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The original documents are located in Box 42, folder "1976/03/30 HJR801 Supplemental
Railroad Appropriations for 1976" of the White House Records Office: Legislation Case
Files at the Gerald R. Ford Presidential Library.
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from Box 42 of the White House Records Office Legislation Case Files at the Gerald R. Ford Presidential Library
APPROVED. MAR30 30
$ 3/30/96
ACTION
THE WHITE HOUSE
Last Day: April 7
WASHINGTON
March 29, 1976
Posted
MEMORANDUM FOR
THE PRESIDENT
3/30
FROM:
JIM CANNON
SUBJECT:
H.J. Res. 801 - Supplemental
To archives
Railroad Appropriations for 1976,
the transition quarter, 1978
and 1979
3/30
Attached for your consideration is H.J. Res. 801, sponsored
by Representative Mahon, which provides supplemental
appropriations totalling $2,143,300,000 for purchase
of ConRail securities, railroad activities of the
Department of Transportation and administrative expenses
of the United States Railway Association.
A discussion of the appropriations contained in the
enrolled bill is provided in OMB's bill report at Tab A.
OMB recommends approval of the enrolled bill as soon
as possible so that the planned conveyance of several
bankrupt railroads in the Northeast and Midwest to the
Consolidated Railroad Corporation may take place as
scheduled on April 1, 1976. Bill Seidman, Max Friedersdorf,
Counsel's Office (Lazarus) and I concur.
RECOMMENDATION
That you sign H.J. Res. 801 at Tab B.
FORD 1. OFFICE LIBRARY
OF THE
RESDENT
OFFICE
WITH
EXECUTIVE OFFICE OF THE PRESIDENT
UNITED
OFFICE OF MANAGEMENT AND BUDGET
STRUTIVE
STATES
WASHINGTON, D.C. 20503
MAR 27 1976
MEMORANDUM FOR THE PRESIDENT
Subject: Enrolled H.J. Res. 801 - Supplemental Railroad
Appropriations for 1976, the transition quarter,
1978, and 1979
Sponsor - Representative Mahon (D), Texas
Last Day for Action
April 7 , 1976 -
Immediate signature is recommended so that the planned conveyance
of several bankrupt railroads in the Northeast and Midwest to
the Consolidated Railroad Corporation (ConRail) may take place
as scheduled on April 1, 1976.
Purpose
Provides supplemental appropriations totalling $2,143,300,000
for purchase of ConRail securities, railroad activities of the
Department of Transportation, and administrative expenses of the
United States Railway Association.
Agency Recommendation
Office of Management and Budget
Approval
Affected agencies
Approval (informally)
Discussion
Appropriations for the U.S. Railway Association
Of the total $2,143.3 million appropriated in the enrolled bill,
$2,026 million is to be used by the U.S. Railway Association
2
for the purchase of ConRail debentures and senior preferred
stock. The appropriation is in the amount you proposed, but
becomes available on a different time schedule than you
requested, as is shown in the following table:
(in millions of dollars)
Request Enrolled bill Difference
1976
400
500
100
Transition quarter
300
965
665
1977
1,326
-1,326
1978
425
425
1979
136
136
Total
2,026
2,026
This revised timing does not affect the main purpose for the
appropriation: to provide firm Federal commitments to ConRail
in its first years of operation. The appropriations committees
believe the revised availability of funds will provide greater
Congressional control. Outlays will not be significantly
affected by the revised budget authority timing.
Despite adequate and flexible safeguards in the authorizing
legislation, the enrolled bill limits the use of appropriations
for ConRail operating losses. This provision was not requested
and may later prove to be unduly restrictive.
The enrolled bill provides $300,000 less than the $6.1 million
requested for administrative expenses of the U.S. Railway
Association, but some of the funds are made available earlier
than requested. No significant problems are expected as a
result of the decrease.
Appropriations for the Department of Transportation
The Congress provided an additional $35 million to fund the
initial phase of the Northeast Corridor Improvement Program.
This program, established by the Railroad Revitalization and
Regulatory Reform Act of 1976, aims to improve commuter rail
service between New York, Washington, and Boston. The report
of the Senate Appropriations Committee deemed your requests
for this program "inadequate" and cited the need to provide
at the outset sufficient funds to meet the tight time
schedule mandated for this program. The amount provided is
to be used to procure long lead-time materials, make emergency
repairs necessary to keep the existing system functioning,
and contract for detail design of the upgraded system.
3
Your request to provide an additional $12 million in interim
operating assistance to those bankrupt railroads being reor-
ganized into ConRail was denied. The request was made in
order to prevent service and employee cutbacks and ensure
continuation of essential rail service. House-Senate
conferees, in their report on this resolution, stated that
it was not their intention that the suppliers of the bankrupt
railroads be denied payment of legitimate claims and that,
if necessary, they would consider a subsequent request.
The $31.7 million requested for grants to the National
Railroad Passenger Corporation was based on the best estimates
available. The degree of uncertainty associated with the
estimates is, however, high enough to preclude claims of
adverse effects from the Congressional reduction of $500,000.
National Transportation Safety Board
The reports of both the Senate Appropriations Committee and
the conference committee contain a directive to the National
Transportation Safety Board to fill the 85 new positions
provided for in their regular 1976 appropriation. The Board
plans to comply with this directive.
Effect of Congressional Action
Congressional action on your requests for this resolution
added $22.2 million in budget authority. The distribution
of this budget authority over the appropriate fiscal periods
and the associated outlay estimate changes are shown in the
following table:
(in millions of dollars)
Budget Authority
Outlays
1976
114
-12
TQ
673
---
1977
-1,326
35
1978
425
---
1979
136
---
Recommendation
I recommend that you sign the enrolled bill before midnight
Tuesday, March 30. Signature by then will allow the minimum
time necessary for Treasury to issue warrants and thus allow
ConRail to receive the scheduled conveyance on April 1.
Joses Lynn day
EXECUTIVE OFFICE OF THE PRESIDENT
/10r 3-29-74 a.m.
OFFICE OF MANAGEMENT AND BUDGET
WASHINGTON, D.C. 20503
MAR 27 1976
MEMORANDUM FOR THE PRESIDENT
Subject: Enrolled H.J. Res. 801 - Supplemental Railroad
Appropriations for 1976, the transition quarter,
1978, and 1979
Sponsor - Representative Mahon (D), Texas
Last Day for Action
April 7 , 1976 -
Immediate signature is recommended so that the planned conveyance
of several bankrupt railroads in the Northeast and Midwest to
the Consolidated Railroad Corporation (ConRail) may take place
as scheduled on April 1, 1976.
Purpose
Provides supplemental appropriations totalling $2,143,300,000
for purchase of ConRail securities, railroad activities of the
Department of Transportation, and administrative expenses of the
United States Railway Association.
Agency Recommendation
Office of Management and Budget
Approval
Affected agencies
Approval (informally)
Discussion
Appropriations for the U.S. Railway Association
Of the total $2,143.3 million appropriated in the enrolled bill,
$2,026 million is to be used by the U.S. Railway Association
THE WHITE HOUSE
ACTION MEMORANDUM
WASHINGTON
LOG NO.:
Date: March 29
Time:
1000am
FOR ACTION: Judy Hope an
cc (for information): Jack Marsh
Max Friedersdorf
Jim Cavanaugh
Ken Lazarus ca
Ed Schmults
Bill Seidman
an
FROM THE STAFF SECRETARY
DUE: Date: March 29
Time: 400pm
SUBJECT:
H.J. Res 801 - Supplemental Railroad
Appropriations for 1976, the transition quarter
1978 and 1979
ACTION REQUESTED:
For Necessary Action
For Your Recommendations
Prepare Agenda and Brief
Draft Reply
X For Your Comments
Draft Remarks
REMARKS:
Please return to Judy Johnston, Ground Floor West Wing
( TORE 1
PLEASE ATTACH THIS COPY TO MATERIAL SUBMITTED.
If you have any questions or if you anticipate a
delay in submitting the required material, please
K. R. COLE, JR.
telephone the Staff Secretary immediately.
For the President
THE WHITE HOUSE
WASHINGTON
March 29, 1976
MEMORANDUM FOR:
JIM CAVANAUGH
FROM:
MAX L. FRIEDERSDORF m.6.
SUBJECT:
H. J. Res. 801 Supplemental Railroad Appropriations
for 1976, the transition quarter 1978 and 1979
The Office of Legislative Affairs concurs with the agencies
that the bill be signed.
Attachments
THE WHITE HOUSE
ACTION MEMORANDUM
WASHINGTON
LOG NO.:
Date: March 29
Time:
1000am
FOR ACTION: Judy Hope
CC (for information):
Jack Marsh
Max Friedersdorf
Jim Cavanaugh
Ken Lazarus
Ed Schmults
Bill Seidman
FROM THE STAFF SECRETARY
DUE: Date: March 29
Time: 400pm
SUBJECT:
H.J. Res 801 - Supplemental Railroad
Appropriations for 1976, the transition quarter
1978 and 1979
ACTION REQUESTED:
For Necessary Action
For Your Recommendations
Prepare Agenda and Brief
Draft Reply
X For Your Comments
Draft Remarks
REMARKS:
Please return to Judy Johnston, Ground Floor West Wing
No objection.
Ken Lazarus
PLEASE ATTACH THIS COPY TO MATERIAL SUBMITTED.
If you have any questions or if you anticipate a
delay in submitting The required material, please
James H. Common
ielephone the Staff Secretary immediately.
For the Pendicial
94TH CONGRESS
HOUSE OF REPRESENTATIVES
REPORT
2d Session
No. 94-941
MAKING SUPPLEMENTAL APPROPRIATIONS, FISCAL
YEAR 1975
MARCH 22, 1976.-Ordered to be printed
Mr. McFALL, from the committee of conference
submitted the following
CONFERENCE REPORT
[To accompany H.J. Res. 801]
The committee of conference on the disagreeing votes of the two
Houses on the amendments of the Senate to the bill (H.J. Res. 801)
"making supplemental railroad appropriations for the fiscal year end-
ing June 30, 1976, the period ending September 30, 1976, the fiscal
year ending September 30, 1978, and the fiscal year ending Septem-
ber 30, 1979, and for other purposes," having met, after full and free
conference, have agreed to recommend and do recommend to their re-
spective Houses as follows:
That the Senate recede from its amendments numbered 1, 2, 6, 12,
13, 14, and its unnumbered amendment to amend the title of the Joint
Resolution.
That the House recede from its disagreement to the amendments of
the Senate numbered 8, 11, and 19, and agree to the same.
Amendment numbered 3 :
The the House recede from its disagreement to the amendment of
the Senate numbered 3, and agree to the same with an amendment as
follows:
In lieu of the matter proposed by said amendment insert
DEPARTMENT OF TRANSPORTATION
FEDERAL RAILROAD ADMINISTRATION
NORTHEAST CORRIDOR IMPROVEMENT PROGRAM
And the Senate agree to the same.
Amendment numbered 4:
That the House recede from its disagreement to the amendment of
the Senate numbered 4, and agree to the same with an amendment as
follows:
57-006 O
2
3
In lieu of the sum named by said amendment insert $25,000,000;
Amendment numbered 16:
and the Senate agree to the same.
That the House recede from its disagreement to the amendment of
Amendment numbered 5:
the Senate numbered 16, and agree to the same with an amendment as
That the House recede from its disagreement to the amendment of
follows:
the Senate numbered 5, and agree to the same with an amendment as
Restore the matter stricken by said amendment amended to read as
follows:
follows:
In lieu of the sum named by said amendment insert $25,000,000;
For acquisition of debentures and series A preferred
and the Senate agree to the same.
stock issued by the Consolidated Rail Corporation to re-
Amendment numbered 7:
main available until expended, $425,000,000 for fiscal
That the House recede from its disagreement to the amendment of
year 1978 and $136,000,000 for fiscal year 1979.
the Senate numbered 7, and agree to the same with an amendment as
And the Senate agree to the same.
follows:
Amendment numbered 17:
In lieu of the matter proposed by said amendment insert:
That the House recede from its disagreement to the amendment of
the Senate numbered 17, and agree to the same with an amendment
GRANTS TO THE NATIONAL RAILROAD PASSENGER
as follows:
CORPORATION
In lieu of the sum proposed by said amendment insert $5,800,000;
and the Senate agree to the same.
For additional amounts for "Grants to the National
The committee of conference report in disagreement amendments
Railroad Passenger Corporation," $36,500,000 to remain
numbered 10, 18, and 20.
available until expended: Provided, That not to exceed
JOHN J. McFALL,
$21,200,000 in fiscal year 1976 and $5,300,000 in the period
SIDNEY R. YATES (except
July 1, 1976 through September 30, 1976 shall be avail-
amendments Nos. 11, 12,
able for additional operating expenses for the Corpora-
13, 14, 15, and 16),
tion in connection with the Corporation's additional
ToM STEED,
operating responsibilities over the rail properties of the
ED Koch,
Northeast Corridor; non-recurring costs related to the
BILL ALEXANDER,
initial assumption of control and responsibility for main-
GEORGE MAHON,
taining rail operations on the Northeast Corridor,
SILVIO O. CONTE (except
$10,000,000.
amendment No. 7),
And the Senate agree to the same.
JACK EDWARDS,
E. A. CEDERBERG,
Amendment numbered 9:
Managers on the Part of the House.
That the House recede from its disagreement to the amendment of
BIRCH BAYH,
the Senate numbered 9, and agree to the same with an amendment as
follows:
JOHN L. McCLELLAN,
ROBERT C. BYRD,
In lieu of the sum named by said amendment insert $25,000,000; and
JOHN C. STENNIS,
the Senate agree to the same.
WARREN G. MAGNUSON,
Amendment numbered 15
JOHN O. PASTORE,
That the House recede from its disagreement to the amendment of
THOMAS F. EAGLETON,
the Senate numbered 15, and agree to the same with an amendment as
CLIFFORD P. CASE,
follows:
TED STEVENS,
Restore the matter stricken by said amendment amended to read as
CHARLES McC. MATHIAS, Jr.,
follows:
DICK SCHWEIKER,
For acquisition of debentures and series A preferred
Managers on the Part of the Senate.
stock issued by the Consolidated Rail Corporation to be-
come available on September 30, 1976, and to remain
available until expended, $615,000,000; Provided, That
not to exceed $200,000,000 shall be made available to the
Corporation for operating losses of the Corporation.
And the Senate agree to the same.
H.R. 941
H.R. 941
JOINT EXPLANATORY STATEMENT OF THE COMMITTEE
OF CONFERENCE
The managers on the part of the House and the Senate at the con-
ference on the disagreeing votes of the two Houses on the amendments
of the Senate to the joint resolution (H.J. Res. 801) making supple-
mental railroad appropriations for the fiscal year ending June 30,
1976, and the period ending September 30, 1976, the fiscal year ending
September 30, 1978, and the fiscal year ending September 30, 1979, and
for other purposes, submitted the following joint statement to the
House and the Senate in explanation of the effect of the action agreed
upon by the managers and recommended in the accompanying confer-
ence report.
Amendments Nos. 1 and 2: Conform enacting clause as proposed by
the House.
DEPARTMENT OF TRANSPORTATION
FEDERAL RAILROAD ADMINISTRATION
Amendment No. 3: Includes heading for Northeast Corridor im-
provement program.
Amendment No. 4: Appropriates $25,000,000 for fiscal year 1976 for
the Northeast Corridor improvement program instead of $27,400,000
as proposed by the Senate.
Amendment No. 5: Appropriates $25,000,000 for the transition pe-
riod for the Northeast Corridor improvement program instead of $52,-
000,000 as proposed by the Senate.
Amendment No. 6: Deletes $12,000,000 appropriation proposed by
the Senate for interim operating assistance.
It is not the intention of the conferees that the suppliers of the bank-
rupt railroads be denied payment of legitimate claims. The conferees
are in agreement that, if necessary, a subsequent budget request for
these claims will be considered.
Amendment No. 7: Appropriates $36,500,000 for Grants to the Na-
tional Railroad Passenger Corporation (Amtrak) instead of $142,-
332,956 as proposed by the Senate.
The conference agreement includes $21,200,000 for fiscal year 1976
and $5,300,000 for the transition period for Amtrak's additional costs
for operating over the rail properties of the Northeast Corridor. The
conference agreement also includes $10,000,000 for non-recurring in-
ventory and equipment costs associated with rail passenger operations
along the Northeast Corridor.
(5)
H.R. 941
6
7
The conference agreement has deleted the following items which
amount of these funds which can be used for operating losses of Con-
were inserted by the Senate:
Rail to $200,000,000 instead of $172,000,000 as proposed by the House.
Amendment No. 16: Appropriates $425,000,000 as proposed by the
Acquiring properties of the Northeast Corridor
$85, 182, 956
Development and utilization of mobile radio frequencies for high
House for fiscal year 1978 and $136,000,000 for fiscal year 1979 instead
speed rail telephone service
650, 000
of $176,000,000 as proposed by the House. In addition, the conference
Acquiring and improving properties designated in accordance with
agreement deletes the House provision to prohibit any of these funds
section 206 (c) (1) (D) of the Regional Rail Reorganization Act of
to be used for operating losses of ConRail.
1973
20, 000, 000
The issue of lease or purchase of the Northeast Corridor is to be
ADMINISTRATIVE EXPENSES
resolved by the parties involved. However, in the event an agreement
is reached pursuant to which Amtrak will purchase the Northeast Cor-
Amendment No. 17 : Appropriates $5,800,000 instead of $4,100,000 as
ridor properties, the conferees do not intend that either ConRail or
proposed by the House and $6,100,000 as proposed by the Senate.
Amtrak should be required to pay any funds or properties to the pres-
Amendment No. 18: Reported in technical disagreement. The man-
ent owners of the Northeast Corridor rail properties for acquisition
agers on the part of the House will offer a motion to recede and concur
of such properties.
in the amendment of the Senate to permit the funds appropriated to
remain available until expended.
URBAN MASS TRANSPORTATION ADMINISTRATION
Amendment No. 19: Deletes $1,400,000 appropriation proposed by
the House for the transition period.
URBAN MASS TRANSPORTATION FUND
MISCELLANEOUS PROVISIONS
Amendment No. 8: Inserts heading for rail service operating pay-
ments as proposed by the Senate.
Amendment No. 20: Reported in technical disagreement. Inasmuch
Amendment No. 9: Appropriates $25,000,000 for Rail service oper-
as this amendment relates solely to the Senate and in accord with the
ating payments instead of $40,000,000 as proposed by the Senate.
long standing practice, under which each body determines its own
Amendment No. 10: Reported in technical disagreement. The man-
housekeeping requirements, and concurs without intervention, the
agers on the part of the House will offer a motion to recede and con-
managers on the part of the House will offer a motion to recede and
cur in the amendment of the Senate to permit the addition, as needed,
concur in Senate amendment No. 20.
of the funds appropriated for Rail Service operating payments to the
limitations contained in Section 306 of Public Law 94-134.
UNNUMBERED SENATE AMENDMENT
UNITED STATES RAILWAY ASSOCIATION
The Senate recedes from its amendment to amend the title.
PAYMENTS FOR PURCHASE OF CONRAIL SECURITIES
NATIONAL TRANSPORTATION SAFETY BOARD
Amendment No. 11: Appropriates $500,000,000 for fiscal year 1976
In order for the National Transportation Safety Board to fulfill its
as proposed by the Senate instead of $460,000,000 as proposed by the
responsibilities under Public Law 93-633, Congress provided suffi-
House.
cient funds in the Department of Transportation and Related Agen-
Amendment No. 12: Appropriates $350,000,000 for the transition
cies Appropriations Act (Public Law 94-134) to enable the Board
period as proposed by the House instead of $300,000,000 as proposed
to fill the 85 new positions provided. The Committees on Appropria-
by the Senate.
tions of the House and Senate direct the agency to fill these 85 posi-
Amendment No. 13 Deletes $1,226,000,000 appropriation proposed
tions as expeditiously as possible.
by the Senate for fiscal year 1977.
Amendment No. 14: Restores House provision limiting operating
CONFERENCE TOTALS BY YEARS-WITH COMPARISONS
losses of ConRail to a total of $308,000,000 for fiscal year 1976 and the
transition period to September 30, 1976.
The total new budget (obligational) authority for the fiscal year
Amendment No. 15: Restores House provision appropriating $615,-
1976, the transition period, and the fiscal years 1978 and 1979 recom-
000,000 to become available on September 30, 1976 and limits the
mended by the Committee of Conference, with comparisons to the
budget estimates and the House and Senate bills follows:
H.R. 941
H.R. 941
8
9
Fiscal Year 1976
CONFERENCE GRAND TOTALS-WITH COMPARISONS
Budget estimates of new (obligational) authority (as amended) 1 $472, 800, 000
House bill
464, 100, 000
Budget estimates of new (obligational) authority (as
Senate bill
722, 532, 956
amended)
12 $2, 121, 100, 000
Conference agreement
587,000,000
House bill
2,031,500,000
Conference agreement compared with
Senate bill
2,305,832,956
Budget estimates of new (obligational) authority (as
Conference agreement
2,143,300,000
amended)
+114, 200, 000
Conference agreement compared with :
House bill
+122, 900, 000
Budget estimates of new (obligational) authority (as
Senate bill
-135, 532, 956
amended)
+22, 200, 000
1 Includes $68,700,000 of budget estimates not considered by the House and Senate, but
House bill
+111, 800, 000
considered by the Committee of Conference.
