decision would be returned to the Secretary and the Attorney\nGeneral for ultimate resolution. Of equal importance, our proposal\nwould have changed the ambiguous test which the Commission now\nuses to decide merger cases.\nTitle IV of the enrolled bill falls far short of the objectives of\nthe Administration. It does not involve the Secretary to the extent\nproposed by the Administration, nor does it reform the procedure\nas we had proposed. Most importantly the standard for mergers\nis left untouched. The most basic change accomplished by Title IV\nis the time limit imposed on merger proceedings. This is a\nbeneficial change, but its value is somewhat diminished by the\nuncertainty as to what will happen if the Commission does not\ncomply with the deadline. It would seem under the \"ordinary\"\nprocedures of section 402 that the Commission could simply avoid\nthe deadline by giving notice to Congress. Under section 403\nthe Congressional notice provision is omitted but there is no\nmechanism to force the Commission to make the required decision.\nMost likely, resort would have to be made to the courts, itself\na potentially lengthy process. The conferees expressly rejected\nimposing any effective time limit.\nWe note in section 401 that the Secretary is given a so-called\ncatalyst role in proposing mergers and we support this provision.\nIn summary we regret that Title IV does not reflect the provisions\nsought by the Administration, but we believe that the time limits\nplaced upon the Commission together with the increased recognition\ngiven to the Secretary by section 401 will be beneficial. Therefore\nwe support Title IV.\n18\nRAIL CONTINUATION SUBSIDIES\nTitle VIII of the enrolled bill modifies the program for rail\nservice continuation subsidies applicable to the Northeast and\nMidwest Region which was established by the RRRA and establishes\na similar program for the Nation as a whole. Under the amend-\nments to the program for the Midwest and Northeast, (1) the\nFederal share of rail continuation assistance is enlarged to 100\npercent for the first year and 90 percent for the second year;\n(2) all funds would be available for the acquisition and modernization\nof rail properties, and no restriction would be imposed upon the\nprovision of continuation subsidies for properties SO acquired or\nmodernized; (3) funds would be distributed to each State under an\nentitlement formula based upon the amount of rail mileage in the\nState eligible for continuation assistance; (4) $180 million would\ncontinue to be authorized but without fiscal year limitation; (5) up\nto five percent of the funds received by a State could be used for\nplanning activities; (6) provision is made for funding the construction\nor improvement of transportation facilities other than rail where\nrail service will no longer be available; and (7) funds are available\nfor acquiring certain rail properties for intercity passenger and\ncommuter service.\nUnder an amendment to section 4 of the Department of Transportation\nAct, the Secretary could make available to all of the States financial\nassistance to cover the cost of rail continuation payments, the\ncost of purchasing and improving rail properties, and the cost of\nreducing the costs of lost rail service in a manner less expensive\nthan continuing rail service. During the period between the date of\nenactment of the bill and the second anniversary of the conveyance\nof rail properties under the final system plan, only those States\noutside the Midwest and Northeast Region would be eligible for funds\nunder this program. After that period, all States could participate\nin the program. The Federal share of costs would be 100 percent\nfrom July 1, 1976 to June 30, 1977. Thereafter, the Federal share\nwould be reduced to 90 percent for the next twelve months; 80\npercent for the following twelve months; and 70 percent for the next\n24 months (through June 30, 1981). For the last two years, the\nSecretary could adjust the amount of the Federal share so as not to\nexceed the maximum funding authorization. $360 million is authorized\nwithout fiscal year limitation for the nationwide program. Funds\nwould be provided under an entitlement formula similar to the one\ndescribed above for the Midwest and Northeast Region.\nCERALD\n?\nFORO\n19\nTitle VIII of the enrolled bill also establishes three other programs\nof Federal financial assistance. Under the first program, the\nSecretary is required to reimburse ConRail, Amtrak, and other\nrailroads for losses attributable to commuter operations continued\nunder revised section 304(e) of the RRRA. The Federal share\nof the costs are 100 percent for the first year, 90 percent for\nthe second year, and 50 percent for any 180-day period of operations\nthereafter. Federal assistance could not be made available for\nmore than two years unless assurances were made by the recipients\nthat the services would be continued after the subsidy is terminated.\n$125 million in obligational authority is provided. The obligations\nwould be liquidated as follows: not to exceed $40 million during\nthe transition period; not to exceed $95 million by September 30, 1977;\nand not to exceed $125 million by September 30, 1978.\nUnder the second program a total of $20 million is authorized for\nthe fiscal years 1976, 1977, and 1978 for (1) the preparation by\nthe Secretary of a report on the future use of abandoned rail\nrights-of-way for rail or other purposes; and (2) the funding by\nthe Secretary of the Interior of State, local, and Federal programs\nfor the conversion of abandoned rights-of-way to recreational and\nconservational purposes. Eighty percent of the funds appropriated\nwould be made available to the Secretary of the Interior.\nUnder the third program, $6 million is authorized for the establishment\nby the Secretary of a fossil fuel rail bank for the purpose of\npreserving existing service in areas in which fossil fuel natural\nresources or agricultural production is located.\nThe Department believes that the Nationwide program for rail\nservice continuation subsidies is inappropriate. The subsidy program\nfor the Midwest and Northeast established by the RRRA will serve\na special need arising out of the extensive rationalization of the\nrail plant provided for by the final system plan. There is no\nsimilar need, however, for a program for the rest of the Nation.