Senate bill
-162, 532, 956
Transition period
1 The total amount of budget requests considered in connection with this resolution was
$2,195,100,000. Of this amount, $74,000,000 was withdrawn after House and Senate action
on the resolution.
Budget estimates of new (obligational) authority (as amended) ¹$322,300,000
2 Includes $89,000,000 of budget estimates not considered by the House and $74,000,000
House bill
966,400,000
not considered by the Senate. The Committee of Conference did consider $89,000,000 of
Senate bill
357,300,000
budget estimates in addition to those considered by the House.
Conference agreement
995, 300, 000
JOHN J. McFall,
Conference agreement compared with:
SIDNEY R. YATES (except
Budget estimates of new (obligational) authority (as
amended
+673, 000, 000
amendments Nos. 11, 12, 13,
House bill
+28, 900, 000
14, 15, and 16),
Senate bill
+638, 000, 000
ToM STEED,
1 Includes $20,300,000 of budget estimates not considered by the House and $5,300,000
ED Koch,
not considered by the Senate. The Committee of Conference considered $20,300,000 of
budget estimates in addition to those considered by the House.
BILL ALEXANDER,
GEORGE MAHON,
Fiscal year 1977
SILVIO O. CONTE (except
Budget estimates of new (obligational) authority (as
amendment No. 7),
amended)
1 $1, 326, 000, 000
JACK EDWARDS,
House bill
E. A. CEDERBERG,
Senate bill
1, 226, 000, 000
Conference agreement
Managers on the Part of the House.
Conference agreement compared with
BIRCH BAYH,
Budget estimates of new (obligational) authority (as
JOHN L. McCLELLAN,
amended)
-1,326,000,000
House bill
ROBERT C. BYRD,
Senate bill
-1, 226, 000, 000
JOHN C. STENNIS,
1 The amount considered by the House and Senate was $1.4 billion. Subsequent to action
WARREN G. MAGNUSON,
by both House and Senate, $74 million in budget estimates were withdrawn.
JOHN O. PASTORE,
THOMAS F. EAGLETON,
Fiscal years 1978 and 1979
CLIFFORD P. CASE,
Budget estimates of new (obligational) authority
TED STEVENS,
House bill
1 $601, 000, 000
CHARLES McC. MATHIAS, Jr.,
Senate bill
Conference agreement
2 561, 000, 000
DICK SCHWEIKER,
Conference agreement compared with
Managers on the Part of the Senate.
Budget estimates of new (obligational) authority
+561, 000, 000
House bill
40, 000, 000
Senate bill
+561, 000, 000
1 Includes $425 million for fiscal year 1978 and $176 million for fiscal year 1979.
2 Includes $425 million for fiscal year 1978 and $136 million for fiscal year 1979.
H.R. 941
H.R. 941
Calendar No. 608
94TH CONGRESS
SENATE
REPORT
2d Session
No. 94-637
SUPPLEMENTAL RAILROAD APPROPRIATIONS
FEBRUARY 19, 1976.-Ordered to be printed
Mr. PASTORE (for Mr. BAYH), from the Committee on Appropriations,
submitted the following
REPORT
[To accompany H. J. Res. 801]
The Committee on Appropriations, to which was referred the reso-
lution (H.J. Res. 801) making supplemental railroad appropriations
for the fiscal year ending June 30, 1976, the period ending September
30, 1976, the fiscal year ending September 30, 1978, and the fiscal year
ending September 30, 1979, and for other purposes, reports the same
with the recommendation that the resolution be passed, and submits
the following explanation of its recommendation.
SUMMARY OF THE RESOLUTION
The central purpose of the Regional Rail Reorganization Act of
1973 was to effectuate the income-based reorganization of the
bankrupt Penn Central Railroad and of six lesser bankrupt rail-
roads serving a 17-State region in the northeastern and midwestern
portion of the Nation. The task of preparing a plan for such a reorga-
nization-the largest corporate reorganization ever attempted and in-
volving certain technical, financial and legal issues for which there
simply was no precedent-was assigned to the United States Railway
Association, which was created under the act to fulfill that function.
The Association, meeting certain statutory deadlines for the com-
pletion of its work, filed its Preliminary System Plan with the Con-
gress on February 26, 1975, and sent Congress its Final System Plan on
July 26, 1975. In accordance with the provisions of the Act, the final
system plan became law and went into effect on November 9, 1975,
in the absence of a disapproval resolution being adopted by either
the House or the Senate.
Under the Act, the creation of the Consolidated Rail Corporation
(ConRail) was also authorized as the new, self-sustaining, private
corporate entity that would acquire such portions of the bankrupt
system (s) as were identified in the Plan as "essential" to the purposes
of the Act; certain other properties of these bankrupt carriers are to
(Star Print) 57-010
2
3
be acquired by profitable railroads operating in the region. Consistent
road Revitalization Act, the Federal Railroad Administration must
with established reorganization concepts and procedures, securities of
have sufficient funds at the outset. Witnesses explained that the
the reorganized entity, along with "certificates of value" issued by the
amounts recommended by the Committee will be used in procurement
Association, are to be issued to those interests entitled thereto in
of long lead-time materials, particularly ties and rail; in making
satisfaction for the rail properties thus transferred to it.
emergency repairs which are' necessary simply to keep the existing
As with any income-based reorganization, the success of this effort
depends upon the ability of the reorganized enterprise (ConRail)
system functioning on a day-to-day basis; and for initial contracts
for detail design for all components of the upgraded system, including
to realize, over a period of time, earnings sufficient to create signifi-
cant value in those securities.
route alignment, track, bridges, tunnels, electrification, signals, and
communications.
In order to effectuate this income based reorganization, the imple-
menting legislation authorizes a Federal investment up to the amount
FEDERAL RAILROAD ADMINISTRATION
of $2.1 billion, and the Administration has submitted a supplemental
appropriation request for the full-amount of the $2.1 billion. The
GRANTS TO NATIONAL RAILROAD PASSENGER CORPORATION
Committee understands that the availability of such funds for use by
the Association to purchase ConRail debentures and series A preferred
Fiscal year 1976
Transition period
stock may be important to document an income-based reorganization.
Government investment is required to create a flow of earnings and
Budget estimate
1 $21, 200, 000
1 $5, 300, 000
cash needed to provide, in turn, significant values in the ConRail
House allowance
Not considered
Not considered
series B preferred stock and common stock to be issued to the estates
Committee recommendation
137, 032, 956
5,300,000
and other transferors.
1 Budget requests pending.
DEPARTMENT OF TRANSPORTATION
The Committee has included $142,332,956 for fiscal year 1976 and
the transition period to be incurred as a result of the takeover and
FEDERAL RAILROAD ADMINISTRATION
operation of rail passenger service in the Midwest and Northeast
region, including the Northeast corridor, as required by the recently
RAIL SERVICE ASSISTANCE
enacted Railroad Revitalization and Regulatory Reform Act of 1976.
Of this amount, $85,182,956 is the cost specified in the final system
Fiscal year 1976
Transition period
plan of the U.S. Railway Association for the purchase of the North-
east corridor right-of-way and passenger-related facilities between
Budget estimate
None
$15, 000, 000
Washington, D.C., and Boston, Mass., and $20 million is for the pur-
House allowance
None
Not considered
chase and improvement of properties necessary for passenger serv-
Committee recommendation
$27, 400, 000
52, 000, 000
ice within the region other than the Washington-Boston corridor.
These properties include short stretches of track or rights-of-way in
the States of Michigan, Indiana, Illinois, New York, and Pennsyl-
The Committee recommends appropriations totaling $79.4 million
vania that are not designated for inclusion in the ConRail system but
for fiscal year 1976 and the transition period for the initial phase of
are vital for the continuation of Amtrak routes as well as certain sta-
the Northeast Corridor Improvement Program.
tions, repair and servicing facilities. Continuation of rail passenger
Title VII of the Railroad Revitalization and Regulatory Reform
operations will permit continued local freight operations as well.
Act of 1976 commits the Federal Government to a five-year, $1.75
Added operating and development expenses for the corridor after
billion program designed to restore and upgrade the Corridor main-
takeover will require an additional appropriation of $37,150,000,
line in order to provide two-hour-and-forty-minute service from New
which the Committee recommends. Of this amount, increased opera-
York to Washington and three-hour-and-forty-minute service from
tions costs for the remainder of fiscal year 1976 will require $21.2
New York to Boston. It is the Committee's belief that maintenance of
million, with $5.3 million recommended for the transition period. These
high standards of passenger comfort coupled with fast, frequent, and
are amounts that will no longer be covered by the Penn Central and
dependable service will reestablish rail as a significant intercity car-
which after takeover will have to be funded by Amtrak. The remainder
rier in this most densely populated region of the Nation and avoid
of the appropriation is required for special nonrecurring costs to be
the otherwise needed expenditures in order to improve other modes of
incurred by Amtrak pursuant to the initial assumption of control and
transportation in the Corridor.
responsibility for maintaining rail operations ($10 million), and for
The Committee views the President's budget request for this pro-
continuation, expansion, and improvement of public radiotelephone
gram as inadequate. No funds have been requested for fiscal 1976 and
service in the corridor ($650,000).
only $15 million is requested for the transition period. Yet, testimony
Prior to the forthcoming transfer of control and responsibility for
received by the Committee makes it clear that in order to meet the
operations in the corridor, the Penn Central railroad has borne a sub-
extremely tight time schedule mandated for this program in the Rail-
stantial portion of the cost of roadbed responsibility, ownership, engi-
S.R. 637
S.R. 637
4
5
neering and support costs for track maintenance, safety, dispatching,
sector of the economy will benefit the total economy in terms of new
and signaling, et cetera. With the takeover of the corridor an ac-
jobs, tax revenues, enlarged productive capacity, and increased
companying shift of these costs is certain and must be funded if serv-
purchasing power.
ice is to be continued. Nonrecurring takeover costs include the purchase
of inventories or the rebuilding of inventories of equipment, materials
Appropriation requirements
and supplies as well as supporting costs incurred as part of the prepa-
Since the Secretary is required to establish the center pursuant to
ration for takeover. The Committee believes that continuation and
section 906 of the act, no specific dollar authorization levels were estab-
expansion of the Metroliner on-board telephone service, which
lished in the act. It is the understanding of the Committee that the
almost terminated last fall because of withdrawal of the frequencies
Secretary plans to request authority to reprogram funds in the amount
involved, is essential if present corridor business travel revenues are
of $175,000 from existing fiscal year 1976 appropriations. It is fur-
to be retained and expanded. The funds recommended are to fund the
ther understood that the Secretary proposes to request additional
engineering necessary for the possible use of other frequencies and for
funds to support the center during the remainder of fiscal year 1976
development of service between Newark and Boston.
and the transition quarter in his second supplemental budget request
to be submitted to the Committee during the month of February 1976.
URBAN MASS TRANSPORTATION ADMINISTRATION
For fiscal year 1977, the Committee directs the Department of Trans-
portation to submit a budget amendment that will provide the funds
Fiscal year 1976
necessary to fully implement the concepts and programs intended
Budget estimate
1 $40, 000, 000
under section 906 of the Railroad Revitalization and Regulatory
Budget estimate
Not considered
Committee recommendation
40, 000, 000
Reform Act of 1976.
1 Budget requests pending.
RELATED AGENCIES
The Committee recommends an appropriation of $40 million to the
Urban Mass Transportation Administration for emergency commuter
UNITED STATES RAILWAY ASSOCIATION
rail subsidies as authorized under section 808 of the Railroad Revitali-
zation and Regulatory Reform Act of 1976. These funds are necessary
ADMINISTRATIVE EXPENSES
to assure the continuity of commuter rail services during fiscal year
1976 by providing a reimbursement to ConRail, other profitable rail-
Fiscal year 1976
Transition period
roads and/or State and local agencies for commuter rail service which
might be adversely affected by the Northeast rail reorganization. These
Budget estimate
$4, 100, 000
$2, 000, 000
funds are also necessary to assure that the congressionally adopted
House allowance
4, 100, 000
1, 400, 000
policy of not allowing cross subsidization between the various services
Committee recommendation
6, 100, 000
None
is implemented. The success of the reorganization depends upon the
elimination of cross subsidization between rail freight and commuter
The Committee recommends a $6,100,000 appropriation for fiscal
services.
year 1976 for the administrative expenses of USRA.
MINORITY RESOURCE CENTER
The Railroad Revitalization and Regulatory Reform Act of 1976
Program concept
increases USRA's administrative expense authorization by $14 mil-
The Minority Resource Center authorized under section 906 of the
lion. The Association had requested supplemental appropriations of
Act provides for the participation by minority business firms, minority
$4.1 million for the current fiscal year and $2 million for the transi-
enterpreneurs, and business firms headed by women as prime contrac-
tion quarter. The Committee received testimony from the Associa-
tors, subcontractors, investors, lessors, and in other business activi-
tion that its administrative expense requirements are changing rapidly
ties and relationships associated with the maintenance rehabilitation,
because of (1) provisions in the new legislation that assign specific
restructuring, improvement, and revitalization of the Nation's rail-
responsibilities to USRA; and (2) the massive technical support es-
roads. The purpose and function of the Center is to facilitate such par-
sential to preparing to litigate the various challenges to the reorga-
ticipation by minorities through the operation of a national program
nization from the estates and their creditors. The Association is now
which provides information; management and technical assistance
requesting that the two supplementals be combined into one amount of
services; marketing data; project feasibility studies; economic re-
$6.1 million with this amount to be made available until Septem-
search and analyses. The general objective of this program is to en-
ber 30, 1976. This will provide additional flexibility and give the As-
large the economic benefits realized from the investment of Federal
sociation an opportunity to adjust to changing requirements over the
funds in private corporate projects. The strengthening of the minority
next few months.
S.R. 637
S.R. 637
6
7
PAYMENT FOR PURCHASE OF CONRAIL SECURITIES
quantification of all the operational changes and improvements, and
rehabilitation and capital programs proposed for ConRail in the Final
Fiscal year 1976
Budget request
$400, 000, 000
System Plan, which quantification was done in 1973 dollars and time-
House allowance
460, 000, 000
phased by year, with the 1973 dollar forecast then being "inflated" in
Committee recommendation
500, 000, 000
accordance with accepted methods. It also understands that the Asso-
ciation also attempted to estimate the extent to which rate relief stem-
Transition Period
Budget request
300, 000, 000
ming from cost inflation would be realized by ConRail, in the process
House allowance
965, 000, 000
assuming both Interstate Commerce Commission authorization of such
Committee recommendation
300, 000, 000
rate increases and the ability of railroads, generally, to implement such
Fiscal year 1977
rate increases based upon supply and demand for transportation by
Budget request
1, 400, 000, 000
rail and by competing modes.
House allowance
None
The Committee recognizes that the financing authorized in P.L. 94-
Committee recommendation
1, 226, 000, 000
210 contemplated a final system plan that included a competitive route
structure provided by participation of the Chessie System and South-
Fiscal year 1978
Budget request
None
ern Railway, and that in view of the inability to execute the labor
House allowance
425, 000, 000
agreements required by section 508 of the Regional Rail Reorganiza-
Committee recommendation
None
tion Act, the alternative industry structure of unified ConRail will
Fiscal year 1979
go into effect and will require more initial government financing than
Budget request
None
was contemplated. It is anticipated that additional authorizing legis-
House allowance
176, 000, 000
lation may be required in order to provide for a similar margin of
Committee recommendation
None
safety contemplated in the original authorizing legislation, and the
The Committee recommends appropriations totaling $2.026 billion
Committee expects a prompt budget request under this new authoriza-
for purchase of ConRail securities. Such appropriations are $74 mil-
tion as soon as it is needed.
lion below the budget requests and the same as the House allow-
The Committee has decided that its proper course of action is to
ances, and are to be made available as follows: fiscal year 1976, $500
provide the $2.026 billion identified as the minimum Federal assistance
million; the transition period, $300 million; and fiscal year 1977,
needed by Unified ConRail, and to provide additional funds if such
$1.226 billion. The House bill would spread these appropriations over
financing is required to document an income-based reorganization.
fiscal years 1976 through 1979.
The Committee fully intends to meet the financing needs of Unified
The Committee has deleted the provisions in the House bill which
ConRail up to the full $2.1 billion authorization as such amounts are
would limit the amounts available to cover future operating losses of
required and to give timely consideration to subsequent authorizations.
the Corporation. We believe that the controls provided in the Railroad
The Committee affirms the expressed congressional intent that a "fair
Revitalization and Regulatory Reform Act are adequate to protect
and equitable" income-based reorganization has here been provided for.
the Government. The act establishes a Finance Committee within
the USRA Board-to be composed of the Secretary of Transportation,
NATIONAL TRANSPORTATION SAFETY BOARD
the Secretary of the Treasury, and the Chairman of the USRA Board
of Directors. In that committee is vested authority to recommend to
In order for the National Transportation Safety Board to fulfill
Congress the termination of further funding of ConRail-through the
its responsibilities under P.L. 93-633, Congress provided sufficient
Government investment to be provided. Under that act, any such
funds in the Department of Transportation and Related Agencies
finding of the Finance Committee together with the comments and
Appropriations Act (P.L. 94-134) for the employment of 85 new posi-
recommendations of the USRA Board, is to be transmitted to the
tions by the NTSB. The Committee hereby directs the agency to fill
Congress within 10 days of the date of such finding, thus giving
such 85 positions as expeditiously as possible.
Congress early notice of any pending ConRail financing or perform-
ance problem.
BUDGET AUTHORITY-OUTLAY EFFECTS
Finally, section 609 of the Railroad Revitalization and Regulatory
Reform Act of 1976 provides that USRA must submit an annual report
Section 308 (a) (1) (B) of the Congressional Budget and Impouna-
to Congress on the performance of ConRail.
ment Control Act of 1974 requires that the report accompanying any
The Committee understands from the Final System Plan, and
bill or resolution providing new budget authority (other than con-
from testimony developed during its hearings on the request, that the
tinuing appropriations) shall contain a projection for the period of 5
Association determined that the minimum needed for such purposes
fiscal years beginning with such fiscal year of budget outlays, asso-
in Federal assistance for Unified ConRail was $2.026 billion. It under-
ciated with the budget authority provided in the bill or resolution, in
stands further that this figure, which the Association believes to be as
each fiscal year in such period.
accurate as possible under the circumstances, was arrived at through
The following table summarizes the budget authority recommended
the application of numerous "point forecasts" which, in essence, were a
in the resolution and the estimated outlays for the subsequent five
fiscal years.
S.R. 637
S.R. 637
8
9
FINANCIAL ASSISTANCE TO STATE AND LOCAL GOVERNMENTS
1979
$46, 000, 000
46, 000, 000
Section 308 (a) (1) (C) of the Congressional Budget and Impound-
ment Control Act of 1974 requires that the report accompanying any
bill or resolution providing new budget authority (other than con-
tinuing appropriations) shall contain a statement of the new budget
authority and budget outlays provided by that bill or resolution for
financial assistance to State and local governments.
1978
$435, 000, 000
435, 000, 000
The amounts recommended in the accompanying resolution contain
$40 million for commuter rail subsidies, a portion of which, under
section 808 of the Railroad Revitalization Act, may be used to reim-
burse State or local agencies for commuter rail service. It is estimated
that the outlays from this appropriation will occur as follows: fiscal
year 1976, $15 million; transition period, $15 million; and fiscal year
Estimated outlays
1977
$10, 000, 000
43, 000, 000
745, 000, 000
798, 000, 000
1977, $10 million.