\nIn fact, the availability of the large amount of funds for the nationwide\nprogram and the high percentage of the Federal contribution will\nonly discourage the switch to more efficient means of moving freight\nto and from branch line communities. With respect to the program\nfor the Midwest and Northeast, we are pleased that the bill contains\n20\na number of provisions proposed by the Department providing\nincreased flexibility with respect to the use of funds, but we\ndisagree with the provisions increasing the Federal share and\nrequiring the allocation of funds solely under an entitlement\nformula.\nThe bill submitted to the Congress by the Department on\nOctober 2, 1976 confined the subsidy program to the Midwest\nand Northeast region and did not provide any increase in the\nauthorization. It also proposed the retention of the existing\ncost-sharing and distribution mechanisms. We continue to\nbelieve that a program of that form and scope would be the best\nway to ensure that State and local decision-making vis-a-vis\nthe retention of service will make economic sense. The large\nFederal shares of the costs and the wide range of uses prescribed\nby the enrolled bill will tend to promote the operation of this\nprogram on a permanent basis.\nWith respect to the program for the subsidization of commuter\nservice, we agree that Federal assistance should be provided\non an interim basis to enable States and regional transportation\nauthorities to determine their response to the increased cost\nof commuter rail service.\nHowever, we believe that the Federal funding should not be a\nnew authorization, but should be provided out of the existing\n$11. 8 billion contract authority available under the Urban Mass\nTransportation Act of 1964. In addition, since the States have\nhad the balance of the present fiscal year in which to make\nprovisions for future subsidies, we believe the Federal share\nshould be the 50 percent applicable to other transit operating\nsubsidies under the UMT Act.\nThe Department also opposes the expenditures contained in the\nbill for the conversion of abandoned rail rights-of-way and for\na fossil fuel rail bank. While relatively small, these authorizations\ncannot be justified in the context of the pressing need for financial\nassistance for other railroad programs.\n21\nFINANCIAL ASSISTANCE FOR ALL RAILROADS\nTitle V of the enrolled bill authorizes a total of $1. 6 billion in\nFederal financial assistance for the rehabilitation and acquisition\nof rail facilities and equipment.\nThis Federal assistance is provided through two separate funds,\nthe Rail Fund and the Obligation Guarantee Fund. The Rail Fund\nis administered by the Secretary and provides up to $600 million\nin Federal funds to the railroads for the rehabilitation, improve-\nment and acquisition of fixed facilities. This Federal assistance\nis provided through the purchase by the Secretary of redeemable\npreference shares from the railroads with general Treasury revenues\nreceived by the Secretary from his sale of fund anticipation notes\nto the Secretary of the Treasury. The redeemable preference\nshares are in effect low interest loans to the railroads which return\na minimum of 150 percent of their par value to the Fund over the last\n20 years of their 30-year term, an annual interest rate of less\nthan two percent. (The Secretary may use a shorter term,\nwhich would increase the effective rate of interest.)\nThe Obligation Guarantee Fund is also administered by the\nSecretary and provides up to $1 billion in authority for the guarantee\nof the principal of railroad obligations for the acquisition or\nrehabilitation of rail facilities or equipment. The provisions of\nthe bill with respect to the guarantee of railroad obligations are\nsimilar to the loan guarantee program which the Administration first\nproposed last May in its Railroad Revitalization Act, with the\nimportant exception that the Administration bill authorized up to\n$2 billion in loan guarantee authority.\nTwo sections of Title V provide for additional specific uses for\nthe Federal funds authorized. Section 511 (e) provides that up to\n$150 million of the $1 billion in loan guarantee authority may be\nused by the Secretary to guarantee obligations for the rehabilitation\nof Northeast Corridor rail properties which are purchased or\nleased by Amtrak. Section 517 provides that up to $200 million\nof the total $1. 6 billion of Title V authorizations can be used by\nthe Secretary to improve intercity rail passenger services outside\nof the Northeast Corridor. In addition, as pointed out above, if the\n22\nSecretary guarantees any ConRail obligations for the purpose of\nelectrifying high-density mainline routes (see section 606 of the\nbill), the amount of the obligations so guaranteed will count\nagainst the $1 billion ceiling placed upon loan guarantees made\navailable under section 511.\nTitle V also mandates two rail studies to be carried out by the\nSecretary: (1) a 360-day classification of the rail lines of each\nof the Nation's Class I railroads into at least three categories\nof main and branch lines based upon the level of usage and\nthe probable economic viability of each line; and (2) a 540-day\ndetermination of, and recommendation of Federal financial assist-\nance for, the deferred maintenance and delayed capital expenditures\nof each Class I railroad from the present through the year 1985.\nDepartmental objections to the provisions of Title V have\ncentered on two areas. First, we have objected to the awkward\nfinancing mechanism of the redeemable preference shares, a\nmechanism which serves to obscure the fact that general tax\nrevenues are being provided to the railroads on extremely soft\ninterest terms. Second, we have opposed both of the studies\nmandated by Title V on the grounds that they are intended to\nforce Congressional action on further Federal financial assistance\nfor the railroad industry, and on the provision of a portion of\nsuch additional assistance through the sale to the public of Fund\nbonds of questionable marketability.