Transition period
$42, 000, 000
314, 300, 000
356, 300, 000
1976
$658, 532, 956
658, 532, 956
Budget authority
recommended
$710, 532, 956
357, 300, 000
1, 226, 000, 000
2, 293, 832, 956
Fiscal year
Transition period
Total outlays
1976
1977
S.R. 637
S.R. 637
COMPARATIVE STATEMENT OF NEW BUDGET (OBLIGATIONAL) AUTHORITY ESTIMATES AND AMOUNTS
RECOMMENDED IN THE RESOLUTION
Increase (+) or decrease (-)
10
Amount recommended
Senate bill compared with-
Item
Budget estimate
House allowance
by Senate committee
Budget estimates
House resolution
DEPARTMENT OF
TRANSPORTATION
FEDERAL RAILROAD ADMINISTRATION
Rail Service Assistance:
Fiscal year 1976
$27, 400, 000
+ $27, 400, 000
+$27, 400, 000
Transition period
$15, 000, 000
(1)
52, 000, 000
+37, 000, 000
+ 52, 000, 000
S.R. 637
Grants to National Railroad Passenger
Corporation:
Fiscal year 1976
2 21, 200, 000
(1)
137, 032, 956
115, 832, 956
+ 137, 032, 956
Transition period
2 5, 300, 000
(1)
5, 300, 000
+5, 300, 000
Urban Mass Transportation Adminis-
tration
2 40, 000, 000
(1)
40,000,000
40, 000, 000
RELATED AGENCIES
UNITED STATES RAILWAY ASSOCIATION
Administrative expenses:
Fiscal year 1976
4,100,000
$4,100,000
6,100,000
+2, 000, 000
+2, 000, 000
Transition period
2,000,000
1,400,000
2, 000, 000
-1,400,000
Payment for purchase of ConRail stock:
Fiscal year 1976
400, 000, 000
460,000,000
500, 000, 000
+ 100, 000, 000
40, 000, 000
Transition period
300,000,000
965,000,000
300,000,000
- 665, 000, 000
Fiscal year 1977
1, 400, 000, 000
1, 226, 000, 000
- 174, 000, 000
1, 226, 000, 000
Fiscal year 1978
425,000,000
- 425, 000, 000
Fiscal year 1979
176,000,000
- 176, 000, 000
Totals by fiscal year:
Fiscal year 1976
465,300,000
464, 100, 000
710, 532, 956
+ 245, 232, 956
+246, 432, 956
Transition period
322, 300, 000
966,400,000
357,300,000
+ 35, 000, 000
609, 100, 000
Fiscal year 1977
1, 400, 000, 000
1, 226, 000, 000
- 174, 000, 000
+1, 226, 000, 000
Fiscal year 1978
425, 000, 000
425, 000, 000
11
Fiscal year 1979
176,000,000
- 176, 000, 000
Grand total, new budget authority
2, 187, 600, 000
2, 031, 500, 000
2, 293, 832, 956
+ 106, 232, 956
+262, 332, 956
1 Not considered.
2 Budget requests pending.
S.R. 637
94TH CONGRESS
HOUSE OF REPRESENTATIVES
REPORT
2d Session
No. 94-832
SUPPLEMENTAL RAILROAD APPROPRIATIONS
FEBRUARY 11, 1976.-Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
Mr. MAHON, from the Committee on Appropriations,
submitted the following
REPORT
together with
SUPPLEMENTAL AND DISSENTING VIEWS
[To accompany H.J. Res. 801]
The Committee on Appropriations, to which was referred House
Joint Resolution 801, making supplemental railroad appropriations
for the fiscal year 1976, the transition period ending September 30,
1976, and the fiscal years 1978 and 1979, and for other purposes, report
the same to the House without amendment and with the recommenda-
tion that the joint resolution be passed.
SUMMARY OF THE RESOLUTION
The grand total of new budget authority recommended in the
resolution is $1,921,500,000 of which $404,100,000 is for fiscal year 1976
and $916,400,000 is for the transition period. The following table
summarizes the amounts recommended in the resolution in comparison
with the budget estimates contained in S. Doc. 94-128 (November 13,
1975).
Resolution
compared
Estimates
Resolution
with estimates
Fiscal year 1976
$404,100,000
$404,100,000
Transition Period
302,000,000
916,400,000
+$614,400,000
Fiscal year 1977
1,400,000,000
-1,400,000,000
Fiscal year 1978
425,000,000
+425,000,000
Fiscal year 1979
176,000,000
+176,000,000
Total, new budget (obligational) authority
2,106,100,000
1,921,500,000
-184,600,000
57-006.0
2
3
INFLATIONARY IMPACT STATEMENT
ization provided in section 213 of the Regional Rail Reorganization
Clause 2(1) (4) of rule XI of the House of Representatives requires
Act. In addition, $300,000,000 in loan authority has been provided
that each committee report on a bill or resolution shall contain a
under section 215. The final system plan provides that $64,000,000 of
statement as to whether enactment of such bill or resolution may have
the section 215 loans be assumed by ConRail with the balance to be
an inflationary impact on prices and costs in the operation of the
forgiven. If these loans are forgiven, the bankrupt railroads will have
national economy.
had a total of $506,000,000 available for interim operations and
It is a matter of conjecture whether or not any appropriation of
maintenance.
money might be inflationary. The total amount of new budget author-
ity recommended in this resolution is $184,600,000 less than the budget
UNITED STATES RAILWAY ASSOCIATION
request. To the extent that the budget request is inflationary, the
Committee feels that the amounts recommended in the accompanying
PAYMENTS FOR PURCHASE OF CONRAIL SECURITIES
resolution will have a less severe impact on aggregate inflation.
The Committee has recommended that the funding requested be
The Committee has recommended $1,916,000,000 in new budget
(obligational) authority for the purchase of ConRail debentures and
provided over 4 years rather than 2 years as proposed in budget
request. By making these funds available over a longer period, the
senior preferred stock over a four year period. This is $184,000,000
less than the budget request.
Committee believes this will further reduce any inflationary impact
from what otherwise might be forthcoming under the budget request.
The Committee has been closely involved with the rail reorganiza-
tion process and has held eight days of hearings with officials from
HISTORY AND FORMATION OF CONRAIL
USRA, ICC, DOT, and ConRail. These hearings were held as follows:
March 14, 1974, September 12, 1974, December 17, 1974, February 6,
In 1968 the Pennsylvania Railroad and the New York Central
1975, March 3, 1975, April 16, 1975, September 10, 1975, and Decem-
System merged to form the Penn Central Transportation Co. After 2
ber 10, 1975.
years of operation, the Penn Central filed for bankruptcy in the U.S.
The Committee commends the United States Railway Association
District Court for the Eastern District of Pennsylvania. The U.S.
for its dedication and professionalism in completing the final system
District judge who was overseeing the Penn Central bankruptcy
plan. The Committee fully agrees with the plan's funding requirements
proceedings was presented by the trustees with a plan for the orderly
for ConRail and has provided the full amount contemplated by the
cessation of operations and the disposition of its rail properties. At the
final system plan's projections. In addition, the Committee has pro-
same time, it was becoming increasingly clear that without some
vided $75,000,000 as a "margin of safety" to further enhance the
fundamental changes in the nature and extent of railioad operations,
viability of the final system plan. The following table summarizes the
plus outside financial assistance, Penn Central and certain other small
Committee's recommendations:
railroads in the region who had filed for bankruptcy could not continue
UNITED STATES RAILWAY ASSOCIATION-PAYMENTS FOR PURCHASE OF CONRAIL SECURITIES
to provide rail service.
The Regional Rail Reorganization Act of 1973 (P.L. 93-236) sought
Recommended
Resoluion compared with-
to extend the process of railroad bankruptcy proceed ngs to deal with
in United
New budget
Budget esti-
States Railway
(obligational)
United States
the Northeast rail problem. It authorized a planning agency (U.S.
mates of new
Association
authority
Budget estimates
Railway Asso-
Railway Association) to analyze, restructure and crea e an economi-
(obligational)
final system
recommended
of new (obliga-
clation final
authority
plan In the resolution
tional) authority
system plan
cally viable private company (ConRail) to operate those portions of
the bankrupt properties which were found to be economically viable.
United States Railway Associa-
Other properties found not to be economically viable or not related to
tion: Payments for purchase of
ConRail securities:
ConRail's purposes as an operating railroad were to be dealt with
Fiscal year 1976
$400,000,000
Transition period
300,000,000
$698,000,000
$400,000,000
915,000,000
+$615,000,000
+$617,000,000
under different programs which were authorized or to be authorized.
Fiscal year 1977
1,400,000,000
505,000,000
-1,400,000,000
-505,000,000
The act also established a special court to oversee the reorganization
Fiscal year 1978
287,000,000
425,000,000
+425,000,000
+138,000,000
Fiscal year 1979
277,000,000
176,000,000
+176,000,000
-101,000,000
process.
Fiscal year 1980
74,000,000
-74,000,000
After issuing a preliminary plan and analyzing comments and
Total, new budget (obli-
criticisms from interested parties, the United States Railway Associ-
gational) authority
2,100,000,000
1,841,000,000
1,916,000,000
-184,000,000
+75,000,000
ation (USRA) announced its final system plan on July 26, 1975. This
1 United States Railway Association recommendations are for calendar years.
plan became effective on November 9, 1975. Under recent legislation,
, Includes $75,000,000 for a "margin of safety."
the properties of the bankrupt railroads are anticipated to be conveyed
to ConRail by March 31, 1976.
REQUIREMENT FOR ADVANCED APPROPRIATION
During the planning period the U.S. Government has been providing
financial assistance to the bankrupt railroads to assure continued rail
The final system plan calls for $1,841,000,000 of funds to be provided
services. A total of $270,000,000 has been appropriated for the Penn
to ConRail by the Federal government over five years (1976-1980).
Central and certain other railroads in reorganization under the author-
The plan also calls for substantial changes in the fixed plant and opera-
tions of the rail properties to be acquired by ConRail. USRA analyzed
4
5
these changes and attempted to quantify the recommendations in
terms of projected revenues and costs of ConRail operations. These
"MARGIN OF SAFETY" REQUEST
projections are part of the final system plan (vol. 1, pp. 51-67).
USRA believes that ConRail will be a reorganized entity capable of
As previously indicated, the Committee is recommending an
sustaining income producing operations if the assumed level of govern-
additional $75,000,000 to be provided in the transition period as a
ment financing is forthcoming.
"margin of safety." This is a reduction of $184,000,000 from the
Some of the creditors of the bankrupt estates allege that the com-
$259,000,000 requested in the budget. The Committee believes the
pensation to be provided to them in the form of ConRail securities is
additional amount requested is not needed at this time. The Com-
not adequate because ConRail will not be an income producing entity.
mittee, however, recognizes that the long term financial projections
The Supreme Court, in ruling that the Regional Rail Reorganization
contained in the final system plan may be subject to substantial
Act of 1973 is constitutional, indicated that the Act appeared to be an
variations. The Committee further recognizes the possible need for
extension of Congressional power under the Bankruptcy Clause
future appropriations if economic or other conditions warrant addi-
(art. I, sec. 8, U.S. Constitution). However, if the bankrupt estates do
tional Federal financing.
not receive securities equal in value to the "constitutional minimum,"
The Committee is recommending that ConRail's rehabilitation
the Court stated that the estates could sue in the U.S. Court of Claims
program be accelerated and has provided funds at a faster rate than
under the Tucker Act.
was contemplated by the final system plan. An accelerated rehabili-
The creditors have alleged that the securities to be offered to them
tation program should enhance ConRail's financial viability and
are worth less than the "constitutional minumum". It is also alleged
reduce the likelihood that additional Federal funds will be needed.
that the degree of control to be exercised by the Government over
ConRail renders its creation an act of eminent domain. If such con-
RAIL PLANT REHABILITATION PROGRAM
tentions were accepted, the U.S. Government could be faced with
a deficiency judgment, the estimated amount of which varies widely.
Under the final system plan, approximately 51 percent of ConRail's
Under the terms of the final system plan, the creditors of the
funds will be used for additions and improvements to the rail physical
bankrupt estates will receive subordinated preferred stock, certificates
plant. The following is a condensed table showing the projected
of value and all of the common stock of ConRail. The certificates of
sources and uses of funds during the 10-year planning period
value will assure that even if ConRail is not successful the creditors
(1976-1985):
will receive an amount equal to the net liquidation value of the bank-
CONSOLIDATED RAIL CORP.
PRO FORMA SOURCES AND USES OF FUNDS STATEMENT
rupt properties plus interest. If the value of ConRail stock issued to
1976 THROUGH 1985
the creditors is less than the amount guaranteed under the certificate
[Amounts in millions of inflated dollars)
of value instrument, the difference will be an obligation of the U.S.
Government. For this reason, the assured availability of funding
Amount
Percent
necessary to establish sufficient ConRail earnings to support sub-
stantial security values could serve to lower the ultimate cost of the
Sources of funds:
From operations
reorganization process to the United States Government.
$3,583
40
Government finance (series A preferred stock, 7.5 percent debentures)
1,841
21
The Committee believes that the economic viability of ConRail
Issuance of equipment debt
502
17
Issuance of series B Preferred stock, common stock (to the creditors)
421
5
depends upon the assured availability of Federal funds in the amount
Increases in noncurrent liabilities
402
4
contemplated by the final system plan. The Committee further believes
Proceeds from passenger subsidies and payments for passenger asset acquisitions
380
4
Issuance of stock in lieu of dividends
372
4
that with the level of funds provided in the bill the creditors of the
Net proceeds from road, facilities and equipment retirements
162
2
Other
297
3
bankrupt estates will be receiving preferred and common stock in a
company reorganized on an income basis and that the degree of con-
Total, sources of funds
8,960
100
trol recommended is not inappropriate to the government's role as an
Uses of funds:
Acquisition, additions and improvements to the rail physical plant
4,582
51
investor. If the Special Court accepts this position, the Committee
Acquisition, additions and improvements to transportation equipment.
2,121
24
believes that the Federal Government can avoid financial exposure to
Dividends and accretions to Government in the form of series A preferred stock and
cash available
655
7
a large deficiency judgment which might otherwise be forthcoming
Increases in net working capital
579
7
Increases in passenger assets
488
5
under a Tucker Act suit.
Payments of equipment trust certificates
414
5
In order to assure all parties concerned that the Federal financing
Increases in other assets
121
1
needed to rehabilitate and improve the rail properties to be operated
Total, uses of funds
960
100
by ConRail will be available in future years as contemplated by
the final system plan, the Committee has departed from its usual
Source: USRA final system plan, pp. 54, 55.
practice of appropriating funds immediately prior to when they are
The Committee fully concurs in the USRA recommendations con-
needed. The Committee believes this exception to the general appro-
cerning ConRail's fixed plant rehabilitation program as delineated on
priations practice is justified because of the unusual circumstances
pages 65 through 69 of the final system plan, supplemental report
surrounding the reorganization of the rail properties and because of
(transmitted September 18, 1975). As already noted, the Committee
the litigation of the final system plan.
believes that such a rehabilitation program is an essential element of
ConRail's overall efforts to achieve financial viability.
6
7
The Committee fully expects ConRail management to give the most
ConRail will not continue to provide the kind of costly and inefficient
careful consideration to the basic recommendations contained in the
service currently being provided by Penn Central and being financed
plan with respect to fixed rail plant rehabilitation and improvement.
by the Federal Government.
But the Committee also recognizes that specific rehabilitation plans
In the accompanying resolution, the Committee recommends that
will change because of changes in underlying business conditions and
no Federal funds be used for financing operating losses during fiscal
the further continuing evaluation of rail investment priorities by
years 1978 and 1979. The Committee has also included language
ConRail's new management. It is important that such changes be
restricting the amount of Federal funds that can be used to finance
made only on the basis of economic conditions concerning the costs
operating losses during the initial periods of ConRail's operations. In
and projected revenue benefits from rehabilitation programs. The
so doing, the Committee has provided ConRail with a strong incentive
Committee believes that rehabilitation decisions based on noneco-
to attempt to minimize its operating losses.
nomic factors would undermine the financial viability of ConRail.
The chief executive officer of ConRail testified before the Committee
ADMINISTRATIVE EXPENSES
and affirmed his commitment to the execution of an efficient, eco-
nomically sound rehabilitation program based substantially on the
The Committee recommends the full fiscal year 1976 supplemental
analysis conducted by USRA. The Committee strongly urges ConRail
budget request of $4,100,000 for administrative expenses of the United
management to stand by this commitment which will enhance Con-
States Railway Association. These funds are in addition to the
Rail's prospects as an income producing entity while minimizing the
$10,000,000 previously appropriated in the regular fiscal year 1976
already substantial cost to the Federal government.
Department of Transportation and Related Agencies Appropriation
The Committee also received testimony concerning the opportunities
Act. The Committee feels these additional funds will be required for
for restructuring rail service through coordination and joint use of
expenses related to the conveyance of rail properties to ConRail and
facilities by two or more carriers. The final system plan recommends
for the litigation of the final system plan.
several coordination and restructuring plans for implementation. The
For the transition period, the Committee recommends $1,400,000, a
Committee strongly endorses the following recommendation made by
reduction of $600,000 below the budget estimate. After the date of
USRA in the final system plan:
conveyance USRA will have fewer responsibilities and should be
able to significantly reduce its personnel level. Other than the activities
It is recommended that ConRail pursue (service coordina-
related to the litigation of the final system plan, USRA will serve as a
tion opportuntities) aggressively SO that improvements in
trustee for the holdings of the Federal government in ConRail. The
service will not depend totally on the speed with which it can
Committee believes that these responsibilities can be accomplished
rebuild its own lines and so that the total cost to the taxpayer
with the amounts recommended in the resolution.
can be reduced to the absolute minimum.
LIMITATIONS AND LEGISLATIVE PROVISIONS
ACCELERATED REHABILITATION PROGRAM
The following limitations and legislative provisions not heretofore
In testimony before the Committee concerning this request, USRA
carried in connection with any appropriation bill are recommended:
officials urged that the funds to be provided should be provided at a
On page 2 of the resolution, in connection with the amounts to be
faster rate than is contemplated by the final system plan. It was felt
provided to the Consolidated Rail Corporation:
that an accelerated program could provide ConRail with increased
Provided, That not to exceed $278,000,000 shall be made available
financial viability sooner than originally contemplated.
to the Corporation for operating losses of the Corporation.
As previously indicated, the resolution provides these funds at an
accelerated rate. The Committee believes that such an accelerated
Provided, That not to exceed $140,000,000 shall be made available
program could be useful in reducing the level of unemployment in the
to the Corporation for operating losses of the Corporation.
regions where rehabilitation projects are to be undertaken. Since the
Provided, That none of these funds shall be made available to
level of rehabilitation spending contemplated is substantial, the
the Corporation for operating losses of the Corporation.
Committee believes it would also be prudent for USRA and ConRail
not to pursue a program which would tend to push up labor and
BUDGET AUTHORITY-OUTLAY EFFECTS
material prices for rehabilitation and improvement work. This would
tend to reduce the amount of rehabilitation and improvement work
Section 308(a)(1)(B) of the Congressional Budget and Impound-
ultimately to be performed and would be to the economic disadvantage
ment Control Act of 1974 requires that the report accompanying any
of ConRail.
bill or resolution providing new budget authority (other than con-
INTERIM RAIL SERVICES
tinuing appropriations) shall contain a projection for the period of 5
fiscal years beginning with such fiscal year of budget outlays, asso-
The Committee is fully aware that a large portion of the Federal
ciated with the budget authority provided in the bill or resolution, in
funds to be provided in the early years of ConRail's operation will go
each fiscal year in such period.
toward financing operating losses. The Committee believes that it is in
The following table summarizes the budget authority recommended
the best interest of ConRail and the nation that essential rail service
in the resolution and the estimated outlays for the subsequent five
continue to be provided. However, the Committee expects that
fiscal years:
8
9
1981-83
FINANCIAL ASSISTANCE TO STATE AND LOCAL
GOVERNMENTS
Section 308(a) (1) (C) of the Congressional Budget and Impound-
ment Control Act of 1974 requires that the report accompanying any
1980
$26, 000, 000
26, 000, 000
bill or resolution providing new budget authority (other than con-
tinuing appropriations) shall contain a statement of the new budget
authority and budget outlays provided by that bill or resolution for
financial assistance to State and local governments.
The amounts recommended in the accompanying resolution contain
1979
no budget authority or budget outlays for any State or local govern-
$115, 000, 000
150, 000, 000
265, 000, 000
ment for any of the years mentioned in the resolution.
Estimated outlays
1978
$115, 000, 000
310, 000, 000
425, 000, 000
1977
$500, 000, 000
500, 000, 000
Transition
period
$200, 000
301, 400, 000
301, 600, 000
1976
$403, 900, 000
403, 900, 000
Budget
authority
recommended
$404, 100, 000
916, 400, 000
425, 000, 000
176, 000, 000
Fiscal year
Transition period
Total outlay effects
1976
1977
1978
1979
SUPPLEMENTAL VIEWS OF THE HONORABLE SILVIO.O.
CONTE, HONORABLE EDWARD P. BOLAND, HONOR-
ABLE JACK EDWARDS, AND HONORABLE LAWRENCE
COUGHLIN
We support the basic purpose of H.J. Res. 801. By providing the
initial funds for the purchase of ConRail securities by USRA, the
Committee is making possible the restructuring of what will become a
strong and efficient rail system in 17 Northeast/Midwest States SO
long plagued with railroad bankruptcies.
Congressional provision of the Federal investment through USRA
in ConRail is an essential element in the Government's presentation
to a Special Court which will, in the first instance, review the "fairness
and equity" of the overall proceedings since, clearly, ConRail's chances
for becoming financially self-sustaining will be jeopardized without
the asurance that its early capital needs will be met. As stated in
USRA's Final System Plan (page 91) : "If the government does not
provide the needed capital and ConRail falters, the eventual cost to
the government could be greater than the amount of the government
investment recommended in the Final System Plan."