\nTOTAL AUTHORIZATIONS\nFrom the standpoint of total authorizations, the enrolled bill\ncompares reasonably well with the Administration's position. As\nthe enclosed chart indicates, the various Administration proposals\nwould have authorized a total of $5,829 million. The enrolled bill,\non the other hand, authorizes a total of $6,372 million, $543 million\nmore than the Administration's total. To place this in the proper\ncontext, one should take into account that the bill originally adopted\nby the Conference Committee on December 19, 1975, authorized\n$7,587 million and the bill originally passed by the Senate\nauthorized over $10 billion. The funding in the enrolled bill for\nthe Northeast Corridor and for rail service continuation subsidies\nare the principal causes for the excess authorizations.\n23\nCONTINGENT LIABILITY\nIt should be pointed out that the enrolled bill subjects the Treasury\nto a contingent liability that could be significant. Along with\nConRail securities, the railraods transferring properties to ConRail\nwill receive certificates of value. These certificates of value\nare full faith and credit obligations of the United States containing\na guarantee by the Secretary of Transportation that the certificates\nwill be paid in cash according to their terms.\nThe certificates are a promise that on December 31, 1987 (or any\nearlier date determined by USRA and the Finance Committee) the\nholder of the certificate will be paid in cash an amount equal to\nwhat the Special Court decides is the net liquidation value of the\nassets transferred by the railroads to ConRail less certain amounts\ncalculated under a formula set out in the enrolled bill. The\nformula subtracts from net liquidation value the value of the\n\"other benefits\" provided by the RRRA to the bankrupts (e.g.,\naid under section 213), the value of the ConRail securities distributed\nto the bankrupt railroads, and any sums paid to the bankrupts\nas the result of sales or leases by ConRail of transferred properties\n(e.g., sale of the Northeast Corridor properties to Amtrak). The\nformula also adds back in to the net liquidation value any amounts\nthe Special Court finds to be due to the railroads because of\nso-called \"unconstitutional erosion\" in their properties - the de facto\ntaking that results from the legal constraints under the RRRA and\nall other laws which require the railroad to continue operations at\na loss - and the formula further adds interest at 8 percent compounded\nannually from the date of conveyance of the properties.\nThe Administration's original proposal had put a ceiling on the\ncontingent liability represented by the certificates. USRA estimated\nin the Final System Plan that the net liquidation value of the\nproperties ConRail will acquire is $422 million (plus $85 million\nfor the Northeast Corridor). This figure was used as a ceiling on\nthe certificates in the administration's bill, but the Administration\nsuggested at a later date as a compromise that the ceiling be\npartially lifted by permitting the Special Court to determine the\nfigure for net liquidation value. The compromise forestalled a much\nworse suggestion - that the certificates have a ceiling equal to\nwhat the Special Court determined to be the constitutional minimum\nvalue to which the railroads were entitled for their properties.\nSuch a ceiling would have been interpreted by some as a repudiation\n24\nof USRA's valuation theory and opened a Government liability of\npotentially many billions of dollars.\nAt the present time it is impossible to estimate what the Special\nCourt will decide is the correct figure for net liquidation value.\nEstimates run as high as $1 billion to $2 billion. The figure\nis pushed up further by the addition of erosion damages. Recently\nfiled complaints by creditors of the bankrupts indicate that claims\nfor erosion could be as high as $10 billion or more. On the\nother hand, Judge Friendly's opinion in the Special Court was\nextremely skeptical about the validity of any erosion claim. While\nthe maximum exposure on erosion is large, realistic analysis\nsuggests the final figure will be far short of the claims of the\nbankrupts and possibly zero. If the securities of ConRail, the\n\"other benefits\" of the Act, and the sums paid the bankrupts as\na result of sales or leases are sufficiently high, the entire amount\nof net liquidation value and erosion damages could be offset, and\nthe Government could be left with no net liability. On the other\nhand, the maximum exposure of the United States is several billion\ndollars.\nAt the same time, the United States faces another contingent\nliability of unknown amount. In the earlier litigation on the RRRA,\nthe Special Court and the Supreme Court found the Act constitutional\nbecause they held that, to the extent that the bankrupts received\nfrom ConRail less than the constitutional minimum due them for\nthe value of their transferred assets, the bankrupts had a cause\nof action for damages against the United States under the Tucker\nAct. USRA has determined that the constitutional minimum is net\nliquidation value, and the combination of the ConRail securities\nand the certificates of value guarantee the bankrupts at least that.\nIf the Special Court and the Supreme Court, however, decide\nthat net liquidation value is not the proper valuation theory, the\nbankrupts will be able to proceed against the United States in\nthe Court of Claims for the difference between the constitutional\nminimum and net liquidation value. The potential liability here is\ngreat - up to perhaps as much as $7 or $8 billion. The chance\nis not very great, however, that the bankrupts will succeed in their\nargument that net liquidation value is not the proper constitutional\ntheory. While the potential for massive liability, therefore, is\npresent, the Department's legal opinion is that it is not a matter\nof any grave concern.\n25\nStill another contingent liability of unknown amount stems from\nprovisions of section 303 of the RRRA (as revised by section 612\nof the bill) which require the United States to pay any judgment\nentered against any profitable railroad, State, or responsible\nperson arising from the transfer to such entities of rail properties\nof railroads in reorganization. The largest portion of these\nparticular properties would be acquired by the Chessie. Again,\nif the Special Court and the Supreme Court decide that net\nliquidation value is not the proper valuation theory, the bankrupts\nwill be able to proceed against the United States for the difference\nbetween the constitutional minimum and net liquidation value.