Creditors of the bankrupt estates have alleged that the ConRail
securities to be offered to them in exchange for their claims of the
rail-related assets to be continued in service through ConRail, are
worth less than the "Constitutional minimum"; and the Supreme
Court has stated that the estates could sue the government in the U.S.
Court of Claims, under the Tucker Act, if the bankrupt estates do
not receive securities equal in value to the "Constitutional minimum."
In addition, it is also alleged that the degree of control to be exer-
cised by the government over ConRail renders its creation an act of
eminent domain. If such a contention were accepted, the government
could be faced with a substantial deficiency judgment, the estimate
amount of which varies widely.
For the foregoing reasons, (1) the assured availability of Federal
funding necessary to establish sufficient ConRail earnings to support
values in its securities, and (2) the absence of government controls
over ConRail beyond those appropriate to the government's role as
an investor, could both serve to lower the ultimate cost of the reor-
ganization process to the United States Government.
With regard to the funds provided in H.J. Res. 801, we must point
out that the authorizing legislation (P.L. 94-210) made no distinction
between the $1.841 billion in minimum Federal funds required for
ConRail and the $250 million requested for contingency purposes. In
fact, that distinction first made by USRA was completely eliminated
in P.L. 94-210. The Administration has made clear its support for
the entire $2.1 billion requested for ConRail. The Committee has
(11)
12
13
chosen to provide $1.921 billion, including only $75 million for con-
It is prudent to review the investment controls already in place
tingency purposes. We believe there are significant risks in not pro-
as the result of P.L. 94-210 (The Railroad Revitalization and Regula-
viding the funding which USRA, the Administration, and the author-
tory Reform Act of 1976).
izing committees determined were necessary to sufficiently capitalize
It established a Finance-Committee within the USRA Board-to
the new railroad.
be composed of the Secretary of Transportation, the Secretary of
Nevertheless, we have an even greater concern about the implica-
the Treasury, and the Chairman of the USRA Board of Directors. In
tions of the Committee's action which seeks to limit by statute the
that Committee is vested authority to terminate further funding of
amount of operating losses for ConRail to $418 million during its
ConRail-through the Government investment to be provided-in the
first year and one-half of operations and prohibiting the use of any
event that it makes an affirmative finding that ConRail has failed to
funds provided in the bill for operating losses thereafter.
meet its overall operating (including rehabilitation) and financial re-
We believe those limitations are unwise and unduly restrictive. No
sults as projected for it in the Final System Plan within margins pre-
one argues with the basic purpose-that ConRail should be encour-
scribed by the USRA Board of Directors, or that " it is not reason-
aged to become profitable as soon as possible. Indeed, it is imperative
ably likely, taking into consideration all relevant factors including
that ConRail have the flexibility necessary to represent a successful
the overall operating (including rehabilitation) and financial results
income-based reorganization. Put simply, the extent to which Con-
achieved by the Corporation, that the Corporation will be able to be-
Rail is successful is the extent to which any future exposure to our
come financially self-sustaining without requiring Federal financial
taxpayers for a suit under the Tucker Act by the bankrupt railroads
assistance substantially in excess of the amounts authorized in (P.L.
and their creditors is reduced.
94-210) The reference, here, in the RRRR Act of 1976, is to
We believe that any attempt to restrict the availability of Federal
section 216 thereof: Under the Act, any such affirmative finding,
funds for the purposes of covering only those projected ConRail oper-
together with comments and recommendations of the USRA Board,
ating losses as estimated for it in the FSP would be imprudent and
is to be transmitted to Congress within ten days of the date of such
unduly restrictive of ConRail in its attempt to achieve self-sufficiency.
finding, for review, thus giving Congress early notice of any pending
In the past year, the operating losses of the bankrupts have been
ConRail financing or performance problems.
in excess of $1 million a day. ConRail cannot hope to erase such losses
The investment controls, appropriately exercised, will preclude any
until such time as the benefits of the restructured system, new equip-
undue diversion of Federal funds into the subsidization of continuing
ment, a rehabilitated plant, and the efforts of its new management can
ConRail operating losses. In and of themselves, they are reasonably
begin to show their effect in improved operating results. As projected
and properly reflective of the Government's role as an investor in
in the FSP, ConRail should begin to realize a positive income from
ConRail. Any further governmental controls as imposed by Congress
operations in calendar year 1979, and it should be able to generate
are both unnecessary and would tend to add weight ot the creditors'
a positive cash flow from operations sometime during that calendar
allegation that the Government's influence over ConRail is SO all-
year and each year thereafter. USRA also estimated that ConRail's
persuasive as to reflect a "taking" rather than an income-based
cash operating losses would be $278 million in calendar year 1976,
reorganization.
and $140 million in calendar year 1977, and that, while it should be
The argument is made that the controls contained in H.J. Res. 801
able to break even on operations sometime in calendar year 1978
are merely the legitimate exercise of Congressional oversight powers
that, in that year, it would still need at least $17 million to cover its
comparable to those enjoyed by the Executive Branch through the
estimated deficit in working capital requirements from other sources.
Finance Committee. On the face of it, this seems like a plausible argu-
It is essential to understand that there are only estimates, prepared
ment, but there are some significant and far-reaching differences.
in 1975, and subject to possibly wide variations stemming from such
In essence, the Finance Committee was given the powers appropriate
unforeseeable eventualities as a prolonged strike in the auto or coal
to any investor: that of halting any further investment into a company
industries, or unusually severe storm damages, significant shifts in
if: (1) it violates any covenants of its loan agreement; (2) it fails
the economy, or even a strike by rail labor. If ConRail, by virtue
to obtain the overall results projected in an agreed upon plan; and (3)
of a Congressional limitation on its flexibility to use Federal funds
it cannot achieve the projected results without more money than agreed
to cover such operating losses as may flow therefrom, is placed in
upon in advance.
such a bind, then it could, apparently, either go bankrupt on its own
In examining the legislative history of the Finance Committee it is
or sharply reduce the level of its services to the public, either of which
instructive to read the Conference Report on the Railroad Revitaliza-
results would surely not be in accord with Congressional intent as
tion and Regulatory Reform Act of 1976 (P.L. 94-210). It states "The
now expressed in the RRRR Act of 1976. If the investment controls
Finance Committee, of course, may not freeze the Corporation to the
established in the Rail Act itself did not address the situation, there
specific rehabilitation strategies, priorities or projects in the plan,
might be a basis for such specific appropriations restrictions. Under
since the Corporation should be permitted some flexibility in this
the circumstances, however, such restrictions are not merely unneces-
regard."
sary, they could prove to be utterly self-defeating.
The acton of the Committee in "freezing" ConRail to specific num-
bers for Operating losses is specifically the kind of power Congress
14
denied to the Finance Committee. Congressman Fred Rooney, the floor
manager of the Railroad Revitalization and Regulatory Reform Act
of 1976, stated this type of power was denied to the Finance Commit-
tee because: "What is at stake here is the assurance that the goals of
DISSENTING VIEWS OF THE HONORABLE
a private sector solution and an income-based reorganization will not
be jeopardized by overly detailed government interference with the
WILLIAM L. ARMSTRONG
operations of the railroad." (Congressional Record, January 28, 1976,
A few decades ago the nation's railroads were healthy and prosper-
page H-403.)
We are concerned that the effect of the Committee's constraints
ous. But under the staggering burden imposed by Congress, one rail-
road after another has been forced into bankruptcy. Today eight of
could jeopardize a "private sector solution and an income-based re-
the nation's major Eastern railroads are already in bankruptcy. And
organization" because it will be construed as "overly detailed govern-
ment interference with the operations of the railroad".
much of the rest of the industry is in shaky financial condition. As
profits and incentives have disappeared, equipment has been allowed
We have confidence in the statement made by Congressman Rooney
to wear out or become obsolete; roadbeds have fallen into disrepair;
when discussing the Conference Report on the Railroad Revitalization
service has deteriorated to an incredible extent and the eastern United
and Regulatory Reform Act of 1976
States, heart of industrial America, has ended up with a crippled rail
"The conferees feel strongly that the conference report before the
House along with the already agreed to basic principles on the terms
system.
Why?
and conditions for the purchase of ConRail securities strike the proper
Several factors can be blamed. But Congress and federal regulatory
balance between the protection of the government's interest and the
agencies are largely to blame. The federal government has put SO
need for a private sector solution based on a successful income-based
many restrictions on railroads that profitable operation has become
reorganization." (Congressional Record, January 28, 1976, page
virtually impossible. No wonder the nation's rail system is falling
H-404.)
apart. Unfortunately, however, Congress has reacted to each successive
In legal terms, the Committee's approval on operating losses of
crisis with a characteristic unwillingness to face the issue. Instead of
ConRail needlessly creates a potential imbalance that exposes the
repealing or drastically modifying legislation and regulations which
government to unnecessary risks. In economic terms, for reasons hav-
are strangling the industry, Congress has passed a series of authoriza-
ing nothing to do with its ultimate success and its ability to repay the
tions to subsidize inefficient operations. I have voted against such
government investment, ConRail may be forced into early bankruptcy
measures in the past and I will also vote against H.J. Res. 801.
because of undue rigidity in the availability of government financing
I believe we badly serve the nation by continuing to subsidize rail-
during its start-up years.
SILVIO O. CONTE
road operations without coping with underlying issues including the
JACK EDWARDS.
following:
First, USRA Chairman Arthur D. Lewis has testified, "One of the
LAWRENCE COUGHLIN.
EDWARD P. BOLAND.
major problems affecting the bankrupt carriers in the past has been
significant losses from passenger operations, from the Amtrak con-
tract and from contracts to commuter authorities. We believe it is
absolutely essential that Amtrak pay its full cost and that the com-
muter authorities pay their full cost
either ConRail is permitted
to abandon passenger service, or that they are paid at least the cash
cost for the service. We think that is critical. It is a lot of money but
it has somehow got to be paid by an agency outside the ConRail
Freight operation.
Over a period of 10 years we estimate, based
on the inflation that is going to take place in that next 10 years, that the
negative impact on ConRail, if it had to carry forward the losses cur-
rently experienced and make the capital commitments required to
meet that service, that it would be another financing requirement of
$1,650 million."
Without going into whether or not this is a realistic estimate (such
estimates tend to be too low !), I simply want to ask if there are any
(15)
17
16
Members of the Committee believe will be bolstered by the passage of
plans to put passenger operations on a paying basis except through
this act, the potential liability to the nation's taxpayers may range
continued federal, state and local subsidies for an indefinite period.
upwards of $13 billion, according to information furnished to the
I am not aware of any realistic plan to do SO. So the outlook is for
committee. I have not evaluated this concern. But I have an uneasy
perpetual subsidies, a prospect which is not palatable to me.
feeling that the Committee has not given it sufficiently serious con-
Second, the USRA Chairman called for a sweeping change in regu-
sideration and I wish it were possible to do SO prior to the time this
latory policy "to give ConRail a greater degree of flexibility in pric-
legislation is taken up by the House itself.
ing, both in terms of raising rates on products that are carried today
For these reasons, I intend to vote against H.J. Res. 801.
at below cost, or to permit a more aggressive merchandizing/market-
WILLIAM L. ARMSTRONG.
ing philosophy or policy."
I share Chairman Lewis's concern. The regulatory abuses of the
Interstate Commerce Commission are mind boggling. During the last
85 years, since ICC began superimposing its wisdom on the industry,
the ICC has accumulated a file of some 43 trillion rates
without
an index
In an instance which was recently brought to my attention, one of
the nation's railroads invested $13 million in 500 special hopper cars
in order to permit a rate reduction of 60% in hauling grain. When the
ICC refused to agree to the reduction, it took 4 years of litigation
and 16,000 pages of testimony before the Supreme Court finally per-
mitted the rate reduction made possible by the new cars. In another
instance, the Commission cancelled a 70% rate reduction for transport-
ing coal. There are many similar instances in which the ICC has ham-
strung the industry by forbidding lower rates to attract new business
or higher rates to cover losses. The ICC is wrecking the railroads and
other segments of the transportation industry, costing consumers bil-
lions of dollars a year in higher prices required by ICC regulations
and putting thousands of people out of work. It is no wonder USRA
terms a regulatory policy change "critical." But since there is no assur-
ance that ConRail will receive needed regulatory flexibility, we are
simply sending good money after bad in passing legislation such as
this appropriation.
Third, the industry has been plagued for generations by restrictive
and outmoded labor practices which Congress has tolerated, and to
some degree, has actually fostered. Incredible though it may seem.
trained operating crews are often paid for a full day's work on the
basis of 100 miles or 8 hours, whichever occurs first. This is based on
the 19th century norm of an 8 hour run to cover 100 miles. Today such
a run should take no more than two or three hours. So three crews of
four to five men each are required to run a train 300 miles. If they
were paid on the basis of a standard 8 hour work day, two men could
perform the same service. This is only one of the many examples of
archaic or "make-work" operating work rules in effect on most major
railroads. Is it any wonder SO many of them are in bankruptcy ? So far
as I know, there is no basis to believe ConRail can prosper until mod-
ern work practices can be implemented. This isn't likely to happen
as long as Congress continues to subsidize inefficient work practices
and featherbedding.
Finally, I note the concern of those who believe federal action may
constitute an act of eminent domain. A creditor's suit is now pending,
and, if creditors are successful in establishing their claim, which some
H. J. Res. 801
Ainety-fourth Congress of the United States of America
AT THE SECOND SESSION
Begun and held at the City of Washington on Monday, the nineteenth day of January,
one thousand nine hundred and seventy-six
Joint Resolution
Making supplemental railroad appropriations for the fiscal year ending June 30,
1976, the period ending September 30, 1976, the fiscal year ending September 30,
1978, and the fiscal year ending September 30, 1979, and for other purposes.
Resolved by the Senate and House of Representatives of the United
States of America in Congress assembled, That the following sums are
appropriated, out of any money in the Treasury not otherwise appro-
priated, for the fiscal year ending June 30, 1976, the period ending
September 30, 1976, the fiscal year ending September 30, 1978, and the
fiscal year ending September 30, 1979, and for other purposes, namely
DEPARTMENT OF TRANSPORTATION
FEDERAL RAILROAD ADMINISTRATION
NORTHEAST CORRIDOR IMPROVEMENT PROGRAM
For necessary expenses related to Northeast Corridor improvements
for fiscal year 1976, $25,000,000, to remain available until expended.
For necessary expenses related to Northeast Corridor improvements
for the period July 1, 1976 through September 30, 1976, $25,000,000, to
remain available until expended.
GRANTS TO THE NATIONAL RAILROAD PASSENGER CORPORATION
For additional amounts for "Grants to the National Railroad Pas-
senger Corporation", $36,500,000 to remain available until expended
Provided, That not to exceed $21,200,000 in fiscal year 1976 and
$5,300,000 in the period July 1, 1976, through September 30, 1976, shall
be available for additional operating expenses for the Corporation in
connection with the Corporation's additional operating responsibilities
over the rail properties of the Northeast Corridor; non-recurring costs
related to the initial assumption of control and responsibility for
maintaining rail operations on the Northeast Corridor, $10,000,000.
URBAN MASS TRANSPORTATION ADMINISTRATION
URBAN MASS TRANSPORTATION FUND
RAIL SERVICE OPERATING PAYMENTS
For an additional payment to the Urban Mass Transportation Fund
there is hereby appropriated to remain available until expended, for
the purposes of the Urban Mass Transportation Act of 1964, as
amended by Public Law 94-210, $25,000,000. The amount appropriated
in preceding paragraph shall be added, as needed, to the limitations
contained in section 306 of Public Law 94-134.
H.J. Res. 801-2
UNITED STATES RAILWAY ASSOCIATION
PAYMENTS FOR PURCHASE OF CONRAIL SECURITIES
For acquisition of debentures and series A preferred stock issued by
the Consolidated Rail Corporation to remain available until expended,
$500,000,000 for fiscal year 1976 and $350,000,000 for the period July 1,
1976 through September 30, 1976: Provided, That not to exceed
$308,000,000 shall be made available to the Corporation for operating
losses of the Corporation.
For acquisition of debentures and series A preferred stock issued
by the Consolidated Rail Corporation to become available on Sep-
tember 30, 1976, and to remain available until expended, $615,000,000 :
Provided, That not to exceed $200,000,000 shall be made available to
the Corporation for operating losses of the Corporation.
For acquisition of debentures and series A preferred stock issued by
the Consolidated Rail Corporation to remain available until expended,
$425,000,000 for fiscal year 1978 and $136,000,000 for fiscal year 1979.
ADMINISTRATION EXPENSES
For an additional amount for "Administrative expenses" for fiscal
year 1976, $5,800,000, to remain available until expended.
MISCELLANEOUS PROVISIONS
On and after the date of the enactment of the joint resolution, the
provisions of section 8344 of title 5, United States Code, shall not
apply to any individual serving as a member of the Commission on
the Operation of the Senate.
Speaker of the House of Representatives.
Vice President of the United States and
President of the Senate.
March 26, 1976
Dear Mr. Director:
The following bill was received at the White
House on March 26th:
H.J. Res. 801
Please let the President have reports and
recommendations as to the approval of this bill
as soon as possible.
Sincerely,
Robert D. Linder
Chief Executive Clerk
The Honorable James T. Lynn
Director
Office of Management and Budget
Washington, D.C.
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"ocrText": "The original documents are located in Box 42, folder \"1976/03/30 HJR801 Supplemental\nRailroad Appropriations for 1976\" of the White House Records Office: Legislation Case\nFiles at the Gerald R. Ford Presidential Library.\nCopyright Notice\nThe copyright law of the United States (Title 17, United States Code) governs the making of\nphotocopies or other reproductions of copyrighted material. Gerald R. Ford donated to the United\nStates of America his copyrights in all of his unpublished writings in National Archives collections.\nWorks prepared by U.S. Government employees as part of their official duties are in the public\ndomain. The copyrights to materials written by other individuals or organizations are presumed to\nremain with them. If you think any of the information displayed in the PDF is subject to a valid\ncopyright claim, please contact the Gerald R. Ford Presidential Library.\nExact duplicates within this folder were not digitized.\nfrom Box 42 of the White House Records Office Legislation Case Files at the Gerald R. Ford Presidential Library\nAPPROVED. MAR30 30\n$ 3/30/96\nACTION\nTHE WHITE HOUSE\nLast Day: April 7\nWASHINGTON\nMarch 29, 1976\nPosted\nMEMORANDUM FOR\nTHE PRESIDENT\n3/30\nFROM:\nJIM CANNON\nSUBJECT:\nH.J. Res. 801 - Supplemental\nTo archives\nRailroad Appropriations for 1976,\nthe transition quarter, 1978\nand 1979\n3/30\nAttached for your consideration is H.J. Res. 801, sponsored\nby Representative Mahon, which provides supplemental\nappropriations totalling $2,143,300,000 for purchase\nof ConRail securities, railroad activities of the\nDepartment of Transportation and administrative expenses\nof the United States Railway Association.\nA discussion of the appropriations contained in the\nenrolled bill is provided in OMB's bill report at Tab A.\nOMB recommends approval of the enrolled bill as soon\nas possible so that the planned conveyance of several\nbankrupt railroads in the Northeast and Midwest to the\nConsolidated Railroad Corporation may take place as\nscheduled on April 1, 1976. Bill Seidman, Max Friedersdorf,\nCounsel's Office (Lazarus) and I concur.\nRECOMMENDATION\nThat you sign H.J. Res. 801 at Tab B.\nFORD 1. OFFICE LIBRARY\nOF THE\nRESDENT\nOFFICE\nWITH\nEXECUTIVE OFFICE OF THE PRESIDENT\nUNITED\nOFFICE OF MANAGEMENT AND BUDGET\nSTRUTIVE\nSTATES\nWASHINGTON, D.C. 20503\nMAR 27 1976\nMEMORANDUM FOR THE PRESIDENT\nSubject: Enrolled H.J. Res. 801 - Supplemental Railroad\nAppropriations for 1976, the transition quarter,\n1978, and 1979\nSponsor - Representative Mahon (D), Texas\nLast Day for Action\nApril 7 , 1976 -\nImmediate signature is recommended so that the planned conveyance\nof several bankrupt railroads in the Northeast and Midwest to\nthe Consolidated Railroad Corporation (ConRail) may take place\nas scheduled on April 1, 1976.\nPurpose\nProvides supplemental appropriations totalling $2,143,300,000\nfor purchase of ConRail securities, railroad activities of the\nDepartment of Transportation, and administrative expenses of the\nUnited States Railway Association.\nAgency Recommendation\nOffice of Management and Budget\nApproval\nAffected agencies\nApproval (informally)\nDiscussion\nAppropriations for the U.S. Railway Association\nOf the total $2,143.3 million appropriated in the enrolled bill,\n$2,026 million is to be used by the U.S. Railway Association\n2\nfor the purchase of ConRail debentures and senior preferred\nstock. The appropriation is in the amount you proposed, but\nbecomes available on a different time schedule than you\nrequested, as is shown in the following table:\n(in millions of dollars)\nRequest Enrolled bill Difference\n1976\n400\n500\n100\nTransition quarter\n300\n965\n665\n1977\n1,326\n-1,326\n1978\n425\n425\n1979\n136\n136\nTotal\n2,026\n2,026\nThis revised timing does not affect the main purpose for the\nappropriation: to provide firm Federal commitments to ConRail\nin its first years of operation. The appropriations committees\nbelieve the revised availability of funds will provide greater\nCongressional control. Outlays will not be significantly\naffected by the revised budget authority timing.\nDespite adequate and flexible safeguards in the authorizing\nlegislation, the enrolled bill limits the use of appropriations\nfor ConRail operating losses. This provision was not requested\nand may later prove to be unduly restrictive.\nThe enrolled bill provides $300,000 less than the $6.1 million\nrequested for administrative expenses of the U.S. Railway\nAssociation, but some of the funds are made available earlier\nthan requested. No significant problems are expected as a\nresult of the decrease.\nAppropriations for the Department of Transportation\nThe Congress provided an additional $35 million to fund the\ninitial phase of the Northeast Corridor Improvement Program.\nThis program, established by the Railroad Revitalization and\nRegulatory Reform Act of 1976, aims to improve commuter rail\nservice between New York, Washington, and Boston. The report\nof the Senate Appropriations Committee deemed your requests\nfor this program \"inadequate\" and cited the need to provide\nat the outset sufficient funds to meet the tight time\nschedule mandated for this program. The amount provided is\nto be used to procure long lead-time materials, make emergency\nrepairs necessary to keep the existing system functioning,\nand contract for detail design of the upgraded system.\n3\nYour request to provide an additional $12 million in interim\noperating assistance to those bankrupt railroads being reor-\nganized into ConRail was denied. The request was made in\norder to prevent service and employee cutbacks and ensure\ncontinuation of essential rail service. House-Senate\nconferees, in their report on this resolution, stated that\nit was not their intention that the suppliers of the bankrupt\nrailroads be denied payment of legitimate claims and that,\nif necessary, they would consider a subsequent request.\nThe $31.7 million requested for grants to the National\nRailroad Passenger Corporation was based on the best estimates\navailable. The degree of uncertainty associated with the\nestimates is, however, high enough to preclude claims of\nadverse effects from the Congressional reduction of $500,000.\nNational Transportation Safety Board\nThe reports of both the Senate Appropriations Committee and\nthe conference committee contain a directive to the National\nTransportation Safety Board to fill the 85 new positions\nprovided for in their regular 1976 appropriation. The Board\nplans to comply with this directive.\nEffect of Congressional Action\nCongressional action on your requests for this resolution\nadded $22.2 million in budget authority. The distribution\nof this budget authority over the appropriate fiscal periods\nand the associated outlay estimate changes are shown in the\nfollowing table:\n(in millions of dollars)\nBudget Authority\nOutlays\n1976\n114\n-12\nTQ\n673\n---\n1977\n-1,326\n35\n1978\n425\n---\n1979\n136\n---\nRecommendation\nI recommend that you sign the enrolled bill before midnight\nTuesday, March 30. Signature by then will allow the minimum\ntime necessary for Treasury to issue warrants and thus allow\nConRail to receive the scheduled conveyance on April 1.\nJoses Lynn day\nEXECUTIVE OFFICE OF THE PRESIDENT\n/10r 3-29-74 a.m.\nOFFICE OF MANAGEMENT AND BUDGET\nWASHINGTON, D.C. 20503\nMAR 27 1976\nMEMORANDUM FOR THE PRESIDENT\nSubject: Enrolled H.J. Res. 801 - Supplemental Railroad\nAppropriations for 1976, the transition quarter,\n1978, and 1979\nSponsor - Representative Mahon (D), Texas\nLast Day for Action\nApril 7 , 1976 -\nImmediate signature is recommended so that the planned conveyance\nof several bankrupt railroads in the Northeast and Midwest to\nthe Consolidated Railroad Corporation (ConRail) may take place\nas scheduled on April 1, 1976.\nPurpose\nProvides supplemental appropriations totalling $2,143,300,000\nfor purchase of ConRail securities, railroad activities of the\nDepartment of Transportation, and administrative expenses of the\nUnited States Railway Association.\nAgency Recommendation\nOffice of Management and Budget\nApproval\nAffected agencies\nApproval (informally)\nDiscussion\nAppropriations for the U.S. Railway Association\nOf the total $2,143.3 million appropriated in the enrolled bill,\n$2,026 million is to be used by the U.S. Railway Association\nTHE WHITE HOUSE\nACTION MEMORANDUM\nWASHINGTON\nLOG NO.:\nDate: March 29\nTime:\n1000am\nFOR ACTION: Judy Hope an\ncc (for information): Jack Marsh\nMax Friedersdorf\nJim Cavanaugh\nKen Lazarus ca\nEd Schmults\nBill Seidman\nan\nFROM THE STAFF SECRETARY\nDUE: Date: March 29\nTime: 400pm\nSUBJECT:\nH.J. Res 801 - Supplemental Railroad\nAppropriations for 1976, the transition quarter\n1978 and 1979\nACTION REQUESTED:\nFor Necessary Action\nFor Your Recommendations\nPrepare Agenda and Brief\nDraft Reply\nX For Your Comments\nDraft Remarks\nREMARKS:\nPlease return to Judy Johnston, Ground Floor West Wing\n( TORE 1\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\nTHE WHITE HOUSE\nWASHINGTON\nMarch 29, 1976\nMEMORANDUM FOR:\nJIM CAVANAUGH\nFROM:\nMAX L. FRIEDERSDORF m.6.\nSUBJECT:\nH. J. Res. 801 Supplemental Railroad Appropriations\nfor 1976, the transition quarter 1978 and 1979\nThe Office of Legislative Affairs concurs with the agencies\nthat the bill be signed.\nAttachments\nTHE WHITE HOUSE\nACTION MEMORANDUM\nWASHINGTON\nLOG NO.:\nDate: March 29\nTime:\n1000am\nFOR ACTION: Judy Hope\nCC (for information):\nJack Marsh\nMax Friedersdorf\nJim Cavanaugh\nKen Lazarus\nEd Schmults\nBill Seidman\nFROM THE STAFF SECRETARY\nDUE: Date: March 29\nTime: 400pm\nSUBJECT:\nH.J. Res 801 - Supplemental Railroad\nAppropriations for 1976, the transition quarter\n1978 and 1979\nACTION REQUESTED:\nFor Necessary Action\nFor Your Recommendations\nPrepare Agenda and Brief\nDraft Reply\nX For Your Comments\nDraft Remarks\nREMARKS:\nPlease return to Judy Johnston, Ground Floor West Wing\nNo objection.\nKen Lazarus\nPLEASE ATTACH THIS COPY TO MATERIAL SUBMITTED.\nIf you have any questions or if you anticipate a\ndelay in submitting The required material, please\nJames H. Common\nielephone the Staff Secretary immediately.\nFor the Pendicial\n94TH CONGRESS\nHOUSE OF REPRESENTATIVES\nREPORT\n2d Session\nNo. 94-941\nMAKING SUPPLEMENTAL APPROPRIATIONS, FISCAL\nYEAR 1975\nMARCH 22, 1976.-Ordered to be printed\nMr. McFALL, from the committee of conference\nsubmitted the following\nCONFERENCE REPORT\n[To accompany H.J. Res. 801]\nThe committee of conference on the disagreeing votes of the two\nHouses on the amendments of the Senate to the bill (H.J. Res. 801)\n\"making supplemental railroad appropriations for the fiscal year end-\ning June 30, 1976, the period ending September 30, 1976, the fiscal\nyear ending September 30, 1978, and the fiscal year ending Septem-\nber 30, 1979, and for other purposes,\" having met, after full and free\nconference, have agreed to recommend and do recommend to their re-\nspective Houses as follows:\nThat the Senate recede from its amendments numbered 1, 2, 6, 12,\n13, 14, and its unnumbered amendment to amend the title of the Joint\nResolution.\nThat the House recede from its disagreement to the amendments of\nthe Senate numbered 8, 11, and 19, and agree to the same.\nAmendment numbered 3 :\nThe the House recede from its disagreement to the amendment of\nthe Senate numbered 3, and agree to the same with an amendment as\nfollows:\nIn lieu of the matter proposed by said amendment insert\nDEPARTMENT OF TRANSPORTATION\nFEDERAL RAILROAD ADMINISTRATION\nNORTHEAST CORRIDOR IMPROVEMENT PROGRAM\nAnd the Senate agree to the same.\nAmendment numbered 4:\nThat the House recede from its disagreement to the amendment of\nthe Senate numbered 4, and agree to the same with an amendment as\nfollows:\n57-006 O\n2\n3\nIn lieu of the sum named by said amendment insert $25,000,000;\nAmendment numbered 16:\nand the Senate agree to the same.\nThat the House recede from its disagreement to the amendment of\nAmendment numbered 5:\nthe Senate numbered 16, and agree to the same with an amendment as\nThat the House recede from its disagreement to the amendment of\nfollows:\nthe Senate numbered 5, and agree to the same with an amendment as\nRestore the matter stricken by said amendment amended to read as\nfollows:\nfollows:\nIn lieu of the sum named by said amendment insert $25,000,000;\nFor acquisition of debentures and series A preferred\nand the Senate agree to the same.\nstock issued by the Consolidated Rail Corporation to re-\nAmendment numbered 7:\nmain available until expended, $425,000,000 for fiscal\nThat the House recede from its disagreement to the amendment of\nyear 1978 and $136,000,000 for fiscal year 1979.\nthe Senate numbered 7, and agree to the same with an amendment as\nAnd the Senate agree to the same.\nfollows:\nAmendment numbered 17:\nIn lieu of the matter proposed by said amendment insert:\nThat the House recede from its disagreement to the amendment of\nthe Senate numbered 17, and agree to the same with an amendment\nGRANTS TO THE NATIONAL RAILROAD PASSENGER\nas follows:\nCORPORATION\nIn lieu of the sum proposed by said amendment insert $5,800,000;\nand the Senate agree to the same.\nFor additional amounts for \"Grants to the National\nThe committee of conference report in disagreement amendments\nRailroad Passenger Corporation,\" $36,500,000 to remain\nnumbered 10, 18, and 20.\navailable until expended: Provided, That not to exceed\nJOHN J. McFALL,\n$21,200,000 in fiscal year 1976 and $5,300,000 in the period\nSIDNEY R. YATES (except\nJuly 1, 1976 through September 30, 1976 shall be avail-\namendments Nos. 11, 12,\nable for additional operating expenses for the Corpora-\n13, 14, 15, and 16),\ntion in connection with the Corporation's additional\nToM STEED,\noperating responsibilities over the rail properties of the\nED Koch,\nNortheast Corridor; non-recurring costs related to the\nBILL ALEXANDER,\ninitial assumption of control and responsibility for main-\nGEORGE MAHON,\ntaining rail operations on the Northeast Corridor,\nSILVIO O. CONTE (except\n$10,000,000.\namendment No. 7),\nAnd the Senate agree to the same.\nJACK EDWARDS,\nE. A. CEDERBERG,\nAmendment numbered 9:\nManagers on the Part of the House.\nThat the House recede from its disagreement to the amendment of\nBIRCH BAYH,\nthe Senate numbered 9, and agree to the same with an amendment as\nfollows:\nJOHN L. McCLELLAN,\nROBERT C. BYRD,\nIn lieu of the sum named by said amendment insert $25,000,000; and\nJOHN C. STENNIS,\nthe Senate agree to the same.\nWARREN G. MAGNUSON,\nAmendment numbered 15\nJOHN O. PASTORE,\nThat the House recede from its disagreement to the amendment of\nTHOMAS F. EAGLETON,\nthe Senate numbered 15, and agree to the same with an amendment as\nCLIFFORD P. CASE,\nfollows:\nTED STEVENS,\nRestore the matter stricken by said amendment amended to read as\nCHARLES McC. MATHIAS, Jr.,\nfollows:\nDICK SCHWEIKER,\nFor acquisition of debentures and series A preferred\nManagers on the Part of the Senate.\nstock issued by the Consolidated Rail Corporation to be-\ncome available on September 30, 1976, and to remain\navailable until expended, $615,000,000; Provided, That\nnot to exceed $200,000,000 shall be made available to the\nCorporation for operating losses of the Corporation.\nAnd the Senate agree to the same.\nH.R. 941\nH.R. 941\nJOINT EXPLANATORY STATEMENT OF THE COMMITTEE\nOF CONFERENCE\nThe managers on the part of the House and the Senate at the con-\nference on the disagreeing votes of the two Houses on the amendments\nof the Senate to the joint resolution (H.J. Res. 801) making supple-\nmental railroad appropriations for the fiscal year ending June 30,\n1976, and the period ending September 30, 1976, the fiscal year ending\nSeptember 30, 1978, and the fiscal year ending September 30, 1979, and\nfor other purposes, submitted the following joint statement to the\nHouse and the Senate in explanation of the effect of the action agreed\nupon by the managers and recommended in the accompanying confer-\nence report.\nAmendments Nos. 1 and 2: Conform enacting clause as proposed by\nthe House.\nDEPARTMENT OF TRANSPORTATION\nFEDERAL RAILROAD ADMINISTRATION\nAmendment No. 3: Includes heading for Northeast Corridor im-\nprovement program.\nAmendment No. 4: Appropriates $25,000,000 for fiscal year 1976 for\nthe Northeast Corridor improvement program instead of $27,400,000\nas proposed by the Senate.\nAmendment No. 5: Appropriates $25,000,000 for the transition pe-\nriod for the Northeast Corridor improvement program instead of $52,-\n000,000 as proposed by the Senate.\nAmendment No. 6: Deletes $12,000,000 appropriation proposed by\nthe Senate for interim operating assistance.\nIt is not the intention of the conferees that the suppliers of the bank-\nrupt railroads be denied payment of legitimate claims. The conferees\nare in agreement that, if necessary, a subsequent budget request for\nthese claims will be considered.\nAmendment No. 7: Appropriates $36,500,000 for Grants to the Na-\ntional Railroad Passenger Corporation (Amtrak) instead of $142,-\n332,956 as proposed by the Senate.\nThe conference agreement includes $21,200,000 for fiscal year 1976\nand $5,300,000 for the transition period for Amtrak's additional costs\nfor operating over the rail properties of the Northeast Corridor. The\nconference agreement also includes $10,000,000 for non-recurring in-\nventory and equipment costs associated with rail passenger operations\nalong the Northeast Corridor.\n(5)\nH.R. 941\n6\n7\nThe conference agreement has deleted the following items which\namount of these funds which can be used for operating losses of Con-\nwere inserted by the Senate:\nRail to $200,000,000 instead of $172,000,000 as proposed by the House.\nAmendment No. 16: Appropriates $425,000,000 as proposed by the\nAcquiring properties of the Northeast Corridor\n$85, 182, 956\nDevelopment and utilization of mobile radio frequencies for high\nHouse for fiscal year 1978 and $136,000,000 for fiscal year 1979 instead\nspeed rail telephone service\n650, 000\nof $176,000,000 as proposed by the House. In addition, the conference\nAcquiring and improving properties designated in accordance with\nagreement deletes the House provision to prohibit any of these funds\nsection 206 (c) (1) (D) of the Regional Rail Reorganization Act of\nto be used for operating losses of ConRail.\n1973\n20, 000, 000\nThe issue of lease or purchase of the Northeast Corridor is to be\nADMINISTRATIVE EXPENSES\nresolved by the parties involved. However, in the event an agreement\nis reached pursuant to which Amtrak will purchase the Northeast Cor-\nAmendment No. 17 : Appropriates $5,800,000 instead of $4,100,000 as\nridor properties, the conferees do not intend that either ConRail or\nproposed by the House and $6,100,000 as proposed by the Senate.\nAmtrak should be required to pay any funds or properties to the pres-\nAmendment No. 18: Reported in technical disagreement. The man-\nent owners of the Northeast Corridor rail properties for acquisition\nagers on the part of the House will offer a motion to recede and concur\nof such properties.\nin the amendment of the Senate to permit the funds appropriated to\nremain available until expended.\nURBAN MASS TRANSPORTATION ADMINISTRATION\nAmendment No. 19: Deletes $1,400,000 appropriation proposed by\nthe House for the transition period.\nURBAN MASS TRANSPORTATION FUND\nMISCELLANEOUS PROVISIONS\nAmendment No. 8: Inserts heading for rail service operating pay-\nments as proposed by the Senate.\nAmendment No. 20: Reported in technical disagreement. Inasmuch\nAmendment No. 9: Appropriates $25,000,000 for Rail service oper-\nas this amendment relates solely to the Senate and in accord with the\nating payments instead of $40,000,000 as proposed by the Senate.\nlong standing practice, under which each body determines its own\nAmendment No. 10: Reported in technical disagreement. The man-\nhousekeeping requirements, and concurs without intervention, the\nagers on the part of the House will offer a motion to recede and con-\nmanagers on the part of the House will offer a motion to recede and\ncur in the amendment of the Senate to permit the addition, as needed,\nconcur in Senate amendment No. 20.\nof the funds appropriated for Rail Service operating payments to the\nlimitations contained in Section 306 of Public Law 94-134.\nUNNUMBERED SENATE AMENDMENT\nUNITED STATES RAILWAY ASSOCIATION\nThe Senate recedes from its amendment to amend the title.\nPAYMENTS FOR PURCHASE OF CONRAIL SECURITIES\nNATIONAL TRANSPORTATION SAFETY BOARD\nAmendment No. 11: Appropriates $500,000,000 for fiscal year 1976\nIn order for the National Transportation Safety Board to fulfill its\nas proposed by the Senate instead of $460,000,000 as proposed by the\nresponsibilities under Public Law 93-633, Congress provided suffi-\nHouse.\ncient funds in the Department of Transportation and Related Agen-\nAmendment No. 12: Appropriates $350,000,000 for the transition\ncies Appropriations Act (Public Law 94-134) to enable the Board\nperiod as proposed by the House instead of $300,000,000 as proposed\nto fill the 85 new positions provided. The Committees on Appropria-\nby the Senate.\ntions of the House and Senate direct the agency to fill these 85 posi-\nAmendment No. 13 Deletes $1,226,000,000 appropriation proposed\ntions as expeditiously as possible.\nby the Senate for fiscal year 1977.\nAmendment No. 14: Restores House provision limiting operating\nCONFERENCE TOTALS BY YEARS-WITH COMPARISONS\nlosses of ConRail to a total of $308,000,000 for fiscal year 1976 and the\ntransition period to September 30, 1976.\nThe total new budget (obligational) authority for the fiscal year\nAmendment No. 15: Restores House provision appropriating $615,-\n1976, the transition period, and the fiscal years 1978 and 1979 recom-\n000,000 to become available on September 30, 1976 and limits the\nmended by the Committee of Conference, with comparisons to the\nbudget estimates and the House and Senate bills follows:\nH.R. 941\nH.R. 941\n8\n9\nFiscal Year 1976\nCONFERENCE GRAND TOTALS-WITH COMPARISONS\nBudget estimates of new (obligational) authority (as amended) 1 $472, 800, 000\nHouse bill\n464, 100, 000\nBudget estimates of new (obligational) authority (as\nSenate bill\n722, 532, 956\namended)\n12 $2, 121, 100, 000\nConference agreement\n587,000,000\nHouse bill\n2,031,500,000\nConference agreement compared with\nSenate bill\n2,305,832,956\nBudget estimates of new (obligational) authority (as\nConference agreement\n2,143,300,000\namended)\n+114, 200, 000\nConference agreement compared with :\nHouse bill\n+122, 900, 000\nBudget estimates of new (obligational) authority (as\nSenate bill\n-135, 532, 956\namended)\n+22, 200, 000\n1 Includes $68,700,000 of budget estimates not considered by the House and Senate, but\nHouse bill\n+111, 800, 000\nconsidered by the Committee of Conference.