\nThese various contingent, and potentially large, liabilities should\nbe viewed in light of the alternatives. Nationalization of the\nrailroads would be an astronomically expensive project. An\nincome-based reorganization was selected as the means for\nrejuvenating the bankrupt lines because it was thought to be cheaper\nthan nationalization. If, as a result of litigation, the bill for the\nreorganization becomes too high, a different course can be selected\nat that time. The Government, therefore, still retains significant\ncontrol over the most significant contingent liabilities.\nSUMMARY\nAs a whole, the Department believes the enrolled bill is acceptable.\nIt is a wide-ranging piece of legislation which has produced a\ngreat deal of interest among many people inside and outside of the\nrailroad industry. There has been considerable conflict over\nvarious provisions of the bill and it was inevitable that any bill\npassed by the Congress would contain provisions deemed unsatisfactory\nby the Department as well as other parties.\nThe bill also followed a very unusual path on its way to the\nPresident for signature. On the final day of the first session of\nthe 94th Congress, the original bill reported by the Committee of\nConference was passed by the House and Senate. Upon an indication\nthat the President would veto the bill, however, the Senate prevented\nthe bill from becoming enrolled and sent to the President. Sub-\nsequently, the Department negotiated changes to the bill at great\nlength with Committee staff personnel and, following the opening\nof the second session of the 94th Congress, the Senate and House\n26\nvoted to vacate the Conference bill. Thereafter, the matter\nwas recommitted to the Conference and the Committee reported\na revised bill on January 22, 1976.\nThe Department was most concerned about the following provisions\nof the first Conference bill:\n(1) The total authorizations were excessive.\n(2) The goals for improvement of intercity rail\npassenger service along the Northeast Corridor\nwere too ambitious, the funding for Corridor\nimprovements was too high, and the control\nover Corridor improvements was to be lodged\nin USRA and Amtrak.\n(3) There was insufficient protection of the Federal\nGovernment's interests in the provisions\nestablishing procedures and guidelines for the\ninvestment of Federal money in ConRail.\n(4) Procedures for the processing of supplemental\ntransactions threatened to hamstring any attempt\nthe Executive Branch might make in the future\nto bring about important changes to the rail\nsystem in the Midwest and Northeast.\n(5) The mechanism for providing financial aid to\nrailroads other than ConRail was unnecessarily\ncomplex and costly.\n(6) The program for rail continuation subsidies was\ntoo expensive and failed to come to grips with\na basic tenet of the RRRA, namely, that barring\nthe willingness of State and local governments\nto provide significant financial support for their\ncontinued operation, there must be a reduction\nin uneconomic lines.\n(7) The regulatory reform was inadequate and in\nsome respects confusing.\n27\nSubstantial gains were made in most of these areas upon the\nadoption of the second Conference bill:\n(1) As indicated above, the funding levels were\nreduced substantially and now are reasonably\nclose to the overall level proposed by the\nAdministration.\n(2) The immediate goals for the improvement\nof intercity rail passenger service along the\nNortheast Corridor were cut back, the\nfunding was reduced, and the Secretary,\nrather than USRA, was designated to receive\nthe funds authorized for Corridor improve-\nments.\n(3) The bill establishes a Finance Committee of\nthe USRA Board to carry out crucial oversight\nfunctions respecting the acquisition of ConRail\nsecurities by USRA. In addition, interest\non debentures was made cumulative.\n(4) Amendments were adopted making it clear\nthat ConRail could not block proposals for\nsupplemental transactions in cases where it\nis the transferor of properties and that the\nICC could not block any proposals for supplemental\ntransactions.\n(5) The regulatory reform provisions were\nstrengthened and most of the potential confusion\neliminated.\nLittle improvement was achieved respecting the mechanisms for\nproviding financial aid to railroads other than ConRail or for\nsubsidizing the continuation of freight and commuter service.\nHowever, a $40 million reduction was made in the authorization\nfor rail continuation subsidies.\nAll in all, we believe that the changes that were achieved were\nmost significant. The bill provides a reasonable means for\nfinancing the restructuring of the decayed rail system in the\nMidwest and Northeast, it provides substantial and flexible means\n28\nfor assisting rail rehabilitation in other areas of the country,\nit will permit a significant upgrading of intercity rail passenger\nservice in the busy Northeast Corridor, and it provides for\nmeaningful economic regulatory reform of the railroad industry.\nRECOMMENDATION\nThe Department recommends that the President sign the enrolled\nbill.\nSincerely,\nWilliam T.Corimon I\nWilliam T. Coleman, Jr.\nAttachment\n2/2/76\nCOMPARISON OF NEW AUTHORIZATIONS FOR FEDERAL ASSISTANCE TO THE RAILROADS\n(Dollars in Millions)\nS. 2718 AS PASSED\nS. 2718 AS PASSED\nS. 2718 AS PASSED\nBY THE SENATE\nBY BOTH HOUSES\nBY BOTH HOUSES\nTHE ADMINISTRATION\nDECEMBER 4, 1975\nDECEMBER 19, 1975\nJANUARY 28, 1976\nI. ConRail\nDebentures\n$1,000\n$1,000\n$1,000\n$1,000\nPreferred Stock\n850\n2,200\n1,100\n1,100\nFinance Committee Discretionary\n250\n--\n--\n--\nLoan Guarantees\n---\n--\n200\n--*\nConRail Total\n$2,100\n$3,200\n$2,300\n$2,100\nII. USRA Section 210 Authority\n235\n500\n400\n275\nIII. Supplemental Transactions\n400\n:\n--\n--\nIV. Railroad Rehabilitation\nLoan Guarantees\n2,000\n1,000\n800\n1,000\nRedeemable Preference Shares\n--\n1,200\n600\n600\nRehabilitation Total\n2,000\n2,200\n1,400\n1,600\n*Up to $200 million for electrification of ConRail mainlines is contained within\nthe loan guarantee program in Title V of S. 2718.\n-2-\n(Dollars in Millions)\nS. 2718 AS PASSED\nS. 2718 AS PASSED\nS. 2718 AS PASSED\nBY THE SENATE\nBY BOTH HOUSES\nBY BOTH HOUSES\nTHE ADMINISTRATION\nDECEMBER 4, 1975\nDECEMBER 19, 1975\nJANUARY 28, 1976\nV. Intercity Rail Passenger Services\nNortheast Corridor Project\n$1,080\n$3,000\n$2,400\n$1,600*\nNEC Stations and Fencing\n--\n--\n--\n150\nNEC Startup, Acquisition, & Telephones\n--\n236\n236\n96\nAcquisition of Other Lines\n:\n20\n20\n20\nPassenger Services Outside NEC\n--\n--\n200\n--**\nPassenger Total\n$1,080\n$3,256\n$2,856\n$1,866\nVI. Rail Service Continuation Subsidies\nBranchline\n--\n677\n400\n360\nCommuter\n--\n125\n125\n125\nContinuation Total\n--\n802\n525\n485\nVII. Other\nConversion of Rail Rights-of-Way\n--\n75\n75\n20\nFossil Fuel Rail Bank\n--\n--\n6\n6\nUSRA\n14\n17\n17\n14\nOffice of Rail Public Counsel\n--\n3\n3\n3\n*In addition to this amount, up to $150 million in obligations for\nNEC rehabilitation may be guaranteed under the loan guarantee\nprogram in Title V of S. 2718.\n**Up to $200 million for intercity rail passenger services outside\nthe NEC is contained within the authorizations in Title V of S. 2718.\n-3-\n(Dollars in Millions)\nS. 2718 AS PASSED\nS. 2718 AS PASSED\nS. 2718 AS PASSED\nBY THE SENATE\nBY BOTH HOUSES\nBY BOTH HOUSES\nTHE ADMINISTRATION\nDECEMBER 4, 1975\nDECEMBER 19, 1975\nJANUARY 28, 1976\nVII. Other (Continued)\nRail Services Planning Office\n:\n$ 2\n$ 2\n$ 2\nRailroad Minority Resource Center\n--\n1\n--\n--\nNational Transportation Program\n:\n5\n--\n--\nAdministration of Rail Fund\n:\n4\n2\n--\nRevision of ICC Accounting System\n--\n1\n1\n1\nOther Total\n--\n$ 108\n$ 106\n$ 46\nTotal New Authorizations\n$5,829\n$10,066\n$7,587\n$6,372\nOFFICE OF TELECOMMUNICATIONS POLICY\nEXECUTIVE OFFICE OF THE PRESIDENT\nWASHINGTON, D.C. 20504\nFebruary 2, 1976\nDEPUTY DIRECTOR\nHonorable James T. Lynn\nDirector, Office of Management and Budget\nAttention: Assistant Director for\nLegislative Reference\nExecutive Office of the President\nWashington, D.C. 20503\nSubject: Enrolled Bill, S. 2718 \"Railroad Revitalization\nand Regulatory Reform Act of 1976\"\nDear Mr. Lynn:\nThis is in response to the request of the Office of Management\nand Budget of January 27, 1976, for the views of the Office\nof Telecommunications Policy on the subject enrolled bill.\nThe Office of Telecommunications Policy has no objection\nto the subject bill, and specifically, has no objection to\nSections 703(4) and 704 (a) (C), as reported by the conference\ncommittee in H. Rept. 94-781, appearing in the Congressional\nRecord, Friday, January 23, 1976, on pp. H 217-282.\nSincerely,\nSquar\nJohn Eger\nActing Director\nTHE OF THE TREASURY\nTHE GENERAL COUNSEL OF THE TREASURY\nWASHINGTON, D.C. 20220\n1789\nFEB 3 1976\nDirector, Office of Management and Budget\nExecutive Office of the President\nWashington, D. C. 20503\nAttention: Assistant Director for Legislative\nReference\nSir:\nReference is made to your request for the views of\nthis Department on the enrolled enactment of S. 2718, the\n\"Railroad Revitalization and Regulatory Reform Act of\n1974. \"\nThe Department would have no objection to a recommendation\nthat the enrolled enactment be approved by the President.\nSincerely yours,\nGeneral Counsel\nRichard R. Albrecht\nOF\nUnited States Department of the Interior\nOFFICE OF THE SECRETARY\nMarch\n1849\nWASHINGTON, D.C. 20240\n3,\nFEB 2 - 1976\nDear Mr. Lynn:\nThis responds to your request for our views on the enrolled bill\nS. 2718, \"To improve the quality of rail services in the United States\nthrough regulatory reform, coordination of rail services and facilities,\nand rehabilitation and improvement financing and for other purposes.\"\nWe recommend that the President approve the enrolled bill, as far\nas Sections 809 and 810 are concerned.\nThis Department is directly concerned with only two sections of\nS. 2718: Sections 809 and 810. Section 706 of an earlier draft\nof S. 2718 would have halted the construction of the National\nVisitor's Center at Union Station in Washington, D. C., but that\nspecific provision was deleted in later action on the bill and no\nsimilar provision appears in the enrolled bill.\nSection 809 of the bill provides that the Secretary of Transportation\nshall, within 360 days of the date of enactment, and in consultation\nwith the Secretary of the Interior and others, prepare and submit\na report on the conversion of railroad rights-of-way. Section 809\nprovides that this report to the Congress and the President shall\nevaluate, and make suggestions concerning potential alternate uses\nof, and public policy with respect to the conversion of railroad\nrights-of-way on which service has been discontinued.\nSection 810 of S. 2718 would establish a Fossil Fuel Rail Bank as\nrecommended under part III, section C of the Final System Plan of\nthe United States Railway Association. The Secretary of Transpor-\ntation would be authorized to acquire those rail properties deemed\neligible to be included in the Rail Bank. He would be empowered\nto hold and dispose of these properties in a manner that would not\nadversely affect rail access or egress. Funds, not to exceed\n$6,000,000, are authorized to be appropriated for the purposes of\ncarrying out the provisions of this section.\nCONSERVE\nAMERICA'S\nENERGY\nSave Energy and You Serve America!\nThis Department reported to the Office of Management and Budget on\na similar Department of Transportation proposal on September 23,\n1975. At that time this Department objected to the proposed bill\nas then drafted because the Department of the Interior was the\noperating agency. We suggested that the Department of Transportation\nwas the proper operating agency in view of its leadership role in\ngeneral transporation matters. This change has been made in the\nenrolled bill with this Department serving in an advisory capacity\nto the Department of Transportation. We do not object to the\nprovisions of Section 810 in the present form\nSincerely yours,\nAssistant Secretary of the Interior\nHonorable James T. Lynn\nDirector\nOffice of Management and Budget\nWashington, D. C.\n2\nEXECUTIVE OFFICE OF THE PRESIDENT\nCOUNCIL ON WAGE AND PRICE STABILITY\n726 JACKSON PLACE, N.W.\nWASHINGTON, D.C. 20506\nFebruary 3, 1976\nJames M. Frey\nAssistant Director for\nLegislative Reference\nOffice of Management and Budget\nWashington, D.C. 20503\nDear Mr. Frey:\nThis is in response to your request for the\nCouncil's views on S. 2718 (the \"Railroad Revitaliza-\ntion and Regulatory Reform Act of 1976\") an enrolled\nbill recently delivered to the President.