\nSenate bill\n-162, 532, 956\nTransition period\n1 The total amount of budget requests considered in connection with this resolution was\n$2,195,100,000. Of this amount, $74,000,000 was withdrawn after House and Senate action\non the resolution.\nBudget estimates of new (obligational) authority (as amended) ¹$322,300,000\n2 Includes $89,000,000 of budget estimates not considered by the House and $74,000,000\nHouse bill\n966,400,000\nnot considered by the Senate. The Committee of Conference did consider $89,000,000 of\nSenate bill\n357,300,000\nbudget estimates in addition to those considered by the House.\nConference agreement\n995, 300, 000\nJOHN J. McFall,\nConference agreement compared with:\nSIDNEY R. YATES (except\nBudget estimates of new (obligational) authority (as\namended\n+673, 000, 000\namendments Nos. 11, 12, 13,\nHouse bill\n+28, 900, 000\n14, 15, and 16),\nSenate bill\n+638, 000, 000\nToM STEED,\n1 Includes $20,300,000 of budget estimates not considered by the House and $5,300,000\nED Koch,\nnot considered by the Senate. The Committee of Conference considered $20,300,000 of\nbudget estimates in addition to those considered by the House.\nBILL ALEXANDER,\nGEORGE MAHON,\nFiscal year 1977\nSILVIO O. CONTE (except\nBudget estimates of new (obligational) authority (as\namendment No. 7),\namended)\n1 $1, 326, 000, 000\nJACK EDWARDS,\nHouse bill\nE. A. CEDERBERG,\nSenate bill\n1, 226, 000, 000\nConference agreement\nManagers on the Part of the House.\nConference agreement compared with\nBIRCH BAYH,\nBudget estimates of new (obligational) authority (as\nJOHN L. McCLELLAN,\namended)\n-1,326,000,000\nHouse bill\nROBERT C. BYRD,\nSenate bill\n-1, 226, 000, 000\nJOHN C. STENNIS,\n1 The amount considered by the House and Senate was $1.4 billion. Subsequent to action\nWARREN G. MAGNUSON,\nby both House and Senate, $74 million in budget estimates were withdrawn.\nJOHN O. PASTORE,\nTHOMAS F. EAGLETON,\nFiscal years 1978 and 1979\nCLIFFORD P. CASE,\nBudget estimates of new (obligational) authority\nTED STEVENS,\nHouse bill\n1 $601, 000, 000\nCHARLES McC. MATHIAS, Jr.,\nSenate bill\nConference agreement\n2 561, 000, 000\nDICK SCHWEIKER,\nConference agreement compared with\nManagers on the Part of the Senate.\nBudget estimates of new (obligational) authority\n+561, 000, 000\nHouse bill\n40, 000, 000\nSenate bill\n+561, 000, 000\n1 Includes $425 million for fiscal year 1978 and $176 million for fiscal year 1979.\n2 Includes $425 million for fiscal year 1978 and $136 million for fiscal year 1979.\nH.R. 941\nH.R. 941\nCalendar No. 608\n94TH CONGRESS\nSENATE\nREPORT\n2d Session\nNo. 94-637\nSUPPLEMENTAL RAILROAD APPROPRIATIONS\nFEBRUARY 19, 1976.-Ordered to be printed\nMr. PASTORE (for Mr. BAYH), from the Committee on Appropriations,\nsubmitted the following\nREPORT\n[To accompany H. J. Res. 801]\nThe Committee on Appropriations, to which was referred the reso-\nlution (H.J. Res. 801) making supplemental railroad appropriations\nfor the fiscal year ending June 30, 1976, the period ending September\n30, 1976, the fiscal year ending September 30, 1978, and the fiscal year\nending September 30, 1979, and for other purposes, reports the same\nwith the recommendation that the resolution be passed, and submits\nthe following explanation of its recommendation.\nSUMMARY OF THE RESOLUTION\nThe central purpose of the Regional Rail Reorganization Act of\n1973 was to effectuate the income-based reorganization of the\nbankrupt Penn Central Railroad and of six lesser bankrupt rail-\nroads serving a 17-State region in the northeastern and midwestern\nportion of the Nation. The task of preparing a plan for such a reorga-\nnization-the largest corporate reorganization ever attempted and in-\nvolving certain technical, financial and legal issues for which there\nsimply was no precedent-was assigned to the United States Railway\nAssociation, which was created under the act to fulfill that function.\nThe Association, meeting certain statutory deadlines for the com-\npletion of its work, filed its Preliminary System Plan with the Con-\ngress on February 26, 1975, and sent Congress its Final System Plan on\nJuly 26, 1975. In accordance with the provisions of the Act, the final\nsystem plan became law and went into effect on November 9, 1975,\nin the absence of a disapproval resolution being adopted by either\nthe House or the Senate.\nUnder the Act, the creation of the Consolidated Rail Corporation\n(ConRail) was also authorized as the new, self-sustaining, private\ncorporate entity that would acquire such portions of the bankrupt\nsystem (s) as were identified in the Plan as \"essential\" to the purposes\nof the Act; certain other properties of these bankrupt carriers are to\n(Star Print) 57-010\n2\n3\nbe acquired by profitable railroads operating in the region. Consistent\nroad Revitalization Act, the Federal Railroad Administration must\nwith established reorganization concepts and procedures, securities of\nhave sufficient funds at the outset. Witnesses explained that the\nthe reorganized entity, along with \"certificates of value\" issued by the\namounts recommended by the Committee will be used in procurement\nAssociation, are to be issued to those interests entitled thereto in\nof long lead-time materials, particularly ties and rail; in making\nsatisfaction for the rail properties thus transferred to it.\nemergency repairs which are' necessary simply to keep the existing\nAs with any income-based reorganization, the success of this effort\ndepends upon the ability of the reorganized enterprise (ConRail)\nsystem functioning on a day-to-day basis; and for initial contracts\nfor detail design for all components of the upgraded system, including\nto realize, over a period of time, earnings sufficient to create signifi-\ncant value in those securities.\nroute alignment, track, bridges, tunnels, electrification, signals, and\ncommunications.\nIn order to effectuate this income based reorganization, the imple-\nmenting legislation authorizes a Federal investment up to the amount\nFEDERAL RAILROAD ADMINISTRATION\nof $2.1 billion, and the Administration has submitted a supplemental\nappropriation request for the full-amount of the $2.1 billion. The\nGRANTS TO NATIONAL RAILROAD PASSENGER CORPORATION\nCommittee understands that the availability of such funds for use by\nthe Association to purchase ConRail debentures and series A preferred\nFiscal year 1976\nTransition period\nstock may be important to document an income-based reorganization.\nGovernment investment is required to create a flow of earnings and\nBudget estimate\n1 $21, 200, 000\n1 $5, 300, 000\ncash needed to provide, in turn, significant values in the ConRail\nHouse allowance\nNot considered\nNot considered\nseries B preferred stock and common stock to be issued to the estates\nCommittee recommendation\n137, 032, 956\n5,300,000\nand other transferors.\n1 Budget requests pending.\nDEPARTMENT OF TRANSPORTATION\nThe Committee has included $142,332,956 for fiscal year 1976 and\nthe transition period to be incurred as a result of the takeover and\nFEDERAL RAILROAD ADMINISTRATION\noperation of rail passenger service in the Midwest and Northeast\nregion, including the Northeast corridor, as required by the recently\nRAIL SERVICE ASSISTANCE\nenacted Railroad Revitalization and Regulatory Reform Act of 1976.\nOf this amount, $85,182,956 is the cost specified in the final system\nFiscal year 1976\nTransition period\nplan of the U.S. Railway Association for the purchase of the North-\neast corridor right-of-way and passenger-related facilities between\nBudget estimate\nNone\n$15, 000, 000\nWashington, D.C., and Boston, Mass., and $20 million is for the pur-\nHouse allowance\nNone\nNot considered\nchase and improvement of properties necessary for passenger serv-\nCommittee recommendation\n$27, 400, 000\n52, 000, 000\nice within the region other than the Washington-Boston corridor.\nThese properties include short stretches of track or rights-of-way in\nthe States of Michigan, Indiana, Illinois, New York, and Pennsyl-\nThe Committee recommends appropriations totaling $79.4 million\nvania that are not designated for inclusion in the ConRail system but\nfor fiscal year 1976 and the transition period for the initial phase of\nare vital for the continuation of Amtrak routes as well as certain sta-\nthe Northeast Corridor Improvement Program.\ntions, repair and servicing facilities. Continuation of rail passenger\nTitle VII of the Railroad Revitalization and Regulatory Reform\noperations will permit continued local freight operations as well.\nAct of 1976 commits the Federal Government to a five-year, $1.75\nAdded operating and development expenses for the corridor after\nbillion program designed to restore and upgrade the Corridor main-\ntakeover will require an additional appropriation of $37,150,000,\nline in order to provide two-hour-and-forty-minute service from New\nwhich the Committee recommends. Of this amount, increased opera-\nYork to Washington and three-hour-and-forty-minute service from\ntions costs for the remainder of fiscal year 1976 will require $21.2\nNew York to Boston. It is the Committee's belief that maintenance of\nmillion, with $5.3 million recommended for the transition period. These\nhigh standards of passenger comfort coupled with fast, frequent, and\nare amounts that will no longer be covered by the Penn Central and\ndependable service will reestablish rail as a significant intercity car-\nwhich after takeover will have to be funded by Amtrak. The remainder\nrier in this most densely populated region of the Nation and avoid\nof the appropriation is required for special nonrecurring costs to be\nthe otherwise needed expenditures in order to improve other modes of\nincurred by Amtrak pursuant to the initial assumption of control and\ntransportation in the Corridor.\nresponsibility for maintaining rail operations ($10 million), and for\nThe Committee views the President's budget request for this pro-\ncontinuation, expansion, and improvement of public radiotelephone\ngram as inadequate. No funds have been requested for fiscal 1976 and\nservice in the corridor ($650,000).\nonly $15 million is requested for the transition period. Yet, testimony\nPrior to the forthcoming transfer of control and responsibility for\nreceived by the Committee makes it clear that in order to meet the\noperations in the corridor, the Penn Central railroad has borne a sub-\nextremely tight time schedule mandated for this program in the Rail-\nstantial portion of the cost of roadbed responsibility, ownership, engi-\nS.R. 637\nS.R. 637\n4\n5\nneering and support costs for track maintenance, safety, dispatching,\nsector of the economy will benefit the total economy in terms of new\nand signaling, et cetera. With the takeover of the corridor an ac-\njobs, tax revenues, enlarged productive capacity, and increased\ncompanying shift of these costs is certain and must be funded if serv-\npurchasing power.\nice is to be continued. Nonrecurring takeover costs include the purchase\nof inventories or the rebuilding of inventories of equipment, materials\nAppropriation requirements\nand supplies as well as supporting costs incurred as part of the prepa-\nSince the Secretary is required to establish the center pursuant to\nration for takeover. The Committee believes that continuation and\nsection 906 of the act, no specific dollar authorization levels were estab-\nexpansion of the Metroliner on-board telephone service, which\nlished in the act. It is the understanding of the Committee that the\nalmost terminated last fall because of withdrawal of the frequencies\nSecretary plans to request authority to reprogram funds in the amount\ninvolved, is essential if present corridor business travel revenues are\nof $175,000 from existing fiscal year 1976 appropriations. It is fur-\nto be retained and expanded. The funds recommended are to fund the\nther understood that the Secretary proposes to request additional\nengineering necessary for the possible use of other frequencies and for\nfunds to support the center during the remainder of fiscal year 1976\ndevelopment of service between Newark and Boston.\nand the transition quarter in his second supplemental budget request\nto be submitted to the Committee during the month of February 1976.\nURBAN MASS TRANSPORTATION ADMINISTRATION\nFor fiscal year 1977, the Committee directs the Department of Trans-\nportation to submit a budget amendment that will provide the funds\nFiscal year 1976\nnecessary to fully implement the concepts and programs intended\nBudget estimate\n1 $40, 000, 000\nunder section 906 of the Railroad Revitalization and Regulatory\nBudget estimate\nNot considered\nCommittee recommendation\n40, 000, 000\nReform Act of 1976.\n1 Budget requests pending.\nRELATED AGENCIES\nThe Committee recommends an appropriation of $40 million to the\nUrban Mass Transportation Administration for emergency commuter\nUNITED STATES RAILWAY ASSOCIATION\nrail subsidies as authorized under section 808 of the Railroad Revitali-\nzation and Regulatory Reform Act of 1976. These funds are necessary\nADMINISTRATIVE EXPENSES\nto assure the continuity of commuter rail services during fiscal year\n1976 by providing a reimbursement to ConRail, other profitable rail-\nFiscal year 1976\nTransition period\nroads and/or State and local agencies for commuter rail service which\nmight be adversely affected by the Northeast rail reorganization. These\nBudget estimate\n$4, 100, 000\n$2, 000, 000\nfunds are also necessary to assure that the congressionally adopted\nHouse allowance\n4, 100, 000\n1, 400, 000\npolicy of not allowing cross subsidization between the various services\nCommittee recommendation\n6, 100, 000\nNone\nis implemented. The success of the reorganization depends upon the\nelimination of cross subsidization between rail freight and commuter\nThe Committee recommends a $6,100,000 appropriation for fiscal\nservices.\nyear 1976 for the administrative expenses of USRA.\nMINORITY RESOURCE CENTER\nThe Railroad Revitalization and Regulatory Reform Act of 1976\nProgram concept\nincreases USRA's administrative expense authorization by $14 mil-\nThe Minority Resource Center authorized under section 906 of the\nlion. The Association had requested supplemental appropriations of\nAct provides for the participation by minority business firms, minority\n$4.1 million for the current fiscal year and $2 million for the transi-\nenterpreneurs, and business firms headed by women as prime contrac-\ntion quarter. The Committee received testimony from the Associa-\ntors, subcontractors, investors, lessors, and in other business activi-\ntion that its administrative expense requirements are changing rapidly\nties and relationships associated with the maintenance rehabilitation,\nbecause of (1) provisions in the new legislation that assign specific\nrestructuring, improvement, and revitalization of the Nation's rail-\nresponsibilities to USRA; and (2) the massive technical support es-\nroads. The purpose and function of the Center is to facilitate such par-\nsential to preparing to litigate the various challenges to the reorga-\nticipation by minorities through the operation of a national program\nnization from the estates and their creditors. The Association is now\nwhich provides information; management and technical assistance\nrequesting that the two supplementals be combined into one amount of\nservices; marketing data; project feasibility studies; economic re-\n$6.1 million with this amount to be made available until Septem-\nsearch and analyses. The general objective of this program is to en-\nber 30, 1976. This will provide additional flexibility and give the As-\nlarge the economic benefits realized from the investment of Federal\nsociation an opportunity to adjust to changing requirements over the\nfunds in private corporate projects. The strengthening of the minority\nnext few months.\nS.R. 637\nS.R. 637\n6\n7\nPAYMENT FOR PURCHASE OF CONRAIL SECURITIES\nquantification of all the operational changes and improvements, and\nrehabilitation and capital programs proposed for ConRail in the Final\nFiscal year 1976\nBudget request\n$400, 000, 000\nSystem Plan, which quantification was done in 1973 dollars and time-\nHouse allowance\n460, 000, 000\nphased by year, with the 1973 dollar forecast then being \"inflated\" in\nCommittee recommendation\n500, 000, 000\naccordance with accepted methods. It also understands that the Asso-\nciation also attempted to estimate the extent to which rate relief stem-\nTransition Period\nBudget request\n300, 000, 000\nming from cost inflation would be realized by ConRail, in the process\nHouse allowance\n965, 000, 000\nassuming both Interstate Commerce Commission authorization of such\nCommittee recommendation\n300, 000, 000\nrate increases and the ability of railroads, generally, to implement such\nFiscal year 1977\nrate increases based upon supply and demand for transportation by\nBudget request\n1, 400, 000, 000\nrail and by competing modes.\nHouse allowance\nNone\nThe Committee recognizes that the financing authorized in P.L. 94-\nCommittee recommendation\n1, 226, 000, 000\n210 contemplated a final system plan that included a competitive route\nstructure provided by participation of the Chessie System and South-\nFiscal year 1978\nBudget request\nNone\nern Railway, and that in view of the inability to execute the labor\nHouse allowance\n425, 000, 000\nagreements required by section 508 of the Regional Rail Reorganiza-\nCommittee recommendation\nNone\ntion Act, the alternative industry structure of unified ConRail will\nFiscal year 1979\ngo into effect and will require more initial government financing than\nBudget request\nNone\nwas contemplated. It is anticipated that additional authorizing legis-\nHouse allowance\n176, 000, 000\nlation may be required in order to provide for a similar margin of\nCommittee recommendation\nNone\nsafety contemplated in the original authorizing legislation, and the\nThe Committee recommends appropriations totaling $2.026 billion\nCommittee expects a prompt budget request under this new authoriza-\nfor purchase of ConRail securities. Such appropriations are $74 mil-\ntion as soon as it is needed.\nlion below the budget requests and the same as the House allow-\nThe Committee has decided that its proper course of action is to\nances, and are to be made available as follows: fiscal year 1976, $500\nprovide the $2.026 billion identified as the minimum Federal assistance\nmillion; the transition period, $300 million; and fiscal year 1977,\nneeded by Unified ConRail, and to provide additional funds if such\n$1.226 billion. The House bill would spread these appropriations over\nfinancing is required to document an income-based reorganization.\nfiscal years 1976 through 1979.\nThe Committee fully intends to meet the financing needs of Unified\nThe Committee has deleted the provisions in the House bill which\nConRail up to the full $2.1 billion authorization as such amounts are\nwould limit the amounts available to cover future operating losses of\nrequired and to give timely consideration to subsequent authorizations.\nthe Corporation. We believe that the controls provided in the Railroad\nThe Committee affirms the expressed congressional intent that a \"fair\nRevitalization and Regulatory Reform Act are adequate to protect\nand equitable\" income-based reorganization has here been provided for.\nthe Government. The act establishes a Finance Committee within\nthe USRA Board-to be composed of the Secretary of Transportation,\nNATIONAL TRANSPORTATION SAFETY BOARD\nthe Secretary of the Treasury, and the Chairman of the USRA Board\nof Directors. In that committee is vested authority to recommend to\nIn order for the National Transportation Safety Board to fulfill\nCongress the termination of further funding of ConRail-through the\nits responsibilities under P.L. 93-633, Congress provided sufficient\nGovernment investment to be provided. Under that act, any such\nfunds in the Department of Transportation and Related Agencies\nfinding of the Finance Committee together with the comments and\nAppropriations Act (P.L. 94-134) for the employment of 85 new posi-\nrecommendations of the USRA Board, is to be transmitted to the\ntions by the NTSB. The Committee hereby directs the agency to fill\nCongress within 10 days of the date of such finding, thus giving\nsuch 85 positions as expeditiously as possible.\nCongress early notice of any pending ConRail financing or perform-\nance problem.\nBUDGET AUTHORITY-OUTLAY EFFECTS\nFinally, section 609 of the Railroad Revitalization and Regulatory\nReform Act of 1976 provides that USRA must submit an annual report\nSection 308 (a) (1) (B) of the Congressional Budget and Impouna-\nto Congress on the performance of ConRail.\nment Control Act of 1974 requires that the report accompanying any\nThe Committee understands from the Final System Plan, and\nbill or resolution providing new budget authority (other than con-\nfrom testimony developed during its hearings on the request, that the\ntinuing appropriations) shall contain a projection for the period of 5\nAssociation determined that the minimum needed for such purposes\nfiscal years beginning with such fiscal year of budget outlays, asso-\nin Federal assistance for Unified ConRail was $2.026 billion. It under-\nciated with the budget authority provided in the bill or resolution, in\nstands further that this figure, which the Association believes to be as\neach fiscal year in such period.\naccurate as possible under the circumstances, was arrived at through\nThe following table summarizes the budget authority recommended\nthe application of numerous \"point forecasts\" which, in essence, were a\nin the resolution and the estimated outlays for the subsequent five\nfiscal years.\nS.R. 637\nS.R. 637\n8\n9\nFINANCIAL ASSISTANCE TO STATE AND LOCAL GOVERNMENTS\n1979\n$46, 000, 000\n46, 000, 000\nSection 308 (a) (1) (C) of the Congressional Budget and Impound-\nment Control Act of 1974 requires that the report accompanying any\nbill or resolution providing new budget authority (other than con-\ntinuing appropriations) shall contain a statement of the new budget\nauthority and budget outlays provided by that bill or resolution for\nfinancial assistance to State and local governments.\n1978\n$435, 000, 000\n435, 000, 000\nThe amounts recommended in the accompanying resolution contain\n$40 million for commuter rail subsidies, a portion of which, under\nsection 808 of the Railroad Revitalization Act, may be used to reim-\nburse State or local agencies for commuter rail service. It is estimated\nthat the outlays from this appropriation will occur as follows: fiscal\nyear 1976, $15 million; transition period, $15 million; and fiscal year\nEstimated outlays\n1977\n$10, 000, 000\n43, 000, 000\n745, 000, 000\n798, 000, 000\n1977, $10 million.\nTransition period\n$42, 000, 000\n314, 300, 000\n356, 300, 000\n1976\n$658, 532, 956\n658, 532, 956\nBudget authority\nrecommended\n$710, 532, 956\n357, 300, 000\n1, 226, 000, 000\n2, 293, 832, 956\nFiscal year\nTransition period\nTotal outlays\n1976\n1977\nS.R. 637\nS.R. 637\nCOMPARATIVE STATEMENT OF NEW BUDGET (OBLIGATIONAL) AUTHORITY ESTIMATES AND AMOUNTS\nRECOMMENDED IN THE RESOLUTION\nIncrease (+) or decrease (-)\n10\nAmount recommended\nSenate bill compared with-\nItem\nBudget estimate\nHouse allowance\nby Senate committee\nBudget estimates\nHouse resolution\nDEPARTMENT OF\nTRANSPORTATION\nFEDERAL RAILROAD ADMINISTRATION\nRail Service Assistance:\nFiscal year 1976\n$27, 400, 000\n+ $27, 400, 000\n+$27, 400, 000\nTransition period\n$15, 000, 000\n(1)\n52, 000, 000\n+37, 000, 000\n+ 52, 000, 000\nS.R. 637\nGrants to National Railroad Passenger\nCorporation:\nFiscal year 1976\n2 21, 200, 000\n(1)\n137, 032, 956\n115, 832, 956\n+ 137, 032, 956\nTransition period\n2 5, 300, 000\n(1)\n5, 300, 000\n+5, 300, 000\nUrban Mass Transportation Adminis-\ntration\n2 40, 000, 000\n(1)\n40,000,000\n40, 000, 000\nRELATED AGENCIES\nUNITED STATES RAILWAY ASSOCIATION\nAdministrative expenses:\nFiscal year 1976\n4,100,000\n$4,100,000\n6,100,000\n+2, 000, 000\n+2, 000, 000\nTransition period\n2,000,000\n1,400,000\n2, 000, 000\n-1,400,000\nPayment for purchase of ConRail stock:\nFiscal year 1976\n400, 000, 000\n460,000,000\n500, 000, 000\n+ 100, 000, 000\n40, 000, 000\nTransition period\n300,000,000\n965,000,000\n300,000,000\n- 665, 000, 000\nFiscal year 1977\n1, 400, 000, 000\n1, 226, 000, 000\n- 174, 000, 000\n1, 226, 000, 000\nFiscal year 1978\n425,000,000\n- 425, 000, 000\nFiscal year 1979\n176,000,000\n- 176, 000, 000\nTotals by fiscal year:\nFiscal year 1976\n465,300,000\n464, 100, 000\n710, 532, 956\n+ 245, 232, 956\n+246, 432, 956\nTransition period\n322, 300, 000\n966,400,000\n357,300,000\n+ 35, 000, 000\n609, 100, 000\nFiscal year 1977\n1, 400, 000, 000\n1, 226, 000, 000\n- 174, 000, 000\n+1, 226, 000, 000\nFiscal year 1978\n425, 000, 000\n425, 000, 000\n11\nFiscal year 1979\n176,000,000\n- 176, 000, 000\nGrand total, new budget authority\n2, 187, 600, 000\n2, 031, 500, 000\n2, 293, 832, 956\n+ 106, 232, 956\n+262, 332, 956\n1 Not considered.\n2 Budget requests pending.\nS.R. 637\n94TH CONGRESS\nHOUSE OF REPRESENTATIVES\nREPORT\n2d Session\nNo. 94-832\nSUPPLEMENTAL RAILROAD APPROPRIATIONS\nFEBRUARY 11, 1976.-Committed to the Committee of the Whole House on the\nState of the Union and ordered to be printed\nMr. MAHON, from the Committee on Appropriations,\nsubmitted the following\nREPORT\ntogether with\nSUPPLEMENTAL AND DISSENTING VIEWS\n[To accompany H.J. Res. 801]\nThe Committee on Appropriations, to which was referred House\nJoint Resolution 801, making supplemental railroad appropriations\nfor the fiscal year 1976, the transition period ending September 30,\n1976, and the fiscal years 1978 and 1979, and for other purposes, report\nthe same to the House without amendment and with the recommenda-\ntion that the joint resolution be passed.\nSUMMARY OF THE RESOLUTION\nThe grand total of new budget authority recommended in the\nresolution is $1,921,500,000 of which $404,100,000 is for fiscal year 1976\nand $916,400,000 is for the transition period. The following table\nsummarizes the amounts recommended in the resolution in comparison\nwith the budget estimates contained in S. Doc. 94-128 (November 13,\n1975).\nResolution\ncompared\nEstimates\nResolution\nwith estimates\nFiscal year 1976\n$404,100,000\n$404,100,000\nTransition Period\n302,000,000\n916,400,000\n+$614,400,000\nFiscal year 1977\n1,400,000,000\n-1,400,000,000\nFiscal year 1978\n425,000,000\n+425,000,000\nFiscal year 1979\n176,000,000\n+176,000,000\nTotal, new budget (obligational) authority\n2,106,100,000\n1,921,500,000\n-184,600,000\n57-006.0\n2\n3\nINFLATIONARY IMPACT STATEMENT\nization provided in section 213 of the Regional Rail Reorganization\nClause 2(1) (4) of rule XI of the House of Representatives requires\nAct. In addition, $300,000,000 in loan authority has been provided\nthat each committee report on a bill or resolution shall contain a\nunder section 215. The final system plan provides that $64,000,000 of\nstatement as to whether enactment of such bill or resolution may have\nthe section 215 loans be assumed by ConRail with the balance to be\nan inflationary impact on prices and costs in the operation of the\nforgiven. If these loans are forgiven, the bankrupt railroads will have\nnational economy.\nhad a total of $506,000,000 available for interim operations and\nIt is a matter of conjecture whether or not any appropriation of\nmaintenance.\nmoney might be inflationary. The total amount of new budget author-\nity recommended in this resolution is $184,600,000 less than the budget\nUNITED STATES RAILWAY ASSOCIATION\nrequest. To the extent that the budget request is inflationary, the\nCommittee feels that the amounts recommended in the accompanying\nPAYMENTS FOR PURCHASE OF CONRAIL SECURITIES\nresolution will have a less severe impact on aggregate inflation.\nThe Committee has recommended that the funding requested be\nThe Committee has recommended $1,916,000,000 in new budget\n(obligational) authority for the purchase of ConRail debentures and\nprovided over 4 years rather than 2 years as proposed in budget\nrequest. By making these funds available over a longer period, the\nsenior preferred stock over a four year period. This is $184,000,000\nless than the budget request.\nCommittee believes this will further reduce any inflationary impact\nfrom what otherwise might be forthcoming under the budget request.\nThe Committee has been closely involved with the rail reorganiza-\ntion process and has held eight days of hearings with officials from\nHISTORY AND FORMATION OF CONRAIL\nUSRA, ICC, DOT, and ConRail. These hearings were held as follows:\nMarch 14, 1974, September 12, 1974, December 17, 1974, February 6,\nIn 1968 the Pennsylvania Railroad and the New York Central\n1975, March 3, 1975, April 16, 1975, September 10, 1975, and Decem-\nSystem merged to form the Penn Central Transportation Co. After 2\nber 10, 1975.\nyears of operation, the Penn Central filed for bankruptcy in the U.S.\nThe Committee commends the United States Railway Association\nDistrict Court for the Eastern District of Pennsylvania. The U.S.\nfor its dedication and professionalism in completing the final system\nDistrict judge who was overseeing the Penn Central bankruptcy\nplan. The Committee fully agrees with the plan's funding requirements\nproceedings was presented by the trustees with a plan for the orderly\nfor ConRail and has provided the full amount contemplated by the\ncessation of operations and the disposition of its rail properties. At the\nfinal system plan's projections. In addition, the Committee has pro-\nsame time, it was becoming increasingly clear that without some\nvided $75,000,000 as a \"margin of safety\" to further enhance the\nfundamental changes in the nature and extent of railioad operations,\nviability of the final system plan. The following table summarizes the\nplus outside financial assistance, Penn Central and certain other small\nCommittee's recommendations:\nrailroads in the region who had filed for bankruptcy could not continue\nUNITED STATES RAILWAY ASSOCIATION-PAYMENTS FOR PURCHASE OF CONRAIL SECURITIES\nto provide rail service.\nThe Regional Rail Reorganization Act of 1973 (P.L. 93-236) sought\nRecommended\nResoluion compared with-\nto extend the process of railroad bankruptcy proceed ngs to deal with\nin United\nNew budget\nBudget esti-\nStates Railway\n(obligational)\nUnited States\nthe Northeast rail problem. It authorized a planning agency (U.S.\nmates of new\nAssociation\nauthority\nBudget estimates\nRailway Asso-\nRailway Association) to analyze, restructure and crea e an economi-\n(obligational)\nfinal system\nrecommended\nof new (obliga-\nclation final\nauthority\nplan In the resolution\ntional) authority\nsystem plan\ncally viable private company (ConRail) to operate those portions of\nthe bankrupt properties which were found to be economically viable.\nUnited States Railway Associa-\nOther properties found not to be economically viable or not related to\ntion: Payments for purchase of\nConRail securities:\nConRail's purposes as an operating railroad were to be dealt with\nFiscal year 1976\n$400,000,000\nTransition period\n300,000,000\n$698,000,000\n$400,000,000\n915,000,000\n+$615,000,000\n+$617,000,000\nunder different programs which were authorized or to be authorized.\nFiscal year 1977\n1,400,000,000\n505,000,000\n-1,400,000,000\n-505,000,000\nThe act also established a special court to oversee the reorganization\nFiscal year 1978\n287,000,000\n425,000,000\n+425,000,000\n+138,000,000\nFiscal year 1979\n277,000,000\n176,000,000\n+176,000,000\n-101,000,000\nprocess.\nFiscal year 1980\n74,000,000\n-74,000,000\nAfter issuing a preliminary plan and analyzing comments and\nTotal, new budget (obli-\ncriticisms from interested parties, the United States Railway Associ-\ngational) authority\n2,100,000,000\n1,841,000,000\n1,916,000,000\n-184,000,000\n+75,000,000\nation (USRA) announced its final system plan on July 26, 1975. This\n1 United States Railway Association recommendations are for calendar years.\nplan became effective on November 9, 1975. Under recent legislation,\n, Includes $75,000,000 for a \"margin of safety.\"\nthe properties of the bankrupt railroads are anticipated to be conveyed\nto ConRail by March 31, 1976.\nREQUIREMENT FOR ADVANCED APPROPRIATION\nDuring the planning period the U.S. Government has been providing\nfinancial assistance to the bankrupt railroads to assure continued rail\nThe final system plan calls for $1,841,000,000 of funds to be provided\nservices. A total of $270,000,000 has been appropriated for the Penn\nto ConRail by the Federal government over five years (1976-1980).\nCentral and certain other railroads in reorganization under the author-\nThe plan also calls for substantial changes in the fixed plant and opera-\ntions of the rail properties to be acquired by ConRail. USRA analyzed\n4\n5\nthese changes and attempted to quantify the recommendations in\nterms of projected revenues and costs of ConRail operations. These\n\"MARGIN OF SAFETY\" REQUEST\nprojections are part of the final system plan (vol. 1, pp. 51-67).\nUSRA believes that ConRail will be a reorganized entity capable of\nAs previously indicated, the Committee is recommending an\nsustaining income producing operations if the assumed level of govern-\nadditional $75,000,000 to be provided in the transition period as a\nment financing is forthcoming.\n\"margin of safety.\" This is a reduction of $184,000,000 from the\nSome of the creditors of the bankrupt estates allege that the com-\n$259,000,000 requested in the budget. The Committee believes the\npensation to be provided to them in the form of ConRail securities is\nadditional amount requested is not needed at this time. The Com-\nnot adequate because ConRail will not be an income producing entity.\nmittee, however, recognizes that the long term financial projections\nThe Supreme Court, in ruling that the Regional Rail Reorganization\ncontained in the final system plan may be subject to substantial\nAct of 1973 is constitutional, indicated that the Act appeared to be an\nvariations. The Committee further recognizes the possible need for\nextension of Congressional power under the Bankruptcy Clause\nfuture appropriations if economic or other conditions warrant addi-\n(art. I, sec. 8, U.S. Constitution). However, if the bankrupt estates do\ntional Federal financing.\nnot receive securities equal in value to the \"constitutional minimum,\"\nThe Committee is recommending that ConRail's rehabilitation\nthe Court stated that the estates could sue in the U.S. Court of Claims\nprogram be accelerated and has provided funds at a faster rate than\nunder the Tucker Act.\nwas contemplated by the final system plan. An accelerated rehabili-\nThe creditors have alleged that the securities to be offered to them\ntation program should enhance ConRail's financial viability and\nare worth less than the \"constitutional minumum\". It is also alleged\nreduce the likelihood that additional Federal funds will be needed.\nthat the degree of control to be exercised by the Government over\nConRail renders its creation an act of eminent domain. If such con-\nRAIL PLANT REHABILITATION PROGRAM\ntentions were accepted, the U.S. Government could be faced with\na deficiency judgment, the estimated amount of which varies widely.\nUnder the final system plan, approximately 51 percent of ConRail's\nUnder the terms of the final system plan, the creditors of the\nfunds will be used for additions and improvements to the rail physical\nbankrupt estates will receive subordinated preferred stock, certificates\nplant. The following is a condensed table showing the projected\nof value and all of the common stock of ConRail. The certificates of\nsources and uses of funds during the 10-year planning period\nvalue will assure that even if ConRail is not successful the creditors\n(1976-1985):\nwill receive an amount equal to the net liquidation value of the bank-\nCONSOLIDATED RAIL CORP.\nPRO FORMA SOURCES AND USES OF FUNDS STATEMENT\nrupt properties plus interest. If the value of ConRail stock issued to\n1976 THROUGH 1985\nthe creditors is less than the amount guaranteed under the certificate\n[Amounts in millions of inflated dollars)\nof value instrument, the difference will be an obligation of the U.S.\nGovernment. For this reason, the assured availability of funding\nAmount\nPercent\nnecessary to establish sufficient ConRail earnings to support sub-\nstantial security values could serve to lower the ultimate cost of the\nSources of funds:\nFrom operations\nreorganization process to the United States Government.\n$3,583\n40\nGovernment finance (series A preferred stock, 7.5 percent debentures)\n1,841\n21\nThe Committee believes that the economic viability of ConRail\nIssuance of equipment debt\n502\n17\nIssuance of series B Preferred stock, common stock (to the creditors)\n421\n5\ndepends upon the assured availability of Federal funds in the amount\nIncreases in noncurrent liabilities\n402\n4\ncontemplated by the final system plan. The Committee further believes\nProceeds from passenger subsidies and payments for passenger asset acquisitions\n380\n4\nIssuance of stock in lieu of dividends\n372\n4\nthat with the level of funds provided in the bill the creditors of the\nNet proceeds from road, facilities and equipment retirements\n162\n2\nOther\n297\n3\nbankrupt estates will be receiving preferred and common stock in a\ncompany reorganized on an income basis and that the degree of con-\nTotal, sources of funds\n8,960\n100\ntrol recommended is not inappropriate to the government's role as an\nUses of funds:\nAcquisition, additions and improvements to the rail physical plant\n4,582\n51\ninvestor. If the Special Court accepts this position, the Committee\nAcquisition, additions and improvements to transportation equipment.\n2,121\n24\nbelieves that the Federal Government can avoid financial exposure to\nDividends and accretions to Government in the form of series A preferred stock and\ncash available\n655\n7\na large deficiency judgment which might otherwise be forthcoming\nIncreases in net working capital\n579\n7\nIncreases in passenger assets\n488\n5\nunder a Tucker Act suit.\nPayments of equipment trust certificates\n414\n5\nIn order to assure all parties concerned that the Federal financing\nIncreases in other assets\n121\n1\nneeded to rehabilitate and improve the rail properties to be operated\nTotal, uses of funds\n960\n100\nby ConRail will be available in future years as contemplated by\nthe final system plan, the Committee has departed from its usual\nSource: USRA final system plan, pp. 54, 55.\npractice of appropriating funds immediately prior to when they are\nThe Committee fully concurs in the USRA recommendations con-\nneeded. The Committee believes this exception to the general appro-\ncerning ConRail's fixed plant rehabilitation program as delineated on\npriations practice is justified because of the unusual circumstances\npages 65 through 69 of the final system plan, supplemental report\nsurrounding the reorganization of the rail properties and because of\n(transmitted September 18, 1975). As already noted, the Committee\nthe litigation of the final system plan.\nbelieves that such a rehabilitation program is an essential element of\nConRail's overall efforts to achieve financial viability.\n6\n7\nThe Committee fully expects ConRail management to give the most\nConRail will not continue to provide the kind of costly and inefficient\ncareful consideration to the basic recommendations contained in the\nservice currently being provided by Penn Central and being financed\nplan with respect to fixed rail plant rehabilitation and improvement.\nby the Federal Government.\nBut the Committee also recognizes that specific rehabilitation plans\nIn the accompanying resolution, the Committee recommends that\nwill change because of changes in underlying business conditions and\nno Federal funds be used for financing operating losses during fiscal\nthe further continuing evaluation of rail investment priorities by\nyears 1978 and 1979. The Committee has also included language\nConRail's new management. It is important that such changes be\nrestricting the amount of Federal funds that can be used to finance\nmade only on the basis of economic conditions concerning the costs\noperating losses during the initial periods of ConRail's operations. In\nand projected revenue benefits from rehabilitation programs. The\nso doing, the Committee has provided ConRail with a strong incentive\nCommittee believes that rehabilitation decisions based on noneco-\nto attempt to minimize its operating losses.\nnomic factors would undermine the financial viability of ConRail.\nThe chief executive officer of ConRail testified before the Committee\nADMINISTRATIVE EXPENSES\nand affirmed his commitment to the execution of an efficient, eco-\nnomically sound rehabilitation program based substantially on the\nThe Committee recommends the full fiscal year 1976 supplemental\nanalysis conducted by USRA. The Committee strongly urges ConRail\nbudget request of $4,100,000 for administrative expenses of the United\nmanagement to stand by this commitment which will enhance Con-\nStates Railway Association. These funds are in addition to the\nRail's prospects as an income producing entity while minimizing the\n$10,000,000 previously appropriated in the regular fiscal year 1976\nalready substantial cost to the Federal government.\nDepartment of Transportation and Related Agencies Appropriation\nThe Committee also received testimony concerning the opportunities\nAct. The Committee feels these additional funds will be required for\nfor restructuring rail service through coordination and joint use of\nexpenses related to the conveyance of rail properties to ConRail and\nfacilities by two or more carriers. The final system plan recommends\nfor the litigation of the final system plan.\nseveral coordination and restructuring plans for implementation. The\nFor the transition period, the Committee recommends $1,400,000, a\nCommittee strongly endorses the following recommendation made by\nreduction of $600,000 below the budget estimate. After the date of\nUSRA in the final system plan:\nconveyance USRA will have fewer responsibilities and should be\nable to significantly reduce its personnel level. Other than the activities\nIt is recommended that ConRail pursue (service coordina-\nrelated to the litigation of the final system plan, USRA will serve as a\ntion opportuntities) aggressively SO that improvements in\ntrustee for the holdings of the Federal government in ConRail. The\nservice will not depend totally on the speed with which it can\nCommittee believes that these responsibilities can be accomplished\nrebuild its own lines and so that the total cost to the taxpayer\nwith the amounts recommended in the resolution.\ncan be reduced to the absolute minimum.\nLIMITATIONS AND LEGISLATIVE PROVISIONS\nACCELERATED REHABILITATION PROGRAM\nThe following limitations and legislative provisions not heretofore\nIn testimony before the Committee concerning this request, USRA\ncarried in connection with any appropriation bill are recommended:\nofficials urged that the funds to be provided should be provided at a\nOn page 2 of the resolution, in connection with the amounts to be\nfaster rate than is contemplated by the final system plan. It was felt\nprovided to the Consolidated Rail Corporation:\nthat an accelerated program could provide ConRail with increased\nProvided, That not to exceed $278,000,000 shall be made available\nfinancial viability sooner than originally contemplated.\nto the Corporation for operating losses of the Corporation.\nAs previously indicated, the resolution provides these funds at an\naccelerated rate. The Committee believes that such an accelerated\nProvided, That not to exceed $140,000,000 shall be made available\nprogram could be useful in reducing the level of unemployment in the\nto the Corporation for operating losses of the Corporation.\nregions where rehabilitation projects are to be undertaken. Since the\nProvided, That none of these funds shall be made available to\nlevel of rehabilitation spending contemplated is substantial, the\nthe Corporation for operating losses of the Corporation.\nCommittee believes it would also be prudent for USRA and ConRail\nnot to pursue a program which would tend to push up labor and\nBUDGET AUTHORITY-OUTLAY EFFECTS\nmaterial prices for rehabilitation and improvement work. This would\ntend to reduce the amount of rehabilitation and improvement work\nSection 308(a)(1)(B) of the Congressional Budget and Impound-\nultimately to be performed and would be to the economic disadvantage\nment Control Act of 1974 requires that the report accompanying any\nof ConRail.\nbill or resolution providing new budget authority (other than con-\nINTERIM RAIL SERVICES\ntinuing appropriations) shall contain a projection for the period of 5\nfiscal years beginning with such fiscal year of budget outlays, asso-\nThe Committee is fully aware that a large portion of the Federal\nciated with the budget authority provided in the bill or resolution, in\nfunds to be provided in the early years of ConRail's operation will go\neach fiscal year in such period.\ntoward financing operating losses. The Committee believes that it is in\nThe following table summarizes the budget authority recommended\nthe best interest of ConRail and the nation that essential rail service\nin the resolution and the estimated outlays for the subsequent five\ncontinue to be provided. However, the Committee expects that\nfiscal years:\n8\n9\n1981-83\nFINANCIAL ASSISTANCE TO STATE AND LOCAL\nGOVERNMENTS\nSection 308(a) (1) (C) of the Congressional Budget and Impound-\nment Control Act of 1974 requires that the report accompanying any\n1980\n$26, 000, 000\n26, 000, 000\nbill or resolution providing new budget authority (other than con-\ntinuing appropriations) shall contain a statement of the new budget\nauthority and budget outlays provided by that bill or resolution for\nfinancial assistance to State and local governments.