\nAlthough we have strong reservations about\nprovisions of the bill establishing ConRail (the transi-\ntion process, the resulting entity, and the extent of\nFederal funding), we believe that the regulatory reform\nprovisions are very important and that this package\nwould appear to represent the best compromise the Admini-\nstration is likely to secure. Therefore, we recommend\nthat the President sign the bill.\nSincerely,\nMimmi\nMichael H. Moskow\nDirector\nCOUNCIL OF ECONOMIC ADVISERS\nWASHINGTON\nALAN GREENSPAN, CHA'RMAN\nPAUL W. MACAVOY\nBURTON G. MALKIEL\nFebruary 2, 1976\nDear Mr. Frey:\nThe Council of Economic Advisers recommends that the\nPresident sign S. 2718, a bill known as \"The Railroad\nRevitalization and Regulatory Reform Act of 1976. \" The\nbill provides significant regulatory reform which we\nbelieve follows the President's leadership in this area.\nThe funding of Conrail for improvements in Northeast\ncorridor passenger service is costly, but still considerably\nless than originally proposed by Congress and now roughly\nin line with our national transportation goals.\nThe regulatory reform measures should make the rail-\nroads more efficient, profitable, and competitive with other\nmodes of transportation. Section one of the ICC act is\namended to make rates legal if they produce sufficient revenue\nto cover variable costs. Rates may be declared too high\nonly if market power is shown and suspension of rates is\nmade very difficult under section one. The ICC may still\nsuspend rates under section two, three, and four, however.\nThe Presidential statement at the time the bill is signed\nmight explicitly discourage the use of this suspension\npower since it is contrary to overall administration policy\nand the main thrust of the Bill.\nAnother significant reform is the placing of strict\nlimits on the activities of rate bureaus. The Bill provides\nthat rate bureau members may choose not to follow any bureau\npolicy without penality, and that agreements on rates for\nsingle line movements are illegal. However, the rate bureaus\nretain some power since agreements on general rate increases\nare allowed. The act also places time limits on ICC handling\nof rate cases and other matters.\nThere may be significant long-term problems with the\nfunding provisions in the Bill. Conrail is unlikely to\nstay within its financial projections and likely will\nexperience substantial losses which are not now made explicit.\nREVOLUTION\nAMERICAN\nBICENTENNIAL\n1776-1976\n@\n-2-\nFortunately, two measures in the Bill provide means to\ndeal with this situation. First, the Bill permits controlled\ntransfer of Conrail facilities to private railroads and for\nsome funding of such transfers. Either the Secretary of\nTransportation or USRA can develop plans for transfer and\nultimately take them to the special court for a decision.\nThe signing message should encourage efforts to effect\ncontrolled transfer. The Bill also creates a finance\ncommittee which can cut off funds to Conrail in the event\nthat it is not viable although Congress can veto decisions\nreached by the committee.\nIt is important to note in the message that funding\nfor work on the Northeast corridor has been reduced and\nthat further study has been ordered before expenditures on\nhigh speed rail service are made. These were the results\nof strong Administration initiatives.\nSincerely,\nAny\nPaul W. MacAvoy\nMember\nMr. James Frey\nAssistant Director\nfor Legislative Reference\nOffice of Management and Budget\nWashington, D. C.\nNational Railroad Passenger Corporation, 955 L'Enfant Plaza North, S.W., Washington, D.C. 20024 Telephone (202) 484-7100\nFebruary 2, 1976\nAmtrak\nHonorable James T. Lynn\nDirector\nOffice of Management and Budget\nExecutive Office Building\nWashington, D. C. 20503\nDear Mr. Lynn:\nThe National Railroad Passenger Corporation recommends\nthat S. 2718, as amended, the Railroad Revitalization and\nRegulatory Reform Act of 1976, be signed into law.\nSincerely,\nBruce Pribe Peke\nBruce Pike\nVice President\nGovernment Affairs\nBP/rfg\nGERALD ? FORD\nWTM CRESIDENT SERVICE M OF UNITED\nEXECUTIVE OFFICE OF THE PRESIDENT\nOFFICE OF MANAGEMENT AND BUDGET\nDATE: 2-17-76\nTO:\nBob Linder\nFROM:\nJim Frey\nAttached is the Labor views\nletter on S. 2718, the Rail\nbill. Please have it included\nin the enrolled bill file.\nThanks.\nOMB FOR\nREV AUG\nU.S. DEPARTMENT OF LABOR\nOFFICE OF THE SECRETARY\nWASHINGTON\nFEB 5 1976\nHonorable James T. Lynn\nDirector\nOffice of Management and Budget\nWashington, D. C. 20503\nDear Mr. Lynn:\nThis is in response to your request for our views\non the revised Conference Report on S. 2718, \"Railroad\nRevitalization and Regulatory Reform Act of 1976 (H. Rept.\n94-781)\nThe bill includes provisions which: reform certain\nprocedures of the Interstate Commerce Commission; authorize\nfinanical assistance to railroads for facilities, maintenance,\nrehabilitation, improvements and acquisitions; and provide\na method of financing such programs by \"the Rail Fund\" for\nwhich $6,000,000,000 would be available for fiscal year 1977\nfrom an authorization to the Secretary of the Treasury and\nopen-ended authorizations for fiscal years 1978, 1979, and\n1980.\nThe bill also provides protection for employees who may be\naffected by actions taken thereunder and explicitly extends\nprotection for the first time to workers affected by railroad\nabandonments. The level of protection afforded workers in\nabandonment cases, as well as in merger and consolidation\nsituations, is equivalent to that granted workers pursuant to\nsection 5 (2) (f) of the Interstate Commerce Act and section 405\nof the Rail Passenger Service Act. In its \"expedited\" merger\nprovisions, the bill requires the Secretary of Labor to provide\nthe ICC with his views on the adequacy of the protection afforded\nemployees.\nWe note with disappointment that the bill does not contain a\nlabor standards provision providing for the application of\nthe Davis-Bacon and other associated acts for the protection\n-2-\nof laborers and mechanics on federally assisted construction\ncontracts that could be authorized under the bill.\nAlthough we regret this omission, we pose no objection to\nPresidential approval of the bill.\nSincerely,\nRoursel I Aders\nSecretary of Labor\nACTING\nUnited States Railway Association\n2100 Second Street, S.W.\nWashington, D.C. 20595\n(202) 426-1991\nArthur D. Lewis\nChairman of the Board\nJanuary 30, 1976\nMr. James M. Frey\nAssistant Director\nLegislative Reference\nOffice of Management and Budget\n17th & Pennsylvania Avenue, N.W.