\nThe amounts recommended in the accompanying resolution contain\n1979\nno budget authority or budget outlays for any State or local govern-\n$115, 000, 000\n150, 000, 000\n265, 000, 000\nment for any of the years mentioned in the resolution.\nEstimated outlays\n1978\n$115, 000, 000\n310, 000, 000\n425, 000, 000\n1977\n$500, 000, 000\n500, 000, 000\nTransition\nperiod\n$200, 000\n301, 400, 000\n301, 600, 000\n1976\n$403, 900, 000\n403, 900, 000\nBudget\nauthority\nrecommended\n$404, 100, 000\n916, 400, 000\n425, 000, 000\n176, 000, 000\nFiscal year\nTransition period\nTotal outlay effects\n1976\n1977\n1978\n1979\nSUPPLEMENTAL VIEWS OF THE HONORABLE SILVIO.O.\nCONTE, HONORABLE EDWARD P. BOLAND, HONOR-\nABLE JACK EDWARDS, AND HONORABLE LAWRENCE\nCOUGHLIN\nWe support the basic purpose of H.J. Res. 801. By providing the\ninitial funds for the purchase of ConRail securities by USRA, the\nCommittee is making possible the restructuring of what will become a\nstrong and efficient rail system in 17 Northeast/Midwest States SO\nlong plagued with railroad bankruptcies.\nCongressional provision of the Federal investment through USRA\nin ConRail is an essential element in the Government's presentation\nto a Special Court which will, in the first instance, review the \"fairness\nand equity\" of the overall proceedings since, clearly, ConRail's chances\nfor becoming financially self-sustaining will be jeopardized without\nthe asurance that its early capital needs will be met. As stated in\nUSRA's Final System Plan (page 91) : \"If the government does not\nprovide the needed capital and ConRail falters, the eventual cost to\nthe government could be greater than the amount of the government\ninvestment recommended in the Final System Plan.\"\nCreditors of the bankrupt estates have alleged that the ConRail\nsecurities to be offered to them in exchange for their claims of the\nrail-related assets to be continued in service through ConRail, are\nworth less than the \"Constitutional minimum\"; and the Supreme\nCourt has stated that the estates could sue the government in the U.S.\nCourt of Claims, under the Tucker Act, if the bankrupt estates do\nnot receive securities equal in value to the \"Constitutional minimum.\"\nIn addition, it is also alleged that the degree of control to be exer-\ncised by the government over ConRail renders its creation an act of\neminent domain. If such a contention were accepted, the government\ncould be faced with a substantial deficiency judgment, the estimate\namount of which varies widely.\nFor the foregoing reasons, (1) the assured availability of Federal\nfunding necessary to establish sufficient ConRail earnings to support\nvalues in its securities, and (2) the absence of government controls\nover ConRail beyond those appropriate to the government's role as\nan investor, could both serve to lower the ultimate cost of the reor-\nganization process to the United States Government.\nWith regard to the funds provided in H.J. Res. 801, we must point\nout that the authorizing legislation (P.L. 94-210) made no distinction\nbetween the $1.841 billion in minimum Federal funds required for\nConRail and the $250 million requested for contingency purposes. In\nfact, that distinction first made by USRA was completely eliminated\nin P.L. 94-210. The Administration has made clear its support for\nthe entire $2.1 billion requested for ConRail. The Committee has\n(11)\n12\n13\nchosen to provide $1.921 billion, including only $75 million for con-\nIt is prudent to review the investment controls already in place\ntingency purposes. We believe there are significant risks in not pro-\nas the result of P.L. 94-210 (The Railroad Revitalization and Regula-\nviding the funding which USRA, the Administration, and the author-\ntory Reform Act of 1976).\nizing committees determined were necessary to sufficiently capitalize\nIt established a Finance-Committee within the USRA Board-to\nthe new railroad.\nbe composed of the Secretary of Transportation, the Secretary of\nNevertheless, we have an even greater concern about the implica-\nthe Treasury, and the Chairman of the USRA Board of Directors. In\ntions of the Committee's action which seeks to limit by statute the\nthat Committee is vested authority to terminate further funding of\namount of operating losses for ConRail to $418 million during its\nConRail-through the Government investment to be provided-in the\nfirst year and one-half of operations and prohibiting the use of any\nevent that it makes an affirmative finding that ConRail has failed to\nfunds provided in the bill for operating losses thereafter.\nmeet its overall operating (including rehabilitation) and financial re-\nWe believe those limitations are unwise and unduly restrictive. No\nsults as projected for it in the Final System Plan within margins pre-\none argues with the basic purpose-that ConRail should be encour-\nscribed by the USRA Board of Directors, or that \" it is not reason-\naged to become profitable as soon as possible. Indeed, it is imperative\nably likely, taking into consideration all relevant factors including\nthat ConRail have the flexibility necessary to represent a successful\nthe overall operating (including rehabilitation) and financial results\nincome-based reorganization. Put simply, the extent to which Con-\nachieved by the Corporation, that the Corporation will be able to be-\nRail is successful is the extent to which any future exposure to our\ncome financially self-sustaining without requiring Federal financial\ntaxpayers for a suit under the Tucker Act by the bankrupt railroads\nassistance substantially in excess of the amounts authorized in (P.L.\nand their creditors is reduced.\n94-210) The reference, here, in the RRRR Act of 1976, is to\nWe believe that any attempt to restrict the availability of Federal\nsection 216 thereof: Under the Act, any such affirmative finding,\nfunds for the purposes of covering only those projected ConRail oper-\ntogether with comments and recommendations of the USRA Board,\nating losses as estimated for it in the FSP would be imprudent and\nis to be transmitted to Congress within ten days of the date of such\nunduly restrictive of ConRail in its attempt to achieve self-sufficiency.\nfinding, for review, thus giving Congress early notice of any pending\nIn the past year, the operating losses of the bankrupts have been\nConRail financing or performance problems.\nin excess of $1 million a day. ConRail cannot hope to erase such losses\nThe investment controls, appropriately exercised, will preclude any\nuntil such time as the benefits of the restructured system, new equip-\nundue diversion of Federal funds into the subsidization of continuing\nment, a rehabilitated plant, and the efforts of its new management can\nConRail operating losses. In and of themselves, they are reasonably\nbegin to show their effect in improved operating results. As projected\nand properly reflective of the Government's role as an investor in\nin the FSP, ConRail should begin to realize a positive income from\nConRail. Any further governmental controls as imposed by Congress\noperations in calendar year 1979, and it should be able to generate\nare both unnecessary and would tend to add weight ot the creditors'\na positive cash flow from operations sometime during that calendar\nallegation that the Government's influence over ConRail is SO all-\nyear and each year thereafter. USRA also estimated that ConRail's\npersuasive as to reflect a \"taking\" rather than an income-based\ncash operating losses would be $278 million in calendar year 1976,\nreorganization.\nand $140 million in calendar year 1977, and that, while it should be\nThe argument is made that the controls contained in H.J. Res. 801\nable to break even on operations sometime in calendar year 1978\nare merely the legitimate exercise of Congressional oversight powers\nthat, in that year, it would still need at least $17 million to cover its\ncomparable to those enjoyed by the Executive Branch through the\nestimated deficit in working capital requirements from other sources.\nFinance Committee. On the face of it, this seems like a plausible argu-\nIt is essential to understand that there are only estimates, prepared\nment, but there are some significant and far-reaching differences.\nin 1975, and subject to possibly wide variations stemming from such\nIn essence, the Finance Committee was given the powers appropriate\nunforeseeable eventualities as a prolonged strike in the auto or coal\nto any investor: that of halting any further investment into a company\nindustries, or unusually severe storm damages, significant shifts in\nif: (1) it violates any covenants of its loan agreement; (2) it fails\nthe economy, or even a strike by rail labor. If ConRail, by virtue\nto obtain the overall results projected in an agreed upon plan; and (3)\nof a Congressional limitation on its flexibility to use Federal funds\nit cannot achieve the projected results without more money than agreed\nto cover such operating losses as may flow therefrom, is placed in\nupon in advance.\nsuch a bind, then it could, apparently, either go bankrupt on its own\nIn examining the legislative history of the Finance Committee it is\nor sharply reduce the level of its services to the public, either of which\ninstructive to read the Conference Report on the Railroad Revitaliza-\nresults would surely not be in accord with Congressional intent as\ntion and Regulatory Reform Act of 1976 (P.L. 94-210). It states \"The\nnow expressed in the RRRR Act of 1976. If the investment controls\nFinance Committee, of course, may not freeze the Corporation to the\nestablished in the Rail Act itself did not address the situation, there\nspecific rehabilitation strategies, priorities or projects in the plan,\nmight be a basis for such specific appropriations restrictions. Under\nsince the Corporation should be permitted some flexibility in this\nthe circumstances, however, such restrictions are not merely unneces-\nregard.\"\nsary, they could prove to be utterly self-defeating.\nThe acton of the Committee in \"freezing\" ConRail to specific num-\nbers for Operating losses is specifically the kind of power Congress\n14\ndenied to the Finance Committee. Congressman Fred Rooney, the floor\nmanager of the Railroad Revitalization and Regulatory Reform Act\nof 1976, stated this type of power was denied to the Finance Commit-\ntee because: \"What is at stake here is the assurance that the goals of\nDISSENTING VIEWS OF THE HONORABLE\na private sector solution and an income-based reorganization will not\nbe jeopardized by overly detailed government interference with the\nWILLIAM L. ARMSTRONG\noperations of the railroad.\" (Congressional Record, January 28, 1976,\nA few decades ago the nation's railroads were healthy and prosper-\npage H-403.)\nWe are concerned that the effect of the Committee's constraints\nous. But under the staggering burden imposed by Congress, one rail-\nroad after another has been forced into bankruptcy. Today eight of\ncould jeopardize a \"private sector solution and an income-based re-\nthe nation's major Eastern railroads are already in bankruptcy. And\norganization\" because it will be construed as \"overly detailed govern-\nment interference with the operations of the railroad\".\nmuch of the rest of the industry is in shaky financial condition. As\nprofits and incentives have disappeared, equipment has been allowed\nWe have confidence in the statement made by Congressman Rooney\nto wear out or become obsolete; roadbeds have fallen into disrepair;\nwhen discussing the Conference Report on the Railroad Revitalization\nservice has deteriorated to an incredible extent and the eastern United\nand Regulatory Reform Act of 1976\nStates, heart of industrial America, has ended up with a crippled rail\n\"The conferees feel strongly that the conference report before the\nHouse along with the already agreed to basic principles on the terms\nsystem.\nWhy?\nand conditions for the purchase of ConRail securities strike the proper\nSeveral factors can be blamed. But Congress and federal regulatory\nbalance between the protection of the government's interest and the\nagencies are largely to blame. The federal government has put SO\nneed for a private sector solution based on a successful income-based\nmany restrictions on railroads that profitable operation has become\nreorganization.\" (Congressional Record, January 28, 1976, page\nvirtually impossible. No wonder the nation's rail system is falling\nH-404.)\napart. Unfortunately, however, Congress has reacted to each successive\nIn legal terms, the Committee's approval on operating losses of\ncrisis with a characteristic unwillingness to face the issue. Instead of\nConRail needlessly creates a potential imbalance that exposes the\nrepealing or drastically modifying legislation and regulations which\ngovernment to unnecessary risks. In economic terms, for reasons hav-\nare strangling the industry, Congress has passed a series of authoriza-\ning nothing to do with its ultimate success and its ability to repay the\ntions to subsidize inefficient operations. I have voted against such\ngovernment investment, ConRail may be forced into early bankruptcy\nmeasures in the past and I will also vote against H.J. Res. 801.\nbecause of undue rigidity in the availability of government financing\nI believe we badly serve the nation by continuing to subsidize rail-\nduring its start-up years.\nSILVIO O. CONTE\nroad operations without coping with underlying issues including the\nJACK EDWARDS.\nfollowing:\nFirst, USRA Chairman Arthur D. Lewis has testified, \"One of the\nLAWRENCE COUGHLIN.\nEDWARD P. BOLAND.\nmajor problems affecting the bankrupt carriers in the past has been\nsignificant losses from passenger operations, from the Amtrak con-\ntract and from contracts to commuter authorities. We believe it is\nabsolutely essential that Amtrak pay its full cost and that the com-\nmuter authorities pay their full cost\neither ConRail is permitted\nto abandon passenger service, or that they are paid at least the cash\ncost for the service. We think that is critical. It is a lot of money but\nit has somehow got to be paid by an agency outside the ConRail\nFreight operation.\nOver a period of 10 years we estimate, based\non the inflation that is going to take place in that next 10 years, that the\nnegative impact on ConRail, if it had to carry forward the losses cur-\nrently experienced and make the capital commitments required to\nmeet that service, that it would be another financing requirement of\n$1,650 million.\"\nWithout going into whether or not this is a realistic estimate (such\nestimates tend to be too low !), I simply want to ask if there are any\n(15)\n17\n16\nMembers of the Committee believe will be bolstered by the passage of\nplans to put passenger operations on a paying basis except through\nthis act, the potential liability to the nation's taxpayers may range\ncontinued federal, state and local subsidies for an indefinite period.\nupwards of $13 billion, according to information furnished to the\nI am not aware of any realistic plan to do SO. So the outlook is for\ncommittee. I have not evaluated this concern. But I have an uneasy\nperpetual subsidies, a prospect which is not palatable to me.\nfeeling that the Committee has not given it sufficiently serious con-\nSecond, the USRA Chairman called for a sweeping change in regu-\nsideration and I wish it were possible to do SO prior to the time this\nlatory policy \"to give ConRail a greater degree of flexibility in pric-\nlegislation is taken up by the House itself.\ning, both in terms of raising rates on products that are carried today\nFor these reasons, I intend to vote against H.J. Res. 801.\nat below cost, or to permit a more aggressive merchandizing/market-\nWILLIAM L. ARMSTRONG.\ning philosophy or policy.\"\nI share Chairman Lewis's concern. The regulatory abuses of the\nInterstate Commerce Commission are mind boggling. During the last\n85 years, since ICC began superimposing its wisdom on the industry,\nthe ICC has accumulated a file of some 43 trillion rates\nwithout\nan index\nIn an instance which was recently brought to my attention, one of\nthe nation's railroads invested $13 million in 500 special hopper cars\nin order to permit a rate reduction of 60% in hauling grain. When the\nICC refused to agree to the reduction, it took 4 years of litigation\nand 16,000 pages of testimony before the Supreme Court finally per-\nmitted the rate reduction made possible by the new cars. In another\ninstance, the Commission cancelled a 70% rate reduction for transport-\ning coal. There are many similar instances in which the ICC has ham-\nstrung the industry by forbidding lower rates to attract new business\nor higher rates to cover losses. The ICC is wrecking the railroads and\nother segments of the transportation industry, costing consumers bil-\nlions of dollars a year in higher prices required by ICC regulations\nand putting thousands of people out of work. It is no wonder USRA\nterms a regulatory policy change \"critical.\" But since there is no assur-\nance that ConRail will receive needed regulatory flexibility, we are\nsimply sending good money after bad in passing legislation such as\nthis appropriation.\nThird, the industry has been plagued for generations by restrictive\nand outmoded labor practices which Congress has tolerated, and to\nsome degree, has actually fostered. Incredible though it may seem.\ntrained operating crews are often paid for a full day's work on the\nbasis of 100 miles or 8 hours, whichever occurs first. This is based on\nthe 19th century norm of an 8 hour run to cover 100 miles. Today such\na run should take no more than two or three hours. So three crews of\nfour to five men each are required to run a train 300 miles. If they\nwere paid on the basis of a standard 8 hour work day, two men could\nperform the same service. This is only one of the many examples of\narchaic or \"make-work\" operating work rules in effect on most major\nrailroads. Is it any wonder SO many of them are in bankruptcy ? So far\nas I know, there is no basis to believe ConRail can prosper until mod-\nern work practices can be implemented. This isn't likely to happen\nas long as Congress continues to subsidize inefficient work practices\nand featherbedding.\nFinally, I note the concern of those who believe federal action may\nconstitute an act of eminent domain. A creditor's suit is now pending,\nand, if creditors are successful in establishing their claim, which some\nH. J. Res. 801\nAinety-fourth Congress of the United States of America\nAT THE SECOND SESSION\nBegun and held at the City of Washington on Monday, the nineteenth day of January,\none thousand nine hundred and seventy-six\nJoint Resolution\nMaking supplemental railroad appropriations for the fiscal year ending June 30,\n1976, the period ending September 30, 1976, the fiscal year ending September 30,\n1978, and the fiscal year ending September 30, 1979, and for other purposes.\nResolved by the Senate and House of Representatives of the United\nStates of America in Congress assembled, That the following sums are\nappropriated, out of any money in the Treasury not otherwise appro-\npriated, for the fiscal year ending June 30, 1976, the period ending\nSeptember 30, 1976, the fiscal year ending September 30, 1978, and the\nfiscal year ending September 30, 1979, and for other purposes, namely\nDEPARTMENT OF TRANSPORTATION\nFEDERAL RAILROAD ADMINISTRATION\nNORTHEAST CORRIDOR IMPROVEMENT PROGRAM\nFor necessary expenses related to Northeast Corridor improvements\nfor fiscal year 1976, $25,000,000, to remain available until expended.\nFor necessary expenses related to Northeast Corridor improvements\nfor the period July 1, 1976 through September 30, 1976, $25,000,000, to\nremain available until expended.\nGRANTS TO THE NATIONAL RAILROAD PASSENGER CORPORATION\nFor additional amounts for \"Grants to the National Railroad Pas-\nsenger Corporation\", $36,500,000 to remain available until expended\nProvided, That not to exceed $21,200,000 in fiscal year 1976 and\n$5,300,000 in the period July 1, 1976, through September 30, 1976, shall\nbe available for additional operating expenses for the Corporation in\nconnection with the Corporation's additional operating responsibilities\nover the rail properties of the Northeast Corridor; non-recurring costs\nrelated to the initial assumption of control and responsibility for\nmaintaining rail operations on the Northeast Corridor, $10,000,000.\nURBAN MASS TRANSPORTATION ADMINISTRATION\nURBAN MASS TRANSPORTATION FUND\nRAIL SERVICE OPERATING PAYMENTS\nFor an additional payment to the Urban Mass Transportation Fund\nthere is hereby appropriated to remain available until expended, for\nthe purposes of the Urban Mass Transportation Act of 1964, as\namended by Public Law 94-210, $25,000,000. The amount appropriated\nin preceding paragraph shall be added, as needed, to the limitations\ncontained in section 306 of Public Law 94-134.\nH.J. Res. 801-2\nUNITED STATES RAILWAY ASSOCIATION\nPAYMENTS FOR PURCHASE OF CONRAIL SECURITIES\nFor acquisition of debentures and series A preferred stock issued by\nthe Consolidated Rail Corporation to remain available until expended,\n$500,000,000 for fiscal year 1976 and $350,000,000 for the period July 1,\n1976 through September 30, 1976: Provided, That not to exceed\n$308,000,000 shall be made available to the Corporation for operating\nlosses of the Corporation.\nFor acquisition of debentures and series A preferred stock issued\nby the Consolidated Rail Corporation to become available on Sep-\ntember 30, 1976, and to remain available until expended, $615,000,000 :\nProvided, That not to exceed $200,000,000 shall be made available to\nthe Corporation for operating losses of the Corporation.\nFor acquisition of debentures and series A preferred stock issued by\nthe Consolidated Rail Corporation to remain available until expended,\n$425,000,000 for fiscal year 1978 and $136,000,000 for fiscal year 1979.\nADMINISTRATION EXPENSES\nFor an additional amount for \"Administrative expenses\" for fiscal\nyear 1976, $5,800,000, to remain available until expended.\nMISCELLANEOUS PROVISIONS\nOn and after the date of the enactment of the joint resolution, the\nprovisions of section 8344 of title 5, United States Code, shall not\napply to any individual serving as a member of the Commission on\nthe Operation of the Senate.\nSpeaker of the House of Representatives.\nVice President of the United States and\nPresident of the Senate.\nMarch 26, 1976\nDear Mr. Director:\nThe following bill was received at the White\nHouse on March 26th:\nH.J. Res. 801\nPlease let the President have reports and\nrecommendations as to the approval of this bill\nas soon as possible.\nSincerely,\nRobert D. Linder\nChief Executive Clerk\nThe Honorable James T. Lynn\nDirector\nOffice of Management and Budget\nWashington, D.C."
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