\nWashington, D. C. 20503\nDear Mr. Frey:\nThis is in response to the request of the Office of Management\nand Budget for advice of the United States Railway Association with\nrespect to the President's approval of S.2718, the Railroad Revitali-\nzation and Regulatory Reform Act of 1976.\nThe United States Railway Association regards this legislation\nas fully meeting the requirements of the Final System Plan and\nrecommends its approval by the President.\nIt is the hope of the Association that the conveyances of rail\nproperties can be certified to the Special Court on or about March 12,\n1976 and that the conveyances to ConRail can be effected on March 31,\n1976. Because of the urgency of this schedule we would urge that the\nPresident give his approval to S.2718 at the earliest feasible date.\nSincerely,\nU them Lears\nArthur D. Lewis\nASSISTANT ATTORNEY GENERAL\nLEGISLATIVE AFFAIRS\nDepartment of Justice\nMashington, D.C. 20530\nFebruary 2, 1976\nHonorable James T. Lynn\nDirector, Office of Management\nand Budget\nWashington, D.C. 20503\nDear Mr. Lynn:\nPursuant to your request for the immediate views of the Department\nof Justice on the Railroad Revitalization and Regulatory Reform Act\nof 1976, S. 2718, we are endorsing its approval by the President.\nFrom the time S. 2718 was first reported out of Conference in\nlate December, attorneys in the Antitrust Division of the Department\nof Justice have been working with the Department of Transportation in\nits effort to affect a revision of certain portions of S. 2718. Our\ncoordinated effort related particularly to certain regulatory reform\naspects of S. 2718 contained in Title II of the bill.\nS. 2718, as first reported out of Conference, had several substan-\ntial defects from a regulatory reform perspective, Through a process of\nnegotiation and compromise, the Department of Transportation has\nsucceeded in obtaining a revision of some of the provisions of Title II\nof the Act. Although S. 2718, as secondly reported out by the Conference\nand passed by both Houses on January 28, 1976, is not as substantial a\nstep toward regulatory reform as the President has sought, on balance\nS. 2718 as passed does further achievement of the President's goal of\nregulatory reform. Specifically, the bill, in part, creates a no-suspend\nzone for limited rate changes; designates a strict standard which must\nbe met before temporary suspension of a rate is allowed; requires that\nthe reasonableness (i.e. lawfulness) of a railroad's rate be measured by\nthe variable costs of that individual railroad, not of the industry; and\nremoves the antitrust immunity for agreements on single line rates.\nThese aspects certainly create a potential for rate-making flexibility\nby the railroads and consequent increased competition.\nAccordingly, the Department of Justice recommends approval of this\nbill.\nSincerely,\nMichael M. Uhlmann\nAssistant Attorney General\nREVOLUTION\nBICENTENNIAL\n1776-1976\nInterstate Commerce Commission\nWashington, D.C. 20423\nOFFICE OF THE CHAIRMAN\nFebruary 2, 1976\nMr. Bernard H. Martin\nAssistant Director for\nLegislative Reference\nOffice of Management and Budget\nWashington, D.C. 20503\nDear Mr. Martin:\nIn reply to your request of January 28 for the Commission's\nrecommendation on enrolled bill S. 2718, the \"Railroad Revitalization and\nRegulatory Reform Act of 1976,\" the Commission recommends that the\nPresident sign this bill.\nS. 2718 provides funding for revitalization of railroad freight\nand passenger service in the Northeast and throughout the country. It also\ncontains substantial regulatory reform including greater ratemaking flexibility\nfor the railroads, new methods for accomplishing railroad mergers in an\nexpedited manner, provisions designed to speed up Commission procedures,\nand a new policy for railroad abandonment of light-density lines.\nAlthough we have heretofore expressed substantial disagreement\nwith many of the regulatory reforms contained in the Act and still question\nthe need for some of these provisions, it is our view that this legislation is\nnecessary to prevent chaos in the Northeast railroad system. Without the\nfunding provisions and the implementing amendments contained in this Act,\nwe do not believe that the essential services formerly furnished by the\nbankrupt railroads can be maintained in the Northeast. Moreover, the\nrehabilitation funding contained in the Act is essential to the revitalization\nof rail service throughout the rest of the Nation.\nMr. Bernard H. Martin\nAssistant Director for Legislative Reference\nIn sum, although we do not support all provisions of the bill,\nwe recognize that much of the bill is necessary and thus, we recommend\nthat it be signed. Moreover, we should emphasize that although we would\nhave preferred a different form of legislation in some respects, we are\nprepared to implement fully the provisions of the legislation to the extent\nof our responsibility.\nSincerely yours,\nGeorge M. Stafford\nChairman\n- 2 -\nOF\nDEPARTMENT\nDEPARTATION\nTHE SECRETARY OF TRANSPORTATION\nUNITED\nWASHINGTON, D.C. 20590\nAMERICA\nSTATES\nOF\nJanuary 29, 1976\nMEMORANDUM FOR THE PRESIDENT\nSUBJECT:\nOmnibus Rail Legislation\nINTRODUCTION\nYesterday, January 28, the Congress approved a new conference\nreport on S. 2718, The Railroad Revitalization and Regulatory\nReform Act of 1976, authorizing a total Federal expenditure of\n$6.37 billion. The bill is probably the most far-reaching railroad\nlegislation of this century and contains a number of provisions\nwith political implications for the election year.\nREVITALIZATION OF THE RAIL FREIGHT SYSTEM\nS. 2718 provides for a complete revitalization, over the next\n5 years, of the Nation's private enterprise freight railroad\nsystem. The bill authorizes up to $4. 1 billion in Federal\nassistance for freight service, of which a minimum of $2. 1\nbillion will go to ConRail to reorganize and rebuild the bankrupt\nrailroads in the Northeast and Midwest. This financial assistance,\nused in combination with expedited merger procedures to\nfacilitate a restructuring of the Nation's railroads, will, I believe,\npermit a private sector solution to our national railroad crisis\nand prevent nationalization of the rail system.\nNORTHEAST CORRIDOR IMPROVEMENT PROJECT\nThe legislation also mandates a swift and substantial upgrading of\nrail passenger service along the Northeast Corridor between\nWashington, D.C., and Boston. Within 5 years after the date of\nenactment, the Secretary of Transportation will be required to\nestablish reliable 120 mph passenger service in the Corridor,\nrefurbish the passenger stations, and install protective fencing\n2.\nalong the rights-of-way. The eight States (and the District of\nColumbia) served by the Northeast Corridor project contain\napproximately 24 percent of the population of the United States\nand represent 127 electoral votes.\nREGULATORY REFORM\nThe revitalization of the railroads will occur not only as a\nconsequence of Federal financial assistance but also as a\nconsequence of the landmark regulatory reform legislation\ncontained in this bill. S. 2718 will inaugurate a new era of\nregulatory policy toward the rail industry which will enable\nrailroads to compete more effectively with other modes of\ntransportation and provide better and more efficient service\nto consumers. It is fair to say that the provisions contained\nin this bill are the most significant transportation regulatory\nreforms since the establishment of the Interstate Commerce\nCommission in 1887. Every Administration since President\nEisenhower's has called for such reforms without success\nuntil now. (Attached is a list of the proposals made over the\nlast quarter century calling for reform of transportation\nregulation.) The Railroad Revitalization and Regulatory\nReform Act is thus the first significant success that any\nAdministration has had in seeking transportation regulatory\nreform.\nCREATION OF JOBS\nThe Federal expenditure provided for in S. 2718 will create,\nbased on DOT estimates, between 30,000 and 40,000 new jobs\nover the next 5 years. If the release of funds for rehabilitation\nprojects is accelerated to the maximum extent possible through\na concerted effort by DOT and the rail industry, between 9,000\nand 15,000 new jobs could be created this year. These figures\nassume that all the new employees will be paid at the prevailing\nunion rate of approximately $6.50 per hour. However, the\nsection of the bill providing for improvement of the Northeast\nCorridor contains a provision which might permit a lower\nrate to be paid in order that more unemployed people could be\nhired for the same amount of Federal money. If, for example,\nthe new workers for the Northeast Corridor project were to be\npaid $4.00 per hour, rather than $6.50, the new jobs created\n3.\nby that project alone would increase from 8,000 - 9,000 to\n11,000 - 12,000. Of course, such a policy might meet with\nopposition from the labor unions who are, to date, very\npleased with the labor protection provisions in the bill.\nBut\nWilliam T. Coleman, Jr.\nAttachment\nLIST OF LEGISLATIVE PROPOSALS OR GOVERNMENT REPORTS\nCALLING FOR REFORM OF TRANSPORTATION REGULATION\nThe Report to the President from the Secretary of Commerce\n(Sawyer Report), 1949\nCabinet Committee on Transport Policy and Organization\n(Weeks Report), 1955\nReport of the Secretary of Commerce (Mueller Report on Transport\nPolicy), 1960\nReport of the Senate Committee on Commerce (Doyle Report), 1961\nReport on Regulatory Agencies to the President-Elect (Landis\nReport), 1961\nThe Kennedy Administration Proposal, 1962\nThe Ash Report\nThe Hilton Study on Transport Policy prepared for President Johnson,\n1965\nThe Transportation Regulatory Modernization Act of 1971 - Nixon\nAdministration Proposal\nThe Transportation Improvement Act of 1974 - Nixon Administration\nProposal\nThe Railroad Revitalization Act of 1975 - Ford Administration\nProposal\n1/28/76\nCOMPARISON OF NEW AUTHORIZATIONS FOR FEDERAL ASSISTANCE TO THE RAILROADS\n(Dollars in Millions)\nS. 2718 AS PASSED\nS. 2718 AS PASSED\nS. 2718 AS PASSED\nBY THE SENATE\nBY BOTH HOUSES\nBY BOTH HOUSES\nTHE ADMINISTRATION\nDECEMBER 4, 1975\nDECEMBER 19, 1975\nJANUARY 28, 1976\nConRail\nDebentures\n$1,000\n$1,000\n$1,000\n$1,000\nPreferred Stock\n850\n2,200\n1,100\n1,100\nFinance Committee Discretionary\n250\n---\n:\n--\nLoan Guarantees\n--\n--\n200\n--*\nConRail Total\n$2,100\n$3,200\n$2,300\n$2,100\nII. USRA Section 210 Authority\n235\n500\n400\n275\nIII. Supplemental Transactions\n400\n--\n--\n:\nIV. Railroad Rehabilitation\nLoan Guarantees\n2,000\n1,000\n800\n1,000\nRedeemable Preference Shares\n--\n1,200\n600\n600\nRehabilitation Total\n2,000\n2,200\n1,400\n1,600\n*Up to $200 million for electrification of ConRail mainlines is contained within\nSERVICE\nthe loan guarantee program in Title V of S. 2718.\nagos\n-2-\n(Dollars in Millions)\nS. 2718 AS PASSED\nS. 2718 AS PASSED\nS. 2718 AS PASSED\nBY THE SENATE\nBY BOTH HOUSES\nBY BOTH HOUSES\nTHE ADMINISTRATION\nDECEMBER 4, 1975\nDECEMBER 19, 1975\nJANUA RY 28, 1976\nV. Intercity Rail Passenger Services\nNortheast Corridor Project\n$1,080\n$3,000\n$2,400\n$1,600*\nNEC Stations and Fencing\n--\n--\n--\n150\nNEC Startup, Acquisition, & Telephones\n--\n236\n236\n96\nAcquisition of Other Lines\n--\n20\n20\n20\nPassenger Services Outside NEC\n--\n--\n200\n--**\nPassenger Total\n$1,080\n$3,256\n$2,856\n$1,866\nVI. Rail Service Continuation Subsidies\nBranchline\n677\n400\n360\nCommuter\n125\n125\n125\nContinuation Total\n802\n525\n485\nVII. Other\nConversion of Rail Rights-of-Way\n--\n75\n75\n20\nFossil Fuel Rail Bank\n--\n--\n6\n6\nUSRA\n17\n17\n14\nOffice of Rail Public Counsel\n3\n3\n3\n*In addition to this amount, up to $150 million in obligations for\nNEC rehabilitation may be guaranteed under the loan guarantee\nprogram in Title V of S. 2718.\n**Up to $200 million for intercity rail passenger services outside\nQUOS\nthe NEC is contained within the authorizations in Title V of S. 2718.\n-3-\n(Dollars in Millions)\nS. 2718 AS PASSED\nS. 2718 AS PASSED\nS. 2718 AS PASSED\nBY THE SENATE\nBY BOTH HOUSES\nBY BOTH HOUSES\nTHE ADMINISTRATION\nDECEMBER 4, 1975\nDECEMBER 19, 1975\nJANUARY 28, 1976\nVII. Other (Continued)\nRail Services Planning Office\n--\n$ 2\n$ 2\n$ 2\nRailroad Minority Resource Center\n--\n1\n--\n--\nNational Transportation Program\n--\n5\n--\n--\nAdministration of Rail Fund\n--\n4\n2\n--\nRevision of ICC Accounting System\n--\n1\n1\n1\nOther Total\n--\n$ 108\n$ 106\n$ 46\nTotal New Authorizations\n$5,815\n$10,066\n$7,587\n$6,372\n,\n."
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